Reasons for Judgment

Court File No.: CV-24-00715961-0000
Date: 2025-01-21
Ontario Superior Court of Justice

Between:
Jerzy Szot, Applicant
– and –
Peter B. Cozzi and Peter B. Cozzi Professional Corporation, Respondents

Appearances:
Olivier Guillaume and Jordan Conway, for the Applicant
Peter B. Cozzi, for the Respondents

Heard: January 16, 2025
Released: January 21, 2025
Judge: Lorne Brownstone

Introduction

[1] The applicant seeks an order under section 140 of the Courts of Justice Act, R.S.O. 1990, c. C.43 declaring the respondents to be vexatious litigants. In the alternative, the applicant seeks an order that the respondents be declared vexatious litigants only in respect of specific proceedings relating to the disposition of adverse costs insurance proceeds, which will be discussed below. The applicant argues the court has the jurisdiction to make the narrower declaration on the basis of the newly enacted s. 140(1)3.

Background

[2] The history of the litigation at the heart of this application is somewhat complex and deeply concerning.

[3] In 2003, Mr. Nguyen was in a car accident. He retained Mr. Cozzi to be his lawyer. In 2007, Mr. Cozzi started a claim on Mr. Nguyen’s behalf against Mr. Szot. Aviva Canada Inc. insured Mr. Szot.

[4] Beginning in 2006, this court made various orders regarding Mr. Nguyen's capacity. There have been five orders appointing guardians of property and/or personal care and/or litigation guardians (2006, 2011, 2019, 2020, and 2024). Mr. Nguyen’s now ex-wife has been Mr. Nguyen’s guardian of property since 2006 and personal care since 2011, and remains so to date. However, she has not been participating in proceedings involving Mr. Nguyen, and the PGT has sought and been granted orders appointing it as litigation guardian in each litigation file in which Mr. Nguyen is involved.

[5] Mr. Nguyen’s motor vehicle accident trial took place before a jury in May 2017. Just prior to trial, Mr. Cozzi had Mr. Nguyen sign a contingency fee agreement. Although Mr. Nguyen lacked capacity and was a party under disability, Mr. Cozzi dealt with Mr. Nguyen personally rather than with his litigation guardian. At the same time, Mr. Cozzi also had Mr. Nguyen apply for an “after-the event” (ATE) insurance policy.

[6] The jury found Mr. Szot to be negligent, but awarded Mr. Nguyen minimal general damages. Archibald J. found that Mr. Nguyen’s damages did not meet the statutory threshold, reduced his damages to zero, and granted judgment in favour of Mr. Szot. Archibald J. ordered Mr. Nguyen to pay the agreed-upon amounts of $90,790.00 in costs and $71,000.00 in disbursements, for a total of $161,790.00 including HST: Nguyen v. Szot, 2017 ONSC 3705.

[7] The provider of the ATE policy paid the policy proceeds to Mr. Cozzi in trust for Mr. Nguyen. Again, Mr. Cozzi dealt with Mr. Nguyen without his guardian, and Mr. Nguyen executed a direction to apply the proceeds to Mr. Cozzi’s disbursements of $68,636.73 (although Mr. Cozzi had previously provided supporting documentation for only $37,858.91 in disbursements), and to apply the remainder towards the costs order in favour of Mr. Szot.

[8] In 2018, both Aviva and Mr. Cozzi’s professional corporation brought applications seeking to have the proceeds of the ATE policy paid out to them. Mr. Cozzi and his professional corporation were both named as respondents to Aviva’s application.

[9] On February 22, 2019, Nishikawa J. released her reasons dismissing both applications: Peter B. Cozzi Professional Corporation v. Szot, 2019 ONSC 1274. She found that Mr. Cozzi’s contingency fee agreement with Mr. Nguyen was not enforceable. In part, this was because Mr. Nguyen was a party under disability and Mr. Cozzi did not seek to have the agreement approved by the court, as required. Nor was Mr. Nguyen’s litigation guardian involved in the signing of the agreement.

