COURT FILE NO.: 05-50/05
DATE: 20121005
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: JIAN SU, Plaintiff/Applicant
AND:
SEC-YONG LAM, in his personal capacity and as executor and trustee of the estate of GAB YI LAM also known as GABY YI LAM or GAB YI CHU, deceased, Defendant/Respondent
BEFORE: Stinson J.
COUNSEL: Jian Su, in person
David M. Goodman, for the Defendant/Respondent
HEARD: By written submissions
ENDORSEMENT AS TO COSTS
[1] This endorsement concerns the costs of this application under Part V of the Succession Law Reform Act, R.S.O. 1990, c. S.26 ("SLRA"). Ultimately, as explained below, I made no order for support. The respondent, who successfully resisted the application, seeks costs of $127,000. The applicant challenges the respondent's entitlement to costs on various grounds.
[2] These proceedings had a lengthy history. They traced their origins to a lengthy common law relationship between the applicant, Mr. Su and the late Gab Yi Lam. That relationship began in approximately May 1993 and lasted until Ms. Lam's death in April 2004. Despite her common law relationship with Mr. Su, throughout that time she remained legally married to the respondent Sec-Yong Lam, whom she named as the executor in her will. She made no provision in her will in favour of Mr. Su.
[3] Following Ms. Lam's death, Mr. Su advanced claims against her estate on several grounds. Initially, he issued a statement of claim (Action No. 05-CV-283500) on February 4, 2005. That action dealt only with the assets of Ms. Lam, and a claim by Mr. Su that he was entitled to a share of her assets or alternatively that he was entitled to be repaid in excess of $200,000 from her estate, having allegedly loaned her that amount of money. That action was defended by her executor, Mr. Lam.
[4] Mr. Lam obtained a certificate of appointment of estate trustee with a will for Ms. Lam's estate on May 6, 2005. More than seven months later, on December 8, 2005, Mr. Su commenced an additional proceeding by issuing a notice of application for dependant's support under Part V of the SLRA. That seven months delay subsequently proved fatal for Mr. Su's support claim, as I will later explain.
[5] On January 26, 2006, Hoilett J. made an interim support order in favour of Mr. Su, gave directions regarding procedure and production of documentation, ordered that the action be transferred to the Estates List and directed that the application and the action either be consolidated, tried together or heard one after the other.
[6] Over the succeeding four and half years, the litigation took a number of twists and turns. A large number of documents were produced on behalf of the respondent. In addition, there were a large number of motions, including these discussed below.
[7] On December 22, 2006, as a result of Mr. Su having failed to attend to be examined, Stewart J. ordered that payment of interim support directly to him be suspended, and directed that further payments be made to Mr. Lam's solicitor in trust pending further order of the court.
[8] On September 9, 2008, Strathy J. ordered Mr. Su to attend for further examination on his undertakings. He further ordered Mr. Su to pay security for costs in the amount of $25,000, as well as an outstanding unpaid costs award.
[9] On February 6, 2009, on consent of the parties, D. Wilson J. ordered the dismissal of action 05-CV-283500, and the dismissal of all property claims in application 05-50/05. By her order, she directed that the costs of the action and the property claims in the application be reserved to the judge hearing the dependant support application. Mr. Su was represented by counsel at the time.
[10] No steps were taken by Mr. Su to proceed with the SLRA application for more than one year. As a result, on March 18, 2010, Belobaba J. heard a motion made by Mr. Lam for an order dismissing the application for want of prosecution. Belobaba J. ordered that the spousal support claim be listed for trial by March 31, 2010, failing which the application would be dismissed with costs fixed on a partial indemnity basis at the all inclusive sum of $56,000.
[11] Mr. Su set the matter down for trial as required. The trial itself proceeded before me over five days in October 2010, followed by subsequent written submissions. In reasons for decision released February 17, 2011, I found that Mr. Su had proven that he and Ms. Lam were spouses within the meaning of s. 30 of the Family Law Act, R.S.O. 1990, c. F.3 ("FLA"), and s. 57 of the SLRA. I further found that, pursuant to s. 30 of the FLA, Ms. Lam was under a legal obligation to provide support to Mr. Su immediately before her death. As such, Mr. Su was a dependant of Ms. Lam for purposes of s. 57 of the SLRA.
[12] In my February 17, 2011 reasons, I directed that the parties attend before me further to adduce evidence regarding the factors recited under s. 62(1) of the SLRA and in particular the value of Ms. Lam's estate for purposes of Part V of the SLRA. During a case conference convened to deal with the scheduling of that further hearing, counsel for Mr. Lam raised a limitation period defence, for the first time in the proceedings. That defence was premised on the argument that there were no assets remaining in the estate against which an order for support could be made. As a consequence, on October 27, 2011, a further day of trial was held, focusing on that issue.
