Hawkins v. Hawkins Estate, 2015 ONSC 1106
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Ian Hawkins, Plaintiff
AND
The Estate of John Patterson Hawkins, Defendant
AND BETWEEN
The Estate of John Patterson Hawkins, Plaintiff by Counterclaim
AND
Ian Hawkins and David Kent Hawkins, Defendants to the Counterclaim
AND BETWEEN
David Kent Hawkins, Plaintiff by Counterclaim
AND
The estate of John Patterson Hawkins, Limerick Farms Ltd. And Carl Hawkins and Garry Kingsley, Defendants to the Counterclaim of David Kent Hawkins
BEFORE: Mr. Justice Timothy Minnema
COUNSEL: E. Jane Murray, Counsel for Ian Hawkins
John Paul Zubec, Counsel for Carl Hawkins and Garry Kingsley
Eric Lay, Counsel for David Kent Hawkins
HEARD: In Chambers
COSTS ENDORSEMENT
Nature of the Request/Background Facts
1Within the context of estate litigation, in response to a summary judgment motion, the parties agreed to the dismissal of the third party claim brought by Ian Hawkins against Carl Hawkins, and to the dismissal of the counterclaim by David Kent Hawkins against Carl Hawkins and Garry Kingsley, all “with costs”.
2Counsel appeared before me for a consent Judgment on September 10, 2014. At that time settlement of the costs issue seemed attainable, or, if not, it was anticipated that resolving it would be a simple process, with short concise written submissions (nine pages in total). The parties added into their consent that the judge signing the order would hear the issue of costs. I had no previous involvement with this file. The costs issue did not settle.
3Contrary to the earlier expectation, the costs submissions were actually quite complex. Carl Hawkins and Garry Kingsley seek costs on a substantial indemnity basis. There are disputes about the Bills of Costs. Apportionment, barely addressed, is complicated. Given some of these issues, David Kent Hawkins has, in the covering letter accompanying his submissions, suggested that I should seek out further submissions and arrange for an oral hearing. This is contrary to what the parties agreed, and would likely involve a half day attendance.
4Rule 57.04 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 as amended (“Rules”) deals with costs on a settlement and says:
57.04 Where a proceeding is settled on the basis that a party shall pay or recover costs and the amount of costs is not included in or determined by the settlement, the costs may be assessed under Rule 58 on the filing of a copy of the minutes of settlement in the office of the assessment officer.
5The parties have decided, for their own reasons, not to follow that process and, as noted, have agreed that I decide costs on brief written submissions. The court is directed to devise and adopt the simplest, least expensive and most expeditious process for fixing costs: see Rule 57.01(7). As such, I am prepared to accommodate them. Along with the costs submissions, I rely for a summary of the facts on the very clear and helpful decision of Master MacLeod on a previous motion in this file to remove the estate trustees found at 2013 ONSC 661.
Law
6Pursuant to subsection 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 as amended, costs are discretionary. I am to assess the costs guided by Rule 57.01. The fundamental purposes of that rule, as restated in Serra v. Serra, 2009 ONCA 395 at para. 8, are: “(1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behavior by litigants.”
7There is no dispute in the submissions of Ian Hawkins and David Kent Hawkins that Carl Hawkins and Garry Kingsley are entitled to their costs. As to the amount of costs, the overriding principle is that costs are to be fixed in a way that is fair to the parties and reasonable in the circumstances (Murray v. Murray (2005), 2005 46626 (ON CA), 79 O.R. (3d) 147 (C.A.)). This includes considering the reasonable expectations of the losing litigant regarding costs (Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40; Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (Ont. C.A.)).
Positions/Issues
8Having shared the same lawyer, Carl Hawkins and Garry Kingsley are each claiming exactly $47,174.85, all inclusive, on a substantial indemnity basis. As the consent Judgment dismissed the claims against them, they seek their costs both in the action and on the summary judgment motion.
9Ian Hawkins and David Kent Hawkins argue that costs should not be awarded on a substantial indemnity basis, and they allege the Bills of Costs contain duplication and are excessive. David Kent Hawkins submits that the total costs for both Carl Hawkins and Garry Kingsley should be fixed at $25,000 on a partial indemnity basis. Ian Hawkins argues that costs should only be awarded up to the summary judgment motion fixed at $15,954.82, and that he should only be responsible for a third of that. Both Ian Hawkins and David Kent Hawkins want the payment of costs deferred until the proceedings involving the estate are completed.
