ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-11-0450
DATE: 29-09-14

B E T W E E N:

GINO L. ARNONE PROFESSIONAL CORPORATION, KENNETH E. ERICKSON PROFESSIONAL CORPORATION AND ROBERT E. SOMERLEIGH PROFESSIONAL CORPORATION, c.o.b. in partnership as ERICKSON & PARTNERS

John Illingworth, for the Plaintiffs

Plaintiffs

and -

CHRISTOPHER D.J. HACIO and CHRISTOPHER D.J. HACIO PROFESSIONAL CORPORATION

Roderick Johanasen, for the Defendants

Defendants

-and between-

CHRISTOPHER D.J. HACIO and CHRISTOPHER D.J. HACIO PROFESSIONAL CORPORATION and TRUSTEES OF THE HACIO FAMILY TRUST

Plaintiffs by Counterclaim

-and-

GINO L. ARNONE PROFESSIONAL CORPORATION, KENNETH E. ERICKSON PROFESSIONAL CORPORATION and ROBERT E. SOMERLEIGH PROFESSIONAL CORPORATION c.o.b. in partnership as ERICKSON & PARTNERS, GINO L. ARNONE, KENNETH E. ERICKSON, ROBERT E. SOMERLEIGH, SOUTHCOURT REALTY PARTNERSHIP, SOUTHCOURT MANAGEMENT SERVICES, 1164294 ONTARIO LIMITED, TRUSTEES OF THE ARNONE FAMILY TRUST, TRUSTEES OF THE ERICKSON FAMILY TRUST and TRUSTEES of the SOMERLEIGH FAMILY TRUST

Defendants by Counterclaim

HEARD: August 14, 2014
at Thunder Bay, Ontario

RSJ Pierce

Reasons on Motions for Costs

Introduction

[1] At issue are costs for three motions:

(a) the plaintiffs, who are the remaining partners in a law firm, moved to compel Mr. Hacio, the departing partner, (defendant) to attend at cross-examinations on his affidavit filed in the pending summary judgment motion;

(b) Mr. Hacio moved to compel the plaintiffs to deliver a further and better affidavit of documents; and,

[2] The first two motions were argued; the third motion proceeded on consent. The motions are inter-related for tactical and procedural reasons; therefore, it is convenient to consider them as a cluster of litigation.

[3] This case is the classic example of the shoemaker’s children going barefoot. It arises out of a partnership dispute among lawyers where one lawyer, Mr. Hacio, left the practice. The litigation began in 2011. Before an accounting can be done to determine what, if anything, he is owed, the partners must agree on when Mr. Hacio withdrew from the partnership. They do not agree. The plaintiffs, who are the remaining partners, moved for summary judgment, seeking a finding on the date of departure.

[4] Pending the summary judgment motion, the case has become bogged down in procedural skirmishes that have overtaken the central issue among them. Whatever personal issues the partners have among themselves have transmuted into internecine warfare. Sadly, the lawyers have forgotten they were once partners.

[5] The costs are escalating accordingly, out of all proportion to what is in issue. The plaintiffs seek partial indemnity costs of $16,133.49 for two motions. Mr. Hacio seeks costs of $8,215.38 for his motion for a better affidavit of documents and $7,922.15 for his motion to remove a solicitor. It is hard to imagine that any of the partners would advise a client to proceed with litigation at such cost.

Motion to Compel Mr. Hacio’s Attendance at Cross-examination

[6] The plaintiffs moved for an order compelling Mr. Hacio to attend to be cross-examined on his affidavit prior the summary judgment motion. This was the pivotal motion. The plaintiffs originally moved for summary judgment with a return date in August, 2013 before an out-of-region judge. The plaintiffs were cross-examined on their affidavits filed on the summary judgment motion. Mr. Hacio refused to be cross-examined until he deemed that the plaintiff partners had disclosed all their documents. Consequently, he did not appear at the appointed time to be cross-examined. The appointment to argue the summary judgment motion was vacated, after considerable efforts on the part of the court to arrange for a visiting judge. The motion still hasn’t been argued.

[7] The refusal of Mr. Hacio to be cross-examined is delaying the litigation. I ruled that he was not entitled to refuse to be cross-examined until the plaintiffs had delivered their affidavit of documents. Mr. Hacio was ordered to attend to be cross-examined by a fixed date.

[8] At the time of that ruling, May 2, 2014, I ordered that the plaintiffs were entitled to their costs thrown away, fixed at $2,000, to be paid within thirty days. Those costs were incurred for time and expense incurred on July 15, 2013, the date of Mr. Hacio’s appointment. The costs include disbursements of $197.75 for room rental and $270 for the court reporter’s cancellation fee on short notice. The balance allowed was for time and preparation for a day-long cross-examination. The order for costs thrown away does not encompass costs for argument of the motion on May 2, 2014 as the defendant suggests. The costs of the motion to compel attendance were reserved.

