Lawrence Jerome Berk Smith v. Nancy-Gay Rotstein et al., 2012 ONSC 4200

SUPERIOR COURT OF JUSTICE – ONTARIO

IN THE MATTER OF THE ESTATE OF RUTH DOROTHEA SMITH, deceased

RE: Lawrence Jerome Berk Smith, Executor and Trustee of the Estate of Ruth Dorothea Smith, Applicant

AND:

Nancy-Gay Rotstein, Marliyn Chapnik Smith, Cynthia Joy Smith, Ilyse Jan Smith, Natalie Jill Smith, Tremayne-Lloyd Smith and Claude R. Thomson, Trustee of the I. & R. Trust settled on November 7, 1991, Respondents

BEFORE: D. M. Brown J.

COUNSEL: R. Shekter, for the Moving Party, Lawrence Smith

T. Sutton, for the Responding Party, Nancy-Gay Rotstein

HEARD: Pursuant to further written submissions on costs and a hearing on April 20, 2012.

REASONS FOR DECISION:

re-consideration of costs

I. Background

1By Reasons released April 15, 2010,¹ I granted the motion for partial summary judgment of Lawrence Smith dismissing the Amended Notice of Objection of his sister, Nancy-Gay Rotstein, in respect of the 1987 Will and the first two codicils made by their mother, Ruth Dorothea Smith, who died in 2007, and I gave directions for the process to determine the validity of the Third and Fourth Codicils. By Supplementary Reasons dated July 30, 2010 I awarded Mr. Smith full indemnity costs fixed at $707,173.00 for fees and $30,407.29 for disbursements, together with applicable taxes (the "Initial Cost Reasons").

2Ms. Rotstein appealed to the Court of Appeal. By Reasons dated July 5, 2011² the Court of Appeal dismissed her appeal from the granting of partial summary judgment. However, the Court of Appeal granted her leave to appeal the award of costs, set aside the award of costs, and referred the issue of the quantum of the fees claimed back to me for reassessment.

3On July 12, 2011, I informed counsel for the parties that I would afford them an opportunity to make further submissions on costs in light of the Reasons of the Court of Appeal. Efforts to schedule such submissions were put on hold until the Supreme Court of Canada dismissed Ms. Rotstein's application for leave to appeal from the decision of the Court of Appeal. Ultimately counsel filed further supplementary written cost submissions and made oral submissions on April 20, 2012.

II. The decision of the Court of Appeal

4The Court of Appeal did not alter the award of $30,407.29 for disbursements, plus applicable taxes.³ Nor did the Court of Appeal interfere with my conclusion that costs should be awarded on a full indemnity basis.⁴ The Court of Appeal remitted for my consideration "the issue of the quantum of the fees claimed" fixed on a full indemnity scale.⁵

5In setting aside my award of $707,173.00 for fees fixed on a full indemnity basis the Court of Appeal made the following points:

(i) There is no requirement for a losing party on a motion who is not seeking costs to file a bill of costs, although it is preferable that a party do so;

(ii) If a losing party does not file a bill of costs, the motions judge may take that into account as a factor when considering the reasonable expectations of the losing party;

(iii) However, a bill of costs for a significant amount, such as one in excess of $700,000.00, "must be able to stand on its own without reference to a bill of costs from the [losing party]";

(iv) It was open to me, as a motion judge, to draw the permissible inference from the failure of Ms. Rotstein to file a bill of costs that "the fees incurred by Ms. Rotstein on a full indemnity basis approximated those incurred and submitted by Mr. Smith";

(v) Notwithstanding such a finding, a motion judge must proceed to consider whether the amount of costs claimed is fair and reasonable and to address any significant concerns about the bill of costs raised by the losing party;

(vi) A bill of costs for an amount such as that sought by Mr. Smith "invites careful analysis", and while a motion judge "is not required to do a line by line analysis, he or she must be satisfied that the bill is fair and reasonable standing on its own";

(vii) If Ms. Rotstein's "analysis is accepted in a reassessment, it could lead to a significantly different result";

(viii) The Court of Appeal did not propose to carry out the reassessment: "The motion judge is best suited to do it and it is for him to come to his own conclusion. What is important is that the analysis be fully considered as part of the assessment"; and,

(ix) While Ms. Rotstein "may well have paid fees equivalent to or in excess of those claimed by the respondent, she is still entitled to challenge the respondent's bill as unreasonable. If there is a critique of the respondent's bill of costs, it is worthy of consideration..."⁶

I should note that the Court of Appeal also commented that we live in a "day of inflationary legal costs", a factor necessitating a careful analysis of any large bill of costs.⁷

III. Overview of approach to the re-assessment of costs

6The Court of Appeal held that the absence of a bill of costs from Ms. Rotstein was not critical to a consideration of her critiques of Mr. Smith's costs claim and that the claimant's bill of costs must be able to stand on its own.⁸ Ms. Rotstein submitted that notwithstanding the propriety of an award of full indemnity costs, consideration must be given to whether the amount claimed by Mr. Smith was "fair and reasonable" in the sense of looking beyond the actual fees incurred to some standard of reasonable allowable costs. As put in her March 23, 2012 submissions:

12./ In Part II of these submissions, Mrs. Rotstein has identified several concrete and objective examples of where Mr. Smith's bill of costs evidences "overreach" and "overkill" which the courts have found will render a bill of costs neither fair nor reasonable. Reasonableness is an objective standard. Where there are objective markers available to the court that support a finding of "excessive" conduct, "overreach" or "overkill", the bill of costs should be adjusted downwards accordingly.

