Court File and Parties
COURT FILE NO.: CV-20-00073440 DATE: 2023/05/29
SUPERIOR COURT OF JUSTICE – ONTARIO
BETWEEN: Robyrt H. Regan Plaintiff
AND:
Alfred J. Esterbauer, Koskie Minsky LLP and John Doe No. 1 Defendants
BEFORE: The Honourable Justice R.J. Nightingale
COUNSEL: Gavin Tighe and Kevin Mooibroek, Counsel for the Defendants Alfred Esterbauer and Koskie Minsky LLP Peter Waldmann, Counsel for the Plaintiff
HEARD: April 11, 2023
Endorsement
[1] The defendants Alfred J. Esterbauer, Koskie Minsky, LLP, and John Doe No. 1, lawyers, (collectively “Esterbauer”), seek an order under rule 21.01(3)(d) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, dismissing the claim of the plaintiff Robyrt H. Regan (“Regan”), presently a suspended lawyer, on the grounds that it is frivolous or vexatious or is otherwise an abuse of process.
[2] Alternatively, Esterbauer claims that Regan's action is res judicata and subject to issue estoppel.
[3] Regan’s action commenced in October 2020 claims $15 million in damages against Esterbauer. He claims that Esterbauer provided him with negligent legal advice and breached his professional obligations by failing to represent him in a conscientious and diligent manner in defending him in a civil contempt application brought against Regan described below.
[4] He also advances a claim against Esterbauer for negligent misrepresentation and seeks to recover in this action the legal fees he paid to Esterbauer in the contempt proceedings including the subsequent appeals.
[5] Esterbauer filed his affidavit and supporting documents as exhibits and Regan filed his responding affidavit and exhibit documents totaling over 1900 pages. There have been no cross-examinations on those affidavits.
Factual Background
[6] Regan is a formerly licensed lawyer now under suspension by the Law Society of Ontario (the “LSO”). In or around June 2015, Regan retained Esterbauer to assist him in litigation involving the Business Development Bank of Canada (“BDC”). BDC was pursuing a claim against Regan’s former client Bortolon and was about to bring a contempt motion against both Regan and Bortolon, details of which are noted below.
[7] Regan had first become acquainted with Esterbauer a few months earlier in connection with an unrelated errors and omission action in which Regan was the defendant. Law Pro had retained Esterbauer as defence counsel on Regan’s behalf.
[8] On June 18, 2015, Regan wrote to Esterbauer about retaining him in connection with BDC’s threatened contempt motion against him.
[9] BDC’s contempt motion was going to be brought because of the failure of both Regan and Bortolon to comply with a production order of LeMay J dated March 11, 2015 (the “LeMay order”). That order made in Regan’s presence required Regan to attend an examination under oath as a witness under Rule 39.03 and that Regan provide access to BDC and its lawyers to the documents in Regan’s possession requested by it.
[10] Five days later on March 16, 2015, Regan sent a letter to Bortolon’s lawyer which alluded to a proposed arrangement between them to purposely not produce a host of documents to BDC by Regan. The letter stated:
I am writing to follow-up our recent appearance before the Honourable Mr. Justice LeMay on March 11, 2015.
As you are aware, His Honour pronounced an Order requiring me to provide access to your client’s file materials currently in my possession March 31, 2015. You are furthered aware that I continue to maintain a possessory lien on same in respect of your client’s unpaid legal accounts.
Earlier today, I was contacted by counsel for BDC who is seeking to schedule a date with he can attend my office and reviewed the file materials.
Without intending to be mischievous, I feel obliged to give you fair warning that there are a number of factual inconsistencies between the statements deposed to in Mr. Bortolon’s affidavit dated September 23, 2014 and the information contained in the various original documents in my possession. The nature of these inconsistencies is likely to be highly prejudicial to your clients. It is also equally likely that the same inconsistencies will come to the attention of BDC’s counsel on their review of the documents which they are entitled to see and should any questions be put to me during my examination, I would be obliged to provide a truthful answer.
It goes without saying that if your clients were to settle their outstanding account with me and complete the terms of the settlement entered into in January 2014 (which they are presently in breach of), then your clients would have a right to return of their file materials (which amount to approximately 18 file boxes, more or less) in priority to the demands for their production by BDC.
If your clients have an interest in retrieving their materials, I would ask you provide me with the confirmation of same on or before the close of business, March 18, 2015. If I do not hear from you by that time, I will assume your clients have no further interest in their files.
