COURT OF APPEAL FOR ONTARIO

CITATION: Best v. Ranking, 2016 ONCA 492

DATE: 20160621

DOCKET: C61271

Blair, Pardu and Brown JJ.A.

BETWEEN

Donald Best

Plaintiff

and

Gerald Lancaster Rex Ranking, Sebastien Jean Kwidzinski, Lorne Stephen Silver, Colin David Pendrith, Paul Barker Schabas, Andrew John Roman, Ma'anit Tzipora Zemel, Fasken Martineau Dumoulin LLP, Cassels Brock and Blackwell LLP, Blake, Cassels & Graydon LLP, Miller Thomson LLP, Kingsland Estates Limited, Richard Ivan Cox, Eric Iain Stewart Deane, Marcus Andrew Hatch, Philip St. Eval Atkinson, PricewaterhouseCoopers East Caribbean (Formerly 'PricewaterhouseCoopers'), Ontario Provincial Police, Peel Regional Police Service a.k.a. Peel Regional Police, Durham Regional Police Service, Marty Kearns, Jeffery R. Vibert, George Dmytruk, Laurie Rushbrook, James (Jim) Arthur Van Allen, Behavioural Science Solutions Group Inc., Tamara Jean Williamson, Investigative Solutions Network Inc., Toronto Police Association, Jane Doe #1, Jane Doe #2, Jane Doe #3, Jane Doe #4, Jane Doe #5, John Doe #1, John Doe #2, John Doe #3, John Doe #4, John Doe #5

Defendants (Respondents)

Paul J. Pape and Justin H. Nasseri, for the appellant, Paul Slansky

Mark Polley and Eric Brousseau, for the respondents

Heard: May 24, 2016

On appeal from the judgment of Justice Susan E. Healey of the Superior Court of Justice, dated October 13, 2015, with reasons reported at 2015 ONSC 6279.

Pardu J.A.:

1Paul Slansky, counsel for the plaintiff Donald Best, appeals from a decision requiring Mr. Slansky to pay costs personally, in the sum of $84,000, on a joint and several basis with his client. He submits that the motion judge erred in two respects:

• The hearing was unfair, because he did not have adequate notice of the grounds upon which the motion judge grounded her decision to order him to pay costs personally.
• The motion judge awarded costs against him because he took on a weak case, not on the basis pleaded by the respondents, which was that he had taken procedural steps which wasted costs.

2More generally, Mr. Slansky submits that the motion judge should not have ordered him to pay costs personally, and would not have done so had she exercised the extreme caution required.

3For the following reasons, I would dismiss the appeal.

A. Background

(1) The first action

4Donald Best was the appellant’s client. In 2007, Mr. Best, not then represented by the appellant, started an action for negligence and economic loss against 62 defendants – including three of the respondents on this appeal, Richard Ivan Cox, Kingsland Estates Limited and PricewaterhouseCoopers East Caribbean. This action (“Action 1”) was stayed on jurisdictional grounds in 2009: 75 C.P.C. (6th) 58 (Ont. S.C.J.).

5Several of the defendants in Action 1, among them the respondents named above, moved for a finding of contempt against Mr. Best for failure to comply with court orders related to attempts to collect costs from him. Mr. Best failed to appear at the hearing of the motion and was held in contempt: 2010 ONSC 569. He failed to purge his contempt when given an opportunity to do so on February 22, 2010, choosing instead to live outside Canada for a period of time.

6In 2012, Mr. Best returned to Canada and applied to purge the contempt. He swore an affidavit that contained accusations of perjury, conspiracy, fraud, obstruction of justice and fabrication of evidence by opposite parties and their counsel. These accusations were rejected as baseless by the contempt judge, who dismissed Mr. Best’s application: 2013 ONSC 9025. Mr. Best served 60 days in prison for contempt.

7It was at this point that Mr. Slansky first appeared in court on behalf of Mr. Best. The latter sought to appeal to this court the finding of contempt and the dismissal of his application to set that finding aside. As part of his appeal, he brought a motion before Feldman J.A. on October 29, 2013 to remove counsel of record for the opposing parties.

8At that time, Mr. Best, through Mr. Slansky, repeated his allegations of serious misconduct on the part of opposite counsel. Feldman J.A. indicated that the repetition of these allegations, in the face of express judicial findings rejecting them, required the court to “express its condemnation by awarding costs on the full indemnity scale”: 2013 ONCA 695.