13./ Although a judge need not undertake a line by line analysis of the hours claimed, nor second guess the amount claimed, where there are objective measures to demonstrate that a bill of costs is clearly excessive or overreaching the court has an obligation to adjust the quantum accordingly. A judge must consider what is reasonable in the circumstances and, after taking into account all of the relevant factors, should award costs in a more global fashion.

7In furtherance of this argument Ms. Rotstein also referred to cases which held that a court must look beyond the amount of the fees claimed where both sides to a proceeding had engaged in litigation "overkill".⁹ However, Ms. Rotstein did not concede in her written submissions, in any clear or unequivocal manner, that the amount she had expended on legal fees in this proceeding constituted "overkill". Consequently, it is open to me to find, and I do find, that not only did the fees incurred by Ms. Rotstein on a full indemnity basis approximate those incurred and submitted by Mr. Smith but, as well, Ms. Rotstein did not consider that the amount of fees she had incurred constituted "litigation overkill". In my view such a finding can inform, in part, the analysis under Rule 57.01(1)(0.b) about the amount of costs Ms. Rotstein, as an unsuccessful party, could reasonably expect to pay in respect of the summary judgment motion.

8The present case did not involve a contest between a David and a Goliath, with the successful Goliath seeking significant costs against the unsuccessful David. As I indicated in my Initial Cost Reasons, both parties drew on equally skilled and equally expensive legal teams. This was a contest between two parties each of whom obviously had access to significant financial resources to fund their legal teams – it was litigation between financial equals. The Court of Appeal did not interfere with my inference of fact that "the fees incurred by Ms. Rotstein on a full indemnity basis approximated those incurred and submitted by Mr. Smith".

9I intend to approach the task of reassessing the full indemnity costs claimed by Mr. Smith in the following way:

(i) I have informed myself of, and I adopt, those portions of the analysis conducted in my Initial Cost Reasons which the Court of Appeal did not find to be in error;

(ii) I will examine each critique made by Ms. Rotstein to Mr. Smith's bill of costs;

(iii) I will consider what explanation, if any, Mr. Smith made in response to the critique; and,

(iv) I will then consider all the critiques and explanations to determine whether any adjustment should be made to the costs claimed by Mr. Smith in order to arrive at a global award of costs for this motion which is fair and reasonable in the particular circumstances of this case.

IV. Examination of Mr. Smith's Bill of Costs

10Ms. Rotstein submitted two sets of written cost submissions – those dated May 28, 2010 ("Rotstein Initial Submissions") and ones dated March 23, 2012 ("Rotstein Supplementary Submissions"). Those submissions criticized several aspects of Mr. Smith's Bill of Costs.

11Before turning to examine the critiques made by Ms. Rotstein and the responding explanations made by Mr. Smith, let me address a preliminary point. Mr. Smith filed Supplementary Costs Submissions dated April 13, 2012 which contained, in part, explanations by his counsel, Mr. Shekter, for certain entries on the bill of costs. Pointing to the principle which prevents a counsel from acting as both advocate and witness in a proceeding, Ms. Rotstein argued that little weight should be given to explanations by Mr. Shekter who also was appearing as advocate at the re-assessment hearing.¹⁰ I did not accept that submission and permitted Mr. Shekter to provide explanations about entries on the bill of costs. It is the general practice for solicitors with direct knowledge of the matter to appear on an assessment of costs before a taxing officer to explain the work for which costs are claimed, so I concluded that it was open to Mr. Shekter to provide such explanations on the re-assessment conducted before me.¹¹

A. Hourly rates used by Mr. Smith's counsel

12Ms. Rotstein submitted that Mr. Smith had failed to use a consistent methodology for setting his claimed partial and substantial indemnity rates and he proposed adjusted partial and substantial indemnity rates: Rotstein Initial Submissions, paras. 29 and 30. However, in neither set of submissions did Ms. Rotstein take issue with the actual rates charged by Mr. Smith's counsel. Accordingly, since costs were awarded on a full indemnity basis, the use of the actual rates charged by Mr. Smith's counsel in the circumstances was fair and reasonable.

B. Excessive time spent (hours charged) for court attendances and cross-examinations

B.1 Ms. Rotstein's critique

13In her Initial Submissions Ms. Rotstein contended that the use by Mr. Shekter, senior counsel for Mr. Smith, of docketing on a half-day or full-day basis resulted in an overcharging, or over-reaching, of time docketed for attendances in court and on cross-examinations. By contrast another counsel for Mr. Smith, Mr. Rabinowitz, docketed on a minutes/hours basis. Ms. Rotstein argued that a comparison of the time charged by Mr. Shekter with that docketed by Mr. Rabinowitz for any particular step, or with the time for any cross-examination as disclosed by the transcript, revealed that Mr. Shekter over-charged by 43.40 hours for time spent on court attendances and cross-examinations.¹²

B.2 Mr. Smith's response

14In the written submissions filed by Mr. Shekter on behalf of Mr. Smith he explained that the Shekter Dychtenberg LLP firm renders accounts in litigation matters on two bases: (i) time docketed for case preparation and other incidental services, and (ii) per diem for examinations and court attendances, billed on either a half-day or full-day basis. A per diem rate included all incidental out-of-court preparation time incurred on the specific day and was not restricted to the actual time spent in court or at an examination. By contrast his co-counsel, Mr. Rabinowitz, who worked at the Fraser Milner Casgrain firm, docketed on a time spent basis.

