CITATION: Adizes v. Adizes et al.; 2015 ONSC 3116 COURT FILE NO.: CV-12-448934 DATE: 20150514

SUPERIOR COURT OF JUSTICE - ONTARIO

RE:

ABRAHAM ADIZES also known as AVRAM ADIZES

Plaintiff

-AND-

TATJANA ADIZES, TAMARA ADIZES, NIORA SCOTT DAVID SCOTT, CIT TECHNOLOGY GROUP INC. and CIT ENGINEERING LMMITS

Defendants

BEFORE: F.L. Myers J.

COUNSEL: Ronald J. Walker for the defendants

Avram Adizes the plaintiff in person

Julie Amourgis in person for herself and for John Weisdorf former counsel to the plaintiff

READ: May 14, 2015

ENDORSEMENT

[1] This truly unfortunate action came before me on April 23, 2015. The lawsuit is between a father, as plaintiff, and his adult children, as defendants. It was a nasty affair. Mercifully, with the assistance of counsel for all parties, the action settled at mediation. Handwritten Minutes of Settlement were entered into in November, 2013.

[2] The settlement called for the lifting of three certificates of pending litigation that the plaintiff had registered against properties of the defendants; the transfer to the plaintiff of a farmhouse property in Serbia; the dismissal of legal proceedings between the parties in Serbia; the exchange of full and final releases; the return of certain items of property to the plaintiff; and an equal split between the plaintiff and his son David Adizes of the sum of approximately $98,000 being held in trust for the parties by lawyer Gary Lufstpring.

[3] The plaintiff threatened to withdraw from the settlement almost immediately after it was signed. He had Serbian counsel contact one of the defendants directly and propose a different agreement. The defendants were having none of it and went about implementing the settlement.

[4] Julie Amougis was the plaintiff’s lawyer at the time of the commencement of the action. She obtained the certificates of pending litigation for the plaintiff. The plaintiff declined to pay Ms Amourgis’ accounts in full and she stopped working. The plaintiff then retained lawyer John Weisdorf. He represented the plaintiff at the mediation. Ms Amourgis stayed involved to assist Mr. Weisdorf. In their submissions, Ms Amourgis refers to her role as being Mr. Weisdorf’s agent. As part of the implementation of the settlement, the plaintiff executed an irrevocable direction to Mr. Luftspring, requiring him to pay the plaintiff’s portion of trust funds that he was holding to Ms Amourgis.

[5] In early 2014, the plaintiff was both implementing the settlement here and pushing for a new deal with his Serbian lawyer. Ms Amourgis wrote a letter to the plaintiff including the following:

I must repeat what I have said to you on several occasions, and written to you on December 13, 2013, there is only ONE agreement, and you signed it here in Toronto, with your lawyer, John Weisdorf present, at the mediation. What we are all doing is trying to finish off what the agreement said needed to be done. If you try to get the Serbian lawyer to make another agreement, it will not be signed….

If you are not happy with your Toronto lawyers, then all you have to do is pay our account and retain other counsel.

[6] The plaintiff then terminated the lawyers’ retainers (formally, just Mr. Weisdorf’s retainer) and served a Notice of Intention to Act in Person dated February 5, 2014. He also withdrew his irrevocable direction to Mr. Luftspring (which I note parenthetically, the law allows despite the adjective used). As one would expect, as a trustee, absent directions executed by all beneficiaries, Mr. Lufstping required a court order before he would release the funds that he was holding in trust.

[7] Just prior to the time their retainers were terminated, Mr. Weisdorf and Ms Amourgis had determined that the Serbian property was being transferred to the plaintiff so they obtained an order discharging the certificates of pending litigation. Mr. Weisdorf requested that Ms Amourgis obtain the order for him on his affidavit. Ms Amourgis obtained the order without providing a consent document to the defendants’ lawyer. She assumed their consent from the settlement agreement and obtained the order on consent on her own.

[8] But Ms Amourgis and Mr. Weisdorf did not enter that order or provide it to counsel for the defendants before Mr. Weisdorf’s retainer was terminated. Without that order being entered, the certificates of pending litigation could not be removed from title to the defendants’ properties.