9A panel of this court rejected Mr. Best’s attempt to review the order of Feldman J.A. and ordered him to pay costs owing to the defendants by April 1, 2014, failing which his appeal from the decision dismissing his action on jurisdictional grounds would be dismissed by the Registrar: 2014 ONCA 167.

10Attempts by Mr. Best to stay the Court of Appeal decision and to obtain leave to appeal from the Supreme Court of Canada were unsuccessful. He did not pay the costs and his appeal was dismissed.

(2) The second action

11Before the Supreme Court released its decision on leave, Mr. Best started a new action, with the appellant as his counsel of record.

12This action (“Action 2”) named 39 defendants, including the five respondents to this appeal. It added claims against opposing counsel from Action 1 and their firms, and claims against police and private investigators, alleging intentional torts committed during the contempt proceedings. The allegations included intentional infliction of harm and mental suffering, misfeasance of public office and abuse of authority, malicious prosecution, conspiracy to injure and invasion of privacy.

13Once Action 2 was started, counsel for the respondents wrote to Mr. Slansky on October 24 and November 6, 2014 indicating that they intended to contest jurisdiction. They advised that for that reason they did not propose to file a defence and asked that he not note their clients in default.

14The letters also noted that other defendants were bringing a motion to strike the claim entirely. Counsel proposed that the parties defer the jurisdiction motion until that other motion was decided. If the action were struck, there would be no need to proceed with the jurisdiction motion and the respondents would not incur the costs of so doing. By this point, Mr. Best owed $375,000 in unpaid costs awards to the three respondents who had been involved in Action 1.

15Mr. Slansky responded that he would not agree to defer the jurisdiction motion until after the motion to strike. He demanded that the respondents serve either a defence or a notice of motion to challenge jurisdiction by November 25, 2014, failing which he would note them in default.

16Counsel asked Mr. Slansky to reconsider his position on noting the respondents in default on November 17, 2014. He did not agree but extended his deadline for a Statement of Defence or notice of motion to contest jurisdiction to December 2. Failing receipt of either, Mr. Slansky noted the respondents in default on December 8 and advised their counsel.

17At a case conference held on December 16, Mr. Slansky refused to agree to set aside the noting in default, and the case conference judge set a timetable to deal with a motion to set aside the noting in default.

18On February 6, 2015, Mr. Slansky served counsel with notices of examination for two of the respondents. The respondents refused to produce themselves for cross-examination, and Mr. Best, in turn, brought a motion to compel them to give evidence. Justice McCarthy dismissed this motion on February 27, noting that there was nothing the respondents could add that would be relevant to the narrow issue to be determined on the motion to set aside.

19Mr. Slansky eventually consented to an order setting aside the default judgment on March 9, 2015, just four days before the motion to set aside the noting in default was to be argued. Motion materials had already been prepared and exchanged. In a letter written two days later, counsel for the respondents informed Mr. Slansky that they intended to seek costs against him personally.

20A hearing to determine the costs of the examination motion and the motion to set aside the noting in default took place on April 10, 2015. Justice McCarthy ordered substantial indemnity costs against Mr. Best, holding that Mr. Best had used the rules to create the need for an unnecessary and time-consuming motion. He described the plaintiff’s conduct as reprehensible, requiring strong disapproval from the court. He said the plaintiff’s conduct in noting the defendants in default and then opposing the setting aside of that step was “entirely unnecessary and unreasonable”.

21Mr. Best’s motion for leave to appeal the April 10 costs order to the Divisional Court was dismissed: 2015 ONSC 5075. Upon learning that Mr. Best sought leave to appeal, counsel for the respondents again wrote to Mr. Slansky on April 29, 2015, informing him that they were considering seeking costs against him personally.

22A further letter from counsel for the respondents followed on May 7, 2015, again warning of their intention to seek costs personally from him:

[I]t is not just a mere disagreement with your client’s positions or actions that leads us to this drastic step of seeking costs against you personally. Fundamentally, your approach to this litigation has been abusive and continues to waste an astonishing amount of money on legal costs. You personally have caused these costs to be incurred without any reasonable cause by either acquiescing to absolutely unreasonable instructions from your client, or worse by advising your client to take the unreasonable steps he has taken through you. Either way, you personally are liable for these costs. [Emphasis added.]

(3) The hearing of the motions to strike

23From June 15 to 18, the motions to strike brought by 21 of the 39 defendants in Action 2 were argued before Healey J. The defendants sought to dismiss Action 2 as frivolous, vexatious and an abuse of process, or to strike the claim as disclosing no reasonable cause of action, without leave to amend.

