CITATION: Best v. Ranking, 2015 ONSC 6279

COURT FILE NO.: CV-14-0815

DATE: 20151013

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

DONALD BEST

Plaintiff

– and –

GERALD LANCASTER, REX RANKING, SEBASTIEN JEAN KWIDZINSKI, LORNE STEPHEN SILVER, COLIN DAVID PENDRITH, PAUL BARKER SCHABAS, ANDREW JOHN ROMAN, MA’ANIT TZIPORA ZEMEL, FASKEN MARTINEAU DUMOULIN LLP, CASSELS BROCK AND BLACKWELL LLP, BLAKE, CASSELS & GRAYDON LLP, MILLER THOMSON LLP, KINGSLAND ESTATES LIMITED, RICHARD IVAN COX, ERIC IAIN STEWART DEANE, MARCUS ANDREW HATCH, PHILIP ST. EVAL ATKINSON, PRICEWATERHOUSECOOPERS EAST CARIBBEAN (FORMERLY ‘PRICEWATERHOUSE COOPERS’), ONTARIO PROVINCIAL POLICE, PEEL REGIONAL POLICE SERVICE a.k.a. PEEL REGIONAL POLICE, DURHAM REGIONAL POLICE SERVICE, MARTY KEARNS, JEFFERY R. VIBERT, GEORGE DMYTRUK, LAURIE RUSHBROOK, JAMES (JIM) ARTHUR VAN ALLEN, BEHAVIOURAL SCIENCE SOLUTIONS GROUP INC., TAMARA JEAN WILLIAMSON, INVESTIGATIVE SOLUTIONS NETWORK INC., TORONTO POLICE ASSOCIATION, JANE DOE #1, JANE DOE #2, JANE DOE #3, JANE DOE #4, JANE DOE #5, JOHN DOE #1, JOHN DOE #2, JOHN DOE #3, JOHN DOE #4, JOHN DOE #5

Defendants

Michael R. Kestenberg, for the former lawyer of the Plaintiff, Paul Slansky

Jessica Prince, for the Defendants PricewaterhouseCoopers East Caribbean (formerly PricewaterhouseCoopers), Kingsland Estates Limited, Philip St. Eval Atkinson, Richard Ivan Cox and Marcus Andrew Hatch

HEARD: September 3, 2015

REASONS FOR DECISION – RULE 57.07 MOTION

HEALEY J.

Nature of the Motion

[1] The moving parties seek an order pursuant to rule 57.07(1)(c) directing that the costs of this action, which have been awarded in their favour in the amount of $84,000, be made payable personally by the plaintiff’s former lawyer, Paul Slansky, on a joint and several basis with the plaintiff.

History of the Proceedings

[2] In 2007, an action was commenced in Ontario against 62 defendants by Nelson Barbados Group Inc., of which Donald Best was the principal (the “Nelson Barbados action”). Five of those defendants, referred to as the “Caribbean defendants”, brought a successful application for a stay. After the Nelson Barbados action was permanently stayed, the Caribbean defendants sought costs on a substantial indemnity basis against Mr. Best personally.

[3] Ultimately, that proposed costs hearing gave rise to a contempt hearing due to Mr. Best’s failure to comply with orders of the court. In January 2010, Shaughnessy J. found Mr. Best in contempt, and ordered him to pay a fine of $7,500 and to serve a three-month sentence of incarceration. Mr. Best unsuccessfully moved to set aside the finding of contempt in May 2013, and then appealed that decision. In the course of that appeal, he made a motion for an order to remove the Caribbean defendants’ former lawyers as counsel of record, based on allegations of misconduct. The motion was unsuccessful, and attracted a costs order of $72,000. The Court of Appeal expressed its condemnation of Best’s “tactic of making serious allegations of deliberate conduct against the lawyers in the face of a finding to the contrary”. Best appealed that decision to a three-judge panel of the Court of Appeal, and was again unsuccessful.

[4] By March 31, 2014, costs orders made against Mr. Best in the Court of Appeal totalled $192,000. He was ordered to pay costs by a deadline, failing which his appeal would be dismissed. Mr. Best unsuccessfully sought a stay of that order. He then sought leave to appeal to the Supreme Court of Canada, which was dismissed with costs on a solicitor-client basis.

[5] Mr. Best commenced this action on July 14, 2014, within months of the administrative dismissal of his appeal in the Nelson Barbados action. Three of the thirty-nine defendants in this action were part of the group comprising the Caribbean defendants in the Nelson Barbados action, and are hereafter also referred to as the “Caribbean defendants”.

