Georganes v. Bludd, 2015 ONSC 1749
COURT FILE NO.: CV-12-2546-ES
DATE: 2015-03-18
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
MELISSA GEORGANES
James S.G. Macdonald, for the Applicant
Applicant
- and -
JUDY BLUDD in her capacity as executrix of THE ESTATE OF TIMOTHY BLUDD and BRIAN BLUDD in his capacity as estate trustee of THE ESTATE OF TERRENCE MAURICE BLUDD
Self-represented
Respondents
REASONS ON COSTS DECISION
Price J.
NATURE OF PROCEEDING
[1] Georganes Bludd sued her uncle, Brian Bludd, and the estate of her other uncle, Timothy Bludd, who were executors of their father’s estate, over legal fees they incurred in litigation with their sister Tara Bludd, over their respective interests in the home their parents had occupied during their lifetimes, and over compensation that Brian Bludd had caused the Estate to pay to him.
[2] I found that the Estate had no obligation to pay Brian Bludd most of the fees he had incurred or any of the fees that Timothy Bludd had incurred in the litigation, as the fees were incurred to protect their own interests as beneficiaries, as the home had vested in the beneficiaries before the pleadings in the action were delivered.
[3] I found that Timothy Bludd had incurred fees of $28,828.52 and Brian Bludd had incurred fees of $30,325.72 on their own accounts, of which Brian Bludd and the Estate of Timothy Bludd were required to reimburse Melissa Georganes 25% for her share, (plus pre-judgment interest) and that Brian Bludd had caused the Estate to pay him compensation of $11,300.00 without obtaining the prior approval of the court or the consent of the other beneficiaries, of which he was also required to reimburse Ms. Georganes 25% for her share. Of the total amount to be reimbursed, Brian Bludd was responsible for 57% and the Estate of Timothy Bludd was responsible for 43%.
[4] The parties were unable to agree on who is to be responsible for the costs of the proceeding, thereby making necessary this further order. The court received written submissions from Ms. Georganes; it received no submissions from Brian Bludd or the Estate of Timothy Bludd.
ISSUES
[5] The court must determine who is responsible for the costs of the proceeding and the amount to be paid.
POSITIONS OF THE PARTIES
[6] Ms. Georganes claims costs on a partial indemnity scale in the amount of $7,942.07 inclusive of fees, HST and disbursements. Additionally, she requests an endorsement dispensing with approval of the draft judgment as at form and content.
ANALYSIS
General principles
[1] Boswell J. set out the general principles governing costs assessments in George v Landels, where he stated:
The award of costs is governed by section 131 of the Courts of Justice Act, R.S.O. 1990 c. C.43 and by Rule 57.01 of the Rules of Civil Procedure. Section 131 provides for the general discretion to fix costs. Rule 57.01 provides a measure of guidance in the exercise of that discretion by enumerating certain factors that the court may consider when assessing costs. In addition, the Court must always be mindful of the purposes that costs orders serve. As Perell J. summarized in 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, [2010] O.J. No. 5692 (S.C.J.), at para. 10:
Modern costs rules are designed to advance five purposes in the administration of justice: (1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements (internal citations omitted).
Ultimately, in determining an amount for costs, the overriding principles are fairness and reasonableness.[^1] In assessing what is fair and reasonable in the circumstances, the Court does not engage in a mechanical exercise, but takes a contextual approach, applying the principles and factors discussed above, to settle on a figure that is fair and reasonable in all the circumstances.[^2]
[2] The Court is guided by the factors set out in Rule 57.01(1) of the Rules of Civil Procedure. The Court may consider, among other factors, the following:
(a) The complexity of the proceeding;
(b) The importance of the issues;
(c) The conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(d) Any offers to settle;
(e) The principle of indemnity;
(f) The concept of proportionality, which includes at least two factors:
(i) The amount claimed and the amount recovered in the proceeding; and,
(ii) The amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(g) Any other matter relevant to the question of costs.
Importance and complexity of the motion
[3] The action was not complex. It involved general principles of estate law concerning the compensation of executors and turned on the timing of the litigation among the siblings in relation to the time when the property vested in the beneficiaries pursuant to s. 9(1) of the Estates Administration Act.
[4] The action was not of great importance to the litigants and did not involve issues of public importance.
Reasonableness and offers to settle
[5] The general rule is that costs follow the event and will be awarded on a partial indemnity scale.[^3] In special circumstances, costs may be awarded on a higher scale, but those cases are exceptional and generally involve circumstances where one party to the litigation has behaved in an abusive manner, brought proceedings wholly devoid of merit, and/or unnecessarily run up the costs of the litigation.[^4]
[6] Although Timothy Bludd improperly caused the Estate to pay him compensation and to lend him money without the consent of the other beneficiaries or an order of the court, Ms. Georganes fairly does not assert that his conduct was so egregious as to justify costs on a higher scale. No one has tendered any offers to settle that would affect the determination of costs.
