COURT FILE NO.: C-193-08

DATE: 2012-11-23

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Theodore Edward Lucas, Plaintifff

AND:

D.T.I. Diversified Transportation Inc.,
A-1 Storage Space Limited, H & R Holdings
Corporation, 1459722 Ontario Inc., Defendants

AND RE: D.T.I. Diversified Transportation Inc.,
A-1 Storage Space Limited, H & R Holdings Corporation,
Belinda Brunton Lucas and 1459722 Ontario Inc., Plaintiffs by Counterclaim

AND:

Theodore Edward Lucas, Rah Products Inc. Client Transport
Inc., Paul David Ming, Client Logistic Services Inc.,
Betty Small and Joyce Higgins, Defendants by Counterclaim

BEFORE: Justice G.A. Campbell

COUNSEL:
Charles Morrison, for the Plaintiff/Defendants by Counterclaim,
Theodore Edward Lucas

Steven D. Gadbois, for the Defendants, PlaintiffS by Counterclaim

ENDORSEMENT ON COSTS

A - September 26, 2012: Motion

[ 1 ] It is very difficult to quarrel with Mr. Morrison’s submission that his client achieved complete success on the motion.

[ 2 ] Ms. Beaulne certainly had a right to vigorously contest the contention that Mr. Lucas’ acceptance of her formal Offer settled the whole action. She did so, to the fullest. Unfortunately, as a result, Mr. Lucas was thereby forced to incur significant expense in his successful quest for a judgment on the terms of the accepted, formal Offer to Settle.

[ 3 ] I am to view the issue of costs of this motion in a flexible and balanced way. Ostapchuk v. Ostapchuk , 2003 57399 (ON CA) , 2003 CarswellOnt 1661, [2003] O.J. No. 1733 (C.A.). Mr. Morrison’s client is entitled to his costs, but the quantum to be paid must reflect the factors in R. 57.01 (1) of the Rules of Civil Procedure ), viewed flexibly: C.A.M. v. D.M. (2003), 2003 18880 (ON CA) , 67 O.R. (3d) 181 (C.A.). The costs award, as well, must represent a fair and reasonable amount that should be paid by Ms. Beaulne, rather than any exact measure of the actual costs to Mr. Lucas: Zestra Engineering Ltd. V. Cloutier , 2002 25577 (ON CA) , [2002] O.J. No. 4495 (C.A.). I am also required to step back and make an assessment of a sensible and fair result consistent with what the unsuccessful party might reasonably have expected to have to pay: Rule 57.01 (1) (0.b) and Moon v. Sher (2004), 2004 39005 (ON CA) , 246 D.L.R. (4th) 440, [2004] O.J. No. 4651 (C.A.). This costs assessment, as well, must reflect some form of proportionality to the actual issues argued, rather than an unquestioned reliance on billable hours and documents created: Pagnotta v. Brown 2002 CarswellOnt 2666 (Sup. Ct.) .

[ 4 ] I also accept and agree with my colleague, Czutrin J.’s analysis of the case law regarding costs in Pollitt v. Pollitt 2011 ONSC 3162 , 2011 CarswellOnt 5873, (especially as he sets them out in his Reasons between pages 8 and 18) and his decision that the tax deductibility of Ms. Beaulne’s legal fees (see para. 9 of Mr. Morrison’s written submission) should be considered a factor in my ultimate decision regarding the quantum of costs allowed or disallowed (see paras. 65 and 66 of Czutrin J.’s decision).

[ 5 ] I am satisfied and agree with Mr. Morrison’s submissions that Ms. Beaulne’s tactics and strategy during this litigation, especially during the period when she purported to be acting for herself (while Mr. Gadbois remained counsel of record in the civil action) and her clear dissipation of assets despite a 2007 order that prohibited just such an action (see para. 4 (c) of Tab 3 of Mr. Morrison’s written Costs Submission brief) establishes that Ms. Beaulne acted both unreasonably and in bad faith (see R. 24(5) and (8) of the Family Law Rules and case law cited thereafter).

[ 6 ] Accordingly, I reject Ms. Beaulne’s claim for costs of the motion. (Despite my recognizing her “good reason” why she vigorously contested the motion.) She lost the motion. Given her prolonging the litigation by her actions, her indecision and her “adjusting” her demands to seek more concessions from Mr. Lucas, it would fly in the face of case law and the Rules that she be allowed any costs of the motion.

[ 7 ] Indeed, Mr. Lucas should and will be granted his costs of the all-day argued motion, payable by Ms. Beaulne to him, forthwith, set in the amount of $15,000.00, inclusive of recoverable disbursements and HST.

B. Costs regarding “Any legal expenses” after August 15, 2011, agreed to by Mr. Lucas in the accepted Offer to Settle .

[ 8 ] The basis upon which the judgment rests is Ms. Beaulne’s formal Offer to Settle, which was accepted by Mr. Lucas and accordingly, he is bound by the wording of that Offer.