[6] As soon as they were retained in this action, counsel for the Caribbean defendants wrote to Mr. Slansky to inform him that they were on the record. At that time, some of the other defendants had already initiated motions to dismiss the action as an abuse of process, or in the alternative, to strike the claim as disclosing no cause of action. In their initial letter, counsel for the Caribbean defendants indicated that they intended to bring a motion to contest jurisdiction if the motions brought by the other defendants were unsuccessful, and for that reason, they did not intend to serve a Notice of Intent to Defend or Statement of Defence. Counsel asked that, in the result, Mr. Slansky refrain from noting their clients in default.

[7] An exchange of letters followed, in which Mr. Slansky insisted that the Caribbean defendants must either file defence pleadings or materials for their jurisdiction motion by November 25, 2014, failing which he would note them in default. He insisted that the jurisdiction motion be scheduled to be heard at the same time as the other defendants’ motions to strike.

[8] On December 8, 2014, Mr. Slansky informed counsel for the Caribbean defendants that he had noted their clients in default. This occurred despite that the lawyers for the Caribbean defendants continued to inform Mr. Slansky of their clients’ intention to contest jurisdiction, and in the face of an upcoming conference with the case management judge scheduled to occur eight days later.

[9] At the case conference the case management judge, McCarthy J., set a schedule for the Caribbean defendants’ motion to set aside the noting in default, as the plaintiff would not consent to such an order.

[10] Within the context of this motion to set aside the Caribbean defendants’ noting in default, on February 6, 2015, Mr. Slansky served counsel with notices of examination for two of the Caribbean defendants. Counsel for the Caribbean defendants made it clear that they would not be making their clients available for cross-examination, and a case conference was hurriedly arranged before McCarthy J. The motion regarding the examination of the two Caribbean defendants was ordered to be set for February 27, 2015. In the seven days leading up to the motion, both parties filed motion materials, including facta and authorities.

[11] Following argument by teleconference on February 27, 2015, McCarthy J. found against Mr. Best, noting that there was nothing that the two defendants could add that would be relevant to the narrow issue to be determined on the motion under rule 19.03. McCarthy J. ordered that costs of the examination motion would be dealt with by the judge hearing the motion to set aside the noting in default.

[12] On March 9, 2015, four days before the motion to set aside the noting in default was scheduled to be argued, Mr. Slansky wrote to counsel for the Caribbean defendants and consented to the motion. By this point the parties had exchanged motion records, facta and books of authority in accordance with the schedule set out by McCarthy J.

[13] Although his client consented to the motion to set aside the noting in default, Mr. Slansky still argued that the Caribbean defendants were not entitled to costs. By letter dated March 11, 2015, counsel for the Caribbean defendants disagreed, stating that they intended to seek full indemnity costs for the rule 19.03 motion and, in light of the conduct of the litigation, they had instructions to seek rule 57.07 costs against Mr. Slansky personally.

[14] The costs hearing before McCarthy J. was delayed until April 10, 2015, as a result of three adjournment requests from Mr. Slansky. In his written costs submissions, Mr. Slansky noted that his client was impecunious and unable to pay previous cost orders made against him. That fact was already abundantly clear to the Caribbean defendants, who have yet to collect from Mr. Best the cost orders made in their favour.

[15] On April 10, 2015, McCarthy J. ordered substantial indemnity costs of $45,253.13 in favour of the Caribbean defendants, and made clear findings as to why the plaintiff should not have noted the defendants in default. Referring to the fact that the plaintiff opposed the order to set aside the noting in default, as well as having brought an “emergency” motion to cross-examine, he stated:

In my view, the plaintiff used the rules to create the need for an unnecessary and time consuming motion. This is reprehensible. That type of conduct should meet with the strong disapproval of the Court. The conduct of the plaintiff in first noting the defendants in default and then opposing the simple, almost routine relief of a setting aside of the noting in default, was entirely unnecessary and unreasonable.

In my view, the plaintiff must have reasonably expected to be faced with significant costs if he persisted in his chosen course of action.

[16] Mr. Best sought leave to appeal the costs order. By order dated August 11, 2015, Eberhard J. dismissed Mr. Best’s motion and denied leave to appeal McCarthy J.’s costs order. Her endorsement is silent with respect to the costs of the motion for leave to appeal.

