2017 NLCA 36, 2017 NLCA 36

Darrin Michael Steele (appellant) v. Lillian Maude Rendell (respondent) (16/56) Indexed As: Steele v. Rendell 2017 NLCA 36 1 C.A.N.L.R. 790 Court of Appeal of Newfoundland and Labrador Welsh, White and Harrington JJ.A. June 6, 2017

Summary: The appellant, Darrin Steele, was ordered to pay double costs after unsuccessfully defending a proceeding brought against him by the respondent, Lilian Rendell. Over the duration of about ten years, Darrin Steele started encroaching onto land owned by his neighbour, Lillian Rendell. She had moved away after buying the property and visited it only occasionally when in the province. After the respondent brought an action against him, Mr. Steele claimed to own the property either through a conveyance by his mother, or through adverse possession. His claims were dismissed.

The court ordered costs on column 5 and also double costs under Rule 20A of the Rules of the Supreme Court, 1986 . He appealed that costs ruling, arguing the trial judge erred in making both awards. Held: Appeal dismissed. White J.A. (Welsh and Harrington JJ.A. concurring): Discretionary costs decisions should only be set aside on appeal if the court below has made an error in principle or if the costs award is plainly wrong. The rules that guide trial judges in selecting an appropriate column for a costs award are rules 55.04(3) and (4).

A judge can exercise discretion to order costs on whatever column, or combination of columns, he or she considers in the exercise of judicial discretion, is appropriate. Mr. Steele argues that the case was fairly simple and did not require senior counsel, and thus seniority of counsel should not receive much weight in a simple case. Even in a simple case, the seniority of counsel can be a good reason to order costs on a higher column. Complexity is not the only reason to engage senior counsel. Senior counsel are often more expensive. Courts can consider the burden of costs borne by the successful litigant.

Costs awards should bear some relation to the cost of litigation. Mr. Steele argued it was an error of principle to place weight on his raising several issues that did not raise a genuine issue for trial. He says his issues were not explicitly found to be frivolous, he was self-represented, and the case was resolved expeditiously at a

summary trial. Although these are all legitimate considerations, the trial judge was entitled to consider that Ms. Rendell was put to significant expense refuting claims that had no reasonable basis. Conduct that comes close to justifying solicitor-and-client costs can justify costs on a higher column. Rule 20A provides that a party who refuses a formal offer to settle, proceeds to trial, and receives a less favourable outcome than the

offer, will pay increased costs (double costs unless otherwise ordered) from the date of the offer. Rule 20A focuses on circumstanceswhere the parties come close to a deal but proceed to trial regardless. Rule 20A penalizes the party who was asking for too much. Thetrial judge retained a discretion not to order double costs, but this discretion should rarely be exercised. Mr. Steele knew in June 2015 that he was very unlikely to win. In the faint hope of avoiding a few thousand dollars in damages and costs(costs he knew had already been incurred by Ms. Rendell) he pushed through to trial.

The costs order in this case, while unfavourable toMr. Steele, is not as unfavourable as it might have been, given the circumstances. The trial judge did not err in ordering double costsunder rule 20A. As for costs on the appeal, if, simply because there is an unpaid Litigation Representative permitted by the Court, nothing more thanexpenses can be ordered, part of the objective of a costs award is not attained. The deterrence of unmeritorious litigation rationale issignificant and an order of payment over and above reimbursement of expenses in the modest lump sum amount of $500 is appropriate.

Cases cited: Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6, [2013] 1 S.C.R. 271 Hiscott v. Hall, 2015 NLCA 1, 53 R.F.L. (7th) 255 Weir’s Construction Limited v. Warford, 2017 NLCA 1 Petten v. E.Y.E. Marine Consultants (1998), (NL SC), 179 Nfld. & P.E.I.R. 94 (Nfld. T.D.) Hynes v. Snook, 2016 NLCA 4 Mega Roofing and Waterproofing Ltd. v. Dobbin (N.D.) Ltd. (1996), (NL SC), 143 Nfld. & P.E.I.R. 14 (Nfld. T.D.) Finn v. St. John’s (City), 2007 NLCA 46, 268 Nfld. & P.E.I.R. 13 Cabana v. Newfoundland and Labrador, 2016 NLCA 75 Counsel: J. Michael Cabot, for the appellant; Brian W.