15Responding to the critiques about the specific docket entries made in paragraph 17 of Ms. Rotstein's Supplementary Submissions, Mr. Shekter explained how in each circumstance the actual work he performed on that day involved preparation time before the attendance in court or at the examination.

B.3 Analysis

16I accept, as reasonable, the explanation provided by Mr. Shekter about his per diem docketing practices. Attendances at court or on examinations invariably require pre-attendance preparation on that particular day. Using per diem rates represents a reasonable alternative to hours/minutes docketing provided the client agrees with the practice, which in this case Mr. Smith did. I also accept the explanations offered by Mr. Shekter of the work he performed for the two specific attendances put in issue by Ms. Rotstein. In my view no adjustment is required on this point.

C. Other adjustments to the hours charged by Mr. Shekter

C.1 Ms. Rotstein's critique

17Ms. Rotstein submitted that Mr. Shekter had overstated by 36% the time he spent on court attendances and on cross-examinations. On that basis Ms. Rotstein contended that all of Mr. Shekter's time should be discounted by 36%.

18Ms. Rotstein also argued that the following further, specific deductions should be made from the time charged by Mr. Shekter:

(i) 40 hours for the preparation of Reply Submissions because the length of those submissions exceeded the page length set by a scheduling order. (Ms. Rotstein also sought a reduction of 20 hours to the time of other lawyers involved in the preparation of those submissions);

(ii) All time spent by Mr. Shekter (15.5 hours) and others (2.3 hours) preparing for a mediation which did not proceed because "mediation is a voluntary process and the associated costs should not be included in these circumstances"; and,

(iii) Time for certain work performed after the release of my Summary Judgment Reasons, reducing 20.8 hours claimed for Mr. Shekter, Mr. Rabinowitz, Mr. Lobl and Ms. Gibbs to 6.0 hours. Ms. Rotstein submitted that some of the work performed involved routine estate administration tasks.

C.2 Mr. Smith's response

19As noted, Mr. Shekter provided an explanation of his per diem docketing practice.

20As to the Reply Submissions, Mr. Smith submitted that notwithstanding the length of those submissions, "the analysis that formed the basis of the reply submissions constituted argument preparation for the substantive motion and was utilized during argument by Larry's counsel during the summary judgment hearing. The analysis of Nancy-Gay's submissions was essential to the successful outcome of this case."

21Mr. Smith contended that although the mediation was cancelled due to the unfortunate, unforeseen circumstances of one counsel, the mediation scheduling and costs were incurred as a consequence of the litigation and therefore recoverable.

22Finally, Mr. Smith submitted that with respect to Mr. Shekter's time claimed following the summary judgment hearing, since costs were awarded on a full indemnity basis they were not subject to the tariff deduction asserted by Ms. Rotstein.

C.3 Analysis

23Although I question the line of reasoning advanced by Ms. Rotstein that since a party had over-claimed for specific, identified work it therefore must have over-claimed for all other work, I have accepted as reasonable Mr. Shekter's explanation of his per diem docketing practice, so I see no basis for an across-the-board reduction of 36% of his time claimed.

24While the Reply Submissions did exceed the stipulated length, I found them very helpful since they contained useful argument on relevant issues. Had the excess submissions dealt with irrelevancies, I would have taken a different view, but in the circumstances I see no basis for an adjustment.

25Rule 75.1.02(1)(b)(ii) mandates mediation in will challenge cases brought in the Toronto Region. Accordingly, the reasonable costs of preparation for a cancelled mandatory mediation are recoverable if the cancellation was reasonable. The parties agree that the cancellation was reasonable. Mr. Shekter spent 15.5 hours preparing for the mediation. I consider that to have been reasonable in the circumstances and see no basis for an adjustment.

26Finally, as to the time claim for work performed following the summary judgment motion (excluding the cost submissions), I have reviewed, again, the description of the 20.8 hours of the work claimed. A few of the items concerned discussions by counsel about the method for applying for probate. Although on their face such discussions concerned a matter involving the administration of the estate, in the specific circumstances of this case they equally involved understanding the relief which I had granted in my Summary Judgment Reasons. At the end of those Reasons I wrote:

308I think this is an appropriate case in which to grant partial probate. The Third and Fourth Codicils deal only with two matters: (i) the amount of the gift to be paid to the I. & R. Smith Trust for the benefit of Marcia Rotstein, and (ii) the gift of a necklace to Tracey Tremayne-Lloyd. Since Ms. Tremayne-Lloyd filed an affidavit confirming that she had renounced that gift, only the amount of the gift for the benefit of Marcia Rotstein remains in issue. I see no reason to delay the administration of Ruth Smith's estate because of that one issue. I therefore direct the Estates Registrar of the Toronto Region to issue to Lawrence Smith a certificate of appointment as estate trustee of Ruth Dorothea Smith's 1987 Will, First Codicil dated May 24, 1989 and Second Codicil dated November 7, 1991, upon the payment of the usual fees, and upon the filing of an undertaking signed by Lawrence Smith that he will hold back from the distribution of estate assets the sum of $250,000.00 until such time as a certificate of appointment may be issued in respect of the Third or Fourth Codicil, or both.