[13] In reasons for decision released March 30, 2012, I held that there were no estate assets against which an order for support in favour of Mr. Su might be made. The basis for that conclusion was that all estate assets had been distributed prior to the commencement of his application for support under Part V of the SLRA. As well, in light of the fact that all of the estate assets had been distributed, there was no basis for making a discretionary extension of the six month limitation period under s. 61(2) of the SLRA. On this basis, I concluded that Mr. Su's claim for support must fail. I directed that if the parties could not agree on costs, they should make written submissions. They have now done so.
liability for costs
[14] The standard approach for an award of costs is that it should follow the outcome of the litigation. In other words, the successful party should recover an award of costs from the unsuccessful party. In the present case, despite having succeeded in establishing that he was a spouse of the late Ms. Lam to whom she owed a legal obligation of support, Mr. Su did not obtain an order of support. By contrast, no relief was granted against the respondent. Applying the standard rule, the respondent should be entitled to an order as to costs against Mr. Su.
[15] Mr. Su argues, however, that no award as to costs should be made despite the outcome. Among other grounds, Mr. Su argues that Mr. Lam withheld and destroyed evidence. The evidence before me does not support that allegation.
[16] Mr. Su argues that Mr. Lam "made conflict [sic] affidavits and used improper form [sic] to obtain the certificate of appointment of estate trustee." Once again, there is no evidence to support this assertion. Mr. Lam has acted for the last seven years as the estate trustee because he was named as such in the will of the late Mrs. Lam. This complaint does not warrant a denial of costs.
[17] Mr. Su asserts that Mr. Lam failed to advise him of the issuance of the certificate of appointment of estate trustee. Once again, this complaint does not warrant the denial of costs to Mr. Lam as the successful party.
[18] A further ground relied upon by Mr. Su in support of his assertion that Mr. Lam should not recover costs is the allegedly misleading summaries of estate assets that were furnished by the respondent from time to time. A series of differing estate asset summaries was provided by the respondent which on their face indicated that estate assets were still available. During Mr. Lam's examination for discovery on July 17, 2007, his counsel did not mention anything about a limitation period. When Mr. Su's then-lawyer was attempting to determine the status of the various estate assets, Mr. Lam's counsel stated, "[i]f your client proves his best position in terms of assets, there is more than enough equity in the various properties to pay him out." Mr. Su argues that this led him to believe that estate assets were still available to satisfy his claim for support. Even to the end of the initial trial in October 2010, there was no mention of a limitation period and yet another summary of assets for SLRA purposes was supplied.
[19] In none of the summaries disclosed prior to July 2011, was the value of the estate for SLRA purposes said to be zero. Up until that point, Mr. Su had believed (quite reasonably, in my view) that the estate had sufficient assets to satisfy his claim and that there was no issue regarding the recoverability or attachability of estate assets.
[20] I agree with Mr. Su that, in light of the subsequent reliance by the respondent on the six month limitation period and the distribution of all of the estate assets prior to the commencement of the SLRA application, the various summaries of the estate assets for SLRA purposes were at best, inaccurate and misleading. Had accurate information been provided from the outset regarding the value of the estate for SLRA purposes, it is very possible that Mr. Su would have reconsidered his decision to pursue the support application.
[21] In the end, once proper disclosure had been made about the estate assets and the timing of their distribution, Mr. Su was forced to re-focus his claim to try to establish that the joint tenancies by which Mrs. Lam had held some of her real property with Mr. Lam had been severed. Mr. Su was unable to do so, and as a result – despite having proved he was a dependant – he came away with nothing.
[22] It is important to remember, however, that the SLRA proceeding was just one aspect of the litigation initiated by Mr. Su. My duty is to fix the costs of the litigation overall, including the steps that preceded or were ancillary to the SLRA claim. In the circumstances, I conclude that the inaccurate summaries of estate assets and the late assertion of the limitation period by Mr. Lam do not warrant a complete denial of a costs award in his favour; instead, I conclude that costs should be fixed in his favour. That said, I do consider these factors to be important considerations when determining the quantum of the respondent's costs award.
scale of costs
[23] Mr. Lam seeks costs on a partial indemnity basis only. I agree that this is the appropriate scale at which to fix his costs.
quantum
[24] Mr. Lam claims costs of $127,872.01, comprised of fees of $105,087.50, disbursements of $8,283.08, and HST of $14,501.43. These costs encompass all steps taken in the litigation since it was initiated in 2005 by way of statement of claim. That proceeding was later incorporated into the SLRA application. There were numerous motions and other attendances, examinations, a mediation and, ultimately, two trials – one to determine whether Mr. Su was a dependant, and the second to decide the amount of support he should be awarded.