[ 9 ] The Offer must be interpreted as having intentionally used the words “Any legal expenses” not, as Mr. Morrison urges, that I should only allow legal “costs” that can be allowed by a taxing officer on, “lawyer’s fees and disbursements allowable under Rules 57.01 and 58.05”.

[ 10 ] I accept (as did Mr. Lucas) that the intentionally broad wording of para. 2 of Ms. Beaulne’s formal Offer to Settle must be interpreted within the context of the Offer and with the usual meaning of the words used.

[ 11 ] The issue to be decided, as I see it, is to distinguish between costs directly attributable to the civil action and other “expenses” incurred by Ms. Beaulne relating to the other action that continues to grind inexorably forward. Mr. William Fehrenbach’s fees can clearly be attributed to that other family matter that remains unresolved. I therefore reject Mr. Gadbois’ argument that the Fehrenbach fees/disbursements (of which I have yet to see a Bill of Costs or Costs Outline) should be included within the ambit of “any legal expenses” as they relate to the civil action. I disallow that amount for purposes of this decision.

[ 12 ] Given that Ms. Beaulne used the terms “on a partial indemnity basis” in her Offer, I accept Mr. Gadbois’ submission that that concept of partial indemnity “would allow for an order based upon 60% of his usual billing rate.

[ 13 ] I accept also that “any legal expenses” would by inference, include only those legal expenses attributable to that part of the proceeding between Mr. Lucas and Ms. Beaulne and not to the other defendants or plaintiffs by counterclaim (with whom Mr. Gadbois had other negotiations, eventually resulting in settlements with Betty Small, Joyce Higgins, Paul David Ming and Client Logistic Services).

[ 14 ] Accordingly, I disallow all “expenses” of Mr. Gadbois that relate to those aspects of the civil action (see dockets April 2 to April 13, 2012).

[ 15 ] I would also disallow intra-office memos from Mr. Gadbois to brief others of his staff (for example, see September 14, 2011, January 10, 2012 and February 7, 2012 – Sherri Bender and “Mary” and October 21, 2011 “create(ing) instructions for Tanya … and “telephone attendances” with Stephen Paull – November 7 and 28, 2011 – who are they and how are they involved with the T.E. Lucas civil matter?)

[ 16 ] Although there appear to exist an inordinately large amount of lawyer client e-mails and telephone “hand holdings” by Mr. Gadbois of Ms. Beaulne, some clients are more “high-maintenance” than others. Mr. Lucas well knows the extent of Ms. Beaulne’s interest in these proceedings and her aggressiveness (indeed, much of Mr. Morrison’s argument, both at the motion and in his costs submission focuses on those personality traits of hers).

[ 17 ] Perhaps the extent of that level of demand on Mr. Gadbois’ time and training may not be allowed in a “usual” costs determination. However, I accept that the choice of wording of para. 2 of the Offer allows for the “expense” of that level of professional involvement.

[ 18 ] I also rule that since Mr. Morrison has sought to separate the family court proceedings from the civil court proceedings, and since I am focusing on the “expenses” of the civil aspect of these litigants’ battle, I do not accept that the listed factors to consider, contained in Rule 24 of the Family Court Rules , apply to this consideration.

[ 19 ] Despite accepting that at least some of Ms. Beaulne’s approach to this litigation exacerbated the conflict and was unreasonable, self indulgent and wasteful, Mr. Lucas should not be surprised by the size of the deduction that Ms. Beaulne seeks from the judgment as her “legal expenses”.

[ 20 ] I have already disallowed $826.88 of Ms. Beaulne’s legal expenses since they relate directly to the motion which she lost.

[ 21 ] Although Mr. Lucas may have good reason to begrudge the cost of the transcripts of the discoveries of the parties, I accept that the wording of para. 2 of the Offer would allow careful counsel to obtain the transcript, just-in-case he was successful on the motion and the action was allowed to proceed. I therefore will allow all of the August 16, 2011 to July 9, 2012 disbursements and HST attracted thereto.

[ 22 ] As a result, I find that a fair and balanced costs (“legal expenses”) award is $18,000 for fees and HST, plus $958.16 for disbursements (including HST) for a total cost award of $18,958.16, which, by the wording of the accepted Offer to Settle, might have been deducted from the judgment owing by Ms. Beaulne to Mr. Lucas. Of course, however, Ms. Beaulne now owes Mr. Lucas, the costs allowed for the motion of $15,000.00

[ 23 ] Therefore, I apply a set-off of the one award against the other and rule that $3,958.16 may be deducted by Ms. Beaulne from the judgment owing by her to the plaintiff in Action #193/08.

G.A. Campbell J.

Date : November 23, 2012