[17] As earlier stated, at the plaintiff’s insistence the Caribbean defendants’ jurisdiction motion was scheduled to be heard during the same four-day period (June 15 to 18, 2015) as the other defendants’ motions to dismiss or strike. As of June 10, 2015, Mr. Slansky still proposed that the Caribbean defendants’ jurisdiction motion be heard prior to the motions to dismiss. Ultimately, counsel came to an agreement that the motions to dismiss should be argued first; however, counsel for the Caribbean defendants was required to attend these motions, as their jurisdiction motion had been scheduled for the same week.

[18] On the evening of June 17, 2015, once the motions to dismiss or strike had been argued but not yet decided, counsel for the Caribbean defendants wrote to Mr. Slansky again, reiterating their intention to seek costs against him personally, and suggesting that this rule 57.07 matter could be argued at a future date. By responding email, Mr. Slansky stated that seeking costs against him personally would constitute an abuse of process, and that if counsel for the Caribbean defendants were to bring such a motion he would respond by seeking costs against them personally and/or sue their clients and the lawyers personally for abuse of process.

[19] On June 18, 2015, this court delivered a short handwritten endorsement dismissing the entire action with reasons to follow, holding that this second action was an abuse of process. As such, the Caribbean defendants’ jurisdiction motion was rendered moot and did not proceed.

[20] Arguments on costs were also heard on June 18, 2015. The Caribbean defendants were awarded their full indemnity costs of the action of $84,000, which took into account the prior costs order of Justice McCarthy. The endorsement further noted that the Caribbean defendants intended to bring this rule 57.07 motion, directing that it be scheduled through the trial coordinator’s office. A more fulsome overview of the history of the Nelson Barbados action and this action, and the basis for the cost orders made by this court in this action, can be found in Best v. Ranking, 2015 ONSC 6269.

[21] At para 7 of those reasons, this court wrote:

In his submissions on costs at the conclusion of the motions, Best’s counsel submitted that, in terms of degree, this claim could not be said to fall at the extreme end of vexatious or abuse of the court's process. This court completely disagrees with that submission. This claim, both in form and substance, is the most vexatious and abusive to ever come before me. The allegations are scandalous, oppressive and shocking, very clearly aimed at undermining key public institutions such as the courts, judges and local and provincial police services, as well as individuals whose professional reputations are intended to be impugned by the allegations made, including lawyers, police officers and a private investigator. The claims are a torturous yarn spun from the most flimsy of material; the evidence presented by Best to purportedly justify these allegations is either non-existent, disturbingly convoluted, irrelevant or, in many instances, the allegations are simply incapable of proof.

[22] It is entirely true that, had the plaintiff cooperated and agreed that the Caribbean defendants should hold off on their motion to contest jurisdiction until after the outcome of the motions to dismiss was known, almost all of their costs would have been saved. In his affidavit, Mr. Slansky asserts “it made no sense to deal with a potential second set of motion records (if the Caribbean defendants intended to proceed with a motion to strike after an unsuccessful jurisdiction motion) and prejudice Mr. Best by unnecessarily delaying the matter until after June, 2015.” Yet nowhere is there evidence that a delay of any significance would have been caused by agreeing to await the outcome of the other motions. There is no evidence that such inquiries were made of the trial coordinator or the case management judge. There is no evidence of potential prejudice. Mr. Slansky’s rationale – that it made no sense to deal with a potential second set of motion records – was exactly the result that occurred. The Caribbean defendants’ jurisdiction motion was rendered moot, even though they had had to take time-consuming and extremely expensive steps to bring it forward on the timetable insisted upon by Mr. Best. This tactic lends itself to the conclusion that Mr. Best meant to place pressure on the Caribbean defendants for an improper purpose: retribution for Mr. Best’s ill-conceived notion that they and their former lawyers were responsible for his incarceration, and to drive up their legal fees.

[23] At the present time, Best owes the Caribbean defendants unpaid costs in an amount exceeding $350,000 from the Nelson Barbados action, and $129,253.13 plus interest from this action.

Position of the Parties

[24] The onus is on the moving parties to adduce evidence of Mr. Slansky’s role in incurring the costs. The Caribbean defendants argue that Mr. Slansky is personally responsible for incurring costs without reasonable cause, and wasting costs due to his negligence and his adoption of a litigation strategy that was both abusive and an astonishing waste of time and money. They assert that he personally caused these costs to be incurred by either acquiescing to unreasonable instructions from his client, or by advising his client to take a series of unmeritorious steps and unreasonable positions, while knowing that his client was impecunious and unable to pay costs orders.

