Docket: CACV2367 William Goodtrack Appellant - v. -, 2013 SKCA 137

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2013 SKCA 137 Date: 2013-12-17 Between: Docket: CACV2367 William Goodtrack Appellant - and - The Rural Municipality of Waverley No. 44 Respondent Coram: Cameron, Herauf and Whitmore JJ.A. Counsel: Kirk Goodtrack for the appellant Gregory Fingas for the respondent Appeal: From: QB 125 and QB 88 of 2011, J.C. of Moose Jaw Heard: October 18, 2013 Disposition: Allowed

Written Reasons: December 17, 2013 By: The Honourable Mr. Justice Whitmore In Concurrence: The Honourable Mr. Justice Cameron The Honourable Mr. Justice Herauf Whitmore J.A. I. Introduction [1] The appellant, William Goodtrack, succeeded in obtaining an order in the Court of Queen’s Bench quashing a municipal bylawexpropriating a portion of his farm land. In consequence, he asked the Chambers judge to order the municipality to pay him the costs hehad incurred in having the bylaw set aside. His solicitor-client costs, he said, amounted to $64,498.92.

The Chambers judge declined toaward him costs on a solicitor-client basis and instead, awarded him the fixed sum of $3,000 payable by the municipality. He thenbrought this appeal. II. Background [2] In 1992 the appellant purchased several quarters of land in the Rural Municipality of Waverley, including the east half of 17-4-4-W3rd (the “Land”). [3] A neighbour of the appellant used certain trails on the Land as a shortcut for his cattle to access other lands owned by theneighbour. A dispute arose as to whether the Land was private land or public land.

The Rural Municipality of Waverley had consideredthe trails on the Land to be public land. [4] In 2002 the appellant brought an application for an interlocutory injunction against the neighbour to prevent the neighbour fromusing the Land as a shortcut. This application was unsuccessful. [5] In 2008 the Rural Municipality of Waverley attempted to purchase the trails, but Mr. Goodtrack did not respond to any inquiries.On September 8, 2008, the Rural Municipality passed a bylaw expropriating the Land. Mr.

Goodtrack was served with a Notice ofIntention to Expropriate but again he did not respond. [6] In 2011 the Rural Municipality applied to the Court of Queen’s Bench for an order pursuant to s. 5(2) of The MunicipalExpropriation Act, R.S.S. 1978, c. M-27, extinguishing the appellant’s right to compensation or alternatively, for leave to pay thecompensation into court. [7] The appellant countered with an application to quash the bylaw.

The parties agreed to treat the application as one for judicialreview and, accordingly, the judge proceeded to determine it as an application for judicial review by way of certiorari under then Rule664 of The Queen’s Bench Rules. [8] The bylaw was passed by the Rural Municipality pursuant to subsection 3(1) of The Municipal Expropriation Act. That being so,the bylaw was required by subsection 3(2) of the Act to “state the purpose” for which the land was required. But it failed to do so.

TheChambers judge held that strict compliance with the requirements of subsection 3(2) was necessary and then went on to hold that, inconsequence of this failure, the bylaw was invalid and the expropriation unlawful. [9] The issue of costs was left to be spoken to and was decided at a later time. [10] The appellant requested unassessed solicitor and client costs in the amount of $64,498.92. The Chambers judge awarded costswhich she fixed at $3,000. It is solely from this decision of the Chambers judge regarding costs that the appellant appeals. III.

The Decision Below [11] The decision of the Chambers judge is brief and may be repeated in its entirety. It states: I rendered a decision on October 10, 2012 quashing an expropriation bylaw passed by the RM of Waverley and gave leave to theparties to speak to the matter of costs. Goodtrack seeks costs on a solicitor and own-client basis, or full indemnification of legal fees which he says amounts to$64,498.92, inclusive of tax. Goodtrack submits the Court of Appeal decision in Siemens v.