[25] There is no dispute raised by Mr. Su that the professional time claimed by Mr. Lam was actually expended on this matter. The hourly rate charged – $350 per hour – is within of range of recoverable partial indemnity costs awards for counsel of Mr. Goodman's seniority. The real issue is whether an award of that magnitude is warranted in these circumstances.
[26] I have already mentioned and rejected various submissions of Mr. Su as they relate to the issue of liability for costs; I will not repeat those comments, except to add that most of them do not support a reduction in the quantum of costs. Of particular significance in relation to deciding the issue of quantum, however, are Mr. Su's submissions relating to the misleading information supplied by Mr. Lam and his counsel regarding the assets of the estate.
[27] From the commencement of the SLRA proceeding, Mr. Lam was aware – but did not disclose – that there were no further assets in the estate against which a support order could be made. Had Mr. Su been armed with that knowledge, he would have been able to reassess the strategy he was pursuing to seek monetary compensation for his contributions to Mrs. Lam's support. Instead, for several additional years, Mr. Su continued to pursue a claim that was ultimately defeated by late disclosure by Mr. Lam and by the late plea of, in effect, a limitation period.
[28] In my view, it would be unfair and inequitable to order Mr. Su to reimburse Mr. Lam for all his costs in defending the SLRA claim, when Mr. Lam failed to make proper disclosure and did not alert Mr. Su to the fact that there were no assets available – the basis upon which the claim was ultimately defeated. Not only does such non-disclosure warrant a sanction by the court, but Mr. Lam's conduct in this regard is a relevant factor under rule 57.01(1)(e): the proceeding was unnecessarily lengthened as a consequence.
[29] In relation to the other factors in rule 57.01(1), I observe as follows:
57.01(0.a) Mr. Lam's lawyer is senior and experienced, his hourly rate is reasonable and the hours spent were not excessive. This factor supports the amount claimed.
57.01(0.b) Mr. Su had to know that he was forcing Mr. Lam to incur significant legal expenses, and he must have been conscious that he was exposed to an adverse order as to costs if he did not prevail. In my view, the costs award sought by Mr. Lam should have been within Mr. Su's reasonable expectation. This factor, too, supports the amount claimed.
57.01(a) Mr. Su sought extensive relief but recovered nothing. It is not surprising that Mr. Lam resisted the claim vigorously. The factor supports the amount sought.
57.01(b) As to "apportionment of liability", Mr. Su succeeded in establishing that he was a dependant (a fact denied by Mr. Lam). His claim was defeated on technical grounds that were neither advanced nor properly disclosed until very late in the proceedings. This factor supports a reduction in the quantum of costs.
57.01(c) The complexity of the proceeding was moderate. The issues relating to the status of Mr. Su as a dependant and the alleged severance of the joint tenancies were somewhat complex. This factor supports the amount claimed for costs.
57.01(d) The issues were important to both sides. Again this factor supports the amount claimed.
57.01(e) I have already commented at length regarding the conduct of Mr. Lam that lengthened the proceeding. This factor warrants a reduction in any costs recovery.
I do not consider the remaining factors in rule 57.01(1) to be of particular significance in this case.
[30] In relation to the claimed fees of $105,087.50, I note that all but 34 hours of the 300 hours spent by Mr. Goodman were expended after the SLRA claim was initiated. Approximately 50% of the time was devoted to activities relating solely to trying the SLRA claim: pre-trial, trial preparation, conduct of the trial(s) and connected activity. Virtually all of the time at the first trial was devoted to the issue whether Mr. Su was a dependant, an issue on which he was successful. Much, if not all of this expense could have been avoided had Mr. Lam made proper and timely disclosure of the fact that there were no assets available to satisfy the claim. Mr. Su was, in effect, misled into continuing to "drill a dry hole."
[31] In the circumstances, I reduce by 50% the fees claimed by Mr. Lam, to $52,500. To that sum I would add taxes (a combination of HST and GST) of $5,000, and disbursements of $8,283.08. I therefore fix Mr. Lam's costs at $65,783.08.
[32] The formal judgment shall issue in the form approved by me and bearing my fiat. To the extent that Mr. Su has previously paid costs awards to Mr. Lam during the course of these proceedings or has paid funds into court as security for costs, he is entitled to credit against his liability for the costs award made by me in this endorsement.
Stinson J.
Date: October 5, 2012