[25] Mr. Slansky argues that all of the steps he took in the conduct of this litigation were taken upon Mr. Best’s instructions. Although Mr. Best has not waived solicitor-client privilege or confidentiality, Mr. Slansky has deposed that his client was involved in all of the litigation decisions and provided detailed instructions for each step of the litigation. He notes that Mr. Best was described as an “experienced litigant” by Shaughnessy J. in the Nelson Barbados action. In addition to acting on his client’s instructions, Mr. Slansky asserts that he acted ethically and in accordance with the Law Society of Upper Canada’s Rules of Professional Conduct.

[26] Mr. Slansky’s counsel, Mr. Kestenberg, argues that because of Mr. Best’s refusal to waive solicitor-client privilege, Mr. Slansky cannot refute the Caribbean defendants’ allegation that he was the cause of any steps taken or any expense incurred unnecessarily. Mr. Kestenberg argues that in this case, there is no evidence regarding the details or advice sought or given relating to the plaintiff’s instructions to bring the action, to bring or respond to motions, or relating to Mr. Slansky’s communications with opposing counsel.

The Issue

[27] The sole issue to be determined on this motion is whether the costs awarded to the Caribbean defendants ought to be paid by the plaintiff’s lawyer, Mr. Slansky, personally. The moving parties also seek an order that Mr. Slansky be jointly and severally liable for the payment of the costs ordered by McCarthy J., and that this court fix the costs of the motion for leave to appeal, with Mr. Slansky being jointly and severally liable for those costs as well.

[28] In a decision released last year, Bailey v. Barbour, 2014 ONSC 3698, 2014 CarswellOnt 8412, I attempted to summarize the law developed under rule 57.07 as follows:

As earlier stated, the legal test for when costs may be awarded against a solicitor personally was outlined by the Ontario Court of Appeal in Galganov, supra. In Galganov the Court outlined a two-step process or inquiry as to whether costs should be awarded against a solicitor personally, at paras. 13-14:

(1) The first inquiry is whether the lawyer’s conduct falls within Rule 57.07(1) in the sense of causing costs to be incurred unnecessarily; and

(2) The second step is to consider, as a matter of discretion (and applying the extreme caution principle), whether in the circumstances of the particular case, the imposition of costs against the lawyer personally is warranted.

The first part of the test requires a “holistic” examination of the lawyer’s conduct, however a general observation about the conduct of the litigation is not sufficient to identify the conduct that contributed to delay and unnecessary cost. The Court must also consider specific incidents of conduct to determine whether the conduct caused unreasonable costs to be incurred and thus, falls within the rule: Galganov, at paras. 20-12; Carleton v. Beaverton Hotel, [2009] O.J. No. 2409 (Ont. Div. Ct.), at para. 20.

The second part of the test is discretionary but, as explained by the Supreme Court of Canada in Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3 (S.C.C.) at para. 254, the court must exercise this discretion with “extreme caution”. Rule 57.07 is concerned with compensating parties for costs unreasonably incurred, and not with regulating lawyers at the instance of the judge or of their client’s litigation adversaries; Carleton v. Beaverton Hotel, at para. 24, Young v. Young, at para. 254; Galganov, at para. 14. Even where the parties deserve compensation for costs incurred, the Court’s discretion to awards costs against a lawyer personally must be exercised “with the utmost care and only in the clearest of cases”. An order for costs against a solicitor “must only be made sparingly, with care and discretion, … and not simply because the impugned conduct may appear to fall within the circumstances described in Rule 57.07(1)”: Belanger v. McGrade Estate, 2003 CanLII 49390 (ON SC), [2003] O.J. No. 2853, 65 O.R. (3d) 829 (Ont. S.C.J.) at para. 25.

As the case authorities discuss, the need for extreme caution in awarding costs against lawyers is necessary to ensure that lawyers’ conduct is not scrutinized and sanctioned as they carry out their duties to their clients and fulfill their obligations under Rule 4.01(1) of the Rules of Professional Conduct, to assist a client’s case within all reasonable means. If the evidence is unclear who was responsible for the pursuit of litigation, “any doubt should be resolved in favour of the solicitor”: Byers (Litigation Guardian of) v. Pentex Print Master Industries Inc., 2002 CanLII 49474 (ON SC), [2002] O.J. No. 1403, 59 O.R. (3d) 409 (Ont. S.C.J.) at para. 17.

[29] In Bailey v. Barbour, costs were awarded against a solicitor personally for knowingly using a biased expert witness to provide expert reports and to give testimony as an expert during the trial. Mr. Kestenberg seeks to distinguish that case, and others noted below, on the basis that Mr. Slansky has not breached his duty to the court and has not misconducted himself in terms of his professional responsibilities.