[10] Justice Nishikawa ordered that the proceeds continue to be held in Mr. Cozzi’s trust account until further order of the court, that a copy of her reasons be sent to Mr. Nguyen, his guardian of property, and the PGT, and that the guardian of property and counsel for the PGT attend before her to determine next steps. On May 28, 2019, Nishikawa J. appointed the PGT as Mr. Nguyen’s litigation guardian in the applications, so that the PGT could assist Mr. Nguyen with an appropriate disposition of the proceeds.

[11] On August 14, 2019, Mr. Cozzi brought an application seeking a charging order over the ATE proceeds for a yet-higher amount—$80,689.06 of disbursements and fees of approximately $30,000.00. Justice Nishikawa dismissed this application, finding, among other things, that it was a collateral attack against her first decision: Peter B. Cozzi Professional Corporation v. Szot, 2019 ONSC 5071. She stated in part as follows:

[13] In my view, the doctrine of issue estoppel precludes the relitigation of Mr. Cozzi’s entitlement to the Proceeds. The same question – that is, whether the Proceeds could be applied to Mr. Cozzi’s disbursements – has already been decided. The addition of fees to his claim in this motion does not make it a new issue. The Decision was final on the question of Mr. Cozzi’s entitlement to the Proceeds. Because this motion is brought in the same proceeding, the parties are the same. The motion is thus an impermissible collateral attack on the Decision, since it brings the Decision into question.

[14] In the Decision, I dismissed the Application because, among other reasons, the contingency fee agreement (the “CFA”) and Direction pursuant to which Mr. Cozzi sought to be paid were unenforceable. Notwithstanding these findings, Mr. Cozzi’s factum on the motion submits that the CFA was fair and reasonable and that the Direction was valid. At the hearing, Mr. Brown, on Mr. Cozzi’s behalf, conceded that the Decision is res judicata on the question of whether the CFA is fair and reasonable, and advised that Mr. Cozzi seeks his fees and disbursements on a quantum meruit basis. This change in the basis for Mr. Cozzi’s claim does not alter my analysis because it is simply a different legal basis to support the same relief.

[15] In any event, if the motion is not an impermissible collateral attack, Mr. Cozzi is precluded from relitigating his entitlement to the Proceeds by the equitable doctrine of abuse of process. …

[21] Accordingly, I would dismiss Mr. Cozzi’s motion for a charging order as an improper collateral attack on the Decision or an abuse of process. Mr. Cozzi is seeking the same result through a different route. Such conduct is to be discouraged….

[38] My conclusion is further supported by the fact that quantum meruit is equitable relief. Not only has Mr. Cozzi failed to demonstrate any ground for this court to exercise its equitable jurisdiction, but the Decision provided ample grounds for concern regarding Mr. Cozzi’s conduct in relation to Mr. Nguyen. These grounds would militate against exercising this court’s equitable jurisdiction in Mr. Cozzi’s favour.

[39] Mr. Brown, on Mr. Cozzi’s behalf, submits that once I found the CFA void and unenforceable, it was incumbent on me, pursuant to s. 19 of the Solicitors Act, to make a determination of Mr. Cozzi’s fees and disbursements. No such relief was sought in the Application. This is an issue that could have and should have been raised in the Application, and I decline to consider it at this stage. In addition, it would not be appropriate for me to assess Mr. Cozzi’s fees and disbursements on a quantum meruit basis at this stage, since the issue of Mr. Cozzi’s entitlement to have the Proceeds to his disbursements is under appeal.

[12] Mr. Cozzi’s professional corporation appealed the two decisions of Nishikawa J. together to the Court of Appeal. That court dismissed the appeal at the conclusion of the oral hearing, and released its decision three weeks later on June 17, 2020: Peter B. Cozzi Professional Corporation v. Szot, 2020 ONCA 397. The Court agreed the contingency fee agreement was unenforceable, finding it was “not fair, reasonable, and in Mr. Nguyen’s best interest”, and also dismissed the appeal in respect of the charging order. The Court stated:

[56] We also agree with the submission of the PGT in its factum that “the facts of this case are nothing less than shocking”, and that it would offend the principles of fairness and justice to reward the appellant, through the payment of fees and disbursements, for entering into the CFA with Mr. Nguyen, brokering an insurance contract between him and DAS, and having Mr. Nguyen sign a direction to him, when he knew that Mr. Nguyen was incapable of making these decisions and had a litigation guardian from whom the appellant was supposed to take instructions.

