COURT FILE AND PARTIES

COURT FILE NO.: CV-10-249

DATE: 20140618

IN THE MATTER OF an appeal by way of trial de novo pursuant to Section 26 of the Land Titles Act, R.S.O. 1990, c.L.5, as amended;

AND IN THE MATTER OF a Notice of Application by Angelina Bailey.

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ANGELINA BAILEY, Possessory Claimant

AND:

GERALD HARRY BARBOUR, Objector

BEFORE: THE HON. MADAM JUSTICE S.E. HEALEY

COUNSEL:
R. Fenn and I. De Rijcke, for the Possessory Claimant

S. Dewart, for the Jeffrey Streisfield, Counsel

HEARD: May 15, 2014

ENDORSEMENT

[1] The trial judgment in this matter was released by this Court on November 29, 2013 (Bailey v. Barbour, 2013 ONSC 7397), and by order dated March 19, 2014 the argument regarding costs was bifurcated. The first hearing, which took place on April 9, 2014, was to determine entitlement and quantum of costs. By costs endorsement released on April 14, 2014, this Court ordered:

1. Angelina Bailey shall be paid costs of the two proceedings fixed in the amount of $490,000 on a substantial indemnity basis, inclusive of HST.

2. Post-judgment interest shall not begin to run until the release of the additional decision regarding liability for payment of such costs, on or after May 15, 2014.

3. The payor of these costs shall be determined on or after May 15, 2014.

[2] This endorsement relates to the final paragraph in the costs endorsement, and deals with the question of whether Mr. Barbour’s counsel should personally be ordered to pay costs pursuant to Rule 57.07 of the Rules of Civil Procedure.

[3] This hearing was initiated by the Court, as opposed to the successful party Mrs. Bailey, by letter to counsel dated March 10, 2014, reproduced below:

Dear Sirs:

RE: Bailey v. Barbour – Court File No.: CV-10-249 & 10-1309

As an appointment has been scheduled before this Court on April 9, 2014 for the purpose of fixing costs of these proceedings, this correspondence is being sent to alert Mr. Streisfield to the fact that the Court will be considering that this may be an appropriate case for invoking rule 57.07, due to costs wasted by Mr. Streisfield as a result of Mr. Stewart’s involvement. Mr. Streisfield should ensure that he is in a position to address that issue and to make submissions through counsel as necessary.

[4] Mrs. Bailey subsequently took the position that she is also seeking costs against Mr. Streisfield personally.

[5] Prior to argument of the substantive portion of the hearing, Mr. Streisfield’s counsel requested that I recuse myself on the basis of reasonable apprehension of bias. Following argument, this Court ruled that the request for recusal was denied, for reasons to be provided in writing. These reasons are given below.

Reasonable Apprehension of Bias

[6] Costs of a trial are always determined by the trial judge, absent special circumstances. This is because the trial judge has the advantage and insight beyond any other judicial officer in being able to assess all factors that impact on a determination of costs, having observed the conduct of the trial him or herself. For the same reason, the trial judge is in the best position to determine costs under Rule 57.07(1) because only he or she can fully appreciate the basis for considering an award of costs against the solicitor in question. The request that a judge recuse herself while in the middle of determining the costs of a trial is both unusual and procedurally problematic.

[7] Rule 57.07 provides:

57.07 (1) Where a lawyer for a party has caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default, the court may make an order,

(a) disallowing costs between the lawyer and client or directing the lawyer to repay to the client money paid on account of costs;

(b) directing the lawyer to reimburse the client for any costs that the client has been ordered to pay to any other party; and

(c) requiring the lawyer personally to pay the costs of any party.

(2) An order under subrule (1) may be made by the court on its own initiative or on the motion of any party to the proceeding, but no such order shall be made unless the lawyer is given a reasonable opportunity to make representations to the court.

(3) The court may direct that notice of an order against a lawyer under subrule (1) be given to the client in the manner specified in the order.

