DARRIN MICHAEL STEELE APPLICANT AND: LILLIAN MAUDE RENDELL RESPONDENT, 2016 NLCA 37

IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR COURT OF APPEAL Citation : Steele v. Rendell , 2016 NLCA 37 Date : July 20, 2016 Docket : 201601H0056 BETWEEN: DARRIN MICHAEL STEELE APPLICANT AND: LILLIAN MAUDE RENDELL RESPONDENT Coram: Green C.J.N.L. Court Appealed From: Supreme Court of Newfoundland and Labrador Trial Division 201501G0247 (2016 NLTD(G) 24 & 44) Application Heard: June 21, 2016 Decision Filed: July 20, 2016 Counsel for the Applicant: Michael Cabot Counsel for the Respondent: Andrew Fitzgerald Green C.J.N.L.: [ 1 ] The applicant seeks an extension of time to seek leave to appeal an order for costs imposed as a result of an unfavourable judgment in a land dispute following a

summary trial in the Trial Division. If an extension is granted, he also asks that leave to appeal be granted. Appeals from Orders as to Costs Only [ 2 ] Rule 57.02 (1) of the Rules of the Supreme Court, 1986 provides:

(1) Leave to appeal shall be obtained by application to the Court where … (

b) a party seeks to appeal from an order (

i) as to costs only, [ 3 ] If an appeal relating to costs is ancillary to issues relating to other aspects of a judgment under appeal, the issues as to costs can be dealt with as part of the overall appeal as of right. It is only where the challenge to the costs disposition is the only matter to be dealt with on appeal that leave is required. This rule is about to change. In the Court’s revised rules of court scheduled to take effect in the Fall, the requirement of leave will be done away with. However, it is the old law which applies to this case. [ 4 ] In Hiscott v.

Hall , 2015 NLCA 1 , 53 R.F.L. (7th) 255, this Court adopted and applied the test for leave expressed by Wells C.J.N. in Workplace, Health, Safety and Compensation Commission v. Mandavia , 2006 NLCA 38 , 256 Nfld. & P.E.I.R. 334 as follows: [8] ... the intended appellants quoted four factors, identified by the British Columbia Court of Appeal in Pierce, Van Loon v. Davro Investments Ltd. (1994), [1994] B.C.J. No. 3254 , 76 W.A.C. 309 , as being matters properly to be considered on an application for leave to appeal an order as to costs only.

Those four factors are: (1) the applicant must identify a good arguable case having enough merit to warrant scrutiny by the court; (2) the issues must be important, both to the parties and in general; (3) the appeal must have practical utility; (4) the court should consider the effect of the delay in proceedings caused by the appeal. [9] Although in a particular case there may be other factors, I agree that the foregoing would, in most cases, be the appropriate factors. ... ... [12] ... Whether leave to appeal should be granted or refused depends on the potential answers to two threshold questions: (

i) whether the trial judge was exercising a conferred discretion; and (ii) if he were, whether he did so judicially. Therefore, leave to appeal should be granted only if the intended appellants can establish that there is an arguable case that the trial judge was not so exercising discretion. (Emphasis added.) [ 5 ] The key to the leave requirement is that the applicant for leave must demonstrate that he or she has “an arguable case” that the trial judge did not properly exercise his or her discretion in making the costs award. As noted in Whalen v.

O’Connor , 2008 NLCA 54 at paragraph 3 : “Paramount amongst [the factors to be considered] are that the applicant must identify a good arguable case having enough merit to warrant scrutiny by the Court.” [ 6 ] The other factors mentioned above, while relevant, are not determinative. [ 7 ] In assessing whether the applicant has an arguable case, it must be kept in mind that “costs awards are quintessentially discretionary” (per Rothstein J. in Nolan v.

Kerry (Canada) Inc., 2009 SCC 39 , [2009] 2 S.C.R. 678 at paragraph 126 ) and that considerable deference is due on appeal to trial costs dispositions: Hiscott , per White J.A. at paragraph 13. This means that in general, a person will only have an arguable ground of appeal if he or she can allege with plausibility that the judge failed to apply or misapplied an applicable principle or made a palpable or overriding error in appreciation of the facts or that failure to interfere would otherwise cause a manifest injustice: Winter v.

