COURT FILE NO.: CV-13-490665 DATE: 20210212

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DIANA HORDO AND MICHAEL HORDO Plaintiffs/Appellants

AND:

ARNOLD H. ZWEIG Defendant/Respondent

BEFORE: Justice Glustein

COUNSEL: Diana Hordo and Michael Hordo (self-represented) Peter Smiley, for Arnold H. Zweig Debra Eveleigh, for Lawyers’ Professional Indemnity Company Ian Sinke, for the Law Society of Ontario

HEARD: January 28, 2021

Reasons for Decision

Nature of Hearing and Overview

[1] The present claim (the Zweig Action) is a solicitor’s negligence action brought by the plaintiffs Diana Hordo (Diana) and Michael Hordo (Michael) (collectively, the Hordos) against the defendant Arnold H. Zweig (Zweig). The Hordos had been represented by Zweig in two matters.

[2] The Hordos retained Robert Besunder (Besunder) to bring the Zweig Action. Zweig retained R. Leigh Youd (Youd) of the law firm Berkow Youd Lev-Farrell Das (BYLD). On consent, Besunder removed himself as lawyer of record for the Hordos shortly after a pre-trial conference held before the scheduled November 13, 2018 trial date. The trial was adjourned and no new trial date was set.

[3] There are three separate proceedings before this court, all addressed in these reasons.

[4] First, the Hordos appeal the decision of Master Muir dated November 26, 2019 (Master’s Decision).[^1] The Master dismissed the motion brought by the Hordos in which they sought the following orders:

(i) removal of Youd and BYLD as lawyers of record for Zweig,

(ii) discovery-related relief: production of documents from Zweig and the non-parties, Lawyers’ Professional Indemnity Company (LawPro) [^2] and the Law Society of Ontario (LSO), including copies of relevant insurance policies and related insurance documents and communications relating to Zweig, [^3] identification of the LawPro representative who attended at the pre-trial conference, and examination for discovery of representatives of LawPro and the LSO,

(iii) answers by Zweig to outstanding undertakings and reattendance for a continued examination for discovery,

(iv) production of Besunder’s file from Zweig,

(v) striking various paragraphs of Zweig’s statement of defence, and

(vi) forensic examination of Youd’s cell phone. [^4]

[5] The principal basis for the relief sought in the motion before the Master was the Hordos’ assertion that Youd, LawPro, and the LSO conspired to have Besunder removed as the Hordos’ lawyer in the Zweig Action. The Hordos submit (before the Master and this court) that the alleged conspiracy is established because a LawPro representative, described by the Hordos as the “grey haired lady,” [^5] attended at the pre-trial conference and was not identified. [^6]

[6] Second, the Hordos bring a motion under Rule 59.06 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, asking this court to set aside the order of the Master on the basis of fraud or facts discovered after the order was made. The Hordos allege that Zweig, LawPro, and the LSO all committed fraud against the court because (i) the Hordos discovered that LawPro retained counsel for Zweig, the LSO, and itself and (ii) such discovery was after a December 12, 2019 motion heard before me (and after the Master’s Decision).

[7] In support of the Rule 59.06 motion, the Hordos further submit that (i) the LSO could not be represented by LawPro but instead must be represented by crown attorneys from the Ministry of the Attorney General (MAG), and (ii) LawPro can only act as insurer for lawyers and not for the LSO.

[8] Third, the Hordos bring a motion for an order of this court for relief that was outside the jurisdiction of the Master. The Hordos seek an order that (i) LawPro (and possibly the LSO) [^7] be required to pay for (a) the Hordos’ interim costs (based on the costs the Hordos paid to Besunder before he removed himself as lawyer of record) and (b) two expert reports the Hordos submit they require to pursue their claim; (ii) LawPro and the LSO be declared vexatious litigants under s. 140 of the Courts of Justice Act, R.S.O. 1990, c. C. 43 (CJA); and (iii) a receiver be appointed for the LSO under s. 101 of the CJA. [^8]

[9] For the reasons I set out below, I dismiss all of the relief sought by the Hordos. In brief:

(i) I dismiss the appeal. There is no basis to interfere with the Master’s findings of fact that (a) “there is simply no evidence of improper conduct on the part of Mr. Youd, LawPro, LSO or the defendant”; (b) “[t]he plaintiffs’ allegations are pure speculation based on inference and conjecture and nothing more”; and (c) the Hordos “failed to provide any direct evidence to support their serious allegations of misconduct”: see Master’s Decision, at para. 18

To the contrary, the uncontested evidence was that the “grey haired lady” was a LawPro representative (claims counsel), properly attending the pre-trial conference on behalf of the insurer. There was no evidence of a conspiracy, let alone any palpable error in the Master’s Decision. Consequently, the Master did not err in dismissing the removal motion relief.

Many of the other grounds of relief were also based on the conspiracy theory, which the Master found to be baseless. There was no palpable error in the Master’s Decision on those issues, nor on the discovery and other issues before him.

(ii) There is no evidence to set aside the order under Rule 59.06. The fact that LawPro retained counsel for the LSO and for itself raises no material issue which would justify setting aside the Master’s order.

Further, separate counsel were acting for Zweig, LawPro, and the LSO, as they each represented to the court. There is no evidence that any counsel sought to mislead the court as to who had retained them.

I do not accept the Hordos’ submission that the LSO must be represented by crown attorneys from the MAG, given the settled case law on the independence of the LSO and the LSO’s role in regulating the legal system.

Consequently, I dismiss the Rule 59.06 motion; and

(iii) There is no evidence to support the extraordinary relief of requiring LawPro or the LSO, as non-parties, to pay for either the Hordos’ legal fees incurred to date in the Zweig Action, or costs of expert reports in that action. Further, there is no evidence to support a declaration that LawPro or the LSO are vexatious litigants, or that a receiver should be appointed for the LSO. Consequently, I dismiss the Hordos’ motion seeking such relief.

Facts

Zweig's representation of the Hordos

[10] Zweig acted for Diana in a 2007 action against her family members. Diana alleged a beneficial interest in properties owned by her family (the “Diana Action”).

[11] The Diana Action was heard before Justice Stewart in February 2011. On October 11, 2011 the court dismissed the majority of Diana’s claims, but found that she was entitled to an interest in one of the properties at issue, and awarded her costs of $30,000.

[12] Zweig also acted for Michael in a 2008 action against Diana’s family members concerning alleged unpaid legal services (the “Michael Action”). While at one point the Michael Action was administratively dismissed, it was restored on consent and set down for trial.

[13] Following the trial of the Diana Action, Zweig rendered an account to Diana in the amount of approximately $45,000, with a credit for $14,000 for amounts paid by Diana. In the absence of an agreement to pay, Zweig scheduled an assessment of his accounts for October 2013.

The Zweig Action and the pre-trial conference

[14] The Hordos, represented by Besunder, commenced the Zweig Action on October 11, 2013, alleging negligence by Zweig. As a result, the assessment sought by Zweig was stayed.

[15] LawPro appointed Youd and BYLD to defend the Zweig Action.

[16] A trial date was set for November 13, 2018, and a pre-trial conference was scheduled for September 26, 2018.

[17] Youd served Besunder with Zweig's pre-trial conference brief on September 17, 2018, and received the Hordos’ pre-trial conference brief from Besunder the following day.

[18] However, on September 25, 2018, Youd received another pre-trial conference brief, this time prepared by the Hordos themselves. Attached to that brief were emails between Besunder and Michael, including one dated September 17, 2018 in which Michael raised criticisms about Besunder’s conduct as his lawyer.

[19] Youd attended the pre-trial conference on September 26, 2018, accompanied by a “grey haired lady” who was a representative of LawPro. [^9] Prior to the commencement of the pre-trial conference, Youd spoke with Besunder, who advised Youd that Besunder intended to bring a motion to remove himself as lawyer of record unless the Hordos agreed to represent themselves.

[20] The pre-trial conference proceeded before Justice Sanderson. At the outset, and prior to the arrival of the Hordos, Besunder advised Justice Sanderson that in light of a conflict between himself and his clients he would have to bring a motion to be removed as lawyer of record if the Hordos would not agree to file a Notice of Intention to Act in Person.

Besunder obtains an order removing him as the Hordos’ lawyer

[21] Immediately following the pre-trial conference, Besunder and the Hordos engaged in an email exchange, upon which Youd was copied. The exchange culminated in Besunder writing the following email to the Hordos:

Your insistence on stating inaccurate information about my current health to third parties (such as Mr. Youd) is inappropriate. It is bordering on defamatory in that it impacts upon my professional reputation and ability to perform a task as a lawyer. I am asking that you refrain from any further such misrepresentations. Further such communications to third parties will be addressed by legal action. I trust that you can understand that in the face of your numerous allegations, it is impossible and inappropriate for me to represent you. These allegations stretch over some time, and were the reason I advised you previously of my concerns and the need for you to either represent yourself or find another lawyer. You chose not to sign a Notice of Intention to Act in Person — I am not certain why you would oppose having me removed as your lawyer, when it is clear you intend to take aggressive steps to attribute liability against me and to involve LawPro and the Law Society. [Emphasis added.]