[11] What Regan did next is noted in detail in the affidavits that were before Gray J when the contempt motion was heard.
[12] After the agreement was made, Regan, on March 25, 2015, returned approximately 14 boxes of highly relevant and prejudicial documents to Bortolon rather than retain them in his possession for the inspection of and production to BDC’s lawyers.
[13] On March 27, 2015, Regan advised BDC’s counsel that he no longer had any of Bortolon’s files and that he only retained documents pertaining to the now settled litigation between himself and Bortolon and his earlier complaint to the LSO.
[14] Bortolon only delivered five boxes of those documents to BDC’s lawyers which were only of marginal relevance and none of which were highly prejudicial to Bortolon. On June 4, 2015, Regan produced approximately four boxes of documents for inspection at his office by BDC’s lawyers.
Nature of the Esterbauer Retainer
[15] There is a dispute between Regan and Esterbauer as to the nature and extent of the retainer agreement.
[16] Esterbauer’s evidence is that Regan, who was an experienced civil and commercial litigation counsel since 2006, in June 2015 asked Esterbauer to assist him because of BDC’s threatened contempt motion against Regan. Regan insisted he wanted to retain full control and carriage over Regan’s response to the contempt motion because he was extremely cost-conscious and was intimately familiar with the underlying facts and complexities of the case.
[17] Esterbauer’s evidence was that Regan advised him that he would prepare all the responding materials to the contempt motion. Regan was a practising barrister at the time and had advanced knowledge of the litigation process. Regan admits in his affidavit that he was concerned that Bortolon would engage in vexatious and collateral steps calculated to drive up Regan’s costs. To ensure the costs would not spiral out of control, Regan insisted that he would do as much of the legal work as possible.
[18] Esterbauer states his retainer was limited to appearing as counsel for Regan on the contempt motion based on materials Regan was to prepare.
[19] Regan, in his evidence, states he was served with the contempt motion of BDC in early September 2015. He admits he began drafting the responding affidavits to the contempt motion and the undertakings and compliance chart shortly after he confirmed the retainer with Esterbauer in October 2015.
[20] Regan states that it was Esterbauer who first suggested as a cost-saving measure that Regan draft all of the responding affidavits and facta and deal with purely administrative communications which Esterbauer would revise where necessary. Regan also states that the contempt motion was outside his knowledge and professional skill set to properly defend and that he lacked the necessary professional objective distance to conduct the defence of the contempt motion.
[21] Regan denies that Esterbauer was retained on a limited basis to defend the contempt motion but rather he was retained on a general basis to represent him in the contempt proceeding. He states he had no knowledge of the civil contempt process.
[22] That evidence is particularly disingenuous and inconsistent with the following facts which support Esterbauer’s version of his retainer.
[23] Regan knew since his first discussion with Esterbauer in late June 2015 that Esterbauer was going to be out of the office on an extended vacation from then until early October 2015.
[24] In addition, Regan himself corresponded with BDC’s counsel on October 5, 2015, saying that he was in the process of delivering responding materials for the upcoming contempt motion and stating it was his position that he had complied with the Le May order. Similarly, on November 16, 2015, he advised BDC’s counsel that he would be delivering a responding motion record and factum (through Mr. Esterbauer) and would also be relying on his responding motion record dated March 4, 2015.
[25] Moreover, on November 23, 2015, Esterbauer provided his brief comments on the lengthy and detailed draft affidavits that Regan had prepared in his own name. Esterbauer asked if his office was to prepare the required factum on the contempt motion or whether Regan would. Esterbauer also indicated to Regan that he understood his role would be to attend at the argument of the motion.
[26] Regan immediately responded on November 24 confirming that Esterbauer’s role was to attend at the argument of the motion i.e., Esterbauer would be advocating on Regan’s behalf on the hearing of the contempt motion. Significantly, Regan confirmed that he himself would be preparing the factum for the contempt hearing and would have it delivered shortly to Esterbauer.
[27] He subsequently did so on November 28, 2015, which included the evidence and applicable principles regarding civil contempt. In particular, he advised Mr. Esterbauer that the decision BDC was relying on for the test of civil contempt had just been varied by a recent unanimous decision of the Supreme Court of Canada (Carey v. Lakin) “which is more favourable to us”. He asked whose name Esterbauer wanted to use on the factum, his office or Regan’s.
