Corporation to pay own legal costs

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The Corporation of Hamilton may have won a legal battle over the Par-la-Ville Hotel loan guarantee, but it will still have to pay its own legal bills.

While costs in legal judgments usually follow the decision, the Supreme Court found that it would be unjust to require Mexico Infrastructure Finance Ltd to pay the municipality’s costs given the details of the case.

The legal dispute stemmed from an $18 million loan guarantee for the Par-la-Ville Hotel project made by the corporation. When the loan defaulted, the corporation initially accepted responsibility.

However, earlier this year the corporation applied to the court to have its order of consent set aside, arguing that it did not have the legal power to issue the guarantee and as a result the consent order was invalid.

While MIF contested the application, arguing that the guarantee and the order were both valid and that the corporation’s application was an abuse of process, the Supreme Court found in favour of the corporation.

The corporation subsequently made an application for costs, causing MIF to object.

According to a judgment by judge Stephen Hellman, dated November 25, Narinder Hargun, the lawyer representing MIF, submitted that the corporation should not recover its costs because the case revolved around a consent judgment, which the corporation claimed to have entered into by mistake. In such circumstances, he argued that the party seeking to set aside a consent judgment should pay the costs of the other party.

“Moreover, Mr Hargun submits, the guarantee was approved by the Senate and the Legislative Assembly,” the judgment continued. “In those circumstances, it was entirely reasonable for MIF to rely upon the guarantee, which it had done to its detriment, prior to the application to set aside, and then to defend the consent order, particularly bearing in mind that the consent order gave it the right to enforce payment of the monies due under the guarantee as a judgment creditor.”

However, Mark Diel, representing the corporation, submitted that if the corporation had initially challenged the issue rather than sign the order of consent, there would have been a trial which the corporation would have prevailed. As the corporation would have been awarded costs in those circumstances, he argued there was no good reason not to be awarded costs in the present circumstances.

Concluding his judgment, Mr Justice Hellman wrote: “There is force in both sets of submissions. However, I cannot get away from the fact that the need to apply to set aside the consent order was entirely of the corporation’s making.

“It would be adding insult to injury, and would be unjust, to cause MIF to pay the corporation’s costs. Therefore the order that I make, based upon the fact that these are exceptional circumstances and taking account of the justice of the case, is no order as to costs.”

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Published Dec 5, 2016 at 8:00 am (Updated Dec 4, 2016 at 11:24 pm)

Corporation to pay own legal costs

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