10There are four issues then: whether Carl Hawkins and Garry Kingsley are entitled to elevated costs; whether the amounts they seek are appropriate; how costs should be apportioned; and whether the payment of the costs award should be deferred.
Scale of Costs
11I adopt the recent passage from Boily v. Carleton Condominium Corporation 145, 2014 ONCA 734, at para. 12:
Elevated costs are warranted in only two circumstances: Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66. The first involves the operation of an offer to settle under rule 49.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, where substantial indemnity costs are explicitly authorized. The second is where the losing party has engaged in behaviour worthy of sanction.
12I was not presented with formal offers to settle. So the question before me on the scale of costs is whether Ian Hawkins and Kent Hawkins engaged in behavior worthy of sanction. Carl Hawkins and Garry Kingsley maintain they are entitled to substantial indemnity costs for three reasons: (1) the nature of the claims (conspiracy, inducing breach of contract, and interfering with economic relations), (2) the claims were made without any evidence to support them, and (3) the claims were made purposefully rather than negligently or recklessly.
13Regarding the latter two reasons, I do not find that they attract substantial indemnity costs in this case. Although it dealt with a discontinuance, the following comments from Blair v. Toronto Community Housing Corp., 2014 ONSC 2292 at para. 31 are applicable:
There has been no determination of the merits of the Third Party Claim, and all that can be said is that it appears that the case against Claims Pro and Mustang Security was unlikely to succeed; but that circumstance in and of itself is not a basis for substantial indemnity costs. Costs on a substantial indemnity scale or full indemnity scale are reserved for rare and exceptional cases, where the conduct of the party against whom costs is ordered is reprehensible or where there are other special circumstances that justify costs on the higher scale
14I would add to the above that the court’s ability to determine motive or disputed inappropriate behaviour are limited on a settlement, as the court only has submissions before it and has not adjudicated the matter on the merits. I find that I am unable to determine that the claims of Ian Hawkins and Kent Hawkins were made without evidence or made for an ulterior motive.
15However, looking at the first reason given by Carl Hawkins and Garry Kingsley – the nature of the claims themselves - Ian Hawkins claimed against Carl Hawkins $4,000,000 for conspiracy and inducing breach of contract, and David Kent Hawkins claimed against Carl Hawkins and Garry Kingsley jointly and severally $8,000,000 for inducing breach of contract, intentional interference with economic relations, and conspiracy. There is no denial that the attacks were personal. David Kent Hawkins’ justification was that when he was attacked personally, he responded in kind. Carl Hawkins and Garry Kingsley argue that these types of claims are alleging intentional misconduct and therefore can attract costs on a substantial indemnity basis if not proven. In the context of this case, I agree. Such allegations have been found to be prejudicial to characters or reputations of those to whom they are directed and to attract a higher scale of costs: see New Solutions Extrusion Corporation v. Gauthier, 2010 ONSC 1897 at paragraphs 3 and 4, MacKinnon v. MacKinnon, 2010 ONSC 2661 paragraphs 27 to 30, and Said v. University of Ottawa, 2014 ONSC 771 at paragraphs 7 to 9.
Amount of Costs
16The substantial indemnity costs claimed by Carl Hawkins and Garry Kingsley noted above - exactly $47,174.85 each - are calculated as 90 percent of their full indemnity costs. They have produced two identical Bills of Costs, each attaching an identical print out of the very same Client Ledger from their shared counsel. Ian Hawkins takes exception to this arguing:
Carl and Garry had one lawyer acting for them jointly. They are each claiming 100% recovery of the same docketed time and disbursements.
17Carl Hawkins and Garry Kingsley in their reply submissions deny this, reiterating their initial submission as follows:
Carl and Garry incurred $47,174.85 in costs and taxes each. They are not seeking double recovery.
18I have examined the Client Ledger and confirm that Carl Hawkins and Garry Kingsley’s counsel has simply divided the amount in the Client Ledger in half to support the individual cost claims. Given the similarities in the nature of the claims this makes some sense, but I can see why it confused counsel for Ian Hawkins as it was not adequately explained.