[28] Regan had already served the documents he had prepared in his own name on BDC’s lawyers on or about November 26, 2015. His November 25, 2015 affidavit stated that the LeMay order did not grant BDC’s lawyers unlimited access to all of Bortolon’s documents but was limited to only the ones requested by their lawyers. Regan also stated that he had complied with his undertakings from his examination to produce documents he had from his electronic files in his possession referring to that chart as exhibit R.
[29] On November 30, 2015, Esterbauer advised Regan of some proposed revisions to the draft factum and that he should finalize it and arrange to have it served and filed along with the casebook. Regan was advised by Esterbauer that the materials should continue to list Regan’s firm on the documents filed and that he may wish to send a letter or email to BDC’s lawyers that Regan had retained Esterbauer to act as counsel for the hearing and that Esterbauer will be in attendance at that time.
[30] On December 2, 2015, Regan wrote to BDC’s counsel and confirmed that “Mr. Esterbauer will be representing me for the argument of the motion…”
[31] Esterbauer at no time became counsel of record for Regan on the motion.
[32] In March 2016, Regan provided Esterbauer with a complete copy of electronic files he had referenced in his material to BDC’s lawyers.
[33] BDC provided its supplementary affidavit of May 10, 2016 directly to Regan and Esterbauer wherein he took the position that Regan and Bortolon had failed to produce boxes of highly relevant and prejudicial documents in breach of the LeMay order. Their evidence was that Regan had returned approximately 14 boxes of documents to Bortolon rather than retain them in his possession for the inspection of and production to BDC’s lawyers. Bortolon had only provided 5 boxes of documents to BDC’s lawyers which were only of marginal relevance and none of which were highly prejudicial to Bortolon.
[34] On May 11, 2016, Esterbauer wrote to Regan advising that he should provide some additional response to the BDC affidavit. Esterbauer also requested clear direction from Regan as to what role Regan would like Esterbauer to play in respect of the hearing of the contempt motion scheduled for June 7, 2016.
[35] On May 27, 2016, Esterbauer wrote to Regan and confirmed, “You have asked me to represent you as counsel at the hearing of the contempt motion which is now only a little over one week away.”
[36] Regan believed that the supplementary affidavit of BDC containing extremely prejudicial allegations against him needed to be countered. Accordingly, Regan prepared and provided his own lengthy and detailed supplementary affidavit of May 31, 2016, again stating as he had in his previous affidavit of November 25, 2015, that he was not in violation of the LeMay order. Regan again swore that he had satisfied all of the undertakings to produce documents from his examination. He also swore that he had provided BDC’s lawyers, on March 1, 2016, with a memory stick for the balance of the Bortolon documents in his possession which he stated were the subject of the LeMay order.
[37] Regan did not dispute Esterbauer’s evidence that in August 2016, Regan retained Esterbauer to appear on his behalf at an urgent Motion brought by the LSO to suspend Regan’s license to practice law in Ontario. Esterbauer’s undisputed evidence was that similarly, the motion materials in that proceeding were also prepared by Regan who wished to control the content of the material and save costs.
[38] Despite there being no cross-examinations on the parties’ affidavits, the evidence, as indicated above, supports Esterbauer’s position that his retainer was limited to appearing as counsel for Regan on the contempt motion based on the detailed affidavit materials and legal documents Regan was to prepare and did prepare including the motion and appeal records, facta and case law authorities.
[39] Esterbauer had only minimal involvement in regard to the steps leading up to the hearing of the liability portion of the motion and did not go on record. Regan was an experienced civil and commercial litigation lawyer who was well-versed in evidence issues as noted in the detailed legal documents including the facta and case brief he prepared and the test to be applied by a court in a contempt of court motion.
[40] I prefer and accept the evidence of Esterbauer over that of Regan on that issue.
Contempt Motion before Gray J
[41] The contempt motion was heard on June 7, 2016 before Gray J, who reserved his decision. Three days after the hearing, Regan advised Esterbauer that he noticed that the refusals and undertakings chart, exhibit R, was missing from his responding affidavit of November 25, 2015 he had prepared in which Regan had stated he had provided the specific documents sought by BDC by way of undertakings on his examination and referring to that as exhibit R. He asked Esterbauer to provide it to Gray J.
