OSHAWA

COURT FILE NO.: CV-76324-11

DATE: 20151218

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

TODD FAMILY HOLDINGS INC. and FUTURE IMAGE HOLDINGS CORPORATION

Plaintiffs

– and –

ROY JOHN WILLIAM GARDINER, BAREFOOT SCIENCE TECHNOLOGIES INC., DAYL MARIE ARMSTRONG, BAREFOOT SCIENCE HOLDINGS INC., BAREFOOT SCIENCE DIRECT INC., BAREFOOT SCIENCE GROUP MARKETING INC. and ADVANCED BAREFOOT TECHNOLOGIES INC.

Defendants

– and –

ROY JOHN WILLIAM GARDINER

Third Party Plaintiffs

– and –

LANCE TODD, BAREFOOT SCIENCE PRODUCTS & SERVICES INC., and 2215535 ONTARIO INC.

Third Party Defendants

Jaan E. Lilles for the Respondents Roy John William Gardiner, Barefoot Science Technologies Inc., Dayl Marie Armstrong, Barefoot Science Holdings Inc., Barefoot Science Direct Inc., Barefoot Science Group Marketing Inc., Advanced Barefoot Technologies Inc. and 2215535 Ontario Inc.

Robert S. Choi for the Moving Party, Robins, Appleby

Heard: December 4, 2015

McISAAC J.

RULING ON COSTS (MOTION BY LAW FIRM TO RETIRE)

INTRODUCTION

[1] There are two issues that should be addressed herein:

(1) The scale of costs to be awarded, if any; and

(2) If costs are awarded, whether the unsuccessful moving party is entitled to a set-off thereof against its outstanding account for legal services.

BACKGROUND

[2] This litigation involved a lengthy and complex attempt by the Todd parties to recoup a significant financial investment that I found was made as the result of marathon acts of deceit and material non-disclosure by the Gardiner parties resulting in the respondents being destitute. At the half-way point of the trial, the moving party law firm sought leave to retire from its representation of the Todd parties for non-payment of outstanding legal fees. In particular, Robins, Appleby relied on an irrevocable consent to an order permitting withdrawal that had been executed by Lance Todd on behalf of the Todd parties after he had received independent legal advice. I dismissed this request for reasons articulated at 2015 ONSC 6590. In a nutshell, I found that this private arrangement was “trumped” by the law firm’s professional obligations to its clients and the need to avoid bringing the administration of justice into serious disrepute. Having succeeded on the motion, the Todd parties now seeks their costs.

POSITIONS OF THE PARTIES

[3] The Todd parties seeks costs on the elevated scale of full indemnity in the amount of $38,584.19. Robins, Appleby suggests, firstly, that no costs be awarded and, alternatively, that if costs are to be awarded, they should be on the partial indemnity scale in the amount of $10,000. In addition, Robins, Appleby seeks an order allowing for set-off of any award of costs against their outstanding account of $366,252.13 which has recently discounted from $391,252.13. The Todd parties resist this claim for set-off.

ANALYSIS

1. Scale of costs, if any

[4] Elevated costs, be they either full or substantial indemnity, are only to be awarded in rare and exceptional circumstances where there is a need to sanction conduct on the part of one of the parties that has been found to be “reprehensive, scandalous or outrageous”: see Young v. Young 1993 34 (SCC), [1993] 4 SCR 3 at p. 134. The Todd parties suggest that the conduct of Robins, Appleby herein meets that threshold suggesting, among other things, that there was a finding by me of bad faith in its attempt to retire from this litigation. I agree with Mr. Choi that my reasons are devoid of such a finding that, no doubt, would have warranted an award at one of the elevated levels. Although I did find that the motion was improper and unprofessional as well as one which would result in significant prejudice to the Todd parties and to the administration of justice thereby creating a manifest injustice, I never went so far as to describe it in the egregious terms that might deserve an award on the elevated scale. I found, at worst, the conduct of Robins, Appleby to be misdirected and ill-advised. On the other hand, I was extremely impressed by the professional conduct of Mr. Choi following my unfavourable ruling forcing him to continue this representation under duress. He pursued his clients’ interests vigorously, thoroughly and achieved a stellar result. Given all of these circumstances, I am not persuaded that this is one of those rare and exceptional cases that cry out for an elevated award of costs.

[5] At the other end of the scale, Robins, Appleby suggests that there should be no costs awarded. This position is mainly premised on the submission that it was unfair for me to characterize the attempt to retire on the part of the law firm mid-trial as unprofessional. I do not propose to re-visit that issue given my lengthy reasons supporting the disposition I made.

[6] Given all of the factors listed in r. 57.01(1), in particular the importance of this determination to the Todd parties, I find that they are entitled to their costs on the partial indemnity scale which I fix in the amount of $25,000, inclusive of HST and disbursements.

2. Set-off

[7] Assuming without deciding that legal or statutory set-off is not available to Robins, Appleby in light of the above award, I am satisfied that this is a case where equity cries out for such an order: see Holt v. Telford 1987 18 (SCC), [1987] 2 SCR 193. Given the inter-relationships between the law firm’s discounted account and the award of costs herein, I am satisfied that it would be manifestly unjust to insulate the latter from the influence of the former. Although it could be argued that Robins, Appleby may have been disentitled to this equitable relief at one time in the past on the “clean hands” theory, I am satisfied that, given the stellar performance of Mr. Choi following my unfavourable ruling requiring his firm to remain in this litigation, his firm has been totally redeemed from such taint and has regained their entitlement to rely on this form of relief.

[8] In the result, Robins, Appleby is entitled to deduct the amount of this award from their outstanding account for legal services.

McISAAC, J.

Released: December 18, 2015