Rendell (as Litigaiton Representative), for the respondent. This appeal was heard on March 13, 2017 before Welsh, White and Harrington JJ.A. The following judgment was delivered on June 6, 2017 by White J.A. for the Court. ______________________________________________________________ White J.A.: [1] Having accepted his defeat at trial, Darrin Steele appeals from an order that he pay double column 5 costs. For the reasons thatfollow, I would dismiss his appeal. Background [2] In 1978 Lillian Rendell bought a .23 acre parcel of land on Fourth Pond in what was then the Town of Goulds (the Land).

Shethen moved away in 1992, and she and her daughter visited the property only occasionally when in the province. [3] Over the past ten years, her neighbour Darrin Steele started encroaching on the Land, as the trial judge described (2016NLTD(G) 24): [71] Prior to 2008 the acts of possession were limited to the storage of the Second Defendant’s boats and some minimal land clearing.Sometime after that year the Second Defendant commenced clearing the property with greater earnest and commenced erecting structureson the property; a greenhouse in 2010, gazebo in 2012, canvas shed in 2013, swing set 2015.

He started a vegetable garden in 2011.

[ 4 ] Unfortunately for Mr. Steele, Ms. Rendell’s children noticed these encroachments, and Ms. Rendell brought an action against Mr. Steele. In response he claimed to own the property through a 2012 conveyance to him by his 83-year-old mother, who when examined did not think she had signed a conveyance and did not claim to have owned the Land. He also claimed to hold the Land through adverse possession. These claims were dismissed and there has been no appeal. [ 5 ] Ms. Rendell had also counterclaimed against the defendant in defamation.

The counterclaim was dismissed as not raising a genuine issue for trial. [ 6 ] At trial, Ms. Rendell, who was represented by counsel, asked for solicitor-and-client costs, saying Mr. Steele’s arguments were essentially meritless and that advancing the 2012 conveyance was scandalous. The Court declined to give solicitor-and-client costs, but considering the seniority of counsel at trial and the weakness of many of Mr. Steele’s claims, did give costs on column 5. [ 7 ] After trial, Ms. Rendell presented an offer to settle she had given in June 25, 2015, seven months before the trial. The offer would give Ms.

Rendell unquestioned title to the property, but her damages and costs would have been capped at $8,500. The trial judge concluded that this triggered the costs consequences in Rule 20A, and ordered double column 5 costs from the date of the offer (2016 NLTD(G) 44). [ 8 ] Mr. Steele received leave to appeal from the costs decisions on July 20, 2016 ( 2016 NLCA 37 ). Issues [ 9 ] Mr. Steele raises two issues: 1. Did the trial judge err in ordering column 5 costs? 2. Did the trial judge err in ordering double costs under Rule 20A?

Standard of Review [ 10 ] The standard of review for a costs order was described by Cromwell J. in Sun Indalex Finance, LLC v. United Steelworkers , 2013 SCC 6 , [2013] 1 S.C.R. 271 : [247] In Nolan v. Kerry (Canada) Inc. , 2009 SCC 39 , [2009] 2 S.C.R. 678 , Rothstein J. held that “costs awards are quintessentially discretionary”: para. 126. Discretionary costs decisions should only be set aside on appeal if the court below “has made an error in principle or if the costs award is plainly wrong”: Hamilton v. Open Window Bakery Ltd. , 2004 SCC 9 , [2004] 1 S.C.R. 303 , at para. 27 . See also Hiscott v.

Hall , 2015 NLCA 1 , 53 R.F.L. (7th) 255 , at paras. 6-12 . Analysis Did the Trial Judge Err in Ordering Column 5 Costs? [ 11 ] Mr. Steele’s argument starts with the proposition that “[t]he default rule for an order of costs following trial is that such costs shall be payable according to Column 3 of the Scale of Costs”. This is a reference to Rule 55.04(2): [T]he costs between parties, unless otherwise ordered, shall be determined by a taxing officer according to Column 3 of the Scale of Costs in the Appendix to this Rule. [ 12 ] Mr.