309As to the Third Codicil of Ruth Smith dated November 15, 1994 and the Fourth Codicil dated June 3, 1998, in respect of which summary judgment ultimately was not sought, I intend to make directions about further steps in the proceeding pursuant to Old Rule 20.05(1). I have reviewed the probate file in this matter (01-4260/07) and see that the Notice of Application was served on the I. & R. Smith Trust c/o Mr. Claude Thomson, Q.C., at the Fasken's law firm. The Motion Record for summary judgment was served on Marcia Rotstein Evans by serving the Hull & Hull firm. Before making any further directions regarding next steps in this proceeding in respect of the validity of the Third and Fourth Codicils, I require Lawrence Smith to serve his Notice of his Application for a certificate of appointment in respect of those two instruments personally on Marcia Rotstein Evans no later than Friday, April 23, 2010, together with a copy of these Reasons for Judgment. I require Marcia Rotstein Evans to serve on counsel for Lawrence Smith, no later than May 7, 2010, a statement clearly indicating whether she wishes a trial to be scheduled in respect of the Third or Fourth Codicils, or whether she is content that a certificate of appointment issue to Lawrence Smith in respect of them. If Marcia Rotstein Evans does not serve such a statement by May 7, 2010, she shall be taken to not oppose the issuance of such a certificate.

310If Marcia Rotstein Evans files a statement indicating that she does not oppose the issuance of a certificate, or if she is deemed to be taken not to oppose its issuance, then I direct the Estates Registrar of the Toronto Region, upon the filing of an affidavit by counsel for Lawrence Smith indicating that Marcia Rostein Evans does not oppose, or is deemed not to oppose the issuance to Lawrence Smith a certificate of appointment as estate trustee of Ruth Dorothea Smith's Third Codicil dated November 15, 1994 and Fourth Codicil dated June 3, 1998, to proceed to issue such a certificate to the applicant.

311If Marcia Rotstein Evans files a statement indicating that she opposes the issuance of a certificate, then I direct counsel for Lawrence Smith and Marcia Rotstein Evans to seek an appointment from my office for a date on which to attend a hearing for further directions.

312Given my grant of partial summary judgment in respect of the 1987 Will and the first two codicils, Nancy-Gay Rotstein has no interest in any further adjudication, if required, of the validity of the Third and Fourth Codicils of Ruth Smith, and no notice need be served on her of any further proceedings in respect of the Third and Fourth Codicils.

In light of those portions of my Reasons, I regard the docketed discussions about how to proceed with probate as concerning how to interpret my Summary Judgment Reasons just as much as dealing with matters of estate administration. Given those specific circumstances, I conclude the time docketed for such discussions was recoverable as part of the necessary work performed in respect of the motion for summary judgment. I do not accede to Ms. Rotstein's submission that any adjustment should be made.

D. Reduction of time claimed for law clerks

D.1 Ms. Rotstein's critique

27Ms. Rotstein submitted that 31.3 hours of a law clerk's time should be disallowed because it consisted primarily of the clerk's attendance at one cross-examination – that of Mr. Rotstein – while no assistance by clerks was performed at any other cross-examination.

D.2 Mr. Smith's response

28Mr. Shekter stated that his clerk attended to prepare immediate summaries of the evidence to inform the following day's examination and to highlight significant points for later argument. Mr. Shekter stated that it was his practice as litigation counsel to read such summaries in place of examination transcripts. He also stated that same day transcripts were not available for the examinations of Mr. Max Rotstein.

D.3 Analysis

29The amount at issue on this line item is $5,250.00 of a law clerk's time. Mr. Shekter advised that he used the clerk's summaries in lieu of same day transcripts which were not available for Mr. Rotstein, the key witness tendered by Ms. Rotstein on the motion. It strikes me that the cost of two days of overnight transcripts would not be too far off the three days' worth of time docketed by the law clerk for attending the cross-examination and preparing immediate summaries. Moreover, Mr. Shekter stated that the summaries prepared by his clerk were used for other aspects of hearing preparation. I see nothing unreasonable about the practice of preparing contemporaneous examination summaries in those circumstances and make no adjustment to Mr. Smith's bill of costs for that line item.

E. Reduction of time docketed by law students

E.1 Ms. Rotstein's critique

30Mr. Smith's bill of costs recorded 96.5 hours of time spent by several law students, representing 5.99% of the total time recorded on the bill.¹³ Ms. Rotstein submitted that:

(i) 1.2 hours of that time should be disallowed because each of the students performed less than one hour's work meaning their work was "likely for clerical tasks as opposed to legal value add (sic)";

(ii) In addition, 60.9 hours of student time for research should be disallowed "on the premise that students tend to operate a (sic) lower level of efficiency".¹⁴ I should note that Ms. Rotstein did not submit that only some student time for research should be allowed. A review of Schedule C to her Initial Submissions revealed that her position was that no student time for research should be allowed.

