ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 08-CV-42440
DATE: 2012-04-17
B E T W E E N:
LOUISE MARCUS
Richard R. Marks, for the Plaintiff
Plaintiff
- and -
CAROL ANN COCHRANE and LOW MURCHISON LLP
Heather Williams, CAVANAGH WILLIAMS CONWAY BAXTER LLP, for the Defendants
Defendants
HEARD: Via written submissions.
Madam Justice B. R. Warkentin
REASONS on costs
[ 1 ] In paragraph 97 of my reasons for judgment I found that the defendants were entitled to their costs of this proceeding. Based upon the evidence at trial, I was of the view that costs should be in the form of full indemnity costs and asked counsel to specifically address that issue in their submissions.
[ 2 ] I have now received and reviewed the submissions of counsel for the plaintiff and counsel for the defendants.
[ 3 ] This was an action in which the plaintiff alleged that the defendant lawyer, Ms. Cochrane, was negligent. In my reasons for judgment I concluded that Ms. Cochrane was not negligent and dismissed the plaintiff's claims. I also found that even if she had been negligent, the plaintiff had not suffered any damages.
[ 4 ] The defendants submit that the plaintiff should pay their costs of $160,706.99. The quantum proposed by the defendants represents the defendants' full indemnity costs, but because the rate charged by counsel for the defendants was at a discounted hourly rate, charged to the defendants' insurers, the defendants indicated that they would have sought the same amount whether partial, substantial or full indemnity costs were awarded.
[ 5 ] It is noteworthy that the plaintiff's partial indemnity costs, as set out in her counsel's costs submissions, were $172,645.55, an amount greater than the defendants' full indemnity costs.
[ 6 ] In Fong et al v. Chan et al , [1] the Ontario Court of Appeal set out three fundamental purposes of modern cost rules:
(1) to indemnify successful litigants for the cost of litigation;
(2) to encourage settlements; and
(3) to discourage and sanction inappropriate behaviour by litigants.
[ 7 ] Rule 57 of the Rules of Civil Procedure , sets out the factors to be considered by a court when exercising its discretion under s. 131 of the Courts of Justice Act . The rule places emphasis on the result in the proceeding and any written offer to settle when considering the other factors enumerated in the rule.
[ 8 ] Rule 57.01(4) (d) confirms that nothing in the Rules affects the authority of the court under s. 131 of the Courts of Justice Act to "award costs in an amount that represents full indemnity".
[ 9 ] One of the main purposes of a costs award is to “compensate the successful party to the litigation for some of the legal expenses that party has incurred.” [2] One must always have in mind the overriding principle of reasonableness and the fundamental objective of preserving access to justice.
[ 10 ] The Ontario Court of Appeal in Boucher v. Public Accountants Council For The Province of Ontario [3] stated that the fixing of costs does not begin nor end with the calculation of hours multiplied by rates. The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case rather than an amount fixed by the actual costs incurred by the successful party.
[ 11 ] Costs on a full indemnity basis represent complete indemnification at actual rates. Full indemnity costs have been held to be appropriate in circumstances still more exceptional than those justifying the application of the substantial indemnity scale. For example, where there are unsubstantiated allegations of dishonesty or where there is conduct of a party that is "reprehensible, scandalous or outrageous", full indemnity costs may be appropriate. [4]
[ 12 ] Counsel for the plaintiff submits that there was no reprehensible, scandalous or outrageous conduct before the court at trial to justify an award of full indemnity or even substantial indemnity costs. He suggested that it was the conduct of the defendants that lengthened the trial because they chose to call their expert witness and the former solicitor of the plaintiff's husband's when they could have simply called the husband as a witness, saving both the time and expense of retaining an expert.
[ 13 ] With respect to the emails that I found brought Ms. Cochrane's honesty into question, counsel for the plaintiff submitted that the allegations were not evidence led by the plaintiff but were based upon her evidence given in the heat of cross examination.