Steele’s argument appeals to the notion that this provision makes column 3 costs the norm, that a judge should order costs on column 3 unless there are special reasons to do otherwise and, that there is an onus to justify any other choice. This is not the correct approach. [ 13 ] Rule 55.04(2) does not provide direction to judges. It is directed at taxing masters. It instructs them on how to assess costs when the reasons for judgment do not indicate a column.

It is a true default rule and applies only when the reasons for judgment do not specify the level of award. [ 14 ] The rules that guide trial judges in selecting an appropriate column are Rule 55.04(3) and (4):

(3) The Court may award costs to be taxed in accordance with any column or combination of columns under the Scale of Costs in the Appendix to this Rule.

(4) In exercising its discretion under this Rule, the Court may consider (

a) the amounts claimed and the amounts recovered; (

b) the importance of the issues; (

c) the complexity, difficulty or novelty of the issues; (

d) the manner in which the proceeding was conducted, including any conduct that tended to shorten or unnecessarily lengthen the duration of the proceeding; (

e) the failure by a party to admit anything that should have been admitted; (

f) the proportion of the services rendered prior to the date the amendment to this paragraph introducing a Scale of Costs where costs are

taxed according to a column or combination of columns came into force; (

g) seniority at the bar of counsel; and (

h) any other relevant matter. (Emphasis added.) [15] These rules assign no special priority to column 3. A judge can exercise discretion to order costs on whatever column, orcombination of columns, he or she considers in the exercise of judicial discretion, is appropriate in light of the factors in Rule 55.04(4)and any other relevant considerations. Seniority of Counsel [16] Mr. Steele points to two possible errors of principle.

First, he says that the case was fairly simple and did not require seniorcounsel, and thus seniority of counsel should not receive much weight in a simple case. [17] The Court has ordered column 5 costs for seniority of counsel alone, without referring to complexity: Weir’s ConstructionLimited v. Warford, 2017 NLCA 1. [18] Even in a simple case, the seniority of counsel can be a good reason to order costs on a higher column. Senior counsel are oftenmore expensive.

A costs order is meant to strike a balance “between the burden of costs which must be borne by a potentially successfullitigant and the risk of putting litigation beyond the financial reach of a potential loser”: Petten v. E.Y.E. Marine Consultants (1998), (NL SC), 179 Nfld. & P.E.I.R. 94 (Nfld. T.D.) at para. 74. In striking that balance, courts can consider the burden ofcosts borne by the successful litigant. Costs awards should bear some relation to the cost of litigation. [19] Potential litigants cannot always gauge whether a file is simple or complex before consulting a lawyer.

It takes significant legalknowledge to assess the complexity of a file. A large company can hire in-house counsel to manage and optimize external retainers, butmost people choose lawyers in a simpler way by choosing someone they trust, someone who was recommended, someone whoadvertised. This is not unreasonable. [20] Finally, courts should be slow to infer that because a case seemed simple it was inappropriate to engage senior counsel. Often theskill of counsel consists in making difficult cases seem simple. Often experienced counsel can resolve cases faster.

Complexity is not theonly reason to engage senior counsel. [21] The trial judge did not err in considering the seniority of counsel as one factor supporting a higher costs award. Issues That Did Not Raise a Genuine Issue [22] Mr. Steele also says it was an error of principle to place weight on his raising several issues that did not raise a genuine issue fortrial. He says his issues were not explicitly found to be frivolous, that he was self represented, and that the case was resolvedexpeditiously at a

summary trial. [23] Although these are all legitimate considerations, the trial judge was entitled to consider that Ms. Rendell was put to significantexpense refuting claims that had no reasonable basis. In particular, much of Mr. Steele’s evidence focused on his theory that the Landwas conveyed to him by his mother. That theory was dramatically contradicted by the evidence. It brought Mr.

