COURT FILE NO.: 11-52422
DATE: 20151014
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
JACKIE MANTHORNE AND MONA FORREST
Plaintiffs
– and –
CANADIAN BREAST CANCER NETWORK, CATHY AMMENDOLEA, DIANA ERMEL, and SHARON YOUNG
Defendants
Counsel:
Peter Cronyn/Alison McEwen, for the Plaintiffs
Mark Charron, for the Defendants, Canadian Breast Cancer Network and Diana Ermel
HEARD: By Written Submissions
COSTS DECISION
Beaudoin J.
[1] The Defendants, CBCN and Diana Ermel, brought a motion for the return of certain documents that they claimed were privileged and sought the removal of Nelligan O’Brien Payne as solicitors of record for the Plaintiffs.
[2] I found that the documents the Defendants sought to be returned were not privileged, other than finding that a portion of a document, CBCN017802, was covered by solicitor client privilege and therefore, required further reduction.
[3] The background to this litigation is set out in my earlier decision.
[4] The Plaintiffs claim to be completely successful on the motion. Prior to the hearing of the motion, they had offered to make reductions to CBCN017802, and that offer was not accepted by the Defendants.
[5] They seek their costs on a full indemnity basis for a total amount of $53,871.81.
[6] The Plaintiffs rely on their Offers to Settle and submit that they “beat” their Offers to Settle. Their offers of further reductions were considerably more extensive than the limited reductions required as a result of my Order. While the Offer to Settle did not come strictly within the strictures of rule 49.10, the Plaintiffs maintain it is still a relevant factor in assessing the fairness and reasonableness of the costs of this matter.
[7] The Plaintiffs rely on the following factors in rule 57.01:
(i) The results achieved in the proceeding;
The Plaintiffs claim complete success.
(ii) The complexity of the proceeding;
The Plaintiffs submit that the factual matrix was complex which required a significant volume of material to be placed before the court.
(iii) The importance of the issues;
The Plaintiffs maintain that the issues in the motion were of utmost importance to them. Many of the documents were found to be the subject of common interest privilege and the Plaintiffs state that they needed to be able to use this evidence and these documents in order to respond to the allegations made by the Defendants.
Moreover, the Defendants made it clear that the thrust of this motion was to remove the firm of Nelligan O’Brien Payne as their counsel of record, irrespective of the ruling on the documents. This issue is of utmost importance to the Plaintiffs as they would lose their counsel of choice and be put to the extra expense of having to hire new counsel.
(iv) The conduct of any party;
the Plaintiffs argue that the motion was wholly unnecessary. They claim it placed significant and needless stress on each of them. They stood to lose their counsel of choice. They also point out the Defendants’ allegations of unprofessional conduct on the part of their lawyers. They note that the issues in regard to these documents first arose in 2013, it took almost 2 years to deal with these issues, and the litigation has been at a standstill. They claim the motion delayed and needlessly inflamed these proceedings.
(v) The principles of indemnity and proportionality;
Given the seriousness of the relief sought by the Defendants, the Plaintiffs claim that their costs to fight this motion were proportionate and that they should be fully indemnified.
(vi) The amount the losing party could reasonably expect to pay;
The Plaintiffs maintain that their costs are in the range of what the Defendants could have reasonably been expected to pay.
(vii) Whether any step in the proceeding was improper, vexatious or unnecessary.
The Plaintiffs rely on all of their submissions in submitting that the motion was improper, vexatious and unnecessary.
[8] The Defendants object to the amount claimed by the Plaintiffs and submit that there should be no costs awarded in respect of the motion. In the alternative, they submit that the Plaintiffs are only entitled to the partial indemnity costs and that the costs should be reduced to account for the moderate importance complexity of the motion as well as for the Plaintiffs’ failure to admit that they were required to seal the disputed documents and bring the motion to decide the privilege issues from the outset.
[9] CBCN argues that the motion was reasonable and necessary to adjudicate legitimate, even if not, ultimately successful claims of privilege asserted by CBCN. CBCN relies on the procedure based on common law that it was for the Plaintiffs to bring a motion to adjudicate the claims of privilege if they disagreed with the claims made by CBCN in respect of the disputed documents. In Chan v. Dynasty Executive Suites Ltd, 2006 23950 (ON SC), Belobaba, J. summarized the course of conduct required of a lawyer upon notice that the opposing party has inadvertently produced privileged documents:
The case law on this point is clear. Once a lawyer has been advised that privileged documents were produced inadvertently, the lawyer must promptly return the material uncopied and, if possible, unread. If there is any issue as to whether privilege is properly asserted, the obligation of the receiving counsel is to seal the documents, and any notes made in respect of the documents, and seek further direction from the court.