[42] Esterbauer, on June 20, 2016, wrote to BDC’s lawyer that the exhibit R inadvertently was not included in Regan’s affidavit and should be provided to the court with a cover letter. BDC’s lawyer advised it would review the matter and that Esterbauer should not communicate with the court without their consent.
[43] On the same day, Gray J issued his decision at 2016 ONSC 4084, and found both Regan and Bortolon in contempt of the LeMay order. He found that Regan and Bortolon had colluded to avoid production of many highly relevant and prejudicial documents that had been in Regan’s possession and gave significant weight to Regan’s letter of March 16, 2015 described above in doing so. He concluded at paragraph 50 that while unstated, the clear inference was that Bortolon would see that none of the incriminating documents would find their way to counsel for the BDC and that is indeed what happened.
[44] Gray J did not accept the affidavit material of Regan and Bortolon to the effect that all relevant documents had been produced as LeMay J had ordered. Regan had prepared and sworn an affidavit that he had condensed the files in his possession to 14 boxes and had delivered all of those boxes to Bortolon on March 25, 2015.
[45] Later, Regan only produced approximately four boxes of documents for inspection at his office by BDC’s lawyers on June 4, 2015.
[46] Gray J concluded that the LeMay order was quite clear and that whatever interest Bortolon had in the documents, that order itself had to be complied with. In paragraphs 48, 49 and 50 of his decision, Gray J referred to Regan’s obligations to provide all relevant documents pursuant to the order.
[47] It is clear that Gray J disagreed with and rejected Regan’s affidavit evidence of November 25, 2015, and his position taken on the contempt motion that the LeMay order entitled BDC’s lawyers to only certain enumerated material but not all the material in Regan’s possession belonging to Bortolon who Regan said was entitled to the return of any material not specifically covered by the LeMay order.
[48] Although the missing exhibit R had been omitted from the materials prepared by Regan, his lengthy affidavits as part of his responding motion materials asserting that there was no contempt and making specific reference to that exhibit were obviously considered by Gray J. Regardless, the finding of contempt against Regan by Gray J was largely due to the incriminating evidence, and in particular, Regan’s letter of March 16, 2015 confirming the agreement between Regan and Bortolon to purposely not produce highly incriminating documents to BDC’s lawyers.
[49] The penalty hearing took place before Gray J in September 2016. Regan filed two supplementary affidavits he had prepared prior to this hearing with the second lengthy and detailed affidavit containing the missing exhibit R. In one of those affidavits, Regan stated that he wished (i.e. in that affidavit) to provide a detailed account of exactly what documents were produced and BDC’s lawyers which he believed would demonstrate that he took the necessary steps to comply with the LeMay order. He then provided approximately 30 paragraphs of evidence in that regard.
[50] On September 26, 2016, Regan also delivered the draft factum he had prepared to Esterbauer for the penalty hearing.
[51] Esterbauer attended and appeared as counsel on behalf of Regan at the penalty hearing. Gray J rendered his decision on November 7, 2016 confirming his earlier findings of contempt of Regan that Regan and Bortolon had made a deal that if Bortolon settled his dispute with Regan, a number of incriminating documents would be shipped to Bortolon rather than being made available for inspection by BDC.
[52] Gray J found that that in fact occurred as 14 boxes were shipped to Bortolon by Regan and only 5 boxes then shipped to BDC.
[53] Gray J sentenced Regan to 90 days imprisonment.
[54] Gray J also noted that both Regan and Bortolon had improperly sought to reargue the merits of the motion and to persuade him again that they were not in contempt of the LeMay order. He ruled that Regan had tried to put in evidence facts and materials that should have been filed at the initial hearing.
Appeal to Court of Appeal
[55] Regan appealed the contempt order and sentence imposed against him of Gray J to the Ontario Court of Appeal. He submitted that the motion judge failed to apply the correct legal framework for the contempt hearing, failed to give appropriate weight to the evidence that he complied with the LeMay order and that he should have been cross-examined on his affidavit if there was an intention by opposing counsel to contradict it. His position essentially was that BDC had failed to prove beyond a reasonable doubt that he was in contempt of the LeMay order that he had in fact complied with.
[56] Esterbauer was retained by Regan to argue that appeal. The Court of Appeal, on August 22, 2017, with reasons reported at 2017 ONCA 663, dismissed Regan’s appeal on liability. It found that the motion judge did not make any palpable and overriding error in his findings of fact and did not err in finding Regan in contempt as he had breached the LeMay order and that his letter of March 16, 2015 and own examination indicated that more documents should have been produced by him.
[57] The court, at paragraph 15, referred specifically to the fact that during Regan’s examination by BDC on June 5, 2015, he admitted he had sent that letter of March 16, 2015 to Bortolon’s counsel, was aware of the requirement of the LeMay order to produce documents to BDC by March 31, 2015 and said that he released approximately 18 boxes of documents to Bortolon which were highly prejudicial without making copies of them. When asked why the documents were returned to Bortolon rather then made available for inspection by BDC’s counsel as required by the LeMay order, Regan stated that Bortolon had “higher rights to the material”.
[58] The court at paragraphs 67 and 68 made it clear that Regan’s letter of March 16, 2015 and Regan’s own examination indicated more documents should have been produced to BDC.
[59] The court also referred to Regan’s evidence from his examination that he released 18 boxes of documents to Bortolon without making copies and that he did not have a policy of scanning incoming documents or documents that a client provided to him for litigation purposes at that time. The court found that the motion judge did not make any errors in his findings of fact in rejecting Regan’s assertion that he had retained electronic copies of all relevant documents.
[60] The court confirmed the motion judge’s findings that Regan’s conduct warranted a jail sentence due to the very serious nature of his contempt but reduced his sentence to 45 days incarceration.
[61] The Court of Appeal on October 2, 2017 declined to hear a request from Regan to vary his custodial sentence to house arrest or be served in a “less violent facility” on weekends in part because of the worsening of his medical conditions of anxiety and insomnia.
[62] In August 2018, Regan instructed Esterbauer to bring an application for leave to appeal that decision to the Supreme Court of Canada which was denied.
[63] Regan then retained Esterbauer to bring a motion to vary the manner in which he would serve his 45-day sentence relying on fresh evidence about his health and other hardship factors.
[64] The motion was dismissed on August 16, 2019 by Doi J for lack of jurisdiction as he stated he could not vary the order of the Court of Appeal citing Whitfield v. Whitfield 2017 ONCA 8995 at para.5. In obiter, Doi J noted that Regan’s proposed fresh evidence relating to his pre-existing health and hardship issues, including from a psychologist’s report obtained in May 2019 stating that Regan was experiencing significant and prolonged stress in March 2015, was previously known and could and should have been raised on his appeal before the Court of Appeal or in his post appeal request.
[65] Ten days later, Regan delivered himself to a provincial correctional institution to serve his sentence.
[66] In his 104-paragraph statement of claim, Regan alleges that Esterbauer’s negligence was his failing to advise him to bring a fresh evidence motion to place the missing exhibit R and obtain expert medical evidence of the effects of Bortolon’s long-term harassment and abuse on Regan and his family before Gray J for his reconsideration of his initial finding of contempt or before the Court of Appeal.
[67] In particular at paragraph 71, “Regan pleads and the fact is that had he been able to place the Missing Exhibit and his medical circumstances into evidence by way of a fresh evidence motion, the result of the Contempt Motion would have been entirely different.”
Analysis
[68] Rule 21.01(3)(d) provides that a court can dismiss an action before trial on the ground that the action is frivolous or vexatious or is otherwise an abuse of process of the court.
[69] The test to be applied is whether there is any reasonable prospect that the claim will succeed, the effect being to weed out the hopeless claims in ensuring that those that have some chance of success go to trial. see: Green v. Canadian Imperial Bank of Commerce, 2014 ONCA 90, 135 O.R. (3d) 334, at para. 86.
[70] An action for which there is clearly no merit qualifies for classification as frivolous, vexatious, or an abuse of process and may accordingly be struck. see: Currie v. Halton Regional Police Services Board at para. 17.
[71] I agree with Esterbauer’s position that Regan’s claim against him for professional negligence and breach of contract has no merit and should be struck because this court and the appellate courts have already determined that Regan clearly contemptuously breached the LeMay J order of March 11, 2015 and as described in his letter of March 16, 2015, he colluded with his client Bortolon to act in contempt of that order.
[72] Regan submits that he is not seeking to challenge the rulings made by Gray J or the Court of Appeal. He submits that he does not contend that those prior rulings were wrong nor that but for Esterbauer’s negligence, these rulings would have been different had Esterbauer did what he could and should have done to defend Regan.
[73] He concedes that had Esterbauer taken all the steps to defend Regan that he failed to take, the rulings by Gray J and the Court of Appeal may still have been the same. He states that the issue in the action is whether as a result of Esterbauer’s negligence, Regan suffered a loss of chance to deliver a complete defence and would not have suffered the consequences to the same extent that he did.
[74] I disagree.
[75] In my view, Regan in fact is clearly seeking to relitigate the finding of contempt made against him by those courts in this professional liability action against Esterbauer. His statement of claim specifically pleads that had he been able to place the missing exhibit R and his medical circumstances into evidence by way of a fresh evidence motion, the result of the contempt motion would have been entirely different.
[76] This action in my view is a collateral attack on those court orders which found that Regan had colluded with a former client and was in contempt of court making specific reference to his letter of March 16, 2015 and what he subsequently did when he chose not to comply with the LeMay order and is an abuse of process.
[77] The jurisprudence is clear and it has long been a fundamental rule that a court order, made by a court having jurisdiction to make it, stands and is binding and conclusive unless it is set aside on appeal or lawfully quashed. It is also well settled in the authorities that such an order may not be attacked collaterally – that is, attacked in proceedings other than those whose specific object is the reversal, variation, or nullification of the order or judgment. see: Indalax Limited (Re), 2011 ONCA 65, 104 O.R. (3d) 641 at para. 152, rev’d on other grounds 2013 SCC 6; Wilson v. The Queen, [1983] 2 S.C.R. 594 at p. 599.
[78] The bringing of a subsequent action to determine issues already determined by a court of competent jurisdiction constitutes a vexatious proceeding and is an abuse of process. See Currie v. Halton Regional Police Services Board at paras. 11 - 17, citing Lang Michener et al v. Fabian et al, 59 O.R.(2d) 353 (S.C.).
[79] The general principle is that the allegations of ineffective legal assistance at trial in civil matters are properly raised by a negligence action brought by the client against the lawyer. Oz Merchandising Inc. v. Canadian Professional Soccer League Inc., 2021 ONCA 520 at para.44.
[80] In Lang Michener LLP v. King, 2017 ONSC 1917 at paras. 26 - 32, rev’d on other grounds, 2018 ONCA 471, the court confirmed that where a professional negligence action against a lawyer arises out of the theory that another court’s decision was wrong and that but for the lawyer’s negligence the decision would have been different, the action constitutes an impermissible collateral attack.
[81] Regan in his factum referred to the decision of Myers J in Foodinvest Limited v. Matlofsky, 2022 ONSC 398 at para. 17 which confirmed that a plaintiff dissatisfied with his counsel’s performance in litigation cannot sue if part of the claim is that the lawyer led the court to make the wrong conclusion. That argument must be made on appeal either on the merits or as a form of “ineffective assistance of counsel” argument. Otherwise, the correctness of the decision of the court cannot be challenged by a collateral attack.
[82] At no time did Regan raise the issue of ineffective assistance of counsel by Esterbauer in the proceedings before Gray J, the Court of Appeal or the application for leave to the Supreme Court of Canada. He was aware of what evidence was presented and not presented before Gray J prior to the hearing of his appeal in the Ontario Court of Appeal.
[83] In particular, he knew that as of January 6, 2017, six months before the hearing in the Court of Appeal, Esterbauer had not sent the missing exhibit R to Gray J because he had already released his decision.
[84] Moreover, Regan has brought no such application since before the Ontario Court of Appeal to make that claim of ineffective counsel of Esterbauer or to provide any fresh evidence in that Court in an attempt to vary or reverse its decision.
[85] I am bound by that decision and the facts determined therein. The Court of Appeal clearly rejected the position of Regan that he had complied with the LeMay order based on the facts referred to in its decision and confirmed his contempt.
[86] Moreover, Regan concedes in his factum at paragraph 19 that the court found that his letter of March 16, 2015 to Bortolon’s counsel was held to be contemptuous. As Gray J held, that letter can admit of no doubt as to its meaning.
[87] Regan’s states that Gray J made his finding based on the factual matrix before him. Regan’s position was that it was Esterbauer’s responsibility to ensure that the factual matrix before Gray J was complete and accurate, including all the documents Regan had delivered to Cartwright in 2011, the extreme duress under which he was placed by Bortolon, the missing exhibit R, details of the contents of the five boxes that were delivered by Bortolon to BDC and cross-examination transcripts of the other party’s affidavits.
[88] That position has no merit given that contemptuous letter of Regan of March 16, 2015 and what Regan did after by releasing the boxes of incriminating documents to Bortolon without keeping copies contrary to the LeMay order which Gray J and Court of Appeal confirmed was Regan’s contempt. Moreover, it was Regan who insisted on preparing all of the evidence in his response to the contempt motion and he did so.
[89] In Harris v. Levine 2014 ONCA 608, leave to appeal ref’d [2014] S.C.C.A. No. 467, Mr. Harris initially alleged but abandoned the argument that he received ineffective legal assistance from his lawyer Levine prior to the hearing of his appeal of his criminal convictions for criminal harassment and assault causing bodily harm. He chose instead to commence an action in negligence against the lawyer in which he took the position that he was innocent of the criminal charges.
[90] The Court of Appeal upheld the motions judge who struck the claim on the basis that it was an abuse of process and at para. 7, found that clearly the civil case was a collateral attack on the convictions. The court agreed that the objective of the plaintiff’s litigation against Levine is and necessarily must be to prove that Harris was innocent and that but for Levine’s negligence, Harris would not have been convicted.
[91] At para. 8, the court concluded that in order to succeed in a civil action against Levine, Harris would have to establish on a balance of probabilities that Harris would have been acquitted but for the conduct of Levine. This would inevitably result in re-litigation of the criminal charges and would potentially impeach the integrity of the adjudicative process.
[92] The court at paragraph 10 confirmed that where there has been a finding of guilt that has been undisturbed on appeal, allegations of ineffective representation generally should be made by way of a direct attack in the context of the criminal proceeding and not by way of a separate civil proceeding.
[93] Although this case involves a finding of civil contempt against Regan, it was accepted as proven beyond a reasonable doubt by the motion judge and Court of Appeal and resulted in a period of incarceration for Regan. I accordingly find the reasoning and facts of Harris v. Levine to be rather similar to this case and persuasive in support of Esterbauer’s position.
[94] Citing Harris v. Levine, the Court of Appeal in Arconti v. Fenton 2020 ONCA 489 at para. 17 specifically rejected the argument that re-litigation should be permitted in a solicitor’s negligence case and held that a person who is concerned that ineffective representation by counsel has led to a wrongful conviction must pursue that issue by way of appeal from the conviction. When that has not been done, or when it is done unsuccessfully, the result is the same. The decision that cannot be collaterally attacked in a civil proceeding is the correctness of the conviction. A civil claim that depends on showing that the conviction would not have occurred but for the lawyer’s conduct is exactly that kind of improper collateral attack.
[95] The court in Arconti was dealing with the finding of securities fraud at the Ontario Securities Commission and upheld the motion judge who concluded that any differences between a criminal proceeding and the OSC proceeding did not warrant permitting re-litigation of the OSC decision upheld in the Divisional Court in light of the seriousness of securities fraud.
[96] Similarly, in my view, any difference between the civil contempt proceeding against Regan which resulted in his incarceration and this proceeding does not warrant permitting re-litigation of that finding of his contempt in light of the seriousness of his conduct.
[97] Regan’s action should also be dismissed as it is an abuse of process. Allowing it to proceed would vitiate the principles of judicial economy, consistency, finality and integrity of the administration of justice or undermine confidence in fairness and integrity by creating inconsistent results and unnecessarily duplicate proceedings that waste judicial resources. Toronto (City) v. CUPE Local 79, 2003 SCC 63 at para. 23.
[98] Regan had earlier failed at all levels in challenging the finding of contempt of court against him and now effectively seeks to overturn that finding through this professional negligence action against the lawyer he chose to retain as his oral advocate not only in this court proceeding but also in the initial disciplinary proceedings before the LSO which resulted in the suspension of his law license.
[99] Based on these findings, I decline to exercise my discretion to allow re-litigation of this court’s and the appellate courts’ determinations regarding Regan’s contemptuous conduct. Esterbauer’s motion to dismiss Regan’s claims in negligence and breach of contract accordingly is granted.
[100] Based on these findings, it is not necessary to consider whether Regan’s action against Esterbauer should also be dismissed because of res judicata and being subject to issue estoppel and I decline to do so.
Negligent Misrepresentation
[101] Regan’s claim that Esterbauer is liable to him for having made negligent misrepresentations which induced him to retain Esterbauer’s legal services also fails.