[8] As set out in subrule 57.07(2), the Court may initiate the inquiry into whether there are grounds for considering an award of costs against a solicitor. That rule inherently places a judge who initiates such a hearing into a position of perceived conflict. Since cost orders against lawyers are never to be lightly entertained, before doing so a judge is likely to already have in his or her mind good reason to consider invoking the rule. Bearing in mind that the threshold test requires, at a minimum, a lawyer for a party to have caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default, any Court taking such initiative must necessarily have made at least a preliminary assessment that there have been costs wasted by the type of conduct that may warrant a personal costs order against a solicitor. Accordingly, such judge is never approaching the issue with a completely unfettered mind, but rather only after carefully considering whether there is a prima facie case made out with respect to the threshold issue.

[9] The tension created by this rule is well described in the journal article authored by Evans, H., “The Wasted Costs Jurisdiction” (2001) 65 MLR 51 at p. 56:

...But the greatest injustice is to the respondent lawyer. The same judge will both initiate the enquiry and come to a conclusion at the end of it. No other tribunal would be allowed to be prosecutor, witness and judge, and it is in principle wrong that our courts should be forced to act in way which is arguably in breach of natural justice. It may also be in breach of Article 6 of the European Convention on Human Rights, now enshrined in English law by the Human Rights Act 1998. These problems appear in a lesser way if the Court suggests the making of an enquiry. Even if the enquiry is wholly driven by the applicant, the judge may still be a witness. The law requires that the judge who dealt with the underlying action should also hear the wasted costs application. The reason behind this rule is the laudable aim of saving costs, and because the judge will be in the best position to assess the lawyers conduct, but the result is that the hearing does not appear to be as impartial as it otherwise would be. [footnotes omitted]

[10] There is agreement between counsel that the correct test to apply on the issue of judicial bias is that confirmed in Wewaykum Indian Band v. Canada, 2003 SCC 45, [2003] 2 S.C.R. 259 [“Wewaykum”] at para. 60:

What would an informed, reasonable and right-minded person, viewing the matter realistically and practically, and having thought the matter through, conclude? Would he or she think it more likely than not that the judge, whether consciously or unconsciously, would not decide fairly?

Also see Committee for Justice and Liberty v. Canada (National Energy Board), 1976 2 (SCC), [1978] 1 S.C.R. 369 at 394; R. v. S (R.D.), 1997 324 (SCC), [1997] 3 S.C.R. 484 at para. 31; and Bailey v. Barbour, 2012 ONCA 325 at para. 16.

[11] The burden is on the party arguing for disqualification to establish that the circumstances justify a finding that the judge must be disqualified. There is a strong presumption of judicial impartiality, which is key to the judicial process. Accordingly, the apprehension of bias must be based on serious grounds. Each case must be examined on its own facts and in light of the entire context: Wewaykum, at paras. 59 and 76.

[12] It is paramount to not have the integrity of the justice system eroded by the perception of judicial bias. Even the possibility of unconscious bias must be looked at through the lens of the reasonable person in order that no one be left with the impression that irrelevant considerations are acting on the judicial mind. Such considerations underlie the oft-heard words from The King v. Sussex Justices, Ex parte McCarthy, [1924] 1 K.B. 256, “It is not merely of some importance but of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done”.

[13] The applicable law was summarized recently by the Ontario Court of Appeal in Bailey v. Barbour, 2012 ONCA 325 at paras. 16-21, as follows:

16. The inquiry into whether a conflict exists sufficient to prompt a decision-maker to recuse him or herself must be fact-specific. As his short oral ruling demonstrates, the trial judge correctly identified the test to be applied for determining whether there exists a reasonable apprehension of bias: What would an informed, reasonable and right-minded person, viewing the matter realistically and practically, and having thought the matter through, conclude? Would he or she think it is more likely than not that the judge, whether consciously or unconsciously, would not decide fairly?