[22] On October 17, 2018, Youd wrote to Besunder advising that Zweig would agree to an adjournment of the trial scheduled to commence on November 13, 2018, but only if it did not further delay the Zweig Action (and as a corollary, Zweig's assessment of his accounts). Youd set out the following conditions (quoted verbatim):

(i) the trial will be adjourned to the first trial scheduling court in January 2019 at which time a fixed date for a pre-trial and trial will be set;

(ii) by no later than November 15, 2018, you will have obtained an order removing yourself as counsel of record for the plaintiffs or alternatively your clients will have either delivered a Notice of Intention to Act in Person or alternatively new counsel will have served a Notice of Change of Lawyers; [and]

(iii) by no later than Friday, January 4, 2019, your clients will have delivered any expert reports that they intend to rely on at trial.

[23] On October 23, 2018, Besunder served Zweig with a copy of his motion record in support of his request to remove himself as lawyer of record. The supporting affidavit attached emails demonstrating that Besunder had been in a position of conflict with the Hordos since May or June of 2018.

[24] Besunder obtained an order removing himself as lawyer of record, to which the Hordos consented.

The scheduling of the motions before the Master and this court

[25] On January 6, 2019, the Hordos and Youd attended at To Be Spoken To Court. By endorsement, Justice Firestone (now Regional Senior Justice) assigned me to case manage the Zweig Action.

[26] On September 19, 2019, the Hordos and Youd attended at a case conference before me. The Hordos advised that they intended to bring a number of motions, including a motion to seek the removal of Youd as counsel for Zweig.

[27] By endorsement (the “September 2019 Endorsement”), I ordered that the Hordos bring:

(i) an “omnibus” motion before a master by November 15, 2019, to address all interlocutory issues within the master’s jurisdiction; and

(ii) a motion before me to be heard on December 12, 2019, to address any relief which was not within a master’s jurisdiction.

[28] At the case conference, the Hordos advised the court that they would seek the following relief in the omnibus motion before the master (quoted verbatim from the September 2019 Endorsement): (i) removal of Youd as counsel for Zweig, (ii) additional documentary disclosure, (iii) further examinations for discovery of [Zweig] (arising from additional undertakings or otherwise), (iv) examination for discovery of a LawPro representative and a representative from the [LSO], and (v) production of a discovery plan.

[29] The motion to be heard by me was (quoted verbatim from the September 2019 Endorsement): (i) To compel LawPro to pay for expert reports for the plaintiffs; and (ii) To compel LawPro to pay “interim costs” on a “party and party” scale so the plaintiffs can proceed with the litigation.

[30] At the September 19, 2019 case conference, the Hordos advised that they also planned to bring an application under ss. 15, 24, 32, and 1 of the Charter of Rights and Freedoms, which was not part of the present action. The Hordos sought to challenge the constitutionality of LawPro representation of Zweig based on what the Hordos asserted is a conflict between the LSO (who regulates lawyers) and LawPro (as insurer of lawyers).

[31] I held that any such proposed Charter application would not delay the trial, and I refused to schedule the application as a pre-condition to the above preliminary matters. The Hordos asked the court to set a deadline for their delivery of materials in the proposed Charter application, which I set for January 31, 2020.

[32] To date, the Charter application has not been brought. The Hordos have asked that it be held in abeyance pending the determination of the preliminary matters. Zweig, the LSO, and LawPro have consented to that request.

The Master’s Decision

[33] The omnibus motion was heard before the Master on November 15, 2019. Michael swore an affidavit dated October 10, 2019 in support of the motion, in which he set out the basis for his theory that Youd acted in a conspiracy with LawPro and the LSO, who had all “willful[ly]” and “unconscionably” “brib[ed] and coerc[ed]” Besunder to remove himself as the Hordos’ lawyer.

[34] Michael asserted in his affidavit that the impugned conspiracy constituted a criminal breach of trust, an abuse of process, a breach of the Rules of Professional Conduct, and a denial of the Hordos’ Charter rights.

[35] The conspiracy theory was based on the presence at the pre-trial conference of the LawPro Representative. The Hordos asserted that the attendance of the LawPro Representative, Besunder, and Youd, confirmed that Youd, LawPro, and the LSO had conspired to have Besunder removed as the Hordos’ lawyer shortly before the scheduled trial date.

[36] In his thorough reasons, the Master made the following findings of fact based on the evidence before him (quoted verbatim):

(i) The plaintiffs allege that they had not heard from their former lawyer for many months leading up to the pre-trial conference. They became concerned enough to take the unusual step of filing their own pre-trial brief in advance of the pre-trial even though their former lawyer had delivered a brief on their behalf: Master’s Decision, at para. 5;

(ii) When the plaintiffs arrived at the pre-trial, they made several observations that raised concerns from their perspective. Mr. Youd attended the pre-trial with a representative of LawPro who was not identified to the plaintiffs. [^10] Their former lawyer would not meet with the plaintiffs during or after the pre-trial. The LawPro representative spoke with the plaintiffs’ former lawyer and apparently left the pre-trial at the same time as the plaintiffs’ former lawyer. Following the pre-trial, arrangements were made to attend to be spoken to court in order to deal with the upcoming trial date. Prior to that hearing, Mr. Youd wrote to the former lawyer for the plaintiffs stating, among other things, that the plaintiffs' former lawyer should obtain an order removing himself as counsel of record by November 15, 2018: Master’s Decision, at para. 6;

(iii) It is clear from the evidence that the relationship between the plaintiffs and their former lawyer had broken down before the pre-trial even took place. The plaintiffs stated that they had not heard from their former lawyer for several months before the pre-trial conference. They were so concerned that they prepared their own pre-trial memorandum. That pre-trial memorandum included a copy of an email the plaintiffs sent to their former lawyer on September 17, 2018. That email was also included in the plaintiffs' evidence on this motion. It states that the plaintiffs asked their former lawyer for an update on numerous occasions without a response. They asked that he obtain an expert report. They were clearly concerned about how their matter was being handled: Master’s Decision, at para. 9;

(iv) Following the pre-trial, the plaintiffs sent more correspondence to their former lawyer alleging a variety of unprofessional conduct: Master’s Decision, at para. 10;

(v) The affidavit filed in support of the motion by the plaintiffs' former lawyer to be removed from the record included detailed evidence. Their former lawyer’s evidence was that the lawyer/client relationship had broken down in May 2018. The plaintiff's former lawyer wrote to the plaintiffs in June 2018 stating that he could no longer act on their behalf. He enclosed a draft notice of intention to act in person. He wrote to the plaintiffs again in July 2018 with the same message. There were more communications of a similar nature after the pre-trial conference. Nowhere in the evidence is there any suggestion by the plaintiffs' former lawyer that he was being forced to bring a removal motion by Mr. Youd or anyone else. It is also noteworthy that the plaintiffs appeared at their former lawyer's motion and consented to the removal order: Master’s Decision, at para. 11; [and]

(vi) Mr. Youd’s letter of October 17, 2018 does not instruct the plaintiffs' former lawyer to get off the record for the plaintiffs. The letter simply sets out the conditions on which the defendant was prepared to consent to an adjournment of the trial date to accommodate the plaintiffs. It was perfectly reasonable for the defendant to want the issue of the plaintiffs’ representation to be clarified in some fashion: Master’s Decision, at para. 13.

