SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: CV-13-482577

DATE: 2014/09/22

RE: Fraser Mason, Plaintiff

AND:

Jeffrey David Shatford, Tanya Crystal Walker and Walker Law
Professional Corporation, Defendants

BEFORE: Justice A.J. O’Marra

COUNSEL:
William A. Chalmers, for the Responding Party/Plaintiff

Jane E. Sirdevan, for the Moving Party/Defendants

HEARD: April 23, 2014

COSTS ENDORSEMENT

[1] On July 7, 2014 I granted the defendants’ motion and struck the plaintiff’s statement of claim as disclosing no reasonable cause of action under Rule 21.01(1)(b) and as an abuse of process under Rule 21.01(3)(d) of the Rules of Civil Procedure with costs to the defendants.

[2] The matter arose in the context of somewhat complex legal proceedings involving defaults judgment, writ of seizure and sale, a fraudulent conveyance claim, judgment creditor enforcement proceedings, and a power of sale.

[3] The plaintiff, Mason commenced his action against Shatford and Shatford’s lawyer, Walker in which he sought special damages, specifically legal fees for which he claimed he would not be compensated because of proceedings initiated by Walker and Walker Law on behalf of Shatford. The plaintiff claimed that he was required to incur unnecessary legal fees to defend his interest as a mortgagee involving a residential property owned by his son, in which the defendant, Shatford also asserted an interest under default judgment on a personal loan to Mason’s son. (See Reasons for Judgment 2014 ONSC 3580)

[4] The parties were directed to make written submissions as to costs if they were unable to agree as amongst themselves. The plaintiff Fraser Mason and defendants Tanya Walker and Walker Law Professional Corporation settled as to costs. I have received the written submissions from counsel for Shatford and Mason, all of which I take into account on the issue of costs in this matter. The following is my costs endorsement.

[5] Jeffrey Shatford seeks costs of the motion and action on a substantial indemnity basis in the amount of $29,766.53. In the alternative, he seeks costs on a partial indemnity basis in the amount of $20,057.

[6] Shatford contends that the plaintiff’s conduct warrants an award on a substantial indemnity basis for the following reasons:

a) The plaintiff chose to initiate the action while engaged in a series of contested proceedings against Shatford. By suing Shatford and his counsel, the plaintiff knew that Shatford would have no alternative but to retain new counsel to deal with the action and various other matters. This resulted in significant wasted time and additional fees incurred as a result of the necessary review by new counsel of copious documentation from the prior proceedings in order to educate and prepare himself.

b) The plaintiff conducted a lengthy cross-examination of Shatford (nearly a full day), which he characterizes as a fishing expedition seeking solicitor-client information and documents. Plaintiff’s counsel asked for such information or documents no less than 86 times, all of which were refused.

c) On the eve of the Shatford cross-examination the plaintiff purported to serve “responding materials” which consisted of a banker’s box of documents, pleadings and proceedings essentially from all of the actions and motions outstanding between the parties. Significant time was spent reviewing the documentation in an attempt to understand precisely what the plaintiff actually intended to rely on.

[7] The plaintiff, Fraser Mason contends that the costs claimed by Shatford are excessive, disproportionate to the nature of the motion and beyond the reasonable expectations of the responding party. He submits that the appropriate order for costs should be fixed on a partial indemnity scale in the amount of $12,500 payable by Mason to Shatford in 30 days.

[8] Masons’ own cost outline prepared on a partial indemnity basis together with fees and disbursements totals $15,867.10.

[9] Pursuant to s.131 (1) of the Courts of Justice Act, costs of and incidental to a proceeding are at the discretion of the court. The fact is the court should consider in the exercise of its discretion in the award of costs are set out in Rule 57 of the Rules of Civil Procedure. Also, I bear in mind that I must adhere to the guiding principles set out in Boucher v. Public Accountants’ Counsel for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634 (CA) that the overall objective in fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by the actual costs incurred by the successful litigant.

[10] Further, the amount at which costs are to be fixed is not simply an arithmetical function. As noted by Lax J. in First Metro Consultants Limited v. 301094 Ontario Limited, [2003] O.J. No. 2894 (SCJ) at para. 8:

In fixing costs the court does not do so pursuant to a simple arithmetic calculation or approach, but in accordance with the principles referred to above enunciated in Rule 57.01(1). It is also important to attempt to establish some consistency so that litigants faced with a trial or motion can fairly access what they may be called on to pay, should they refuse an offer to settle or be unsuccessful.

[11] The first issue to consider is whether in the circumstances of this matter the cost award should be on a substantial indemnity basis or a partial indemnity basis.

[12] Elevated costs on a substantial indemnity basis are awarded in only two circumstances. The first involves the operation of an offer to settle under Rule 49.10 where substantial indemnity costs are explicitly authorized. The second is where the losing party is engaged in sanction worthy behavior that is characterized as being reprehensible, scandalous or outrageous.

[13] In my view, even though the plaintiff’s claim was struck as an abuse of process, having commenced an action within an action that led to the defendant unnecessarily retaining new counsel and caused the former counsel to become joined in the action, it was not such reprehensible, scandalous, or outrageous conduct as to elevate the cost award.

[14] I accept the plaintiff’s submission that his claim against Shatford and Walker was instituted during the currency of the other proceedings in order to avoid becoming statute barred by the two year limitation period that related to the fraudulent conveyance action brought by Shatford against Mason on June 22, 2012 and later withdrawn.

[15] In terms of counsel for Mason’s attempts to elicit solicitor/client information during the examination, none of questions were responded to and the plaintiff took no steps to compel responses. Notwithstanding the “fishing expedition” character of the questioning during the examination for discovery and the document dump made on the eve of Shatford’s cross-examination by the plaintiff, it is not conduct in my view that elevates the level of costs to a substantial indemnity basis. It was conduct however, that added unnecessarily to the matter

[16] The plaintiff submits that the number of hours claimed by Shatford in dealing with the matter, 67.4 hours are excessive.

[17] The defendant’s new counsel required additional time to prepare himself to deal the matter. This was a matter of moderate complexity due the multiple earlier related proceedings. Further, the conduct of the plaintiff, while short of misconduct, added to the increased number of hours required by the defendant to bring his motion to strike the pleadings. Mason submits that he might reasonably have expected costs on a partial indemnity basis for the motion in the amount of $15,867.10. I do not consider the number of hours claimed by the defendant to be inordinate or improper in the circumstances.

[18] This was a matter of great importance to the defendants as the plaintiff had asserted without basis they had acted improperly by initiating legal process to force him to pay money he claimed he was not legally required to pay. I accept that it was necessary and appropriate for the defendant(s) to vigorously seek to quash the abusive action.

[19] In my view, the costs claimed by the defendant on a partial indemnity basis in the amount $20,057.00 is both fair and reasonable in the circumstances. In the result, the plaintiff is ordered to pay the defendant, Shatford the sum of $20,057.00 forthwith.

A.J. O’Marra

Date: September 22, 2014