[9] The ensuing year can best be described as schizophrenic. The plaintiff at the same time demanded further concessions but also said that he had instructed his former lawyers to implement the settlement and release the certificates of pending litigation. He went to Serbia ostensibly for cancer treatment for some time. The plaintiff’s Serbian lawyer put up all manner of roadblocks to the transfer of the Serbian farmhouse to the plaintiff in order to frustrate implementation of the settlement. The plaintiff also attacked the settlement claiming that his former lawyers had improperly had him sign it. Time passed and there was nothing the defendants could do to get the settlement implemented and the certificates off their property despite trying repeatedly to appease the plaintiff.

[10] The defendants finally brought a motion to enforce the settlement in December, 2014. They sought an order requiring Mr. Weisdorf and Ms Amourgis to enter the order that they had obtained or to provide it to their lawyer for entry. They sought other orders implementing the settlement terms. They expressly sought costs against the plaintiff and Ms Amourgis jointly payable from the plaintiff’s half of the trust funds held by Mr. Luftspring.

[11] The plaintiff made an aggressive response which at the same time repudiated the settlement (para 76 of his affidavit) while also saying (at para. 71) that he had repeatedly instructed his former lawyers to release the order discharging the certificates of pending litigation and they refused to do so.

[12] Ms Amourgis and Mr. Weisdorf brought a motion for charging orders against the plaintiff’s portion of the trust funds being held by Mr. Luftspring. Ms Amougis’ total outstanding fees claimed are $8,761.90. Mr. Weisdorf’s total outstanding fees claimed are $22,520.

[13] After considerable procedural delays caused by the plaintiff, the matters came before me on April 23, 2015 on a peremptory basis. At that time, new counsel for the plaintiff appeared and requested an adjournment. The plaintiff testified at the hearing in support of his request for an adjournment and he was cross-examined by the defendants’ counsel. Among the things he said in his testimony was that he had been instructing his former lawyers to release the order discharging the certificates of pending litigation since April, 2014. There is contemporaneous email traffic consistent with that testimony.

[14] For oral reasons dictated in open court that day, I declined to grant the adjournment sought.

[15] Thereafter the parties settled subject to costs. That settlement disentangled the parties. In addition, the plaintiff agreed to the making of charging orders in favour of his former lawyers as against his share of the funds held by Mr. Luftspring. The defendants reserved the right to challenge the priority of those orders as against their claim for costs.

[16] At the hearing, the defendants sought over $100,000 in costs on a full indemnity basis against the plaintiff and Ms Amourgis. They recognize that the plaintiff has no assets in Canada beyond his half of the funds held by Mr. Lufstpring. They also agree that from the plaintiff’s share, the mediator’s unpaid bill to the plaintiff for 50% of his fees is to be paid first.

[17] The plaintiff did not seek costs at the hearing. But, he blamed Ms Amourgis for the motion since she did not release the certificates of pending litigation as instructed and as agreed. The plaintiff’s lawyer had not brought a costs outline with him and both he and Ms Amourgis asked for time to file written submissions as to costs.

[18] I have now received submissions from the defendants, Ms Amourgis, and the plaintiff personally. He apparently is no longer represented by counsel who appeared for him at the hearing.

[19] The defendants seek costs on a full indemnity basis against the plaintiff and Ms Amourgis jointly in the amount of $107,795.94. They ask that the costs should be paid from the plaintiff’s 50% share of the trust funds (after the mediator’s bill). They then ask that any outstanding balance should be paid by the plaintiff alone and not Ms Amourgis unless the court finds that the plaintiff should not be liable for costs. In that case, the defendants ask for their full indemnity costs against Ms Amourgis alone.

[20] The defendants rightly argue that the motion should not have been necessary. The settlement was clear and the plaintiff and his former lawyers simply frustrated its implementation.

