COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Sutherland v. The Attorney General of Canada,

 

2008 BCCA 27

Date: 20080123

Docket: CA032930

CA032931

Between:

Wilfred Gary Sutherland and others

Respondents

(Plaintiffs)

And

The Attorney General of Canada

The Vancouver International Airport Authority

Appellants

(Defendants)

Before:

The Honourable Chief Justice Finch

The Honourable Madam Justice Prowse

The Honourable Madam Justice Huddart

 

A.D. Borrell

M. Booker

 

L. Lachance

Counsel for the Appellant Vancouver International Airport Authority

 

 Counsel for the Appellant The A.G. of Canada

J.R. Shewfelt

Counsel for the Respondents

Place and Date of Hearing:

Vancouver, British Columbia

November 21, 2007

Place and Date of Judgment:

Vancouver, British Columbia

January 23, 2008

 

Written Reasons by:

The Honourable Chief Justice Finch

Concurred in by:

The Honourable Madam Justice Prowse

The Honourable Madam Justice Huddart

Reasons for Judgment of the Honourable Chief Justice Finch:

I. INTRODUCTION:

[1]                FINCH, C.J.B.C.: This appeal involves the review of a trial judge’s exercise of discretion in apportioning costs between parties based on their respective successes on discrete issues in the proceedings.

[2]                The defendants appeal the order of the Supreme Court of British Columbia pronounced 1 April 2005 and entered 2 November 2006 apportioning costs between the parties, despite the defendants’ success in having the action dismissed in its entirety on appeal to this Court. 

[3]                At trial, the learned trial judge gave judgment in the plaintiffs’ favour, holding the defendants liable in nuisance and rejecting the defence of statutory authority: 2001 BCSC 1024, (2001) 202 D.L.R. (4th) 310.

[4]                On the defendants’ appeal to this Court, we held in a judgment pronounced 3 July 2002 that the learned trial judge did not err in holding that the defendants’ conduct in the operation of a runway at Vancouver International Airport constituted a private nuisance.  We held, however, that the trial judge did err in holding that the Attorney General and others had not met the onus of establishing the defence of statutory authority, a complete answer to the plaintiffs’ claims: 2002 BCCA 416, (2002) 215 D.L.R. (4th) 1.  In subsequent reasons pronounced 10 January 2003, we held that the defendants were entitled to their costs of the appeal, except for one-half of the disbursements incurred for the preparation of the appeal books and transcripts, and one-half day’s costs of the appeal in respect of the nuisance issues, which were disallowed: 2003 BCCA 14.  The issue of costs in the Supreme Court of British Columbia was remitted for disposition by the trial judge. 

[5]                In his ruling on costs of 1 April 2005, reported at 2005 BCSC 479, (2005) 15 C.P.C. (6th) 368, the learned trial judge ordered that:

(1)        the plaintiffs are entitled to 25/39ths of all their properly assessable costs and the defendants are each entitled to 14/39ths of all their respective properly assessable costs;

(2)        costs shall be assessed at scale 5;

(3)        costs relating to the class proceeding certification application in this action are not assessable; and

(4)        costs of the apportionment application and of the application to settle the order will be as now settled for the action.

[6]                The proportion of costs awarded to the parties was arrived at on the basis that the trial lasted 39 days, 25 of which were occupied with the issue of nuisance, on which the plaintiffs succeeded in this Court, and 14 of which were occupied with the defence of statutory authority, the issue on which the defendants succeeded in having the action dismissed.

[7]                Applications to apportion costs are not a regular part of litigation. They should be confined to relatively rare cases:  British Columbia v. Worthington (Canada) Inc. et al (1988), 32 C.P.C. (2d) 166, 29 B.C.L.R. (2d) 145 (C.A.) (Worthington).

[8]                The learned trial judge held that this was one of the rare cases where the apportionment of costs permitted under Rule 57(15) of the Rules of Court was “manifestly fair and just”.  That rule reads:

The court may award costs that relate to some particular issue or part of the proceeding or may award costs except so far as they relate to some particular issue or part of the proceeding.