[10] CBCN submits that it was only as a result of the Plaintiffs’ failure to bring the required motion, and in the face of their retention and continued use of the disputed documents that it was forced to bring a motion and to seek as relief the removal of Plaintiffs’ counsel.
[11] The Defendants dispute that there could be any meaningful settlement offers in the context of a dispute regarding claims of privilege while the disputed documents were being held by the Plaintiffs and their counsel.
[12] Although, I found that in respect of the majority of the disputed documents, privilege was jointly held by the Plaintiffs or had been implicitly waived by CBCN. The Defendants note that there was never an express waiver of privilege and that the implicit waiver of privilege by certain of its former board members was unknown to the rest of the CBCN board.
[13] The Defendants deny any delay on their part. They emphasize that the obligation was always upon the Plaintiffs to bring the motion to have the court determine the privilege dispute. They argue that the record discloses that at various times between October 2013 and September 2014 it was unclear if the motion would be required, and if so, whether the Plaintiffs or the Defendants would be bringing this motion. The Defendants note that examinations for discovery have taken place and answers to undertakings have been exchanged since October, 2013. Furthermore, in September, 2014, the Plaintiffs amended their Statement of Claim a second time to bring additional claims against two of the Defendants personally. As a result, new defence counsel had to be retained and new defences delivered. The Amended Amended Statement of Claim was not issued until December, 2014. Counsel obtained the first long motion date on which they were both available.
[14] The Defendants submit that the fees claimed are excessive and grossly disproportionate to the scope and complexity of the motion. Their own costs are approximately half of the amount claimed by the Plaintiffs, and this is significant considering that counsel for the Defendants on the motion was required to familiarize himself with a new file while counsel for the Plaintiffs had been retained since the action began.
Conclusion
[15] The case law is consistent and clear that a party disputing the claim of privilege is required to bring a motion to determine whether the claim is valid. In this case, the Plaintiffs did not bring the motion and continued to keep and use the documents. As repeated in the case law on this issue, it is irrelevant whether the receiving counsel was well-intentioned or believed that the documents at issue were not privileged; that counsel is under a positive duty to return the documents without keeping any documents or, if they reasonably believe that there is an issue as to whether their clients are entitled to retain the documents, counsel must take immediate steps to seek a ruling from the court on the documents at issue.
[16] Therefore, it was necessary for the Defendants to bring the motion to get the court’s direction. I do not find that there is any bad faith on their part.
[17] Nevertheless, I do have a significant concern with respect to the Defendants’ attempts to remove opposing counsel as solicitor of record irrespective of the Court’s ruling on the issue of privilege. I found that there had been no misuse of the information. A court should only remove opposing counsel at this late stage of the proceedings for the clearest of reasons.
[18] The material relied upon in support of a motion was not particularly voluminous and there were no cross examinations. There was no need for junior counsel to attend the motion on behalf of the Plaintiffs.
[19] In this case, the Plaintiffs should have brought the motion and the Defendants should not have sought their removal. The Plaintiffs were successful, but I do not consider this a case for substantial indemnity costs. Furthermore, I consider the Plaintiffs’ claim for costs to be disproportionate and excessive and well beyond what an unsuccessful party could reasonably be expected to pay. I believe that costs should be reduced to account for the reasonable expectations of the Defendants having regard to their own costs. In addition, they hired outside counsel to argue the motion who had to familiarize himself with the material.
[20] In this case, I award the Plaintiffs’ their costs in the amount of $25,000 for fees plus HST, and their taxable disbursements.
Mr. Justice Robert N. Beaudoin
Released: October 14, 2015
COURT FILE NO.: 11-52422
DATE: 20151014
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
JACKIE MANTHORNE AND MONA FORREST
Plaintiffs
– and –
CANADIAN BREAST CANCER NETWORK, CATHY AMMENDOLEA, DIANA ERMEL, and SHARON YOUNG
Defendants
costs decision
Beaudoin J.
Released: October 14, 2015