[21] On this motion, the plaintiff did not adhere to either of the two court ordered timetables. He did not attend cross-examination out of court. He delivered late material including a note written in Serbian from his “attending physician” dealing with his claimed cancer. On cross-examination the plaintiff disclosed that he had the note for almost a full month before disclosing it late in the day to the defendants. Moreover, the “attending physician” was his wife. She is a neurosurgeon and not an oncologist. He also claimed that the defendants had not conveyed title to the Serbian farmhouse to him when, in fact, they had provided required documents to him but he had not had the documents registered on title in Serbia. The plaintiff’s Serbian lawyer claimed that he needed further or additional documents shortly before the hearing which the defendants immediately provided. It is not at all clear that those documents were actually required or that, if they were, they would not have been provided immediately by the defendants had they been sought on a timely basis.

[22] Therefore, there is much to criticize the plaintiff for when it comes to looking at how the process of the motion played out. But, why was the motion necessary? Arguably, if the certificates of pending litigation had been removed, the defendants would have had what they needed. They had given the plaintiff what was required to end the litigation in Serbia and to transfer the farmhouse. Had the plaintiff sought to commence or continue any litigation here or there, they could have held up the settlement agreement as a release. But, the plaintiff also held up the release of the trust funds. That required a court order regardless of Ms Amourgis’ conduct with respect to the certificates of pending litigation. I cannot say that but for Ms Amourgis’ acts, the motion would not have been necessary. However, the fact that she became entangled in the process and that the plaintiff was able to enmesh the defendants in his problems with his prior counsel, lies right at former counsels’ feet.

[23] Ms Amourgis says that she declined to enter or provide the order releasing the certificates of pending litigation because her instructions were uncertain once her principal Mr. Weisdorf was fired. She believed that, like Mr. Lufspring, she should require an order before releasing the court order that she had obtained. However, she received clear instructions from the plaintiff to release the order and she continued to decline to do so

[24] In my view Ms Amourgis was not in the position of a trustee who requires unanimous consent from the beneficiaries to release funds. She was a lawyer who obtained a consent order. First, I have never heard of a lawyer obtaining a consent order without advising the other side that she was doing so. She assumed the consent of counsel opposite. Had she sought actual consent, she would have had to provide the usual undertaking to provide a copy of the signed and entered order to opposing counsel. Moreover, approval for entry of an order, even after a lawyer’s retainer has been terminated, is an ethical requirement of counsel. Chrysler Credit Canada Ltd. v. 734925 Ontario Ltd., 1991 7311 (ON SC (Master)). The order was an order that had been made by the court. It was operative. The certificates should have been removed from title as the court ordered. By her unilateral conduct, Ms Amourgis prevented a court order from being implemented. The defendants ought to have been able to go to the court office to obtain a copy of the entered order to which they consented.

[25] Moreover, Ms Amourgis was not a neutral trustee keeping an even hand between two beneficiaries. She was protecting her own position and that of Mr. Weisdorf while they, at the same time, advanced adverse claims against the plaintiff concerning fees. By their acts, they subjected the defendants to their dispute with their former client.

[26] In my view, vis-à-vis the plaintiff, given his consent, the lawyers should be entitled to their fees. However, vis-à-vis the defendants, much of their suffering was due to the acts of Ms Amourgis and Mr. Weisdorf which ought not to have involved the defendants at all.

[27] In his submissions, the plaintiff simply reargued many of his incredible claims that the defendants had not fulfilled their part of the settlement. He asks for indemnity from all counsel for any costs that he is ordered to pay. There is no basis in the evidence to relieve him from liability for his abuse of the defendants notwithstanding the inappropriate positions taken by his former lawyers.

[28] I have reviewed the revised costs outline of the defendants. The 192 hours claimed are high and are claimed 100% at senior counsel rates. On a partial indemnity basis, they would amount to $74,556 including counsel fee and disbursements but before HST.

[29] The fixing of costs is a discretionary decision under section 131 of the Courts of Justice Act. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the complexity of the issues (57.01(1)(c)). Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v Public Accountants Council (Ontario), 2004 14579 (ON CA), (2004), 71 O.R. (3d) 291, at paras 26, 37.

