Court of Appeal

NOVA SCOTIA COURT OF APPEAL

Citation: Halifax (Regional Municipality) v. David, 2004 NSCA 138

 

Date: 20041118

Docket: CA 211937

Registry: Halifax

Between:

 

The Regional Municipality of Halifax, Halifax Regional Water Commission,

Carl Yates and Reginald Rankin

Appellant

v.

Marty David; Paul F. Williams; Maurice Allison Jr.; M.C. Allison; Florence D. Smith; Dawn Marsman; Valmar Anderson; Sabrina Wellington; Victor A. Wellington; Cecilia Williams; Donald E. Anderson; Wendell David; Randall David; Myles Simms; Carolyn Allison; Spencer Anderson; Bertina Oliver; Clifford Oliver; Ruth Anderson; Dennis Oliver; Carl Marsman; Geneva Marsman; Ismaid Kadir; Wayne Williams; Daniel Jackson; Charles Jackson; Alfaretta Williams; Raymond David; Neil H. Anderson; Wesley H. Anderson; Alfreda Anderson; Viola Marsman; Rhona Simms; Lynn David; Lilena Jones; Walter Jones; Ruby Oliver; Norma Marsman; Curtis Marsman; Doreen Mantley; Lillian Carvery; Goldie David; Leeman David; Jacqueline Cromwell; Maxwell Mantley; Douglas Oliver; Vera Gibson; Nelson Anderson; Marion Anderson; Esther Peterson; Clyde Oliver; Alden Oliver; Manual David; Russell David; Christopher F. Jones; Margaret Brushett; Tracy Kelsie; Brian David; Aubrey Whiley; Joyce Symonds; Yvonne Redmond; Carl Redmond; Clark Symonds; Audrey Symonds; Janell Simms; Daniel H. White; Lee A. Eisenhauer-White; Frankie Allison; Alcora Norton; Daniel J. Norton; Diane Whiley; Wayne Radkey; Clarence Anderson; Buzzell Anderson; Barbara Borden; Kevin Emmerson; Mary Allison; Michelle Simms; Earle Oliver; Earlene Oliver; Melinda Simms; Holly David; Matuelder David; Ann David; Cornel Marsman; Shonna Smith; Milton B. Allison.

 

Respondent

 

Judge(s):                        Bateman, Freeman and Saunders, JJ.A.

 

Appeal Heard:               September 15-16, 2004, in Halifax, Nova Scotia

 

Held:                    Appeal allowed with respect to the five residents of Anderson Court, otherwise appeal is dismissed with costs subject to recalculation of award of damages per reasons for judgment of Freeman, J.A.;  Bateman, J.A. concurring and Saunders J.A. concurring but dissenting on matter of costs.

 

Counsel:               Douglas Tupper, Q.C. and Andrew Fraser, for the appellant

Mary Jane McGinty and Srinivasen Pilay, Q.C., for the respondent

Reasons for judgment:

 

[1]              Upper Hammonds Plains, a small and historically disadvantaged  black Community built along Pockwock Road west of Halifax, is now at the fringe  of a sprawling suburban area included in the Regional Municipality of Halifax (HRM) and within the jurisdiction of the Halifax Regional Water Commission (HRWC). It will often be referred to in this decision simply as "the Community."

 

Overview

 

[2]              Some 400 acres of Community land was expropriated by the Province of Nova Scotia in 1974 as part of a water supply area for the then City of Halifax and neighbouring communities. The water main from the Pockwock Lake water supply to the areas served passes close to part of Upper Hammonds Plains but the Community was not included in the municipal water system.

 

[3]              After a number of failed attempts, residents successfully took the initiative to obtain municipal water beginning in 1995, working through the Upper Hammonds Plains Community Association headed at that time by the Rev. Daryl Gray. Initial cost estimates were daunting and would have resulted in excessive frontage charges to the Community. But the merits of the Community's position were recognized: quality and quantity of water from the Community's individual wells were below standard. The Community's initiative was met with a high degree of cooperation from all levels of government.

 

[4]              HRM and HRWC had initially favoured extending the proposed project along the Pockwock Road to the neighbouring white community of English Corner, but it was quickly recognized this would have made it too expensive.  English Corner was deleted from the proposal. HRM and HRWC made "stewardship" funds totalling $350,000 available; these were later revised upwards. The Province of Nova Scotia provided a $500,000 special grant from the budgets of two departments exclusively for the Upper Hammonds Plains project, after English Corner had been removed from the project proposal. Some federal funds appeared likely but did not materialize. Construction of a nearby school requiring a water main provided fortuitous savings.  In the hopes of achieving a project cost within the Community's financial means, the scope of the Upper Hammonds Plains project was scaled back, including a difficult decision to omit fire protection. By the spring of 1999 the project was considered affordable . The Community gave its approval on the condition that frontage charges would not exceed $15.00 per foot and would be reduced if actual costs were less than projections.

 

[5]              Tenders were called and came in well below projections, resulting in a projected cost which was $630,000 under the budget.  Rather than applying the anticipated surplus to reduce frontage charges or restore fire protection,  HRWC and HRM decided to use the money to provide service to English Corner.

 

[6]              If, as the Community had understood would occur, the surplus had been applied to the project, frontage fees would have been eliminated with some money left for improvements in the system. Construction of the expanded project was begun in the summer of 1999 and completed in 2000.

 

[7]              Following installation of the service the plaintiffs, almost half of the property owners of the Community or their representatives, brought the action resulting in this appeal. They alleged that the surplus funds should have been used for the benefit of their Community, and not diverted elsewhere.

 

[8]              The plaintiffs were successful after a sixteen‑day trial in the Supreme Court of Nova Scotia. The trial judge found their conditional acceptance of proposed  frontage fees prior to the tender call had been induced by negligent misrepresentations that they would benefit from savings on the actual costs of construction. They had relied on those representations reasonably and to their detriment. He awarded damages against HRM, HRWC, and the chairman of HRWC, who have appealed.

 

[9]              The standard of review set out in Housen v. Nikolaisen (2000), 286 N.R. 1 (S.C.C.) has been adopted .The facts of this case are highly particular to it but are not seriously in dispute; the extensive findings of the trial judge are well founded in the evidence and entitled to deference. It is not apparent the trial judge made a palpable or overriding error which would warrant intervention. The standard of correctness was met with respect to the law applicable to the main issue, negligent misrepresentation. In situations of mixed fact and law, where the law of negligent misrepresentation was applied to the facts as found, the standard of correctness was also met. In my view, except for one ground of appeal that does not go to the main issues, the appeal must be dismissed.

 

 

The Judgment at Trial

 

[10]         The trial judge, Justice Hilroy Nathanson, summarized the issues before him at the beginning of his decision:

 

Property owners who solicited municipal, provincial and federal funding for extension of the municipal water service to their community allege that they were promised that the funding would be used only for that purpose and, further, were informed that, if the lowest tender came in below what was estimated, any savings would benefit them in the form of reduced frontage charges, but the savings were used to extend the service to an adjacent area and they received little of the benefit.

 

[11]         He found that Carl Yates, the chairman of the HRWC, had repeatedly informed Community members that they would benefit by reduced frontage charges if the tenders came in lower than the estimates. The Community reasonably had relied on his representations when it approved a proposal based on betterment charges of $15.00 per front foot with that acceptance conditional upon a reduction of the frontage fee if costs were lower than estimated.

 

[12]         The judge was satisfied that what the Community had actually agreed to was a frontage charge of  $15.00 per foot less the $630,000 difference between the projected cost and the tender amount. On the assumption that the Community was content with the $15.00 per foot charge, but without further consultation with Community representatives, the Province of Nova Scotia agreed with HRWC and HRM to release its $500,000 contribution to the water commission to be applied to both the Upper Hammonds Plains and the English Corner projects.

 

[13]         The trial judge found that before its agreement to release its contribution,  the Province had repeatedly informed the community, HRM and HRWC that the $500,000 had been committed exclusively to the  Upper Hammonds Plains project and was conditional upon acceptance of the project by the Upper Hammonds Plains Community. This finding was amply supported by evidence.

 

[14]         This exclusive commitment of funding by the Province had placed the Community in a favourable bargaining position, resulting in reasonable communication and consultations with the other players. The deference to the Community's wishes was exemplified by the number of proposals that HRWC had  presented to the Community for consideration. On each occasion the Community expressed its wishes through votes at Community meetings. Until May of 1999 all proposals were rejected because projected frontage charges were considered unaffordable by the residents. When a proposal was rejected, all concerned directed fresh efforts to finding a new one that might be more acceptable. The Province's response to inquiries about new proposals from HRWC and HRM and the Community was that its promised funding would not be released without Community acceptance.

 

[15]         The Province's position that the Community acceptance was necessary for the release of the funds was confirmed in a letter dated April 27, 1999, from Marvin MacDonald, Director of Development Services for the Department of Municipal Affairs and the liaison coordinator between the provincial government and the Community, to Douglas Sparks, Development Coordinator for the Upper Hammonds Plains Development Association and successor to Mr. Gray. The letter was written in the context of a proposal by HRM for a phased approach, one of the alternatives considered for reducing costs.

 

Your concerns regarding the lack of communication between the Halifax Regional Municipality (HRM) and the community on this project are shared by the Province.  The Province normally does not fund water supply projects, as there is an opportunity for the Municipal Unit to recover revenue from user rates on water services.  An exception was made in this case due to the longstanding dispute over water services in the area and the health concerns surrounding the existing on‑site water supply in the community.  As a result, the Province through the Departments of Housing & Municipal Affairs and Environment jointly committed $500,000 towards the project.  The intent of the funding was to support a project that would address the problems in the entire community.

 

. . . While the Province accepts minor changes to the proposal, it is important that the overall intent of the project remains to supply the area residents with high quality potable water.

 

 In light of the decision by the community not to support the project based on an earlier proposal with a frontage charge of $18.85 plus lateral fee, and your letter, it is evident that the phased approach proposed by HRM will not achieve the intent of the provincial funding.  The Province will not support the HRM proposal unless it becomes evident that the community agrees with the phased approach and is prepared to proceed with phase 2 and 3 of the project at future dates.

 

(Emphasis added)

 

[16]         Mr. MacDonald had written to Councillor Reg Rankin in a similar vein about the same time. Howard Windsor, Deputy Minister of Housing and Municipal Affairs, wrote Dan English, Deputy CAO of HRM, on May 11, 1999, also in the context of the phased approach, to say:

 

The Province's support of the specific proposal outlined in your letter is contingent on the Community accepting the proposed frontage charge and agreeing to proceed with the project. . . .

 

[17]         The Community did not agree to the phased approach and it was abandoned.  There was no evidence of any intention by HRM or HRWC at any relevant time prior to the summer of 1999 to proceed with the project until Community approval had been obtained.

 

[18]         After tenders were opened on August 7, 1999, and all concerned realized the amount of the potential savings, attitudes toward the Community appeared to change. The bargaining power the Community had enjoyed with respect to the provincial commitment was lost when the Province agreed, despite its previous assurances, to release its funds to HRWC to provide services to English Corner.  The Community was viewed as if it were satisfied with a $15.00 frontage charge, and the condition that such was a maximum and acceptable only if there was no surplus on the contract was ignored by HRWC. The Province then took the position that the Community would have to negotiate its options with HRM and HRWC. With release of the provincial funds the Community had been left without effective power to negotiate for lower frontage charges, restoration of the sacrificed fire protection service or any other options. In apparent recognition of this impotency, officials of HRM and HRWC gave the Community no opportunity to attempt to negotiate before deciding to use the funds elsewhere.

 

[19]         HRWC and HRM ignored the representations which their officials had made to the Community and the conditions attached by the Community to its acceptance. The diverted funds enabled the provision of services to English Corner at a comparable frontage charge to that of the Community, but included, for English Corner only, fire protection which had been removed from the Upper Hammonds Plains portion of the project to reduce the cost.

 

[20]         Justice Nathanson found Mr. Yates liable for the material misrepresentation, HRWC vicariously liable, and HRM liable in agency as the principal of HRWC.  He awarded the plaintiffs damages equal to their proportionate share of the construction savings, an amount which exceeded their frontage charges.

 

[21]         The central issue in this appeal is whether reliance on negligent misrepresentations caused Community members to suffer damages. This is reflected in the seventh of twelve grounds of appeal raised by the appellants.

 

Background–the Critical Period

 

[22]         It is helpful to focus in detail upon events during the time period after the Community had conditionally approved the frontage charge.

 

[23]         The Community met on May 26, 1999, and conditionally approved the most recent proposal for the water project. The next day the late Daniel Norton, then president of the Community Association, wrote Reg Rankin, the area's representative on the HRM Council, who had been actively involved in negotiating the project, advising him of the vote. Mr. Norton said the executive of the association had accepted the mandate given by the membership on the understanding "that the following terms are made as conditions of acceptance."  He then listed eight conditions of acceptance, of which the first is of key relevance to the issue in this appeal.

