Court File and Parties
DIVISIONAL COURT FILE NO.: 13-137
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Dambrot and Mew JJ.
B E T W E E N :
SEBASTIAN NASSAB, BY HIS LITIGATION GUARDIAN SEN OZUNAL Applicant
– and –
ERINOAKKIDS Respondent
James Mutoigo, for the Applicant Cara Zacks, for the Respondent
HEARD at Toronto: 21 April 2017
Costs Decision
1This application for judicial review, brought by Sen Ozunal on behalf of her son, Sebastian Nassab, was heard at Brampton on 19 October 2016 by a panel of his court consisting of Dambrot, Hambly and Mew JJ. For reasons released on 21 November 2016 (reported at 2016 ONSC 7122), the application was dismissed.
2As noted at para. 36 of the application decision, at the conclusion of the hearing of the application, counsel for the respondent advised the court that his client would be seeking costs against counsel for the applicant personally. We noted at that time that counsel for the applicant would be entitled to be represented were such a request to be pursued and invited the parties to make an appointment for a further hearing before the panel.
3Pursuant to a request made by the respondent, a costs hearing was scheduled for 19 January 2017 at Toronto. Hambly J. retired from judicial service on 10 December 2016. Accordingly, and in accordance with section 123(3) of the Courts of Justice Act, R.S.O. 1990, c.C.43, the remaining members of the panel have heard and determined the issue of costs.
4On 19 January 2017, counsel for the applicant appeared, but requested an adjournment. He said that he was unable to proceed with argument that day. He cited health reasons and claimed that he had not received the written costs submissions prepared by the respondent. Counsel adverted to the possibility that separate counsel might be retained to represent him. He also indicated that he had not, as yet, notified his insurer of the respondent’s claim that he should personally pay some or all of the costs of the application. That, he indicated, he intended to do.
5The respondent opposed the adjournment request, pointing out that the materials had, in fact, been served at the business address of the applicant’s lawyer and that he had had months to retain someone else. Furthermore, if he was genuinely incapacitated, a doctor’s letter or report to that effect should have been produced.
6We adjourned the costs hearing until 21 April 2017, but stipulated that return date would be peremptory to the applicant.
7When the parties appeared in court again on 21 April 2017, counsel for the applicant requested a further adjournment. He claimed continuing health challenges. He said that he did not have the capacity to instruct someone else or to go through the materials delivered by the respondent in order to present his and his client’s case. He stated that he was “groggy” and not in a position to proceed. Two “sick notes” from a physician at a walk-in clinic were produced, dated 20 January 2017 and 23 January 2017 respectively, which stated that counsel for the applicant had been “having disabling symptoms including difficulty breathing, tightness in the head and neck area”. He had a low vitamin B12 level and was said, also, to have a “condition that has not yet been diagnosed”.
8The respondent opposed any further adjournment, noting that quite aside from the peremptory order made by the court, similar requests for adjournments had been made, on similar medical grounds, on a number of occasions since July 2015.
9We declined to grant a further adjournment. This matter had previously been adjourned, with the next date being peremptory to the applicant. The grounds for the adjournment request in January were virtually the same as the grounds presented in April. Counsel for the applicant had not availed himself of the opportunity to obtain separate legal representation or secure the assistance of his insurer.
10Despite Mr. Mutoigo’s assertion that he was not well enough to instruct counsel and had been unable to review the respondent’s costs submissions and prepare a response, after we declined his request for a further adjournment, he then proceeded to fully argue the issues raised, referring to notes as he made submissions and making several references, without any apparent hesitation or confusion, to portions of the application record and the respondent’s costs submissions.