[102] The statement of claim in paragraph 10 made bald allegations that Esterbauer made the following misrepresentations which he knew or ought to have known were untrue in order to induce Regan to retain Esterbauer and Koskie as his solicitors:
a) Esterbauer was a senior civil litigation defence counsel who had extensive experience in defending complex litigation matters similar to the contempt proceedings; b) Esterbauer had significant prior experience defending lawyers in professional negligence and Law Society of Ontario regulatory proceedings; c) Esterbauer had the necessary experience to formulate and execute a suitable litigation defence strategy in respect of the contempt motion and subsequent proceeding; and d) Koskie Minsky had adequate resources to support Esterbauer and could obtain further expert advice as and when necessary.
[103] However, Regan’s own affidavit in this motion confirms that he reached out to Esterbauer to retain him on the contempt motion on June 18, 2015 after Esterbauer, while retained by Law Pro, had assisted Regan in obtaining a favourable resolution of an unrelated earlier complaint made against him to the Law Society of Ontario. Regan then spoke to Esterbauer about retaining him in this manner because he was impressed by the manner Esterbauer had represented him.
[104] The only evidence in Regan’s affidavit that Esterbauer had made any representations or misrepresentations to Regan, negligent or otherwise, in respect of Regan retaining him was a bald statement that Esterbauer had made a “prior representation to me that he had prior experience in defending contempt proceedings”. Regan further only stated that in June 2015 when he contacted Esterbauer about this matter, Esterbauer indicated he was able to act for him in respect of the contempt motion.
[105] There is nothing on the evidence before me to suggest that there would be a reasonable prospect that Regan’s claim for negligent representation against Esterbauer will succeed in the event the pleadings are proven to be true.
[106] Accordingly, the negligent misrepresentation claim in the statement of claim of Regan is also dismissed.
Regan’s Claim for Recovery of Legal Fees paid to Esterbauer
[107] Regan states that “in the interests of good order”, he included his claim for recovery of his legal fees paid to Esterbauer in this action. However, he concedes that if this professional negligence component of his action against Esterbauer is dismissed, he requests leave to transfer that claim to the local assessment officer pursuant to the Solicitors Act, R.S.O. 1990, c. S.15.
[108] As indicated above, this action by Regan for professional negligence and negligent misrepresentation against Esterbauer is dismissed. The assessment process under that legislation rather than an action in this court is the appropriate forum to determine whether the legal fees billed by Esterbauer to Regan were appropriate. Given the potential issues including that of the limitation period under that legislation, I decline to make any further order in that regard.
Costs
[109] The defendants’ motion is granted and the plaintiff’s action accordingly is dismissed.
[110] The defendants being successful in their motion are presumptively entitled to their costs of this motion and of defending the action on a partial indemnity basis. There are no grounds established for an award of substantial indemnity costs.
[111] The parties have provided their respective costs outlines. The defendants’ fees total approximately $25,000 but that includes their costs incurred since the commencement of the action and exchange of pleadings of approximately $7,000.
[112] The plaintiff’s costs total approximately $14,000 for fees with respect to the motion only.
[113] The plaintiff sought millions of dollars in damages against the defendants as well as an accounting and the return of all legal fees paid to them.
[114] The matter was complex with the plaintiff raising numerous complex legal issues all of which had to be satisfactorily answered by the defendants in their defence and in this motion. The defendants prepared their motion materials, affidavit and factum. There were no cross examinations on the parties’ affidavits and the hearing lasted one day.
[115] The motion was particularly important to the defendants who had to respond to serious allegations of professional negligence made against them by the plaintiff.
[116] The time spent by defendants’ counsel and the amounts claimed on an hourly basis appear reasonable given their experience.
[117] The court in fixing costs should determine an amount that the unsuccessful party would reasonably expect to pay rather than simply multiplying the hours spent by counsel times their hourly rate.
[118] That reasonable amount of costs is $20,000 plus HST plus disbursements of $1000 including HST which the plaintiff shall pay to the defendants within 30 days.
Nightingale J Date: May 29, 2023
COURT FILE NO.: CV-20-00073440 DATE: 2023/05/29 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: Robyrt H. Regan -and- Alfred J. Esterbauer, Koskie Minsky LLP and John Doe No. 1 ENDORSEMENT RJN Released: May 29, 2023