24On the first day of argument, nearly eight months after the issue was first raised, Mr. Slansky conceded that the respondents’ jurisdictional motion should await the outcome of the motions to strike.

25On the third day of argument, counsel for the respondents again notified Mr. Slansky of their intention to seek costs against him personally.

26On the fourth day of argument, Justice Healey dismissed the action as an abuse of process, making the jurisdiction motion moot. In her endorsement dated that same day, she ordered costs of the action to the respondents on a full indemnity basis. She noted that the respondents would be moving for an order under rule 57.07, requiring Mr. Slansky to be jointly and severally liable for the costs of the action. In reasons released later, she found that Action 2 had not a “scintilla of merit” and that it was the most “vexatious and abusive” claim to ever come before her: 2015 ONSC 6269, at para. 7.

27Mr. Best attempted to appeal from the dismissal of his action, but the appeal was dismissed after he failed to comply with an order to provide security for costs.

B. The Notice of Motion

28As noted, counsel for the respondents provided written notice of the respondents’ intention to seek costs personally against the appellant on four occasions during the course of Action 2: March 11, 2015; April 29, 2015; May 7, 2015 and June 17, 2015.

29On July 22, 2015, the respondents served their Notice of Motion. Pursuant to rule 57.07(1)(c) of the Rules of Civil Procedure, they sought that Mr. Slansky be held jointly and severally liable with Mr. Best for all costs awarded in the respondents’ favour in Action 2 – an amount totaling over $160,000. The motion was heard on September 3, 2015. On October 13, 2015, Healey J. ordered Mr. Slansky to pay costs fixed at $84,000 on a joint and several basis with Mr. Best.

30Rule 57.07 provides in part:

(1) Where a lawyer for a party has caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default, the court may make an order,

(c) requiring the lawyer personally to pay the costs of any party.

(2) An order under subrule (1) may be made by the court on its own initiative or on the motion of any party to the proceeding, but no such order shall be made unless the lawyer is given a reasonable opportunity to make representations to the court.

31The grounds advanced in support of the motion emphasized, but were not limited to, the unreasonable procedural steps taken. The Notice of Motion included factors related to the merits of Action 2 at paras. (c) and (n):

Mr. Slansky counselled the plaintiff or otherwise allowed his client to proceed with a series of unmeritorious steps and to take unreasonable positions to achieve unattainable goals in this action;

On June 18, 2015, Justice Healey dismissed the entire action from the bench for being vexatious and an abuse of process and stated that Mr. Best’s position lacked a “scintilla of merit”[.]

C. Motion Judge’s decision

32The motion judge observed that the onus lay upon the moving parties, the respondents, to establish that Mr. Slansky should pay costs personally, and that a two-step inquiry was required:

• Did the lawyer’s conduct fall within rule 57.07(1) in that he caused costs to be incurred unnecessarily?
• As a matter of discretion, applying the extreme caution principle, was the imposition of costs against the lawyer personally warranted? (See Galganov v. Russell (Township), 2012 ONCA 410, 350 D.L.R. (4th) 679, application for leave to appeal to S.C.C. discontinued, [2012] S.C.C.A. No. 382.)

33Counsel agreed that it was not necessary to show negligence, bad faith or reprehensible conduct in order to justify an award of costs under rule 57.07.

34In addressing the first step of the inquiry, counsel for the respondents (who were referred to below as the “Caribbean defendants”) urged the motion judge to rely on the procedural steps undertaken by Mr. Slansky, rather than focusing on the lack of merit to Action 2. The motion judge described counsel’s submissions:

[Counsel] argues that it is sufficient that Mr. Slansky took unnecessary and vexatious steps that wasted costs, regardless of whether he was acting on his client’s instructions. She focusses on five particular steps taken that she alleges were unreasonable, unnecessary and wasted costs:

(i) the decision to note the Caribbean defendants in default;

(ii) opposing the motion to set aside the noting in default;

(iii) bringing an urgent motion to examine two of the Caribbean defendants for purposes of the above motion;

(iv) opposing and delaying the determination of costs in the above motions; and

(v) insisting that the jurisdiction motion had to be argued in June 2015, with the motions to dismiss/strike.

35The motion judge found that Action 2 was an abuse of process, doomed to failure, and that Mr. Slansky should have known this. She explained that the specific examples of unnecessary costs provided by the respondents had to be seen “within the context of the action as a whole.” That action was dismissed as an abuse of process – “a transparent attempt to re-litigate issues that had already been decided.” Rather than being in the interests of justice, the litigation taxed the resources of a strained judicial system. It also taxed the resources of the respondents, who faced significant unpaid costs orders from the previous action.