Issues
11The substantive costs issues to be addressed are as follows:
a. What costs should be awarded to the respondent in respect of:
i. The application itself;
ii. The costs of the motion heard by Fragomeni J. on 4 March 2016, the costs of which were reserved to the panel hearing the application; and
iii. The costs of a motion to dismiss the action for failure to comply with an order of Fragomeni J., which did not ultimately proceed because the applicant belatedly paid a costs award of $1,548.10 which Fragomeni J. had made in relation to an unsuccessful request by the applicant that Fragomeni J. recuse himself;
b. The scale of costs; and
c. Whether some or all of the costs awarded in the respondent’s favour should be paid by James Mutoigo, counsel for the applicant, personally.
Background
12The application for judicial review was issued on 13 December 2013. The applicant sought:
a. An order quashing the decision of the respondent dated 8 August 2012 that the applicant was ineligible for intensive behavioural intervention (“IBI”) funding for autism; and
b. An order directing the respondent to reassess the applicant’s eligibility for IBI funding for autism according to the Autism Intervention Program Guidelines.
13On 28 January 2014, less than a month after the notice of application had been issued, the respondent offered to reassess Sebastian Nassab’s eligibility for IBI therapy, using different clinicians who were not privy to the original clinicians’ assessment of him, in exchange for a without costs dismissal of the application. As noted, in the respondent’s costs submissions:
The Offer would have provided Sebastian with the very relief he sought in this application. Moreover, Erinoakkids, agreed that if, upon this re-assessment, Erinoakkids determined that Sebastian was ineligible for IBI, Erinoakkids would give Sebastian access to an internal review process called the Independent Review Mechanism (“IRM”). The IRM was introduced in December 2012 and therefore was not available to Sebastian when Erinoakkids initially assessed him for IBI eligibility.
14Thereafter, there was an exchange of views between the lawyers representing the respondent and the applicant about additional terms and conditions but, ultimately, the applicant did not accept the offer made by the respondent.
15By virtue of the dismissal of the application in its entirety, the applicant obtained a judgment less favourable than the terms of the 28 January 2014 offer. The respondent’s position is that, pursuant to Rules 49.10 and 57.01 of the Rules of Civil Procedure, Erinoakkids should be entitled to its substantially indemnity costs from the date of the offer onwards.
Claim for Costs
16The respondent’s claim for fees associated with the application is divided into three parts:
a. Fees up to 28 January 2014 at a partial indemnity rate totalling $14,230;
b. Fees post 28 January 2014 at a substantial indemnity rate totalling $52,560; and
c. Fees for the attendance of two counsel at the hearing of the application on a substantial indemnity scale totalling $6,000 ($3,600 for senior counsel and $2,400 for junior counsel).
17The standard hourly rate of Mr. Hanna, senior counsel for the respondent, who was called to the Bar in 1994, is $800/hour. However, the partial indemnity rate claimed by him is $300/hour and the substantial indemnity rate $450/hour. The partial indemnity rate claimed for junior counsel Cara Zacks, 2013 call to the Bar, is $200/hour and her substantial indemnity rate is $300/hour.
18The application was originally scheduled to be heard in October 2015. However, counsel for the applicant failed to produce Ms. Ozunal for cross-examination. The respondent moved for an order compelling her attendance. That motion was returnable on 27 July 2015. If it had proceeded that day, there would have been sufficient time for any resulting cross-examination to have been conducted and for the application hearing date to proceed on its originally scheduled date.
19Instead, on 27 July 2015, counsel for the applicant came to court unprepared to respond to the motion. The motion was adjourned to 24 February 2016, and the date for the application hearing was adjourned to the next sitting of the Divisional Court in Brampton during the week of 14 March 2016.
20Counsel for the applicant was, again, unprepared to respond to the motion on 24 February 2016, resulting in a further adjournment of that motion to 4 March 2016. As a result, the application hearing was again adjourned to the next sitting of the Divisional Court during the week of 17 October 2016.
21Inevitably, additional and wasted costs were incurred as a result of these adjournments and the associated delay.
