File No. MA 008-13 

Friday, the 24th day of April, 2015.

M. Orr
Deputy Mining and Lands Commissioner

L. Kamerman
Mining and Lands Commissioner

THE MINING ACT

IN THE MATTER OF
Mining Claims P-4209355, situate in the Township of Benneweis, 3004844, 3014374, 3017666 to 3017668, both inclusive, 3011820, 3011854, 3018411, 3018437, 4203839, 4203852, 4227171, 4240907 and 4240908, situate in the Township of Chester, and 3017674 and 4203294, situate in the Township of Yeo, in the Porcupine Mining Division, recorded in the name of Sanatana Resources Inc. as to a 100% interest (hereinafter referred to as the "Sanatana Mining Claims");

AND IN THE MATTER OF
Easement rights for the construction of a tailings pipeline, a proposed power transmission line and a water course realignment, pursuant to section 175 of the Mining Act over the Sanatana Mining Claims, situate in the Townships of Benneweis, Chester and Yeo, in the Porcupine Mining Division, Surface Rights Only.

B E T W E E N:

TRELAWNEY MINING AND EXPLORATION INC.
Applicant

-and -

SANATANA RESOURCES INC.
Respondent

ORDER ON COSTS

FURTHER TO an application received by this tribunal on the 26th day of April, 2013 which was discontinued on consent by Orders issued on the 10th and 12th days of November, 2014 and amended on the 13th day of November, 2014;

AND WHEREAS the parties were given fifteen days to arrive at an agreement on  costs, failing which dates for filing submissions on costs and an appearance would be required, with the aforementioned filing of submissions and an appearance becoming necessary;

AND WHEREAS submissions were filed by the parties on the 3rd day of December, 2014 (Respondent, in the main application) and the 10th day of December, 2014 (Applicant, in the main application);

AND WHEREAS the costs portion of this matter was heard by this tribunal on the 6th day of January, 2015;

1.    IT IS ORDERED that costs in the amount of $402,189.86 be awarded to the Respondent, Sanatana Resources Inc. to be payable by the Applicant, Trelawney Mining and Exploration Inc. within thirty (30) days of the date of this Order, with proof of payment being provided to the tribunal.

2.    IT IS FURTHER ORDERED that if an appeal is filed and subsequently dismissed, discontinued or abandoned, the costs payable pursuant to paragraph 1 of this Order On Costs shall be payable within thirty (30) days of the dismissal, discontinuance or abandonment of the appeal (if any).

DATED this 24th day of April, 2015.

Original signed by M. Orr

M. Orr
DEPUTY MINING AND LANDS COMMISSIONER

Original signed by L. Kamerman

L. Kamerman
MINING AND LANDS COMMISSIONER

 

 

 

File No. MA 008-13 

Friday, the 24th day of April, 2015.

M. Orr
Deputy Mining and Lands Commissioner

L. Kamerman
Mining and Lands Commissioner

THE MINING ACT

IN THE MATTER OF
Mining Claims P-4209355, situate in the Township of Benneweis, 3004844, 3014374, 3017666 to 3017668, both inclusive, 3011820, 3011854, 3018411, 3018437, 4203839, 4203852, 4227171, 4240907 and 4240908, situate in the Township of Chester, and 3017674 and 4203294, situate in the Township of Yeo, in the Porcupine Mining Division, recorded in the name of Sanatana Resources Inc. as to a 100% interest (hereinafter referred to as the "Sanatana Mining Claims");

AND IN THE MATTER OF
Easement rights for the construction of a tailings pipeline, a proposed power transmission line and a water course realignment, pursuant to section 175 of the Mining Act over the Sanatana Mining Claims, situate in the Townships of Benneweis, Chester and Yeo, in the Porcupine Mining Division, Surface Rights Only.

B E T W E E N:

TRELAWNEY MINING AND EXPLORATION INC.
Applicant

-and -

SANATANA RESOURCES INC.
Respondent

REASONS

Appearances

Mr. Neal J. Smitheman  –   Counsel for the Applicant
Ms. Kimberley Potter  –   Co-counsel for the Applicant

Mr. Robert Wisner   –   Counsel for the Respondent
Mr. Stephen Brown-Okruhlik   –   Co-counsel for the Respondent

History

[1]        Mr. Richard Butler, original co-counsel with Mr. Smitheman acting on behalf of Trelawney Mining and Exploration Inc. (“Trelawney”), sent a four-page letter via email to the office of the Mining and Lands Commissioner (the “tribunal”) dated April 25, 2013 describing several easements their client was requesting under section 175 of the Mining Act.[1] Specifically, Trelawney was seeking two 50 meter wide tailings pipeline easements; two 50 meter wide transmission line easements; and watercourse realignment easements for the construction of watercourse realignment channels (along with the construction of a number of dams to accommodate the anticipated rise in water level of at least one lake).  The pipeline and transmission line easements were also expected to accommodate related infrastructure components such as an access road.  The easements would have to cross mining claims held by Sanatana Resources Inc. (“Sanatana”), located on what is known as its “Watershed Property”.

[2]        Mr. Butler described the four-page letter as Trelawney’s application under section 175 and therein requested that an Order to File be issued forthwith by the tribunal.  Sanatana was copied on this letter. By way of background, both companies shared a corporate relationship that, at the time, was derived, in part, from the fact that Sanatana was a signatory to a joint venture and option agreement with Trelawney Augen Acquisition Corp., a subsidiary of Trelawney.  As well, Sanatana and Trelawney’s subsidiary were joint owners of the aforementioned “Watershed Property”.  IAMGOLD Corporation (“IAMGOLD”) was yet another player in the corporate landscape, being Trelawney’s parent company.

[3]        Following receipt of Trelawney’s application, the tribunal issued an Order to File on April 26, 2013. The substance of Trelawney’s application quickly became the basis for discussion between the parties, much of which focussed on what documentation was required under section 175 of the Mining Act (Act) and whether the application was premature (Sanatana arguing that there was no mine and thus section 175 was not available to Trelawney).

[4]        Matters came to a head in the late fall of 2013 when an attempt at settlement failed and the parties asked the tribunal to approve a hearing process, which was to have included discoveries taking place in Vancouver, British Columbia, along with certain hearing dates to be fixed. The tribunal informed the parties that it would not give approval to the proposed process, schedule or dates until all information required by the Act under section 175 had been filed by the Applicant. The tribunal was not prepared to accept the “application” as filed and hold a hearing without the information required by section 175, specifically any item under subsection 175(1) as expanded upon by subsection 175(4).  This led to a motion by the Respondent for dismissal of the “application”.  This motion was heard and, by Order dated May 8, 2014 (the “May 8th Order”), the tribunal dismissed the motion but also ordered Trelawney to file certain information required by the Act.

[5]       There were a number of subsequent motions held whose details are not relevant for the purposes of this costs order except for one.  Pursuant to an Order issued on September 17, 2014 following a motion heard earlier in the week, a right of reply was granted to file certain further information to that ordered by the tribunal on May 8, 2014 in the paragraph above.  The motion also considered a request for discoveries which was denied.

[6]        A hearing date was set for November 10, 2014.  The parties attended at the tribunal office on November 10, 2014, at which time the Applicant advised that it wished to discontinue the matter and had obtained the consent of the Respondent.  The parties proposed a date by which they would attempt to come to an agreement on costs, failing which they agreed to a schedule of dates by which they would file and exchange their materials on costs.  It should be noted that this schedule did not include a date for the filing of reply. Due to an intervening statutory holiday, the tribunal issued two Orders accordingly, one for the discontinuance at the end of business on November 10, 2014 and one to exclude time during which the affected mining claims were under pending proceedings thereafter.  As no agreement was reached, a hearing was held on January 6, 2015.