36The motion judge stated:

Both of these facts should have been known to Mr. Slansky, and should have guided his judgment in accepting this retainer to commence and conduct such an unmeritorious action. Further, for the reasons given, the arguments advanced by Mr. Slansky to justify commencing a second proceeding did not have a scintilla of merit. It is Mr. Slansky, who has legal training and expertise, upon whom responsibility for that act must lie. While Mr. Best may have given instructions to proceed, it would be within the purview of Mr. Slansky to guide him as to what causes of action could be supported on the facts presented to him; his judgment was misguided, at the expense of the moving parties.

37The motion judge observed that the Statement of Claim in Action 2 was 90 pages and 234 paragraphs. It made scandalous and unsupported allegations of dishonesty and fraud against lawyers and law firms, and it sought to extend those allegations by way of conspiracy theory “to impugn the professional reputations of police officers, a private investigator and various police services, along with the Caribbean defendants.”

38The motion judge continued:

The responsibility for drafting such a claim rests ultimately with Mr. Slansky. The choice to repeat such allegations in affidavits and facta drafted by him, and to repeat those allegations on the record during submissions, was the exercise of Mr. Slansky’s professional judgment.

39The motion judge found that the entire action incurred and wasted costs unnecessarily, and that Mr. Slansky was instrumental in “both starting and advancing the action in the manner that he did.” The specific steps she found to have wasted costs were:

• He drafted a claim that was an abuse of process because it was a collateral attack on prior rulings and sought to relitigate the same issues.
• He issued and served the claim.
• He based his legal rationale for commencing the action on a theory that had no chance of success.
• The causes of action were not properly pleaded and lacked any factual basis.
• He advanced serious and scandalous allegations in the claim, factum and oral submissions of fraud, dishonesty, criminal conduct, false representations and other improper conduct against various professional individuals knowing that courts had previously ruled that those same allegations were baseless.
• He acted on unreasonable instructions from his client, or provided unreasonable advice to his client, regarding the scheduling of the respondents’ jurisdiction motion.

40The motion judge observed that, had Mr. Slansky consented to deferring the respondents’ jurisdiction motion at the outset, the respondents would have incurred only minimal costs. Given the absence of prejudice to Mr. Best, in the event of such forbearance, the motion judge concluded that the tactic was adopted to “place pressure on the Caribbean defendants for an improper purpose: retribution for Mr. Best’s ill-conceived notion that they and their former lawyers were responsible for his incarceration, and to drive up their legal fees.”

41Turning to the second arm of the test, the motion judge concluded that this was one of the rare cases in which counsel should personally pay costs for the following reasons:

• The need to deter the commencement of a third unmeritorious claim, potentially bearing Mr. Slansky’s name as counsel of record.
• Mr. Slansky should have known Action 2 was an abuse of process.
• He advanced arguments that had no chance of success, despite what he described as his good faith belief to the contrary.
• He drafted and advanced a claim that made spurious and unsupported allegations that maligned the professional reputation of lawyers and others, for which contrary findings had already been made by the court.
• He may have deferred to his client on a matter of scheduling of a motion without evidence of prejudice to his client, or alternatively advised his client to take a position that unnecessarily incurred costs, without evidence that he needed to do so to safeguard his client’s rights.

D. Analysis

42In oral argument on appeal, the appellant submits that the appellant did not have a reasonable opportunity to make representations to the court on the particular ground upon which the motion was decided, which was that the action lacked merit and should never have been brought by the appellant on behalf of Mr. Best. He indicated that the grounds listed in his factum distill “down to that.”

43As I explain below, I do not accept the appellant’s argument. First, Mr. Slansky did have adequate notice that the merits of Action 2 would be a component of the rule 57.07 motion. Second, it was not merely the meritless nature of Action 2 that was a factor in the motion judge’s award of costs against Mr. Slansky, but rather that Action 2 was an abuse of process.

44The motion judge exercised her discretion as to costs with extreme caution, as was required, and her decision is entitled to deference.

(1) Was the requisite notice provided to Mr. Slansky?

45I do not accept the argument that Mr. Slansky did not have adequate notice of the reliance upon the meritless nature of Action 2.

46The Notice of Motion making the claim for costs against him included amongst the grounds:

• He counselled the plaintiff or otherwise allowed his client to proceed with a series of unmeritorious steps and to take unreasonable positions to achieve unattainable goals in this action: para. (c).
• On June 18, 2015, Justice Healey dismissed the entire action from the bench for being vexatious and an abuse of process and stated that Mr. Best’s position lacked a “scintilla of merit”: para. (n).