22The respondent’s motion was finally heard by Fragomeni J. on 4 March 2016. After the motion had been argued, but before Fragomeni J. had released his decision, the respondent notified the applicant and the court that there had been changes in the provincial government policy regarding IBI funding eligibility. A further hearing was scheduled on 29 April 2016 for submissions to be made as to whether or not, in light of the government’s policy changes, the issues raised on the application were moot. Fragomeni J. heard the submissions of counsel for the respondent on 29 April 2016, but counsel for the applicant did not make submissions on that day. Instead, after hearing the submissions of counsel for the respondent, counsel for the applicant made a motion for Fragomeni J. to recuse himself.
23The issue of recusal was argued on 27 May 2016 and Fragomeni J. gave oral reasons dismissing the motion. The matter was then adjourned to 21 June 2016 to give counsel for the applicant an opportunity to prepare responding material and make submissions on the issue of mootness. The matter was further adjourned from 21 June 2016 to 23 June 2016 for submissions.
24Fragomeni J. decided that the issue of mootness should be dealt with by the Divisional Court panel hearing the substantive application. He ordered that Ms. Ozunal should attend for cross-examinations. The applicant was ordered to pay to the respondent costs of the recusal motion, fixed in the all-inclusive sum of $1,548.10 within 30 days. After receiving written submissions on all other issues of costs arising from the motion before him, Fragomeni J. reserved the determination of those costs to the Divisional Court panel hearing the application.
Respondent’s Position
25The respondent submits that all of the costs associated with the motion to compel attendance at cross-examinations (which ultimately included argument on whether the application was moot as a result of policy changes by the Ontario government) should be awarded on a substantial indemnity basis, given that all such costs were incurred after the 28 January 2014 offer to settle. The amounts claimed total $42,009. The vast majority of the time is that of Ms. Zacks, who attended in court.
26When, after more than 30 days had elapsed since Fragomeni J.’s order, the applicant had not paid the costs of the unsuccessful recusal motion, the respondent prepared material for a motion to dismiss the application. The costs were eventually paid, but not until 16 January 2016, by which time, the motion material had already been prepared. The motion was resolved on the basis that the costs thrown away would be reserved to the Divisional Court panel. The substantial indemnity fees for the resolved motion were $4,020.
27The cumulative total amount claimed by way of fees is $131,359 plus H.S.T. of $17,076.67 and disbursements totalling $4,518.89 (included H.S.T. where applicable). A grand total of $152,954.56.
28Having regard to the factors set out in Rule 57.01, although the amount claimed in costs is significant, the respondent submits that it is a fair reflection of the time and effort required to address the application and that all of these costs could have been avoided if the offer to settle which was made by the respondent, at the outset, had been accepted.
Applicant’s Position
29Counsel for the applicant did not attempt to challenge the reasonableness of the amounts claimed. Rather, he noted that Ms. Ozunal is on welfare. Accordingly, she would be unable to pay an award of costs in the magnitude sought by the respondent.
30Furthermore, the applicant submits that the application raises matters of public interest.
Quantum of Costs
31We are in general agreement with the submissions made by the respondent. Of course, our task is to ultimately fix an amount that is fair and reasonable to the parties against whom costs are awarded, rather than an amount fixed only by reference to the actual costs incurred by the successful litigant: Boucher v. Public Accountants of Ontario, (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 at para. 26. Also, to be borne in mind is the overarching principle of proportionality (Rule 1.04(1)).
32It would have been within the reasonable expectation of the applicant that, if unsuccessful, she would be required to pay the respondent’s costs. Furthermore, the applicant’s conduct resulted in delaying the application hearing by a full year. There were several unnecessary attendances caused by the applicant’s inability or unwillingness to proceed.
33The rates claimed by the respondent and the total amount of time expended by the lawyers and other fee earners involved in the file, are reasonable and, as indicated, not seriously challenged.