[37] On the basis of the above evidentiary findings, the Master found no basis to support the conspiracy theory relied upon by the Hordos to remove Youd as lawyer of record for Zweig. He held (quoted verbatim):

(i) The primary reason the plaintiffs want the defendant's lawyer removed relates to a motion brought by the plaintiffs' former lawyer in early November 2018 to have himself removed as lawyer of record for the plaintiffs. The plaintiffs argued that their former lawyer was compelled to bring that motion at the behest of the defendant's lawyer, LawPro and the Law Society of Ontario (“LSO”). The plaintiffs submitted that all these persons and organizations were working together to force the plaintiffs' lawyer off the record thereby leaving the plaintiffs with no representation: Master’s Decision, at para. 4;

(ii) The plaintiffs argued that the reasonable inference from all of this is that Mr. Youd, LawPro, LSO and the defendant were fully aware of these facts and were instructing the plaintiffs' lawyer on what to do with this claim and specifically to bring a motion to remove himself as lawyer of record. Mr. Hordo's evidence is that Mr. Youd, his firm, LawPro, LSO and Mr. Zweig interfered with the plaintiffs' right to counsel by “ordering, bribing and coercing” the plaintiffs' former lawyer to remove himself as lawyer of record for the plaintiffs: Master’s Decision, at para. 7;

(iii) In my view, none of the evidence supports the plaintiffs’ argument that their former lawyer was directed in any way or specifically compelled to bring the removal motion by the defendant's lawyer, LawPro, or anybody else. The evidence does not support the plaintiffs’ contention that Mr. Youd should be removed as lawyer of record for the defendant. The removal of a lawyer and the denial of a party of his or her lawyer of choice is a serious matter. Such an order should not be made lightly and only in the clearest of cases. See Tiffin v. Teplitsky Colson LLP, 2018 ONSC 5122 at paragraph 29: Master’s Decision, at para. 8;

(iv) I see nothing unusual about a representative of LawPro being present at the pre-trial conference. LawPro is the defendant's insurer. Its involvement is necessary if there is to be any chance of reaching a settlement. The fact that the plaintiffs’ former lawyer spoke to the LawPro representative and left the pre-trial at the same time is not an indication of anything improper. The fact that there was a lack of communication between the plaintiffs and their former lawyer is consistent with their former lawyer’s assertion that the relationship had broken down several months before the pre-trial: Master’s Decision, at para. 12;

(v) I also see nothing improper about the affidavit Mr. Youd delivered in response to this motion. The argument raised by the plaintiffs about whether Mr. Youd's cell phone was on during the pre-trial is not persuasive. Mr. Youd stated that his cell phone had run out of battery power. The plaintiffs suggested that this was false because they sent him a text message at the time that their phone showed as having been delivered. That assertion is contradicted by the plaintiffs' own evidence, being the document they produced from Apple. Delivered means that the message has arrived at Apple’s servers. It does not mean that the message has been delivered to the recipient's phone. There is no reason to doubt Mr. Youd’s evidence: Master’s Decision, at para. 15;

(vi) The fact that the plaintiffs’ former lawyer apparently continues to represent the plaintiffs in other proceedings may be surprising, but it is not evidence of anything improper in connection with this proceeding. The evidence is clear. The lawyer/client relationship between the plaintiffs and their former lawyer, at least in terms of this action, had completely broken down by the fall of 2018: Master’s Decision, at para. 17; [and]

(vii) In summary, there is simply no evidence of improper conduct on the part of Mr. Youd, LawPro, LSO or the defendant. The plaintiffs' allegations are pure speculation based on inference and conjecture and nothing more. They have failed to provide any direct evidence to support their serious allegations of misconduct. The motion to remove Mr. Youd and his firm is dismissed: Master’s Decision, at para. 18.

[38] With respect to the other relief sought in the notice of motion, the Master:

(i) dismissed the Hordos’ request for an order for identification of the LawPro Representative and for productions and examinations of non-parties in relation to the removal motion and “in respect of the allegations of improper conduct generally”. He held that “I have found that there is no evidence to support the allegations of misconduct”: Master’s Decision, at para. 19,

(ii) dismissed the motion to strike paragraphs of the statement of defence since (Master’s Decision, at paras. 20-21):

(a) the pleadings had been closed for a considerable time and oral discoveries had occurred, such that “[t]his is not a situation where the impugned paragraphs need to be struck so that the plaintiffs can properly plead to the defence or to prevent unfairness at discovery”; and

(b) the impugned pleadings either “simply set out the defendant’s version of the general terms of his retainer, his billings and work done for the plaintiffs”, “set out the particulars of the defendant’s specific work for the plaintiffs and the instructions he was given”, or “respond to specific allegations in the statement of claim with respect [sic] allegations of negligence in relation to a claim made by the plaintiff Diana Hordo”, and as such “simply respond to issues clearly raised in the statement of claim”. The Master held that “[t]he merits of this dispute are not before the court on this motion” and “[t]he merits are a matter for the trial judge or perhaps a motion for summary judgment”, and

(iii) held that Zweig had answered his undertakings and had offered to provide copies of his productions to the Hordos on reasonable terms. The Master allowed follow-up examination for discovery restricted to written questions and answers “given the limited number and nature of the answers to undertakings”: Master’s Decision, at paras. 22-23.

[39] The Master noted that the Hordos had asked for additional relief at the hearing. The Master:

(i) held that the requirement that the relevant insurance policies be produced under Rule 31.06(4) was satisfied by LawPro providing the Hordos with a link to the LawPro website where the policies from 2013 to 2019 could be found, and dismissed the Hordos’ request for “insurance documents and communications involving the defendant” since that request “goes beyond the requirements under Rule 31.06(4)”: Master’s Decision, at para. 24,

(ii) dismissed the Hordos’ request for the Besunder file from Zweig since “that is not the responsibility of [Zweig]” and Zweig had “offered to provide the plaintiffs with further copies of the defendant’s productions upon the plaintiffs paying reasonable photocopying costs”: Master’s Decision, at para. 23, and

(iii) dismissed the Hordos’ request “for the forensic examination of Mr. Youd’s phone” since “[g]iven my findings above, the plaintiffs have failed to establish the relevance of any such examination”: Master’s Decision, at para. 25.

[40] By separate costs endorsement, the Master ordered the Hordos to pay substantial indemnity costs, fixed at $8,000 to Zweig and $4,500 to the LSO. The Master held in the Cost Endorsement, at paras. 12 and 14:

In my view, the defendant and LSO are entitled to costs as the successful parties. I am also satisfied that it is appropriate that costs be paid on a substantial indemnity basis. The plaintiffs made very serious allegations against the defendant, his counsel and LSO. The plaintiffs’ allegations against the defendant, his counsel and LSO included interfering with the plaintiffs' right to counsel, bribery, criminal breach of trust, perverting the course of justice, dishonesty, swearing false affidavits and various other similar misconduct. These allegations appear repeatedly throughout the plaintiffs’ evidence. Specifically, they can be found, among other places, at paragraphs 39 and 43 of Mr. Hordo's affidavit sworn October 10, 2019 and at paragraphs 7, 8, 17, 18, 19, 23, 35, 36, 53, 54, 55 and 59 of Mr. Hordo's affidavit sworn October 28, 2019.

The plaintiffs made very serious allegations that included criminal behaviour, dishonesty and other reprehensible conduct by the defendant, his lawyers and LSO. The plaintiffs failed to prove those allegations. Mr. Hordo is a retired lawyer. He should be aware of the serious nature of such allegations and the potential consequences if they are not proven. Substantial indemnity costs are warranted in the circumstances of this motion.

The December 12, 2019 motion

[41] The motion for the additional relief, not available before a Master, was brought before me on December 12, 2019, as directed by the September 2019 Endorsement.

[42] Shortly prior to that motion, the Hordos served a “Notice of Supplemental Motion” (the Supplemental Notice), along with an additional affidavit of Michael sworn on December 3, 2019. In the Supplemental Notice, the Hordos sought a variety of relief which had already been dismissed by the Master, including an order removing Youd and BYLD as counsel of record for Zweig, an order requiring Youd’s phone records to be produced, and an order requiring the “grey haired lady represented by LPIC” to be identified.

[43] At the December 12, 2019 hearing, I dismissed the relief sought in the Supplemental Notice, on the basis that “it is an abuse of process to relitigate matters already decided”. I held that “[t]he plaintiffs have appealed the Master’s decision and that is the proper forum for those issues”.

[44] With respect to the issues which had been scheduled before me under the September 2019 Endorsement, as well as the Hordos’ request that LawPro and the LSO be declared vexatious litigants, [^11] I adjourned those matters to be determined after the appeal of the Master’s Decision. [^12] I held that “it would be an abuse of process to relitigate that matter (the plaintiffs rely on the same motion record as before the Master), subject to the plaintiffs’ appeal rights”.

[45] At the December 12, 2019 hearing, the parties consented to me hearing the appeal of the Master’s Decision.

[46] I fixed costs thrown away for the December 12, 2019 motion at $1,000 for LawPro, $750 for Zweig, and $700 for the LSO, payable by the Hordos within 60 days of the order. I also ordered that “[t]here will be no further motions in this matter unless scheduled by me at a case conference”.

[47] Finally, at the request of the Hordos, and on consent, I adjourned the January 31, 2020 deadline for the Hordos to file materials for the Charter application, “with any future dates for filing to be addressed at a case conference after the appeal, if necessary”.

The present hearing

[48] The Hordos bring an appeal of the Master’s Decision.

[49] The Hordos also bring a motion under Rule 59.06 to set aside the Master’s order on the basis of fraud or facts discovered after the order was made.

[50] The Hordos also seek the additional relief (i) compelling LawPro (and possibly the LSO) [^13] to pay the Hordos’ “interim costs” (i.e. costs paid by the Hordos to Besunder) and fees for expert reports the Hordos assert are required for the Zweig Action, (ii) declaring LawPro and the LSO vexatious litigants, and (iii) appointing a receiver for the LSO.