 

1.         That the frontage charge be set at $15.00 per foot.  If during the tendering process, the cost is greater, then it must return to the community for approval.  Further, if the cost is less than, the savings goes to the property owners as reduced frontage charges.

 

[24]         This condition was based on the representations to the Community by Mr. Yates, often with the acquiescence of Mr. Rankin, that the Community would benefit from reduced frontage charges if tenders were lower than projections.

 

[25]         Mr. Norton's letter to Mr. Rankin was copied to Marvin MacDonald, the provincial contact man with the Province, Carl Yates, Ken Meech, Chief Administrative Officer for HRM, and several others.

 

[26]         The Community was never informed that the first  condition was problematic. It was considered by Mr. Yates, who raised no objection to it in a memo to Ken Meech, Chief Administrative Officer for HRM, and Reg Ridgley, the Chief Financial Officer.  Councillor Rankin asked Mr. Ridgley to draft the response to the Community. Various draft documents, prepared by staff contemplating acceptance of that condition and containing no objection to it, were in evidence. At a meeting with officials on June 18, 1999, just prior to approval of the project by HRM Council, Doug Sparks, successor to Mr. Gray and Development Co‑ordinator of the Upper Hammonds Plains Community Association, was informed the condition was acceptable. That meeting appeared to be the only communication with the Community after Mr. Norton's letter and prior to Council's approval of the project.

 

[27]         Only two of the conditions in Mr. Norton's letter appeared to cause any concern to HRM and HRWC. One called for a fund of $75,000 paid from frontage charges to be set aside to provide subsidies for cases of hardship, and the other sought deferral of frontage fees without interest for properties with 300 foot frontages or more, to be paid by annual instalments over a 20 year period.   The subsidy fund was approved and deferrals were accepted with interest.

 

[28]         The trial judge summarized events following the receipt of Mr. Norton's letter as follows:

 

[46]      Reg Ridgley did not respond to Norton’s letter. Yates and Ridgley prepared a report for HRM Council.  It noted that the UHP community had endorsed the latest proposal to provide water service, but it did not mention the conditions of acceptance set out in Norton’s letter.  Nor was a copy of Norton’s letter of May 27 attached.  In Ridgley’s opinion, the phrase “conditions of acceptance” meant nothing.  It was, at most, a shopping list.  Ridgley testified that he told Doug Sparks that a report was going forward to Council.  He wanted Sparks to see the report beforehand, and so he faxed a copy of it to him.  Because one of the fax machines was not working properly, only pieces of the report reached Sparks.  Ridgley did not re-fax it until June 23, one day after the Council meeting. . . .

 

[48]      On the basis of the staff report, HRM Council effectively approved the proposal for UHP water servicing by appointing HRWC to be the contracting agency for the project, establishing the amount of $503,570 to be recovered through frontage charges of $15.35 per foot, and authorizing a deferral program for property owners whose frontages exceeded 299 feet.  No mention was made of the conditions of acceptance set out in Norton’s letter.  Ridgley testified that Council was not aware of Norton’s conditions of acceptance when it approved the project.

 

(Emphasis added)

 

[29]         There was evidence that it was not uncommon for communities voting for water projects to attach conditions to their acceptances. Ordinarily these could be ignored because HRM has the power to impose water projects, and the resulting frontage charges, without Community approval. Upper Hammonds Plains was not in the same position as other communities, however. The Province's insistence on Community approval before releasing its funds gave the Community a special status and a strong bargaining position. The compromises in the quality of the system, such as deletion of fire protection, resulting from attempts to find an affordable model had been reached by negotiation. The Community's conditions of acceptance represented more than a mere wish list. Without the Community's  approval of the proposed project and the frontage charges, the project would not have gone ahead.

 

[30]         When HRM and HRWC chose to ignore the condition as to the construction savings and to proceed with the project without honouring it, they went ahead without the agreement of the Community. They were able to do so when they did because the Province ignored, or was prevailed upon to ignore, its own requirements for Community approval before releasing its funds.  (See paras. 72 to 88 below.)

 

 

[31]         These events were found not to be actionable in themselves, but they were  key links in the chain of detrimental effects suffered by the Community as a result of altering its position in reliance on Mr. Yates' misrepresentation.

 

[32]         In his decision the trial judge reproduced in full a draft letter dated June 23, 1999,  from Reg Rankin to Daniel Norton.  It begins:

 

Thank you for your letter of May 27, 1999 setting out the conditions of acceptance respecting the installation of water services into the community.  I am pleased to advise you that at its meeting of June 22, 1999, Halifax Regional Council approved the project.  The conditions of approval were agreed to at a meeting held Friday June 18, 1999 at the offices of the Halifax Regional Water Commission (HRWC).  I understand staff from the HRWC and Halifax Regional Municipality (HRM) met with your Mr. Douglas Sparks.  The conditions are substantially unchanged from that as outlined in your letter.

 

For more certainty I will address each issue as outlined in your letter.

 

1.         The frontage charge will be based upon $503,570.  Using 32,815 lineal feet this results in a charge of $15.35 per foot.  Should the actual project costs be less, the recoverable amount will be reduced accordingly.

 

. . .

 

[33]         The remainder of the letter addresses the other conditions.   Reg Ridgley, the chief financial officer for HRM, testified he drafted the letter for Councillor Rankin.   He was assisted by a memorandum from Mr. Yates which stated:

 

We have recently reviewed the letter of May 27, 1999, from Daniel Norton with respect to the above noted project.  As indicated in the letter, the community has overwhelmingly endorsed the latest scenario to provide central water service to the community of  Upper Hammonds Plains.  However a response from HRM is appropriate to ensure there is a clear understanding of project implementation.  In this regard, we wish to provide our comments on the eight items identified as conditions of acceptance from the community of  Upper Hammonds Plains.

 

1.         The Halifax Regional Water Commission has no problem with the frontage charge to be set at $15.00 per foot, in accordance with the attached schedule, and the understanding with respect to the cost implications from the tendering process.

 

The trial judge stated:

 

[50]      On June 25, Reg Ridgley, at the request of Rankin, faxed Doug Sparks and Yates a copy of Rankin’s draft letter, but excluding the introductory paragraph.  The covering letter describes it as “a copy of information that I will be sending to Councillor Rankin for his response to your letter of Monday June 21, 1999".  (Ridgley testified that the date was in error and was intended to be a reference to Norton’s letter of May 27).  Ridgley testified that the introductory paragraph was omitted because it was mere dialogue. The draft letter was never sent to Rankin; Rankin testified that he never saw it. Doug Sparks testified that he was not aware of the existence of the draft letter until some two years later.

 

[34]         At the council meeting on June 22, 1999, a report from Mr. Meech and his Deputy CAO Dan English advised council that "subsequent to council's motion of May 11, 1999, the Community of  Upper Hammonds Plains endorsed the latest proposal to provide water service from the Pockwock Transmission main."  The conditions on which the proposal were endorsed were not included, nor mentioned,  in the report.

 

[35]         The report set out the following summary of financing for the project:

 

Total project cost of extension (net of HST)                                      $1,478,570

 

Funding available

 

Halifax Regional Municipality

 

(Approved by Council June 23,1998)             $350,000

 

Halifax Regional Water Commission             $100,000

 

Federal Department of Human Resources      $ 25,000

 

Provincial Funding                                          $500.000            $975,000

 

Direct Abutters' Charges                       $503,570

 

[36]         The project was approved at the June 22, 1999 meeting of council.    Tenders were called and opened on August 7.

 

[37]         The successful tender was for $837,000 including engineering, contingencies and net HST. This was $641,570 lower than the estimated cost of $1,478, 570 (excluding HST) on which council had based its approval at its June 22 meeting. The $1,478,570 estimate was presumably the same figure on which the Upper Hammonds Plains Community Association had based its conditional approval.

 

[38]         The trial judge reviewed the events of this period as follows:

 

[52]      On August 16, Jamie Hannam (chief engineer of the water commission) wrote to Marvin MacDonald proposing four possible scenarios for use of the savings from the lower tender amount: (1) reduce the frontage charge to zero; (2) add the rest of Anderson Road and Anderson Court (areas of  Upper Hammonds Plains which had voluntarily opted out of the project) to the project; (3) add oversized pipe to allow for  future extra capacity and fire protection; (4) add full fire protection system.

 

[53]      Next day Perry Borden (acting executive director of the Upper Hammonds Plains Community Association while Doug Sparks was on vacation) left a voice mail message for Jamie Hannam, HRWC Chief Engineer, indicating that the UHP Community had voted in favour of the status quo, which Hannam believed was a reference to the first scenario–reduction of the frontage charges to zero.

 

[54]      A meeting of the funding partners was called for August 18.  Sometime prior to the meeting, Jamie Hannam had a conversation with Doug Sparks with respect to the results of the tender call.  Hannam outlined the possible options which could be considered in deciding how to use the savings, including re-extension to English Corner.  Sparks’ response to such a possible re-extension was “Don’t even go there!”.  Based on that response, Hannam did not see any point in discussing the matter further with Sparks or the UHP community.

 

[55]      Representatives of the funding partners met to discuss what to do with the surplus funding.  This meeting was attended by Kulvinder Dhillon, Director of Engineering, on behalf of HRM, Marvin MacDonald, on behalf of the Department of Municipal Affairs, and Jamie Hannam and Yates on behalf of HRWC.  Neither Doug Sparks nor anyone else on behalf of the UHP community had been invited.  Those in attendance discussed a number of possible scenarios.  Jamie Hannam reported that Doug Sparks was not in favour of including English Corner.  The representatives of HRM said that they would not support a zero frontage charge, possibly because they believed that Council would not agree to it.  MacDonald was concerned that if the frontage charge were reduced to zero it might be a precedent for future cases.   A consensus was reached to recommend that the water service be extended to English Corner.  They decided to contact the people residing between White Hills Run and English Corner in order to ascertain their wishes in respect of this extension, with a view to presenting the results, if positive, to the Council meeting on August 24 for approval.  Marvin MacDonald agreed on behalf of the Province to allow the Province’s contribution to be used for the proposed extension to English Corner on two conditions: that the UHP community would get the water service which had been promised, and that the frontage charge would be $15 per foot or less.

 

[56]      Marvin MacDonald testified at trial that the actual amount of the frontage charge would be a matter for the UHP community to negotiate with HRWC and HRM.  He also testified that he was satisfied as long as the core area of UHP was serviced.  He believed that the Province’s position did not change at the meeting.

 

[57]      Upon becoming aware of the amount of the so-called savings from the tender process, the UHP community decided to call a community meeting to discuss possible uses for the money.  But Perry Borden testified that he received a telephone call and a faxed letter from Jamie Hannam who told him that the funding partners had met and decided to expand the scope of the project to include English Corner.  Therefore, a community meeting was considered to be unnecessary.

 

[58]      Yates testified that he was aware that the UHP community was very much opposed to the project thereafter.  However, he did not pass on this information to Council.  He considered it to be opportune for HRM to go ahead with the project.

 

[59]      Yates prepared a staff report for the August 24 meeting of Council.  It noted that $630,000 of external funding remained unspent from the UHP water project, which amount was available to pay the additional net funding of $616,500 required to extend the scope of the project to include English Corner. It recommended re-extension of the project and a frontage charge of $15 per foot.

 

[39]         In a report prepared for council dated August 23, 1999, after the meeting with officials, but before the HRM Council meeting of August 24, Mr. Meech and his Deputy noted that "by holding a $15.00 per foot frontage charge for the  Upper Hammonds Plains project, approximately $630,000 will remain unspent."

 

[40]         The report continued:

 

The external funding partners for this project (HRM, HRWC, NS Department of the Environment and NS Department of Housing and Municipal Affairs) met to discuss the options that may be available due to the current funding availability.  The most desirable option was to try to extend the water service to the remainder of the Pockwock Road residents.  This section of Pockwock Road, between Hammonds Plains Road and White Hills Run, is experiencing water quality and quantity problems, and was included within the initial scope of work as endorsed by Council.  However, due to funding restrictions and the priority for  Upper Hammonds Plains, this area was not included within the recently tendered project.

 

[41]         (The area described as the "section of Pockwock Road between Hammonds Plains Road and White Hills Run" refers to English Corner.)

 

[42]         Commenting on the absence of Community representatives from the meeting of the funding partners, the trial judge stated:

 

. . . [I]t was attended by representatives of the funding partners, without the presence of a representative of the community which had conceived the project, for whose benefit the project was implemented, and whose members were as much funding partners as were the Province, HRM and HRWC.  I can only infer that he did not want the community’s representative to be heard at the meeting lest he influence the Province. 

 

[43]         Marvin MacDonald noted in a "project update" he prepared just after the meeting that the cost for the Upper Hammonds Plains portion of the project was 51.82 per cent of the total while the frontage charge to that Community amounts to 75.06 per cent of the total frontage charges.