34There can be circumstances where, in matters of public interest, it is appropriate not to award costs against an unsuccessful applicant (see, for example, Mahar v. Rogers Cable Systems Ltd. (1995), 1995 7129 (ON SC), 25 OR (3d) 690 (Gen. Div.). However, we do not accept the applicant’s submission that this application raised a matter of public interest. While the work of the respondent, which each year involves providing services to over 13,500 children while disabilities including autism, developmental disabilities, physical disabilities and visual and hearing disabilities is a matter of significant public interest, the issue raised on the application was principally that of eligibility of Sebastian Nassab for IBI therapy. No constitutional issues, new or uncertain or unsettled points of law or practice or issues of generally applicable public policy were involved.
35There are also circumstances in which the inability of a party to pay costs may be a relevant factor in determining whether an adverse costs award should be made (see, for example, Baines v. Hehar (2013), 2013 ONSC 849, 114 OR (3d) 551 (SCJ)). Such cases will be few and far between and generally require evidence not only that a party against whom costs would otherwise be awarded does not currently possess the financial wherewithal to pay an award of costs, but that it is most unlikely that they will ever acquire the ability to meet a costs burden arising from the case. Beyond the bald statement by counsel for the applicant that she is on welfare, there is no such evidence here. That said, we do accept, as a practical reality, that it is highly unlikely that the applicant would be able to satisfy an award of costs in the magnitude sought by the respondent.
36In Seretti v. Hamilton Health Sciences – McMaster Children’s Hospital, 2010 ONSC 1716 (Div. Ct.), the responding party incurred partial indemnity costs of just over $78,000 in connection with an application for judicial review challenging a decision to discharge the applicant, a child with autism, from the Regional Autism Intervention Program delivered by the respondent hospital. The applicant’s partial indemnity costs were said to be just over $90,000. When the issue of costs came to be addressed, however, the respondent sought to recover costs only in the amount of $25,000. Notwithstanding, the applicant submitted that there should be no order of costs.
37In contrast to the present case, in Seretti the parties agreed that complex issues of fact and of law were involved; that the issues were novel in nature; that there was a public interest in the issues raised by the application; and that the application had been brought in good faith.
38The respondent hospital, however, also asserted that every effort had been made to try and settle the applicant’s issues, but that the applicant had “stalled at every stage”, with the effect that the service, which was the subject of the application, continued to be provided.
39The applicant in Seretti submitted that he was impecunious and that the respondent had the superior capacity to bear the costs of the proceeding.
40Leach J. declined to make an award of costs in favour of the unsuccessful applicant and ordered the applicant to pay costs to the respondent, fixed at $5,000.
41Seretti was a very different case to the present one. Furthermore, any sympathies that we might otherwise have for the applicant are tempered by the fact that as a publicly funded entity, the respondent has incurred significant expenditure on legal representation in a case with no merit that might otherwise have been spent to provide services to the children who are the respondent’s clients.
42As we have indicated, we regard as reasonable the time spent by the fee earners who worked on this case on behalf of the respondent. We also recognise that the respondent should obtain the benefit, in costs terms, of its offer to settle.
43But is also necessary that the amount of costs awarded should be proportionate, rational, and fair, having regard to both parties.
44We have concluded that an amount that would be fair and reasonable to the applicant, who must take significant responsibility for the very considerable costs that have been caused to be incurred by the respondent, would be the sum of $50,000, inclusive of disbursements and H.S.T.
Costs Against Counsel Personally?
45The remaining issue is by whom the costs should be paid. The respondent submits that it should be counsel for the applicant, James Mutoigo.
46A lawyer whose conduct results in costs being incurred unreasonably, or wasted, may be deprived of his or her costs or required to pay costs of any other party. Rule 57.07 provides as follows with respect to awarding costs against a lawyer personally:
57.07 (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,
(a) disallowing costs between the lawyer and client or directing the lawyer to repay to the client money paid on account of costs;
(b) directing the lawyer to reimburse the client for any costs that the client has been ordered to pay to any other party; and
(c) requiring the lawyer personally to pay the costs of any party.
47In Galganov v. Russell (Township) (2012), 2012 ONCA 410, 350 DLR (4th) 679 (Ont. C.A.), the Court of Appeal approved a two-part test to determine the liability of a lawyer for costs under Rule 57.01.