[30] I agree that this case differs significantly from Bailey v. Barbour. Mr. Slansky has not acted in a way that fundamentally interfered with the fairness of the hearing, as occurred in that case. This case is also distinguishable from Schreiber v. Mulroney, 2007 CanLII 31754, 2007 CarswellOnt 5267 (S.C.), in which costs were awarded against a solicitor for breaching an agreement with opposing counsel not to note his client in default, as well as delivering several letters that were discourteous and unprofessional. I find that Mr. Slansky is not guilty of similar conduct, other than the isolated example of his reaction to the letter informing him that the defendants were going to seek costs against him personally. Similarly, the conduct of the lawyers in Sangha v. Sangha, 2014 ONSC 4088, 47 R.F.L. (7th) 195 was a complete dereliction of their duties to the court and their client, including: (i) commencing ex-parte proceedings for a custody and a restraining order in the wrong forum; (ii) intentionally exaggerating evidence of an “abduction threat” to the court; (iii) delaying service of the ex-parte order and restraining order; (iv) misrepresenting to the court the contents of alleged discussions with opposing counsel regarding an adjournment; and (v) not being present at a hearing.

[31] Counsel for the Caribbean defendants asks that this court consider the procedural choices made by Mr. Slansky, rather than focusing on the lack of merit in Mr. Best’s action. She argues that it is sufficient that Mr. Slansky took unnecessary and vexatious steps that wasted costs, regardless of whether he was acting on his client’s instructions. She focusses on five particular steps taken that she alleges were unreasonable, unnecessary and wasted costs:

(i) the decision to note the Caribbean defendants in default;

(ii) opposing the motion to set aside the noting in default;

(iii) bringing an urgent motion to examine two of the Caribbean defendants for purposes of the above motion;

(iv) opposing and delaying the determination of costs in the above motions; and

(v) insisting that the jurisdiction motion had to be argued in June 2015, with the motions to dismiss/strike.

[32] Counsel for the Caribbean defendants relies upon three cases in which costs were made payable by a solicitor in the context of actions that were dismissed as an abuse of process. The first is Soderstrom v. Hoffman-La Roche Limited, 58 C.P.C. (6th) 160, 2008 CanLII 15778 (ONSC), in which the plaintiff commenced a second action that had as its foundation the same subject matter as an earlier, complex class action proceeding, that had been moving through the courts over a six-year period. In contravention of an order, the plaintiff did not seek leave to commence the second action. At para. 24 of the ruling, Justice Perell stated “[t]here is no doubt that the 2^nd Soderstrom Proceeding is an effort to re-litigate the causes of action and the issues that were settled by the Vitapharm Proceedings.” The plaintiff was bound by the settlement in the earlier action. For reasons explained by Justice Perell, he concluded, at para. 59:

The last point, in effect, adds stare decisis to the various doctrines of res judicata that lead to the conclusion that Mr. Soderstrom is re-litigating and abusing the process of the court. His re-litigation is now operating on two planes. There is the underlying re-litigation of the issues in the Vitapharm Proceedings, and by commencing the 2^nd Soderstrom Proceeding, Mr. Soderstrom is compelling Hoffman La-Roche to re-litigate the arguments that were dismissed as without merit by Speigel, J. and the same arguments that were rejected by Ellen Macdonald, J.

[33] Soderstrom does not reference the law developed under rule 57.07. At para. 5, Justice Perell finds that Mr. Soderstrom’s counsel caused costs to be incurred without reasonable cause, and therefore he “shall be personally liable to pay costs of this motion pursuant to rule 57.07 of the Rules of Civil Procedure.” The comments of the court that seem to be the basis for the cost order against the lawyer are found at paras. 61-78, where Justice Perell analyzes the arguments advanced by counsel to justify commencing the 2^nd Soderstrom Proceeding. He concludes, at paras. 66 and 79:

If this is Mr. Borden’s argument on behalf of Mr. Soderstrom, then, in my opinion, it fails because it is bar[r]ed by the several res judicata or abuse of process doctrines mentioned above or because on its merits, the argument is fallacious.

The premises of Mr. Soderstrom’s arguments are false and the reasoning from the premises to the conclusion is unsound. He and Mr. Borden cannot justify continuing the 2^nd Soderstrom Proceeding.

[34] Justice Perell considered that this extraordinary relief was necessary to protect the defendants, and that the jurisdiction to grant it was “available from the Court’s inherent jurisdiction to control its own process, from its jurisdiction to control its own officers, and from rule 57.07 of the Rules of Civil Procedure. See Chavali v. Law Society of Upper Canada, [2006] O.J. No. 2036 (S.C.J.)” (para. 28).