Analysis

[51] I address below each of (i) the appeal of the Master’s Decision, (ii) the Rule 59.06 motion, and (iii) the motion for additional relief.

The appeal of the Master’s Decision

1. The standard of review

[52] On a pure question of law, the standard of review on appeal is correctness. Questions of fact cannot be reversed unless the trial judge has made a “palpable and overriding error”. The latter standard also applies to questions of mixed fact and law unless there is an extricable error of law, in which case correctness applies: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 8, 10, and 36.

[53] The standard of review applies equally to an appeal from a Master’s order: Zeitoun v. Economical Insurance Group (2008), 91 O.R. (3d) 131 (Div. Ct.), at paras. 40-41, aff’d 2009 ONCA 415, at para. 1.

[54] A palpable and overriding error is one which is “readily or plainly seen” or “so obvious that it can easily be seen or known”: Housen, at para. 5.

[55] The Master dismissed the motion brought by the Hordos in which the Hordos sought the following relief:

(i) removal of Youd and BYLD as lawyers of record for Zweig,

(ii) discovery-related relief: production of documents from Zweig, LawPro and the LSO, including copies of relevant insurance policies and related insurance documents and communications relating to Zweig, [^14] identification of the LawPro Representative, and examination for discovery of representatives of LPIC and LSO,

(iv) answers by Zweig to outstanding undertakings and reattendance for a continued examination for discovery, [^15]

(v) production of Besunder’s file from Zweig, [^16]

(vi) striking various paragraphs of Zweig’s statement of defence, and

(vi) forensic examination of Youd’s cell phone.

[56] I now address each of the orders sought before the Master.

2. The removal motion

[57] The Hordos sought to remove Youd primarily on their submission that Youd, LawPro and the LSO conspired to compel Besunder to remove himself as the Hordos’ lawyer in the Zweig Action.

[58] In their motion records, the Hordos advance serious allegations of intentional wrongdoing by Youd, LawPro, and the LSO. In his affidavit, Michael asserts:

Proper inference and limited document evidence makes it abundantly clear that LawPro/LSO, instructed and paid Mr. Youd and his firm to co-opt our counsel and he did so on the eve of trial to deny the Plaintiffs Justice and in doing so criminally abused the Court process. […]

[Besunder’s service of the notice of motion to be removed as lawyer of record] allows the further inference that this was done under criminal threat, criminal breach of trust and coercion the full extent of these nefarious actions and criminal conduct rest solely in the records of these parties and must be disclosed so Justice and [sic] be done. […]

[59] The Hordos do not submit that the Master made any extricable error of law in the requirements to establish conspiracy or on the test for removal of counsel. Rather, they ask this court on appeal, as they did before the Master, to make an evidentiary finding of conspiracy.

[60] The evidence before the Master failed to establish such a conspiracy, let alone meet the test of being “so obvious that it can easily be seen or known” as required to establish palpable and overriding error.

[61] The email from Besunder to Michael (set out at paragraph 21 above), copied to Youd, demonstrated that the issues resulting in a breakdown of the lawyer-client relationship “stretch over some time, and were the reason [Besunder] advised [Michael] previously of [Besunder’s] concerns and the need for [Michael] to either represent yourself or find another lawyer”. Besunder’s removal was based on circumstances where “it is clear [the Hordos] intend to take aggressive steps to attribute liability against me and to involve LawPro and the Law Society”.

[62] Consequently, the Master made a reasonable finding, supported by the evidence, that the Hordos did not have confidence in Besunder even prior to the pre-trial conference. The Master also relied on evidence that the Hordos prepared their own pre-trial conference brief, which included emails that referred to the breakdown of the lawyer-client relationship.

[63] The Hordos rely on the October 17, 2018 letter from Youd to Besunder, set out at paragraph 22 above, as evidence of the alleged conspiracy. The Master properly rejected that argument.

[64] In his letter, Youd set out the conditions on which Zweig was prepared to consent to an adjournment. There is no error (let alone a palpable error) in the Master’s conclusion (at paras. 13 and 17 of his reasons and set out at paragraph 36(vi) above) that:

(i) the letter does not instruct Besunder to “get off the record for the plaintiffs”;

(ii) the letter “simply sets out the conditions on which the defendant was prepared to consent to an adjournment of the trial date to accommodate the plaintiffs”; and

(iii) “[i]t was perfectly reasonable for the defendant to want the issue of the plaintiffs’ representation to be clarified in some fashion”.

[65] Consequently, the Master properly considered the evidence and dismissed the removal motion. His conclusions, at para. 18, that (i) “there is simply no evidence of improper conduct on the part of Mr. Youd, LawPro, LSO or the defendant”, and (ii) “[t]he plaintiffs’ allegations are pure speculation based on inference and conjecture” were amply supported by the evidence.

[66] At the hearing of the appeal, the Hordos further submitted in their factum that Youd ought to be removed as lawyer for Zweig because Youd swore an affidavit in response to the removal motion.

[67] The Hordos relied on the decision of Essa (Township) v. Guergis (1993), 15 O.R. (3d) 573, 52 C.P.R. (3d) 372 [Essa Divisional Court]. However, in Essa, the Divisional Court reversed the decision of the judge who had removed counsel in two matters: the first because a lawyer had sworn an affidavit on a contempt motion, and the second when the court removed a lawyer at a pre-trial conference because the lawyer might need to give evidence about the plaintiff’s competency at trial. The Divisional Court in Essa did not set out a prohibition against a lawyer acting at trial when the lawyer swore an affidavit for a motion, and the Hordos’ position is not supported in law. [^17]

[68] The only prohibition set out in Essa is that “it is improper for the deponent of an affidavit to act as counsel and rely on that affidavit”: Essa Divisional Court, at 377.

[69] In the present case, Youd did not argue either the motion before the Master or the appeal. Further, the evidence provided by Youd does not address the merits of the claim against Zweig but only reviews the procedural history of the matter relevant to the removal issue, and other relief sought. There is no basis to remove counsel simply because counsel swears an affidavit on a procedural motion, provided that the deponent does not act as counsel on the motion. Otherwise, in every removal motion when counsel swears an affidavit to address the alleged conflict, removal would automatically follow.

[70] In any event, the only disputed evidence considered by the Master, raised in Youd’s affidavit, related to whether Youd’s cell phone was on during the pre-trial conference. The Master had evidence on which to accept Youd’s position on this issue, and made no palpable error in his conclusion at paragraph 15 of his decision, as set out at paragraph 37(v) above. Further, that evidence was not of a disputed issue on the merits of the Zweig Action.

[71] Finally, the Hordos submitted that the Master could not rely on any evidence as to the breakdown in the lawyer-client relationship as set out in the supporting affidavit to Besunder’s removal motion, since it was not sworn by Besunder. However, regardless of the admissibility of the emails attached to that affidavit (on which I make no finding), the email exchange attached to the Youd affidavit provided more than sufficient evidence for the Master to conclude that the lawyer-client relationship between the Hordos and Besunder broke down before the pre-trial conference.

[72] For the above reasons, I dismiss the appeal of the Hordos on the removal issue.

3. Discovery-related relief

[73] The Master dismissed the discovery-related relief sought by the Hordos, which consisted of: production of documents from Zweig and the non-parties LawPro and the LSO, including copies of relevant insurance policies and related insurance documents and communications relating to Zweig, identification of the LawPro Representative, and examination for discovery of representatives of LawPro and the LSO. I address these issues below.

[74] The Hordos’ request for production of documents and examination for discovery of LawPro and the LSO (as well as for identification of the LawPro Representative), was based on Rules 30.10 and 31.10. Both Rules require the court to be satisfied that the non-parties have relevant information which cannot be obtained from another source.

[75] Given the Master’s finding that the conspiracy theory was baseless, there was no factual basis to make a non-party discovery order. Consequently, the Master properly dismissed the non-party relief sought.

[76] Under Rule 30.10(a), a document sought by a non-party must be “relevant to a material issue in the action”. Under Rule 31.10, “there must be good reason to believe that the non-party has information relevant to a material issue”: Hopkins v. Robert Green Equipment Sales Ltd., 2018 ONSC 998 (Master), at para. 6.

[77] Consequently, in the Master’s Decision, at para. 19, the Master relied on “the same reasoning”, based on the lack of evidence of conspiracy, to support his conclusion that the Hordos’ request for “an order for the identification and examination of non-parties and the production of documents from non-parties … made in relation to the motion to remove the defendant’s lawyer and in respect of the allegations of improper conduct generally” was not supported by the evidence. [^18]

[78] For the same reasons, the identification of the LawPro Representative would not be material to the Hordos’ action against Zweig and it would not be unfair for the Hordos to proceed to trial without such information.

[79] Any production or discovery order could not be made against the LSO or its representatives. Section 49.12(1) of the Law Society Act, R.S.O. 1990, c. L.8 (LSA), prohibits any bencher, officer, employee, agent or representative of the LSO from disclosing “any information that comes to his or her knowledge in relation to an audit, investigation, review, search, seizure or proceeding”, subject to certain exceptions under s. 49.12(2) which do not apply to civil proceedings.

