COURT OF APPEAL FOR ONTARIO

DATE: 20000519

DOCKET: C31011

RE: D. WAYNE TWAITS (Plaintiff/Appellant) v. ROBERT
MONK, ROBERT KYLE AGENCY INC., 630497 ONTARIO
LTD., LOUIS DeLAMARTER, WILLIAM TERRY, JANIS
HAUGH, DAVID WEST and LINDA PATTERSON
(Defendants/Respondents)

BEFORE: CARTHY, ROSENBERG and O’CONNOR JJ.A.

COUNSEL: Rubin Dexter
for the appellant

John F. Rook, Q.C.,
Robert McNeely and
Lisa Sand
for the respondents

HEARD: May 16, 2000

On appeal from the judgment of Spence J. dated October 29, 1998.

E N D O R S E M E N T

[1] We are not persuaded that the trial judge made any of the errors in his findings of fact relied upon by the appellant. In our view, there was evidence to support each of the impugned findings. Although the trial judge, in his reasons, did not specifically mention some of the evidence referred to by the appellant, his findings are nevertheless reasonable even when viewed in light of that evidence. The appeal against the judgment is therefore dismissed.

[2] In our view, the trial judge erred in principle in awarding solicitor-client costs to the respondent. Solicitor-client costs may be ordered in cases where allegations of fraud are shown to be totally unfounded: 131843 Canada Inc. v. Double “R” (Toronto) Ltd. (1992), 7 C.P.C. (3d) 15 at p. 17 (Ont. Ct. Gen. Div.). This same principle has also been expressed as follows: Solicitor-client costs may be justified where a defendant unjustly accuses a plaintiff of fraudulent and dishonest conduct and persists in the assertion through the trial without being able to establish it: Procor Ltd. v. U.S.W.A. (1990), 1990 6637 (ON SC), 71 O.R. (2d) 410 at p. 437 (H.C.J.).

[3] In this case, the trial judge found that the appellant made allegations that were tantamount to fraud and dishonest conduct. He found that the allegations “had not been made out” and “were without foundation.”

[4] In our view, the allegations in the statement of claim relied upon by the trial judge did not constitute allegations of fraud or dishonest conduct that warrant an order for solicitor- client costs. In his statement of claim, the appellant alleged that the respondent “artificially depressed” the consideration for the shares of RKA “in order to defeat or avoid the obligations to the plaintiff” under the minutes of settlement. The plaintiff also alleged that the respondent had made an oral representation “falsely or recklessly, not caring whether it was true or false.”

[5] These allegations, while strong in tone, stop short of necessarily attributing to the respondent a fraudulent or dishonest intention in doing the things that were alleged in the statement of claim.

[6] Moreover, while these allegations were not established at trial, they were not made without some justification. On the uncontested evidence, there was a basis for a legitimate concern on the part of the appellant that the shares provided to the respondent personally were in fact consideration for the sale of the shares of RKA. We do not view the appellant’s pursuit of this claim through trial to be unreasonable.

[7] In the result, we grant leave to appeal the order as to costs, allow the appeal, set aside the order for solicitor-client costs, and substitute an award of party-party costs.

[8] The costs issue formed a very small portion of this appeal. We order that the respondent recover 90 percent of his costs of the appeal.

“J.J. Carthy J.A.”

“M. Rosenberg J.A.”

“Dennis O’Connor J.A.”