Motion for a Further and Better Affidavit of Documents

[9] Mr. Hacio moved for an order that the plaintiffs deliver a further and better affidavit of documents. Mr. Hacio’s former counsel wrote to opposing counsel in advance of the motion seeking disclosure. Many of the documents sought were delivered on consent in advance of the motion. I ruled that the plaintiffs were to produce 2 out of 17 documents sought. In my view, this does not represent substantial success on the motion as the defendant suggests.

Motion to Remove Mr. Somerleigh as Solicitor of Record

[10] In order to understand how the motion to remove Mr. Somerleigh, a plaintiff partner, came about, it is necessary to understand the origins of the pleadings. When the case was originally pleaded, Mr. Hacio, as defendant, counterclaimed against certain partnerships involved with the plaintiffs, and inadvertently included his own family trust which was a partner. The result was that Mr. Hacio’s own family trust was a defendant to his counterclaim. The pleading was amended to correct the error, naming the individual members of the partnership as defendants by counterclaim instead of the partnerships. As a result of the amendment, Somerleigh was now a party as a named partner and could not also appear as counsel.

[11] The motion to remove Mr. Somerleigh was never argued. Unfortunately, the motion arose in conjunction with the more serious issues that were argued. It also coincided with a dispute the partners had over disposition of proceeds from the sale of their office building, a matter that was argued before Mr. Justice Wright and decided in December, 2013.

Costs Claimed for Mr. Hacio’s Services

[12] Mr. Hacio was represented by counsel on the motions. Nevertheless, on the production motion, his counsel claimed for 8.3 hours in his bill of costs for Mr. Hacio’s work as a lawyer in addition to his own time. On the motion to remove Mr. Somerleigh as solicitor of record, 8.7 hours of Mr. Hacio’s work as a lawyer is claimed in the bill of costs.

[13] When costs were argued, I asked counsel to make submissions as to whether Mr. Hacio’s time, as client, could be considered as part of the bill of costs. The parties differ on whether Mr. Hacio is entitled to claim his personal costs for the motions. Leaving aside considerations of the reasonableness of the costs claimed, it is useful to consider the principles applicable to this issue, which will no doubt arise again.

[14] The plaintiffs submit that Mr. Hacio cannot recover for personal time spent on his file. They rely on MacRae v. Simpson, 2003 2307 (ON SC), a case in which the respondent, a lawyer who was represented by counsel, attempted to claim for his own time. The court disagreed. It held that since Mr. Simpson was a salaried employee of an agency, and there was no evidence that he was out of pocket for the time he spent instructing his counsel, he was not entitled to costs for his personal work.

[15] In MacRae, the court adopted the reasoning in Fellowes, McNeil v. Kansa General International Insurance Co. (1997) 1997 12208 (ON SC), 37 O.R. (3d) 464 (Ont. Gen. Div.), where the court recognized only three categories of litigant:

• a represented litigant who can claim both costs and counsel fees;

• the barrister litigant who can recover all costs with counsel fee being in the discretion of the court; and,

• the lay litigant who represents himself.

[16] The court in MacRae specifically rejected the litigant’s efforts to establish a fourth category, a litigant who is represented by counsel but claims personal compensation in costs because he is a lawyer. Describing Mr. Simpson’s claim for costs, the court observed at p. 7:

In preparing notes for his lawyer Mr. Simpson was acting as a client just like any other client. The fact that he is a lawyer is no more relevant than a client who is an accountant helping his lawyer with financial information, or a social worker being better able to advise his/her lawyers about the child’s needs. Mr. Simpson is not out any money from his regular job and as such is not distinguishable from any other client and no amount of compensation is appropriate in the determination of costs.

[17] The reasoning in MacRae was adopted in Lakemount Sportsworld Inc. v. Cicchi, 2012 ONSC 5462. The court refused personal costs to a represented lawyer who, as a defendant in a proceeding, claimed for his time in addition to that of his counsel. However, the court did allow costs for an employed lawyer in the defendant’s firm who worked on the file.

[18] The defendants cite M. McGrath Canada Ltd. v. Vincent Dagenais Gibson LLP, [2008] O.J. No. 2208 (S.C.J.) as support for the proposition that Mr. Hacio can recover his personal costs for work as a lawyer. At para. 11, the court characterized the firm as a self-represented litigant. It awarded costs to lawyers in the law firm for the time they spent working on the firm’s file on the basis of lost opportunity.

[19] The seminal case in a discussion of costs for the unrepresented is Fong v. Chan, (1999) 1999 2052 (ON CA), 46 O.R. (3d) 330 (C.A.). Fong post-dates the analysis of costs for the unrepresented in Fellowes, McNeil.

[20] In Fong, an appeal was taken by a law firm. The appeal was argued by counsel to the law firm who was not a member of it. Costs were allowed below for counsel’s time. The firm sought costs on appeal for the firm’s salaried lawyers who had also worked on the file.

[21] The Court of Appeal considered the firm to be self-represented and ruled that self-represented lawyers are entitled to recover costs in litigation in which they are parties under certain circumstances. However, at para. 26, the court distinguished between represented and unrepresented litigants, saying:

I would add that self-represented litigants, be they legally trained or not, are not entitled to costs calculated on the same basis as those of the litigant who retains counsel.