[80] The Hordos sought to examine the following LSO representatives: (i) Ms. Diana C. Miles, CEO, (ii) Mr. Malcolm Mercer, Treasurer, (iii) Mr. Nicolas Woloszczuk, Investigator, (iv) Mr. David W. Cass, Intake Counsel, and (v) Ms. Sophie Papanastasiou, Intake Resolution Officer.

[81] The motion record contains no evidence to indicate that Ms. Miles or Mr. Mercer were involved in any way in these proceedings.

[82] With respect to Mr. Woloszczuk, Mr. Cass, and Ms. Papanastasiou, the motion record contains as exhibits a number of letters exchanged with these individuals in the course of complaints made to the LSO. There is no evidence that these individuals were involved in these proceedings, or with any party to these proceedings, except in their capacity as employees/officers of the LSO with respect to disciplinary complaints and investigations.

[83] At the hearing of the appeal, the Hordos did not raise any issue as to the Master’s decision that the link to the LawPro website was sufficient to provide LawPro insurance policies from 2013 to 2019. The related insurance documents and communications involving Zweig would be non-party documents which the Master correctly held (i) did not meet the test for production since there was no evidence to support a conspiracy theory and (ii) went beyond the requirements under Rule 31.06(4).

[84] For the above reasons, I dismiss the appeal from the Master’s order on discovery-related relief.

4. Undertakings and reattendance

[85] There is no basis to reverse the Master’s conclusion, at paragraph 22 of his decision, that (i) Zweig answered his undertakings and (ii) given the limited number and nature of the answers to undertakings, such follow-up examination shall be by way of written questions and answers.

[86] There is no evidence that Zweig had not answered his undertakings.

[87] The Hordos did not pursue this issue at the present appeal hearing. The Master had evidence to support his discretionary order, and there is no palpable error in his conclusion.

5. Production of Besunder’s file from Zweig

[88] There is no basis to reverse the Master’s conclusion, at paragraph 23 of his decision, that Zweig (i) was not required to compel Besunder to produce his file, and (ii) had satisfied his disclosure obligations by offering “to provide the plaintiffs with further copies of the defendant’s productions upon the plaintiffs paying reasonable photocopying costs”.

[89] The Hordos did not pursue this issue at the present appeal hearing. The Master had evidence to support his discretionary order, and there is no palpable error in his conclusion.

6. Striking of various paragraphs of Zweig’s statement of defence

[90] There is no basis for the Hordos’ appeal of the Master’s decision to not strike the impugned paragraphs of the statement of defence: [^19] see Master’s Decision, at paras. 20-21.

[91] At the appeal hearing, the Hordos relied on an order of Master Linton in 2008 in which he struck certain paragraphs of the statement of defence in the Diana Action. However, the issue on that motion was whether those paragraphs were relevant to the defence of Diana’s claim, not whether they were relevant to a solicitor’s negligence claim against Zweig for his conduct as counsel for Diana in that action.

[92] The Master properly limited his review of the impugned pleadings to the issue of whether they were relevant to the Zweig Action. The Master specifically referred to the relevance of those paragraphs to the issues of Zweig’s retainer, his billings, the work done for the Hordos, instructions from the Hordos, and the Hordos’ allegations of negligence. A review of those paragraphs establishes their relevance as held by the Master. There was no error in his conclusion.

[93] As the Master noted, at paragraph 21 of his decision, while the Hordos “may not agree with the defendant’s version of events … there is nothing improper about the impugned paragraphs [which] … simply respond to issues clearly raised in the statement of claim”.

7. Forensic examination of Youd’s cell phone

[94] The Hordos’ request at the hearing before the Master for a forensic examination of Youd’s cell phone was also based on the conspiracy theory and, as such, the master’s conclusion at paragraph 25 of his decision that “the plaintiffs have failed to establish the relevance of any such examination” raises no palpable error.

8. Grounds of appeal raised by the Hordos in their notice of appeal

[95] On the basis of the above reasons, I would dismiss the appeal. A review of each of the issues considered by the Master demonstrates no error of law or palpable error on any finding of fact or a mixed finding of fact and law (or any extricable legal error).

[96] In addition to the submissions of the Hordos, which I address above, the Hordos raised 19 separate grounds of appeal in their notice of appeal. I briefly review the issues raised by those grounds below.

[97] For ground (a), the Hordos submit that the Master “failed to distinguish that this is a Stated Case under Rule 37.15(1.1)”. However, the Master heard and decided the issues as directed in the September 2019 Endorsement, so there is no breach of Rule 37.15(1.1). The September 2019 Endorsement did not require the Master to decide in favour of the Hordos on the issues that the Hordos planned to bring before the court.

[98] For ground (b), the Hordos submit that the Master “failed to adhere to [the September 2019 Endorsement]”. However, that endorsement only set out the relief the Hordos intended to seek on their motion. As with ground (a), the Master heard and decided the issues as directed in the September 2019 Endorsement, so there is no error.

[99] For ground (c), the Hordos submit that the Master erred in law by “setting aside, varying or amending the Judge’s order contrary to his jurisdiction in Rule 37.02(2)”. However, as with ground (a), the Master heard and decided the issues as directed in the September 2019 Endorsement. He did not set aside or vary the September 2019 Endorsement.

[100] For ground (d), the Hordos submit that the Master “erred in failing to find cause in the removal of Mr. Youd and his firm from the record despite bringing into a confidential Pre-Trial hearing a Lawpro person who he later confirms he did not represent”. For the reasons I discuss above, the Master properly held that the LawPro Representative was entitled to attend the pre-trial conference and that her attendance was not a basis for a conspiracy finding or the removal of Youd.

[101] For ground (e), the Hordos submit that the Master “erred in law in failing to find cause in the removal of Mr. Youd and his firm from the record for the letter of October 17, 2018 which was a contributing factor in the removal of the solicitor of record for the Plaintiffs on the eve of trial”. As I discuss above, the Master properly held that the lawyer-client breakdown occurred before the pre-trial conference, and that the Youd letter does not instruct Besunder to get off the record for the Hordos, but rather sets out the conditions on which Zweig was prepared to consent to an adjournment of the trial date, which included clarification of the Hordos’ representation.

[102] At ground (f), the Hordos submit that the Master erred by “failing to recognize that the Grey haired LawPro lady, represented by LPIC, was under a differed [sic] LawPro file number than that of the Defendant, and that her presence at the Pre-trial was unlawful”. As with ground (d), the Master properly held that the LawPro Representative was entitled to attend the pre-trial conference and that her attendance was not a basis for a conspiracy finding or the removal of Youd. Further, the fact that each law firm had a different file number for the matter is of no relevance to a conspiracy theory, and is entirely consistent with proper file management by each law firm which uses its own file management system.

[103] At ground (g), the Hordos submit that the Master “erred in law in failing to recognize that the Grey Haired Lady from LawPro arrived with the Defendant’s counsel and left with the Plaintiffs’ counsel and not finding this highly improper and irregular”. As with ground (d), it is appropriate for an insurer (LawPro) to participate fully in a pre-trial with its counsel (Youd). Further, I agree with the Master, at paragraph 13 of his decision, that it is not unusual for all parties to a pre-trial conference to leave at the same time, nor for plaintiff’s counsel to speak with an insurance representative at a pre-trial conference.

[104] At ground (h), the Hordos submit that the Master erred by not ordering that the identity of the LawPro Representative be disclosed. I have addressed that issue at paragraph 78 above.

[105] At ground (i), the Hordos submit that the Master “failed to apply the Constitution in not recognizing breaches to the Charter rights of the Plaintiffs by the forced removal of their long time solicitor of record on the eve of trial”. Since the Master had ample evidence to find no conspiracy, this ground of appeal cannot succeed.

[106] At ground (j), the Hordos submit that the Master “erred in law in failing to recognize that the Plaintiffs’ counsel was still on the record for Mr. Hordo, in this very matter and that further creates ambiguity and uncertainty in the judicial process”. I adopt the Master’s conclusion, at paragraphs 9 and 17 of his reasons and as set out at paragraphs 36(iii) and 37(vi) above, that “[t]he fact that [Besunder] apparently continues to represent the plaintiffs in other proceedings may be surprising, but it is not evidence of anything improper in connection with this proceeding” and “[i]t is clear from the evidence that the relationship between the plaintiffs and their former lawyer had broken down before the pre-trial even took place”.

[107] At ground (k), the Hordos submit that the appeal should be granted because the Master failed “to assist, redress or benefit the self-represented litigants, who through no fault of their own, lost proper legal representation on the eve of trial, in seeking equity and clarity”. However, there is no evidence that the Master failed to give the Hordos every opportunity to advance their case to the best of their abilities. The Master’s reasons demonstrate that he fairly permitted the Hordos to make their submissions. There was no evidence before me of any instance where the Master denied the Hordos the opportunity to advance their case.