Newfoundland and Labrador Health Care Association , 2005 NLCA 66 at paragraph 9 . [ 8 ] As noted in Hiscott and Mandavia , other factors to be considered in determining whether to grant leave to appeal include whether the issue has some degree of importance to the parties or in general, whether there is some practical utility to the appeal and the effect of any delay in proceedings that the appeal may cause. The impact of delay is not a factor here.

For the purposes of this application I am prepared to accept that the matter is of some importance to the applicant, considering the size of the costs claims that have been made when viewed in relation to the length and lack of complexity of the trial and is also of importance generally in light of the types of issues (discussed hereinafter) the applicant proposes to raise on appeal.

There is also utility to the appeal if it will result in clarification of certain approaches to application of the rules of court relating to costs that the applicant’s proposed appeal potentially raises. [ 9 ] What remains for consideration, therefore, is whether the applicant has raised an arguable case. I will return to this issue after dealing with the application for extension of time. Extension of Time [ 10 ] Apart from noting that the onus was on the applicant to satisfy the Court that an extension of time was warranted, the respondent took “no position” on whether an extension should be granted.

This is not the same as consenting to or acknowledging the merits of the application. Accordingly, it is still necessary to consider the merits of whether an extension should be granted. [ 11 ] Rule 57.05 allows this Court to extend time for filing a notice of application for leave to appeal where, in the opinion of the Court, “refusal to do so would create an injustice.” Factors to be considered when deciding this question are (

i) whether the applicant had a bona fide intention to appeal within the appeal period; (ii) whether there is a reasonable excuse for failure to comply with the rule; (iii) the potential merits of the appeal; and (iv) whether there are any exceptional or special circumstances justifying or working against the fairness of an extension: S.(K.) v. H.(M.), 2010 NLCA 39 , 298 Nfld. & P.E.I.R. 145. This is not an exhaustive list and they are not mandatory requirements: Douglas v. Eastern Regional Integrated Health Authority , 2016 NLCA 32 .

[ 12 ] As to the first factor ( bona fide intention to appeal), following receipt of judgment on the substantive issues and on costs, the applicant, who was unrepresented at trial, sought a legal opinion as to whether there were grounds for an appeal. He did so within the 10 days allowed for making an application for leave to appeal, as required by rule 57.02(2,). At that point, however, he was focused on appealing the whole of the decision, not just the costs disposition. In that regard he had 30 days from April 19, 2016 (the day the formal trial orders were filed) to file such an appeal (see rule 57.03(1)).

That would have made May 19, 2016 the deadline for filing, assuming substantive issues as well as costs were to be appealed. [ 13 ] The applicant was told by his lawyer that he would need to obtain a transcript of the proceeding in the Trial Division in order to provide an opinion on the merits of the proposed appeal. Following receipt of the transcript and other related material and review by his lawyer he was advised that there were likely no grounds for appeal on the merits of the trial decision but there were possible grounds for appeal as to the order as to costs.

He instructed his counsel on May 19, 2016 to proceed with only an appeal as to costs. By that time, however, the ten-day limit for filing an application for leave to appeal had expired. [ 14 ] It is clear that the applicant had the possibility of appeal within his contemplation within the 10-day time limit. He also formulated a decision to appeal the costs disposition within the general 30-day limit.

Although it cannot be said he had actually decided to appeal within the 10-day time limit (as opposed to adverting to the possibility of an appeal), his actions show he was acting bona fide in addressing the question of appeal in an expeditious way. Under these circumstances I would not be prepared to deny an extension on the basis that he had no bona fide intention to appeal. This case is similar to S. (K.) where there was a mistake as to the application of the 10-day time limit but it was clear that an intention to appeal was formed within the 30-day time limit that was mistakenly thought to have applied.

There, the fact that an intention to appeal was not formed within the applicable 10-day appeal period was not treated as fatal to the application for extension of time. [ 15 ] The foregoing circumstances also provide a reasonable excuse for failure to comply with the time limit (the second factor). The applicant certainly contemplated the possibility of an appeal at an early date. He moved to get legal advice and was told he needed to obtain a transcript of the trial proceedings before an opinion could be given, There was no significant delay in obtaining it.

The legal opinion was given within the thirty days for appealing, but because the opinion was only favourable regarding the costs portion of the decision and the applicant decided to act on that advice and only appeal costs, the ten-day time limit for that type of appeal (actually, an application for leave to appeal) had expired.