19Ian Hawkins submitted that no costs should be awarded after June 1, 2014 as the motion for summary judgment could have been avoided. He says that his counsel around that date indicated that he would consent to the dismissal of his claims, and therefore the costs for the summary judgment motion, of about roughly $23,500 for both Carl Hawkins and Garry Kingsley together on a substantial indemnity basis, should not be considered. I do not accept this. A claim is alive until it is disposed of. Ian Hawkins could have discontinued his claim at any time by serving a simple notice. He did not, and it took the summary judgment motion to obtain a resolution.
20Ian Hawkins alleged, rather generally, that “[t]here was significant duplication of effort between counsel for the Estate and counsel for Carl and Garry which should be taken into account in assessing the appropriate quantum of costs.” I agree that duplication would not be appropriate. However, there was no evidence or detail pointing me to specific impugned entries in the Client Ledger to support this claim. I have no basis upon which to make any such allowance. David Kent Hawkins made similar arguments. He noted that at the discoveries he was only examined for 1.5 hours, he did not examine Garry Kingsley, and Carl Hawkins would have been examined on matters relating to the estate in any event. He acknowledged that while he put Carl Hawkins and Garry Kingsley to some expense in responding to the personal claims, he argued that they were relatively modest. However, as Carl Hawkins and Garry Kingsley point out, their solicitor and client fees before bringing the motion for summary judgment were not that far off those of David Kent Hawkins. I do not have an account from Ian Hawkins to compare.
21In my view, upon review of the Client Ledgers, the fees claimed up to the summary judgment motion are generally valid, although higher than what should have been reasonably expected by Ian Hawkins and David Kent Hawkins given that the claims did not have to be judicially determined. That is not to say that the amounts Ian Hawkins and David Kent Hawkins suggest they are liable for are appropriate. They are much too low, particularly given the serious implications of the nature of their claims, the amount of monetary compensation they sought, and the resulting effort by counsel for Carl Hawkins and Garry Kingsley to respond to them. The combined fees of $23,500 sought by Carl Hawkins and Garry Kingsley for the summary judgment motions that were not argued are excessive in my view, even on a substantial indemnity scale. They had to have had some sense that just bringing the motions would force the responding parties to finally capitulate
22I find that the proper amount for costs for both Carl Hawkins and Garry Kingsley is $70,000 inclusive of fees, disbursements and taxes. As by their Bills of Costs they maintain that the legal costs for each of them were equal, that amounts to $35,000 each.
Deferral
23As noted by Master MacLeod at para. 67 of his decision referred to above, the modern practice in litigation involving estates is to apply the ordinary costs rules. Although tied to estate litigation, the claims disposed of here were personal. Ian Hawkins and David Kent Hawkins have not provided me with any authorities or argument explaining why it would be proportionally fairer to them than unfair to the moving parties for me to exercise my discretion by deferring payment in this situation. I am unable to find compelling reasons on the materials before me to make the order requested.
Apportionment
24Ian Hawkins was the only party to address apportionment in his submissions. He suggested that he should only be liable for a third of the total costs incurred prior to the summary judgment motion.
25As noted, Carl Hawkins and Garry Kingsley each seek their own costs with separate Bills of Costs submitted. The single Client Ledger from their shared lawyer shows a mix of legal services in defending both the third party claim and the counterclaim, making the apportionment of the responsibility for fees difficult to assess, and, again, as it has not been seriously challenged, I accept that their costs are equal.
26I find that a lesser amount for Ian Hawkins is appropriate as he sued only one of the two defendants, although in my view that does not mean a straight fractional calculation is appropriate. The extent of the overlapping issues in the two separate proceedings has to be considered, and much of the work done for Carl Hawkins on the third party claim would have spilled over to his defence of the counterclaim. As for the motions for summary judgment, those undertakings were directed to both actions, and in my view the related costs should be borne roughly equally by Ian Hawkins and David Kent Hawkins.
Decision
27Incorporating the above, fair and reasonable amounts for costs in all the circumstances are follows. Ian Hawkins shall pay costs to Carl Hawkins of $30,000 relating to the dismissal of the third party claim and the summary judgment motion. David Kent Hawkins shall pay costs of $5,000 to Carl Hawkins and $35,000 to Garry Kingsley relating to the dismissal of the counterclaim and the summary judgment motion. All sums are inclusive of taxes and disbursements.
Mr. Justice Timothy Minnema
Date: February 19, 2015