[7]        Twelve Orders were made by the tribunal between the time the tribunal issued its Order to File on April 26, 2013 and the costs hearing of January 6, 2015.

Preliminary Issues

[8]       Clearly the parties did not reach agreement. The Respondent, Sanatana, filed its costs documentation – Submissions on Costs and Book of Authorities – on December 3, 2014.  The Respondent, Trelawney filed its documentation - Submissions on Costs and Book of Authorities – on December 10, 2014.

[9]       Mr. Smitheman filed a brief of email correspondence setting out what occurred prior to the hearing of the costs application, accepted at the hearing as Ex. 8.  On December 15, 2014, Mr. Wisner wrote to Mr. Daniel Pascoe, tribunal Mediator/Registrar, copied to Mr. Smitheman.  Two issues were raised – that of filing a motion to strike privileged settlement discussions and seeking a right of Reply.  The question was raised as to whether there would be time to address these issues on January 6, 2014.

[10]       This led to an exchange of no fewer than ten additional emails on that date.  There were several missteps, but ultimately, the issues boiled down to whether there would be sufficient time on January 6, 2015 to hear the costs matter along with the two added motions, whether it was appropriate to hear them altogether and whether a telephone conference call was required to schedule another date to hear Mr. Wisner’s motions.

[11]       At the end of the flurry of emails, the tribunal made it clear through Mr. Pascoe to Messrs. Wisner and Smitheman that the Commissioners had asked that counsel be informed that no further filings would be accepted and that counsel refrain from sending additional emails to the tribunal.  Sufficient time would be available to both parties on January 6, 2015 to address any issues by way of preliminary motions.

[12]       On December 16, 2014, Mr. Wisner delivered materials for its Motion Record and Submissions on Motions to Strike and For Leave to Reply to Trelawney and indicated in writing (letter) that should the tribunal wish to receive these materials prior to the hearing date, two copies would be filed accordingly.

[13]       On December 17, 2014, Mr. Pascoe wrote to Messrs. Wisner and Smitheman, further to Mr. Wisner’s correspondence and indicated that the tribunal would accept Mr. Wisner’s Reply filings based on the fact that the tribunal had noted that the right of Reply had been the subject matter of an earlier motion and was allowed.  Mr. Wisner’s Motion to Strike Record was also accepted.

[14]       At the costs hearing on January 6, 2016, Mr. Smitheman indicated that this had been done without his objections being heard but in his words, that ship had sailed.

[15]       Nonetheless, Trelawney had not been precluded from serving its materials on Sanatana prior to the hearing.  It was permitted to file its materials with the tribunal on the Motion to Strike at which time Mr. Smitheman also provided a copy to Mr. Wisner, as was his choice.

[16]       The tribunal heard the motion to strike as a preliminary matter on January 6, 2015 and issued its thirteenth Order on January 19, 2015.  The latter Order, striking parts of an affidavit filed at the costs hearing of January 6, 2015, was issued following a decision of the tribunal (on the day of the costs hearing) to strike certain information arising out of a settlement discussion that had been filed for the same costs hearing by Trelawney.  The tribunal ruled at the costs hearing that the settlement discussion was protected by settlement privilege.

Costs Hearing - Merits

[17]       Sanatana seeks its costs of responding to Trelawney’s section 175 application and related steps. Trelawney does not seek any costs against Sanatana; rather, Trelawney asks that no costs be awarded or, in the alternative, that the amounts claimed by Sanatana be significantly reduced.

Issues

(1)  Having discontinued its application under section 175 of the Mining Act (with Sanatana’s consent), is Trelawney liable for payment of Sanatana’s costs up to and including the date of discontinuance?

(2)  If the answer to the above question is “yes”, is Sanatana entitled to reimbursement for all of its claimed costs?

Submissions of the Parties

Sanatana’s Submissions

[18]       The Respondent seeks costs on a partial indemnity basis for expenses incurred as a result of having to respond to Trelawney’s “application” in addition to other steps it had to take in the months leading to the date of discontinuance.  The fact that Trelawney decided to unilaterally discontinue the “application” on the morning of the hearing of the merits meant that costs were sustained up until that date.

[19]       Mr. Wisner, counsel for Sanatana, argued that Trelawney had no excuse to avoid paying costs as the “application” was premature and based on what Sanatana called a “risky gamble” regarding the price of gold: as gold prices fell, Trelawney continued to pursue its “application”.  Mr. Wisner took the position that Sanatana should not pay the price of Trelawney’s “unsuccessful gamble”.

[20]       Mr. Wisner further submitted that Trelawney did not require the requested easements as it did not currently have a mine in the subject area and, indeed, might never build one.  Trelawney’s risky venture resulted in it having to make cost-cutting decisions; however, these did not constitute an excuse to not pay the costs of the party that had to respond to its “application” over a period of 18 months Mr. Wisner asked the tribunal to not accept Trelawney’s argument that Sanatana should not have opposed the “application” and should have worked, pursuant to the provisions in the Act, to provide the requested easements.

[21]       Mr. Wisner took the tribunal through five issues which he saw as being relevant to the tribunal’s decision on costs, as follows:

  1.   When an applicant discontinues an application under section 175 of the Mining Act, what must it prove to avoid paying costs?
  2.   The applicant bears the burden of paying costs and the question is, regardless of the standard and burden on Trelawney, according to the Rules of Civil   Procedure, has Trelawney discharged its burden?
  3.   The conduct of both parties and the objective conduct of the litigant are factors to be considered by the tribunal when exercising its discretion.  For example,   what happened in terms of the motions that were brought?
  4.    Was this a complex or “high stakes” proceeding that justifies a higher costs award?
  5.   Are the fees and disbursements reasonable?

[22]       In order to underscore his argument that on an abandonment or discontinuance, there is a presumption, which is rebuttable, that the applicant must pay costs, Mr. Wisner took the tribunal to decisions rendered under the Rules of Civil Procedure[2].  Otherwise, Mr. Wisner’s arguments made under the Rules were made in the alternative to the Mining Act.  Only if the action was appropriate would the burden shift from the plaintiff to the defendant.  On a discontinuance, where no judicial determination as to the merits is involved, only exceptional circumstances can relieve a plaintiff of its burden to pay the defendants’ costs.  He made reference to the rule dealing with abandonment (Rule 38.08(3)) which gives discretion to the court in terms of costs.  In the context of an application, there is a presumption in the Rules.

[23]       Nonetheless, Mr. Wisner used the Act as his starting point, and preferred argument for his costs argument, as the Act has a “rather distinctive costs regime”.  Under the Act, the approach taken by the tribunal in the past favoured indemnifying the responding party. In support of this position, Mr. Wisner referred to a chart provided by Trelawney that summarized a list of cases decided under section 175 of the Act.  Mr. Wisner submitted that these decisions exemplified the general rule that a respondent who appears on an application under section 175 is awarded costs. Mr. Wisner took the tribunal to Nipigon Gold Resources Ltd v Armstrong,[3] a decision of the Mining and Lands Commissioner wherein the tribunal noted that it was “unaware of any case where the costs of the application were ordered paid by the respondent.”  There is a good policy reason for such a distinctive cost regime which has been historically applied in connection with section 175 matters in that the respondent is required to surrender as part of its property to the applicant.  According to Mr. Wisner, it followed that there was a presumption that the respondent’s costs are payable by the applicant even if the matter does not proceed to a full hearing and, in fact, is discontinued.