The applicant nevertheless acted quickly and made application for extension of time within six days of expiration of the 30-day time limit that would have applied had a decision been taken to appeal another issue as well as costs. [ 16 ] As to the fourth factor (special or exceptional circumstances), nothing was said about this in argument and I will not comment further on it. [ 17 ] That leaves the third factor (potential merits of the proposed appeal) for consideration.

Inasmuch as the key consideration as to whether leave to appeal should be granted also focuses on appellate merits (whether there is an arguable case that the judge erred in the exercise of his discretion), the discussion of appellate merits for both the extension and leave applications can be dealt with together. Potential Merits of Proposed Appeal [ 18 ] The proposed appeal involves two judgments relating to costs.

The first, delivered as part of the judgment on the merits which found against the applicant, awarded his opponent costs on a party-and-party basis under column 5 of the scale of costs in the Appendix to rule 55 of the Rules of the Supreme Court, 1986 . Costs based on the numbers in column 3 of the scale are the default position (rule 55.04(2)) but the judge, in the exercise of his or her discretion, may depart from that column and base the costs on one or more of the other four columns and, as well, in exceptional and limited circumstances, award costs on a solicitor-and-client basis.

In this case, the judge rejected the respondent’s claim for solicitor-and-client costs but awarded costs on a party-and-party basis on the higher column 5. Rule 55.04(4) lists a number of factors which the judge may take into account in exercising discretion to depart from column 3. [ 19 ] In opting to apply column 5, the judge gave as his reasons the fact that respondent was represented by senior counsel and “most” of the defences and the counterclaim raised by the applicant did not raise a genuine issue for trial.

He did not advert to any other factors within rule 55.04(4). [ 20 ] Counsel for the applicant submits that failure of the trial judge to address and deal with each of the relevant factors in exercising his discretion is an arguable ground of appeal.

Counsel for the respondent, on the other hand submits that, while the judge may not have referred to each factor explicitly when making his disposition, it is clear from the analysis of the law in his judgment that he was aware of and was adverting to the factors that were to be taken into account when exercising his discretion and he stated the applicable law correctly. Further, although not mentioned specifically, from the circumstances of the case it is clear that other factors listed in rule 55.04(4) would have application and would have supported the disposition made.

Bearing in mind that the disposition is a discretionary one and there is no apparent error of legal principle, the respondent argues that there is in reality no arguable ground of appeal and, certainly, whatever argument could possibly be raised is so weak that it would not justify granting an extension of time to appeal. [ 21 ] If that were the only ground of appeal being advanced, I would find the respondent’s argument persuasive.

However, there are additional grounds being advanced, arising out of a subsequent decision of the trial judge resulting from an application under Rule 20A dealing with the consequences of an offer to settle that was made in the case.

Furthermore, the decision applying column 5 continues to have relevance to the decision based on the application of Rule 20A. [ 22 ] Following the original costs disposition, the respondent made application for a higher award of costs, submitting that the judgment obtained was “as favourable or more favourable” than the terms of a formal offer to settle that had been made to the applicant, thereby triggering double party-and-party costs in accordance with rule 20A.08 (1).

The trial judge agreed with the respondent’s application and awarded double party-and-party costs plus taxed disbursements from the date of the respondent’s offer to settle calculated under column 5 of Rule 55. [ 23 ] The respondent’s offer to settle essentially proposed that the applicant acknowledge the respondent’s claim to title to the disputed property and that he remove structures from the property and consent to a future no-trespass order. In effect this was a proposal to capitulate. However, in addition the offer proposed to cap the amount of the respondent’s claims for costs, damages and pre-judgment

interest at $8,500. The applicant did not respond and the matter went to

summary trial seven months later.

The result of the trial gave therespondent essentially the same as was proposed in the offer to settle in terms of the declaration of ownership and the no-trespass order.With respect to monetary matters, the trial judgment gave leave to the respondent to apply for assessment of damages. [24] The trial judge acknowledged that an offer to settle that contained no element of compromise and in effect required capitulationfrom the other side did not attract the double costs consequences of the rule but concluded that the offer in this case did not require fullcapitulation because the cap on costs and damages was in effect a compromise.

He concluded that the estimated party-and-party costs,quite apart from damages, would have greatly exceeded the proposed $8,500 cap. [25] After rejecting the respondent’s claim for solicitor-and-client costs, the judge awarded double party-and-party costs from thedate of the delivery of the offer to settle.