[108] At grounds (l) and (m), the Hordos submit that the Master erred by not finding that the conduct of Zweig was contrary to the alleged LSO requirements concerning file retention and co-mingling of accounts. However, these grounds relate to the merits of the claim against Zweig, and it was proper for the Master not to rule on those issues as he held at paragraph 21 of his reasons (see paragraph 38(ii) above).

[109] At ground (n), the Hordos submit that the Master erred by not striking the impugned paragraphs of the statement of defence. I adopt the Master’s conclusion, at paragraphs 20 and 21 of his decision (see paragraph 38(ii) above).

[110] At ground (o), the Hordos submit that the Master “erred in law in allowing the Defendant’s list of documents for Ms. Diana Hordo to stand as these are the same documents already put to the Court of Appeal and adjudicated on”. The Hordos made no submission on this issue on appeal and the Master made no reference to it in his reasons. There is no basis before me to support such an alleged error, let alone a palpable error that could serve as the basis for an appeal.

[111] At ground (p), the Hordos submit that the Master made an error of fact and law “in allowing the Defendant with no valid defense to continue this action which is akin to vexatious litigation”. As with grounds (l) and (m), this ground relates to the merits of the claim and it was proper for the Master not to rule on these issues.

[112] At ground (q), the Hordos submit that the Master “erred in law in failing to uphold and to follow the [September 2019 Endorsement]” by not ordering a discovery plan. However, as at grounds (a) and (b), the Master heard the motion and ordered the discovery relief (i.e. further written questions) that he considered appropriate. There was no error, let alone a palpable error, in his exercise of his discretion to address discovery-related issues.

9. Conclusion on the appeal

[113] For all of the above reasons, I dismiss the appeal of the Master’s Decision. The Master carefully considered and addressed all of the issues before him. While the Hordos raise many grounds of appeal in their factum, at the hearing, and in their notice of appeal, those grounds do not establish (i) a legal error of the Master, (ii) an error on an extricable legal issue arising from a mixed question of fact or law, or (iii) any palpable error on the findings of fact or mixed fact and law which would be required under the standard of review. There is no basis for any of the grounds of appeal raised by the Hordos.

Rule 59.06 motion

1. Overview

[114] The Hordos submit that the Master’s Decision should be set aside under Rule 59.06 based on the “fresh evidence” or “fraud” which the Hordos allegedly discovered after the Master’s Decision. The Hordos submit that they learned, after my December 12, 2019 decision on the motion before me, that LawPro had retained counsel on behalf of Zweig, the LSO, and itself. In particular, all of the costs I ordered were ultimately paid to LawPro, at each of the respective parties’ counsel’s direction.

[115] The Hordos allege fraud on the court based on the following submissions in their factum:

(i) The lawyers for the LSO “held out to the Learned Master on the record and in [sic] Factum” as “representing LSO”;

(ii) The lawyers for the LSO “confirmed that their client was LPIC” and asked the Hordos “to make the payment of the cost order to LPIC”;

(iii) The LSO “is a statue [sic] formed company, governed by the Legislature of the Province of Ontario […] with a member of the Attorney Generals [sic] Office sitting on their board”;

(iv) “The Attorney General of Ontario, not a private law firm or individual lawyers not of the Attorney General’s Office, can represent the LSO”;

(v) LawPro is not licensed to insure the LSO; and

(vi) LawPro, therefore, is “trying to represent indirectly, those they cannot represent directly, and in fact; this is fraud on the Court”, which is “bringing … the Administration of Justice into disrepute”.

[116] The Hordos submit that my costs order from the December 12, 2019 motion was obtained “under colour of fraud” and that counsel for the responding parties improperly held out that “they were/are proper and legal representatives”.

[117] The Hordos submit that (i) they have since discovered that the Financial Services Regulatory Authority of Ontario (FSRAO) is the sole licensing authority for insurance companies in Ontario and (ii) LawPro’s license restricts it to insuring lawyers only. Based on this determination and the fact that the LSO is a creature of statute, the Hordos conclude that the LSO must be represented by crown attorneys from the MAG.

[118] The Hordos further submit that “[s]imilarly, Ms. Eveleigh, lawyer can only represent her client, the grey haired lady, and not the whole of LawPro, and only the chief agent of LPIC, Daniel Pinnington, can speak for LPIC.”

[119] For the reasons that follow, I dismiss the Rule 59.06 motion. In brief:

(i) Even if I accepted all of the Hordos’ submissions (which I do not), none of the alleged fraud or fresh facts would have been material to the Master’s decision on the motion before him;

(ii) It is proper for counsel to (a) represent that he or she is acting for a client when an insurer has retained counsel for that client and (b) pay to the insurer any costs received, since the insurer is paying for counsel. Consequently, there is no evidence of fraud on the part of counsel;

(iii) I do not accept the Hordos’ submission that the LSO must be represented by crown attorneys of the MAG;

(iv) There is no legal basis for the Hordos’ submission that counsel cannot represent “the whole of LawPro” and that her “client” is the LawPro Representative; and

(v) Even if there is a dispute as to whether LawPro has the statutory jurisdiction to insure LSO, it is not material to the Master’s Decision.

[120] I first review the relevant facts and applicable law for the Rule 59.06 motion. I then address each of the issues raised at paragraph 119 above.

2. Relevant facts

[121] LawPro is an insurance company, incorporated in Ontario. Its services include providing lawyers’ professional liability insurance.

[122] LawPro is not a party to this action and there is no basis for adding LawPro as a party to this matter. LawPro is not mentioned at any point in the statement of claim.

[123] The LSO is a non-share capital corporation continued under the LSA, with a statutory mandate to regulate the practice of law and provision of legal services by persons in Ontario.

[124] The LSO is not a party to this action. It is not named or discussed in the statement of claim.

[125] In my December 12, 2019 endorsement, I ordered costs payable to each of Zweig, the LSO, and LawPro. Those costs were ultimately paid to LawPro, at each of the respective parties’ counsel’s direction. At the December 12, 2019 hearing, counsel for Zweig, the LSO, and LawPro represented to the court (truthfully) that they were acting for their respective clients. All counsel had been retained by LawPro.

3. The applicable law

[126] Rule 59.06(2)(a) provides:

(2) A party who seeks to,

(a) have an order set aside or varied on the ground of fraud or of facts arising or discovered after it was made;

may make a motion in the proceeding for the relief claimed.

[127] Rule 59.06 “is not an invitation to reargue cases endlessly or an invitation to raise new issues after a decision has been rendered. The rule provides a mechanism for re-opening a hearing under very strict conditions”: Berge v. College of Audiologists and Speech Language Pathologists of Ontario, 2019 ONSC 3351 (Div. Ct.), at para. 34.

[128] Rule 59.06 should only be used sparingly, in exceptional circumstances and with the greatest of care: Patra Ironworks & Railings v. Laurin General Contractor, 2017 ONSC 1690, at para. 19.

[129] Those “very strict conditions” are summarized in International Corona Resources Ltd. v. LAC Minerals Ltd. (1988), 66 O.R. (2d) 610, 54 D.L.R. (4th) 647(S.C.), at 658-660; see also Pfizer Canada Inc. v. Canada (Health), 2011 FCA 215, 336 D.L.R. (4th) 49, at para. 21:

(i) The fraud alleged must be proved on a reasonable balance of probability;

(ii) The proved fraud must be material—it must go to the foundation of the case;

(iii) The evidence of fraud must not have been known at the time of trial to the party seeking to rely upon it on a motion to set aside a trial judgment;

(iv) The unsuccessful trial party is exposed to a test of due or reasonable diligence;

(v) If the fraud alleged is that of a non-party, the test must be more stringent than for the fraud of a party;

(vi) The test imposed upon the unsuccessful trial party to obtain evidence going to establish fraud with due diligence is objective. The questions to be asked are: what did the moving party know, and what ought the moving party to have known?

(vii) Unreasonable delay in bringing or pursuing the motion will defeat a motion to set aside a trial judgment under Rule 59.06;

(viii) Relief under Rule 59.06 is discretionary—the conduct of the moving party is relevant; and

(ix) The central question to be answered is whether it has been shown, by the moving party, that there has been a new discovery of something material, in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgment.

[130] The court in International Corona also reviewed the requirement of materiality, at 658:

It seems to me the word “material” means that which goes to the foundation of the decision or which goes to the crux of a central issue before the Court. “Material” obviously means something different from and, in this context, more than “relevant”; it means more than evidence which would be an appropriate topic for cross-examination on credibility, but collateral in the sense of being divorced from any of the main issues in the case in a trial. [Emphasis added.]