47Mr. Slansky was represented by counsel on the motion. He was aware, as of June 18, that the action had been dismissed as an abuse of process. His own factum filed on the motion devoted argument to the merits of the action. Overall, there was no unfairness in the notice given to him of the claim for costs.

48While the lack of merit and abusive nature of the overall action was emphasized in the motion judge’s reasons, the motion judge also found that Mr. Slansky wasted costs unnecessarily by acting on unreasonable instructions from or providing unreasonable advice to his client on the scheduling of the respondents’ jurisdiction motion. In particular, she found that “almost all of [the respondent’s] costs would have been saved” had it not been insisted that the jurisdiction motion be argued in June 2015 together with the motions to strike.

49This core finding supporting the motion judge’s ruling – that counsel caused “costs to be incurred without reasonable cause” – is unassailable. It was open to the motion judge to conclude that it was a waste of costs to require the respondents to move to contest jurisdiction immediately rather than await the motion to strike by other defendants. It was also open to her to conclude that there was no justification for Mr. Slansky to require this, whether it was insisted upon by Mr. Best or not.

(2) Does a lawyer become liable to pay costs personally because he starts an action that has little chance of success?

50I agree with the submission of the appellant that the fact that a lawyer starts an action which is unlikely to succeed is not, on its own, a basis to award costs personally against that lawyer.

51Rule 57.07 is “designed to protect and compensate a party who has been subjected to costs being incurred without reasonable cause, not to punish a lawyer”: Galganov, at para. 14.

52The motion judge here did not make Mr. Slansky liable for costs personally simply because he started a case that was weak. As the motion judge pointed out, the nature of the proceedings is an important contextual factor in assessing whether costs wasted by a solicitor justify an order that he pay costs personally.

53As this court held in Galganov, at para. 20:

[R]ule 57.07(1) requires an examination of “the entire course of litigation that went on before the application judge so that the application judge can put in proper context the specific actions and conduct of counsel.” This holistic examination of the lawyer’s conduct produces an accurate tempered assessment. [Citation omitted.]

54The motion judge examined the entire course of the litigation in assessing the specific actions and conduct of counsel, as she was required to do. In particular, she focused on the vexatious or abusive nature of the proceeding. This is not a necessary element of an award of costs against counsel personally but is not unfamiliar in this context. (See e.g. Soderstrom v. Hoffman-LaRoche Limited (2008), 2008 15778 (ON SC), 58 C.P.C. (6th) 160 (Ont. S.C.J.); Donmor Industries Ltd. v. Kremlin Canada Inc. (No. 2) (1992), 1992 7543 (ON SC), 6 O.R. (3d) 506 (Gen. Div.); and Baryluk (Wyrd Sisters) v. Campbell (2009), 81 C.P.C. (6th) 172 (Ont. S.C.J.).)

55On appeal, Mr. Slansky argues that Action 2 was not abusive. It was against many different parties and for different causes of action. That issue has now been conclusively determined by the dismissal of Mr. Best’s appeal from the decision striking Action 2 as an abuse of process. Action 2 made similar allegations of impropriety as had been voiced in the course of Action 1. The motion judge did not err in considering that Mr. Slansky incorporated into the pleading in Action 2 accusations of criminal misconduct against opposing counsel that had repeatedly been judicially rejected as baseless.

56Finally, as this court indicated in Galganov, at paras. 23-25, deference is owed to a motion judge’s decision as to whether a lawyer should pay costs personally:

The determination as to costs is a matter within the discretion of the application judge. An appellate court may set aside a costs award if the application judge made an error in principle or if the costs award is plainly wrong.

In Rand Estate, this court held that:

The application judge who managed the proceedings was in a much better position than this court to make the necessary assessments underlying the findings of fact he eventually made. Those findings are, by their nature, somewhat subjective and the cold paper record cannot, in our view, capture all of the considerations that would be relevant to those findings. We defer to the [application] judge’s findings unless they are clearly in error and clearly material to his ultimate determination.

As a result, this court owes a high degree of deference to the application judge’s holding…. [Citations omitted.]

57I see no basis to interfere with the motion judge’s discretionary decision to order Mr. Slansky to pay some portion of the costs wasted.

58In the event leave to appeal a costs order against counsel personally is necessary, I would grant leave.

E. disposition

59For these reasons, the appeal is dismissed with costs payable by Mr. Slansky in favour of the respondents in the agreed sum of $30,000 inclusive of HST and disbursements.