 

[44]         At the meeting of the HRM Council on August 24, 1999, Councillor Rankin was co‑mover of a motion which was passed to extend the water service on Pockwock Road from Upper Hammonds Plains to the Hammonds Plains Road, which includes English Corner. This was based on retention of the $15.00 frontage charge to abutting property owners in Upper Hammonds Plains. Council passed the bylaw necessary to give effect to this proposal, and the system was installed serving both communities.

 

Liability

 

[45]         The respondents took the position in their action that the Community had fought long and hard for a potable water supply, had been promised exclusive benefit of the $500,000 Provincial contribution, and had accepted the project conditionally in reliance they would benefit from a low tender.  Believing the assurances from HRWC that, as was the usual case, they would benefit from lower tender prices, the Community did not move to formalize that commitment.  Therefore, submitted the Community, any surplus funds resulting from the tendering process should have  been used for the benefit of  Upper Hammonds Plains, not for English Corner.

 

[46]         The respondents' action was initially broadly focussed and a number of alternative claims, including claims based on breach of contract, were rejected on a non‑suit motion. All but one of the others were dismissed, including a claim for breach of fiduciary duty, which is not an issue in this appeal.

 

[47]         The trial judge found in the plaintiffs' favour only on the issue of negligent misrepresentation. He found that Mr.Yates had negligently misrepresented to them that if the tenders came in for less than the estimated cost of building the water line, this would result in reduced frontage fees. Relying on this misrepresentation caused the respondents to alter their position to their detriment, whereby they suffered damages. HRWC was vicariously liable for the actions of its manager, and HRM liable in agency as the principal of HRDC, its wholly owned corporation and its contracting agent for the project.

 

[48]         The appellant raised twelve issues on appeal, which will be considered below. The seventh ground of appeal mirrors the test for actionable negligent misrepresentation set out by Iacobucci J. in Queen v. Cognos, [1993] 1 S.C.R. 87 at p. 110:

 

(1) there must be a duty of care based on a "special relationship" between the representor and the representee; (2)  the representation in question must be untrue, inaccurate or misleading; (3)  the representor must have acted negligently in making the misrepresentation; (4)  the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and (5) the reliance must have been detrimental to the representee in the sense that damages resulted.

 

[49]         The trial judge cited Cognos and made findings of fact favourable to the respondents with respect to all five requirements, supported by appropriate citations from Anns v. Merrton London Borough Council, [1977] 2 All E.R. 492 (H.L.) at p. 498, Esso Petroleum v. Mardon, [1976] 2 All E.R. 5 (C.A.) at p. 16, and Hercules Managements Ltd. v. Ernst & Young, [1997] 2 S.C.R. 165 at pp. 188.

 

[50]         He quoted Esson J.A. in Rainbow Industrial Caterers Ltd. et al. v. Canadian National Railway Co. et al. (1988), 54 D.L.R. (4th) 43 (B.C.C.A.) at p. 75 quoting  D.W. McLauchlan, “Assessment of Damages for Misrepresentations Inducing Contracts”, (1987) Otago L. Rev. 6:3 at p. 371:

 

Professor McLauchlan puts the matter this way at pp. 411‑412 of his article . . . "to recover damages in tort for misrepresentation, it is enough that the misrepresentation induces an alteration of position (such as entry into a contract) and loss flows from that alteration. . . . " (Emphasis added.)

 

[51]         Referring to the requirement for alteration of position the trial judge stated:

 

Alternately, if that is not so, while I have found that no contract existed here the situation is nevertheless analogous: representations were made with the intention that the representees would change their position; they did so, and the representations became the basis for their perceived approval of the water supply extension, as they reasonably understood it.

 

[52]         The trial judge made findings of fact that Yates had a special relationship, in the sense of Anns or Cognos, with residents of Upper Hammonds Plains. This arose from his position as general manager of HRWC, the special knowledge and skill that entailed, his pattern of giving advice to the Community and the Community's reliance on that advice. In the course of giving such advice to the Community, he

 

. . .  provided the community with information as to a policy or practice of the HRM with respect to the savings or surpluses from underbids.  He did so with the intention of inducing the UHP community to change its position and to be bound.  I have already found that the UHP community must be taken to have acquiesced to the project.  It changed its position, and was treated by HRM and the Province as being bound.

 

[53]         Elsewhere in his decision the trial judge stated:

 

[89]      I find that Yates and Rankin informed the UHP community that its members would benefit from lower frontage charges if the lowest tender came in below what had been estimated.  Yates made the statement in his letter of March 24, 1999, copies of which were sent to Rankin, Jamie Hannam and Marvin MacDonald, and confirmed it to Marvin MacDonald, Doug Sparks and Jamie Hannam at a meeting on the same day.  I find that he did so in order to induce the members of the community to approve the project.  Yates and Rankin also made oral statements of similar effect at meetings attended by others.  The community made it a condition of its acceptance in Daniel Norton’s letter of May 27.  Yates and Ridgley omitted reference to these conditions of acceptance from their staff report to HRM Council.   Rankin denied it to HRM Council at its meeting on August 24.  But, in a letter dated September 10, Yates acknowledged to the Mayor and Council for the first time that a verbal agreement had been made, but then attempted to limit its application to a context of situations of “typical small dollar value savings”.

 

[90]      I find that Yates, in telling the UHP community that lower tenders would result in lower frontage charges, was following the pattern established earlier of advising the UHP community.  In this particular case, I find that he was stating the policy or practice of HRM or HRWC, or both, as to the use of savings or surpluses on bids which were lower than expected.  His statement was not a promise; he never characterized it as such and, upon consideration of the context of the paragraph containing it and of the letter as a whole, it was clearly not a promise.  In any event, he was wrong.  There is no evidence of an HRM policy or practice in place with respect to this subject.  Yates should have known better.

 

[91]      I find that the UHP community, having relied upon Yates’ advice in the past and in doing so saw the project brought to fruition, relied on his statements that lower tenders would result in lower frontage charges.  It relied to its detriment in that it led the community to be held to have acquiesced to the project and, consequently, to a frontage charge which was higher than would have been the case if its members had received the benefit of the savings on the underbid.

 

. . .

 

[143]    Yates had been advising the UHP community for several years in respect of this project.  They had relied upon his advice - successfully.  It was reasonably foreseeable that the plaintiffs would rely on what Yates told them about the policy or practice of HRWC or HRM, or both.  Given his position as General Manager of HRWC, and given the ongoing relationship between him and the UHP community over a period of years, it was reasonable for the members of the community to rely upon his representations.  I see no considerations that would limit the duty of care that arose from this special relationship.

 

[144]    Yates knew the UHP community relied upon his advice and information.  He ought reasonably to have known what he was saying and the implications of saying it.  He did not qualify his statements.  His duty in the circumstances was to ensure that his statements were accurate and not misleading.  In fact, there was no such policy or practice, and his statements were untrue, inaccurate or misleading.  Yates made the statements negligently.

 

[145]    In the context of Yates’ position as General Manager of HRWC and the long-standing advisory relationship between him and the UHP community, during which he had given advice that the community relied upon, it was reasonable for the community to rely upon his statements as to the way in which savings realized in the tendering process would be used.

 

[146]    The result of Yates’ advice and the UHP community’s reliance upon it was higher frontage charges than the members of the community intended to agree to.  The charges would have been lower had Yates’ representations been accurate.  Hence, the reliance was detrimental to the members of the UHP community.  They suffered damages.

 

[54]         It is clear that Mr. Yates intended the Community to act on his representations. In the letter referred to above by the trial judge, he wrote the Community Development Office as follows on March 24, 1999:

 

We understand that affordability of the project is a prime concern for the community of Upper Hammonds Plains.  However, we believe that we have presented the most realistic scenario with regard to anticipated tender prices.  Should the tenders come in lower than our estimate, we will be celebrating with the Community as lower tender prices would ensure lower frontage charges. We also wish to acknowledge that should tenders come in above our projected estimates, we would not award a tender unless it was ratified by the community first.   (Emphasis added.)

 

[55]         Mr. Yates agreed with counsel for the respondents that he was attempting to induce the Community to move ahead with the project so funding then on the table would not be lost.  Asked by respondents' counsel on discovery why he used such strong language in the letter, he acknowledged that he was trying to get the Community to move along with the project.

 

[56]         His exchange with counsel not only illustrates Mr. Yates' interest in urging the Community to move ahead, but, more importantly, it illustrates the strong bargaining position the Community was in at that time. Because of the Province's commitment, the project was not about to go forward without the Community's agreement. A number of proposals had been presented to the Community, beginning with one that would have set the frontage fees at $52 per front, and all had been rejected on grounds of affordability, as was the proposal Mr. Yates was urging in March of 1999. There was a strong political will to build the Upper Hammonds Plains water system and funding was available, but all of the players recognized ‑ or behaved as if they recognized ‑ that Community agreement was essential before the project could proceed.

 

[57]         The trial judge noted that at a meeting among Mr. MacDonald, Doug Sparks, Yates and Jamie Hannam of the Water Commission in March, 1999, Mr. Yates stated that any underbid on the tender would directly benefit lot owners.

 

The general opinion was that a positive vote in the UHP Community would allow the project to go ahead.

 

[58]         The trial judge concluded his analysis of liability as follows:

 

[150]    Yates represented that there was an existing policy or practice of HRWC or HRM, or both, that savings resulting from lower tenders would be returned to the community in the form of lower frontage charges.  This representation led the UHP community to accept the project.  It was an unequivocal representation made in the exercise of his powers and duties.

 

[151]    Yates had the implied actual authority of HRWC, deriving from his position as General Manager of HRWC.  When he made his representation to the UHP community, he was acting within the scope of his duties in dealing with the expansion of the municipal water infrastructure in general and, more particularly, extension of the water supply to UHP.  Yates’ principal, HRWC, is not a municipality. His misrepresentation is attributable to his principal which is vicariously liable for the negligent misstatement of its servant, Yates.

 

[152]    HRWC, in turn, was acting as agent for HRM.  The HRM Council had passed a resolution appointing HRWC to be the contracting agency for the project.  The nature of its responsibility can be inferred from the fact that HRWC had originally volunteered to act as project manager in order to facilitate the design, tendering and contract administration for the project.  The appointment implied that HRWC was the agent of HRM for this project.  HRWC is held to have implied actual authority to act on behalf of HRM for the limited purpose of construction and completion of the project.  This is analogous to the situation in Brown & Huston Ltd. v. York (Borough), [1985] O.J. No. 211 (Ont. C.A.).  A construction consultant for a city, having negligently omitted material from the tender documents, was held to be the agent of the city, which was liable for the agent’s acts:

 

The trial judge in the case at bar has found that Fenco was negligent in not supplying the Geocon Report to the tenderers but appears to have overlooked the fact that under the construction contract, the legal obligation to supply such a document for the information of tenderers rested on the City.  Clearly the City had appointed Fenco its agent for this limited purpose and must be held liable for Fenco’s negligence in failing to perform this function at least.

 

[153]    Liability for negligent misrepresentation does not extend to Rankin, nor do his statements serve as a basis to attribute liability to HRM.  He was only one of many municipal Councillors, and had no power to speak on behalf of, or bind, HRM.  Since HRM is a municipality, Rankin did not have ostensible authority to speak or act on its behalf.

 

[154]    In the result, I find no direct liability in negligence for HRM, but do find liability against Yates for innocent but negligent misrepresentation and, on an agency basis, such liability extends to HRWC and, in turn, to HRM.

 

 

[59]         The trial judge's strong findings of fact are amply supported by the evidence; I am not persuaded he ignored or misconstrued any relevant evidence or fell into palpable or overriding error. His findings of fact and the inferences and conclusions of fact he drew from them are therefore immune from intervention by this Court.

 

[60]         The current standard of review to be followed by appeal courts was definitively stated by the Supreme Court of Canada in Housen v. Nikolaisen (supra). The standard of review on questions of law is correctness. The standard of review for findings of fact, and the inferences and conclusions of fact drawn from them, is deferential: such findings are not to be reversed unless it can be established that the trial judge made a "palpable and overriding error."

 

... (A) trial judge's inferences of fact and findings of fact should be accorded a similar degree of deference.

 

. . . (E)ven where a finding of fact is not contingent upon credibility, this Court has maintained a non‑interventionist approach to the review of trial court findings.

 

[61]          An appeal court is not free to interfere with a factual conclusion that it disagrees with on the basis of a difference of opinion over the weight to be assigned the underlying facts. The finding of facts and the drawing of evidentiary conclusions from them is the province of the trial judge, not the court of appeal, and the standard of palpable and overriding error applies.  It is noted in Housen that an appeal court will be hard pressed to find palpable and overriding error when there is evidence to support the trial judge's conclusions.