[35] In Donmor Industries Ltd. v. Kremlin Canada Inc. (No. 2), (1992), 1992 CanLII 7543 (ON SC), 6 O.R. (3d) 506, 3 W.D.C.P. (2d) 57, costs were awarded against a solicitor and his client jointly and severally in circumstances where a lengthy claim was struck as an abuse of process. It contained causes of action unavailable in law and claims that had been or could have been raised in an earlier proceeding, and attempted to re-litigate an issue of costs dealt with in the former proceeding. The justification for the rule 57.07 order was described at pp. 509 - 510:

I am also satisfied that he was aware that in seeking to re-litigate the costs of the earlier actions in this action the plaintiffs were attempting to do indirectly what they could not do directly. Even more important is the fact that he knew that the claim in this second action included claims which were known to him to have been raised or which were capable of having been raised in the first action and which were known to him to exist at the time of the first action. Mr. Howell says that he knows more about the first action and its surrounding circumstances than anyone else. He was counsel for these plaintiffs who were defendants in the first action throughout the whole of the proceedings which took some five years before the courts and which are still not completed.

[36] In Baryluk (Wyrd Sisters) v. Campbell, 2009 CanLII 34042 (ONSC), the statement of claim was struck without leave to amend, and the action was dismissed. The basis for striking the claim was that it sought to re-litigate issues decided in another proceeding, and therefore constituted an abuse of process. Hackland J. ordered that the plaintiff pay the defendants’ costs on a substantial indemnity basis fixed in the amount of $103,480, and ordered that the plaintiff’s lawyer attend to show cause why she should not be personally ordered to pay all or part of the costs of the action. In applying rule 57.07 and the governing principles in Young, Hackland J. set out the basis of the cost award at paras. 13-16:

Given that Rule 57.07 is not intended to be used to punish solicitors’ misconduct, except to the extent that such misconduct has resulted in wasted and unnecessary costs, how should this rule be applied in the present case? In my opinion, the entire proceeding necessitated an expenditure of unnecessary costs on the defendants’ part because the plaintiff’s action was doomed to failure from its inception. The action was a clear abuse of process in the form of a collateral attack on orders made by the judicial defendants in the Harry Potter action in Toronto and could not possibly have succeeded due to the absolute immunity of judicial officers in respect of the performance of their judicial functions. In circumstances comparable to these, costs have been awarded against counsel personally under Rule 57.07, see Schreiber v. Mulroney[,] 2007 CanLII 31754 (ON SC), [2007] O.J. No. 3191 (S.C.J.).

As the Supreme Court pointed out in Young, personal costs awards against counsel are to be made sparingly, with care and discretion and only in clear cases. Since in my opinion this case falls within Rule 57.07 due to the unwarranted waste of costs involved, I must consider as a matter of discretion whether the interests of justice are served by an award of costs personally against Ms. Townley-Smith.

It is in the context of the exercise of this discretion that Ms. Townley-Smith’s conduct is relevant both in terms of her pursuing her own allegations on a personal level and more importantly what I have found to be an egregious and unwarranted attack on the administration of justice by a member of the bar. Ms. Townley-Smith writes in her factum that my original decision in this matter is “an attack on the independence of the Bar and a further attack on the integrity of Canada’s judicial system.” She submits in oral argument that this court lacks integrity, is guilty of intellectual dishonesty and has engaged in criminal behaviour (altering transcripts). She asserts that her tenacious advocacy is the resolute and honourable advocacy mandated by Rule 4.01(1) of the Rules of Professional Conduct of the Law Society of Upper Canada.

Rule 4.01(1) of the Rules of Professional Conduct does indeed require the vigorous advocacy of counsel, even for unpopular causes, but it also mandates that this be done in a way that demonstrates respect for the administration of justice.

[37] Counsel are in agreement that it is not necessary to show negligence, bad faith or some reprehensible conduct in order to justify an award of costs under rule 57.07. In all of the above-referenced cases relied upon by the Caribbean defendants, the quality that seems to have tipped the scales in favour of awarding costs against a solicitor was the nature of the proceeding commenced by each solicitor of record, each constituting an abuse of process, and steps taken in the litigation that run contrary to the interests of justice.

