COURT OF APPEAL FOR ONTARIO

CITATION: Marcus v. Cochrane, 2014 ONCA 207

DATE: 20140320

DOCKET: C55101

Goudge, Sharpe and Rouleau JJ.A.

BETWEEN

Louise Marcus

Plaintiff (Appellant)

and

Carol Ann Cochrane and Low Murchison LLP

Defendants (Respondents)

Richard R. Marks, for the appellant

Heather J. Williams, for the respondents

Heard: March 5, 2014

On appeal from the judgment of Justice Bonnie Warkentin of the Superior Court of Justice, dated January 24, 2012, with reasons reported at 2012 ONSC 146.

Goudge J.A.:

[1] At trial, the appellant’s claim against the respondent solicitor and her firm for solicitor’s negligence was dismissed. The trial judge found that, in the circumstances of this case, the respondent solicitor did not breach the standard of care owed to the appellant, her client. The trial judge also found that, in any event, the appellant suffered no damages due to the respondent’s conduct. Finally, the trial judge awarded costs to the respondents on a full indemnity scale in the amount of $160,706.99.

[2] Counsel for the appellant challenges all three findings in this court. In my view, there is no merit to his argument that the trial judge was wrong to dismiss the claim for solicitor’s negligence. Nor is there any error in the trial judge’s finding that the appellant suffered no damages in any event. However, in my opinion, the costs award was excessive and must be substantially reduced.

[3] The background facts are straightforward. The appellant separated from her husband on August 1, 2005. By early February 2006, they had prepared their own draft separation agreement, which resolved their family law issues. It provided for a small equalization payment to the appellant. The appellant then sought legal advice from the respondent solicitor on the agreement she had reached with her husband. The list of her assets at separation, which was attached to the agreement, included a severance payment of approximately $120,000 she received on March 16, 2006. She received the payment as a result of the termination of her employment on January 19, 2006, which was after the date of separation.

[4] The respondent cautioned her not to sign a final agreement until there had been full financial disclosure so that a proper equalization calculation could be made. The appellant rejected this advice and, subject to several minor changes, proceeded to sign the agreement she had reached with her husband.

[5] Mr. Marks argues that by not advising the appellant that her severance payment should be excluded from any equalization calculation, but rather suggesting that she had a severance pay entitlement at separation that would have to be factored in, the respondent’s conduct fell below the standard of care owed to the appellant.

[6] The trial judge dealt with this issue by first finding the scope of the respondent solicitor’s retainer. She concluded that it was only to accept the draft agreement prepared by the appellant and her husband, and with some minor amendments, incorporate that agreement into a final separation agreement. That is a finding of fact for which there was ample evidence at trial. There is no basis to disturb it on appeal.

[7] The trial judge then turned to the standard of care required of a solicitor with such a retainer. The appellant called no expert evidence on this question. The respondents called as an expert witness a senior family practitioner in Ottawa. His opinion was that in discharging this retainer, the respondent did not breach the standard of care required of a reasonably competent lawyer in the circumstances. The trial judge accepted this opinion and found that the respondent was not negligent. This conclusion was amply justified on the evidence the trial judge had before her. We cannot interfere with her finding.

[8] The trial judge then turned to the appellant’s claim that if she had been properly advised about her severance payment, she would have been able to negotiate an equalization payment of $70,000 to $80,000, rather than the $4,573.59 she did receive.

[9] The trial judge found this position entirely unsupported by the evidence. Rather, she concluded that the evidence indicated that had the appellant sought such a payment from her husband, he would not have agreed to it. Nor would a court have ordered it. The evidence was that, had full financial disclosure been made, the equalization result would have been much the same as that provided for by the agreement signed in March 2006. This finding of fact was entirely open to the trial judge on the record. As a result, I see no error in her conclusion that in any event the appellant suffered no damages.

[10] The third issue before us is the award of trial costs on a full indemnity scale. The trial judge concluded that this was justified because the appellant’s conduct of the trial was “reprehensible”. She based her conclusion on two reasons, neither of which is sustainable in my view.

[11] The first concerned two emails that the respondent solicitor sent to the appellant. After admitting on discovery that she received them, the appellant gave evidence at trial that she had not received them or thought it unlikely that she did, because the emails had no date and time stamp. The IT information she received led her to believe they were “invalid”. The trial judge found that the appellant was in effect suggesting that the respondent had falsified documents for trial and was calling her honesty into question, thus justifying full indemnity costs. In my view, the appellant’s evidence cannot be taken that far. I cannot read the appellant’s evidence as suggesting any deliberate conduct, let alone dishonesty, on the part of the respondent solicitor.

[12] The second reason was that the appellant failed to call expert evidence on the standard of care and misstated her damages “when she knew or ought to have known that she suffered no damages”. The failure to call expert evidence is normally a decision of trial counsel. There is nothing here to suggest otherwise, let alone to lay the responsibility for it at the feet of the appellant. While counsel’s decision may have been unwise, it is hardly reprehensible conduct justifying full indemnity costs against the appellant. The same is true of trial counsel’s decision to advance a theory of damages (namely that the appellant could have negotiated a vastly superior equalization payment) that the trial judge ultimately rejected. I see no basis on this record to say that the appellant ought to have known that this would happen, or that she in fact knew it would happen.

[13] Since neither of the trial judge’s reasons can be sustained, I conclude that it was an error in principle to fix trial costs on a full indemnity basis. In order to bring a merciful end to these proceedings, this court should determine the appropriate trial costs order rather than remit the issue to the trial court.

[14] In my opinion, there is no basis on this record to depart from the usual partial indemnity scale in fixing trial costs.

[15] In fixing those costs, it is important to remember that the dispute was essentially about a claim for approximately $80,000. The partial indemnity bill of costs of appellant’s counsel Mr. Marks was $172,645.55. The full indemnity bill of costs of the respondents was $160,706.99. The comparison of what this dispute was about and what was spent on it is stark and difficult to justify. While undoubtedly Mr. Marks, as counsel asserting the claim, must bear the greater responsibility, the principle of proportionality which is fundamental to any sound costs award cries out for application by both counsel. With the assistance and indeed the direction of the trial judge if need be, counsel simply must cut the cloth to fit. The health of the justice system depends on it. Trial costs cannot serve as an incentive to look away from this important challenge.

[16] In the end, the order for trial costs against the appellant must be fair and reasonable: see Boucher v. Public Accountants Council for the Province of Ontario(2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at p. 299. Making that assessment is more art than science. Of particular importance here is that, primarily, this was a trial about a modest amount of money. In my opinion, an award to the respondents of $60,000 together with disbursements represents a fair and reasonable order for trial costs. I would so order.

[17] With this change in the costs provision, the appeal is otherwise dismissed.

[18] Finally I turn to costs of the appeal. Both counsel have submitted bills of costs.

[19] Mr. Marks’ bill on a partial indemnity basis is $202,649.15. Even if he charges his own client on no more than a partial indemnity basis, the appellant will face a total cost from her own lawyer of some $375,000 to try and unsuccessfully appeal a claim for $80,000. In my view, that is completely unjustifiable.

[20] Respondents’ counsel has submitted a vastly more reasonable partial indemnity bill of $49,001.53. While the appellant succeeded on one issue, she was unsuccessful on two of the three issues in this court. The respondents therefore deserve some modest costs. I would order costs of the appeal to the respondents in the sum of $20,000 inclusive of disbursements and taxes.

Released: March 20, 2014 (“S.T.G.”)

“S.T. Goudge J.A.”

“I agree. Robert J. Sharpe J.A.”

“I agree. Paul Rouleau J.A.”