 

[62]         Questions of fact, law and mixed fact and law fall along a continuum or spectrum of particularity between the high deference owed to findings of fact and the standard of correctness that applies to errors of law. Findings of negligence are questions of mixed fact and law requiring deference from a court of appeal. They should be set aside only where there is a palpable and overriding error. Questions of mixed fact and law involving the application of a legal standard fall toward the less deferential end of the continuum, but to a certain extent support deference for the trial judge's inferences. Where the legal principle involved is not readily extricable from a set of facts, the standard is palpable and overriding error unless it is clear the trial judge made an extricable error in principle in the characterization of the legal standard or its application, in which case the error may amount to error of law.

 

[63]         Applying the Housen standards to the trial  judge's characterization and application of the test for actionable negligent misrepresentation in Cognos, modified by appropriate authority, I do not find the trial judge erred at law nor departed from the standard of correctness either in his conclusions of law or his consideration of questions of mixed fact and law.

 

[64]         I am satisfied that the trial judge did not err in finding that, as a result of negligent misrepresentation, the respondents altered their position to their detriment and suffered damages. The Community relied upon the HRWC/HRM assurances that it would fully benefit from lower tender prices, reflected in reduced frontage fees. Absent the misrepresentation the Community would not have approved the proposed project without a formalized commitment on the use of any surplus funds. This is discussed more fully under "Damages" below.

 

Damages

 

[65]         The Cognos analysis results in a finding of negligent representation causing damages to the respondents. Once the plaintiff has discharged its burden of proof that damages have occurred, the court must quantify the damages from the evidence. The plaintiff‑respondents are entitled to damages that would place them in the position they would have been in if the tort had not been committed. The court must envision the hypothetical scenario in which they would have found themselves if Mr. Yates had not caused them to rely on his representation that they would get the benefit if the successful tender was lower than projections.

 

[66]         The speculation a court must engage in is discussed in Jamie Cassels, “Remedies: The Law of Damages”, (2000) Irwin Law Inc.  Professor Cassels' section on Assessing the “but for” Situation, pp.56‑60, has particular relevance in the present appeal. He states:

 

In tort compensation, the plaintiff is entitled to be put in the position she would have been in but for the wrong.  As is the case with expectation damages, the assessment of reliance damages will often require the court to make findings using hypothetical scenarios.  Whereas in assessing expectation damages, a court must hypothesize what would have happened had the contract been performed, in assessing reliance damages a court must hypothesize what would have happened had the tort not been committed.  For example, when the plaintiff has relied upon a negligent misrepresentation to plan a course of action (e.g. to make an investment, bid on a contract, buy a property), the court must construct an alternative scenario about what the plaintiff would have done had the misrepresentation not been made.

 

In most cases, where the fraud or misrepresentation induced the plaintiff to enter into a transaction, the court will simply presume that the plaintiff would not have entered into that transaction and would therefore have avoided any loss on the investment (including any consequential losses).  For example in Rainbow Caterers v. Canadian National Railway, [1991] 3 S.C.R. 3,  the plaintiff tendered a bid to supply meals to railway crews. The bid was based on an negligent forecast by the defendant as to the volume of meals that would be required and the plaintiff lost money on the contract before terminating it.  The Supreme Court of Canada granted the plaintiff its full operating loss, thus restoring it to the position that it would have occupied had it never entered into the contract. . . .

 

The situation in England is different.  The House of Lords has held that the only damages the plaintiff may receive, even if the action is framed as one for negligent misrepresentation, are those that are causally related to the breach of duty.  . . .

 

It is submitted that the Canadian approach to this question is preferable.  While it may appear to protect the plaintiff from risks of an investment unconnected to the defendant's wrong, the plaintiff would not have made the investment in the first place but for that wrong.  Moreover, attempting to disentangle the losses caused by the defendant's wrong  from losses that might have been suffered in any event may not be worthwhile from the point of view of judicial expediency.

 

There is one class of cases where the defendant may plausibly claim that damages should be reduced because some of the loss would have been incurred in any event.  As seen above, in the usual case, where the plaintiff enters into a transaction on the faith of a careless statement by the defendant, the plaintiff is entitled to all of the losses suffered on that transaction on the assumption that ‘but for" the negligent advice, the plaintiff would have avoided the transaction altogether.  However, in some cases the more likely scenario is that had accurate information been given, the plaintiff would still have entered into the transaction though perhaps on different terms.  In these cases, it cannot be said that all the losses suffered on the investment were caused by the defendant's wrong because even in the absence of the wrong, the plaintiff might still have made the investment and might still have suffered a loss (though likely a smaller one).

 

This issue arose in Rainbow.  The defendant took the position that, had a proper forecast been made, the plaintiff would still have entered into the contract (albeit with a somewhat higher bid) and would still have lost money.  Thus, the damages awarded to the plaintiff put him in a better position than if no wrong had been done.  The Court rejected this submission on the basis of a plaintiff‑favourable presumption:

 

Once the loss occasioned by the transaction is established, the plaintiff has discharged the burden of proof with respect to damages.  A defendant who alleges that a plaintiff would have entered into a transaction on different terms sets up a new issue. It is an issue that requires the court to speculate as to what would have happened in a hypothetical situation. It is an area which is usually impossible to adduce concrete evidence. In the absence of evidence to support a finding on this issue, should the plaintiff or defendant bear the risk of non‑persuasion? Must the plaintiff negate all speculative hypotheses about his position if the defendant had not committed a tort or must the tortfeasor who sets up this hypothetical situation establish it?

 

The appellant CN alleged that the loss was not all attributable to the misrepresentation because Rainbow would have entered into a different contract on other terms which would have resulted in at least some of the loss.  What the respondent would have done had it not been for the tortious act requires a great deal of speculation, and . . . I would apply the legal burden of proof against the appellant.

 

[67]         The trial judge appears to have understood and applied the principles of damages in tort law. He stated that "the basic principle of compensation for tort is that the amount of the award should, as close as possible, restore the claimants to the same position they would have been in if the tort had not been committed. It is an eminently reasonable principle."

 

[68]         The plaintiffs had submitted, he said, "that if the tort had not been committed they would have received the benefit of the lower tender, that is, the so‑called savings of $630,000.This submission cannot be accepted as is for two reasons." The second reason involved the need for deductions or adjustments which will be referred to below. As to the first, he stated:

 

The first reason is that, if there had been no misrepresentation, it is highly improbable that the UHP Community would have acquiesced to the project which, therefore, would never have been constructed, at least until frontage charges were reduced considerably to the level of affordability of the members of the Community.  In such circumstances, it is difficult to state with accuracy what amount would be appropriate compensation.  After due consideration, I have concluded that it would be fair and just for it to be based upon the amount of the so‑called savings from which they would have benefited if the representation had indeed been true and correct.

 

[69]         The trial judge's hypothetical scenario is briefly stated, that without the misrepresentation, the Community would not have acquiesced in the proposed project which would therefore not have been constructed until frontage charges were reduced to the level of affordability. This is reasonable and in accord with the evidence, for this is what had actually been happening on numerous previous occasions. The Community withheld its approval from each new proposal on grounds of affordability, and the project could therefore not go ahead.   The Community's definition of affordability was set out in Mr. Norton's letter to Mr. Rankin of May 27, 1999: frontage charges capped at $15.00 per foot on the condition that they be reduced to reflect the savings if tenders were less than projections. That letter was written two months after Mr. Yates' letter informing the Community: "Should the tenders come in lower than our estimate, we will be celebrating with the Community as lower tender prices would ensure lower frontage charges."  Because they relied on that assurance, reasonably assuming it reflected the way things were done by the water commission  and HRM, they did not demand written confirmation their condition would be honoured.

 

[70]         The trial judge found that because of this representation, which he held to be untrue and negligently made,  Community members, including the plaintiff‑respondents, altered their position to their detriment when they conditionally agreed to the proposal for the water project which was before their meeting on May 26, 1999.

 

[71]         The trial judge's hypothetical scenario can be fleshed out considerably from the evidence. If Mr. Yates had not told them that "lower tender costs would ensure lower frontage charges" they would have insisted on confirmation from HRWC and HRM that contract savings would be applied to reduce frontage charges. Because of what Mr. Yates had told them, verbally and in writing, they could confidently assume that the condition in Mr. Norton's letter was not remarkable nor controversial, but merely referred to the policy or practice Mr. Yates had told them of: lower tenders ensured lower frontage charges.

 

[72]         That is the nub of the Community's detrimental reliance. They believed, based on what they hade been told, they were only making their acceptance conditional on what they were entitled to and would receive in any event: the lower frontage charges ensured by the lower tender. If they had not been lulled by the misrepresentation, they were in a strong enough bargaining position at that time to demand binding assurances their condition would be honoured. By relying on the misrepresentation, they lost both their bargaining position and the benefit of the contract savings.

 

[73]         After so many negative responses, this positive response by the Community  was treated as a green light for the project. If the condition caused a problem for anyone in HRWC or HRM, nobody told the Community about it. When HRM Council approved the Upper Hammonds Plains water project and tenders were called without any objection having been raised to the condition, this could only have reinforced the Community's reliance on what Mr. Yates, supported by their councillor Reg Rankin, had been telling them. They were entitled to assume the project would not be moving ahead if their conditions had not been accepted. If they had been told their conditions were not acceptable, they would have been able to negotiate for a mutually acceptable alternative before their bargaining position disappeared from beneath them. The lack of response from HRM and HRWC to Mr. Norton's letter could only have reinforced their reliance on Mr. Yates' misrepresentations.

 

[74]         Had Community members, including the respondents, not been relying on Mr. Yates' misrepresentation, they would not have altered their position without demanding enforceable assurances from HRM that they would indeed receive the full benefit of construction savings in the form of reduced frontage fees. The Community was not naive; its members were experienced in dealing with HRWC and HRM as a result of previous unsuccessful attempts to obtain safe water. But Mr. Yates had earned its trust, as the trial judge found.

 

[75]         If the Community had not been relying on his assurances, or if they had any reason to believe their condition was not acceptable, they would have turned to the Province, as they had when they were being urged to accept a phased approach in April, 1999, to obtain renewed assurances that the provincial contribution would not be released until the proposed project met with their approval.

 

[76]         I would superimpose this further hypothetical scenario, which I consider to be  well founded on the evidence, on that of the trial judge, for I feel there is no conflict between the two:  If the Community had not been relying on Mr. Yates' misrepresentations and had demanded enforceable assurances from HRM and HRWC, they would have received them.

 

[77]         There was  demonstrated will to proceed with the  Upper Hammonds Plains water project on the part of HRM and HRWC.  It was their duty to close gaps in the infrastructure, and the need was apparent.  Funds were in place, subject to the Province's willingness to release its contribution when the Community approved of the project. It is clear from the history of the project that construction would not have gone forward without the Community's acceptance, to which the Province's contribution was tied.

 

[78]         There is no evidence anyone  in HRM or HRWC had any difficulty with the condition as to construction savings in Mr. Norton's letter. Doug Sparks attended a meeting prior to the Council vote on June 22, 1999, when no objection was raised to the condition. HRWC appears to have been confident in its projections, and savings from the tendering process were not expected to be substantial. Mr.Yates later informed Council, and testified, that it was common to apply contract surpluses to reducing frontage charges when the amounts were not substantial.  There would have been little reason to refuse the Community's demand for assurances, and there is clear evidence a response was actually being prepared that would have accepted the condition in writing. Internal memos among Mr.Yates, Mr. Meech and Mr. Ridgley took the condition in stride. Mr. Ridgley drafted a reply for Mr. Rankin to send to Mr. Norton specifically accepting the condition.   It appears to be nothing more than discourtesy or inadvertence that the letter was never sent.

 

[79]         While it is true that only the HRM Council could pass the necessary by‑law setting frontage charges, and cannot fetter its legislative discretion by binding itself contractually to passing a particular form of by‑law, it is also true that a municipality can give assurances that its council will honour.  By-laws adopting agreements reached with citizens are common. Counsel could direct us to no relevant instance when HRM Council did not adopt the recommendations of Mr. Yates. If the Community had insisted on such assurances prior to the June 22 Council meeting, or indeed, any time before the tenders were opened, I am confident it would have received them. The Community did not consider it necessary to insist on them because of the reliance it placed on Mr. Yates' representations.

 

[80]         There is no real basis for questioning the hypothesis that, but for Mr. Yates' assurances, the Community could and would have demanded and received assurances that construction savings would result in reduced frontage charges. By relying on Mr. Yate's misrepresentation without demanding and receiving further  assurances, the Community altered its position in a manner that resulted in it being deprived of a $630,000 benefit. This was the final outcome of the series of occurrences that began after Mr. Norton's letter of conditional acceptance. The sea change occurred when the tenders were opened August 7, 1999. Nothing changed in principle, but the amount of money changed attitudes.