[24]       In the course of his submissions, Mr. Wisner reviewed the “justified action test” which was to be considered by the tribunal, pursuant to Rule 38, and only in the alternative if it did not agree that section 175 itself sets up a distinctive costs regime.  Under this test, the applicant must show that the application was justified in order to be relieved of the burden of paying the responding party’s costs.  He submitted that the courts look for situations where the applicant obtains a result that justifies it having started the action in the first place.  This did not simply involve demonstrating that the applicant acted in good faith and that its case wasn’t frivolous or vexatious; indeed, such a test would have the effect of making the presumption in favour of costs meaningless.  Rather, the applicant must show that its application was “justified”.  He argued that Trelawney was not able to show that it had obtained any relief (in contrast to the situation in  Golda Developments Inc. v Dawe[4] where there had been relief through settlement) and furthermore, business decisions could not be translated into excuses for not paying the costs of the affected respondent, in this case Sanatana.

[25]       Mr. Wisner also referred to Sanatana’s position, assumed prior to the hearing on the merits, that Trelawney’s “application” was premature.  He equated Trelawney’s business decision to discontinue the “application” with the issue of prematurity.  He also disputed Mr. Smitheman’s argument that gold prices had experienced a sudden free fall. According to Mr. Wisner gold prices had been fluctuating for the past 18 months. Drawing on his argument about the disputed status of the mine, Mr. Wisner referred the tribunal to Howes v Re Manderson Estate[5] and Nipigon to support his submission that, mining companies have always operated with long time horizons notwithstanding fluctuating prices (making predictions difficult) and while companies must assume certain risks, it is not reasonable to pursue a project to “de-risk” it and, as a result, pass the risk or the costs of the risk on to a neighbouring landowner. The gamble or risk properly belongs with the shareholders of Trelawney and not with Sanatana.

[26]       Regarding the conduct of the parties, Mr. Wisner reminded the tribunal that Sanatana had asked for a speedy and efficient resolution of the case.  In addition, Sanatana had asked for disclosure from Trelawney but was not satisfied with the information produced. Mr. Wisner also referred to the fact that Trelawney had filed materials found to be deficient by the tribunal in its Order of May 8, 2014, despite the tribunal having alerted Trelawney to the nature of the information required under section 175 of the Act in November 2013.[6] Mr. Wisner relied on Digiuseppe v Todd[7] to support his submission that, where the plaintiff has failed to provide particulars, the court may exercise its discretion to award costs to the defendant.

[27]       Mr. Wisner further asked the tribunal to consider Trelawney’s disclosure of “without prejudice” communications a negative factor when assessing its conduct, not just for the purposes of the costs hearing but as symptomatic of its behaviour throughout the litigation.  In Mr. Wisner’s view, failing to provide particulars was bad enough, but disclosure of protected communication was worse in terms of conduct.  Sanatana’s (positive) conduct, on the other hand, was illustrated through its efforts to move the process along.  All that Trelawney could do in terms of raising a defence was to challenge the merits of Sanatana’s objections.  Sanatana did the best it could, with the information provided by Trelawney, to understand and quantify the impact of the proposed easements on its activities on a claim-by-claim basis.  Ultimately, there was no evidence of bad faith on the part of Sanatana.

[28]       In turning to the issue of quantum, Mr. Wisner submitted that case law looked to two factors, namely whether the application was high stakes and whether it was complex.  He stated that Trelawney was treating the matter like a “high stakes” case by hiring lawyers with expertise in the area (here he referred to the on and off again presence of Mr. Michael Bourassa, a colleague of Mr. Smitheman and Ms. Potter), and calling on its parent company’s internal legal team and general counsel.  Mr. Wisner admitted that the stakes were equally high for Sanatana.

[29]       Mr. Wisner argued that the complexity of the case was demonstrated by the type of expert witnesses retained by Trelawney, namely mining, finance, and development experts, and the number, the variety and the types of different easements being requested.  In response, Sanatana had to put forward equally expert witnesses, commission expert reports, quantify appropriate compensation, etc.

Disbursements

[30]       With respect to expert fees, Mr. Wisner referred to Purolator Courier Ltd v United Parcel Service Canada Inc,[8] where the court cited Cheskin v Schrage[9] for the proposition that “it is only if it can be concluded that the plaintiff was unreasonable in calling experts that the costs of doing so may be disallowed on the assessment of costs.”[10]  Nor was the court in Purolator prepared to “scrutinize all of the evidence … in order to determine if it was all entirely necessary in the circumstance.” [11]

[31]       In the case at bar, Mr. Wisner argued that Sanatana required experts to quantify the compensation that Sanatana would be asking for should the requested easements be granted.  In addition, geologists, who happened to be long-standing consultants with the Respondent, prepared an expert report in anticipation of litigation summarizing the geological work that had been done in order to discuss how the easements would have an impact upon future work.

[32]       Mr. Wisner also asked the tribunal to include travel costs as his client was based in Vancouver.  It was inevitable that travel costs would be incurred as they prepared for the hearing.  Preparation of witnesses had to take place as well because the application was discontinued at such a late date.  This also contributed to disbursement costs.

[33]       Sanatana’s disbursements up to the date of discontinuance came to $204,692.37, including of HST.

Fees

[34]       Mr. Wisner asked the tribunal to award costs for his client’s legal fees on a “partial indemnity” basis.  Excluding HST, these costs totalled $262,851.00.[12]

[35]       Legal fees included the cost of hearing preparation, which were incurred up until the first day of the hearing/the date of discontinuance.  Furthermore, that Trelawney’s written submissions changed over the course of the pre-hearing period meant that Sanatana had to incur further expense in responding to the changes. Specifically, Mr. Wisner referred to Trelawney’s original easement application; reply; new maps and documents filed when the tribunal noted deficiencies; the new application filed after the Order of May 8, 2014; and Trelawney’s second reply.  Each of these items had to be reviewed by the appropriate person and their impact on Sanatana’s position had to be considered.

[36]       Finally, because the matter could be described as a “complex, high stakes case”, Sanatana believed it reasonable to obtain advice from its “lead mining law counsel” (Mr. Munro) with respect to the “application”.

[37]       Total costs claimed by Sanatana are $501,714.00, including HST @ 13%.

Trelawney’s Submissions

[38]       Mr. Smitheman commenced his oral submissions by taking issue with Mr. Wisner’s reliance on rule 38 of the Rules of Civil Procedure.  He disagreed with the argument advanced by Mr. Wisner that there is a presumption that costs follow the event on an abandonment.  Flowing from that, and connected with it, he submitted that the “exceptional circumstances” test was not the proper test; rather, the “justified action” test was. The tribunal noted that he did not address Mr. Wisner’s primary argument that first and foremost, the test should be applied according to the distinctive costs regime contemplated by section 175 of the Mining Act.  Mr. Smitheman argued that rule 38 did not apply as this was not a case of abandonment nor was it an application (as opposed to an action) as envisaged by the Rules.  It was Mr. Smitheman’s position that rule 23.05, which addresses costs of discontinuance and deemed dismissal, applied in this case.  Given the wording of rule 23.05 there was no longer a presumption that the plaintiff was liable for costs, until and unless the Court ordered otherwise.

[39]       According to Mr. Smitheman, the word “application”, as employed in the Rules, is a technical term. Mr. Smitheman took the tribunal through examples of proceedings that are brought by way of an application: specifically, he submitted that “[t]he application provisions under the Rules are for uncontested, for the most part undisputed matters … supported by affidavit evidence.”[13] Reference was made to rule 14.05. Mr. Smitheman viewed the matter before the tribunal as akin to an originating process and one that was a “highly disputed, contested matter”—in other words, it was not a “technical application”.  He described it as a discontinuance of an action under rule 23.05, pursuant to which no presumption applied with respect to the awarding of costs against a particular party.