[ 14 ] Counsel for the plaintiff based his submissions regarding the emails upon his recollection of the evidence, which was that the plaintiff never called Ms. Cochrane's honesty into question, but simply could not recall having received certain emails from Ms. Cochrane.
[ 15 ] The defendants submit that an award of full indemnity costs is appropriate in this case for the following reasons:
a) The plaintiff made serious allegations against Ms. Cochrane which had no basis in evidence and which the plaintiff must have known were not true. For example, in her statement of claim the plaintiff alleged that she signed the separation agreement "in complete reliance upon the legal advice given to her by the defendant, Ms. Cochrane." At trial, I found that the plaintiff signed the agreement "without regard to" the advice given to her by Ms. Cochrane. Similarly, the plaintiff alleged that Ms. Cochrane failed to recommend that the plaintiff not waive her right to spousal support and failed to recommend the plaintiff's husband's pension be valued. Those allegations were untrue and were shown to be so early in the litigation, prior to examinations for discovery, and yet the plaintiff persisted in these allegations at trial. At trial, the evidence that Ms. Cochrane did advise the plaintiff not to waive her right to spousal support and to obtain a valuation of the husband's pension was overwhelming.
b) The plaintiff proceeded with her litigation against Ms. Cochrane, including an 8 day trial, even after it was or should have been evident to her that regardless of whether or not Ms. Cochrane was negligent, the plaintiff had suffered no damages (paras 93, 94 and 95 of my reasons for judgment).
c) The plaintiff, who was represented by counsel throughout these proceedings, chose not to call an expert witness, even though she had served an expert report. The plaintiff knew or ought to have known that the likelihood that her action would succeed at trial, absent any expert evidence on the standard of care of a solicitor practicing family law was unlikely; particularly when the defendants, in response to the plaintiff's expert, served an expert report and called that expert at trial to demonstrate that Ms. Cochrane had met the standard of care of a solicitor practicing family law.
d) Finally, the plaintiff made unfounded allegations against Ms. Cochrane at trial that called into question Ms. Cochrane's honesty; which was the opposite of the evidence of plaintiff in her examinations for discovery (paras 41 through 44 and 84 of my reasons for judgment).
Analysis
[ 16 ] Counsel for the plaintiff is incorrect in his recollection of the plaintiff's evidence. The plaintiff stated that it was her evidence that she had not received the emails in question. She gave this evidence both in her examination in chief and during her cross examination. In fact during her examination in chief, the questioned emails with attached documents were made lettered exhibits because the plaintiff claimed not to have received them. They were only made numbered exhibits after Ms. Cochrane identified the emails.
[ 17 ] Even after being offered the opportunity to correct her statements in her cross examination, having been shown the evidence she gave in her examination for discovery and her sworn affidavit of documents in which she included the emails with attachments, the plaintiff continued to deny having received the emails from Ms. Cochrane.
[ 18 ] I did not believe the plaintiff's evidence regarding those emails at trial and found that it was apparent that the emails in question had been sent to her by Ms. Cochrane and that the plaintiff had received them. I also expressed concern that by denying having received the emails at trial, the plaintiff appeared to be "suggesting that Ms. Cochrane had falsified documents for use in this proceeding" (at para 44 of my reasons for judgment). By making these statements, the plaintiff was calling Ms. Cochrane's honesty into question.
[ 19 ] I was sufficiently concerned with the manner in which the plaintiff had conducted her case against the defendants, which included the fact that the plaintiff failed to call her expert regarding the standard of care of a solicitor practicing family law and by misstating her damages when she knew or ought to have known that she had suffered no damages that I asked counsel to make submissions on full indemnity costs.
[ 20 ] The legal fees of the defendants, because of the arrangement with their insurer the Lawyers Professional Indemnity Corporation (LawPro), are lower than those commonly charged by lawyers of the same or similar years of call in this jurisdiction.