[131] “[T]he meaning of fraud as that term is used in r. 59.06” is “that fraud is a false representation made either knowingly, or without belief in its truth or else recklessly, careless as to whether it is true or false”: Lam v. Chen, 2019 ONSC 2510, at para 24.

[132] In other words, for the court to find that a “fraud” was perpetrated, as meant in Rule 59.06, the court would have to find not only that counsel or the client made false statements to the court, but that they did so knowing, or reckless to, the fact that the statements were false.

4. Analysis

[133] There is no basis for a finding of fraud or fresh facts to set aside the order. I now address each of the issues set out at paragraph 119 above.

(i) None of the alleged fraud or fresh facts is material to the Master’s Decision

[134] The Hordos set out the crux of their argument under Rule 59.06 at paragraphs 14 and 16 of their Amended and Supplemental Notice of Motion dated September 23, 2020. They submit that “[t]here are no three distinct, independent representatives of the Defendant and Non-parties before the Court”, but “all are hired by the same private insurance company LPIC”. The Hordos submit that this conduct is “deceitful” and “an abuse of the judicial system”.

[135] However, even if the Hordos could establish fraud or that LawPro could not retain its own counsel or act for the LSO, they cannot establish that had the Master known that counsel for Zweig, the LSO, and LawPro on the December 12, 2019 motion were all retained by LawPro, [^20] then such facts would have “gone to the foundation of [his] decision”. To the contrary, those facts would have been irrelevant to the allegation that Youd, LawPro and the LSO conspired to have Besunder removed as counsel of record in the Zweig Action, which was the basis for the relief sought before the Master.

[136] The fact that Zweig, the LSO, and LawPro are each represented by counsel retained by LawPro is not unusual. A defendant and non-parties can work together to respond to a plaintiff’s motion, even if the same insurer funds all of them. There is no evidence that each of the counsel retained to represent Zweig, LawPro, and the LSO are acting in any manner other than representing the best interests of their respective clients in collectively opposing the Hordos’ motion, which they are entitled to do.

[137] Consequently, even if the Master had been aware that counsel for all three responding parties to the motion were being retained by LawPro, [^21] it would have had no bearing on the Master’s finding that the Hordos’ alleged conspiracy theory was without evidentiary support and premised solely on inference and conjecture.

(ii) It is proper for counsel to (a) represent that he or she is acting for a client when an insurer has retained counsel for that client and (b) pay any costs received to the insurer who is paying for counsel

[138] LawPro is entitled to retain its own counsel to represent its interests and to speak on its behalf. Absent leave of the court under Rule 15.01, LawPro is not entitled to be represented in court without counsel. Consequently, LawPro was entitled to seek its costs of the December 12, 2019 motion.

[139] LawPro, as the professional insurer of Zweig, was also entitled to have any costs award obtained by Zweig directed to be paid to LawPro. There is nothing unusual or improper about an insurer receiving payment of costs orders where that insurer is undertaking the costs of the insured’s representation in the proceeding. Such an approach is standard for cases defended by counsel retained by the insurer, but acting as counsel for the defendant.

[140] Similarly, counsel for the LSO was retained by LawPro. There is nothing nefarious about the fact that the LSO asked the Hordos to pay their costs to LawPro.

[141] Finally, counsel did not misrepresent to the court their status of acting as counsel to Zweig and the non-parties, let alone knowingly mislead the court. They did act as counsel for their respective clients, regardless of being retained by LawPro.

[142] Consequently, I reject this submission made by the Hordos.

(iii) The LSO should not be represented by crown attorneys of the MAG

[143] The Hordos rely on ss. 12(2) and 13(1) of the LSA, which provide that the Attorney General for Ontario is a bencher of Convocation and the “guardian of the public interest” with respect to the LSO. From this, they submit that the LSO can only be represented in court by “crown attorneys”. I do not agree.

[144] The LSO is not a branch of the Ontario government or the MAG. It is an independent non-share corporation, incorporated by statute, and is a regulator in its own right: Hitchlock v. Ontario (A.G.), 2020 ONSC 5348, at para. 16.

[145] In LaBelle v. Law Society of Upper Canada (2001), 56 O.R. (3d) 413 (C.A.), at para. 4, the court held that the Attorney General’s role under s. 13 of the LSA as the “guardian of the public interest in all matters within the scope of this Act or having to do in any way with the practice of law in Ontario” did not charge the Attorney General with the responsibility to investigate complaints against lawyers in the province. That role has been given by the legislature to the LSO (formerly the Law Society of Upper Canada).

[146] Given the independence of the LSO from the MAG, and the LSO’s role in disciplinary proceedings, it would not be appropriate for crown attorneys from the MAG to act as counsel for the LSO.

[147] Consequently, I reject this submission made by the Hordos.

(iv) There is no legal basis for the Hordos’ submission that counsel cannot represent “the whole of LawPro” and that her “client” is the LawPro Representative

[148] It was the Hordos who brought LawPro into the Zweig Action as a non-party, seeking production of documents, examination for discovery, and identification of the LawPro Representative. LawPro properly responded to the relief sought against it as an affected party.

[149] The LawPro Representative is not an affected party who requires legal representation. No relief is sought against her. LawPro was entitled to retain its counsel to respond to the Master’s motion and the current proceedings.

[150] Consequently, there is no legal basis for the Hordos’ submission that counsel cannot represent “the whole of LawPro” and that her “client” is the LawPro Representative.

(v) Even if there is a dispute as to whether LawPro has the statutory jurisdiction to insure LSO, it is not material to the Master’s Decision

[151] The Hordos submit that LawPro is not licensed to insure the LSO. I make no findings on that issue.

[152] For the reasons I discuss above, the jurisdiction of LawPro to insure the LSO is not material to the Master’s Decision and, as such, cannot serve as the basis to set aside his order. It does not matter to the removal, production, discovery, or pleadings issues considered by the Master, let alone go to their “foundation” as required under the case law.

[153] LawPro submits that under the approach in Pro-Demnity Insurance Co. v. Ontario (Financial Services Commission), 2015 ONSC 5999, aff’d 2016 ONCA 260, the court should defer to the Chief Executive of FSRAO to determine LawPro’s jurisdiction to insure the LSO.

[154] The Hordos distinguish Pro-Demnity on the basis that the insurer in that case had already brought a proceeding before the Financial Services Commission of Ontario (FSCO) seeking amendments to its insurance license to permit it to sell additional classes of insurance and to sell insurance to non-architects and, as such, the court deferred to an existing FSCO proceeding, which does not arise in the present case: see Pro-Demnity, at para. 13.

[155] LawPro submits that the factual distinction raised by the Hordos is not relevant, and that the court should defer to the Chief Executive Officer of FSRAO.

[156] I do not address this issue on this appeal. It is not appropriate to review the jurisdiction of LawPro to insure the LSO when that issue was not related in any way to the Master’s Decision, and any comments in the present case would be strictly obiter with extremely limited argument on the issue.

5. Conclusion on Rule 59.06 motion

[157] For the above reasons, I dismiss the Rule 59.06 motion brought by the Hordos.

Motion for relief under a judge’s jurisdiction

[158] As I held in my December 12, 2019 endorsement, none of the relief sought in the supplemental notice of motion which is duplicative of the relief sought before the Master can be granted. It is an abuse of process, as the matters were required to be addressed on appeal.

[159] Consequently, the only issues which were not within the Master’s jurisdiction and remain before me on the Hordos’ present motion for such relief are the Hordos’ request for an order that:

(i) LawPro (and possibly the LSO) [^22] be required to pay for (a) the Hordos’ interim costs (based on the costs the Hordos paid to Besunder before he removed himself as lawyer of record) and (b) two expert reports the Hordos submit they require to pursue their claim;

(ii) LawPro and the LSO be declared vexatious litigants under s. 140 of the CJA; and

(iii) a receiver be appointed for the LSO under s. 101 of the CJA. [^23]

[160] I address each of these issues below.

1. Payment of interim costs and expert reports

[161] The court’s power to award interim costs is discretionary and is based on s. 131 of the CJA which provides that:

131 (1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

[162] An order for interim costs is rarely granted. The test for awarding interim costs requires a number of conditions, all of which must be present, before such an award will be granted: Karas v. Ontario, 2016 ONSC 8152, at para. 28 (quoted verbatim):

(i) The party seeking interim costs must be impecunious to the extent that, without the order, the party would be deprived of the opportunity to proceed with the case;

(ii) The party seeking the order must establish a prima facie case of sufficient merit to warrant pursuit; and

(iii) There must be special circumstances sufficient to satisfy the court that the case is within the narrow class of cases where this extraordinary exercise of its powers is appropriate.

[163] The Hordos failed to meet the conditions set forth above. They led no evidence as to their financial status. There are no special circumstances in this case which warrant this extraordinary exercise of power.