[9]                Despite the deference which this Court shows to discretionary decisions by trial judges on matters of costs, I am of the view that there is no justification in principle for depriving the defendants of their full costs at trial, or for apportioning costs between the parties as the trial judge ordered.  For the reasons that follow, I would allow the appeal, set aside paras. 1 and 4, and affirm paras. 2 and 3 of the trial judge’s order on costs.  I would award both defendants their full costs at trial without apportionment on scale 5.

II. FACTS:

[10]            This action arose from the construction of the “north runway” at Vancouver International Airport (YVR).  The runway opened on 4 November 1996.  The airport is owned by the federal government, represented in this litigation by the Attorney General for Canada.  The Vancouver International Airport Authority operates the airport under a lease from the federal government, granted by the Ministry of Transport. 

[11]            The plaintiffs are resident land owners in a neighbouring subdivision, whose properties are located almost directly under the flight path of aircraft landing on the north runway.  They allege that the noise caused by use of the runway creates an unreasonable interference with the use and enjoyment of their properties.  The plaintiffs sought damages for that nuisance. 

[12]            The defendants denied the allegation of nuisance and pleaded the defence of statutory authority.  They contended that the construction, maintenance and operation of the runway was specifically authorized under the Aeronautics Act, the Canadian Aviation Regulations, and an Order in Council of the Federal Government.  They said the runway was an undertaking authorized by statute, and that any noise nuisance caused by its operation was the inevitable result of the authorized activity. 

[13]            Throughout the proceedings the plaintiffs sought to have all issues tried at the same time.  In pre-trial proceedings, the plaintiffs argued that the overall factual inquiry, including the plaintiffs’ evidence as to aircraft noise, was relevant to the defence of statutory authority.  The Airport Authority, however, submitted that the defence of statutory authority could be tried separately.  The Attorney General for Canada supported that position. 

[14]            The plaintiffs resisted the defendants’ proposal.  They said that the defence of statutory authority could not be tried “in the abstract”, and insisted that all issues be tried together.  The defendants did not move to have the defence of statutory authority tried in a summary manner under the Rules of Court

[15]            In the result, the action proceeded to trial on all liability issues.  The nuisance issue took 25 trial days to litigate.  The defence of statutory authority took up a further 14 days.

[16]            The learned trial judge held that a nuisance had been created, and that the defence of statutory authority had not been made out.  This Court upheld the trial judge’s determination that a nuisance had been created, but held that the defence of statutory authority was proven, and was a complete answer to the plaintiffs’ claims.  The action was dismissed. 

III. TRIAL JUDGE’S REASONS ON COSTS:

[17]            The learned trial judge reviewed the parties’ positions on costs.  The plaintiffs applied for an order that they were entitled to all costs at trial, or alternatively, costs relating to the issue of nuisance.  They said that in the event the defendants were entitled to any costs, they were entitled to assess only one bill of costs between them.

[18]            The defendants opposed the plaintiffs’ application.  Each sought an order for costs against the plaintiffs. 

[19]            The learned trial judge found that this was an appropriate case to apportion costs under Rule 57(15), quoted above at para. 8.  The judge held that there were three fundamental criteria to consider in a decision to apportion costs, namely:

(1)        there must be separate or distinct issues clearly delineated;

(2)        the use of court time and the expenditure of resources must be taken

into account;

(3)        the purpose of Rule 57(15) is to “effect a just result” between the parties.

[20]            With respect to the third factor, the learned trial judge said:

[17]      The third criteria requires recognition that the purpose of Rule 57(15) is to “effect a just result” between the parties.  When it will be “manifestly fair and just” to apportion is fact dependent.  [British Columbia v. Worthington (Canada) Inc. (1988), 29 B.C.L.R. (2d) 145 (C.A.)].

[18]      The plaintiffs argue, with considerable merit, that the severity of the interference with private property, at least in respect of the location of the test plaintiffs’ properties, give credence to the observation of Esson J.A. in Worthington that the defendants should “…not have thought they had much chance of success” in denying the existence of a basic finding of nuisance.

