SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Helen Berman, By her Litigation Guardian and Attorney for Property, Evie Garnet, 754273 Ontario Limited, 754274 Ontario Limited and Milliken Mills Investment Inc., Plaintiffs
– AND –
Samuel Schwartz, Samuel Schwartz in his capacity as former Estate Trustee of the Estate of Joseph Berman, Davis LLP, Goodman and Carr LLP, and the Estate of Joseph Berman, by its Estate Trustee, Reuben Rosenblatt, Defendants
BEFORE: Justice E.M. Morgan
COUNSEL: R.S. Harrison and Avrum Slodovnick, for the Plaintiffs
Joseph Groia, Jennifer K. Bradley, and David Sischy, for the Defendants
HEARD: November 19, 2012
COSTS ENDORSEMENT
[1]
Entitlement to Costs
On December 3, 2012, I released my judgment in this motion and invited written submissions on costs. I have now received submissions from all counsel, including responding submissions by Plaintiffs’ counsel delivered after they had a chance to review the successful parties’ submissions.
2The Defendants Samuel Schwartz, Samuel Schwartz in his capacity as former Estate Trustee of the Estate of Joseph Berman, Davis LLP, Goodman and Carr LLP (“Schwartz et al.”) were successful on the motion. I held that Evie Garnet must be replaced as litigation guardian for Helen Berman and that Solmon Rothbart Goodman LLP must be replaced as counsel for Ms. Berman and her litigation guardian.
3While the issues raised by the motion were highly contentious, the motion itself proceeded in an orderly fashion. The parties exchanged affidavits and motion records containing numerous exhibits, but none of the affiants were cross-examined by either side. The parties also exchanged factums and briefs of authorities containing a substantial amount of legal research. The hearing of the motion lasted approximately two hours, and each side had a senior counsel argue the case and another lawyer present to assist him.
4Schwartz et al. have submitted a Costs Outline setting out their costs totaling just over $19,500.00. They submit that the issues raised complex questions of law. They further indicate that the motion was particularly significant to Schwartz et al. as the allegations made against them – and especially against Samuel Schwartz – took aim at their professional competence and reputation. They also advise me in their cost submissions that they had made an offer to settle the motion several days prior to the hearing, and that this offer was rejected by the Plaintiff.
5The offer to settle does not appear to me to be significant in terms of awarding costs. Although it was a legitimate offer, strictly speaking it went beyond the issues in the motion. Acceptance of the offer would have required the Plaintiffs to change the claim itself in a substantial way. The Plaintiffs were justified in confronting, albeit unsuccessfully, the conflict of interest issues in their own right; the decision not to drop part of the substantive claim is a decision that was separate from the actual motion.
6I do agree, of course, that the motion raised some fairly complex legal issues, and I have no doubt that the time invested researching and putting together this motion by counsel for Schwartz et al., as summarized in the Costs Outline, was time well spent.
7I also agree that the allegations that gave rise to the motion were of great personal significance for Mr. Schwartz. He was, after all, discharged as solicitor for his longtime client, Ms. Berman, under circumstances which put his professional reputation in issue. It should not surprise the Plaintiffs that his legal team poured substantial resources into this motion.
8Schwartz et al. therefore deserve an award of costs.
[9]
Liability of the Litigation Guardian
The one thing that gives me pause is that the Plaintiff Helen Berman was the unsuccessful party in the motion. In the usual course, she would have to bear the costs. Ms. Berman, however, did not instruct counsel to defend the motion brought by the Defendants. Her litigation guardian, Ms. Garnet, who I have ordered removed due to her conflict of interest, did that.
10Given this concern, after releasing my judgment I wrote to all counsel and asked for submissions on whether it would be appropriate to award costs against Ms. Garnet personally rather than against Ms. Berman. Mr. Slodovnick, who is counsel to Ms. Garnet as defendant in the Third Party Claim, has provided me with written submissions on behalf of Ms. Garnet, and counsel for Schwartz et al. has also submitted to me its view on the issue.
11As was said in Re Koch (1997), 1997 12265 (ON SC), 35 OR (3d) 71 (Gen Div), there are two competing interests at stake in a controversy like this. On one hand, persons who assume guardianship duties ought not be unduly deterred from carrying out their duties on behalf of the person under disability. On the other hand, individuals who assume the guardian’s role must be held accountable for the manner in which they fulfill that role.
12This thinking was applied to the case of public trusties by the British Columbia Court of Appeal in White v Rutter (1998), 1988 2899 (BC CA), 32 CPC (2d) 195, at 201, where the court noted that, “it cannot be in the public interest to deter a statutory agent from carrying out his duties by exposing him to an order for costs.” The Ontario courts have generally followed this policy reasoning for private guardians as well as public trustees where the action or motion, though unsuccessful, was neither frivolous nor pursued in bad faith. Socha (Committee of) v Millar, [1995] OJ No 371 (Gen Div); aff’d 1998 CarswellOnt 1989 (Ont CA).
13Mr. Slodovnick urges me to pay heed to the policy of protecting the functioning of the guardianship system, submitting that if a litigation guardian were readily subject to costs no one would ever take on that role. In this, he reflects the position articulated by Coady J. of the British Columbia Supreme Court in Lopaschuk v Henderson (1951), 1951 467 (BC SC), 3 WWR (NS) 327, at 328, who commented that to hold a guardian to the risk of bearing costs personally “might well be to discourage defences on behalf of infants where legitimate defences might well be advanced and to thus perhaps sacrifice infants’ interests.”
14Although it may seem unfair to Ms. Berman here, I agree that the overriding concern is for the system of litigation guardianship itself. The defense of this motion was unsuccessful, but I would not say that it was defended in bad faith or that the defense was so frivolous that it should not have been pursued at all. The system requires that the Plaintiffs, and not Ms. Berman’s litigation guardian personally, bear the costs of the motion.
[15]
Disposition
The Plaintiffs shall pay costs to Schwartz et al. in the amount of $19,500.00, inclusive of disbursements and HST.
Morgan J.
Date: January 23, 2013