 

[81]         Because of  their own failure to respond in a timely fashion to Mr. Norton's letter, HRM and HRWC officials took the position that they had done nothing to bind themselves to honour the conditions of the Community's acceptance. The officials knew what the conditions were and had had no problem with them; they did not inform the HRM council about them.

 

[82]         When HRM and HRWC officials met August 18, they ignored the conditions of acceptance and Mr. Yate's representations. They denied the Community a place at the table. They adopted the position the Community had actually accepted a frontage fee of $15.00 a foot. Following the meeting, Mr. Meech recommended to HRM Council the Community should be held to that frontage charge so the money could be spent in English Corner. Mr. MacDonald, without hearing from Community representatives, agreed to release the Province's contribution, leaving the Community powerless to negotiate. He expressed the view, however, that it was up to the Community to try to negotiate frontage fees with HRM.

 

[83]         After the meeting Mr. MacDonald prepared the memo updating the project in which he remarked that the Community would be made to pay a disproportionate share of the cost of the combined projects.  He must have known the Community had not agreed to the terms that were being imposed upon them when he released the provincial money.

 

[84]         This had significant consequences for the Community. The trial judge found that the Province's $500,000 contribution to the water project was solely for the benefit of the Community. The Province committed its funding for this one project and for no other. Since the project as originally conceived was for the exclusive benefit of the UHP Community, it follows that the money was committed for the exclusive benefit of the UHP Community. This was confirmed repeatedly in the testimony of David Darrow, Deputy Minister of Municipal Affairs.

 

[85]         Yet at the August 18, 1999 meeting, Mr. MacDonald, who had reviewed his instructions with Mr. Darrow, his superior, just beforehand, agreed to release the provincial money if the Community received the proposed water service and accepted  a frontage charge of $15.00 per foot or less. That was a distortion of what the Community had actually accepted. Mr. MacDonald had received a copy of Mr. Norton's letter of May 27, 1999, in which the Community's acceptance was made conditional on a frontage charge of $15.00 per foot less any savings realized on construction costs.

 

[86]         The trial judge found:

 

[97]      The Province is not without blame.  It did not authorize its appointed representative to police the scope and performance of the project.  It appears to have accepted HRWC's uninformative invoice at face value and without question.

 

[98]      The responses of Marvin MacDonald and Deputy Minister Darrow reflect poorly upon the Province. MacDonald responded to a letter from a Solicitor on behalf of the UHP community by saying merely that he understood that the residents had agreed to a frontage charge of $15 per foot.  He did not set out the facts upon which his understanding was based, nor did he indicate the source of his information.  He showed no interest in discovering whether there was truth to a complaint of the UHP community about the project for which the Province was on the verge of expending $500,000 of public money.  Deputy Minister Darrow's testimony was similar to that of MacDonald's on this point; he also showed no such interest.  Both of them believed that the Province had honoured its obligation by paying the HRM invoice.  It is obvious that neither considered that the Province had a higher obligation to ascertain the truth.

 

[87]         The trial judge considered whether the Province's money had in fact been used exclusively for Upper Hammonds Plains:

 

[103]    HRWC invoiced the Province for $500,000. From this it follows that the balance of the $945,370 cost of the portion of the pipeline servicing the UHP community was paid out of the contributions of HRDC, HRWC, HRM and residents' frontage charges.  The implication is that not all of the funding contributed by those funding partners was used to pay for the UHP portion of the project.  On the other hand, if the contributions of these funding partners was used to pay most or all of the $945,370 cost, that would imply that little, if any, of the Province's money was in reality used for its original purpose of benefiting the UHP community.

 

[104]    An example may illustrate the point. The $945,370 cost for the portion of the property servicing the UHP community was calculated to be 52.8% of the total final cost of $1,788,419.  If we assume for the purposes of this example that the $945,370 was paid for by using 52.8% of each of the contributions of the funding partners, the implication would be that almost half the funding was diverted from the project for which it had been promised and, instead, was used to pay for expansion of the project to include English Corner.

 

[105]    It is unproven whether all the Province's funding was or was not used for this project.  It is not possible to state with any certainty that the Province fulfilled its promise to the UHP community

 

[106]    In my view, the Province has a moral obligation to the UHP community which, I trust, even at this late date will impel it to confirm that its money was properly expended.

 

[88]         The judge did not consider that release of the provincial contribution in the circumstances described above gave rise to a claim for damages with respect to it.  I agree. This was not an intervening cause of action. The Community had no real control over the Province's contribution beyond the bargaining advantage it provided, and did not make the Province a party to the litigation. Had the Province ensured that the funds would benefit only the Community by refusing to release its contribution, the Community might have maintained leverage concerning the use of project savings. With the release of the Provincial monies, the fact that the Community, in reliance on the Yates representation, had not formalized the commitment on the application of the savings, left the Community powerless to stop HRWC and HRM from misinterpreting its position and diverting the funds. The damage arose, however, because of the circumstances caused by the misrepresentation, not the release of the monies by the Province.

 

[89]         Mr. Yates recommended to HRM Council that the extra money be spent to bring water to English Corner. Counsel acknowledged that English Corner received fire protection and  Upper Hammonds Plains did not. Mr. Rankin put the motion to proceed with the expanded project to HRM Council, which was passed.  The Community was then confronted with a done deal, and had no place to turn but the court.

 

[90]         To its credit, HRM Council  voted that each of  HRM and HRWC pay an additional $40,000 to reduce the frontage charges in  Upper Hammonds Plains to $12.00 a foot. The Community was not mollified. It had been deprived of the opportunity to crown its efforts to obtain safe water with the $630,000 benefit it would have been entitled to, but for its reliance on  Mr. Yates' representations.

 

[91]         The trial judge commented on the position taken by HRM:

 

[96]      I have difficulty understanding why HRM Council dealt in a somewhat shallow manner with the complaint of the leader of the UHP community, Daniel Norton.  One would think that it would want to investigate Norton's claim that the UHP community had attached explicit conditions to its acceptance of the project, that the conditions had been communicated in writing to officials of HRM, and that the conditions had not been dealt with or even acknowledged by HRM or any of its officials.  One would also think that HRM Council would be even more interested in allegations that a senior official of HRWC and, to a lesser extent, some of its own officials had represented that savings from the tender process would lower frontage charges to the UHP community.  Its interest in ascertaining the truth appears to have been low and of short duration.

 

[92]         In assessing damages, the trial judge concluded, after due consideration, "that it would be fair and just for compensation to be based upon the amount of the so‑called savings from which they would have benefited if the representation had been true and correct."  I agree. That is the only appropriate measure of damages, subject to the deductions and other adjustments made by the trial judge. In the circumstances there is no meaningful distinction to be drawn between expectancy and reliance damages, nor between the position the plaintiffs would have been in if the representation had been true on the one hand or not made at all on the other.    In the scenario above, but for its reliance on the misrepresentation,  the Community could have negotiated for treatment as favourable as if the misrepresentation had been true, or if it had not been made at all.

 

[93]         The Trial judge began his calculation of the damages award with the $630,000 surplus and made two deductions:

 

[159]    First, the figure of $630,000 must be reduced by $35,000 to reflect HRWC's additional contribution of $25,000 and the contribution of $10,000 of Rankin's discretionary funds, both of which were made after completion of construction.  Otherwise, there would be a double recovery or benefit to the extent of $35,000.

 

[160]    Second, the figure of $630,000 must be reduced to reflect the fact that the misrepresentation was directed to the whole of UHP community and was not limited to the plaintiffs, who constitute only a portion of that community.  The plaintiffs were never told that only they would have the benefit of the savings from the tender process.  The 87 plaintiffs own or represent the owners of properties in the UHP community which includes a total of 181 properties.  Thus, the community must include 94 properties other than those of the plaintiffs.  Therefore, the figure of $630,000 must be reduced by 94/181 or 52%.  I seem to recall some uncertainty in counsel's summations about the accuracy of these figures; if counsel have access to more accurate information, they may agree upon alternate figures.  Until they do, the calculation of this reduction is: 52% of $630,000 = $327,600.

 

[161]    The net amount to which the plaintiffs are entitled is: $630,000 ‑ ($35,000 + $327,600) = $267,400).

 

[162]    This award should not attract interest if HRM and HRWC do not charge interest in regard to the payments of which collection has been suspended pending the outcome of the trial.

 

[94]         While the calculation of the proportional entitlement between the plaintiffs and the remainder of the Community might have been more precise if it were based not on the number of properties but on the front footages of those properties, this is not an issue on appeal, and the necessary footage figures do not appear to have been in evidence.

 

[95]         The trial judge continued:

 

[163]    The amount of the award will be applied to reduce the amount recoverable and, after calculation, to reduce the frontage charge for each of the plaintiffs.  The Court cannot make an award in favour of persons who are not parties to the action and, therefore, cannot require that any amount be applied to reduce the frontage charges of the members of the UHP community who are not parties to this action. However,  HRM Council in its wisdom may wish to give them an equitable break.

 

[96]         Application of the damage award of $267,400 left a balance of $30,826.98 after payment down to zero of the plaintiffs' frontage charges, which were agreed by counsel to total $236,755.11. In my view the balance would be compensation for omission of fire protection from the Upper Hammonds Plains project, to which the plaintiffs claim entitlement, citing Canson Enterprises Ltd. v. Boughton & Co. et al., [1991] 3 S.C.R. 534. This case was decided on the basis of breach of fiduciary duty. However Justice (as she then was)  McLachlin's decision suggests that the principle of compensation would be no less applicable in the case of negligent misstatement.

 

... The difference between the rights of a claimant in equity for maladministration of property as opposed to wrongful advice or information, resides in the fact that in the former case equity can and does require property wrongfully appropriated to be restored to the cestui qui trust together with an account for profits.  Where there is no property which can be restored, restitution in this sense is not available.  In those cases, the court may award compensation in lieu of restitution....

 

[97]         The appellant's ground of appeal respecting the actual calculation of damages is considered further Under Ground Twelve i) below.

 

[98]         I have not been persuaded the trial judge erred in the principles he applied in assessing damages, and arrived at a result that is fair and reasonable. It would not be appropriate for this Court to interfere.

 

Other Grounds of Appeal

 

[99]         Some of the 13 grounds of appeal raised by the appellants have been considered and subsumed in the course of the foregoing decisions on liability and damages.  I will now list and consider all of the grounds of appeal.

 

Issue 1.            Did the learned trial judge misconstrue and misapply the requirements of the Municipal Government Act relating to setting of frontage fees for water services, the determination of the scope of any water services to be provided, and the use of any potential savings from a particular project?

 

Issue 2.            Did the learned trial judge err in law by failing to find the plaintiffs were presumed to know the law when dealing with any apparent representative of the municipality?

 

Issue 3.            Did the learned trial judge err in law by failing to find the plaintiffs were obligated, at law, to inquire into the actual authority of any apparent representative of the municipality?

 

Issue 4.            Did the learned trial judge err in law by failing to apply the principle that ostensible authority does not apply to municipalities, or their apparent representatives?

 

Issue 5.            Did the learned trial judge err in law by failing to find the alleged representations, if they were made, would be ultra vires and void for public policy?

 

Issue 6.            Did the learned trial judge err in law by failing to find Halifax Regional Municipal Council ("HRM Council") had the right to reconsider, and change, any decisions concerning frontage fees for water services?

 

Issue 7.           In the context of the alleged tort of negligent misrepresentation did the learned trial judge err in law and/or in fact in finding:

 

(a)        there was a duty of care based on a special relationship;

 

(b)        the alleged misrepresentations of the defendant, Carl Yates ("Yates"), were untrue, inaccurate or misleading;

 

(c)        Yates acted negligently in making the alleged misrepresentations;

 

(d)       the plaintiffs reasonably relied on Yates' alleged representations; and

 

(e)        the plaintiffs suffered detrimental reliance, and damages resulted.

 

Issue 8.            Did the learned trial judge err in law by finding the property owners on Anderson Court were entitled to recover damages for any alleged misrepresentations?

 

Issue 9.           Did the learned trial judge err in law by awarding expectation damages, instead of reliance damages, for negligent misrepresentation?

 

Issue 10.          Did the learned trial judge err by reducing frontage fees for the plaintiffs when that power, by statute, was reserved for HRM Council to exercise?

 

Issue 11.          Did the learned trial judge err in law by ordering, in effect, a rebate to the plaintiffs above and beyond reducing their frontage charges to zero?

 

The appellants have reviewed the grounds of appeal in Issue 12 of the Notice of Appeal and determined only grounds 12 (a, (c), and (i) will be advanced.  The other grounds in issue 12 are withdrawn.  For convenience, listed below are all of the grounds in Issue 12.  However, only the italicized ones remain.