Bawolin, 2002 SKCA 84, which sets out astringent fourfold test to guide a court when considering an award of solicitor and client cots [sic], is inapplicable to expropriation cases.He argues that expropriation proceedings are in and of themselves special and extraordinary and should therefore be considered solelyfrom a broader public policy perspective. Goodtrack relies upon the Saskatchewan Court of Appeal decision, Canada (Attorney General)v. Saskatchewan Water Corp. (SK CA), [1992] 4 W.W.R. 712.

The Sask Water decision is distinguishable on its facts, and in any event predates the Siemens case. Moreover there is nothing inthis decision which articulates the bald proposition that expropriation cases stand outside the common law jurisprudence in relation tosolicitor-client costs. I am satisfied that the Saskatchewan Court of Appeal decision in Siemens v. Bawolin is the controlling decision in this jurisdictionwith regard to solicitor-client costs (see also Wilson v. SGI, 2012 SKCA 106).

Both Siemens and the Wilson decision make it abundantlyclear that an award of solicitor-client costs is limited to rare and exceptional circumstances where the conduct of the party against whom,costs are sought is scandalous, outrageous or reprehensible. [emphasis added] Costs are the discretion of the Court. Rule 545(1) of The Queen’s Bench Rules of Court for Saskatchewan sets out the jurisdictionof this Court to award costs. Given that the applicant was successful with his application and having regard to Rule 545, the applicant, William Goodtrack, isentitled to costs of the application.

Having considered the factors set out in Rule 545(4), costs are fixed at $3,000. [12]

Section 38 of The Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01, provides that an appeal of an award of costs only requires leaveof the judge making the costs order. The Chambers judge granted leave to appeal stating: While I remain of the view that an award of costs in these proceedings is discretionary pursuant to s. 358(5) of The MunicipalitiesAct, s. 9 of The Queen’s Bench Act, 1998, and Rule 545 of The Queen’s Bench Rules, and that deference is owed to that decisionprovided it was exercised judicially, I cannot conclude the proposed applicant lacks an arguable case.

The law of expropriation recognizes the general principle that expropriated landowners are to be made whole. Whether thatprinciple extends to costs and displaces the discretionary authority of the court in relation to an award of costs generally is a debatablepoint. It finds some support in jurisprudence from other jurisdictions, albeit possibly governed by the specific legislative provisionsbefore those courts. An award of full indemnification for solicitor and own client costs is not without precedent in Saskatchewan. (Canada (AttorneyGeneral v.

Saskatchewan Water Corporation, (SK CA), [1992] 4 W.W.R. 712) Whether that decision was restrictedto its unique facts or stands for a larger, more encompassing principle of law is, at the least an arguable point. In

summary, having regard to the nature of the issue and the unsettled point of law raised, I conclude that an arguable case hasbeen articulated which is not prima facie destined to fail. With the expropriation issue settled, an appeal on costs alone will not undulydelay conclusion of proceedings. IV. The Appeal [13] The issue is whether the Chambers judge committed a reversible error by interpreting Siemens v.

Bawolin as precluding an awardof solicitor-client costs in the circumstances of this case because solicitor-client costs may only be awarded in exceptional casesfeaturing scandalous, outrageous or reprehensible conduct. [14] The proper standard of review applicable to a discretionary costs order was set out by Cameron J.A. in Benson v. Benson (1994), (SK CA), 120 Sask. R. 17 at paras. 89-90: … In general costs are in the discretion of the court with full power to determine by whom and to what extent they are to be paid.

Theexercise of that discretion has been taken to be limited only by the need to act judicially on the facts of the case. Its exercise is otherwise"unfettered and untrammelled"… That, combined with the nature of our function in relation to appeals concerning the exercise of judicial discretion, serves tosignificantly narrow the scope for appeal. The discretion is vested in the trial judge, not us. And our function, at least at the outset, is oneof review only, review for error vitiating the exercise by the judge of that discretion.