[40]       Case law supported his argument that the “exceptional circumstances” test did not apply and that the “justified action” test did. Under the “justified action” test, the plaintiff must satisfy the court that, on a balance of probabilities, it had a bona fide cause of action that was not frivolous or vexatious and that there was some justification to commence the action.  Mr. Smitheman submitted that his client had satisfied all three parts of this test.

[41]       With respect to the bona fides of Trelawney’s application, Mr. Smitheman submitted that all that was required of his client under the Act was to file material showing that the easements applied for were required for the proper working of a mine.  A consideration of the merits of the application was improper; in this regard, he referred to Digiuseppe v. Todd.[14]  Sanatana was improperly arguing the merits when it asserted that Trelawney did not have a mine that was very close to production. The tribunal should not speculate on the merits of the claim or the result had it been adjudicated.  In any event, he argued that, in referring to the status of the mine, Sanatana was relying on the decision in Howes v. Estate of M.E. Manderson[15] and that this case did not reflect current law regarding easement applications under section 175.  He drew the tribunal’s attention to its decision in Nipigon Gold Resources v. Armstrong[16]  where the tribunal stated that “[t]he words do not… require an up and running mine or mill.”  It followed with “… the words do contemplate the existence of an operation which is beyond its preliminary or exploratory stages.”  Trelawney had spent $4.5 million on environmental assessments and that was enough to show bona fides.

[42]       Mr. Smitheman further submitted that, while the merits of the application were not relevant, his client’s reasons for discontinuing the “application” and the surrounding circumstances were relevant.   His client, like a lot of other mining companies, was finding it necessary to cut losses to survive.  Trelawney discontinued the application because its parent company, IAMGOLD, had made a decision to cut costs, independent of Trelawney, in an effort to deal with sinking gold prices.  Trelawney was unable to proceed without the appropriate budget or personnel.  At the time the application was filed, gold was valued at $1,600 per ounce and while it had generally decreased there were some upward trends.  IAMGOLD continued the project over this time-period in an effort to “de-risk” it.   The test for bona fides had nothing to do with the price of gold or the economic viability of the project.  Mining companies plan for the long term and do not stop planning just because there is a downturn in the market.

[43]       Mr. Smitheman stated that the Crown was the owner of the land over which his client was seeking easements and that the Crown had not voiced any objections to the proposed easements.  (The tribunal notes that no evidence was presented as to the Crown’s interest, if any).  In the words of Mr. Smitheman, this case was simply a case of a tenant-at-will (Sanatana) arguing with another mining company (Trelawney) over land owned by the Crown.  Sanatana’s rights were limited by its status that of a mining claim holder only  It was not as if Sanatana had an estate in fee simple with respect to the land and was objecting to the placement of a road over its land.  It is not a landowner.

[44]       Mr. Smitheman took issue with Sanatana’s position that the case was complex.  Section 175 of the Act sets out everything required for an application thereunder: Trelawney provided specifics for its plans when concerns were raised and, while there was some “to-ing and fro-ing” by the parties, this did not equate to a complex case.

[45]       Mr. Smitheman put it to the tribunal that all that his client was asking for was “one tower on a remote claim…a pipe across another claim” and so on.  All of which was set out in section 175 – all being “standard procedure”.  Easements were sought on “only 12 of the 46 mining claims of the watershed projects” – a small percentage of the property that was actually jointly owned by both parties.  Why would Trelawney try to lower the value of its own property?  This point brought him to the allegation that his client was trying to drive down Sanatana’s share price (through the easement application) so as to buy them at a cheaper price.  (He referred to Sanatana’s position that granting the easements would sterilize its property and virtually put it out of business.  He noted that Sanatana’s share price had dropped even after the discontinuance had been filed.)

[46]       As for referring to the settlement discussions in his submissions, Mr. Smitheman stated that this was to support his argument that Sanatana was not prepared to settle and, in fact, had wanted to scuttle settlement talks because it would have had to pay a large bonus to an executive if a settlement had been reached.  Mr. Smitheman argued that, had Sanatana dealt with section 175 in the “normal” way, it would have consented to the requested easements.  He needed to “explore” the bonus deal and required access to further particulars to do that.  According to Mr. Smitheman, Sanatana was engaged in an attempt at what he described as “self-benefit”.

[47]       Mr. Smitheman argued that Sanatana could have worked something out under section 175 if it had wanted to; however, it was not interested in coming to an agreement and scuttled the settlement talks accordingly. In that context, Mr. Smitheman argued that Sanatana’s reasons for objecting to the application were without merit.  Specifically, he took issue with the nature of Sanatana’s objections to the proposed easements, namely that Sanatana would be driven out of business should the easements be granted. In Mr. Smitheman’s view, a more appropriate objection would have related to the amount of compensation due to the affected party resulting from any injury or damage incurred as a result of granting the easements. This could have been a simple matter but for Sanatana’s behaviour which led to the matter becoming complex.  Too much time and money was spent as a result.  He submitted, “[t]his case cried out for settlement….It’s a pipe across the land, a tower on a remote claim.”

[48]       When the tribunal noted that the “application” was not one that proposed the placement of “just a tower or just a tailings pond or just a road or just a pipeline” but that there appeared to be many different aspects to it, Mr. Smitheman submitted that none of that was relevant and that the tribunal ran the risk of getting into the merits of the application.  The justified action test meant that all his client had to do was submit documents under section 175 and the tribunal had to look no further for justification of the action.  His client had satisfied that test.  His pursuit of particulars was not connected to the justified action test; rather, it was separate.

[49]       When pressed by the tribunal to list the actions of Sanatana that were, as Mr. Smitheman put it, “inappropriate”, and which led to making the case unnecessarily complex, he demurred, saying that he did not want to “step into something that’s already been decided”.  Mr. Smitheman made reference to Sanatana’s “Condensed Interim Financial Statements” for the second quarter, ending September 30, 2014, and the item in that document that referred to Trelawney’s easement claim and described a bonus that, in part, could be as much as 5% of any settlement amount (capped at $10,000,000) to be paid to Sanatana’s board chairman in the event of Sanatana reaching a settlement with Trelawney and others.  Mr. Smitheman claimed that the value of any settlement would have been in the “tens of millions” of dollars and indicated that Sanatana expected more than simply being compensated for potential injury or damage caused by the easements.  In other words, it was in Sanatana’s interest not to settle.  Having to pay Sanatana’s costs would be like rewarding Sanatana for this litigation strategy.

[50]       Mr. Smitheman again claimed that a settlement could have been reached but for the actions of Sanatana and that those actions indicated that Sanatana was trying to force Trelawney to purchase it by scuttling the settlement discussions, thereby complicating an otherwise uncomplicated matter and forcing up costs.   Trelawney should not have to pay costs built up in this way.  Mr. Smitheman wanted to be able to “explore” the settlement discussions because he was of the view that Sanatana was looking for what he described as a “large payout” and was not prepared to deal with issues related to the easement application.  He pointed to Sanatana’s responses to the “application” – for example, in relation to a proposed water course realignment, Sanatana claimed it would reduce access to ground prospecting and drilling; in Mr. Smitheman’s words, “[w]here is the evidence?” This all supported his argument that Sanatana was only interested in “self-benefit”, presumably through a buyout forced on Trelawney.  Mr. Smitheman wanted to be able to probe the settlement discussions in order to obtain evidence that would support his allegation that Sanatana never intended to settle anything but that it was focussed on obtaining compensation worth more than what it would have obtained by way of compensation under section 175.

