SUPERIOR COURT OF JUSTICE – ONTARIO
COURT FILE NO.: #08-6767 (Hamilton)
DATE: 2012/02/21
RE: Bozica Deveric (Plaintiff) v. Nina Deveric and Toronto-Dominion Bank (Defendants)
BEFORE: The Honourable Mr. Justice R.A. Lococo
COUNSEL:
John J. Cvetkovic, for the Plaintiff
Nina Deveric, Defendant, on her own behalf without counsel
Robert C. Dunford, for the Defendant, Toronto-Dominion Bank
HEARD: By written submissions
ENDORSEMENT – COSTS
I Introduction
[ 1 ] Bozica Deveric was the Plaintiff in an action claiming the return from her daughter, Nina Deveric, of the proceeds of a guaranteed investment certificate issued by Toronto-Dominion Bank (TD) and registered in Nina’s name. TD was also a defendant in the action, with Mrs. Deveric alleging breach of duty and breach of contract against TD. After a four day trial that started November 21, 2011, I reserved judgment, and subsequently gave an oral judgment on December 8, 2011. Mrs. Deveric succeeded in her action against Nina Deveric, but her action against TD was dismissed. The question of costs was left to be determined based on written submissions.
[ 2 ] In their written submissions, the parties referred to offers to settle that were made in accordance with Rule 49 of the Rules of Civil Procedure . [1]
[ 3 ] On March 2, 2011, TD made an offer to settle to Mrs. Deveric under which TD would have paid Mrs. Deveric the sum of $1,500 inclusive of interest and costs. Since Mrs. Deveric’s action against TD was dismissed, the result achieved at trial by Mrs. Deveric against TD was less favourable than the terms of the offer to settle.
[ 4 ] As well, by an offer to settle made to Nina Deveric on October 31, 2011, the sum of $100,000 paid into court by Nina Deveric, plus interest, would have been paid to Mrs. Deveric, together with interest thereon, and the parties would have been responsible for their own costs. The result achieved at trial by Mrs. Deveric against Nina Deveric was at least as favourable as the terms of the offer to settle.
[ 5 ] Based on the written submission filed by the parties, the following matters require determination:
TD’s entitlement to its costs against Bozica Deveric,
Bozica Deveric entitlement to costs against Nina Deveric, and
Nina Deveric’s liability for TD’s costs.
[ 6 ] I will deal with each of these matters in turn.
II. TD’s entitlement to its costs against Bozica Deveric
[ 7 ] As between TD and Mrs. Deveric, TD as the successful defendant is presumptively entitled to its costs against Mrs. Deveric. [2] I see no reason to depart from the presumptive result in this case.
[ 8 ] Mrs. Deveric argued that Nina Deveric, and not Mrs. Deveric, should be responsible for TD’s costs, pursuant to what is known as a Sanderson order. [3] I will deal with this issue in more detail below under the heading “Nina Deveric’s liability for TD’s costs,” but suffice it to say that I agree with TD that it would be manifestly unfair to TD if it did not have recourse against Mrs. Deveric for its costs. On the evidence at trial, Nina Deveric is a young woman with a low paying job and a chequered work history. In the absence of special circumstances that were not present in this case, TD as the successful defendant should not be expected to bear the risk of non-payment by Nina Deveric of a cost award. [4]
[ 9 ] Mrs. Deveric’s cost submissions also suggested that she has no or minimal ability to pay the costs herself. However, there was no evidence provided that would suggest that she would be unable to pay a cost award against her. In fact, the evidence at trial was quite the contrary, suggesting that Mrs. Deveric had access to to financial and other assets and disability entitlements. As well, Nina Deveric paid $100,000 into court to the credit of this action, and that amount plus interest would be available to satisfy a cost award against Mrs. Deveric.
[ 10 ] On the basis of an offer to settle made by TD on March 2, 2011, TD asked for costs on a partial indemnity basis to that date, and on a substantial indemnity basis thereafter. I have concluded that such an order should be made in this case.