17. This test was first articulated by Grandpré J. in his dissenting reasons in Committee for Justice and Liberty v. National Energy Board, 1976 2 (SCC), [1978] 1 S.C.R. 369, at p. 394. Ever since, the Supreme Court of Canada has consistently endorsed the standard, including the case referred to by the trial judge, Wewaykum Indian Band, although the court has also sought from time to time to clarify and develop it.

18. Thus, for example, in his reasons in R. v. S. (R.D.), 1997 324 (SCC), [1997] 3 S.C.R. 484, Cory J. explained, at para. 111, that the test set down by Grandpré J. contains a “two-fold objective element”: not only must the person considering the alleged bias be reasonable, but “the apprehension of bias itself must also be reasonable in the circumstances of the case.” Cory J. added, at para. 113, that:

[T]he threshold for a finding of real or perceived bias is high. It is a finding that must be carefully considered since it calls into question an element of judicial integrity. Indeed an allegation of reasonable apprehension of bias calls into question not simply the personal integrity of the judge, but the integrity of the entire administration of justice.

19. In addition to this “high” threshold set out by Cory J., the Supreme Court has made clear that, in those cases where a party seeks the recusal or disqualification of a judge, allegations of judicial bias will have to overcome the strong presumption of judicial impartiality. Moreover, “in any case where the impartiality of the judge is in question, the appearance of the matter is just as important as the reality”: R. v. Bow Street Metropolitan Stipendiary Magistrate and others, ex parte Pinochet Ugarte (No. 2), [1999] 1 All E.R. 577 (H.L.), at p. 592.

20. In Metropolitan Properties Co. (F.G.C.) Ltd. v. Lannon, [1968] 3 All E.R. 304 (C.A.), at p. 310, Lord Denning M.R. stressed the importance of the appearance of judicial impartiality. He put the matter this way:

[I]n considering whether there was a real likelihood of bias, the court does not look at the mind of the justice himself… It does not look to see if there was a real likelihood that he would, or did, in fact favour one side at the expense of the other. The court looks at the impression which would be given to other people. Even if he was as impartial as could be, nevertheless, if right-minded persons would think that, in the circumstances, there was a real likelihood of bias on his part, then he should not sit. And if he does sit, his decision cannot stand.

21. This passage from Lord Denning M.R. in Metropolitan Properties Co. was cited with approval by Major J. in his dissenting reasons in S. (R.D.), at para. 11, and by this court in Benedict v. Ontario (2000), 2000 16884 (ON CA), 51 O.R. (3d) 147 (C.A.). In Benedict, the court also noted, at para. 20, that while Lord Denning M.R. used the phrase “real likelihood”, variations in the expression such as “reasonable apprehension”, “reasonable likelihood”, and “reasonable suspicion” should not be regarded as involving any substantive difference in the approach to be taken, and indeed amount to the same standard.

[31] For all of the foregoing reasons, the test set out in Wewaykum was not met by Mr. Streisfield and therefore the request for recusal, made while the proceeding is in its final stages, was denied.

Rule 57.07

[32] Having found there to be no basis in fact or law to warrant the requested recusal, I now turn to a determination of the hearing on the merits.

[33] Rule 57.07(2) provides that no order shall be made unless the lawyer has been given a reasonable opportunity to make representations to the Court.

[34] Mr. Streisfield has now had that opportunity. He has independent representation. He has filed a fulsome affidavit that addresses, within the constraints imposed by the solicitor and client relationship, his view of the litigation. I have carefully reviewed that affidavit, as well as the affidavit of Mr. Stewart. No time constraints were placed on his counsel’s submissions, nor do I deem any of the affidavit evidence to be inadmissible.

[35] As earlier stated, the legal test for when costs may be awarded against a solicitor personally was outlined by the Ontario Court of Appeal in Galganov, supra. In Galganov the Court outlined a two-step process or inquiry as to whether costs should be awarded against a solicitor personally, at paras. 13-14:

(1) The first inquiry is whether the lawyer’s conduct falls within Rule 57.07(1) in the sense of causing costs to be incurred unnecessarily; and

(2) The second step is to consider, as a matter of discretion (and applying the extreme caution principle), whether in the circumstances of the particular case, the imposition of costs against the lawyer personally is warranted.