[19]      The defendants ignored the studied recommendation of the EARP Panel which clearly defined the inference [interference] with use and enjoyment of property that would occur by the construction of the north runway and the need to compensate affected owners.  The defendants also ignored the dramatic and relatively consistent evidence of persons living in the affected areas, even allowing for some exaggeration of those involved in the litigation.

[21]            In deciding to apportion costs, the learned trial judge concluded:

[42]      In the totality of the evidence there is some overlap between the issues of nuisance and the inevitable result aspect [of] statutory authority.  That admixture was not significantly large and I am of the view it did not distract from the basic nuisance issues being essentially discrete, capable of an assessment as portions of trial time, and did not detract from essentially distinct questions of fact or law.

[43]      I conclude that the circumstances here qualify as one of the rare cases where an apportionment of costs pursuant to Rule 57(15) is manifestly fair and just to allow costs on an issue in favour of a party despite overall loss of the action on a separate issue.  I am of the view that the threshold test for apportionment is met, that costs can be assessed in respect of court time and resources, and that a just and fair result can be achieved that reflects the success of the plaintiffs on the base nuisance issue within the overall context of the ultimate success of the defendants on the statutory authority defence.

[44]      The trial lasted 39 days.  I apportion to the plaintiffs pursuant to Rule 57(15) in relation to the nuisance issue their costs and disbursements based upon 25 days of trial.  The defendants will be entitled to their costs and disbursements, except in relation to the nuisance issue, based on 14 days of trial.

[22]            The judge also held that both defendants were entitled to their separate assessable costs and disbursements.  That conclusion is not an issue on this appeal. 

IV. ISSUES:

[23]            The defendants say the learned trial judge erred in principle in awarding costs to the unsuccessful plaintiffs.  Specifically, the Airport Authority says the learned trial judge failed to exercise his discretion under Rule 57(15) in a judicial manner, because he applied the wrong test for apportionment, ignored a relevant factor, acted arbitrarily, and wrongly characterized this case as so “rare” or “special” as to warrant deviation from the general rule that costs go to the successful party.

V. DISCUSSION:

[24]            The standard for review of a trial judge’s order for costs is high.  The Court of Appeal is justified in interfering with the trial judge’s exercise of discretion only if the trial judge misdirects himself, or his decision is so clearly wrong as to amount to an injustice: Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd. (2002), 2002 BCCA 219, 100 B.C.L.R. (3d) 146 (C.A.) at para. 7 and Laurin v. Ford Credit Canada Ltd. (1992), 20 B.C.A.C. 73, 22 C.P.C. (3d) 141, 86 B.C.L.R. (2d) 282 (C.A.) at 284.  Misdirection may include making an error as to the facts of the case, taking into consideration irrelevant factors or failing to take into account relevant factors, all of which would amount to an error in principle: Elsom v. Elsom, [1989] 1 S.C.R. 1367 at 1377.

[25]            In the case at bar, the trial judge misdirected himself in apportioning costs under Rule 57(15).  He failed to take a relevant factor into consideration, namely that the defendants, the parties who were ultimately successful, did not prolong the case unnecessarily through their conduct with respect to the nuisance issue (the issue on which they failed).  The trial judge also took an irrelevant factor into consideration in suggesting that the defendants should not have thought they had much chance of success in defending against the allegation of nuisance.  Lastly, he misdirected himself in finding that the defendants “ignored” the recommendation of the EARP Panel.  As a result of these errors, this Court is justified in interfering with the trial judge’s order for costs.

[26]            The general rule of costs stipulates that absent special considerations, a successful litigant has a reasonable expectation of obtaining an order for the payment of his costs:  see Currie v. Thomas (1985), 19 D.L.R. (4th) 594 (B.C.C.A.) at 608.  This rule has been codified in Rule 57(9) of the Rules of Court, which provides that:

Subject to subrule (12), costs of and incidental to a proceeding shall follow the event unless the court otherwise orders.

[27]            In the case at bar, the defendants were ultimately successful in defeating the plaintiffs’ claim in its entirety.  Thus, unless special circumstances can be established that would warrant depriving the defendants of an award of costs following trial, the defendants should receive their costs.

