Friday, July 5, 2019

Not all Drainage Act appeals are decided on a without costs basis


Ontario's Drainage Act provides mechanisms to municipalities and landowners to implement drainage solutions on a collective basis.  On petition by landowners, a municipality may be compelled to construct a municipal drain; a municipality may develop a municipal drain on its own initiative; an existing municipal drain may be reconstructed, improved, or maintained.  Costs associated with the municipal drain, including engineering costs, are generally shared by the owners of the lands that outlet to the drain, with each owner responsible for an amount proportional to his or her respective share of the total drainage area.

Disputes related to municipal drains are often the subject of appeals by affected landowners to the Agriculture, Food and Rural Affairs Appeal Tribunal.  Landowners may challenge the necessity for the drainage work being proposed by a municipality and its drainage engineer, the scope or extent of the drainage work, the cost of the drainage work, or the portion of the cost of the drainage work being charged to the landowner.  In the normal course, the parties to a drainage appeal before the Tribunal bear their own costs of litigation, such as legal fees and disbursements; cost awards against a party are exceptional.  However, no party should assume that an adverse cost award might not be made in the right circumstances.

The Tribunal's Rules of Procedure include the following commentary on appeal costs:

Costs are a sum of money ordered to be paid from one party to another party in order to cover only this party's expenses incurred for preparation and attending the proceeding. This may include such things as preparation and hearing time for counsel, consultant and witness fees, and travel expenses. It does not include business or personal financial losses. If the party's conduct caused such losses, however, this conduct may be included in considering a cost order.

A cost order may be made if a party requests it, if one party has in the Tribunal's opinion acted inappropriately, as in Rule 28.04. Such orders and the amount awarded are to discourage conduct that wastes a great deal of the Tribunal's and parties' time as well as other resources. Note that for matters under the Drainage Act, costs are awarded only as provided in that Act.

An order for costs is very rare. Recovery of costs is not standard as in court proceedings. It is only where the Tribunal finds that a party wrongly brought the appeal or participated unacceptably in preparation or hearing events, that an award of cost will be made. Only a party may make a request for costs. Participants, witnesses or others without official party standing can request or receive costs only in the most unusual circumstances. [emphasis added]

According to the Rules, a party to a drainage appeal may ask for an award of costs where another party has "acted clearly unreasonably, frivolously, vexatiously or in bad faith considering all of the circumstances."  Conduct that might warrant an award of costs can include failing to attend the hearing, changing a position without notice, failing to prepare adequately for hearing events, failing to present evidence, acting disrespectfully or maligning the character of another party, or knowingly presenting false or misleading evidence.

In a drainage appeal decision released in January of this year, the Tribunal ordered an appellant landowner to pay the respondent municipality nearly $6,000 in costs.  The landowner had brought an appeal challenging the quality of construction of drainage works, which is a proper issue for appeal under the Drainage Act.  However, the Tribunal found that the landowner provided no reliable evidence of any quality of construction issue and, in fact, that the landowner's true complaint was about the design of the drainage works.  The design of the works was not something that could be appealed to the Tribunal by that point in time, and the Tribunal dismissed the appeal.

The respondent municipality had communicated to the landowner early in the appeal process that the appeal did not actually raise quality of construction issues, and warned the landowner that the municipality might seek costs if the appeal continued.  This communication apparently resulted in a settlement between the landowner and the municipality, but the landowner almost immediately rescinded the settlement.  In its costs decision, the Tribunal concluded that the landowner understood the deficiencies in its appeal, but continued nevertheless, "using the appeal process and potential associated costs as a negotiating tactic to get the Township to fund some or all of its private drainage works of approximately $25,000."

The Tribunal ordered the appellant landowner to pay the municipality its legal costs and engineering costs related to the appeal incurred after the failed settlement, and authorized the municipality to enter the cost award immediately on the tax roll of any land owned by the appellant assessed under the particular municipal drain at issue.  The Tribunal found that the landowner had failed to produce any evidence in support of its quality of construction appeal and, more importantly, that the landowner had unreasonably reneged on its settlement with the municipality.  But for this conduct, the municipality would not have incurred the costs awarded by the Tribunal.

Read the decision at: Ellis Drain Branch 'A' 2017.