[36] The first part of the test requires a “holistic” examination of the lawyer’s conduct, however a general observation about the conduct of the litigation is not sufficient to identify the conduct that contributed to delay and unnecessary cost. The Court must also consider specific incidents of conduct to determine whether the conduct caused unreasonable costs to be incurred and thus, falls within the rule: Galganov; Carleton v. Beaverton Hotel.

[37] The second part of the test is discretionary but, as explained by the Supreme Court of Canada in Young v. Young, 1993 34 (SCC), the court must exercise this discretion with “extreme caution”.

[38] As the case authorities discuss, the need for extreme caution in awarding costs against lawyers is necessary to ensure that lawyers’ conduct is not scrutinized and sanctioned as they carry out their duties to their clients.

[39] However, a lawyer may not rely on a client’s instructions as a defence if the lawyer has acted in a manner inconsistent with the goals of the justice system.

[40] I find that it is unnecessary to resolve this issue, as the calling of Mr. Stewart as an expert witness is enough to attract the consequences of Rule 57.07.

[41] Turning to the two-step analysis set out in Galganov, the first issue is whether Mr. Streisfield wasted the parties’ resources within the meaning of R. 57.07(1).

[42] Mr. Streisfield’s affidavit filed in response to this hearing addresses the involvement of Mr. Stewart in this proceeding.

[43] Rule 4.1.01 of the Rules of Civil Procedure sets out the duty of the expert witness.

[44] It defies reason that Mr. Streisfield could fail to question Mr. Stewart’s objectivity when one considers the evidence reviewed in the Reasons for Judgment.

[45] Similarly, it defies common sense and reason to accept that a lawyer who receives communications from his expert that disparage another expert and advocate litigation strategy could fail to recognize the expert’s lack of impartiality.

[46] Accordingly, I must find that it is Mr. Streisfield who caused the unnecessary waste of costs.

[47] At the second step of the inquiry the Court is to consider the principles set out in Young v. Young.

[48] There was overwhelming evidence of Mr. Stewart’s lack of impartiality with respect to the issues before this Court.

[49] In these circumstances, this is a case where there is no benefit of any doubt that can be given to the lawyer. The evidence is plain and obvious that Mr. Streisfield breached his obligation to the Court in using Mr. Stewart, and in doing so he acted in bad faith and was directly responsible for wasting costs. A costs order against him personally is warranted.

[50] I decline to order that costs be payable on a joint and several basis.

[51] Estimating very conservatively, I place that figure as being equivalent to 20% of the total costs incurred by Mrs. Bailey, or 20% of her costs award of $490,000.

[52] This court orders:

1. Gerald Barbour shall pay costs to Angelina Bailey fixed in the amount of $490,000 inclusive of disbursements and HST;

2. Jeffrey Streisfield shall reimburse Gerald Barbour for a portion of the above costs, being 20% of the total award, such that Jeffrey Streisfield shall pay to Gerald Barbour the amount of $98,000 inclusive of disbursements and HST;

3. Jeffrey Streisfield shall pay Angelina Bailey her costs of the hearing on May 15, 2014 fixed in the amount of $7,500 inclusive;

4. Notice of this order shall be given to Mr. Barbour by mailing a copy of this endorsement and order by ordinary mail, and proof of service of same shall be filed by counsel for Mr. Streisfield with this Court within 15 days; and

5. All costs plus interest owing to Angelina Bailey, including the order for costs made by the Court of Appeal, shall be paid to her within thirty (30) days from the date of this order.

HEALEY J.

Date: June 18, 2014

[^1]: Orkin, Mark M., The Law of Costs (2nd ed.) at para. 220.2.
[^2]: On further reflection, the reference to Barbour’s rejection of the offer of a midtrial settlement conference should not have been the subject of comment, as there is no obligation to do so once a judicial pretrial has already been conducted, as was the case here.