[22] The court recognized that all litigants suffer a loss of time through their involvement in the legal process. To be claimable, the costs sought must be reasonable and the lawyers must be able to demonstrate that they incurred an opportunity cost by doing the work themselves instead of having the work done by their counsel. The lawyer is not entitled to recover costs that would be incurred by any litigant.

[23] With respect to the motion to have Mr. Somerleigh removed as solicitor of record, some of Mr. Hacio’s time claimed in the bill of costs represents legal work not done by his counsel, such as drafting a notice of motion and an affidavit. However, other work claimed, such as reviewing documents and an offer are time that any client would incur to instruct his counsel. Still other work, such as preparation of a motion record is clerical in nature and not compensable at solicitor’s rates.

[24] With respect to the motion for a better affidavit of documents, there is limited time claimed by Mr. Hacio for drafting a notice of motion and affidavit that was not also claimed by his counsel. This is work that would not be completed by a lay client. However, discussions with his lawyer about the drafting, and review of responding affidavits are time that a lay litigant would also expend.

[25] In accordance with the reasoning in Fong, Mr. Hacio’s time is not recoverable at counsel’s rates.

[26] That said, there is no evidence that Mr. Hacio incurred an opportunity cost in performing these limited legal services. There is no evidence that he worked on his own case in preference to other client files and is out of pocket as a result. Accordingly, no costs for Mr. Hacio’s time are recoverable on these motions.

Are the Costs Claimed Reasonable?

[27] The Court of Appeal held in Boucher v. Public Accountants Council for the Province of Ontario, (2004) 2004 14579 (ON CA), 71 O.R. (3d) 291, para. 37, that the overriding principle in awarding costs is one of reasonableness. Are the costs claimed for these motions reasonable?

[28] I have concluded they are not. The courts have a responsibility to foster access to justice. One of the ways to do that is to supervise the cost of litigation, using the court’s discretion over costs. The risk in allowing costs on these motions at the scale claimed is that this award of costs may become a reference point for other similar motions. It may be that these parties, as lawyers, can afford the litigation in which they are embroiled, but that does not make the costs reasonable. It should not shackle other litigants in similar circumstances to similar costs awards. Such a trend would not foster access to justice but impede it. The average person cannot afford litigation on this scale for minor issues. Exposed to this risk of costs, it should not be surprising that more and more litigants come to court unrepresented.

[29] The motion to compel Mr. Hacio’s attendance at cross-examination was a necessary motion in view of Mr. Hacio’s recalcitrance, but it was not complex. It was not lengthy. The plaintiffs have already been compensated for costs thrown away when Mr. Hacio failed to attend at his appointment.

[30] I have considered that this motion was strategic to move the litigation forward; that a record was prepared; that the motion, in conjunction with others, was adjourned several times; and that counsel for the plaintiffs is a senior member of the bar. The plaintiffs shall have their costs of the motion to compel Mr. Hacio’s attendance at cross-examinations fixed at $1,500, payable within thirty days.

[31] The defendants’ motion for a further affidavit of documents was of questionable use and only marginally successful. It was not long. Of 18 items sought to be produced, only two were ordered. The plaintiffs had made substantial disclosure in response to a simple written request prior to the motion being served. In any event, there was no urgency in requesting these documents prior to the summary judgment motion.

[32] I have considered that this motion was adjourned several times; and that it was argued by senior counsel. Mr. Hacio shall have his costs of the motion for a further and better affidavit of documents fixed at $750, also payable within thirty days.

[33] The motion for removal of Mr. Somerleigh was unnecessary. It is obvious that it would not be argued as there was no question that new counsel would be required. Largely, it was a question of securing other counsel to act. Once those arrangements were in place, the plaintiffs consented to an order removing Mr. Somerleigh in January, 2014. There was no undue delay in making these arrangements; it was a housekeeping matter. It could have just as easily have been done by filing a notice of change of solicitors. New counsel was in place within five days of the order removing Somerleigh.

[34] Apart from the fact that the motion was unnecessary, the need to substitute counsel was brought about by Mr. Hacio’s pleadings error.

[35] No costs are ordered on the motion to remove the solicitor.

“Original Signed By”

Regional Senior Justice H.M. Pierce

Released: September 29, 2014

COURT FILE NO.: CV-11-0450
DATE: 29-09-14

ONTARIO
SUPERIOR COURT OF JUSTICE

B E T W E E N:
GINO L. ARNONE PROFESSIONAL CORPORATION, KENNETH E. ERICKSON PROFESSIONAL CORPORATION AND ROBERT E. SOMERLEIGH PROFESSIONAL CORPORATION, c.o.b. in partnership as ERICKSON & PARTNERS

Plaintiffs

and –

CHRISTOPHER D.J. HACIO and CHRISTOPHER D.J. HACIO PROFESSIONAL CORPORATION

Defendant

REASONS ON MOTIONS FOR COSTS

Pierce, RSJ

Released: September 29, 2014

/nf

Arnone Professional Corporation et al. v. Hacio et al., 2014 ONSC 5611

Case Summary