The obvious aside, vitiating error is to be foundeither in misapplication of some governing principle or rule or in disregard of some critical fact or other consideration. Either that or it isto be assumed in the case of an order so obviously unjust as to invite intervention.

But in the absence of something of that sort we are notto wade in, substituting our discretion for that of the trial judge. [15] The appellant argues that the Chambers judge should have exercised her discretion in favour of awarding solicitor-client costs. [16] The respondent in turn argues that this is a judicial review application and costs are generally awarded to the successful party basedupon The Court of Queen’s Bench Rules.

Queen’s Bench Rule 545 was as follows [now Rules 4-28 and 11-1]: 545(1) Subject to the express provisions of any statute or regulation, and notwithstanding any other rule, the court has discretionrespecting the costs of and incidental to a proceeding or a step in a proceeding, and may make any direction or order respecting costs thatit considers appropriate.

(2) The court in exercising its discretion as to costs may determine: (

a) by whom costs are to be paid, which may include a successful party; (

b) to whom costs are to be paid; (

c) the amount of costs; (

d) the date by which costs are to be paid; and

(

e) the fund or estate or portion thereof out of which costs are to be paid.

(3) In awarding costs the court may: (

a) fix all or part of the costs with or without reference to the Tariff; (

b) award a lump sum instead of or in addition to any assessed costs; (

c) award or refuse costs in respect of a particular issue or step in a proceeding; (

d) award assessed costs up to or from a particular step in a proceeding; (

e) award all or part of the costs to be assessed as a multiple or a proportion of any column of the Tariff; (

f) award costs to one or more parties on one scale, and to another party or other parties on the same or another scale; (

g) direct whether or not any costs are to be set off; (

h) make any other order it considers appropriate.

(4) In exercising its discretion as to costs, the court may consider: (

a) the result of the proceeding; (

b) the amounts claimed and the amounts recovered; (

c) the importance of the issues; (

d) the complexity of the proceedings; (

e) the apportionment of liability; (

f) any written offer to settle, or any written offer to contribute; (

g) the conduct of any party that tended to shorten or to unnecessarily lengthen the proceeding; (

h) a party’s denial of or refusal to admit anything that should have been admitted; (

i) whether any step in the proceeding was improper, vexatious or unnecessary; (

j) whether any step in the proceeding was taken through negligence, mistake or excessive caution; (

k) whether a party commenced separate proceedings for claims that should have been made in one proceeding or whether a partyunnecessarily separated his or her defence from that of another party; and (

l) any other matter it considers relevant. [17] The respondent argues such costs are subject to the discretion of the Chambers judge hearing the motion. [18] The respondent states that costs may only be awarded on a solicitor-client basis where justifiable based on the principlesestablished in Siemens v. Bawolin, supra. The respondent goes so far as to say the “application of the ‘full indemnity’ principle with noregard for normal rules as to costs (as sought by the Appellant) would itself constitute an error in principle justifying appellateintervention.” (Respondent’s Factum, para. 28) V.

Analysis [19] The appellant relies on Canada (Attorney General v. Saskatchewan Water Corp., (SK CA), [1992] 4 W.W.R.712, and states that this case governs the issue of costs in expropriation cases. In that case, the Provincial Government expropriated theTetzlaff’s land and did so in alleged breach of an undertaking it had given the Federal Government not to do so pending the completionof a Federal environmental assessment and the clarification of the status of the requisite Federal license.

The Tetzlaffs were drawn intolegal proceedings between the two levels of government regarding the alleged breach, including a set of interlocutory proceedings whichin time reached this Court. Pursuant thereto, the Tetzlaffs succeeded in obtaining an interlocutory injunction forestalling theexpropriation, coupled with an order for the recovery of their land. The Court awarded them their costs on a solicitor and client basis. Indelivering the judgment of the Court, Bayda C.J.S. said this of the matter: 74 From the standpoint of the Tetzlaffs, this picture presents itself.