E.2 Mr. Smith's response

31Mr. Smith submitted that his counsel engaged law students where appropriate and the use of law students on a lengthy and complex matter was judicious.

E.3 Analysis

32Part I of Tariff A permits the recovery of fees for services provided by students-at-law. In the present case counsel for Mr. Smith used several law students over the course of about one year to perform 96.5 hours of work. In light of the complexity of the issues on the motion, in my view the use of students-at-law to that extent was reasonable and their time recoverable in the costs award.

F. Rule 39.03 examinations

F.1 Ms. Rotstein's critique

33Ms. Rotstein requested access to her mother's medical records and the records of her home care workers. She contended that Mr. Smith had refused to provide those records on consent. Ms. Rotstein then conducted three Rule 39.03 examinations of representatives from Baycrest, Sunnybrook/Women's College Hospital and Qualicare. Those examinations related to the allegations asserted by Ms. Rotstein about her mother's incapacity and her brother's exertion of undue influence over the affairs of their mother. Ms. Rotstein submitted that all time claimed associated with those Rule 39.03 examinations should be disallowed because the examinations would not have been necessary had Mr. Smith consented to the release of the information requested.

F.2 Mr. Smith's response

34Mr. Smith submitted that the Rule 39.03 examinations were not conducted as a result of any position which he took. He stated that it took time for the parties to work out a consensual arrangement for the production of the large volume of medical records requested by Ms. Rotstein.

F.3 Analysis

35At issue on this line item is three (3) hours of lawyer's time amounting to $1,325.00 in claimed fees.

36Neither party placed before me the pre-hearing correspondence between counsel on this issue. That makes it very difficult for a judge to determine whether the litigation conduct of a party caused an unnecessary expenditure of legal time.

37I therefore resort to recalling the context of, and the issues involved in, this piece of litigation. Ruth Smith had made several wills during her life, but at her death her last will and testament was one dated November 4, 1987, which had been altered by four codicils – May 24, 1989; November 7, 1991; November 15, 1994; and, June 3, 1998. As a result of his father's death, Lawrence was the sole appointee as estate trustee under his mother's 1987 Will. Mr. Smith moved for partial summary judgment dismissing his sister's objections to the issuance of a certificate of appointment in respect of the 1987 Will, and the First (1989) and Second (1991) Codicils. Ms. Rotstein challenged the validity of those testamentary instruments on all possible grounds, including the testatrix's lack of capacity and an allegation that her brother had exercised undue influence over their mother.

38As can be seen from the following passages from my Summary Judgment Reasons, the medical and assisted care records covered periods of time long after Mrs. Smith had made her testamentary instruments:

154I should note that the responding party filed 18 volumes of medical records for Ruth Smith, amounting to some 5,308 pages. Most covered the period from 2002 on. Dr. Kingstone's clinical records as Ruth Smith's family physician totaled 384 pages, extended back to at least September, 1978, and contained clinical notes, lab reports and consult reports from other doctors covering the entire period of the testamentary instruments in question in this proceeding – 1987 until 1998. Notwithstanding the availability of those medical records for expert review, Nancy-Gay Rotstein did not file any opinion from a medical practitioner offering a view of Ruth Smith's competence at the material times.

Notwithstanding the production of the medical records, Ms. Rotstein filed no expert evidence on the summary judgment motion regarding her mother's testamentary capacity or lack thereof. The breadth, and ultimate irrelevance, of Ms. Rotstein's allegations of undue influence against her brother for the periods of time involving assisted care and their mother's admission to Baycrest were canvassed at length in my Summary Judgment Reasons.¹⁵

39Ms. Rotstein put the issues of lack of capacity and undue influence in play; she contended that her brother's conduct many years after her mother's execution of the testamentary instruments was somehow relevant to those issues; she tendered, at the hearing, 18 volumes of medical records containing 5,308 pages, without adducing any expert evidence on the issue; and her objection on the point was dismissed as without any merit. In those circumstances, I do not find unreasonable a claim by Mr. Smith for a mere three hours of counsel's time to attend three examinations of non-party witnesses on the point.

G. Time spent preparing the Bill of Costs

G.1 Ms. Rotstein's critique

40Ms. Rotstein submitted that the 43.2 hours of clerk's time spent preparing Mr. Smith's bill of costs was excessive "in an era when docket entries and billing records are in electronic databases exportable to Excel spreadsheets" and should be reduced to 16 hours.

G.2 Mr. Smith's response

41Mr. Smith submitted that notwithstanding the existence of computerized dockets, the preparation of his bill of costs still required the categorization of time by a law clerk which proved to be a significant and time-consuming task.

G.3 Analysis

42While computerized time and disbursements ledgers are the starting point for the preparation of a bill of costs, they are not the end point. A proper bill of costs must allocate time to each relevant step in a proceeding. Such an allocation process requires both a review of the time ledger and the exercise of judgment, by a person familiar with the file, to categorize properly the time spent. Where firms specialize in somewhat homogenous litigation files, it may well be that their computer systems can generate dockets organized to reflect the standard categories of work for such homogenous litigation. By contrast, firms engaged in more heterogeneous complex litigation of necessity must resort to a greater degree of personal review of time dockets to generate the categories of time appropriate for a bill of costs.