[13] The Court ordered Mr. Cozzi’s professional corporation to pay costs of the appeal to Mr. Szot of $20,000 and to the PGT of $11,000.

[14] Mr. Cozzi’s professional corporation also initially sought leave to appeal Nishikawa J.’s decision to have the policy proceeds paid into court. The motion for leave to appeal was withdrawn, and the Divisional Court ordered the moving party to pay $5,000 in costs to Mr. Szot: Peter B. Cozzi Professional Corporation v. Szot, 2020 ONSC 5986.

[15] The professional corporation has paid neither the Court of Appeal nor the Divisional Court costs orders to the applicant. When asked about this in oral argument, Mr. Cozzi advised that Aviva does not need the money, given its large profits. He stated that he would pay them when the assessment of his account vis-à-vis Mr. Nguyen was complete and he had access to the ATE proceeds (access to which this court and the Court of Appeal has determined he is not entitled). He acknowledged the costs orders were made against his professional corporation, not against Mr. Nguyen, and so were not, in his words, “directly” connected to any fees he says Mr. Nguyen owes him. Ultimately, Mr. Cozzi stated that he would undertake to pay the costs within 30 days, if that was required in order to proceed with his assessment.

[16] Very shortly after the Court of Appeal dismissed his corporation’s appeal from the bench, Mr. Cozzi advised Mr. Szot that he would petition Mr. Nguyen into bankruptcy and retained bankruptcy counsel to do so. Bankruptcy counsel wrote Mr. Szot’s counsel and suggested that it would be in their respective clients’ interests to settle the issue of the disbursement of the ATE proceeds rather than proceeding with the bankruptcy application.

[17] Mr. Cozzi states that the ATE proceeds are Mr. Nguyen’s only asset. The only purpose of petitioning his former client into bankruptcy is to seek access to those proceeds.

[18] On December 15, 2020, then Case Management Master Mills ordered the PGT appointed as Mr. Nguyen’s litigation guardian in the bankruptcy proceeding.

[19] On January 22, 2021, the PGT wrote to the bankruptcy lawyer retained by Mr. Cozzi, advising in part as follows:

I am writing in response to your correspondence of January 18, 2021, in which you disclose that your client, Mr. Cozzi, has been in direct contact with Quoc Nguyen. I would remind you that Mr. Nguyen is a party under disability, in which the Public Guardian and Trustee (PGT) has been appointed his Litigation Guardian in every proceeding in which the two parties are involved. (Moreover, Mr. Nguyen currently has a Guardian of Property and of Personal Care.) It is the view of the PGT that it is inappropriate, at the very least, for your client, as the opposing party, to be communicating with Mr. Nguyen directly. To be clear, I ask that your client immediately desist from any further direct communications with Mr. Nguyen involving this or the related civil litigation. All communications regarding this or the related civil litigation must be directed to this office.

[20] Yet just over seven months later, on September 8, 2021, Mr. Cozzi received a letter from Mr. Nguyen’s treating physician, which reads as follows:

Dear Mr. Cozzi,

This letter is in response to your request for medical information on Mr. Quoc Nguyen. Thank-you for sharing his previous medical records from physicians related to his neurological and cognitive conditions.

Mr. Nguyen is a regular patient of mine. He attends for regularly scheduled appointments for evaluations and renewal of his medications. He was last seen on May 12, 2021. He suffers from [omitted from this decision]…

It is my understanding that he was reported to the Ministry of Transportation for cognitive issues. After careful examination of Mr. Nguyen, it has been established that he has [omitted from this decision]. There appears to be no impediments to Mr. Nguyen being able to instruct counsel on his financial affairs.

Kindly contact my office should you require further information.

[21] There was no evidence in the record to explain how Mr. Cozzi came to receive personal health information about his former client, a party under disability, directly from that party’s treating physician. Mr. Cozzi submitted to the Court that Mr. Nguyen had arrived in his office seeking assistance with his driver’s licence, so Mr. Cozzi had helped him as “a fellow human being” and a resource to Mr. Nguyen.