It is not any wrong doing on their part that has precipitated thepresent as well as many other proceedings involving them as parties. They were quite content carrying on their farming operations whentheir world was invaded. It was the decisions--many bad as noted by--the federal and provincial governmental agencies and officials thatare responsible for what has happened to them and their farm.

And yet, the actual persons making the decisions for the governmentalagencies and officials are not required to support their decisions with legal fees and disbursements: it is the governmental agencies theywork for and ultimately the taxpayer who foots the legal bills generated by those decisions, irrespective of their quality. On the otherhand, it is the Tetzlaffs themselves-- they, who have done no wrong and who are merely reacting to decisions made by other persons--who are required to pay the legal bills incurred by their need to be parties to the proceedings.

The principles of equity cry for some sortof relief. It is for these reasons that the Tetzlaffs should recover their solicitor and client costs rather than party and party costs.

75 The Tetzlaffs should submit their solicitor-and-client bill to the Registrar for taxing. The Registrar after hearing representationsfrom the parties shall fix the amount of the bill, allowing for only one counsel fee. The costs shall be paid 50% by the appellant and 50%by the respondents. [20] That case is analogous to the case before us. The Tetzlaffs had been deprived of their land and succeeded in challenging theexpropriation. The Court was critical of the Federal Government’s conduct but did not find reprehensible, malicious or high-handedconduct.

The Court was much less critical of the actions of the Provincial Government, yet the Provincial Government was ordered topay one-half of the solicitor and client’s bill. [21] The appellant also relies on the Costello case (Calgary (City) v. Costello, 1997 ABCA 281, 152 D.L.R. (4th) 453). In Costello: 1 The City of Calgary (the appellant) took possession of property that it purported to expropriate from Mrs. Costello and Mrs.Dickhoff (the respondents). Many years later, the Supreme Court of Canada declared the purported expropriation to be void and of noeffect.

The respondents thereafter resumed possession of the land and brought an action against the appellant on the basis of an allegationthat the City's occupation of their property constituted a trespass. The court below upheld the claim and awarded substantial damages.An appeal was brought to this court on several grounds, as set out below. [22] The relevant expropriation statute provided for the recovery of legal costs. The trial judge awarded solicitor-client costs holdingthat there was a presumption in favour of such awards in the context of expropriation and related matters.

The City argued that since theowners recovered for trespass rather than expropriation, the award of solicitor-client costs was inappropriate. [23] The Alberta Court of Appeal affirmed the discretion of the trial judge to award solicitor-client costs, quoting the relevant paragraphof Sask Water and emphasizing the deference awarded to costs awards. [24] The respondent relies on the decision from the Manitoba Court of Appeal in Fouillard v. Ellice (Rural Municipality), 2007 MBCA108, [2007] 12 W.W.R. 250.

In that case, the owners failed to have the expropriating bylaw quashed in either the Court of Queen’sBench or the Court of Appeal. Nevertheless, the trial judge ordered the Municipality to pay solicitor-client costs. The Court of Appealoverturned this award stating: 53 Concerning the solicitor and client costs, I am of the opinion that the award of costs to the appellants cannot stand.

With all duerespect to the decision in Costello, there is a clear distinction between compensation proceedings where there is a statutory schemeproviding for payment of costs to the land owner, and court proceedings to challenge the validity of the expropriation itself. In theformer, the only issue is compensation and it is fit and proper that the land owner who is being deprived of his/her property should becompensated in such circumstances. In the latter, it is an ordinary court proceeding to quash an order in the Court of Queen's Bench.

Therationales with respect to costs are decidedly different, a distinction recognized in the Act itself.