48The first step is to inquire whether the lawyer’s conduct falls within Rule 57.07(1) in the sense that it caused costs to be incurred unnecessarily. It is not necessary to show negligence, bad faith or reprehensible conduct on the part of the lawyer in order to justify an award of costs under Rule 57.07. The lawyer’s conduct will fall within the scope of the rule if he or she pursues a goal that is clearly unattainable or clearly derelict in his or her duties as an officer of the court. (Galgonov, paras. 17-18.)
49The second step is to apply the “extreme caution” principle, which requires that costs awards made under Rule 57.07(1) should only be made sparingly, with care and discretion, only in clear cases and not simply because the conduct of the lawyer may appear to fall within the circumstances described in Rule 57.07. (Galgonov at para. 22.)
50The Court of Appeal also directed that an examination of the entire course of the litigation that went on before the application judge should be considered so that the application judge can put in proper context the specific actions and conduct of counsel (Galgonov at para. 20).
51The respondent submits that Mr. Mutoigo’s conduct throughout the course of this litigation has fallen well short of his duties as an officer of the court and justifies an order against him personally.
52Before turning to a number of examples of such conduct which Ms. Zacks specifically directed our attention to during the course of her submissions, we set the scene by repeating para. 26 of the reasons of Dambrot J., delivered on behalf of the panel that heard the application, in respect of various allegations made by the applicant that the respondent’s assessment of Sebastian Nassab was not in accordance with the Autism Program Guidelines:
These allegations are largely unsupported by evidence, irresponsible, and generally irrelevant. In particular, the allegation that EOK falsified records is without foundation and scandalous. The applicant’s allegation that EOK falsified records includes a claim that Dr. Factor did not administer the requisite standardized tests, but falsely recorded that he did. In fact, the tests administered by Dr. Factor are outlined in detail in the evidence. This evidence stands uncontradicted. The applicant’s mother could only say in cross-examination that she didn’t know what Dr. Factor did because she wasn’t there. In fact, she was present when the tests were administered. Her presence is confirmed by a DVD recording of the testing process. But she persists in her allegation on the basis that she was informed by the applicant’s lawyer that Dr. Factor did not administer the Guidelines properly. This sort of wild allegation has no place in this proceeding, and ought never to have been made. [Underlining added]
53Allegations that the respondent had falsified records and hidden records were repeatedly made by Mr. Mutoigo, in both his written and oral submissions. For example, para. 10 of the applicant’s factum:
The Respondent falsified its records to state that the Applicant had been referred by Shaujjuddin Hafiz, a paediatrician…
Then in para. 28 of the factum, there is reference to a psychometrist who “apparently hid the applicant’s missing records”. Not only was no basis advanced for these allegations, but the allegations were not tested through cross-examination of any representative of the respondent.
54The affidavit of Ms. Ozunal makes it very clear that a major source of her information on the alleged wrongdoing of the respondent was Mr. Mutoigo. In her affidavit of 8 November 2013, she said, at para. 24:
I am informed by my lawyer, James Mutoigo, and I believe it to be true, that the Respondent inexplicably destroyed and/or lost the Applicant’s medical and behavioural history, including the Joshua Creek primary school surveillance records and the questionnaires filled out by the Applicant’s teacher and myself.
And at para. 28 of her affidavit:
I am also informed by my lawyer, James Mutoigo, and believe it to be true, that, the Respondent did not consult any of the Applicant’s physicians or hospitals where he has been treated to establish the Applicant’s full medical, psychiatric and/or psychological history and adopted some false facts to suit its decision not to provide IBI services to the Applicant.
55There was no cross-examination of the respondent and no other evidentiary support offered in relation to these allegations either. Even when Mr. Mutoigo was given proof that the allegations were baseless, he continued to accuse the respondent of false facts. This, among other reasons, was why the respondent decided to cross-examine Ms. Ozunal. The result was a confirmation that there was no substance underlying the bald allegations made by Mr. Mutoigo through his client.