[164] Further, it is an abuse of process for the Hordos to pursue such relief. Although the requests for payment of interim costs and expert reports were not before the Master, since they were not within his jurisdiction, they are premised upon the same conspiracy theory rejected by the Master. Paragraph 29 of the Hordos’ Notice of Motion states as follows:

In order to level the playing field, LawPro should pay for the expert opinion on Solicitor’s Negligence as their interference on the eve of trial to remove the Plaintiffs’ solicitor of choice has left the Plaintiffs without representation[.]

[165] Consequently, the relief should be denied as res judicata or abuse of process.

[166] Accordingly, there is no legal basis for the Hordos’ request that LawPro or the LSO pay for either the Hordos’ “costs thrown away” (interim costs) or the costs of the Hordos’ proposed expert reports.

2. The Hordos’ request for LawPro and the LSO to be declared vexatious litigants

[167] Section 140 of the CJA provides the authority for the court to declare a party to be vexatious. This provision stipulates that the court must be satisfied that a party has persistently and without reasonable grounds either:

(a) instituted vexatious proceedings in any court; or

(b) conducted a proceeding in any court in a vexatious manner.

[168] Neither situation exists on the facts before the court.

[169] LawPro and the LSO are not parties to this action. They have taken no steps in these proceedings aside from responding to the Hordos’ efforts to obtain relief directly as against them. On that basis alone, the vexatious litigant argument must fail.

[170] LawPro’s only role in this matter is pursuant to its contractual obligation to defend Zweig. In fulfilling its contractual obligation, LawPro’s conduct has not been abusive: D.M. v. Alberta Lawyers Insurance Association, 2006 ABQB 598, 271 D.L.R. (4th) 246, at para. 58.

[171] The LSO has a statutory mandate to regulate the practice of law and provision of legal services by persons in Ontario. Its only role in this matter is as a non-party alleged co-conspirator with LawPro and Zweig to remove Besunder as the Hordos’ counsel. As I discuss above, the Master properly held that such a theory was baseless. In any event, even if such conduct could be established, it would not make the LSO a vexatious litigant.

[172] The LSO is only a participant in this proceeding by virtue of the Hordos’ attempt to seek evidence from it. The Hordos have led no evidence to support a claim that the LSO has conducted this or any other proceeding in a vexatious manner.

[173] Consequently, I dismiss the Hordos’ request to have LawPro and the LSO declared vexatious litigants.

3. Appointment of receiver for the LSO

[174] An interim receiver may be appointed under s. 101 of the CJA “in cases where the plaintiff can demonstrate a strong case that the defendant has engaged in fraud and that without the appointment of a receiver the plaintiff’s right to recovery would be in serious jeopardy”: Loblaw Brands v. Thornton, [2009] O.J. No. 1228, 78 C.P.C. (6th) 189 (S.C.), at para 14.

[175] For the reasons outlined above, the Hordos have not demonstrated any case, let alone a strong case, that the LSO engaged in fraud.

[176] Consequently, I dismiss the Hordos’ request for the appointment of a receiver.

Order and costs

[177] For the above reasons, I dismiss the appeal of the Master’s Decision, the Rule 59.06 motion, and the motion for additional relief under a judge’s jurisdiction.

[178] At the hearing, the parties agreed that costs should be addressed by brief written submissions. Zweig, the LSO, and LawPro shall deliver their written costs submission of no more than three pages each (excluding a bill of costs) by no later than February 26, 2021. The Hordos shall deliver responding submissions of no more than three pages to each of the written costs submissions delivered by Zweig, LawPro, and the LSO respectively, by no later than March 12, 2021. Each of Zweig, LawPro, and the LSO may deliver reply written costs submissions of no more than one page each no later than March 19, 2021.

GLUSTEIN J. Date: 20210212

COURT FILE NO.: CV-13-490665 DATE: 20210212 ONTARIO SUPERIOR COURT OF JUSTICE DIANA HORDO and MICHAEL J. HORDO Plaintiffs AND: ARNOLD H. ZWEIG Defendant

reasons for decision Glustein J. Released: February 12, 2021

Footnotes

[^1]: The Hordos appeal both the decision of the Master (Hordo v. Zweig, 2019 ONSC 6765 [Master’s Decision]) and his separate costs endorsement (Hordo v. Zweig, 2020 ONSC 1442 [Cost Endorsement]), although they advised the court at the present hearing that the appeal of the costs award was based only on the Hordos’ position that the merits of the motion were wrongly decided. They did not seek to modify the costs award if the appeal on the merits was not granted. [^2]: At the hearing, the Hordos submitted that LawPro was a separate corporate entity owned by the LSO, while counsel for Lawyers Professional Indemnity Company submitted that LawPro was a business name under which Lawyers Professional Indemnity Company operated (having previously operated under the business name of “LPIC”). While the Hordos rely on the alleged corporate structure as a basis to challenge LawPro’s ability to retain its own counsel or counsel for the LSO, I find that the corporate structure is not relevant for reasons I discuss below. When I refer to “LawPro” in these reasons, it is irrelevant whether LawPro is a separate legal entity or business name of Lawyers Professional Indemnity Company. [^3]: The request for copies of relevant insurance policies and related insurance documents and communications relating to Zweig appears to have been made at the hearing before the Master: see Master’s Decision, at para. 24. [^4]: The request for forensic examination of Youd’s cell phone also appears to have been made at the hearing before the Master: see Master’s Decision, at para. 25. [^5]: In these reasons, I refer to the “grey haired lady” as the “LawPro Representative”. [^6]: At the present appeal hearing, the Hordos acknowledged that they were late in arriving at the pre-trial conference and have no knowledge as to whether the participants were introduced at the outset. The Hordos filed no evidence that, upon their late arrival, they asked at the pre-trial conference for the “grey haired lady” to be identified and that any of the participants at the pre-trial conference refused to identify the LawPro Representative. [^7]: The Hordos filed an Amended Notice of Motion dated November 30, 2020 (Amended Notice), which included reference to the LSO as a party from whom they were seeking payment of both interim costs and expert reports, despite not having included that relief in their initial notice of motion and despite my endorsement dated November 6, 2020 in which I permitted the Hordos to serve an amended notice of motion by December 1, 2020 to indicate only what relief was “withdrawn” from the initial notice of motion. Nevertheless, I address the issue of the relief sought against the LSO (as well as LawPro) in these reasons. [^8]: The Hordos did not seek the “receiver” relief in either their initial notice of motion or the Amended Notice but requested such relief in their factum for the present hearing. [^9]: The uncontested evidence is that the representative was “claims counsel” for LawPro, i.e. a lawyer who (similar to an insurance adjuster) is responsible for reviewing the claim, attending at a pre-trial conference, and instructing LawPro counsel retained for the insured lawyer. [^10]: (see footnote 6 above) [^11]: (which had been included in the initial notice of motion for the December 12, 2019 hearing even though it had not been raised at the September 19, 2019 case conference) [^12]: It was later agreed by all parties that the remaining issues would be heard together with the appeal. [^13]: (see footnote 7 above) [^14]: As I note at paragraph 39(i) above, the Master held, at para. 24 of his decision, that LawPro’s offer to provide a link to the LawPro website where all policies from 2013 to 2019 could be found was sufficient to comply with Rule 31.06(4). The Master refused to order production of “insurance documents and communications involving the defendant”. [^15]: As I note at paragraph 38(iii) above, the Master held, at para. 22 of his decision, that Zweig had answered his undertakings. The Master permitted limited follow-up written questions. [^16]: As I note at paragraph 39(ii) above, the Master held, at para. 23 of his reasons, that Zweig was not required to compel Besunder to produce his file and, as such, Zweig had satisfied his disclosure obligations by offering “to provide the plaintiffs with further copies of the defendant’s productions upon the plaintiffs paying reasonable photocopying costs”. [^17]: The lower court in Essa released a correction (Heck v. Royal Bank (1993), 15 O.R. (3d) 127, 1993 CarswellOnt 1857 [Essa Correction]) to the initial decision (Heck v. Royal Bank (1993), 12 O.R. (3d) 111), in which the judge clarified that the prohibition on counsel acting “where he or she has earlier given evidence” applies only to “that motion, trial or appeal” at which the evidence is to be used: See Essa Correction, at paras. 2-3. [^18]: In any event, the Hordos led no evidence that they could not obtain the necessary documents or evidence through Zweig, which also would have been required under Rules 30.10 and 31.10. [^19]: The Hordos seek to strike approximately 30 paragraphs from the statement of defence. Those impugned paragraphs are set out at paragraph 48 of Michael’s October 10, 2019 affidavit sworn in support of the motion before the Master. [^20]: LawPro submits that the Master likely was aware that LawPro retained all counsel. There is no evidence whether the Master knew this information. In any event, even if it the Master did not know about LawPro’s retainer, it would not be material. [^21]: Ibid. [^22]: (see footnote 7 above) [^23]: (see footnote 8 above)