Steele within a hair’sbreadth of a solicitor-and-client costs order; only the “benefit of the doubt” saved him (see paragraph 90). [24] Conduct that comes close to justifying solicitor-and-client costs can justify costs on a higher column. (See Hynes v. Snook, 2016NLCA 4.) The trial judge did not err in considering that factor. In the result, I am satisfied that the trial judge did not err in exercisinghis discretion to order costs under column 5 of the Scale of Costs. Did the Trial Judge Err in Applying Rule 20A [25] Rule 20A.08 reads:

(1) Unless ordered otherwise, when (

a) an offer to settle was made by a plaintiff (

i) at least 7 days before commencement of the trial or hearing of the proceeding, and (ii) was not revoked or accepted prior to commencement of the trial or hearing, and (

b) where that plaintiff obtains a judgment as favourable or more favourable than the terms of the offer to settle, that plaintiff shall be entitled to party and party costs plus taxed disbursements to the date of service of the offer to settle and thereafter todouble party and party costs plus taxed disbursements.

(2) Unless ordered otherwise, when (

a) an offer to settle was made by a defendant (

i) at least 7 days before the commencement of the trial or hearing of the proceeding, and (ii) was not revoked or accepted prior to commencement of the trial or hearing, and (

b) where the plaintiff obtains a judgment no more favourable than the terms of the offer to settle, the plaintiff shall be entitled to party and party costs plus taxed disbursements to the date of service of the offer to settle, and thedefendant shall be entitled to party and party costs plus taxed disbursements from the date of service of the offer to settle.

(2.1) Unless ordered otherwise, when (

a) an offer to settle was made by a defendant (

i) at least 7 days before the commencement of the trial or hearing of the proceeding, and (ii) was not revoked or accepted prior to commencement of the trial or hearing, and (

b) where the plaintiff’s claim is dismissed, the defendant shall be entitled to party and party costs plus taxed disbursements to the date of service of the offer to settle and thereafterto double party and party costs plus taxed disbursements.

(2.2) If a plaintiff or defendant is awarded costs after judgment under a column of the Scale of Costs pursuant to rule 55.04, the judgeshall not change the column if it is later determined that paragraphs (1), (2) or (2.1) apply.

(3) If after a trial or hearing (

a) an offer to settle had been made and not revoked or accepted prior to commencement of the trial or hearing; and (

b) an application for a determination as to costs based on the application of Rule 20A is made by a party within 15 days following thefiling or delivery of the decision or order the decision of a judge with respect to costs shall be suspended pending determination of the application in clause (b).

(4) A determination as to costs resulting from an application pursuant to paragraph (3) shall, to the extent determined by the judge,replace and be deemed to have replaced a determination made by the judge as to costs in the original decision or order.

(5) In place of an application pursuant to paragraph (3), the parties may settle the issue of costs on a basis different from that stipulatedin the original decision or order by filing, within 15 days following the filing or delivery of the decision or order, a consent in writing asto the manner of disposition of costs. (6) [Rep. by 26/15 s1] [26] Rule 20A provides that a party who refuses a formal offer to settle, proceeds to trial, and receives a less favourable outcome thanthe offer, will pay increased costs (double costs unless otherwise ordered) from the date of the offer.

The underlying policy wasexplained by Orsborn J. in his often-cited decision Mega Roofing and Waterproofing Ltd. v. Dobbin (N.D.) Ltd. (1996), (NL SC), 143 Nfld. & P.E.I.R. 14 (Nfld. T.D.) at p. 17: Rule 20A is one of a group of new rules recently enacted with a view to streamlining the civil trial process. These rules… are intended …to focus the parties’ attention on the primary issues in dispute, to encourage and facilitate pretrial settlement, and to send to a full trialonly those issues or disputes which properly require for their adjudication the full trial process.

Part of this regime for encouragingsettlements contemplates that adverse costs consequences will result if a party fails to accept an offer which is less than the amountultimately awarded. … (Emphasis added.) [27] Ms. Rendell made a formal offer to settle, thereby engaging the prospect of double costs under Rule 20A. But the trial judgeretained a discretion not to order double costs. Mr. Steele says double costs were inappropriate because he had also made offers to settle,including one that was essentially an offer to capitulate in exchange for Ms. Rendell waiving damages and costs.