56The respondent observes that there was no indication that the positions taken with respect to the falsification of records, the hiding of records, and the provocation of false facts were the product of Mr. Mutoigo’s client’s instructions (as opposed to Mr. Mutoigo’s own theories and beliefs).
57The respondent also points to various tactical and procedural manoeuvres made by Mr. Mutoigo. He twice requested adjournments of the motion to compel the attendance of Ms. Ozunal for cross-examination on the basis that he was “unwell”. As noted by Ms. Zacks in opposing the request for an adjournment of the costs hearing on 21 April 2017, Mr. Mutoigo has been telling the court that he is too unwell to proceed since August 2015.
58The motion requesting Mr. Justice Fragomeni to recuse himself was advanced on the basis that Fragomeni J. had had an ex-parte communication with counsel with the respondent. In fact, the respondent’s lawyers had asked Mr. Mutoigo to agree to a communication with Justice Fragomeni to inform him of the Ontario government change in policy. When Mr. Mutoigo failed to extend that courtesy, the respondent sought the court’s direction pursuant to Rule 1.09(b).
59In other respects, Mr. Mutoigo was obstructive, non-responsive or derelict in his obligations. Undertakings to produce documents and other evidence were not complied with. Requests for compliance with those undertakings were not responded to. Production of hospital records that Mr. Mutoigo had, prior to the cross-examination of his client, offered to produce, was not forthcoming. He refused to engage in communications with the defendant’s lawyers by email, taking the position that his email was not an address for service. This, despite him having on at least one occasion, initiated a communication with the respondent’s lawyers by email.
60Mr. Mutoigo concedes that there was a delay in paying the costs awarded by Fragomeni J., but claims that this was because he was unwell. He asserts, generally, that to “punish” him for falling sick would not be appropriate. He claims that when he appeared to argue the application in October 2016 (at which time, he requested an adjournment based on his medical condition), he did suggest to the respondent that “Trustee Services” should take over the case for the applicant, but that the respondent rejected this. No evidence or further particulars of this were offered.
61We share the observation made by counsel for the respondent that there is very little in the record to suggest that the applicant herself was the driver in this litigation. She appears to have relied almost exclusively on what Mr. Mutoigo told her. While we are obviously not privy to the advice that was given by Mr. Mutoigo to his client, we find it unlikely in the extreme that the applicant was given competent, objective, balanced advice. Not once, during the course of Mr. Mutoigo’s submissions, was there any suggestion by him that he took positions because he was instructed to do so.
62Mr. Mutoigo, throughout this case, has shown no reluctance at all to advance wholly meritless positions, and make serious allegations of impropriety on the part of the respondent and the individuals engaged by the respondent, with absolutely no factual or legal basis for doing so. He shows an almost total lack of appreciation of his responsibilities to not only his client, but also the court.
63If, as he claims, for the better part of the last two years, his health has precluded him from appearing in court, then his professional responsibility was to withdraw and assist his client to find alternative representation.
64The respondent’s lawyers have acted with commendable courtesy and restraint. Despite abundant cause for frustration, a professional tone was maintained by both Mr. Hanna and Ms. Zacks in their communications with Mr. Mutoigo and their submissions in court.
65Mr. Mutoigo has been afforded every opportunity to resolve this litigation. His conduct has been an aggravating factor in the costs of this litigation throughout.
66Exercising extreme caution, as we are bound to, we are satisfied that this is one of those rare cases in which an award should be made against Mr. Mutoigo personally.
Disposition
67Accordingly, we order that the costs of this application, which we have fixed at $50,000, should be paid by Mr. Mutoigo and not his client. We further order that Mr. Mutoigo be required to deliver a copy of these reasons to Ms. Ozunal.
___________________________ MEW J.
I agree.
___________________________ DAMBROT J.
RELEASED: 10 May 2017