[28]            One exception to the general rule for costs is set out in Rule 57(15) of the Rules of Court.  As noted above, this rule provides that:

The court may award costs that relate to some particular issue or part of the proceeding or may award costs except so far as they relate to some particular issue or part of the proceeding.

[29]            A plain reading of the rule appears to give the judge a broad discretion to award costs to an unsuccessful party, or to deny costs to a successful party, with respect to an identifiable issue or part of the proceeding.  As with every discretionary power, it must be exercised on a principled basis. 

[30]            British Columbia v. Worthington (Canada) Inc. is the leading case with respect to the application of Rule 57(15).  It affirms that under Rule 57(15) the Court has full power to determine by whom the costs related to a particular issue are to be paid.  As Esson J.A. states in Worthington, the discretion of trial judges under Rule 57(15) is very broad, and must be exercised judicially, not arbitrarily or capriciously.  There must be circumstances connected with the case which render it manifestly fair and just to apportion costs.

[31]            The test for the apportionment of costs under Rule 57(15) can be set out as follows:

(1)        the party seeking apportionment must establish that there are separate and discrete issues upon which the ultimately unsuccessful party succeeded at trial;

(2)        there must be a basis on which the trial judge can identify the time attributable to the trial of these separate issues;

(3)        it must be shown that apportionment would effect a just result.

[32]            In this case, the first and second branches of the test for apportionment are satisfied.  The plaintiffs’ allegation of nuisance, and the defence of statutory authority, can be seen as separate and discrete issues.  In addition, the trial judge was able to identify the time attributable to the trial of these separate issues.  The trial lasted 39 days, 25 of which were occupied with the issue of nuisance, and 14 of which were occupied with the defence of statutory authority.

[33]            However, in my respectful opinion, the trial judge erred in determining that the plaintiffs satisfied the third branch of the test for apportionment.  In the circumstances of this case, it would not be manifestly just or fair to apportion costs as did the trial judge.  There was no basis for denying the defendants their costs on the issue of nuisance and, even more clearly, no basis for awarding costs on that issue to the plaintiffs.

[34]            The trial judge first erred by failing to consider a relevant factor, namely that the defendants, the parties that were ultimately successful, did not prolong the case unnecessarily through their conduct with respect to the nuisance issue (the issue which they lost).  

[35]            A party might prolong a case unnecessarily in various ways.  One way would be by raising an unnecessary issue: see Webber v. Canadian Aviation Insurance Managers Ltd. (2003), 2003 BCSC 274, 29 C.P.C. (5th) 226, [2003] B.C.J. No. 381 (QL) (S.C.) at para. 23; Van Halteren v. Wilhelm (1997), 22 C.P.C. (4th) 319 (B.C.S.C.) at 326.  Another would be by raising a spurious or unsupportable defence to an issue raised by the other party.  A third way to prolong a case unnecessarily would be to “over litigate” an issue properly raised by either party.  In such cases it could be unfair to the party that is ultimately unsuccessful to have to pay costs for issues raised or prolonged unnecessarily by the other party.  In order to remedy such unfairness, the judge may exercise his or her discretion to award costs to the party who succeeded on a particular issue, but lost overall.

[36]            In this case, there was no evidence that the defendant prolonged the case unnecessarily through its conduct with respect to the issue of nuisance.  The defendants did not introduce the issue of nuisance into the litigation.  That cause of action was advanced by the plaintiffs.  In fact, the defendants sought, throughout the pre-trial process, to avoid a trial on the issue of nuisance by having the defence of statutory authority resolved first.  The effect of this proposal would likely have been a shorter, simpler trial.  The plaintiffs resisted that course of action.  They succeeded in persuading the court to try all issues together.  

[37]            Moreover, not only did the defendants not raise the issue of nuisance, but the trial judge did not find that the defendants inflated or “over litigated” that issue.  The plaintiffs contended that the defendants led unnecessary and irrelevant evidence on the issue of nuisance, such as evidence related to noise levels both at the airport and elsewhere in the city, as well as expert evidence on the science of noise metrics.  The learned trial judge referred to and summarized some of this evidence at trial (see reasons for judgment at trial para. 29 and following).  The judge did not conclude that this evidence was irrelevant or unnecessary.  Rather, he held:

[68]      All the various forms of relevant evidence must be considered and weighed to determine if the aircraft noise in issue "is an inconvenience materially interfering with the ordinary physical comfort of human existence, not merely according to elegant or dainty modes and habits of living, but according to plain and sober and simple notions"… (citations omitted).