Sec. 15(6) of the Act mandates that theauthority pay reasonable costs incurred by the owner in determining compensation; on the other hand, s. 20(7) enables the authority, withleave of the judge who granted the order, to recover costs in the event it is necessary to proceed to court to obtain an order for possessionof the expropriated property. 54 I agree with counsel for the municipality that, as a matter of policy, challenges to expropriation orders should not be encouraged bythe courts by providing litigants with financial support regardless of outcome. 55 It follows from the above that the normal principles dealing with the order for solicitor and client costs should be applied.

Atcommon law, solicitor and client costs are only awarded, even to successful parties, in rare and exceptional circumstances where theconduct of the other party is unconscionable. See Orkin and Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303. Itis definitely not the practice to award costs, even party and party costs, to an unsuccessful party in the absence of misconduct. A case onpoint is Smuck v. St. Thomas (City) Corp. (1982), (ON SC), 32 O.R. (2d) 698 (H.C.J.). See as well Favor and Favorv.

Winnipeg (City) et al., (1988), (MB KB), 51 Man.R. (2d) 81 (Q.B.), aff'd (1998), (MB CA), 52Man.R. (2d) 66 (C.A.). [25] In our view, Fouillard is not applicable as it dealt with an unsuccessful challenge to the validity of an expropriation bylaw. In thecase before this Court, of course, Mr. Goodtrack was successful in quashing the bylaw. We do not see Fouillard being persuasive in thecontext of this case. [26] While some of the case authority put forward by the appellant does deal with solicitor-client costs in expropriation matters, they doso in the context of

interpretation of the relevant statute. While solicitor-client costs may be appropriate in certain cases and while thesecases, particularly the Sask Water case, have some relevance to the present case, there is no authority for the proposition that solicitor-client costs must be awarded in expropriation cases.

There is, however, a substantial body of literature suggesting, as a matter of fairness,that persons whose private land has been taken from them by means not of agreement but of compulsory expropriation should generallybe able to recover their reasonable legal and other costs, responsibly incurred, in responding to the expropriation.[1] This is not to saythat compensation on expropriation necessarily includes recovery of such costs, for the scope of compensation is customarily a matter ofstatute.

It is only to say that the courts, in exercise of their discretionary power to award costs as between the parties to litigation, mayproperly have regard for considerations of this nature in the exercise of that discretion. [27] This Court, in Siemens v.

Bawolin at para. 118 outlined the principles to be followed regarding solicitor-client costs: 118 These are the principles, relevant to this appeal, which I take from my review of the above authorities: 1. solicitor and client costs are awarded in rare and exceptional cases only; 2. solicitor and client costs are awarded in cases where the conduct of the party against whom they are sought is described variously asscandalous, outrageous or reprehensible; 3. solicitor and client costs are not generally awarded as a reaction to the conduct giving rise to the litigation, but are intended to censure

behaviour related to the litigation alone; 4. notwithstanding point 3, solicitor and client costs may be awarded in exceptional cases to provide the other party complete indemnification for costs reasonably incurred. [ 28 ] There was no finding by the Chambers judge that the Rural Municipality of Waverley acted in bad faith or that its conduct was scandalous, outrageous or reprehensible. The question then becomes is conduct deserving of censure required in order for solicitor-client costs to be awarded under the fourth principle in Siemens ? [ 29 ] In the case of Lynch v.

Hashemian , 2006 SKCA 126 , [2007] 2 W.W.R. 52, this Court stated in applying Siemens : 32 In the course of her analysis Jackson J.A. had noted a divergence in the case law on the question of whether solicitor-client costs should be awarded to mark the court's disapproval of the conduct which had given rise to the litigation or whether they should be confined to condemnation of conduct in relation to the litigation itself. Clearly, point 3 in the principles enunciated reflects a general conclusion in favour of the latter position.

It would appear that the exception set out in point 4, then, relates to those exceptional cases where the principle of indemnification for the wrongdoing (and not merely disapproval, however strong, of the wrongdoing) justifies such an order. . . . 37 Moreover, his remarks reveal that the trial judge considered the award of solicitor-client costs as in some sense an alternative to an award of punitive damages.