He says that if Ms.Rendell had accepted that offer, the trial would have been unnecessary. [28] As the trial judge observed in the oral hearing, Mr. Steele’s offer was not a formal offer to settle under the requirement of Rule20A.01 and did not engage the Rule. But the basic problem with Mr. Steele’s argument is deeper. [29] Rule 20A focuses on circumstances where the parties come close to a deal but proceed to trial regardless. Rule 20A penalizesthe party who was asking for too much.

[ 30 ] Although trial judges have a discretion to modify the application of the rule in special cases, the trial judge explained why this discretion should rarely be exercised: [35] … [P]redictability as to the cost consequences from the failure to accept an offer of settlement is a cornerstone to the Rule. This predictability enables the party faced with an Offer to Settle to objectively assess the economics of proceeding further. In the words of Orsborn, J.: “predictable and severe cost consequences serve to focus the mind on a realistic assessment of the offer” (at paragraph 27).

The predictability of the cost consequences means that in all but the most unusual circumstances the Court should adhere to the costs set forth in the Rule, which in this case is double party and party costs. [ 31 ] The word “severe” was criticized in Finn v. St. John’s (City) , 2007 NLCA 46 , 268 Nfld. & P.E.I.R. 13 . But apart from that, the trial judge’s explanation of the law is correct. Even if Mr. Steele’s offer had been a formal offer and had remained open until trial, it would not have justified reducing Mr. Steele’s costs order.

In any event, the offer did not meet the criteria required by Rule 20A. [ 32 ] From a more intuitive perspective, Mr. Steele knew in June 2015 that he was very unlikely to win. He was willing to settle the case for nothing. Nevertheless, in the faint hope of avoiding a few thousand dollars in damages and costs (costs he knew had already been incurred by Ms. Rendell) he pushed through to trial. [ 33 ] Ms. Rendell’s offer was open on the eve of trial. Mr. Steele could have accepted it at any time, leaving any additional costs to be absorbed by Ms.

Rendell. [ 34 ] The costs order in this case, while unfavourable to Mr. Steele, is not as unfavourable as it might have been. Ms. Rendell had requested solicitor-and-client costs and, in the circumstances such an order was well within what would properly be considered by the trial judge. [ 35 ] The trial judge did not err in ordering double costs under Rule 20A. Costs on Appeal [ 36 ] Chief Justice Green heard an application by Ms. Rendell seeking permission for her son, Brian W. Rendell, to appear and argue the appeal on her behalf.

The Chief Justice granted the application ( see 2016 NLCA 70 at paras. 23-25 ) and ordered that Mr. Rendell be designated as the “Litigation Representative”. [ 37 ] For such an order to be granted Mr. Rendell had to undertake pursuant to Rule 22(3)(a): Not to receive directly or indirectly any compensation for the assistance provided, except reimbursement for expenses actually incurred, unless the Court otherwise permits. [ 38 ] In Cabana v.

Newfoundland and Labrador , 2016 NLCA 75 , Chief Justice Green expanded the common law to allow a self- represented litigant to recover a counsel fee to reflect the time and effort the self-represented litigant spent performing the tasks a lawyer would have undertaken for him. [ 39 ] In this case, there is nothing to indicate that Ms. Rendell performed any of the work for which she would have otherwise paid a lawyer. Her Litigation Representative cannot accept any compensation whatsoever from her for the effort he expended in preparing the appeal and attending to argue it.

If she offers him a dollar over and above the actual expenses, he cannot accept it. [ 40 ] Nevertheless, there is more to an award of costs than some degree of reimbursement for time and effort.

In Cabana , the Chief Justice states at para. 26: … Today, however, it is accepted that the purposes of costs include compensation (something greater in scope than strict indemnification), deterrence and encouragement of settlement and facilitating access to the courts. … [ 41 ] If, simply because there is an unpaid Litigation Representative permitted by the Court, nothing more than expenses can be ordered, part of the objective of a costs award is not attained. Here, I would highlight the deterrence of unmeritorious litigation rationale and would order a payment over and above reimbursement of expenses.

A modest lump sum of $500 is appropriate. Conclusion [ 42 ] I would dismiss the appeal and would order lump sum costs of $500.00 and reimbursement of expenses. Appeal dismissed.