[ 11 ] In this regard, I note that subrule 49.10(2) of the Rules of Civil Procedure relating to offers to settle by a defendant is not relevant in this case, since that provision applies only if the plaintiff obtained a judgment in her favour, albeit one that was as favourable or less favourable than the terms of the offer to settle; the judgment in this case dismissed Mrs. Deveric’s claim as against TD outright. However, pursuant to rule 49.13 of the Rules of Civil Procedure , in exercising my discretion with respect to costs, I am entitled to take into account any offer to settle made in writing. Based on that rule as well as the general principles in subrule 57.01(1), it is open to me to order substantial indemnity costs after the date of the offer, consistent with the result in S & A Strasser Ltd v. Richmond Hill (Town) . [5] I agree with TD that such an order is appropriate in this case.
[ 12 ] I have examined the bill of costs of TD’s counsel and find the amounts claimed to be reasonable. I therefore order Bozica Deveric to pay TD’s costs, fixed at $35,000, inclusive of disbursements and tax.
III. Bozica Deveric entitlement to costs against Nina Deveric
[ 13 ] Mrs. Deveric, as the successful party in her action against Nina Deveric, asked for costs against Nina Deveric. I see no reason to depart from the presumptive result that Mrs. Deveric as the successful plaintiff should be awarded costs against Nina Deveric.
[ 14 ] Nina Deveric’s position was that Mrs. Deveric should bear her own costs, citing their relative abilities to bear those costs. In particular, Nina Deveric argued that Mrs. Deveric was well able to bear her own costs, whereas Nina was impecunious, and Mrs. Deveric put the GIC into Nina’s name knowing her to be impecunious. She also argued that Mrs. Deveric should be disqualified from recovering her costs, given that she had not come before the court with clean hands, referring to the fact that Mrs. Deveric had put the GIC into Nina Deveric’s name for the purpose of avoiding income tax on the interest and in the mistaken belief that having the GIC in her own name would affect Mrs. Deveric’s eligibility for disability payments.
[ 15 ] I do not agree, however, that the relative abilities of Mrs. Deveric and Nina Deveric to pay Mrs. Deveric’s costs should be a determining factor in deciding whether there should be a cost award against Nina Deveric. By appropriating the GIC proceeds without legal justification, Nina Deveric made it necessary for Mrs. Deveric to bring this action in order to recover those funds. In my view, it is appropriate for Nina Deveric to live with the cost consequences of her actions.
[ 16 ] As well, while I might reasonably take into account Mrs. Deveric’s alleged lack of good faith in placing the funds in Nina Deveric’s name, I do not agree that this consideration should deprive her of costs in the circumstances. This conclusion is consistent with my finding at trial that Mrs. Deveric’s motivation did not disqualify her from recovering the GIC proceeds from Nina Deveric, given that it appeared that no creditor (including the Canada Revenue Agency) was “defeated, hindered or delayed by the transfer” (to use the words of the Supreme Court of Canada in Krys v. Krys [6] ).
[ 17 ] Mrs. Deveric asked for costs on a partial indemnity basis to October 31, 2011, the date of her offer to settle, and on a substantial indemnity basis thereafter. Subrule 49.10(1) of the Rules of Civil Procedure is applicable in this case, and I agree with Mrs. Deveric that it is appropriate to award costs on that basis.
[ 18 ] The bill of costs filed by Mrs. Deveric’s counsel claims fees totaling $43,094 plus disbursements of $3,512, in each case including tax. While the recovery of costs in that amount may well have been reasonable had Mrs. Deveric been successful against both defendants, I consider it appropriate to take into account the extent to which time and expense were expended by Mrs. Deveric’s counsel (which appeared to be significant) in the pursuit of the claim against TD. As discussed further below in the next section, I do not consider it appropriate for Nina Deveric to bear legal costs that Mrs. Deveric incurred in its unsuccessful claim against TD. I therefore order Nina Deveric to pay Bozica Deveric’s costs, fixed at $30,000 including disbursements and tax.
IV. Nina Deveric’s liability for TD’s costs
[ 19 ] As previously noted, Mrs. Deveric in her cost submissions raised the issue of whether Nina Deveric should be responsible for payment of TD’s legal costs.
