CITATION: McLEOD v HARNETT , 2010 ONSC 5849
COURT FILE NO.: DC-08-003-C1
DATE: 2010-10-22
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
GRANT STEWARD McLEOD
DENNIS VAN SICKLE, for the PLAINTIFF/APPELLANT IN CROSS-APPEAL (Moving Party)
PLAINTIFF/APPELLANT IN CROSS-APPEAL (Moving Party)
- and -
WILLIAM JAMES HARNETT
FRANCIS J. THATCHER, for the DEFENDANT/RESPONDENT IN CROSS-APPEAL (Responding Party)
DEFENDANT/RESPONDENT IN CROSS-APPEAL (Responding Party)
HEARD: Thunder Bay, October 20, 2010
Regional Senior Justice H.M. Pierce
Reasons on Motion
Introduction
[1] The appellant moves, pursuant to s. 21 (3) of the Courts of Justice Act for two orders:
a) for substantial indemnity costs of $3,424.82 incurred when the respondent breached the terms of a consent adjournment in this appeal;
b) prohibiting the respondent from filing responding material in the appeal should the respondent breach any further terms of the adjournment.
[2] This motion highlights how costs can escalate, to the detriment of the client, when counsel fail communicate directly or effectively with each other.
The Facts
[3] The facts may be simply stated. The respondent’s counsel was ill and he decided to retain new counsel before this appeal was argued at the June sittings of the Divisional Court at Thunder Bay. As a condition of the adjournment, the respondent agreed to pay costs fixed at $1,500 per month payable to the appellant or his bank on the first day of each month between July and December 2010. Cheques drawn on the respondent’s corporate account were tendered through the respondent’s former solicitor. At all times funds in the respondent’s corporate account were sufficient to cover these costs.
[4] However, the appellant demanded cheques on the respondent’s personal account and these cheques were substituted. His former solicitor sent them to appellant’s counsel and advised that Mr. Thatcher would continue with the appeal as the respondent’s new counsel.
[5] The July cheque was returned with insufficient funds. Counsel for the appellant was notified of this development by the bank’s solicitors on August 13th. There is no evidence that this came to the respondent’s notice before he was advised by his counsel. The appellant’s counsel, Mr. D. Shanks, called Mr. Thatcher on August 16th to advise that the July cheque had been returned. This conversation was confirmed by e-mail that day, along with a request that the cheque be covered. Mr. Thatcher requested a replacement cheque from his client on August 18th. There is no evidence that he communicated that fact to Mr. Shanks.
[6] Next, the respondent’s August cheque did not clear. The appellant’s solicitor learned of this on August 23rd. Appellant’s counsel wrote to Mr. Thatcher on August 24th to pass on the bad news. For some reason, this letter was not faxed to Mr. Thatcher until Friday afternoon, August 27th. The letter did not come to Mr. Thatcher’s attention until early on Monday, August 30th when he immediately contacted his client to request replacement cheques. Then he telephoned Mr. Shanks to advise that he just received his letter about the dishonoured August cheque and had spoken to his client about correcting the problem. Mr. Shanks’ letter referred to the dishonoured cheques and stated, “…we will be bringing a motion to transfer the appeal to Sudbury, to be heard as soon as possible, the costs of which we will be claiming against your client….”
[7] Mr. Thatcher confirmed to Mr. Shanks that he had impressed upon his client the need to cover the cheques and asked him not to proceed with a motion to transfer the appeal to Sudbury until they had a chance to discuss the matter two days later. Mr. Shanks did not indicate that he had already begun work to transfer the case to Sudbury.
[8] That same day, Mr. Thatcher delivered his firm trust cheque to Mr. Shanks’ office in the amount of $4,500 to cover the two dishonoured cheques and deal with the September cheque which was due imminently. Understandably, Mr. Thatcher concluded the matter was at an end. Mr. Harnett explained that although there were adequate funds in his corporate account to make the payments, he had neglected to “top up” his personal account which was largely inactive.