[51]       As for disbursements, Mr. Smitheman submitted that Trelawney should not have to pay for reports that had no bearing on the issues to be decided at the hearing on the merits - specifically, the report by FTI Consulting Canada ULC (a business evaluator hired to provide an expert opinion on how Sanatana’s market value might be affected) and the report prepared by Mr. Malcolm Swallow.  Caracle Creek authored a report that was also not connected to the litigation in that it was prepared in the normal course of Sanatana’s exploration programme.  It was an exhibit to an affidavit and the author of the report would not have been produced for cross-examination according to Mr. Smitheman.

[52]       Mr. Smitheman also argued that the costs submitted by Sanatana were unreasonable.  The Statutory Powers Procedure Act (SPPA) does not allow the tribunal to make an order for costs against the Applicant unless its conduct was unreasonable, frivolous or vexatious, or it had acted in bad faith.

[53]       With respect to case law on the point of costs awards under section 175, Mr. Smitheman referred to the Ministry of Transportation v. 1520650 Ontario Inc.[17] and the tribunal’s decision therein that the seriousness and complexity of the issues resulted in both parties incurring costs to get the issues addressed. In the result, no costs were awarded.

[54]       As for Sanatana’s costs claim for counsel fees, Mr. Smitheman took issue with the fees claimed for the work of Mr. Munro who, as far as Mr. Smitheman was concerned, was acting as general counsel and no more.  He was working in the capacity of a solicitor (participating in backroom corporate strategy) and not a litigator.  No dockets were provided to support any litigation work he might have carried out.  A lack of details in the cost summary was found to be a problem by the court in the case of Bulloch-MacIntosh v. Browne wherein the court stated that “a broad brush approach without the details [did] not demonstrate fairness and reasonableness.”[19]

Sanatana’s Reply Submissions

[55]       Regarding Mr. Smitheman’s argument on the applicability of the Rules, Mr. Wisner argued that the relevant “costs regime” was that found in section 175 of the Mining Act.  If the Rules were followed, one would look to those rules that applied to “applications”, which is what the “application” submitted by Trelawney was.  Even if one applied the rule dealing with “actions”, the bona fides test still applied and the onus was on the plaintiff to satisfy the test and demonstrate that the discontinued action was justified.  Commencing at paragraph 23 of Digiuseppe the court stated:

“[t]he issuance of an originating process that is not legitimate or bona fide can be, in itself, a step in the proceeding which is improper, vexatious or unnecessary.  There is nothing in the new Rule 23.(05)(1) which directs the court to look elsewhere other than general principles under Rule 57.01 in exercising its discretion on the matter of costs.  I find that applying the bone fide test established in the case law referred to above remains a fair and workable manner by which to consider whether costs consequences should flow out of the application of paragraph (f) of Rule 57.01.”

[56]       As for Mr. Smitheman’s argument about the application of the SPPA to the tribunal’s decision regarding costs, it was Mr. Wisner’s submission that the fact that the Act was in force on February 14, 2000, negated any application of the SPPA to the Commissioner’s decision regarding costs under section 126 of the Act.

[57]       With respect to the quantum of costs, Mr. Wisner submitted that the tribunal was being asked to “fix” costs, and to not carry out the type of costs assessment normally conducted by an assessment officer or judge acting as one.  In this regard, and contrary to the position advanced by Mr. Smitheman, dockets were not necessary to fix costs.

[58]       As for Mr. Smitheman’s call for particulars regarding the bonus provisions in Sanatana’s financial statements, Mr. Wisner described it as meaning that the new director would receive a “small percentage of any award of compensation that would be ordered by [the] tribunal if compensation were ordered or any other settlement amount that might be paid if the matter settled.” The bonus was payable in March, 2014. More fundamentally, the bona fides of the defendant was not a relevant factor where an application had been discontinued. Furthermore, the bonus provision had nothing to do with the matter before the tribunal on the costs motion and Mr. Smitheman was really on a fishing expedition.

[59]       Mr. Wisner also dealt with Trelawney’s request for disclosure of professional advisor fees in the event of a change of control of Sanatana.  He reiterated that these fees were not connected to the present litigation under section 175.  Agreements that might pertain to a takeover bid or related events were, amongst other things, irrelevant and privileged.  The costs application could be decided without these documents.

[60]       In turn, Mr. Smitheman raised Nipigon, where prior dealings between the parties and an attempt to use the Act for self-benefit resulted in no costs being awarded to the respondent.

[61]       Mr. Smitheman also took issue with Mr. Wisner’s description of the bonus provision in the financial statements and pointed to wording that said “a settlement with Trelawney” – noting that it did not refer to compensation in the way that Mr. Wisner had said (compensation under the Act).  He repeated his self-benefit argument, stating that if he could prove his allegation by obtaining particulars related to the footnote in the financial statements, then he could argue that Sanatana should not be awarded any costs.

[62]       Mr. Wisner, in turn, corrected Mr. Smitheman’s reference to the Nipigon case by pointing out that the reference he had made was actually a summary of the applicant’s submissions and that the tribunal had placed no weight on them in the result.  In other words, the tribunal had disregarded the argument in the past and should do so now.

The Law and Findings

Request for Further Disclosure in Miles Affidavit

[63]       The request for further particulars arising out of the Miles affidavit made by Mr. Smitheman are found by the tribunal to be inappropriate to an application for costs on a discontinuance, where issues going to the merits are not to be considered.  It was suggested that the door to this question had been opened by Mr. Wisner by stating that the quantum of costs claimed was justified based on this having been a highly complex matter.  Mr. Smitheman maintained that he should be allowed to explore further the matter of self-benefit which presented itself in paragraph 16(c) of the Notes to the Condensed Interim Financial Statements for the six months ending September 30, 2014 of Sanatana Resources Inc., Exhibit E to the Affidavit of Jeffrey Snow, General Counsel and Senior Vice President, Business Development of IAMGOLD Corporation, Parent of the Applicant Trelawney.  Sanatana’s Watershed Property is subject to an easement claim by Trelawney which, in the event of a “settlement or transaction”, the board chairman, Mr. Barry Fraser is to receive a financial bonus.

[64]       The tribunal finds that it has no idea what a “transaction” may be referring to, so that this alone is sufficiently ambiguous to cast doubt on the veracity of Mr. Smitheman’s certainty that this bonus is payable only in the event of settlement, which he maintained in alleged was in Sanatana’s or Mr. Fraser’s best interests to scuttle.  Aside from that issue, if there is an allegation of improper dealings with respect to the manner in which a board member has conducted him or herself, a costs hearing upon a discontinuance during which the merits simply cannot be considered is not the proper venue for such a matter to be considered.  Nor is it the only venue where such a matter could be considered.

[65]       The tribunal has considered Mr. Smitheman’s submissions and allegations concerning potential for self-benefit in connection with whether or not costs should be awarded in this matter and finds that, on the current facts it has not been proved that there is an issue.  To open up this question further would place the entire costs hearing matter into jeopardy as it would necessarily involve questions dealing with the merits of the case.  There are other, more appropriate venues, should Trelawney wish to pursue this matter.  The request for particulars is denied.

Applicable Statutory Law

[66]       Section 126 of the Act sets out the authority of the Mining and Lands Commissioner to award costs.  This section provides that “[t]the Commissioner may in his or her discretion award costs to any party, and may direct that such costs be assessed by an assessment officer or may order that a lump sum be paid in lieu of assessed costs.” The Commissioner’s power to award costs existed prior to February 14, 2000, and is therefore not subject to the SPPA. Subsection 17.1(6) of the SPPA provides the basis for this conclusion.  On this point, the tribunal agrees with the submissions of the Respondent.

[67]       Section 127 of the Act speaks to the scale of costs and counsel fees, and provides as follows:

  1. The costs and disbursements payable upon proceedings before the Commissioner shall be according to the tariff of the Superior Court of Justice.
  2. (2) The Commissioner has the same powers as an assessment officer of the Superior Court of Justice with respect to counsel fees.

[68]       The “tariff” referred to in subsection 127(1) is that set out in the Rules and entitled “Tariff A – Lawyers’ Fees and Disbursements Allowable Under Rules 57.01 and 58.05”.  Part I of the tariff addresses counsel fees and provides that “[t]he fee for any step in a proceeding authorized by the Rules of Civil Procedure and the counsel fee for motions, applications, trials, references and appeals shall be determined in accordance with section 131 of the Courts of Justice Act and the factors set out in subrule 57.01 (1)”.  Part II of the tariff speaks to disbursements: many of the types of disbursements listed thereunder are not applicable to the present case.

[69]      The powers of an assessment officer of the Superior Court of Justice (which are the same powers possessed by the Commissioner with respect to counsel fees, as provided for in subsection 127(2) of the Mining Act) are set out in rule 58 of the Rules of Civil Procedure. Subrule 58.05(1) provides that “[i]f costs are to be assessed, the assessment officer shall assess and allow, (a) lawyers’ fees and disbursements in accordance with subrule 57.01 (1) and the Tariffs.”

[70]       As to whether this matter constitutes an “application” or an “action”, the tribunal sees no need to determine this issue in order to decide if costs should be awarded and in what quantum. Section 126 of the Mining Act gives the tribunal the discretion to award costs “to any party” (emphasis added) and does not differentiate between actions and applications in its wording.  The tribunal can find no logical reason for imposing the sort of differentiation suggested by the parties and as found in the Rules, with respect to this matter. Furthermore, there is nothing in the Act to suggest that the power of the Mining and Lands Commissioner to award costs does not also include the power to award costs on a discontinuance.

What is the Test for Awarding Costs under section 175 of the Mining Act?

[71]       Both parties relied on costs decisions made by this tribunal under the Mining Act as well as jurisprudence developed by the courts under the Rules. In total, 14 Mining Act decisions involving section 175 were cited by both parties, dating from 1930 to 2000. Of these, eight were cases where the respondent was awarded costs even though an application for rights or easements was granted under section 175. In other instances, costs were not awarded to either party.  In no case was the respondent made to pay the applicant’s costs.  In fact, in its most recent decision, Nipigon, the tribunal noted that the “costs of the application [under section 175] are normally awarded to the owner of the adjacent lands if he or she appears on the return of the application.  This makes sense when one considers that the respondent is named as a party by the applicant.  The tribunal is unaware of any case where the costs of the application were ordered paid by the respondent.”[20]

[72]       It would appear that, as far as costs claimed in a section 175 matter are concerned, such are generally awarded to the responding party and not to the party that obtains a benefit in the form of an easement or other right.  Such an approach recognizes the fact that a responding party is put to some expense as a result of the filing of an application for rights and easements; more specifically, the responding party must provide adequate information that the tribunal can use to determine whether an application should be granted and, if so, what compensation, if any, the responding party is entitled to.

[73]       This general presumption—as articulated in the case law—that the responding party is entitled to costs on an application under section 175, should not be viewed as determinative of the outcome in this case.  Both parties produced past decisions of this tribunal in which no costs were awarded.  Reasons were not always provided. An example where no costs were awarded is Brown v Green,[21] where the tribunal noted that, although typically the owner of the surface rights is entitled to its costs, in the circumstances, “the actions of both parties, whether or not they were taken with legal advice,” did not warrant the granting of costs to either.  Apparently the tribunal had noted what it called “a great deal of misunderstanding between the parties as to their respective rights”.

Where an applicant is “forced” to discontinue or abandon its application due to economic factors, should the general presumption with respect to costs under section 175 be set aside?

[74]       Trelawney, through its counsel, argued that it was compelled to discontinue its “application” because its parent company (IAMGOLD) in effect “pulled the plug” when the price of gold started to drop. In other words, the “application” was discontinued for financial reasons and, consequently, Trelawney should not be held responsible.  Evidence of gold’s price range from 2012 to 2014 was presented by both parties and the tribunal accepts Sanatana’s claim that the price had already started to drop when Trelawney filed its “application” in April, 2013.  It continued to drop until the middle of 2013 with a few upward spikes but with a general downward trend until the end of 2014.  Trelawney’s decision to discontinue the “application” was brought before the tribunal in November, 2014.  From April, 2013 to November, 2014 there was no indication from Trelawney that it had any other intention but to pursue rights and easements under section 175 of the Act.  Given the burden that the filing of such an application places on a respondent (to compile information required by the Act) it seems unreasonable for an applicant to not accept the consequences associated with its actions.  Sanatana was compelled to respond and did so.  It retained legal counsel to represent its interests and expert consultants to support its position.  In addition, it had to travel to Ontario to defend its interests before this tribunal on more than one occasion. In the circumstances, the tribunal finds that a claim of “economic factors” does not displace the general presumption under section 175 that a respondent is entitled to costs and Trelawney’s argument that it was forced to abandon its “application” due to economic factors has no bearing on the tribunal’s determination as to which party, if any, should bear the costs in this case.

To which Party, if any, should Costs be awarded in this case?

[75]       It is reasonable to conclude that the approach taken by the tribunal with respect to the issue of costs under “normal” circumstances in respect of an application under section 175 of the Act (i.e., where there is an actual hearing on the merits) may be utilized where the applicant discontinues its application.  A party affected by such an application has no choice but to present its position before the tribunal, as required by the relevant provisions of the Act.  The legislation expects a respondent to provide information that would allow the tribunal to assess those matters set out under subsection 175(2) dealing with compensation and damage.  In this case, in addition to complying with the tribunal’s orders to file that information, the responding party had to deal with a number of preliminary issues.  In light of the foregoing, the tribunal finds that Sanatana, as the responding party to the section 175 application made by Trelawney, is entitled to costs.

[76]       Allegations were made by Trelawney that many of Sanatana’s costs were not aimed at dealing with the issue of adequate compensation for injury or damage pursuant to the requirement placed on a respondent under subsection 175(2).  This treads very close to the line of dealing with the merits.  However, the tribunal must acknowledge the right of every respondent in a section 175 matter to pursue whatever strategy it should choose whether it be to quantify damage to its property rights or to repel the application altogether.  The tribunal finds that this argument made by Trelawney as to the various reports and technical experts used by Sanatana to be without merit.

[77]       Sanatana asks that costs to be fixed by the tribunal (as opposed to the tribunal directing that costs be assessed by an assessment officer, as provided for in section 126 of the Act). While the tribunal finds this approach to be reasonable, given that an assessment process would lengthen the matter and lead to additional costs, one drawback to this approach is that specificity is lacking.  This lack of specificity is addressed in further detail below.

What Quantum of Costs is Appropriate in the Circumstances?

[78]      In fixing costs, the tribunal is guided by the factors set out under subrule 57.01(1) of the Rules, in addition to the result in the proceeding and any offer to settle or to contribute made in writing. Subrule 57.01(1) provides as follows:

In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(i) any other matter relevant to the question of costs.

[79]       The tribunal finds that the result in this proceeding was that the “application” was discontinued; in other words, the Respondent “won”.  With respect to settlement, while there was an attempt by the parties to settle their differences, nothing was achieved and, in particular, no offer to settle or contribute was made in writing.