[38] The Rules of Professional Conduct, rule 5.1-1, requires a lawyer to represent his or her clients resolutely and honourably. A lawyer has a duty in adversarial proceedings to raise fearlessly every issue, advance every argument, and ask every question however distasteful that the lawyer thinks will help the client’s case and obtain a remedy by law. However, reasonable limits are placed on a lawyer’s legal and ethical obligations to act as a zealous advocate for his or her clients. These limits were described by Alice Wooley in “Rhetoric and Realities: What Independence of the Bar Requires of Lawyer Regulation” (2012) 45 UBC L. Rev. 145, at pp. 158-159, as follows:

This justification for the lawyer as a zealous advocate itself dictates the limits on that advocacy. The lawyer’s role is not to obtain for the client whatever the client wants. The lawyer is not a gunman for hire. Rather, the lawyer helps the client pursue her conception of the good within the bounds of the law. The lawyer must be able to engage in good-faith interpretation of the law, to determine the difference between what the law provides and what the law can simply be made to give. [Footnote omitted.] The lawyer cannot be a morally blinkered technocrat, ignoring the meaning of the law, interpreted reasonably and in good faith. A lawyer may not engage in quasi-legal subterfuge. While the law can be subject to varying interpretations and does not always dictate a single response or answer, it also has a core meaning— interpretations that it does not permit and that cannot be reasonably sustained. As suggested by Marty Lederman in discussing HLA Hart’s example of the meaning of a statute forbidding vehicles in the park, we may not know prior to adjudication of the matter whether vehicles include a stroller or an ambulance, but we certainly know that the statute prohibits driving a souped-up Corvette through the park. [Footnote omitted]. Lawyers have an obligation to restrict their advocacy for clients to these legal boundaries.

[39] The specific examples offered by the moving parties as to how costs were incurred unnecessarily must be seen within the context of the action as a whole. As noted, the action was dismissed as an abuse of process, as it was a collateral attack on findings and rulings made in a previous proceeding. The claim was a transparent attempt to re-litigate issues that had already been decided. These processes are not in the interests of justice. They unnecessarily tax the resources of an already strained judicial system. They also tax the resources of the defendants, who have already been oppressed by significant unpaid cost orders from the previous proceedings. Both of these facts should have been known to Mr. Slansky, and should have guided his judgment in accepting this retainer to commence and conduct such an unmeritorious action. Further, for the reasons given, the arguments advanced by Mr. Slansky to justify commencing a second proceeding did not have a scintilla of merit. It is Mr. Slansky, who has legal training and expertise, upon whom responsibility for that act must lie. While Mr. Best may have given instructions to proceed, it would be within the purview of Mr. Slansky to guide him as to what causes of action could be supported on the facts presented to him; his judgment was misguided, at the expense of the moving parties. It is also noted that the claim was 90 pages and 234 paragraphs in length, and made scandalous and unsupported allegations of dishonesty, conspiracy, misleading of the court, and fraud against lawyers and law firms in the face of the court’s findings to the contrary. It also sought to extend those allegations by way of conspiracy theory to impugn the professional reputations of police officers, a private investigator and various police services, along with the Caribbean defendants. The responsibility for drafting such a claim rests ultimately with Mr. Slansky. The choice to repeat such allegations in affidavits and facta drafted by him, and to repeat those allegations on the record during submissions, was the exercise of Mr. Slansky’s professional judgment.

[40] Mr. Slansky had the benefit of all of the court’s rulings in the Nelson Barbados Action, and was counsel of record during the later stages of that proceeding. The court’s assessment of Mr. Best’s credibility, and of the merits of that action, was made abundantly clear by the various endorsements and reasons issued during that proceeding. And in particular, it is clear that the allegations made against counsel in the Nelson Barbados Action attracted the censure of the court. And yet Mr. Slansky chose to act as counsel for an action in which similar allegations were repeated.

[41] The entire action incurred and wasted costs unnecessarily. Mr. Slansky was instrumental in both starting and advancing the action in the manner that he did. The specific acts undertaken by Mr. Slansky that wasted costs and/or caused them to be incurred unnecessarily were: drafting a claim that was an abuse of process because it was a collateral attack on prior rulings and which sought to re-litigate the same issues, having it issued and served; basing his legal rationale for commencing the action on a theory of joint liability that had no chance of success, and on causes of action that were not properly pleaded and were lacking any factual basis; advancing serious and scandalous allegations in the claim, factum and oral submissions of fraud, dishonesty, criminal conduct, false representations and other improper conduct against various professional individuals; and acting on unreasonable instructions from his client, or providing unreasonable advice to his client, regarding the scheduling of the Caribbean defendants’ jurisdiction motion. All of the foregoing leads to the conclusion that the decisions to advance the claim using the litigation strategy adopted can be attributed in part to Mr. Slansky. Accordingly, he can personally be attributed with wasting costs and causing them to be incurred unnecessarily in the same or a similar manner as the lawyers in Soderstrom, Donmor Industries and Baryluk.