 

Issue 12.          Did the learned trial judge err in law and/or in fact by finding:

 

(a)        in paragraph 83 of the Decision, " . . . the Province's funding was contributed for the exclusive benefit of the  Upper Hammonds Plains Community.;

 

(b)        in paragraph 89 of the Decision, "I find that he [Yates] did so in order to induce the members of the Community to approve the project.";

 

(c)        in paragraph 90 of the Decision, "I find that he [Yates] was stating the policy or practice of HRM or HRWC, or both, as to the use of savings or surpluses on bids which were lower than expected.";

 

(d)       in paragraph 94 of the Decision, "But why two men [Ken Meech and Carl Yates] anticipated savings which were typical or normal is something of a mystery.";

 

(e)        in paragraph 95 of the Decision, "I can only infer he [Jamie Hannam of HRWC] did not want the Community's representative to be heard . . . lest he influence the province.";

 

(f)        in paragraph 99 of the Decision, "he [Yates] knew that HRM had not authorized the statement.";

 

(g)        in paragraph 100 of the Decision, "That may explain why he [Rankin] worked to add additional funds to HRM's contribution to the project.";

 

(h)        in paragraph 157, ". . .  if there had been no misrepresentation, it is highly improbable . . . the Community would have acquiesced to the project . . . " when no acquiescence was required for the project to proceed and where the Respondents had no legal interest or right which they could have asserted in any event;

 

(i)         in paragraph 157 to 163 the learned trial judge used the projected earnings for the project, as opposed to actual savings (which would have accounted for cost overruns, withdrawal of funding by HRDC and further contributions of HRWC/HRM in its damage calculation.

 

Issue 13.          Did the learned trial judge err in law in failing to find the Plaintiffs' offer to settle dated May 7, 2001, was withdrawn on May 22, 2002, and under Civil Procedure Rule 41A.04(2) could not be considered when determining costs?

 

Analysis of the Grounds

 

[100]     First Ground.      With respect to the first issue, in my view the trial judge was careful to avoid confusing the issue of negligent misrepresentation, on which the plaintiff‑respondents relied, with HRM's lawful exercise of authority under the Municipal Government Act. He did not find liability or damages resulted from the exercise of the municipality's right to set frontage fees for water services, determination of the scope of any water services to be provided, or the use of any potential savings from a particular project. The municipality's liability for damages arose in its capacity as principal for Mr. Yates who, by negligent representations as the municipality's agent,  had induced the Upper Hammonds Plains Community to alter its position to its detriment so it was adversely affected by the municipality's lawful exercise of its statutory powers. I find no merit in this ground of appeal.

 

[101]     Second Ground.    Given the strength of the evidence of the longstanding  relationship between Mr. Yates and the Community on which the trial judge based his decision, I find no merit in the ground that the Community should have been presumed to know better than Mr. Yates what the policy or practice of HRWC and HRM was, with respect to surplus funds created by the tendering process.

 

[102]     Third Ground.      Did the trial judge err in failing to find the plaintiffs were obligated, at law to inquire into the actual authority of the head of the Water Commission to speak to matters of practice or policy?  I find this ground has less merit than the second ground.

 

[103]     Fourth Ground.   The trial judge did not find it necessary to rely on Mr. Yates' ostensible authority. He found it reasonable for the Community to rely on Mr. Yates' misrepresentations not because of his ostensible authority to bind his principles, but because of the relationship created over the years that Mr. Yates had been giving the Community advice that brought the water project to fruition, and which created a relationship of trust. He also found that Mr. Yates' expertise derived from his position as head of the Water Commission, which is a corporation and not a municipality. I would dismiss this ground of appeal.

 

[104]     Fifth Ground.       Did the learned trial judge err in law by failing to find the alleged representations, if they were made, would be ultra vires and void for public policy? The trial judge did not err. The alleged representations were not ultra vires and void for public policy in the context in which they were made. Mr. Yates was telling the Community what, in his experienced opinion, would happen to surplus funds. The trial judge considered his statements to be comments on what he, Mr. Yates, saw mistakenly as the practice or policy of HRM or HRWC.  I would dismiss this ground of appeal.

 

[105]     Sixth Ground.       Did the learned trial judge err in law by failing to find the Halifax Regional Municipal Council had the right to reconsider, and change, any decision concerning frontage fees for water services. The trial judge did not err. The issue is not what HRM Council had the right to do, but what the Community did as a result of negligent misrepresentation. I would dismiss this ground as irrelevant.

 

[106]     Seventh Ground.      This ground repeats the Cognos test for finding actionable negligent misrepresentation. I considered this above under Liability and found the trial judge had not erred. I would dismiss this ground of appeal.

 

[107]     Eighth Ground.    Did the learned trial judge err in law by finding the property owners on Anderson Court were entitled to recover damages for any alleged misrepresentations? The Anderson Court Property owners fell through the cracks. They were part of the Community when the misrepresentations were made, but they had voluntarily dropped out of the project by the time the Community voted to conditionally approve the proposed project on May 26, 1999. They were included again only on October 23, 1999, when they voted to accept water services at $12.00 per front foot after additional funds had been put into the project by HRM and HRWC,  after English Corner was added to it.   They did not alter their position to their detriment as a result of Mr. Yates'  misrepresentations. The plaintiffs are correct in asserting the five Anderson Court property owners who are plaintiffs cannot succeed. The consequences will be considered in the disposition. I would allow this ground of appeal.

 

[108]     Ninth Ground.     Did the learned trial judge err in law by awarding expectation damages, instead of reliance damages, for negligent misrepresentation? I found above under damages that there is no practical distinction between expectation damages and reliance damages in the present appeal. That is, the distinctions associated with damages in contracts cases as opposed to torts cases, is of little assistance.  The concern is whether the trial judge applied the proper principles in assessing damages, and I am satisfied that he did. This will be considered under Ground Twelve i). I would dismiss this ground of appeal.

 

[109]     Tenth Ground.     Did the learned trial judge err by reducing frontage fees for the plaintiffs when that power, by statute, was reserved for HRM Council to exercise?  The trial judge did nothing of the kind.  He awarded damages which were to be applied to pay frontage charges lawfully imposed by the municipality.  I would dismiss this ground of appeal.

 

[110]     Eleventh Ground.     Did the learned trial judge err in law by ordering, in effect, a rebate to the plaintiffs above and beyond reducing their frontage charges to zero? The trial judge was required to award damages providing the respondents with restitutio in integrum, that is, restoration to the position they would have been in but for the negligent misrepresentation. While such damages included consideration of the frontage charges, the frontage charges did not represent a limitation on the trial judge's discretion. If setting off the frontage charges against the damages award left a balance in the award, this was not an error of law. Any surplus left in the damages award should represent compensation for the omitted fire protection. I would dismiss this ground of appeal.

 

[111]     Twelfth Ground  a).     Did the learned trial judge err in law and/or in fact by finding:

 

(a)     in paragraph 83 of the Decision, " . . . the Province's funding was contributed for the exclusive benefit of the  Upper Hammonds Plains Community;

 

[112]     The trial judge made this finding based on an abundance of evidence, in particular that of David Darrow, Deputy Minister of Municipal Affairs, who repeatedly asserted in his uncontradicted evidence that the Province's money was exclusively for the Upper Hammonds Plains water project. The trial judge did not err. I would dismiss this ground of appeal.

 

[113]     Twelfth Ground  c).      Did the learned trial judge err in law and/or in fact by finding: in paragraph 90 of the Decision, "I find that he [Yates] was stating the policy or practice of HRM or HRWC, or both, as to the use of savings or surpluses on bids which were lower than expected."  The finding that he made such statements, negligently and mistakenly, was amply supported by the evidence and was not in error. I would dismiss this ground of appeal.

 

[114]     Twelfth Ground  i).       Did the learned trial judge err in law and/or in fact when  in paragraph 157 to 163 [he] used the projected earnings for the project, as opposed to actual savings (which would have accounted for cost overruns, withdrawal of funding by HRDC and further contributions of HRWC/HRM in its damage calculation.) ( See Ninth Ground.)

 

[115]     In paragraphs 157 to 163 of his decision the trial judge assessed damages by starting with the projected savings figure, which he reduced by $35,000 to account for two additional contributions made after the completion of construction, and applied the formula he used to apportion the surplus funds between the plaintiffs and the Community members who were not plaintiffs. The evidence before him was sparse and not well enough developed to permit precise calculations.

 

[116]     This is the situation described by Ms. Mary Jane McGinty, counsel for the respondents, in her factum:

 

With limited guidance as to the measure of damages, in circumstances in which damages were difficult to assess, the judge chose a formula which was reasonable and equitable in the circumstances, and produced a result very similar to the result arrived at by the formula offered by the plaintiffs in their submissions.  At trial, the defendants did not make any representations with respect to how damages would be calculated.  The formula used by the trial judge produced a result very close to the result produced by the formula suggested by the Plaintiffs in argument.  The Plaintiffs' formula used the actual under expenditure. . . .

 

The actual under expenditure of $64,222.88 is presumably the number that would have been spent to improve the system once the frontage charges were brought to zero. Note that in this context, under expenditure means funds remaining from external sources only, with no frontage charges whatsoever. The plaintiffs never asked for a rebate. They simply asked for the best system their funding could buy. However, since that system cannot now be delivered, it is appropriate that a percentage of those actual savings be returned to the plaintiffs in the form of damages. . . .

 

[117]     Ms. McGinty referred to damages awarded by the trial judge in the amount of $267,000 (he actually awarded $267,400) and continued:

 

The final figures should read as follows:

 

Principal of frontage charges as of May 15, 2001

 

as agreed by counsel for the parties                                        $236,765.11

 

Portion of actual surplus attributable to the plaintiffs

 

in the litigation                                                                        $ 30,826.98

 

TOTAL                                                                                   $267, 582.09

 

A difference of $582.09 (sic:$182.09?) from the damages awarded by the trial judge is hardly surprising and certainly within a reasonable tolerance level in circumstances in which it is "difficult to state with accuracy what amount would be appropriate compensation".  The trial judge's conclusion that the model he employed was "fair and just" was well founded.

 

[118]     The appellant relies on a letter in evidence from Jamie Hannam of the Water Commission to A. Douglas Tupper, Q.C., counsel for the appellants dated June 18, 2002, when final figures were presumably known, responding to a request for information on the comparison of the actual versus estimated under expenditure on the upper Hammonds Plains portion of the project.

 

[119]     Mr. Hannam stated:

 

As noted in the HRM Council Report dated August 24, 1999, the original estimated under expenditure was calculated as $630,000.00. This was based on an estimated project cost of $1,467,000.00 compared to the revised estimated cost after  tenders closed of $837,000.00.  Following the completion of construction, the actual project cost for the Pockwock Road (Upper) Project was $945,369.82.  Using this actual project cost in comparison to the original pretender cost estimate, the actual under expenditure turned out to be $521,630.18. 

 

Based on a frontage for the upper community of 32,907 feet , and an approved frontage charge of $13.90, the total amount to be collected through frontage charges is $457,407.30. Based on these actual numbers, if all of the under expenditure were applied to the frontage fees owing, the frontage charge would be reduced to zero with a net remainder of $64,222.88.

 

[120]     The damages awarded by the trial judge had two components: an amount sufficient to reduce the plaintiffs' frontage charges to zero, plus any balance left in the surplus funds resulting from the lower tender after reducing the frontage fees.  Whether figures used in the calculations are actual or projected has no bearing on the first component: the result is always zero. Any differences between the figures used by the trial judge and those urged by the parties would have to be reflected in the second component, the balance left.

 

[121]     The trial judge apportioned the total construction surplus 48 per cent to the plaintiffs and 52 per cent to the other Upper Hammonds Plains residents.  Forty‑eight per cent of Mr. Hannam's "net remainder of $64, 222.88" is $30,826.98, the exact damages awarded to the plaintiffs as their portion of the balance left after zeroing the frontage fees. I can see no error of principle by the trial judge in assessing damages. I would dismiss this ground of appeal.

 

[122]     Thirteenth Ground.        The appellants allege that the trial judge erred in law in failing to find the plaintiff's offer to settle dated May 7, 2001, was withdrawn on May 22, 2002, and under Civil Procedure Rule 41A.04(2) could not be considered when determining costs.  This ground will be considered together with the respondent's Notice of Contention which states:

 

If this [Appeal] Court finds that the Offer to Settle dated May 7, 2001, should not have been considered by the Trial Judge in determining costs at trial, the Respondents contend that the increased costs should be confirmed, pursuant to the Costs and Fees Act, provisions of the Nova Scotia Civil Procedure Rule 62.23(1) and 62.23(2) and Civil Procedure Rule 63, and the common law principle that costs awarded should represent a substantial contribution to the actual cost of the litigation.

 

[123]     The trial judge held a separate hearing to determine costs and concluded in his separate decision on costs:

 

With the exception of the award of double costs, the application for additional costs is refused.

 

[124]     The issue is whether the party and party costs determined by the trial judge should be doubled pursuant to Civil Procedure Rule 41A because the offer to settle remained unrevoked and open for acceptance at the commencement of trial.

 

[125]     The party and party costs were fixed at $15,546.00 after a review of the scheme of costs which came into effect in Nova Scotia on January 1, 1989 on the recommendation of a Statutory Costs and Fees Committee on which the trial judge had  served. This is governed by Rule 63 of the Rules of Civil Procedure.  The party and party costs were doubled to $31,092.00 by the application of Civil Procedure Rule 41A–Offers to Settle–which the trial judge noted is "outside the scope of the scheme described."

 

[126]     The fundamental rule, noted by the trial judge, is that costs are discretionary pursuant to Civil Procedure Rule 63.02, which states:

 

. . . the costs of any party , the amount thereof, the party by whom, or the fund or estate or a portion of an estate out of which they are to be paid, are in the discretion of the court. . . .

 

[127]     The basic approach under the current scheme is for the court to determine the amount involved, which requires consideration of the amount of the damages awarded, the complexity of the case and the importance of the issues,  and apply this figure to one of several tariffs selected on the basis of the circumstances of the case. The amount involved and the selection of the tariff involve the exercise of discretion.

 

[128]     In the present case the party and party costs resulted from an “amount involved” fixed by the trial judge at $267,400, the amount he awarded in damages,  applied to Scale 4 of Tariff A .

 

[129]     The trial judge explained:

 

[13]      The philosophy behind this scheme of costs is that the amount awarded should represent a substantial contribution to the successful party's expense of carrying the proceeding, but should not amount to a complete indemnity.  This is not a rule of law, nor a mandatory direction of any kind.  It is simply the theoretical philosophy underlying the scheme.  An appropriate award in accordance with that philosophy is achieved by applying the rules and the tariffs.

 

[130]     The trial judge observed that the appellants' counsel estimated her fees at $160,000. He reviewed other means at his disposal for exercising his discretion to increase the amount of costs he awarded, such as doubling or tripling the amount involved to reflect importance or complexity, or awarding a lump sum in lieu of or in addition to taxed costs, but saw no need to depart from the Tariffs and Rule 41A.

 

... As previously indicated, the concept of "substantial contribution" is a matter of general philosophy rather than an operating objective of taxation of costs.  Moreover, I am not at all sure that the costs awarded do not represent a substantial contribution in the particular circumstances of this case; ...

 

[131]     I agree with the trial judge that his $31,092.00 costs award, achieved by applying the tariffs and Rule 41A without further exercise of his discretion, was a just disposition of the costs issue. Under the scheme of costs $31,092 is a discretionary award which this Court should not interfere with unless the trial judge erred in principle in the exercise of his discretion.

 

[132]     The issue under this ground of appeal is whether Rule 41A was properly applied in the circumstances of this case. Relevant parts of Rule 41A are as follows:

 

Where Available

 

41A.02.   A party may serve upon an adverse party an Offer to Settle (Form 41A(A)) any claim between them in the proceeding and, where there is more than one claim between them, to settle one or more of them, on the terms therein specified.

 

Time for making offer

 

41A.03.  An offer to settle may be made at any time before the commencement of the trial or hearing; but, where an offer to settle is made less than seven (7) days before the day on which the trial or hearing is commenced, the cost consequences prescribed by this rule shall not apply unless the offer to settle is accepted before the commencement of the trial or hearing. [Amend. 12/86]

 

When offer to settle may be revoked

 

41A.04.  (1)   A party may revoke an offer to settle at any time before acceptance by serving upon the party to whom the offer was made a notice of revocation (Form 41A(B)).

 

(2)  Where an offer to settle stipulates a time for acceptance and is not accepted within that time, it shall be deemed to have been revoked.

 

(3)   The cost consequences prescribed by this rule shall not apply to an offer to settle that has not been accepted and which has been revoked before the commencement of the trial or hearing.

 

Time for acceptance

 

41A.07.   Notice of acceptance may be delivered at any time before the commencement of the trial or hearing unless, in the meantime, the offer has been revoked.

 

Effect of failure to accept

 

41A.09. (1)  Unless ordered otherwise, where an offer to settle was made by a plaintiff at least seven (7) days before the commencement of the trial or hearing of the proceeding and was not revoked or accepted prior to the commencement of the trial or hearing, and where that plaintiff obtains a judgment as favourable or more favourable than the terms of the offer to settle, that plaintiff shall be entitled to party and party costs plus taxed disbursements to the date of the service of the offer to settle and thereafter to taxed disbursements and double the party and party costs.

 

(2)  Unless ordered otherwise, where an offer to settle was made by a defendant at least seven (7) days before the commencement of the trial or hearing of the proceeding and was not revoked or accepted prior to the commencement of the trial or hearing, and where the plaintiff fails to obtain a judgment more favourable than the terms of the offer to settle, the plaintiff shall be entitled only to party and party costs plus taxed disbursements to the date of service of the offer to settle and the defendant shall be entitled to party and party costs plus taxed disbursements from the date of such service. [Amend. 12/86]

 

41A.11  Notwithstanding the provisions of this rule, the court, in exercising its discretion as to costs, may take into account any offer to settle made in writing, the date the offer to settle was served, the terms thereof and any other relevant matters.

 

(Emphasis added)

 

[133]     It is common ground that the plaintiffs made an offer to settle which was not accepted prior to the commencement of the trial. The trial judge found that the offer was conditional but capable of acceptance; it was more favourable to the defendants than judgment the plaintiffs received at trial. That finding has not been appealed. The issue is whether the offer to settle had been revoked.

 

[134]     The Offer to Settle did not stipulate a time for acceptance as contemplated by Rule 41A.05(2). A year later it was followed by a letter to the appellants from the respondents' lawyer dated May 14, 2002 stating:

 

Since trial preparation will result in increased costs to my clients, I have been instructed to leave the Offer to Settle, filed on May 7, 2001, open only until May 22, 2002. If the Offer has not been accepted by that time, I shall file a Notice of Revocation pursuant to Rule 41A.

 

[135]     No Notice of Revocation was filed. The trial judge found that the plaintiff's offer to settle remained  in effect:

 

[38]      ... The Offer to Settle was never revoked. While it states that it is open only until May 22, 2002, it clearly contemplates that the Offer to Settle will be revoked by filing a Notice of Revocation pursuant to Rule 41A.  In other words, the Offer to Settle was open until the revocation of offer in the prescribed form was filed and, since the plaintiffs never filed such a form, it follows that there was no revocation.

 

[136]     I would interpret Rule 41A.04 to mean that an offer to settle can be revoked in two ways: (1) it is deemed to be revoked if the offer itself stipulates a time for acceptance, and the time period expires without acceptance(Rule 41A.04(1)) or  (2) by "serving upon the party to whom the offer was made a notice of revocation (Rule 41A.04(2) and Form 41A(B))".  If it is not revoked in one of the two ways specified in Rule 41A, costs determined under the tariffs are to be doubled pursuant to Rule 41A.09(1).

 

[137]     The facts to which this law must be applied consist of the contents of the letter of  May 14, 2002, and the absence of evidence of any other attempts to revoke the offer prior to the commencement of trial. The question is therefore one of mixed fact and law calling for a conclusion that was essentially factual: had the offer to settle been revoked prior to the commencement of trial?

 

[138]     In considering mixed questions of law and fact in Housen v. Nikolaisen (supra) the Supreme Court of Canada was primarily focussed on the issue of negligence, but the following statements provide direction in the present circumstances:

 

27        Once it has been determined that a matter being reviewed involves the application of a legal standard to a set of facts, and is thus a question of mixed fact and law, then the appropriate standard of review must be determined and applied.  Given the different standards of review applicable to questions of law and questions of fact, it is often difficult to determine what the applicable standard of review is.  In Southam, supra, at para. 39, this Court illustrated how an error on a question of mixed fact and law can amount to a pure error of law subject to the correctness standard:

 

 ... if a decision‑maker says that the correct test requires him or her to consider A, B, C, and D, but in fact the decision‑maker considers only A, B, and C, then the outcome is as if he or she had applied a law that required consideration of only A, B, and C.  If the correct test requires him or her to consider D as well, then the decision‑maker has in effect applied the wrong law, and so has made an error of law.

 

Therefore, what appears to be a question of mixed fact and law, upon further reflection, can actually be an error of pure law.

 

28      However, where the error does not amount to an error of law, a higher standard is mandated.  Where the trier of fact has considered all the evidence that the law requires him or her to consider and still comes to the wrong conclusion, then this amounts to an error of mixed law and fact and is subject to a more stringent standard of review: Southam, supra, at paras. 41 and 45.  While easy to state, this distinction can be difficult in practice because matters of mixed law and fact fall along a spectrum of particularity. This difficulty was pointed out in Southam, at para. 37:

 

 ... the matrices of facts at issue in some cases are so particular, indeed so unique, that decisions about whether they satisfy legal tests do not have any great precedential value.  If a court were to decide that driving at a certain speed on a certain road under certain conditions was negligent, its decision would not have any great value as a precedent.  In short, as the level of generality of the challenged proposition approaches utter particularity, the matter approaches pure application, and hence draws nigh to being an unqualified question of mixed law and fact.  See R. P. Kerans, Standards of Review Employed by Appellate Courts (1994), at pp. 103‑108.  Of course, it is not easy to say precisely where the line should be drawn; though in most cases it should be sufficiently clear whether the dispute is over a general proposition that might qualify as a principle of law or over a very particular set of circumstances that is not apt to be of much interest to judges and lawyers in the future.

 

[139]     In the absence of a stipulated time for acceptance in the offer to settle itself (Rule 41A.04(2),  the offer could only have been revoked by a notice of revocation (Rule 41A.04(1). The trial judge found the offer was not revoked in the absence of a  notice of revocation served on the defendants.  In my view this meets the standard of correctness on the question of law relating to Rule 41A.04, because the offer to settle itself did not stipulate a time for acceptance, and so could not be deemed to have been revoked by the passage of time, but only by the filing of a notice of revocation. The trial judge did not commit an error of law in applying s.41A.04;  he met the standard of correctness.

 

[140]     The remaining question, whether the offer was revoked, that is, whether Ms. McGinty's letter of May 14, 2002, was a notice of revocation, was also a question of fact mixed with the law represented by the form provided by the Rules.   Form  41A(B) is as follows:

 

                                REVOCATION OF OFFER TO SETTLE

 

                         1. (Court, Court File Number, Style of Proceeding)

 

REVOCATION OF OFFER TO SETTLE

 

TO: The plaintiff (or as may be),

 

The defendant (or as may be),   ,  revoked his offer to settle dated the ……… day of ………..,19 …..

 

DATED at …………………….., this ………… day of …………, 19 ……

 

………………………………..

 

Solicitor for defendant

 

(or as may be)

 

[141]     The notice of revocation contemplated  by the form requires a clear statement that revocation has occurred, which the notice brings to the attention of the opposing party. It may be assumed this was designed to avoid situations such as the present one, leaving lawyers free to discuss outstanding offers to settle in correspondence without concern they could be inadvertently revoked without formal notice.

 

[142]     In perusing Ms. McGinty's letter, which is the only evidence before the trial judge that the offer was revoked, the trial judge would have searched in vain for a statement that the offer had been revoked. It would have been reasonable to conclude that Ms. McGinty merely sought to give the defendants notice of her intention to revoke the offer if it was not accepted by May 22, 2002. Her reference to her intention to file a notice of revocation suggests she considered such a notice would be necessary in order to revoke the offer. That reference makes it clear she did not intend the letter itself to revoke the offer.

 

[143]     In my view it was not a departure from the standard of correctness on the part of the trial judge to find that Ms. McGinty's letter was not in itself a notice of revocation in the only form specified as acceptable in Rule 41A, that is, in form 41A(B). The contents of the letter itself, which the trial judge obviously considered, in the absence of any other evidence of attempts to revoke the offer, was evidence upon which, if it remained necessary to do so, the trial judge could find as a fact the offer to settle was not revoked. In so finding he did not commit palpable or overriding error.

 

[144]     The  circumstances have a high degree of particularity and minimal precedential value. This is a matter of mixed law and fact which I would place toward the deferential end of the spectrum of particularity. I would at least accord the finding of the trial judge, that the offer to settle was never revoked, a considerable degree of deference, though in my own view it meets the standard of correctness.

 

[145]     As a practical matter, the appellants suffered no prejudice even if they perceived the offer to settle had been withdrawn. They never intended to accept the offer. As recently as the date of the Appellant's Reply Factum, August 6, 2004, the appellants argued they "were not behaving unreasonably when they declined to settle this matter, short of seeing the Respondents agree to a dismissal without costs."

 

[146]     The respondent asserts that even if it were found the Offer to Settle had been withdrawn, the costs award of $31,092 should be confirmed by applying Rule 41A.11, which states:

 

41A.11.   Notwithstanding the provisions of this rule, the court, in exercising its discretion as to costs, may take into account any offer to settle made in writing, the date the offer to settle was served, the terms thereof and any other relevant matters.