[22] Mr. Cozzi had no regard for the concern expressed by the Court at the hearing of this application that he was receiving confidential information about a former client, who was a party under disability, and whom he had been expressly asked to cease contacting. He disagreed with the Court that Mr. Nguyen was in fact his adversary in proceedings. He disagreed that he used the information he received from the physician against Mr. Nguyen. He maintained this position while conceding that he relied on this very letter in support of his request to remove the PGT as Mr. Nguyen’s litigation guardian in the bankruptcy proceeding in an affidavit sworn November 12, 2021, and again in opposing the PGT being appointed as Mr. Nguyen’s litigation guardian in the solicitor-assessment file in October 2024 (discussed below).

[23] On March 25, 2022, Mr. Cozzi commenced fee assessment proceedings against Mr. Nguyen. Mr. Cozzi obtained a notice of preliminary appointment for assessment proceedings, proceedings in which he now seeks $595,992.73. On September 7, 2022, those proceedings were adjourned. Officer Mittleman set out a history of proceedings and stated as follows:

It is not necessary for me to rule on whether or not the Solicitor is entitled to an assessment on a quantum meruit basis. In the face of this issue, an assessment hearing cannot be scheduled absent directions from the Court. Mr. Cozzi advised that it is his intention to pursue the assessment and seek such directions.

I hereby direct:

1. The assessment is adjourned sine die pending receipt of directions from the Court. Any motion brought by Peter B. Cozzi Professional Corporation and/or by Peter Cozzi shall be on notice to the Client, Quoc Nguyen, the Public Guardian and Trustee and Jerzy Szot.

2. In the event that the Court orders that the assessment proceed, a further Preliminary Appointment shall be scheduled by the Assessment Office, allowing time for a motion to appoint the PGT.

[24] On March 6, 2024, Mr. Cozzi appeared before me, seeking orders that Mr. Nguyen’s guardianship of property be terminated and that the assessment of Mr. Cozzi’s fee and disbursement accounts proceed. The PGT appeared and asked that Mr. Cozzi’s motion be adjourned, noting that it had a motion scheduled for October 10, 2024, in which it sought to be appointed as litigation guardian in the assessment application. It had asked Mr. Cozzi to agree to the adjournment of his motion before me, in order to enable the PGT to be appointed as litigation guardian but Mr. Cozzi refused to agree. I adjourned Mr. Cozzi’s motion, stating in part as follows: "[t]he motion is adjourned to be heard after the October 10, 2024 motion to appoint the PGT as the respondent's litigation guardian in this matter is decided. This is a threshold issue to be determined before the applicant's motion can proceed on its merits."

[25] On October 10, 2024, the PGT’s motion to be appointed litigation guardian in the assessment was heard by Associate Justice Josefo. Mr. Cozzi opposed the motion, relying in part on the letter Dr. Beharry sent to him in September 2021.

[26] Associate Justice Josefo appointed the PGT as Mr. Nguyen’s litigation guardian in the assessment proceeding. He stated:

In my view, it is in the interests of all parties that the assessment, long adjourned, now proceed. The PGT will be acting to protect Nguyen's interests, so there is no prejudice to Nguyen in that regard. Accordingly, I order that the assessment proceed, pursuant to the rules and processes which govern such assessments, as directed by the Assessment Officer assigned to the matter.

Standing to Bring a s. 140 Application

[27] The applicant in this proceeding is Mr. Szot, the defendant in the motor vehicle accident litigation, represented by Aviva’s counsel.

[28] Subsection 140(2) provides that a vexatious litigant order “may be made on a judge’s own initiative or on motion or application by any person, as provided in the rules of court.”

[29] Mr. Cozzi argues that the applicant has no standing to bring this application, and that the applicant is injecting itself into a solicitor’s assessment between Mr. Cozzi and Mr. Nguyen. Further, Mr. Cozzi argues that the applicant brings this application for a collateral purpose, namely, to gain access to the ATE proceeds.

[30] In its factum, the applicant framed its interest in the matter in part as follows:

Despite the Applicant being a party adverse in interest to the disabled Mr. Nguyen (and in fact a creditor to Mr. Nguyen), counsel for the Applicant believes that they owe to Mr. Nguyen the decency and candour that should be afforded to a disabled person and member of the public. The Applicant will not stand by idly while potential abuses are being levied against a disabled party by his own former counsel.