Indemnity - The hourly rates charged
[7] In determining the appropriate hourly rates to be assigned to the lawyers involved in the motion, the court follows the approach taken by Aitkin J. in Geographic Resources.[^5] That is, the starting point is the successor of the Costs Grid, namely, the “Information for the Profession” bulletin from the Costs Sub-Committee of the Rules Committee (the “Costs Bulletin”), which can be found immediately before Rule 57 in the Carthy or Watson & McGowan editions of the Rules, sets out maximum partial indemnity hourly rates for counsel of various levels of experience.
[8] The Costs Bulletin suggests maximum hourly rates (on a partial indemnity scale) of $80.00 for law clerks, $225.00 for lawyers of less than 10 years’ experience, $300.00 for lawyers of between 10 and 20 years’ experience, and $350.00 for lawyers with 20 years’ experience or more.[^6] The upper limits in the Costs Bulletin are generally intended for the most complex and important of cases. Having regard to the complexity of the motion, Mr. Farooq, who was senior counsel at the hearing, is entitled to the maximum hourly rate for a lawyer of between 10 and 20 years’ experience.
[9] The Costs Bulletin, published in 2005, is now dated. Aitkin J. considered adjusting the Costs Subcommittee’s hourly rates for inflation, as Smith J. did in First Capital (Canholdings) Corp. v. North American Property Group,[^7] but the unadjusted rates of the lawyers in her case were only slightly less than the actual fees they charged, so she elected to use their unadjusted rates. Normally, however, it is appropriate to adjust the hourly rates in the Costs Bulletin to account for inflation since 2005.
[10] Based on the Bank of Canada Inflation Calculator, available online at http://www.bankofcanada.ca/rates/related/inflation-calculator/, the current (2014) equivalent of the hourly rates in the Costs Bulletin are $93.52 for law clerks, $263.03 for lawyers of under 10 years’ experience, which I would round up to $265, $350.71 for lawyers of between 10 and 20 years’ experience, which I would round down to $350, and $409.16 for lawyers of over 20 years’ experience, which I would round up to $410.
[11] The court is guided by the rates in the Costs Bulletin, not the actual hourly rates charged. The actual rates charged are relevant only as a limiting factor, in preventing the costs awarded from exceeding the actual fees charged. The Costs Subcommittee’s rates apply to all lawyers and all cases, so everyone of the same level of experience starts at the same rate.
[12] The court adjusts the hourly rate, or the resulting fees, to reflect unique features of the case, including the complexity of the proceeding, the importance of the issues, and the other factors set out in Rule 57.01(1). If an excessive amount of time was spent, or too many lawyers worked on the file, the court reduces the resulting amount of fees accordingly. As long as the resulting amount does not exceed the amount actually charged to the client, the actual fee that the client agreed to pay is irrelevant.
[13] Ms. Georganes’ lawyer, Mr. Macdonald, was called to the Ontario Bar in 2004 had had practiced litigation for ten years at the time of the hearing. He was therefore entitled to claim a maximum of $260 per hour by the time of the hearing, on a partial indemnity scale, for his time. He charged an actual rate of between $250 and $295 over the course of the proceeding and claims an hourly rate of between $180 to $215 on a partial indemnity scale, which I find to be reasonable.
Indemnity - The time spent on the motion
[14] Mr. Macdonald spent a total of 30.45 hours for the entire proceeding. The proceeding culminated in a two day hearing, for which he claims a total of 11 hours, and 4.3 hours preparation, which I find to be reasonable. He also spent 4.15 hours before issuing the Notice of Application, 5.45 hours for drafting the pleadings, and 4.55 attending before Justice Donohue and scheduling the date of the hearing.
[15] At the hourly rates Mr. Macdonald was entitled to claim from time to time during the proceeding, the value of the time he spent, up to the time of the hearing, was $6,224.25.
Proportionality and the reasonable expectation of the unsuccessful parties
[16] Ms. Georganes recovered a judgment for $17,613.56. The amount she claims for costs is 35% of the amount at stake. I do not find the costs to be disproportionate to the amount at stake, and they were within the range of the costs that Brian Bludd and the Estate of Timothy Bludd should reasonably have expected to pay if unsuccessful.
[17] The somewhat unusual nature of the proceeding defies comparison with costs awarded in similar cases. I note that in the Civil Justice Review of 1994, the Committee analyzed the civil actions tried in Toronto and found that the average action, which involved $70,000 at stake, resulted in each litigant, on average, incurring costs of $32,800 for an action culminating in what was, on average, a three day trial. According to the Bank of Canada Inflation Calculator, that translates to $47,352.38 in today’s dollars. Even on the basis of 2/3 of this amount, or $31,565, for the total fees of an action culminating in a two day trial, partial indemnity costs at the rate of 60% of total costs would amount to $18,939. On this basis, the costs claimed by Ms. Georganes, which amount to only 33% of that amount ($6,224.26/$18,939) are modest.