[80]       Factors (a), (b), (g), and (h) are not applicable to the present case and will not be considered for the purpose of fixing costs. Further, the tribunal is of the view that there is no “other matter” in this case relevant to the question of costs and will thus not address factor (i). This leaves for consideration the remaining factors listed under subrule 57.01(1), each of which is discussed in greater detail below.

The Reasonable Expectations of the Unsuccessful Party

[81]       Trelawney says that no costs should be awarded.  In the alternative, it asks that the amounts claimed by Sanatana be significantly reduced “in light of what was actually in issue in the application.”  Trelawney did not produce a costs outline that the tribunal could compare with that of Sanatana.  No time records were provided by Trelawney.  In order to judge whether the costs claimed by Sanatana are fair and reasonable, in light of the expectations of the unsuccessful party, it would have been helpful to have this information.  That being said, the tribunal is not completely hamstrung in addressing the reasonableness of the number of hours claimed by Sanantana’s counsel in this matter. Ultimately, in the circumstances, it is unreasonable for Trelawney to have expected Sanatana to incur minimal or no costs in responding to the application.

Complexity of the Proceeding

[82]       The tribunal has considered complexity in terms of what the Applicant was seeking under section 175.  Trelawney’s “application” requested a number of easements, as set out earlier in these reasons.  The project was described at some point in the application process as “massive” by Trelawney’s counsel.  The infrastructure associated with the requested easements included dams and transmission lines as well as roads.  Changes in water levels and flooding would have to be taken into account.  These were but a few of the issues connected with the “application”. As the responding party, Sanatana would have been required to produce information that would allow the tribunal to understand the impact of the proposed easements on its mining claims.

[83]       However, as there has been no hearing on the merits, the tribunal is of the view that it would be improper to try to assess the complexity of something that never happened.  While on its face the hearing might have dealt with complex material, and might have been complex in terms of the issues considered, the tribunal is ultimately unable to decide whether, in fact, the proceeding would have been “complex”. The “size” of the “application”, in terms of the number of easements requested and the anticipated infrastructure requirements, does not necessarily mean that the proceeding would have been “complex”.

[84]       Having regard for the manoeuvers and the issues raised by both parties leading up to the costs hearing, as it concerns the complexity of the proceeding, the tribunal is of the view that there was nothing unusual in the efforts made.  Although both parties exchanged numerous emails, often resulting in a motion and/or ruling from the tribunal, this in itself does not suggest that the underlying application and hearing was or would have been complex.

Importance of the Issue(s)

[85]       Without question, both parties viewed the application as raising critically important issues. Mr. Smitheman described Trelawney’s application and the easements requested thereunder as a “massive” undertaking. Mr. Wisner, on behalf of Sanatana, stated that the potential impact of granting the requested easements would be to drive his client out of business. As for section 175 of the Act, this provision raises issues such as whether or not the easement is “required”; whether any damage or injury caused by the granting of the easement can be “adequately compensated for”; and so on. Historically, individual property rights, and this includes those held in unpatented mining claims being but some of the rights granted to individuals under the Act, are held in high regard and not readily interfered with. The tribunal thus finds that the issues were important to both parties.

[86]       Whether the issues were important to the public, as opposed to the individual parties, is not determinative in this case. While Trelawney referred to a lack of objection by the Crown to its application, the tribunal is unable to take anything from this statement. Indeed, there was never any indication that the Crown was in any way involved in this matter on any level. Furthermore, there was no indication, based on the materials filed by both parties up until the date of the costs hearing, that the matter involved novel or complex questions of law or matters of public policy or interest.

Conduct of the Parties

[87]       In its Order of May 8, 2014, the tribunal ordered Trelawney to produce the information required under section 175.  This order followed a motion and hearing, with the result that Sanatana’s lawyers had to review additional material, thereby adding to its costs. That being said, the sword cut both ways when it came to the topic of “information”.  Trelawney also viewed the information provided by Sanatana as being deficient on some level, with the result that it sought to discover certain of Sanatana’s witnesses. There was hesitancy on both sides to produce the information required by section 175 of the Act; in other words, no party’s conduct was so reprehensible as to affect the tribunal’s determination with respect to costs.

Whether Any Step in the Proceeding was Vexatious or Unnecessary or Taken through Negligence, Mistake, or Excessive Caution

[88]       The tribunal accepts that the filing of an application under section 175 is necessary for the granting of rights and easements under the Act.  The status of whatever it is an applicant needs to service through these easements is something that would be an issue at a hearing.  Sanatana argued that Trelawney’s application was premature given that no mine was in existence; in short, it never should have been filed.  It bears repeating - whether or not the application was premature due to the absence of a mine (as stated by Sanatana) would have been an issue to be dealt with at the hearing on the merits. Sanatana’s claim of prematurity would have to be grounded in evidence. Given that the application was discontinued the tribunal has no evidence on which to base a finding that it was in fact premature.

The Principle of Indemnity

Counsel Fees

[89]       The tribunal acknowledges that, when fixing costs, the overall objective is to fix a fair and reasonable amount in the circumstances and based on the particular proceeding.  The fixing of costs is not the same as conducting an assessment, which is typically more detailed and specific. Nonetheless, a “critical examination” of the work done is still required so as to determine if the costs claimed have been reasonably incurred and whether they are reasonable and appropriate in the circumstances.[22]  The production of lawyers’ dockets (from both sides) is considered helpful in this respect but not required.  On the other hand, where the amount claimed is clearly excessive or overreaching, and without additional information that could explain the calculations, the court will attempt to base its decision on what is reasonable in the circumstances.  The tribunal is of the view that it is in a position to do this given its knowledge of the Act in general and specifically the expectations of section 175.

[90]       As noted earlier, Trelawney did not submit any information about the hours spent by its legal team.  Thus, the tribunal has nothing to compare to Sanatana’s claim with respect to the hours spent on this matter; and yet, Trelawney argued at the costs hearing that Sanatana’s claim was “grossly disproportionate and that it [was] well outside the range of what would be reasonable in the circumstances”.  As noted by Price J., in Ogbu & Blius Engineering et al v. Anyadiegwu,[22] “when one party attacks another’s costs as excessive, but does not put its own dockets before the court that attack ‘is nothing more than an attack in the air’”.

[91]       With the exception of the motion decided on May 8, 2014 (where no costs were awarded), Sanatana claims a total of $297,021.63 (including HST) for counsel fees on a partial indemnity basis. These fees arose out of the need, in part, to review the “application” and respond to it.  In assessing the reasonableness of Sanatana’s counsel fees it is helpful to take note of the relevant timelines, particularly as they relate to the hours incurred/fees charged by Sanatana’s counsel in reviewing and responding to Trelawney’s application, which step alone totalled $143,733.00.  With respect to this step in the proceeding, most of the hours were claimed by Mr. Munro. At the costs hearing, Mr. Smitheman focussed on the hours claimed by Mr. Munro for the various steps in the proceeding.  He argued that Mr. Munro was not a counsel of record; that he was a solicitor and not a litigator; and that no dockets were produced by the Respondent to support the number of hours claimed for Mr. Munro’s time on the file.  Further, Mr. Munro did not appear on any matters before the tribunal. The tribunal agrees with Applicant’s counsel that Mr. Munro’s hours should undergo more scrutiny as, in the circumstances, they appear excessive given the circumstances of and matters at issue in this case. 