43This was a piece of complex litigation. The bill of costs submitted by Mr. Smith was a highly professional piece of work which obviously required a significant amount of time to place the docketed time in the various categories and, as well, to calculate claimed amounts on partial, substantial and full indemnity scales. Preparation of the work was properly delegated to an experienced law clerk, and the total time claimed - $6,000.00 – was not the full amount of time spent in preparing the bill of costs as the bill noted that a "client courtesy discount" had been given. Given the complexity of the motion I conclude that the amount claimed for the preparation of the bill of costs was reasonable and I see no need to adjust this line item.

H. The need for a "global adjustment"

H.1 Ms. Rotstein's critique

44Ms. Rotstein contended that "because of the evidence of overreaching, the general 'over-lawyering of the file' and the inclusion of tasks that are clearly related to the administration of the estate, an additional discount of 15% should be applied" to all fees claimed. Ms. Rotstein argued that the deductions she was advocating would bring the overall level of fees to "a reasonable amount and proportionate" to an estate with a net value of $1.24 million. Ms. Rotstein also contended that because I had disallowed certain disbursements claimed by Mr. Smith, it follows that Mr. Smith engaged in over-reaching in respect of his claimed fees.

45Finally, in her Supplementary Submissions Ms. Rotstein advanced an argument which she did not make in her Initial Submissions. She submitted that the 817.6 hours docketed by Mr. Shekter for this summary judgment motion over an 18 month period was "excessive and speaks to over-lawyering".

H.2 Mr. Smith's response

46Mr. Smith submitted that his counsel did not "over-lawyer" the case and that the 15% global reduction proposed by Ms. Rotstein was arbitrary.

H.3 Analysis

47Let me start with Ms. Rotstein's proposition that because some disbursements were disallowed it follows that Mr. Smith must have engaged in over-reaching in respect of his fees. With respect, that proposition is not a logical one. The disbursements were examined on their merits against the Tariff and most were disallowed because of the nature of the disbursement claimed, not the time expended on a task.

48Following my review of the bill of costs submitted by Mr. Smith I wrote in my Initial Cost Reasons:

62I have reviewed carefully Mr. Smith's Bill of Costs. It breaks down the fees incurred by each stage of the litigation, clearly shows the time spent and hourly rates, and indicates that the file was managed by delegating appropriate tasks to junior counsel or clerks. It also shows that Mr. Shekter and Mr. Rabinowitz did not simply duplicate their work, but involved themselves to different degrees depending on the particular task.

That is to say, my initial review of the bill of costs did not disclose any "over-lawyering" by Mr. Smith's counsel.

49I have set out above my more detailed line-item analysis of the critiques made by Ms. Rotstein to Mr. Smith's bill of costs. On a further review of the bill of costs I saw no evidence of "over-lawyering" by Mr. Smith's counsel.

50As to Ms. Rotstein's argument that the 817.6 hours docketed by Mr. Smith's senior counsel for this summary judgment motion over an 18 month period was "excessive and speaks to over-lawyering", I think I am entitled to infer from the absence of any bill of costs from Ms. Rotstein that her senior counsel spent approximately the same amount of time on this file. Ms. Rotstein certainly made no submission that her senior counsel spent significantly less time on this motion than did Mr. Shekter. Having made that factual inference, let me conclude my analysis about the reasonableness of the costs claimed by Mr. Smith by recalling the context in which he brought his summary judgment motion. His sister, Ms. Rotstein, had filed a notice of objection challenging their mother's testamentary instruments. It was her broad notice of objection which shaped the scope of the issues at play on the motion.¹⁶ Were the objections Ms. Rotstein raised to her mother's testamentary instruments reasonable? Absolutely not, for reasons I gave at length in my Summary Judgment Reasons. The lack of reasonableness in the positions advanced by Ms. Rotstein factored in the award against her personally of full indemnity costs, an award upheld by the Court of Appeal. In my view the scope of Mr. Smith's response to his sister's objections was proportionate to the issues which she had put in play. If one litigant puts in play a host of unreasonable issues, the other litigant cannot be tagged as acting unreasonably by simply responding fully to the issues raised by the other. In an adversarial litigation system, one usually responds to all issues raised by the other side. In other words, against the background of having read all of the voluminous materials placed before me on the motion for summary judgment, there is not the slightest doubt in my mind that the scope of the litigation response undertaken by Mr. Smith in his motion for partial summary judgment was a proportionate response to the unreasonable objections taken by his sister to their mother's testamentary instruments.

51Put more simply, having reviewed again Mr. Smith's bill of costs with care and having considered all the critiques advanced by Ms. Rotstein, as well as the factors set out in Rules 57.01(1) and 1.04(1.1) of the Rules of Civil Procedure, I conclude, without reservation, that the fees claimed by Mr. Smith on a full indemnity basis were fair, reasonable and proportionate in the circumstances and completely consistent with any reasonable expectation which Ms. Rotstein could hold as an unsuccessful objector to her mother's testamentary instruments. In my view any reduction in those fees claimed would work an injustice in light of the specific evidence placed before me in this case.