[ 20 ] Where the plaintiff succeeds in an action against one defendant and fails against another defendant, courts have in some circumstance granted cost orders that depart from the usual “loser pays” principle by requiring the costs of the successful defendant to be borne by the unsuccessful defendant rather than the plaintiff. Pursuant to a Bullock order, the unsuccessful defendant is ordered to reimburse the plaintiff for costs that the plaintiff has been ordered to pay to the successful defendant. [7] Pursuant to a Sanderson order, the unsuccessful defendant is ordered to pay the costs of the successful defendant directly to the successful defendant. [8]
[ 21 ] The circumstances in which a Sanderson order should be granted were considered by the Ontario Court of Appeal in Moore v. Wienecke [9] , as follows:
The usual test for determining whether a Sanderson order is appropriate has two steps: …. First, courts ask a threshold question: whether it was reasonable to join the several defendants together in one action. If the answer to that threshold question is Yes, courts must use their discretion to determine whether a Sanderson order would be just and fair in the circumstances. [10]
[ 22 ] The decision in Moore v. Wienecke also referred to a number of factors that may be relevant in deciding whether to exercise the Court’s discretion in favour of granting a Sanderson order, including: whether the defendants at the trial tried to shift responsibility onto each other, as opposed to concentrating on meeting the plaintiff’s case; whether the unsuccessful defendant caused the successful defendant to be added as a party; whether the two causes of action were independent of each other; and the parties’ ability to pay. [11]
[ 23 ] Since Sanderson orders and Bullock orders are based on the same rationale [12] , it may be expected that courts would take an equivalent approach to considering whether a Bullock order is appropriate, subject to one qualification. As noted in Willis v. Hall : [13]
The prima facie rule is that the successful defendant is therefore entitled to look to the plaintiff for its costs. A Sanderson order relieving the plaintiff from that obligation and imposing it directly on the unsuccessful defendant should not be made if there is a real risk that the successful defendant will not receive those costs from the unsuccessful defendant because of the latter’s impecuniosity. [14]
[ 24 ] As noted previously, I have already concluded that a Sanderson order is not appropriate in this case, given the risk of non-payment by Nina Deveric of a cost award against her.
[ 25 ] Turning to the question of whether a Bullock order is appropriate, and applying the first of the two steps referred to in Moore v. Wienecke , [15] I have concluded that the threshold question should be answered in the affirmative. In my view, it was reasonable for Mrs. Deveric to bring claims against both Nina Deveric and TD. The claims arose out of the same factual circumstances. It would have made no practical sense to pursue her claims in separate actions.
[ 26 ] Addressing the second step in the test, I have concluded in the exercise of my discretion that it would not be just and fair in the circumstances to grant a Bullock order, which would permit Mrs. Deveric to pursue Nina Deveric for the costs I have ordered Mrs. Deveric to pay to TD.
[ 27 ] In this regard, Mrs. Deveric argued that a relevant factor in favour of making Nina Deveric liable for TD’s costs was that Nina Deveric’s defence at trial effectively implicated TD. However, I did not find such to be the case. Nina Deveric’s position was that by placing the GIC in her name, Mrs. Deveric was making a gift to her. Nina did not take the position that TD took any action that would cause it to be liable to Mrs. Deveric; Nina’s position was that TD acted properly in paying the proceeds of the GIC to her.
[ 28 ] As well, I agree with TD that it is relevant that Nina Deveric had no role in causing TD to be added as a defendant. The decision to pursue a claim against TD was made by Mrs. Deveric alone, and that claim was ultimately found to be without merit.
[ 29 ] In deciding whether Nina Deveric should be liable to Mrs. Deveric for TD’s costs, I also find it relevant that Mrs. Deveric continued with her action against TD knowing that there was there was significant question as to Nina Deveric’s ability to pay any amount beyond what she had paid into court to the credit of this action.
[ 30 ] Taking these factors into account, I have concluded that it would not be fair and reasonable to issue a Bullock order in the circumstances of this case.
V. Order
[ 31 ] Accordingly, an order will issue as follows:
The Plaintiff shall pay the costs of the Defendant Toronto-Dominion Bank, fixed at $35,000, inclusive of disbursements and tax.
The Defendant Nina Deveric shall pay the costs of the Plaintiff, fixed at $30,000, inclusive of disbursements and tax.
The amount due to the Defendant Toronto-Dominion Bank under paragraph 1 shall be satisfied by the payment of that amount to that Defendant from the amount paid into court to the credit of this action by the Defendant Nina Deveric.
The balance of the amount paid into court together with interest thereon shall be paid to the Plaintiff.
The Honourable Mr. Justice R.A. Lococo
Released: February 21, 2012