[ 21 ] Counsel for the defendants submitted that the rates they charged were also lower than the maximum partial indemnity rates set by the Costs Subcommittee of the Civil Rules Committee in 2005. For example, the maximum partial indemnity rate for more than 20 years of experience is $350.00. The actual hourly rates charged by defendants' counsel who had 20 years of experience was $285.00 and $300.00. Thus the rates charged by defendants' counsel were considerably less than the reasonable partial indemnity rates contemplated by the Rules Subcommittee four years ago.
[ 22 ] It was the position of counsel for the defendants that if the court were to reduce the amounts sought in their Bill of Costs, the plaintiff would receive a double discount, the benefit of LawPro's negotiated retainer with her counsel and the court's reduction of the fees. In this circumstance, counsel for the defendants submitted that an award of one hundred percent of the costs detailed in their Bill of Costs is reasonable.
[ 23 ] In similar situations, the court has found that:
In fixing partial indemnity costs, the court does not look at the actual fee arrangement between solicitor and client and discount that arrangement to ensure that recovery is "partial". Rather, the court considers the pertinent factors laid down in the rules in fixing the amount of recovery appropriate on a partial indemnity basis. So long as the amount is equal to or less than the actual fees and disbursements charged, then the amount arrived at by reference to the factors listed in the rules will be the amount of the award- whether that represents 50% of actual fees, 75% of actual fees, or even 100% of actual fees. If counsel is prepared to work at rates approximating partial recovery costs, that is counsel's choice. There is no reason why the client's fee recovery ought to be reduced because she has negotiated a favourable rate with counsel, so long as the total of the indemnity does not exceed the fees actually charged. [5]
[ 24 ] Having reviewed the submissions and jurisprudence I am of the view that an award of full indemnity costs is warranted in this case. In my reasons for judgment I made a number of findings that the plaintiff knew or ought to have known that she could not succeed at trial either with regard to the claim of negligence or to her claim for damages. In spite of the overwhelming evidence in favour of the defendants, the plaintiff persisted in taking this matter to trial.
[ 25 ] At trial, the plaintiff changed her evidence from that given at her examinations for discovery and claimed not to have received emails with attached documents from Ms. Cochrane in an attempt to discredit Ms. Cochrane. In essence she accused Ms. Cochrane of dishonesty.
[ 26 ] Ms. Cochrane is a lawyer and an officer of the court. An accusation of this nature during a trial is very serious and if the allegation was true it would have had a long lasting, negative effect on Ms. Cochrane's career, including a likely disciplinary hearing with the Law Society.
[ 27 ] Those accusations taken together with the manner in which the plaintiff's case was conducted put an award of costs into the range of exceptional circumstances where full indemnity costs should be awarded. The plaintiff's conduct of the trial was reprehensible.
[ 28 ] The plaintiff is fortunate that the costs claimed by the defendants are in the range of partial indemnity costs, and so will receive that benefit.
[ 29 ] I therefore order the plaintiff to pay the costs of the defendants on a full indemnity scale in the amount of $160,706.99.
Warkentin J.
Released: April 17, 2012
COURT FILE NO.: 08-CV-42440
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N: LOUISE MARCUS Plaintiff – and – CAROL ANN COCHRANE and LOW MURCHISON LLP Defendants
REASONS ON COSTS
Warkentin J.
Released: April 17, 2012
[1] (1999), 46 O.R. (3d) 330
[2] Televisions Real Estate Ltd. v. Rogers Cable T.V. Ltd., [1997] O.J. No. 1944 (Ont. C.A.) at para 24 .
[3] 71 O.R. (3d) 291 (C.A.)
[4] Baryluk (c.o.b. Wyrd Sisters) v. Campbell (2009), 66 C.C.L.T. (3d) 160, (Ont. Sup. Ct.)
[5] Mantella v. Mantella 2006 CarswellOnt 3176 (S.C.J.) at para 7