V. Summary and award

52For the reasons set out above, I conclude that the full indemnity costs of $707,173.00, plus applicable tax, claimed by Mr. Smith for the fees incurred on this motion are fair and reasonable and that no deduction should be made to them. This is the same result which I reached in my Initial Cost Reasons. As I read the decision of the Court of Appeal, the Court did not find that an award of fees in that amount would be unreasonable; the Court of Appeal held that I had committed a reversible error by not giving Ms. Rotstein's cost critiques adequate consideration. Specifically, the Court of Appeal stated that "if [Ms. Rotstein's] analysis is accepted in a reassessment, it could lead to a significantly different result." For the reasons given above, I do not accept Ms. Rotstein's analysis and, having considered Mr. Smith's bill of costs "standing on its own", I have concluded that the full indemnity costs he claimed are fair and reasonable.

53I therefore order Ms. Rotstein personally to pay Mr. Smith full indemnity costs fixed at $707,173.00 for fees, plus applicable taxes, together with the previously ordered disbursements of $30,407.29, plus applicable taxes, within 120 days of the date of this order, the same period of time I afforded to her in my Initial Cost Reasons.

VI. Costs of this re-assessment

54Mr. Smith sought full indemnity costs for this re-assessment hearing of slightly over $19,000.00. Ms. Rotstein submitted that an award of partial indemnity costs in the amount of $5,000.00 was appropriate for this re-assessment.

55I agree that the appropriate scale for the costs of the re-assessment is the partial indemnity scale. The re-assessment resulted from the Court of Appeal holding that I had committed a reversible error in my initial assessment of the costs. Accordingly, the need for the re-assessment resulted from my error, not from the litigation conduct of Ms. Rotstein. There was nothing in the way Ms. Rotstein or her counsel conducted the re-assessment which would merit an award of elevated costs. Accordingly, Mr. Smith is entitled to partial indemnity costs.

56Although the oral hearing lasted less than two hours, considerable time evidently went into the preparation of Mr. Smith's responding cost submissions. The level of detail in those submissions was reasonably necessary to reply to the critiques made by Ms. Rotstein. Given the nature of the critiques made by Ms. Rotstein, it was reasonable for senior counsel to have spent most of the time preparing the responding cost submissions (25.3 hours). Mr. Shekter is a senior counsel who has been in practice for 36 years; a partial indemnity rate of $350.00 for him is reasonable. Taking into account all of the factors enumerated in Rules 57.01(1) and 1.04(1.1), I conclude that a fair and reasonable award of partial indemnity costs to Mr. Smith for the re-assessment is $8,500.00, including disbursements and taxes, and I order Ms. Rotstein to pay Mr. Smith that amount within 120 days.

VII. A final observation: Cost Outlines from unsuccessful parties

57In my Summary Judgment Reasons I encouraged the parties to settle the costs of the motion, failing which I set a timetable for the filing of written cost submissions and bills of costs by both parties.¹⁷ The Court of Appeal held that "there is no requirement for the losing party, who is not seeking costs, to file a bill of costs although it is preferable that he or she does so."¹⁸

58I explained in my Initial Cost Reasons why I thought that information about the amount expended on costs by the losing party could act as an indicia of the "objective reasonableness" of the costs incurred: if both parties spent the same amount on the same legal steps, then, arguably, that provides a measure of "objective reasonableness", as well as benchmarking the reasonableness of expectations about a possible cost award if one loses. Absent a bill of costs from an unsuccessful party, complaints about over-reach and excessive costs are difficult to bench-mark or, as Winkler J., as he then was, observed in Risorto v. State Farm Mutual Automobile Insurance Co., an attack on the quantum of costs where the court did not have before it the bill of costs of the unsuccessful party "is no more than an attack in the air".¹⁹

59Allowable costs, awarded on whatever scale, are limited to those which have been reasonably incurred.²⁰ If reasonableness is an objective standard, in the absence of information about the amount of costs expended by the losing side, to what sources can a motion judge look for guidance in discerning the concrete tangibles of objectively reasonable costs? The Rules of Civil Procedure contain three general principles which provide some substance to the concept of "reasonably incurred" costs. First, Tariff A stipulates that fees claimed must be "for any step in a proceeding authorized by the Rules of Civil Procedure". In other words, fees incurred for work which did not relate to the litigation are not considered fees "reasonably incurred" for the purposes of assessing costs. Second, Rule 57.01(1) provides a list of qualitative factors which must inform the reasonableness of fees claimed. Third, Rule 1.04(1.1) sets out another qualitative factor by requiring that cost orders be "proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding". However, these are all qualitative factors. How does one transform, in an objective fashion, these qualitative factors into quantitative terms? Here the Rules provide much less guidance because they no longer contain a costs grid. In the absence of a costs grid – either statutory or one set by appellate authority - the general principles of the Rules, while helpful, provide no concrete, dollar and cents, guidance on how much time or money objectively should be spent on any particular step in a proceeding.

60So, where else can a motion judge turn for assistance in ascertaining the objectively reasonable level of costs applicable to a case? In some cases the court might be able to identify internal inconsistencies in a bill of costs – such as two counsel docketing different amounts of time for the same task – and treat those inconsistencies as evidence of the objective unreasonableness of the claimed costs. But most bills of costs contain no such inconsistencies. Or, should the process of assessing costs, even on a full indemnity basis, start from the premise that the successful party's bill of costs must always be cut to some extent because, well, that's just the way the litigation game is played? That does not strike me as a principled approach to fixing costs.