[31] In its reply factum and oral argument the applicant’s primary position was that the applicant is a party directly affected by Mr. Cozzi’s continued proceedings. The applicant is unable to proceed to resolve with the PGT the matter of the costs arising from the decision of Archibald J., while Mr. Cozzi and his corporation continue to launch collateral proceedings in court regarding the disposition of the ATE policy proceeds. The applicant argues that this constitutes a direct legal interest, that is not remote or speculative, that grounds its standing: Imperial Oil v. Haseeb, 2023 ONCA 364, paras. 92-93.

[32] The Court of Appeal has clearly stated that third parties may bring s. 140 applications, stating: “Section 140 of the Courts of Justice Act does not restrict who can bring such an application. The policy reasons that the appellant advances for limiting who might have standing to bring such an application is a matter for the legislature and for the courts given the broad wording of the current section”: Balanyk v. Dutton Brock LLP, 2014 ONCA 122, para. 2. I find that there is no impediment to Mr. Szot bringing this application, and that he has standing to do so.

Governing Law and Analysis

[33] Subsection 140(1) of the Courts of Justice Act provides as follows:

140 (1) If a judge of the Superior Court of Justice or of the Court of Appeal is satisfied that a person has persistently and without reasonable grounds instituted vexatious proceedings in any court or conducted a proceeding in any court in a vexatious manner, the judge may make an order that includes any of the following terms:

1. No further proceeding may be instituted by the person in any court, except by leave of a judge of the Superior Court of Justice.

2. No proceeding previously instituted by the person in any court shall be continued, except by leave of a judge of the Superior Court of Justice.

3. Any other term that is just.

[34] In Re Lang Michener and Fabian, the Court set out a number of non-exhaustive characteristics of vexatious litigants, as follows:

• (a) the bringing of one or more actions to determine an issue which has already been determined by a court of competent jurisdiction constitutes a vexatious proceeding;
• (b) where it is obvious that an action cannot succeed, or if the action would lead to no possible good, or if no reasonable person can reasonably expect to obtain relief, the action is vexatious;
• (c) vexatious actions include those brought for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights;
• (d) it is a general characteristic of vexatious proceedings that grounds and issues raised tend to be rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings;
• (e) in determining whether proceedings are vexatious, the court must look at the whole history of the matter and not just whether there was originally a good cause of action;
• (f) the failure of the person instituting the proceedings to pay the costs of unsuccessful proceedings is one factor to be considered in determining whether proceedings are vexatious;
• (g) the respondent's conduct in persistently taking unsuccessful appeals from judicial decisions can be considered vexatious conduct of legal proceedings.

[35] The court is not limited to the conduct of the allegedly vexatious litigant in the courtroom: Dobson v. Green, 2012 ONSC 4432, para. 12.

[36] The purpose of s. 140(1) has been expressed by the Court of Appeal as being “to codify the inherent jurisdiction of the Superior Court to control its own process and to prevent abuses of that process by authorizing the judicial restriction, in defined circumstances, of a litigant's right to access the courts”: Kalaba v. Bylykbashi, para. 30.

[37] The section is intended not to punish the vexatious litigant, but to limit the costs imposed on the system and other litigants: Ironside v. Roskam, 2017 ONSC 7416, para. 20.

[38] The PGT, as it explained before Associate Justice Josefo, can only act and make submissions in a specific proceeding once it is appointed to act, since it is not Mr. Nguyen’s guardian of property.

[39] The following troubling factors exist in this case:

a. Mr. Cozzi and/or his professional corporation continue to ask the court to determine an issue that has already been determined. Even if he were correct that Nishikawa J. and the Court of Appeal did not determine the issue of whether he was entitled to funds on the basis of quantum meruit (and I do not believe he is correct), there is no doubt the courts have determined he is not entitled to the proceeds of the ATE insurance;

b. Mr. Cozzi has commenced the bankruptcy proceedings for an improper purpose, namely, to try to obtain access to insurance proceeds in face of a court order finding he is not entitled to those proceeds;

c. Mr. Cozzi communicated with Mr. Nguyen directly when specifically advised not to do so by the PGT. He attempted to characterize this communication in benevolent terms – he was helping another human being, and acting as a resource. There is no doubt that he used the fruits of this purportedly benevolent act against Mr. Nguyen, in two attempts to deprive Mr. Nguyen of the assistance of the PGT;

d. Mr. Cozzi’s professional corporation has refused, without legitimate reason, to pay outstanding costs awards to Mr. Szot. Mr. Cozzi, as counsel, knows that he is not obeying court orders. He knows that these orders are mandatory. He knows, or must be taken to know, that his assessment of whether the other side “needs” the money is irrelevant to his obligation to comply with court orders. His materials before the court, an affidavit from his legal assistant, wrongly deposed that there had been only one demand for payment. This was not true. There have been many. Even had there been only one, his professional corporation is obliged to pay.