[38]            The fact that the defendants did not raise the nuisance issue, and did not inflate or “over litigate” the issue, are circumstances that weigh against a determination that apportionment of costs is needed to effect a just result.  The trial judge erred by not taking these factors into consideration before awarding the plaintiffs costs on the nuisance issue.

[39]            The trial judge also erred by taking an irrelevant factor into consideration. At para. 18 of his reasons on costs, the learned trial judge, as part of his justification for apportioning costs, suggests that the defendants should not have thought they had much chance of success in defending against the allegation of nuisance.  With respect, this consideration is irrelevant in determining whether it would be fair to apportion costs.  As responsible public bodies, the defendants were entitled to defend, by all lawful means, against their alleged liability, including a denial of the alleged nuisance.  The suggestion that the defendants should not have thought they had much chance of success could be relevant if the defendants had raised the issue knowing that to be so.  In such a situation, the defendants could be considered as having unnecessarily prolonged the trial. However, as noted above, the defendants did not raise the issue of nuisance, and there was no evidence that the defendants unnecessarily prolonged the case through its litigation of the nuisance issue.

[40]            Lastly, the trial judge misdirected himself in finding that the defendants “ignored” the recommendation of the EARP Panel.  At para. 19 of his reasons on costs, the trial judge says the defendants “ignored” important evidence supporting the allegations of nuisance.  A fair reading of the trial judge’s reasons on liability does not support the inference that the defendants “ignored” any evidence, nor does he say that in those reasons. 

[41]            At paras. 11 and 12 of the trial judge’s reasons on liability he said:

[11]      The Ministry of Transport accepted most of the recommendations of EARP.  It did not, however, accept the recommendation to identify and compensate those adversely affected by noise.  It chose instead to address the problem of noise in surrounding areas by requiring certain noise abatement procedures, including limiting traffic landing on the runway and placing a daily landing curfew from 10:00 p.m. to 7:00 a.m.

[12]      The commencement of lawsuits was an understandable reaction to the government’s decision not to negotiate compensation for those directly affected by noise attributed to the operation of aircraft on the third runway…

[42]            The defendants chose not to adopt the recommendation of the EARP Panel which recommended compensation for those adversely affected by noise.  To say, as the trial judge does at para. 19 of his reasons on costs, that the defendants “ignored” this recommendation suggests indifference or bad faith on their part.  There is nothing in the reasons at trial to warrant such inferences.  A more logical and coherent inference from the defendants’ decision not to pay compensation is that they were advised, or were of the opinion, that they did not have a legal obligation to do so.  The same may be said of the defendants’ response to the evidence of the affected residents.

VI. CONCLUSION:

[43]            It is not uncommon for the Crown to defend against the claim of government interference with individual rights by relying on the defence of statutory authority.  Where the defence is successful, the result from the plaintiffs’ perspective is often unfortunate, and may appear unfair.  In this case a nuisance has been caused to many persons without any redress.  With respect, that without more does not qualify the case as a rare or special case warranting the apportionment of costs permitted under Rule 57(15).

[44]            In my respectful opinion, the trial judge erred in apportioning costs under Rule 57(15).  He failed to take a relevant factor into consideration, namely that the defendants, the parties who ultimately succeeded, did not prolong the case unnecessarily through their conduct of the nuisance issue.  He took an irrelevant factor into consideration in suggesting that the defendants should not have thought they had much chance of success in defending against the allegation of nuisance.  Lastly, he misdirected himself in finding that the defendants “ignored” the recommendation of the EARP Panel.  As a result of these errors, this Court is justified in interfering with the trial judge’s order for costs.

[45]            I would allow the appeal, and grant the relief set out in para. 9 above.

“The Honourable Chief Justice Finch”

I agree:

“The Honourable Madam Justice Prowse”

I agree:

“The Honourable Madam Justice Huddart”