CITATION: The Law Society of Upper Canada v. James, 2016 ONSC 3246
DIVISIONAL COURT FILE NO.: DC-14-105-00
DATE: 20160512
ONTARIO
SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
THEN, SACHS AND WARKENTIN JJ.
B E T W E E N :
THE LAW SOCIETY OF UPPER CANADA Applicant (Respondent in Appeal)
– and –
KENNETH JAMES Respondent (Appellant)
Suzanne Jarvie, for the Applicant (Respondent in Appeal) Patrick Bakos, for the Respondent (Appellant)
HEARD at Toronto: May 12, 2016
SACHS J. (ORALLY)
[1] This is an appeal from a decision of the Law Society appeal panel (“the Appeal Panel”) on a costs award. The original hearing panel recused themselves from participating in the hearing, save for deciding the issue of costs, which were awarded against the appellant. The appellant appealed that decision to the Appeal Panel who allowed the appeal in part and reduced the costs award. The appellant now appeals that decision to the Divisional Court pursuant to s. 49.38 of the Law Society Act, R.S.O. 1990, c.L.8.
[2] The parties agree that the standard of review on a costs award is one of considerable deference. A court or tribunal should only set aside a costs award on appeal if the adjudicator made an error in principle or was plainly wrong (Hamilton v. Open Window Bakery, 2004 SCC 9, [2004] 1 S.C.R. 303 at p. 313). This was the standard of review that the Appeal Panel applied to the Hearing Panel’s decision. Given that the Appeal Panel applied the correct legal test, its decision is entitled to deference by this Court and is to be assessed on a reasonableness standard. Before us the appellant made four submissions:
The Hearing Panel erred in making any decision as to costs, given their decision to recuse themselves. At paragraph 19 of their decision, the Appeal Panel notes that this argument was raised by the appellant in his factum filed before them, but was not pursued in oral argument. As a result, the Appeal Panel did not address it. It is inappropriate for the appellant to pursue an agreement before us that he did not pursue before the Appeal Panel.
The Appeal Panel unreasonably awarded the Law Society $8,145 plus HST in relation to the appellant’s motion to exclude the evidence of the Law Society’s investigator, a motion that the appellant ultimately abandoned on the third day of the hearing. The Appeal Panel based this costs award on the premise that the motion to exclude took three days. The appellant argues that the motion did not consume three days, but only a couple of hours. Before us, the Society concede that the motion did not take three days to argue, but that it did take one and a half days. The difference between the parties appears to relate to the fact that the appellant’s estimate does not include the time it took to hear evidence in relation to the motion. It only includes the time for argument. We agree that the time to hear evidence should be included in the costs award and therefore we are reducing the costs awarded by the Appeal Panel in relation to this issue by fifty percent to $4,072.50 plus HST.
The Appeal Panel acted unreasonably in upholding the Hearing Panel’s decision not to award costs against the Society for the last thirteen days of the hearing. According to the appellant, costs should have been awarded in his favour against the Society on a substantial indemnity basis in the amount of approximately $113,000.00. In order to obtain costs against the Society, the onus was on the appellant to satisfy the Hearing Panel that the proceeding was unwarranted or that the Society “caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default.”
Even if the test is met, the Hearing Panel retains the discretion not to award costs (Law Society Rule 25.01(1) and Law Society of Upper Canada v. Sultan 2015 ONLSJH 171 at paras. 93-94).
In our view, the Appeal Panel reasonably concluded that the Hearing Panel committed no error in principle, nor was plainly wrong in declining to award costs to either side for the last 13 days of the hearing on the basis that both parties were at fault in failing to raise the conflict of interest issue regarding Mr. Gold at the earliest opportunity. We reject the submission of the appellant that there was no evidence from which the Hearing Panel could reasonably infer that the appellant knew of the conflict at least as early, if not before, the respondent. The evidence from which the Hearing Panel could draw this inference is summarized at paragraph 30 of the Appeal Panel’s decision.
The appellant argues that the same inference could reasonably be drawn about Mr. Gold’s knowledge of the conflict. However, even if this is true (we make no finding in this regard) this does not affect the reasonableness of the Appeal Panel’s finding that the Hearing Panel was not plainly wrong when it found that the appellant also knew of the conflict and did not raise it at the earliest opportunity.
- The Appeal Panel acted unreasonably in upholding the Hearing Panel’s decision not to award costs against the Society in relation to the appellant’s bias motion. The appellant sought substantial indemnity costs of this motion in the amount of over $97,000.00. In dealing with this argument, it is important to note that the appellant was requesting that the proceeding against him be stayed or dismissed (i.e. terminated). The respondent opposed the request for a stay or dismissal and was successful. On this basis alone it was reasonable for the Appeal Panel to uphold the Hearing Panel’s decision that there should be no costs awarded in relation to the bias motion. Success was divided and the Society’s actions in opposing the appellant’s request to terminate the proceedings were not unwarranted. Further, given the divided views that the Hearing Panel held on the bias issue, it cannot be said that the Society caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default.
[3] For these reasons the appeal is dismissed.
COSTS
THEN J.
[4] On behalf of the panel, I have endorsed the back of the Appeal Book, “This appeal is dismissed for oral reasons on behalf of the Court delivered by Sachs J. Counsel have agreed that costs in the amount of $6,000 is appropriate in the circumstances. Accordingly, costs in the amount of $6,000 all in is awarded to the respondents in respect of this appeal. To clarify, the appeal panel awarded costs in the amount of $12,270.00 plus HST. The respondent concedes that this award be reduced by $4,072.50 plus HST. Accordingly, the amount of costs due to the respondent from the proceedings below is $8,197.50.”
SACHS J.
THEN J.
WARKENTIN J.
Date of Reasons for Judgment: May 12, 2016
Date of Release: June 8, 2016
CITATION: The Law Society of Upper Canada v. James, 2016 ONSC 3246
DIVISIONAL COURT FILE NO.: DC-14-105-00
DATE: 20160512
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
THEN, SACHS AND WARKENTIN JJ.
B E T W E E N :
THE LAW SOCIETY OF UPPER CANADA Applicant (Respondent in Appeal)
– and –
KENNETH JAMES Respondent (Appellant)
ORAL REASONS FOR JUDGMENT
SACHS J.
Date of Reasons for Judgment: May 12, 2016
Date of Release: June 8, 2016