COURT FILE NO.: 577/01

DATE: 20030221

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

THEN, GREER AND CAPUTO JJ.

B E T W E E N:

JOHN BINDER

Appellant

• and -

JOHN VAES and RONALD G. BURK

Respondents

In Person

Gary Caplan, for the Defendant, Ronald G. Burk

HEARD: February 21, 2003

THEN J.: (Orally)

1This is an appeal from the decision of Madam Justice Mesbur dated February 7, 2001, wherein the learned Justice ordered the defendant/respondent Ronald Burk to pay the plaintiff/ appellant John Binder nominal damages of $1.00 and fifty percent of Mr. Binder's party-and-party costs. Mr. Binder appeals and asks the Court to vary the judgment of Madam Justice Mesbur by increasing the damages payable and increasing the costs ordered.

2While the issue of costs was not specifically raised in the notice of appeal, the issue was raised before us and in the circumstances it is in our view appropriate for us to exercise our discretion to deal with that issue.

3We are of the view that there is no palpable or overriding error in the trial Judge's conclusion that the damages attributable to the loss of the business were nominal. At paragraph 78 of her decision Madam Justice Mesbur stated:

"Mr. Burk was in a fiduciary relationship with Mr. Binder from the time Mr. Binder and Mr. Vaes came to him about their difficulties with Mr. Gibbon, until Mr. Binder retained separate counsel. He acted against Mr. Binder's interests, without giving him an opportunity, or the advice, to obtain independent legal counsel. In doing so, he breached his fiduciary obligations to Mr. Binder. However, I cannot find that any quantifiable damages flow from this breach. Mr. Binder's loss of the business, which is his real complaint, is the result of his stubbornness and refusal to pay the taxes on behalf of 104, not any acts or omissions of Mr. Burk's. Mr. Binder is the author of his own misfortune."

4As I have stated, we are in general agreement with the conclusions of Madam Justice Mesbur that the damages attributable to the loss of the business were nominal.

5We however are of the view that the trial Judge failed to address the costs incurred by the appellant with respect to the hiring of Ms. Pratt, which in our view were incurred as a result of the breach of fiduciary duties to the appellant as set out in paragraphs 21 and 22 of her judgment. The burden is on the solicitor to show that the costs incurred were unreasonable or cannot be recovered as damages because of some other legal cause (see MacCulloch et al. v. Corbett) 1982 3046 (NS CA), 133 D.L.R. (3d) 43 (N.S.C.A.). In our view Madam Justice Mesbur erred in not awarding $9,500 in damages representing the cost to the appellant of Ms. Pratt's services on the basis of efforts made by Ms. Pratt to rectify or to attempt to rectify the breaches of fiduciary duty by Mr. Burk.

6We find no error on the part of the trial Judge in not awarding punitive damages as the circumstances do not fall within the principles of Meyer v. Gordon (1981) 17 C.C.L.T 1 (BC.S.C.) nor within Whiten v. Pilot (2002) 2002 SCC 18, 209 D.L.R. (4th) 257 (S.C.C.).

7Finally, in dealing with the issue of trial costs, the trial Judge identified the principle in paragraph 7 of her costs judgment that breach of fiduciary duty should be deterred and also identified in paragraph 9 of her costs judgment that his conduct at trial aggravated his breach of fiduciary duty. The trial Judge was required in assessing trial costs to consider Rule 57.01(4)(b) in exercising her discretion under s.131 of the Courts of Justice Act. She concluded in that regard that 100% of the appellant's party-and-party costs would be unreasonable and that 50% of his party-and-party costs was appropriate to reflect the principles which I have adverted to above.

8In our view, the egregious circumstances recognized by the trial Judge of both breach of fiduciary duty and of conduct at trial are such that 100% of the party-and-party costs were fully justified. The trial judge erred in principle in exercising her discretion in failing to assess 100% of those costs. Accordingly the appeal is allowed to the extent that we have specified.

9The appeal book is endorsed as follows: "The appeal is allowed in part for oral reasons by the Court. Success has been divided and there shall be no costs of the appeal to either party."

THEN J.

GREER J.

CAPUTO J.

Date of Reasons for Judgment: February 21, 2003

Date of Release: February 28, 2003

COURT FILE NO.: 577/01

DATE: 20030221

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT