CITATION: Carola v. Simpson, 2020 ONSC 183
COURT FILE NO.: DC-18-2432
DATE: 10/01/2020
ONTARIO SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
Marie-Jeanne Carola
Plaintiff/Respondent
– and –
Bruce Simpson
Defendant/Appellant
Pierre Champagne for the Plaintiff/Respondent
Self-Represented
HEARD: December 4, 2019
JUSTICE SALLY GOMERY
[1] Bruce Simpson appeals a decision of the Small Claims court dated September 28, 2018.
[2] Mr. Simpson is a lawyer. Beginning in July 2012, Marie-Jeanne Carola hired him to handle three legal disputes for her. First, she wanted him to make changes to child custody and access arrangements negotiated in the context of divorce proceedings (the “Family Law retainer”). Second, she wanted to challenge the amount charged by the lawyer who had represented her in those negotiations (the “Assessment retainer”). Third, she wanted to sue the local children’s hospital and various staff working there for defamation and other causes of action (the “CHEO retainer”).
[3] In 2015, Ms. Carola sued Mr. Simpson for $25,000. She claimed that Mr. Simpson had mishandled all three retainers. Mr. Simpson counterclaimed for fees which he said Ms. Carola owed him. At the end of a four-day hearing, Deputy Judge Houle granted Ms. Carola’s action and ordered Ms. Simpson to pay Ms. Carola $17,476 plus costs and disbursements of $9,818. The costs award included $2,400 for a motion seeking to call further evidence, which Mr. Simpson unsuccessfully brought after the close of his case. The Deputy Judge dismissed the counter-claim.
[4] In this appeal, Mr. Simpson seeks a reduction of the amounts awarded and partial judgment on his counterclaim. For the reasons that follow, the appeal is dismissed.
[5] I will deal with each of these questions in turn:
a. Did the Deputy Judge make a reversible error in his decision on the CHEO retainer?
b. Did the Deputy Judge make a reversible error in his decision on the Assessment retainer?
c. Did the Deputy Judge make a reversible error in his decision on the Family Law retainer?
d. Did the Deputy Judge make a reversible error in dismissing the counterclaim?
e. Did the Deputy Judge make a reversible error in his cost award?
a. Did the Deputy Judge make a reversible error in his decision on the CHEO retainer?
[6] In July 2012, Ms. Carola retained Mr. Simpson to sue the Children’s Hospital of Eastern of Ontario and various staff following a confrontation in the emergency room. Mr. Simpson prepared a statement of claim but failed to serve it on the individual defendants within the limitation period. In her Small Claims Court action, Ms. Carola alleged that this was negligent.
[7] At the trial before the Deputy Judge, Mr. Simpson conceded that he had been negligent and should pay damages of $2,825 for fees that Ms. Carola subsequently paid to another lawyer to obtain an extension of the time for service. The only issue remaining in dispute was whether Ms. Carola owed him fees of $3,390 plus HST. This in turn depended on whether the parties had entered into a contingency fee arrangement. The Deputy Judge held that they had. As result, he concluded that Ms. Carola did not owe any fees to Mr. Simpson that would offset the damages owed. He further concluded that the defendant was required to return $319 to Ms. Carola because she had given him an advance of $500 for disbursements, from which he had paid a $181 filing fee for the notice of action.
[8] On this appeal, Mr. Simpson does not take issue with any of the Deputy Judge’s findings except for the refund owed on the advance for disbursements. He says that he paid an additional $13.96 in disbursements, and so should have been required to return only $305.04.
[9] The invoice that Mr. Simpson sent to Ms. Carola on the CHEO retainer listed total disbursements of $194.96. The Deputy Judge was aware of this evidence, because he referred to it during argument on September 21, 2018. In delivering his oral reasons on September 28, 2018, however, he was apparently relying on his notes. Accordingly, at p. 9 of the transcript, the Deputy Judge invited counsel to correct him if he made any mistakes on the amounts at issue:
Now, it is not normally my practise to do this when I’m giving decisions, but gentlemen, if there is anything that isn’t clear, please ask me as I go along, especially if I’m using the wrong amounts or wrong dates or wrong numbers.
[10] Over the course of delivering his reasons, the Deputy Judge mentioned the $181 disbursement amount three separate times.[^1] On one of these occasions, he again expressed uncertainty about the amount and invited the parties to correct him if appropriate. Mr. Simpson took no steps to correct him. He also took no steps to obtain a correction of the judgment once it was issued.
[11] In these circumstances, I am not prepared to interfere with the Deputy Judge’s conclusion on the refund owed.
b. Did the Deputy Judge make a reversible error in his decision on the Assessment retainer?
[12] In early 2014, Ms. Carola retained Mr. Simpson to apply for an assessment of the accounts of her former family lawyer, Ian Vallance. She believed that Mr. Vallance should return some of the fees she had paid to him. Mr. Simpson applied for an order referring Mr. Vallance’s account for assessment. An order was necessary because more than 30 days had passed since Ms. Carola had received his last invoice. The hearing on the application was set for October 14, 2014.
[13] On October 9, 2014, Ms. Carola and Mr. Simpson met. Following their meeting, she sent him an email saying that she did not want to make any offers to settle her claim against Mr. Vallance. Despite this instruction, Mr. Simpson settled the assessment prior to the October 14 hearing. He and Mr. Vallance agreed that Ms. Carola would accept a refund of fees of $4,000, in return for which she would sign a full and final release of any further claim against him.
[14] When Mr. Simpson advised Ms. Carola of the settlement, she refused to sign the release. In the Small Claims Court action against him, she claimed that she was entitled to $10,000 in damages—the amount that Mr. Simpson had allegedly told her he could recover from Mr. Vallance on the assessment. She also claimed $2,500 in damages for inconvenience.
[15] The Deputy Judge found that Mr. Simpson did not have instructions to settle the assessment, and that the unauthorized settlement was both negligent and a breach of Mr. Simpson’s contract with Ms. Carola. He ordered him to pay her a total of $6,500 on the claim. This consisted of the $4,000 Mr. Simpson had received in trust from Mr. Vallance pursuant to the settlement agreement, and damages of $2,500.
[16] On this appeal, Mr. Simpson does not take issue with the Deputy Judge’s determination that he failed to follow Ms. Carola’s instructions, or his determination that she was entitled to the benefit of the $4,000 settlement. He argues, however, that there was no evidentiary basis for the additional award of $2,500, and that the Judge effectively reversed the onus of proof by requiring the defendant to disprove the plaintiff’s damages.
[17] In support of this argument, Mr. Simpson relies on the following passage from the Deputy Judge’s reasons, at page 18 of the transcript of his oral judgment:
So I’m stuck with this, there is a breach of contract, possibly negligence for which I cannot award any damages because I don’t have any evidence of damages, because as I have said before, I am of the opinion the burden was on Mr. Simpson to establish there was no damages.
[18] I agree with Mr. Simpson that, regardless of whether Ms. Carola’s action was based on contract or negligence, she had the burden of proving her damages. Mr. Simpson was not required to establish that there were no damages.
[19] But although the passage cited above suggests otherwise, when the Deputy Judge’s reasons on damages are read in their entirety, I find that he ultimately did not shift the burden of proof. After the above-quoted passage, he went on to say the following:
There’s a claim of $2500 for inconvenience. I’m going to change it from inconvenience to damages for breach of contract resulting in a loss of opportunity. … The claim [against Ms. Carola’s former family lawyer] was $10,000. There’s obviously $4000 [that] was successful. … I cannot find that there is a breach by way of negligence or by way of contract and not award any damages. And that’s what I have said, whether it is by negligence or contract I am awarding $2500 under that heading.
[20] The Ontario Court of Appeal has emphasized that appellate review of reasons given on Small Claims Court actions “must recognize the informal nature of that court, as well as the volume of cases it handles and its statutory mandate to deal with these cases efficiently”; Maple Ridge Community Management Ltd. v. Peel Condominium No. 231, 2015 ONCA 520, 389 D.L.R. (4th) 711, at para. 35.
[21] The Court of Appeal has also recognized that damages for loss of opportunity in solicitor’s negligence cases are notoriously difficult to quantify: Jarbeau v. McLean, 2017 ONCA 115, 410 D.L.R. (4th) 246, at para. 21. The Deputy Judge himself acknowledged this. He noted that an assessment might have produced no result, or might have left Ms. Carola worse off, if costs had been awarded against her. He concluded, at p. 18, that he must rely on his own assessment of the value of her claim, saying:
I have to apply some common sense to this matter. In Small Claims Court we do not get perfect cases. We often, mostly when there are cases when there is not legal representation, have to rely on experience, either day-to-day experience, or professional experience, to determine usually the issue of damages… .
[22] I cannot disagree with the approach taken by the Deputy Judge. It would have been absurd for him to embark on a full inquiry into the exact amount that Ms. Carola might have been able to recover on the assessment. The costs of doing so would easily surpass the value of her claim.
[23] As it was, the Deputy Judge heard three days of evidence, including a full day of testimony by Ms. Carola, as well as a full day of argument. He was of view that Ms. Carola had suffered a loss of opportunity, however impossible to quantify, to pursue a recovery of fees from Mr. Vallance. He was also clearly troubled by how Mr. Simpson had simply ignored his client’s instructions and instead entered into a settlement on her behalf. Faced with this difficult situation, the Deputy Judged used the amount Ms. Carola claimed for inconvenience – $2,500 – as a reasonable proxy for her loss.
[24] An appellate court cannot substitute the trial judge’s findings of fact or mixed findings of fact and law with its own unless the trial judge made a palpable and overriding error, or some extricable error in principle “with respect to the characterization of the [legal] standard or its application, in which case the error may amount to an error in law”: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 23, at para. 37.
[25] In the circumstances of this case, I do not find that awarding $2,500 for loss of opportunity is clearly unreasonable. I conclude that, in assessing the damages in this claim, the Deputy Judge did not make an extricable error of law, or a finding of mixed law and fact based on a palpable and overriding error. I therefore dismiss Mr. Simpson’s appeal from the award of damages.
c. Did the Deputy Judge make a reversible error in his decision on the Family Law retainer?
[26] In February 2014, Ms. Carola retained Mr. Simpson to take carriage of litigation previously handled by Mr. Vallance. The litigation was a divorce proceeding with her former spouse. A month earlier, on Mr. Vallance’s advice, she had signed minutes of settlement. She was now having second thoughts. She told Mr. Simpson that she found the minutes confusing and did not agree with the draft order that had been prepared based on them.
[27] On February 13, 2014, Mr. Simpson wrote a letter to Jones Horwitz, the law firm representing Ms. Carola’s former spouse, saying that the minutes needed to be clarified. He advised that she had instructed him to bring an application to have the minutes set aside, but that Mr. Simpson hoped that the outstanding issues could be resolved on consent.
[28] Despite this letter, on June 27, 2014, a divorce, custody, and access order was issued based on the minutes of settlement. Jones Horwitz had sought Ms. Carola’s consent to the order, but mistakenly faxed the form to the wrong number. When Mr. Simpson learned of the fax mistake in April 2014, he did not take any steps to prevent the order from being issued or, after it was issued, to have it set aside. He proceeded instead with his existing motion to set aside the January 2014 minutes of settlement. This motion was rejected by Justice Ray on September 25, 2014, and Ms. Carola was ordered to pay $2,200 in costs. According to Ms. Carola, Justice Ray explained at the hearing of the motion that he was dismissing the motion, in part, because she had waited too long to bring it. Ms. Carola then ended Mr. Simpson’s retainer and hired another lawyer, Marc Coderre. Mr. Coderre successfully moved to vary the terms of the June 2014 order.
[29] In the Small Claims Court action, Ms. Carola claimed damages equivalent to the fees she paid to Mr. Coderre to vary the order, as well as the costs she had been ordered to pay by Justice Ray. The Deputy Judge found that Mr. Simpson must have realized, by April or June 2014, that an order would issue based on the minutes, but that he failed at that point to take any meaningful steps to assist Ms. Carola. He ordered Mr. Simpson to pay Ms. Carola $7,831 in damages. She had in fact paid Mr. Coderre $2,000 more, but the Deputy Judge reasoned that she should assume a part of the fees herself because she had changed lawyers multiple times. He also declined to require Mr. Simpson to compensate her for the cost order.
[30] On this appeal, Mr. Simpson contends that the Deputy Judge erred in finding that he could have done anything to set aside the order or the minutes of settlement. He also takes issue with the damages award.
[31] The Deputy Judge accepted Ms. Carola’s evidence about Justice Ray’s comments during the hearing of the motion, and the conclusions in an expert report she filed on Mr. Simpson’s standard of care. According to this expert, in the circumstances of the retainer, Mr. Simpson was obliged to take steps to assist his client, and his failure to do so was negligent. Mr. Simpson neither cross-examined the expert nor produced a responding report.
[32] Mr. Simpson has not identified any palpable or overriding error or any extricable error in principle committed by the Deputy Judge. The Judge recognized that some of the expert’s assumptions were incorrect. In his view, however, these mistaken assumptions did not fatally undermine the expert’s reasoning. It was therefore open for the Deputy Judge to give weight to his report.
[33] Even without this expert report, however, Mr. Simpson’s argument that there was nothing further that could be done to assist Ms. Carola is fatally undermined by the evidence that Mr. Coderre was later able to obtain a variance of the order.
[34] The damages awarded were a portion of the fees paid by Ms. Carola to that lawyer. The Deputy Judge discounted these fees. I agree with Mr. Simpson that he did not provide much of an explanation for how he reached this figure. As a Small Claims Court judge, however, the Deputy Judge has experience in assessing the appropriate level of costs for doing this kind of work. I therefore see no basis upon which this court could interfere with the damages award.
d. Did the Deputy Judge make a reversible error in dismissing the counterclaim?
[35] The Deputy Judge dismissed Mr. Simpson’s counterclaim for fees and disbursements in the three retainers. On this appeal, Mr. Simpson argues that he is entitled to recover the value of disbursements in the Assessment retainer, additional disbursements in the CHEO retainer, and his full account of $1,187.28 in the Family Law retainer.
[36] I have already dealt with the argument for additional disbursements in the CHEO retainer. As to the remaining issues on this part of the appeal, Mr. Simpson has failed to identify any critical error in the Deputy Judge’s decision.
[37] Given that Mr. Simpson had breached his contract with Ms. Carola by settling her claim against Mr. Vallance contrary to her instruction not to do so, the judge concluded that Mr. Simpson should not recover fees of $860.98 for the Assessment retainer. This was an entirely reasonable conclusion in the circumstances.
[38] With respect to the Family Law retainer, at p. 37 the Deputy Judge stated:
[T]here is no doubt that what was before Judge Ray resulted in probably more hardship to the client than anything else, including an award of costs. And the whole matter should have been dealt with differently.
[39] In my view, the Deputy Judge was entitled to reach the conclusions he did on the evidence before him. The appeal of his rejection of Mr. Simpson’s counterclaim is therefore dismissed.
The Deputy Judge’s costs award
[40] The Deputy Judge awarded Ms. Carola a total of $9,718 in costs and disbursements. This included $5,100 in costs on the action; $2,218 for disbursements, including her expert report; and $2,400 in costs for an unsuccessful motion to introduce further evidence, which was brought by Mr. Simpson at the end of the trial.
[41] Mr. Simpson argues that both cost awards are too high.
Costs awarded on the action
[42] With respect to the fees of $5,100 on the action, Mr. Simpson relies on four arguments.
[43] First, he argues that the cost amount exceeds the 15% cap on costs in s. 29 of the Courts of Justice Act, R.S.O. 1990, c. C.43.
[44] Rule 19.02 of the Rules of the Small Claims Court, O Reg 258/98 (the “SC Rules”) provides that the power to award costs in Small Claims actions is subject to the limit set in section 29 of the Courts of Justice Act. Section 29 caps an award of costs in the Small Claims Court, other than disbursements, to 15% of the amount claimed or the value of the property sought to be recovered, “unless the court considers it necessary in the interests of justice to penalize a party or a party’s representative for unreasonable behaviour in the proceeding”. This is consistent with Rule 19.06, which says that “[i]f the court is satisfied that a party has unduly complicated or prolonged an action or has otherwise acted unreasonably, the court may order the party to pay an amount as compensation to another party”.
[45] Mr. Simpson argues that, assuming that he did not engage in unreasonable behavior, s. 29 limits the allowable costs to 15% of the damages awarded. He contends that this amounts to less than what he was ordered to pay, since $4,000 was a return of fees from Mr. Vallance and $319 was a return of the balance of the advance for disbursements in the CHEO retainer. As a result, by his calculation, the maximum costs awarded should have been $1,973.55.[^2]
[46] The first flaw in this argument is that the Deputy Judge clearly determined that Ms. Carola was entitled to more than the usual cost award of 15%.
[47] Beyond this, I do not accept Mr. Simpson’s reading of s. 29, because it ignores its plain language. It does not refer to the amount recovered but the amount claimed. Since Ms. Carola claimed $25,000, she was entitled to a maximum of $3,750 in costs, absent a finding of unreasonable behavior by Mr. Simpson.
[48] Second, Mr. Simpson argues that the Deputy Judge erred in finding that he engaged in unreasonable behavior.
[49] I will not interfere with the Deputy Judge’s conclusion on this point, as he was in the best position to assess how the trial had been conducted, and he identified factors relevant to a cost award. At p. 59, he cited (1) Mr. Simpson’s reasonable expectation that he would have to bear the cost consequences of the action, if it was granted; (2) the nature of the action (a solicitor’s negligence case); and (3) Mr. Simpson’s conduct during the trial. On this last point, he stated that there was no doubt that Mr. Liss [the defence counsel] was taking instructions from Mr. Simpson. I saw him pulling on his shirt-sleeve and doing everything else that shouldn’t be done to counsel during a process, and there is an expression out there that sometimes is true: When you act as your own lawyer … And I’m not going to continue the expression”. The Deputy Judge concluded that the defence “was greatly lacking in assistance to the Court”. These were all factors appropriate to consider in a cost award.
[50] Third, Mr. Simpson objects strenuously to the implication that he should pay higher costs because he is a lawyer. Having read the Deputy Judge’s reasons, I do not agree that he awarded costs based on Mr. Simpson’s professional qualification as such. He noted, however, that, for the purpose of suing her formal lawyer, it was entirely reasonable for Ms. Carola to retain counsel to represent her and that Mr. Simpson ought to have been aware that she would do so. In assessing costs, a court should always take into account the losing party’s reasonable expectation of what they might have to pay in costs. Mr. Simpson’s experience as a litigation lawyer was relevant to his expectation. As a lawyer, he would also presumably be in a better position than other litigants to make sound decisions about litigation strategy.
[51] Finally, Mr. Simpson argued that the cost award could not exceed 30% of the value of the amount claimed. Under r. 14.07 of the SC Rules, a litigant who refuses an offer to settle that is better than the result at trial may be required to pay double the costs that would otherwise be payable. I do not accept that this rule displaces the broad discretion specifically given to deputy judges in s. 29 of the Courts of Justice Act and r. 19.06. In any event, the Deputy Judge’s award of $5,100 in costs on the action is less than double the amount of full potential costs payable of $7,500.
[52] Costs awards are highly discretionary and are given significant deference: Feinstein v. Freedman, 2014 ONCA 205, 119 O.R. (3d) 385, at para. 52. The Deputy Judge concluded that Mr. Simpson behaved unreasonably and that a higher cost award was therefore appropriate. I see no basis to interfere with his exercise of discretion.
Costs awarded on the motion
[53] The Deputy Judge awarded Ms. Carola $2,400 in costs on a motion presented by Mr. Simpson on September 21, 2018. In this motion, Mr. Simpson sought leave to call further evidence with respect to the trust funds held by Mr. Vallance’s firm for Ms. Carola and with respect to Ms. Carola’s own bank statements. The Deputy Judge dismissed the motion.
[54] Rule 15.07 provides that the costs of a motion, exclusive of disbursements, shall not exceed $100 unless the court determines there are special circumstances. The Deputy Judge concluded there were special circumstances. He held that Mr. Simpson had not provided any evidence to establish that he had taken steps to obtain the evidence at an earlier date; that some of the evidence could have been obtained through Mr. Vallance, who had been on Mr. Simpson’s witness list since 2015 but was ultimately not called to testify; and that the motion was a collateral attack on an earlier ruling he made at the beginning of the trial. The Deputy Judge concluded that Mr. Simpson failed to justify why he should not order meaningful costs for a motion that was unnecessary, unfounded, and even abusive.[^3] He therefore awarded costs of $2,400 to Ms. Carola on the motion.
[55] In his arguments on the costs of his unsuccessful motion, Mr. Simpson is effectively trying to re-litigate it. He has not identified any error by the Deputy Judge in dismissing it. He has also not persuaded me that the judge’s exercise of discretion with respect to the costs on the motion was unreasonable.
Conclusion
[56] For these reasons, the appeal is dismissed. If the parties are unable to agree on costs, Ms. Carola shall submit a cost outline, along with a draft bill of costs, within the next seven days. Mr. Simpson shall submit a responding outline, and a draft bill of costs, within seven days. Each costs outline shall be no more than two pages long.
Justice Sally Gomery
Released: January 10, 2020
CITATION: Carola v. Simpson, 2020 ONSC 183
COURT FILE NO.: DC-18-2432
DATE: 10/01/2020
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Marie-Jeanne Carola
Plaintiff/Respondent
– and –
Bruce Simpson
Defendant/Appellant
REASONS FOR JUDGMENT
Justice S. Gomery
Released: January 10, 2020
[^1]: See pp. 8, 34, and 37 of the transcript. [^2]: That is, 15% of $17,476 minus $4319. [^3]: Or, in his words at p. 43, “une requête qui a tardé beaucoup puis qui était pas necessaire”.