[30] This is not a case for an order under Rule 57.07. However, Ms Amourgis and Mr. Wesidorf were parties to the proceedings before me in that (a) the defendants sought relief against them; and (b) they brought a motion for charging orders. The defendants should have had their properties cleared of the certificates as ordered by the court a year ago. The motion would have been much more straightforward and would not have needed to involve the lawyers vis-a-vis the defendants at all. They could have sought their charging order against the plaintiff and there would have been no or only minimal involvement of the lawyers in the issues between the parties. They effectively injected themselves into the fray by holding the defendants hostage to their dealings with the plaintiff.

[31] In my view, it is fair and reasonable for the defendants to have their costs against the plaintiff and Ms Amourgis on a partial indemnity basis fixed in the amount at $55,000 inclusive of disbursements and HST. The costs against Ms Amourgis will be limited to any recovery that she could have had from the plaintiff’s share of the funds held by Mr. Luftspring. The defendants shall have no recourse against Ms Amourgis personally. As I subordinate the lawyers’ recovery below and the costs awarded against the plaintiff are more than the amount being held in trust for him, the order regarding Ms Amourgis is of no practical effect.

[32] The defendants do not seek costs orders against Mr. Weisdorf directly. However, they did ask for an order subordinating the lawyers’ charging orders behind their costs order. In my view they are entitled to this order. The lawyers obtained the charging orders on the consent of the plaintiff only, knowing that the defendants reserved their rights to claim priority in this costs process. Mr. Weisdorf took his retainer with the plaintiff on the basis that he would be paid at the end. He was therefore always subject to the plaintiff’s credit risk by his own agreement. While it is and remains equitable for Mr. Weisdorf and Ms Amougis to have claims against the plaintiff (subject to assessment of course), there is no basis for them to have priority against the defendants as the successful parties. A charging order assumes that the party for whom the lawyer acted has won the case or settled with a net recovery. The settlement proceeds or the client’s net recovery can then be said to have been created by the lawyer’s industry and are charged as between lawyer and client. Here, while the lawyers’ industry helped create the plaintiff’s share in the trust funds, his share remained subject the litigation. The costs award herein was caused or contributed to largely by the actions of Mr. Weisdorf and his agent Ms Amourgis. Whether Mr. Weisdrof is vicariously liable for his agent is not an issue that I need to resolve. It is sufficient in my view that it would be wholly inequitable if the lawyers, having injected themselves into the defendants’ litigation, were to then recover against the client first before the successful defendants whose costs were inflated by the acts of the lawyers as discussed above.

[33] Pursuant to my endorsement dated April 23, 2015:

a. Gary Luftspring or Ricketts Harris LLP, whichever is formally trustee of the funds being held for the parties (the “Trustee”) shall, from the portion of the funds remaining held for the plaintiff under the terms of the parties’ settlement dated November 11, 2013:

i. pay the account of Harvey M. Haber , Q.C. LSM addressed to John Weisdorf dated November 25, 2013 with accrued interest;

ii. pay the remaining funds to the defendants or as they may direct in writing.

b. Upon making the payment to David Adizes provided for in my endorsement of April 23, 2015 and the payments provided herein, the Trustee is released and forever discharged from any and all claims, liabilities, and demands of any nature and kind, made or that may be made in future, by any of the parties, Julie Amourgis, and John Weisdorf, and any of the respective, heirs, executors, administrators, successors or assigns of any of the foregoing, concerning any matter that was or might have been an issue in this litigation and any matter concerning the holding of funds in trust for the parties or some of them. Notwithstanding the generality of the foregoing, none of the people or entities referred to in the prior sentence, or anyone acting on their instructions or on their behalves, jointly or severally, may make any claim against the Trustee concerning anything done or not done by it concerning the holding, investing, payment, or accounting for any of the funds that the Trustee held.

c. The court dispenses with any requirement for the plaintiff to approve the form and content of the formal order implementing this endorsement or the court’s endorsement dated April 23, 2015.

________________________________ F.L. Myers J.

Date: May 14, 2015