[18] Based on the foregoing analysis, I find that the costs claimed by Ms. Georganes for her fees, consisting of $6,224.25 on a partial indemnity scale, are reasonable and should be allowed as claimed.
Any other matters relevant to the determination of costs
a) Disbursements
[19] In fixing costs, the court need not undertake a line by line analysis of the hours or expenses claimed, nor should it second guess the amounts claimed unless they are clearly excessive or overreaching.[^8] The respondents have not challenged the disbursements, which consist of amounts for photocopies and binding, filing fees, and courier fees. I find them to be reasonable, on the whole, and no reductions will be made to them.
b) Apportionment
[20] It is rarely possible, in my experience, to apportion the costs of a motion among moving parties, but circumstances vary and there is precedent for the practice.[^9] In the present case, Timothy Bludd was somewhat more responsible for the proceeding, since he not only charged the Estate for the costs of the litigation with Tara Bludd but caused the Estate to pay him compensation without the approval of the other beneficiaries or an order of the court. In these circumstances, I will apportion the costs of the motion in proportion to the amounts each of Brian Bludd and the Estate of Timothy Bludd were required to pay to Ms. Georganes, subject to the proviso that if the costs are not fully paid in 60 days, any of the parties may apply for directions regarding their payment.
CONCLUSION AND ORDER
[21] For the foregoing reasons, it is ordered that:
- Brian Bludd and the Estate of Timothy Bludd shall pay to Melissa Georganes her costs of this proceeding in the following proportions, subject to the fact that, if the costs have not been paid within 60 days following the release of this costs endorsement, they each shall be jointly and severally liable for the full amount, and, if necessary, any party may apply to the court for directions regarding enforcement.
a) Brian Bludd: 57%
b) Estate of Timothy Bludd: $43%
If the costs are not paid in their entirety, Brian Bludd and the Estate of Timothy Bludd shall be jointly and severally liable for the payment of the costs in their entirety.
- Costs shall be paid to Melissa Georganes, on a partial indemnity scale, in the amount of $7,942.07, consisting of the following:
a) Fees: $6,224.25
b) HST: $809.15
c) Disbursements: $908.67
Ms. Georganes shall additionally be paid pre-judgment interest on the said costs at the rate of 3% from August 11, 2014.
- If all of the costs are not paid within 60 days of the release of this costs endorsement, any of the parties may apply to the court for directions regarding the enforcement of the order.
Price J.
Released: March 18, 2015
CITATION: Georganes v. Bludd, 2015 ONSC 1749
COURT FILE NO.: CV-12-2546-ES
DATE: 2015-03-18
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
MELISSA GEORGANES
Applicant
- and -
JUDY BLUDD in her capacity as executrix of THE ESTATE OF TIMOTHY BLUDD and BRIAN BLUDD in his capacity as estate trustee of THE ESTATE OF TERRENCE MAURICE BLUDD
Respondents
REASONS FOR COSTS DECISION
Price J.
Released: March 18, 2015
[^1]: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.); and Moon v. Sher (2004), 2004 39005 (ON CA), 246 D.L.R. (4th) 440 (C.A.)
[^2]: George v. Landles, 2012 ONSC 6608, paras. 4 to 6, citing Gratton-Masuy Environmental Technologies Inc. (c.o.b. Ecoflow Ontario) v. Building Materials Evaluation Commission, 2003 8279 (ON SCDC), [2003] O.J. No. 1658, at para. 17
[^3]: Bell Canada v. Olympia & York Developments Limited et. al. (1994), 1994 239 (ON CA), 17 O.R. (3d) 135 (C.A.)
[^4]: Standard Life Assurance Company v. Elliott (2007), 2007 18579 (ON SC), 86 O.R. (3d) 221 (S.C.J.)
[^5]: Geographic Resources Integrated Data Solutions Ltd. v. Peterson, 2013 ONSC 1041, paras. 7 and 11 to 16
[^6]: “Information for the Profession” bulletin (“the Costs Bulletin”) from the Costs Sub-Committee of the Rules Committee (that the Costs Sub-Committee of the Rules Committee issued to replace the Costs Grid, which it repealed in 2005). The Costs Bulletin has advisory status only and not statutory authority, as it was not included in the Regulation that repealed the Costs Grid.
[^7]: First Capital (Canholdings) Corp. v. North American Property Group, 2012 ONSC 1359, 2012 ONSC 1359 (S.C.J.)
[^8]: Fazio v. Cusumano 2005 33782 (ON SC), 2005 CarswellOnt 4518 (S.C.J.), at para. 8.