[40] Mr. Cozzi brings court proceedings ignoring orders already obtained. He has yet to pay outstanding costs orders. He has been unrelenting in his pursuit of the insurance proceeds despite the clear order of Nishikawa J. that he is not entitled to them. After failing the first time, he tried again before Nishikawa J. He appealed both of her decisions unsuccessfully. Then he tried bankruptcy proceedings. Then he tried assessment proceedings. In each case, he has acted against a party under disability. He has repeatedly sought to prevent the party from being properly represented. Courts have found his behaviour to be shocking. That he is a lawyer taking steps against an incapacitated former client exceeds that description, in my view. His unrelenting efforts to obtain the ATE insurance proceeds to pay his ever-increasing costs claims are frivolous, vexatious, and decidedly an abuse of this court’s process.

[41] I am not inclined to embark on an analysis of the scope of the court’s discretion under s. 140(1)3 of the Courts of Justice Act in this application. Given the breadth and extent of Mr. Cozzi’s efforts to use the courts to try to achieve his goals with disregard to the court’s rulings, in my view the wording of any narrow discretionary terms or conditions will just invite Mr. Cozzi to bring further proceedings claiming that he is not acting outside the terms or conditions. The better way to protect the administration of justice and the people affected by Mr. Cozzi’s proceedings is to make the full order sought and require Mr. Cozzi to establish the propriety of any future legal proceedings when seeking leave to do so under s. 140. Mr. Cozzi did not advise the court that he had any other proceedings that would be adversely affected by an order under s. 140. Further, as Mr. Nguyen is a vulnerable party in need of protection, in my view, a judge should be involved before Mr. Cozzi takes any steps in this court again that are contrary to Mr. Nguyen’s interest, to ensure that Mr. Nguyen is properly protected and represented.

Disposition

[42] I therefore declare that Peter Cozzi and Peter B. Cozzi Professional Corporation are vexatious litigants to whom s. 140(1) of the Courts of Justice Act applies.

[43] No further proceeding may be instituted by Peter Cozzi and Peter B. Cozzi Professional Corporation in any court, except by leave of a judge of the Superior Court of Justice.

[44] No proceeding previously instituted by Peter Cozzi or Peter B. Cozzi Professional Corporation in any court shall be continued, except by leave of a judge of the Superior Court of Justice.

[45] Should either of the respondents file material seeking to commence or continue a proceeding or appeal in any court in Ontario without first filing an entered Order permitting them to do so, the proceeding shall be immediately stayed upon any person filing a copy of the order made on this Application in such a court.

[46] A copy of the judgment and these reasons for decision shall be forthwith delivered to every region of the Superior Court of Justice, Divisional Court, and Small Claims Court.

Costs

[47] The applicant seeks partial indemnity costs of $22,964.00 and disbursements of $1,244.46. Mr. Cozzi’s costs outline claims costs of $28,000 on a partial indemnity scale, and $3,640 of disbursements, although he submitted in oral argument that he should be paid his full, actual costs of $47,460 should he be the successful party on this application.

[48] Fixing costs is a discretionary matter under s. 131 of the Courts of Justice Act, taking into account the factors in Rule 57. The court is ultimately to fix costs that are reasonable and proportionate in the circumstances.

[49] This matter required a CPC attendance, an extensive application record, review of the lengthy litigation history, cross-examinations, and a factum. The applicant’s bill of costs is reasonable and proportionate. The amount sought should have been within the expectations of the respondent, given his own costs outline.

[50] The respondents shall pay the applicant’s costs of $22,964.00 and disbursements of $1,224.46, plus HST, within 30 days.

Lorne Brownstone
Released: January 21, 2025