Implicit in his comment that the plaintiff should not be penalized in legal costs for having brought the case forward is the assumption that, presumably as a matter of public policy, it was desirable that the matter be brought forward.

While, again, it is our conclusion that this factor would preferably have been considered in the context of an analysis as to whether punitive or exemplary damages ought to have been awarded, it could also justifiably have been seen as a circumstance rendering the instant case an extraordinary case within the meaning of the fourth principle enunciated by Jackson J.A. in Siemens . 38 In light of these considerations it is our conclusion that in the absence of an award of punitive damages the trial judge's award of solicitor-client costs was not inappropriate.

However, given our conclusion that punitive damages should be awarded in this case, and our view that the considerations that led the trial judge to award solicitor-client costs would better have been considered as factors leading to that conclusion, we find that the award of solicitor-client costs in this case is not warranted by the principles that properly must be considered in making such an award. [ 30 ] Thus, this Court in Lynch separated the conduct of the parties from the need for indemnification.

In other words, the fourth principle in Siemens is not subject to the second principle. [ 31 ] Following that reasoning, we conclude that Siemens v. Bawolin provides for solicitor-client costs in exceptional circumstances including but not restricted to situations where the conduct of the party against whom they are awarded is scandalous, outrageous or reprehensible. Viewing Siemens v.

Bawolin in this manner allows a trial judge to exercise judicial discretion in awarding costs, which the Queen’s Bench Rules and the relevant legislation contemplate. [ 32 ] The Sask Water case is directly on point and is relevant for the proposition that solicitor-client costs are available if deemed appropriate where a landowner successfully resists expropriation, and where the conduct of the party against whom costs are sought is not necessarily subject to censure.

In fact, the Chambers judge recognized the precedential value of Sask Water in granting leave to appeal to the appellants. [ 33 ] Following this reasoning, the Chambers judge erred in interpreting the Siemens case when she stated that “an award of solicitor- client costs is limited to rare and exceptional circumstances where the conduct of the party against whom costs are sought is scandalous, outrageous or reprehensible”.

By limiting solicitor-client costs to circumstances where there is both exceptional circumstances and scandalous, outrageous or reprehensible conduct, the Chambers judge incorrectly fettered her discretion. This amounts to reversible error. VI. Conclusion [ 34 ] The appellant’s land was taken from him through no fault on his part pursuant to a process in which he had no input. As it turns out, the land was unlawfully expropriated, yet the appellant had to go to court at his expense to establish the wrongdoing and recover his land.

As in Sask Water , equity cries out that the appellant should get some relief. [ 35 ] In reading Siemens v. Bawolin together with Sask Water , it is our view that this is an appropriate case in which solicitor-client costs should be awarded. [ 36 ] It is to be noted that in seeking the sum of $64,498.92 the appellant did not submit his bill to the Court, nor was the account assessed. The Court was not provided with a suitable explanation as to how such a sum could be arrived at in an application that lasted approximately one and one-half hours in Queen’s Bench Chambers.

It seems the respondent’s bill for the same case approximated $10,000 to $12,000. The sum of $3,000 which was awarded was not explained and is impossible to evaluate. [ 37 ] Thus, the Court is unable to properly assess what reasonable solicitor-client costs should be. Queen’s Bench Rule 11-20 provides that if the Court awards costs as between solicitor-client, the judge awarding those costs shall assess them.

Accordingly, the award of fixed costs is vacated and the matter is remitted to the Chambers judge to assess reasonable solicitor-client costs in favour of the appellant. [ 38 ] The costs of this application shall follow in the usual manner. DATED at the City of Regina, in the Province of Saskatchewan, this 17 th day of December, A.D. 2013.

“Whitmore J.A.” _____________________ Whitmore J.A. I concur. “Cameron J.A.” Cameron J.A. I concur. “Herauf J.A.” Herauf J.A.