[92]       With respect to reviewing the application and preparing a response, Sanatana lists 171.60 hours for Mr. Wisner; 300.84 hours for Mr. Munro; and 96.50 hours for Mr. Chisholm.  Messrs. Wisner and Chisholm appeared as counsel on the record for this matter.  Mr. Munro did not.  No dockets were provided in support these hours.  In total, Sanatana claims 568.94 hours for this step in the proceeding.  The tribunal counts approximately 69 days (give or take a day and including weekends) between the time the Order to File was issued and the date of Sanatana’s response.  Dividing total lawyers’ time by 69 results in an average of 8.2 hours spent per day on this one matter for the time period in question.  Looking only at Mr. Munro’s time, and using the same calculation, one comes up with 4.36 hours per day spent by Mr. Munro on this step in the proceeding.

[93]       Mr. Munro was described as Sanatana’s “lead mining counsel”, although he was not a counsel of record.  Mr. Wisner stated that Mr. Munro provided advice regarding the “application”.  According to Sanatana’s costs outline, Mr. Munro expended hours for each step in the matter with the exception of hearing preparation and attendance on the discontinuance.  A total of 426.84 hours is credited to Mr. Munro and 406.60 hours with a ½ day attendance for the discontinuance is credited to Mr. Wisner.

[94]       The tribunal agrees with Mr. Smitheman that details are needed when a seemingly extraordinary number of hours are claimed for work that, in the circumstances, does not seem to justify them.  The fixing of costs can be achieved without the help of dockets and details where the hours claimed are what one would expect in the circumstances.  Where the hours claimed appear extraordinary, the tribunal may reasonably expect that such expenditures are supported by sufficient detail. In this respect, the tribunal notes that Sanatana provided details in its claim for costs associated with the hearing on costs; the tribunal is of the view that, in this case, it is reasonable to expect that the same could have been provided for the hours claimed for Mr. Munro.

[95]       Furthermore, despite asking about the nature of Mr. Munro’s involvement, the tribunal is no further ahead in understanding what exactly he contributed to the Respondent’s case.   Mr. Wisner said Mr. Munro brought “specialized mining expertise”.  The tribunal has no way of connecting this expertise to the application and justifying the amount of hours claimed for it.  Indeed, the tribunal was not provided with any details as to the various counsel’s involvement aside from which aspect of the case they were connected to and the number of hours they spent.  The tribunal is prepared to accept that some mining law expertise might be needed at the time the “application” was received by Sanatana so as to craft a suitable response.  But it questions why dealing with the application and crafting the response warranted over 400 hours of counsel time.  Given Mr. Wisner’s experience and years before the Bar (18) compared to Mr. Munro (9), the tribunal is concerned that there was significant duplication of effort among counsel (in this respect, it should be noted that four lawyers were involved in responding to the original “application”).  Three hundred hours spent by one lawyer (Munro) while another spent 171.6 hours (Wisner), plus 96.50 hours spent by a third lawyer (Chisholm), and 73.20 hours of student time reviewing the application and providing a response is excessive in the circumstances.  It is the view of the tribunal that this step in the proceeding was “over-lawyered” as were each of the other steps listed by the Respondent where at least three lawyers (including Mr. Munro) were involved.

[96]       Mr. Munro may be a leading mining expert; however, Trelawney should not be required to overpay.  The tribunal can find nothing in what has been submitted to justify the amounts claimed for his time.  For the reasons above, Mr. Munro’s hours will be excluded from the respondent’s bill of costs. The hours attributed to Messrs. Wisner, Chisolm, and S. Brown-Okruhlik, as well as the students-at-law are to be awarded as claimed.

Disbursements

[97]       Sanatana asks for reimbursement of its actual disbursements in the amount of $204,692.37 ($181,143.69 + $23,548.68 HST).  This figure includes the cost of various items such as photocopying ($2,731.00); process server fees ($165.00); couriers ($169.98); flights and accommodations to and from Vancouver for witness preparation and mediation attendance ($27,564.09); and the cost of three reports produced by consultants for the purpose of the hearing on the mertis.  The reports themselves total $148,010.00—the most expensive report being that produced by FTI Consulting ($84,485.00) and which dealt with the quantification of compensation based on the view that Sanatana’s market value would be negatively affected by granting the rights requested by Trelawney.  The other two reports consisted of a mining engineer’s report assessing the viability of the Applicant’s project and the impact of the proposed easements on Sanatana’s development of its mining claims as well as a summary of Sanatana’s exploration programme.

[98]       Mr. Smitheman argued that the above-noted expert reports had not been tested before an impartial adjudicator and that at least one of the reports was merely an exhibit to an affidavit.  He claimed it was not part of the litigation that might have occurred but only a technical report prepared for Sanatana’s project. The tribunal is not prepared to entertain conjecture as to the evidentiary weight of the reports or their relevance given that there has been no hearing on the merits.  The tribunal must ask itself whether the costs incurred are fair and reasonable in the circumstances. There is nothing to persuade the tribunal that the costs claimed for the expert reports at issue were unreasonable.  The costs of the expert reports will be allowed. The remaining items listed as disbursements by Sanatana will also be allowed, having been reasonably incurred in the circumstances.

[99]       Finally, the costs outline submitted by Mr. Wisner for the purpose of the motion for costs states a total of $9,008.93 in counsel fees, on a partial indemnity basis, for Messrs. Wisner and Brown-Okruhlik as well as one student-at-law and one law clerk; $97.75 is claimed for disbursements. Sanatana is entitled to its costs as claimed with respect to the motion for costs.

[100]       In conclusion, the tribunal finds that Sanatana is entitled to costs in the amount of $ $402,189.86.  The break-down is as follows. (Disbursements: $204,692.37; motion for costs: $9,008.93; counsel fees: $297,012.63-108,524.07 = $188,488.56)

1 RSO 1990, c  M.14 [Actor Mining Act].

2 RRO 1990, Reg 194 [Rules].

3 (21 December 1995), MA 038-93, online: MLC <http://filesectionontario.ca/environment-and-energy/mining-decisions/mnr_e001928.pdf [Nipigon].

4 [2008] OJ No 1565 (QL) (Sup Ct J) [Golda].

5 (1977) 5 MCC 348 [Howes].

6 Specifically, in its May 8, 2014 Order, after dismissing Sanatana’s motion to dismiss the “application” because it failed to meet the requirements imposed by section 175 of the Act, the tribunal ordered Trelawney to file the information required by that section.

7 2012 ONSC 1028 [Digiuseppe].

8 [1995] OJ No 3370 (QL) (Ct J (Gen Div)) [Purolator].

9 [1986] OJ No 680 (QL) (HCJ).

10 Supra note 8 at para 10.

11 Ibid at para 12.

12 The amount of HST payable using the Ontario scale (13%) comes to $34,170.63. The Respondent did not provide a breakdown indicating which fees were incurred in British Columbia, where, presumably, the GST rate of 5% would apply to counsel fees incurred on or after April 1, 2013.

13 Transcript pages 103-104.

14 2012 ONSC 1028 [Digiuseppe].

15 (1977) 5 MCC 348 [Howes]

16 (21 December 1995), MA 038-93, online: MLC <http://filesectionontario.ca/environment-and-energy/mining-decisions/mnr_e001928.pdf [Nipigon].

17 (14 October 2008) MA 026-06, online: MLC <http://files.ontario.ca/environment-and-energy/mining-decisions/275399.pdf.

18 2011 ONSC 1210.

19 Ibid  at para 30.

20 Nipigon, supra note 3 at p 13.

21 7 MCC 102.

22 Ogbu & Blius Engineering et al v Anyadiegwu, 2014 ONSC 5426 at paras 25-27 where Price, J. reviews the decisions that set out this principle.

23 2014 ONSC 5426.

24 Ibid. at para. 21.