61The inability of a motion judge, as part of his or her inherent power, to order an unsuccessful party to file a bill of costs presents practical problems for fixing the costs of a motion. Once the costs claimed by a party rise above a level of $75,000.00 or so, it becomes increasingly difficult for a motion judge to ascertain "the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed": Rule 57.01(1)(0.b). The disclosure of the amount and allocation of costs expended by an unsuccessful party on the step in the proceeding, through the provision of a bill of costs, is a useful tool in assisting a motion judge in ascertaining the reasonable expectations of an unsuccessful party.

62The Rules of Civil Procedure presently provide that absent agreement by the parties on costs, "every party who intends to seek costs for that step shall give to every other party involved in the same step, and bring to the hearing, a costs outline (Form 57B) not exceeding three pages in length": Rule 57.01(6). In some regions both parties on a motion routinely bring their costs outline to the motion hearing. As a result, the motion judge possesses information about the costs sought by both parties - since every party to a motion thinks it will succeed and will be entitled to costs - and the costs outline provides a useful tool in the ultimate fixing of costs. Indeed, in Andersen v. St. Jude Medical Inc. the Divisional Court stated that "the introduction of the Costs Outline in Rule 57.01(6) will provide some measure of what the unsuccessful party expected..."²¹ Unfortunately the practice of requiring counsel on all motions to bring to court costs outlines has not caught on in the Toronto Region, in part through the failure of Toronto Region judges (myself included) to insist that parties comply rigorously with Rule 57.01(6).

63So, part of the solution might be for the Toronto Region judiciary to enforce Rule 57.01(6) more vigorously, although it is not clear to me what sanctions a court reasonably could impose if, at the start of a hearing, the motion judge discovers that one or both parties have not come armed with their costs outline. Perhaps where a motion judge reserves on a complex matter the judge could direct the parties to file costs outlines before the judge releases his or her reserved reasons for judgment – i.e. at a time when there is not yet an unsuccessful party. Such an approach would appear to be consistent with the obligations imposed on parties by Rule 57.01(6).

64But often a judge will reserve on a complex motion and then set out a timetable for the filing of written submissions upon the release of his or her reasons. For such cases it might well be appropriate for the Civil Rules Committee to consider an amendment to Rule 57.01 which will authorize a judge to order an unsuccessful party on a motion or at a trial to file a bill of costs, or costs outline, as part of its responding cost submissions.

D. M. Brown J.

Footnotes

1. 1Re Estate of Ruth Smith: Smith v. Rotstein, 2010 ONSC 2117 (the "Summary Judgment Reasons").
2. 22011 ONCA 491
3. 3Ibid., para. 66.
4. 4Ibid., para. 64, and paras. 57 to 63.
5. 5Ibid., para. 66.
6. 6Ibid., paras. 51 to 56.
7. 7Ibid., para. 54.
8. 82011 ONCA 491, para. 54.
9. 9For example, Anderson v. St. Jude Medical, Inc. (2006), 2006 85158 (ON SCDC), 264 D.L.R. (4th) 557 (Ont. Div. Ct.), para. 27.
10. 10Imperial Oil Ltd. v. Grabarchuck (1974), 1974 869 (ON CA), 3 O.R. (2d) 783 (C.A.), para. 2.
11. 11See, generally: Orkin, The Law of Costs, Second Edition, §202; Hamilton Wentworth Credit Union Ltd. (Liquidator of) v. Courtcliffe Parks Ltd., 1995 CarswellOnt 3559 (Comm. List), para. 7; Boucher v. Ontario (Public Accountants Council), 2002 22268 (Ont. Div. Ct.), per Epstein J. at para. 71.
12. 12Schedule B to Rotstein Initial Submissions.
13. 13Rotstein Initial Submissions, Schedule F.
14. 14The precise amount of the disallowance was not stated in the text of the Rotstein Initial Submissions. I have arrived at this figure by performing what was close to a "line-by-line analysis" of Schedule C to those submissions.
15. 15Summary Judgment Reasons, paras. 189, 190, 212 to 216 and 297 to 300.
16. 16As I stated in paragraph 32 of my Costs Reasons: "It was apparent from the volume and the quality of materials placed before the court that each side had engaged in extensive and meticulous preparation, leaving no stone – factual or legal – unturned."
17. 172010 ONSC 2117, para. 313.
18. 182011 ONCA 491, para. 50.
19. 19(2003), 2003 43566 (ON SC), 64 O.R. (3d) 135 (S.C.J.), para. 10, quoted with approval by the Divisional Court in United States of America v. Yemec, 2007 65619 (ON SCDC), [2007] O.J. No. 2066 (Div. Ct.), para. 54.
20. 20MacKinnon v. Ontario Municipal Employees Retirement Board (2007), 2007 ONCA 874, 88 O.R. (3d) 269 (C.A.), at para. 92.
21. 212006 85158 (ON SCDC), [2006] O.J. No. 508 (Div. Ct.), para. 19.