[42] While the moving parties raise other specific acts as the basis for the order sought, such as the steps taken in relation to the noting in default, I have declined to base this decision on those steps because they were the subject of McCarthy J.’s cost order. Having not raised the issue of a rule 57.07 order during that hearing before McCarthy J., despite having referred to it in correspondence, I believe that I am now functus officio with respect to those particular costs. Just as I cannot vary the quantum, I may not now go back to vary that order to make the costs payable jointly and severally, where the issue was not specifically reserved for future determination. However, as earlier stated, the costs incurred and wasted in this proceeding were a product of the Caribbean defendants having to be involved in this claim at all.

[43] Similarly, the moving parties request that I assess costs of the plaintiff’s unsuccessful motion for leave to appeal that cost order. As earlier stated, the order of Eberhard J. is silent with respect to costs. Although I am loathe to put the Caribbean defendants to more costs, the appropriate recourse would be to address the issue of costs of that motion before Eberhard J., as that material was considered by her and different considerations may apply.

[44] Turning to the second part of the test in Galganov v. Russell (Township), 2012 ONCA 410, 350 D.L.R. (4th) 679, I find that this is one of those rare cases in which costs should be imposed in the interests of justice because:

(i) deterrence is required against the commencement of yet a third unmeritorious claim, potentially again bearing Mr. Slansky’s name as counsel of record;

(ii) Mr. Slansky should have known that the proceeding was an abuse of process;

(iii) Mr. Slansky advanced arguments and relied on case law that had no chance of success, despite what he describes as his good-faith belief to the contrary;

(iv) Mr. Slansky drafted and advanced a claim that made spurious and unsupported allegations that maligned the professional reputation of lawyers and others, for which contrary findings had already been made by the court; and

(v) Mr. Slansky may have deferred to his client on a matter of scheduling of a motion without evidence of prejudice to his client, or alternatively, advised his client to take such a position, where that position unnecessarily incurred costs and no evidence exists that he needed to do so to safeguard his client’s rights.

[45] It is part of a lawyer’s special role in this society and our justice system to endeavour to maintain the public’s confidence in and respect for the administration of justice. This mandate is set out in rule 5.6-1 of the Rules of Professional Conduct. It requires that a lawyer “encourage public respect for and try to improve the administration of justice”. The commentary under this rule, at para. 1, cautions lawyers to take care not to weaken or destroy public confidence in legal institutions by making irresponsible allegations. While it is clear from the context that that rule addresses a lawyer’s relationship to the administration of justice and allegations made toward that institution and those positioned within it, the message is nonetheless instructive: lawyers should not advance allegations that impugn the integrity of lawyers, judges, or those who administer our legal institutions, without very solid foundation. And certainly where such allegations are baseless, unsupported by evidence, patently ridiculous and unable to support the causes of action advanced, as was the case here, a lawyer should strive to distance himself from, rather than promote, such allegations.

[46] There has been a great deal of focus in the last decade on proportionality between allocation of resources and the importance of the issues being litigated, including the recommendation and rule changes that arose from the Civil Justice Reform Project initiated in 2006. It is discouraging that these efforts can be taken off the rails by vexatious actions, and lawyers who accept retainers to pursue them. This was not a case in which there were important legal issues at stake for Mr. Best. The following assessment of Mr. Best’s case can be found in an endorsement from MacPherson, J.A., dismissing Mr. Best’s application to stay an order requiring an administrative dismissal of his appeal if costs were not paid:

Although the appellant attempts to dress up his leave application with the language of access to justice, protection of rights in civil contempt and, most vividly, the return of debtors’ prison, the reality is that the subject matter of the proposed appeal is simply the non-payment of costs orders relating to motions and an appeal in meritless proceedings impugning the integrity of counsel. This is not an issue of national importance.

[47] Mr. Slansky represented Mr. Best on that application. Yet, despite the very clear and realistic comments by MacPherson J.A., of the merits of the proceeding, Mr. Slansky was instrumental in commencing this second action, of the same characterization and tenor. A decision by this court to not hold Mr. Slansky responsible for the costs wasted by this litigation would erode the confidence of the Caribbean defendants, lawyers, and the public generally, in the court’s ability to safeguard against actions and processes of the type seen here.

[48] For the foregoing reasons, this court orders that costs of the action in the amount of $84,000 shall be paid jointly and severally by Donald Best and Paul Slansky.

HEALEY J.

Released: October 13, 2015