 

[147]     The appellant's position is as follows:

 

The Trial Judge awarded increased costs (doubling the amount otherwise available under the Tariff) on the sole basis the Offer was open for acceptance.  The Respondents' arguments urging the cost award be confirmed by this Honourable Court were made before, and rejected by, the Trial Judge. Further, and in any event, this Honourable Court should not uphold the cost award under Rule 41A.1l, a rule not considered by the Trial Judge and a rule which should not apply here, where the Offer was withdrawn six months before trial.

 

[148]     It is not strictly accurate to say the trial judge had not considered this rule; it was before him, and it is properly before this Court. What he said was:

 

It was also submitted that Rule 41A.11 should be given effect (citing it). . . . In view of my previous ruling, I see no point in considering the submissions in this regard."

 

[149]     His previous ruling, of course, was that the offer to settle had not been withdrawn, entitling the plaintiffs to double the tariff costs. That provided his rationale for costs on the order of $30,000. Further submissions were redundant.   It was in this context that he heard and dismissed the respondents' other arguments for increasing costs beyond the tariff amount.

 

[150]     I am not persuaded the trial judge erred in principle in exercising his discretion to award costs of $31,092.00 plus disbursements. I would dismiss this ground of appeal and the notice of contention, and uphold the cost award of the trial judge.

 

Disposition

 

[151]     I would allow the appeal with respect to the five residents of Anderson Court in Upper Hammonds Plains, and otherwise dismiss the appeal and uphold the judgment of the trial judge, subject to a recalculation of the award of damages necessitated by the Anderson Court decision.

 

[152]     The position of the Anderson Court residents is unfortunate. The remaining plaintiffs have been successful; the other residents of Upper Hammonds Plains have a right to bring a similar action, if necessary. Only the Anderson Court people would remain liable to pay the frontage charges for which their properties are assessed from their own pockets. Removal of the Anderson Court residents from the list of plaintiffs will in itself require a re‑calculation of the final figures used in the award of damages.

 

[153]     I would reserve our jurisdiction over the final order for sixty days to enable counsel to make submissions, if necessary, or to provide a consent order reflecting the present position.

 

[154]     The respondents are entitled to costs of the appeal.  While under the Rules, the offer to settle is not a factor in the appeal. I consider the costs award of the trial judge to be in an appropriate range and to reflect a proper exercise of his discretion. The appeal was vigorously argued over two full days of hearings, necessitating an appellant's factum of 102 pages and a respondents' factum of 118 pages. The litigation was of great importance to the parties; the appellants sought costs based on an amount involved of $630,000. I would therefore exercise my discretion to award costs on the appeal on the basis of  40 per cent of the costs awarded at trial rounded to $12,500, plus disbursements.

                                                             

Freeman, J.A.

 

Concurred in:

 

 

Bateman, J.A.

 

 

Saunders, J.A.  (except on matter of costs)

 

 

 

 

 

 

 

 

Saunders, J.A.

 

Dissenting reasons for judgment: (on the matter of costs only)

[155]  Having reviewed the thorough and compelling analysis of my colleague, I am pleased to endorse his reasoning and disposition in all but one respect, that being his upholding of the trial judge’s award of costs.

 

[156]     With great respect I differ from Justice Freeman’s application of Civil Procedure Rule  41A, as well as the interpretation he places on the effect of Ms. McGinty’s letter dated May 14, 2002.

 

[157]     I agree with my colleague’s statement of the issue under review as being whether the party and party costs determined by the trial judge should be doubled pursuant to CPR 41A because the offer to settle remained unrevoked and open for acceptance at the commencement of trial.  I also share my colleague’s characterization of the question facing the trial judge - “had the offer to settle been revoked prior to the commencement of trial” - as one of mixed fact and law.  I agree that applying Housen to such a question in the circumstances of this case mandates a standard of correctness.  However, in my respectful view the trial judge failed to meet such a standard.  His conclusion that:

 

. . . the Offer to Settle was open until the revocation of the offer in the prescribed form was filed and, since the Plaintiffs never filed such a form, it follows that there was no revocation.

 

constitutes reversible error, warranting our intervention.

 

[158]     This case involved difficult and protracted litigation.  The trial lasted 16 days, including a motion for non-suit that lasted three.  There were other pre-trial skirmishes that required appearances in chambers.  Counsel recognized that this would be a costly venture.

 

[159]     On May 7, 2001, some 19 months prior to trial, Ms. McGinty, solicitor for the plaintiffs (respondents) filed an offer to settle pursuant to Rule 41(A).  It is not a lengthy document and for convenience I will reproduce the operative body of the document, leaving out only the style of cause and the space for counsel’s signature.

 

                        OFFER TO SETTLE PURSUANT TO RULE 41(A)

 

The Plaintiffs offer to accept the total sum of $280,000.00, in full settlement of their claim.  This offer is made on condition that the frontage charge for water installation to the individual Plaintiffs will not ultimately exceed $14.90 per lineal foot.

 

Payment to the Plaintiffs, along with confirmation of compliance with the condition herein, must be received at the time of acceptance of this offer.

 

DATED at Halifax, this 7^th day of May, 2001.

 

 

Clearly, this offer did not include any stipulation as to a time deadline for acceptance.

 

[160]     Exactly a full year and one week later, on May 14, 2002, counsel for the respondents sent a letter by facsimile, marked WITHOUT PREJUDICE to counsel for the appellants.  Much turns on this correspondence and I will reproduce it in its entirety.

 

May 14, 2002

 

BY FAX

 

WITHOUT PREJUDICE

 

A. Douglas Tupper, Q.C.

 

Patterson Palmer Hunt Murphy

 

1600-5151 George Street

 

Halifax, Nova Scotia

 

B3J 2N9

 

Dear Mr. Tupper:

 

Re:      Upper Hammonds Plains v. Halifax Regional Water Commission and Halifax Regional Municipality - Your File No. 2519/443

 

Since trial preparation will result in increased costs to my clients, I have been instructed to leave the Offer to Settle, filed on May 7, 2001, open only until May 22, 2002.  If the Offer has not been accepted by that time, I shall file a Notice of Revocation pursuant to Rule 41A.

 

The Plaintiffs shall rely on the provision of Rule 41A.11 with respect to costs.

 

Thank you.

 

Yours very truly,

 

MCGINTY MCCLEAVE

 

Mary Jane McGinty

 

 

[161]     This single letter is of critical importance in the determination of  costs following trial.  The letter obviously had a purpose.  Counsel refers to her original offer to settle, filed on May 7, 2001 and then declares, based on her clients’ instructions, that that offer is “open only until May 22, 2002.”  To my mind this declaration, clear and unequivocal on its face, transformed the earlier offer to settle (which had not contained any stipulated time for acceptance) into an offer that did, thus engaging CPR 41A.04(2).

 

[162]                   Rule 41A.04 provides:

 

When offer to settle may be revoked

 

41A.04. (1) A party may revoke an offer to settle at any time before acceptance by serving upon the party to whom the offer was made a notice of revocation (Form 41A(B)).

 

(2) Where an offer to settle stipulates a time for acceptance and is not accepted within that time, it shall be deemed to have been revoked.  (underlining mine)

 

(3) The cost consequences prescribed by this rule shall not apply to an offer to settle that has not been accepted and which has been revoked before the commencement of the trial or hearing.

 

 

[163]     I respectfully disagree with my colleague when he writes:

 

In the absence of a stipulated time for acceptance in the offer to settle itself (Rule 41.A.04(2)), the offer could only have been revoked by a notice of revocation (Rule 41A.04(1)).  (underlining mine)

 

Neither can I accept my colleague’s statement that:

 

. . . on the question of law relating to Rule 41A.04, because the offer to settle itself did not stipulate a time for acceptance, and so could not be deemed to have been revoked by the passage of time, but only by the filing of a notice of revocation.

 

In my view, counsel could and did stipulate a time for acceptance in her letter to Mr. Tupper and in so doing amended her earlier offer to settle and triggered the application of CPR 41A.04(2).  By writing her letter dated May 14, 2002, counsel stipulated a time for acceptance, thus engaging the deeming provisions of subsection (2) whereby her offer would be deemed to have been revoked upon passage of the eight day deadline her clients imposed.  There was no need to “formally” revoke by notice of revocation, whether as prescribed in 41A.04(1) or using the Form suggested by the Rules.  Her stated intention to do so on some undisclosed future date is simply irrelevant to our consideration of the issue.

 

[164]     To my mind the ancillary question - as framed by both the trial judge and my colleague - is not whether Ms. McGinty’s letter of May 14, 2002 constituted a notice of revocation - but rather whether it amended the earlier offer, by stipulating a time for acceptance, and thus triggered the deeming provisions of 41A.04(2).  I say it did.

 

[165]     The words “. . . instructed to leave the (Offer) . . . open only until May 22 . . .” are pivotal and unequivocal.  The expiry date - May 22, 2002 - is clear.  Counsel for the respondents on the instructions of her clients, declared a stipulated time for acceptance of their offer.  It was not accepted by opposing counsel within that time.  Thus, CPR 41A.04(2) became engaged and Ms. McGinty’s offer was (“shall be deemed”) revoked upon the passing of that date.

 

[166]     In my opinion the second sentence of counsel’s letter:

 

If the Offer has not been accepted by that time, I shall file a Notice of Revocation  . . .

 

was redundant and did not in any way modify or equivocate from the operative words of her letter.

 

[167]     CPR 41A.04(1) merely refers to the means by which a party may  declare to an opposing party that the earlier offer was revoked, for example by choosing to file a notice of revocation in Form 41A(B).

 

[168]     I simply do not see the second sentence of Ms. McGinty’s May 14, 2002 letter as attaching any kind of further condition(s) to her initial offer, nor to the means by which, nor the time within which, it remained open.  Surely counsel for the appellants upon reading that letter, was entitled to rely upon the clear deadline expressed therein as being May 22, 2002.  I do not see Mr. Tupper as being obliged to wonder (or instruct his clients) to the effect “Well, the clock is still running because Ms. McGinty hasn’t got around, yet, to filing a Notice of Revocation.”

 

[169]     The Form identified as 41A(B) for a notice of revocation is a suggested format, approved for use under our Rules.  Its invocation is not compulsory.  Whether its clarity might avoid the inquiry in which we are now engaged is not the point.  With great respect, and for the reasons already expressed, I simply do not see counsel’s letter of May 14, 2002 as being equivocal or ambiguous, and if it is, then the appellants ought not to bear the consequences of such lack of clarity.

 

[170]     In his decision on costs the trial judge characterizes Ms. McGinty’s arguments before him:

 

Counsel for the plaintiff submits that the plaintiff offered to settle in a timely manner, that the offer was never formally revoked, that the offer was never accepted by the defendant,   . . . (underlining mine)

 

Thus, the respondents’ counsel’s position was that her offer was never revoked because she never “formally” revoked by filing a “formal” Notice of Revocation.  I have already explained why in my respectful opinion such an assertion, which the trial judge accepted and upon which he based his award of costs, is flawed.

 

[171]     While in my view the issue here is not so much revocation per se, but rather the act of amending a previous offer in order to stipulate a time for acceptance, I would say that to oblige counsel to formalize a revocation by filing a particular Form, would be to impose an overly technical burden and add unnecessarily to steps and expense in litigation.  As a practical matter, I think counsel can be left to their own devices to choose the words that will bind them.

 

[172]     Contrary to my colleague’s assertions that “as a practical matter the appellants suffered no prejudice even if they perceived the offer to settle had been withdrawn,” the very real prejudice faced by the appellants was the risk of exposure to double costs which, on the trial judge’s determination, in fact occurred.

 

[173]     Accordingly, I would find that the trial judge erred in concluding that the offer had not been revoked, which then enabled him to effectively double costs and award the plaintiffs the sum of $31,092.00.  It must be emphasized that this was the only basis upon which the trial judge was prepared to double the amount of costs which would otherwise have been awarded.  But for the trial judge’s determination on the issue of revocation he would, as he said, have fixed costs in the amount of $15,546.00 (plus disbursements) after applying Scale IV of Tariff A to an “amount involved” of $267,400.00.

 

[174]     On this record there is no other basis to provide for an augmented cost award.  In his comprehensive analysis the trial judge addressed and then rejected each of the factors or circumstances that might otherwise have justified an increased award.  Having reviewed his reasons, I see no basis for disturbing his assessment of those matters.  Consequently, I would limit costs to the respondents at trial to $15,546.00, plus disbursements, as agreed or taxed.

 

[175]     I agree that the respondents are entitled to their costs on appeal.  Using our standard measurement based on 40% of the costs I say ought to have been awarded at trial ($15,546.00) I would fix those costs on appeal at  (rounded) $6,220.00, plus disbursements.                                                         

 

 

 

 

Saunders, J.A.