Relying on rule 20A.08 (2.2), he awarded the costs to be calculated on column 5, since that wasthe basis he chose for calculation before the offer to settle was made known. [26] The applicant submits that it is arguable that the trial judge made a number of errors in the way he approached the applicationof Rule 20A. He says that they amount to errors in principle with respect to the way the discretion to award costs should be judiciallyexercised. Among them, he lists: 1.

The failure of the trial judge to consider the fact that the applicant had made an informal (i.e. outside of the formalities of Rule 20A)offer to settle in writing prior to the respondent’s formal offer to settle. This other offer, he says, should have been considered as part ofthe costs disposition process under Rule 20A.10, which allows the court, in exercising its discretion as to costs, to “take into account anyoffer to settle made in writing.” Relying on Lawson v.

Viersen, 2012 ONCA 25, which dealt with the similar Ontario rule, and on obitercomments of this Court in Winter, he asserts that even offers that do not technically comply with the formalities of Rule 20A, can andshould be considered in making the costs disposition under Rule 20A. He points out that the informal offer made an offer of capitulationwithout any order as to costs and that it was effectively incorporated in the respondent’s offer to settle with the only exception of theproposal of $8,500 for costs, damages and interest.

The applicant submits that failure to take the informal offer into account meant thatthe trial judge was effectively rewarding the respondent for pushing the case to trial simply to avail of a larger costs award. 2. The trial judge failed to conclude that the respondent’s offer to settle was nominal because the sum of $8,500 was in amount reallyonly an indemnification for costs incurred to date. It was, he says, really a demand for capitulation designed solely for the purpose of acosts advantage which, as noted by Orsborn J. in Burton v.

Global Benefit Plan Consultants Inc., (1999), (NL SC),183 Nfld. & P.E.I.R. 86 (SCN,TD) at paragraph 49, is “not to be encouraged.” He also says that because the issue of damages was notyet resolved (and could in fact only amount to nominal damages) that is a matter that should be taken into account in assessing thesignificance of the $8,500 offer. In essence, this is an argument that the application of rule 20A was premature because a comparison ofthe overall result with the scope of the offer could not be made until all matters were settled.

The applicant also points to rule 20A.04(2)which requires that an offer to settle should not be disclosed to the court until “all of the questions of liability and the relief to be grantedhave been decided.” [Emphasis added.] [27] In response, the respondent emphasizes, relying on Winter, that costs dispositions are discretionary decisions that require a highdegree of deference on appeal, that the trial judge identified all of the relevant principles and came to reasonable conclusions in theexercise of his discretion.

He takes issue with the suggestion that the respondent acted unreasonably in pursuing trial simply to obtain asubstantial costs award and says, in fact, that it was the applicant who acted intransigently and forced the matter to trial. [28] The applicant’s submissions, however, are not simply a disagreement with the result of the exercise of the judge’s discretion toaward costs. He alleges failure to take into account relevant considerations and apply proper principles relevant to the application of Rule20A. These are arguable positions to take.

It is arguable, if the applicant’s submissions were to be accepted, that the Court could bepersuaded that the trial judge “failed to apply or has misapplied an applicable principle or made a palpable and overriding error in his orher appreciation of the facts, or the failure to interfere would otherwise cause a manifest injustice.” As noted in Winter, paragraph 9, thisis the standard against which appellate review of discretionary costs decisions is to be judged.

Conclusion and Disposition [29] I conclude, therefore, that the applicant’s proposed appeal meets the “arguable case” standard for granting leave to appeal. Italso follows that, considering the potential merits of the appeal, an extension of time for filing the application for leave should begranted. [30] Accordingly, I order that: 1. The time for filing an application for leave to appeal the costs dispositions of the trial judge is extended.

The notice of applicationfor an extension of time to file an appeal and for leave to appeal filed on May 27, 2016 shall be deemed to be the applicant’s applicationfor leave to appeal as duly filed; 2. Leave to appeal each of the costs dispositions of the trial judge is granted; 3. The applicant shall file a Notice of Appeal with respect to costs only on or before July 29, 2016; and 4. Costs of the application for the extension of time and for leave to appeal shall be in the cause. _________________________ J.D. Green C.J.N.L