[9] Mr. Shanks made no demand for the appellant’s costs in connection with the cheques when counsel first discussed the matter on August 30th. However, later that day, Mr. Shanks wrote Mr. Thatcher, demanding costs of $1,304.02.
[10] As of September 22nd, Mr. Thatcher had repeatedly requested the docket entries to support the claim for costs. He anticipated the costs claim would relate to the NSF cheque fees and some administrative time. Mr. Thatcher wrote to the appellant’s counsel on October 4th agreeing that costs for the dishonoured cheques should be covered, together with some modest costs for the solicitor’s time. It was only when the appellant brought on this motion, that the appellant tendered dockets and disbursements totalling $6,000.
[11] The dockets deal primarily with the motion to transfer the file to Sudbury Divisional Court, a motion that was never argued, and with this motion. As well, there are disbursements claimed unrelated to the motion before the court. The quantum of costs claimed is far in excess of the simple cost of a solicitor’s time to request and forward new cheques.
[12] It did not help the temper of Mr. Thatcher that, despite his request, the Cheadles firm would not acknowledge that it had received his notice of change of solicitors, served electronically. Without that acknowledgement, Mr. Thatcher could not file his notice of change of solicitors with the court. See: Rule 16.05(f). The Cheadles firm then insisted on serving their materials on the respondent’s former solicitor, complaining that Thatcher had not filed his notice of change of solicitor with the court. Here, a telephone call might have served counsel better.
[13] On October 13, 2010, the respondent tendered a cheque to pay costs previously ordered by Mr. Justice Wright which had been overlooked. Payment of these costs was not a term of the adjournment. The respondent is not now in default of any costs order.
Discussion
[14] The dishonouring of the cheques was unfortunate. No doubt it increased tensions between the parties. The appellant is entitled to some modest costs for his inconvenience and costs for two dishonoured cheques which together I fix at $200. There will be an order accordingly.
[15] The respondent has remedied his breach of the terms of the adjournment. The motion prohibiting the respondent from filing responding material in the appeal should he breach any further terms of the adjournment is premature and is dismissed. The interests of justice are better served by a hearing on the merits.
[16] The more troubling issue is the absence of professional courtesy by counsel in dealing with the matter. When an immediate response was not forthcoming from Mr. Thatcher about the first cheque, one wonders why Mr. Shanks did not simply call him. The conflict has now escalated to the point that the clients have incurred costs for bringing on and defending this motion and for preparing a motion to transfer the appeal to Sudbury. On this motion, the appellant has filed 80 pages of affidavits plus two authorities; the respondent has filed 45 pages of responding material. The clients’ interests have not been advanced by either proceeding. Just as unfortunately, animosity has developed between counsel, who are colleagues at the bar.
[17] The Rules of Civil Procedure have formally incorporated the notion of proportionality into litigation. This is not a new principle, but it remains an important one: that the work that goes into a case should be proportional to the importance and complexity of the issues and to the amount that is involved. Here, what was involved was $3,000.
[18] Counsel’s duty is one of service to the client. Part of that duty involves not getting caught up in the client’s conflicts, the better to advise him or her. In evaluating strategy, the needs and interests of the client must always be first. Keeping a client out of court may be just as important as getting him into it.
[19] In this case, I regret that the court room door was too close. Counsel lost perspective, which is not a common occurrence.
[20] Costs of this motion are reserved. The parties are invited to make written submissions on costs within 20 days if demanded.
Regional Senior Justice H.M. Pierce
Released: October 22, 2010
COURT FILE NO.: DC-08-003-C1
DATE: 2010-10-22
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
GRANT STEWART McLEOD
PLAINTIFF/APPELLANT IN CROSS-APPEAL (MOVING PARTY)
- and –
WILLIAM JAMES HARNETT
DEFENDANT/RESPONDENT IN CROSS-APPEAL (RESPONDING PARTY)
REASONS FOR JUDGMENT
Pierce RSJ.
Released: October 22, 2010
/sb