Court File and Parties

Newmarket Court File No.: FC-04-20255-01 Date: 2016-04-18 Ontario Superior Court of Justice – Family Court

Between: Peter Brian Cozzi, Applicant – and – Miranda Leigh Smith, Respondent

Counsel: S. Benmor, for the Applicant J. Herbert, for Chappell Partners LLP

Heard: December 16, 2015

Costs Endorsement

McGee J.:

[1] Chappell Partners LLP seeks full recovery costs of $5,518.50 [1] against the applicant, Mr. Cozzi. CP was the successful party on a motion heard December 16, 2015 for which reasons were released February 23, 2016. CP is presumptively entitled to costs. The respondent mother did not participate in the motion.

[2] The amount of costs sought is reasonable, and well within the range commonly sought by a successful party represented by experienced counsel on a one hour motion of this complexity and importance. [2] There is no charge within the Bill of Costs for travel time, the Book of Authorities, or law clerk fees. [3] Mr. Herbert’s hourly rate is consistent with that of other counsel at his level of experience.

[3] Mr. Cozzi’s counsel asserts that Mr. Herbert’s hourly rate ought to be assessed as if he were a self-represented litigant, not as counsel for CP. I reject this assertion. The applicant did not bring this motion against Mr. Herbert in his personal capacity. Mr. Cozzi served a motion on CP per Rule 14 (3) of the Family Law Rules seeking an order to remove or extinguish a collateral mortgage secured by CP as security for fees during an active retainer. CP answered through counsel - the counsel who had carriage of the file.

[4] The full recovery of fees sought by the respondent CP is not fashioned on Rule 18 (14) of the Family Law Rules [4] or a finding of bad faith. Rather, CP asks for a full recovery on two grounds:

(a) the applicant acted unreasonably in bringing a motion in this action for relief plead in court file #CV-14-119955-00; and (b) the applicant made unproven allegations of fraud and dishonesty.

[5] Mr. Cozzi states that the latter is unwarranted. He states that there were no male fides, no allegations of fraud against Mr. Herbert and no unreasonable conduct. He argues that the following reasoning in Toth v Toth, 2015 CarswellOnt 6306 is not applicable.

An unsuccessful attempt to prove allegations of fraud and dishonesty invites scrutiny. When such rises to the level, as here, of being “reprehensible, scandalous or outrageous conduct” by or on behalf of Mr. Toth, the invitation also rises to consider full indemnity costs. See Young v. Young, , [1993] 4 S.C.R. 3 (S.C.C.) at p. 134; and Hamilton v Open Window Bakery Ltd. (2003), 2004 SCC 9, [2004] 1 S.C.R. 303 (S.C.C.), at para 26.

[6] Mr. Cozzi’s costs submissions belie both his counsel’s oral submissions on the motion and the content of his factum drawn from affidavit materials. For example, at paragraph 24 of the factum filed in support of the motion, he proposes that certain tenets of the collateral mortgage between CP and Ms. Smith (Mr. Cozzi’s former spouse), are two of eight “badges of fraud.” He makes these statements within a motion that cannot result in a finding of fraud.

[7] Mr. Cozzi asserts that the collateral mortgage – an instrument commonly used by counsels to secure legal fees – placed Mr. Herbert in a conflict of interest, that it was improper for CP to so act and that they did so knowingly. Even if the conflict of interest assertion was accurate, such an allegation belongs to Ms. Smith; not her former spouse, Mr. Cozzi. It does not lie with Mr. Cozzi to step into his former spouse’s shoes and usurp a claim that she does not make. Ms. Smith has neither challenged, nor taken any issue with the collateral mortgage. She has no objection to her account with CP.

[8] Mr. Cozzi further asserts that CP acted improperly by registering a collateral mortgage for which their client had no independent legal advice. Under the subheading of “No Independent Legal Advice” the factum states at paragraph 32 that Ms. Smith did not receive independent legal advice on the collateral mortgage. At paragraph 33 it states that the purpose of independent legal advice is to “assure that the client understands and appreciates the consequences of proceeding with a certain act or transaction where the lawyer is, or may be, in a conflict of interest.” The section concludes at paragraph 34: “It appears that [Mr.] Herbert and [Mr.] Flynn [5] did not ensure that Smith received[d] independent legal advice on her mortgage to [Mr.] Herbert.”

[9] The statements at paragraphs 32 and 34 were known to be false at the time the factum was served on counsel and filed with the court. [6] This is no small thing.

[10] The false statement was only corrected by Mr. Benmor after it was challenged by Mr. Herbert during oral submissions. Mr. Benmor confirmed that the statements had been known to be false at the time the factum was filed, apologized, and dismissed it as an oversight.

[11] Rule 24 (11) of the Family Law Rules sets out the factors to be considered in setting the amount of a costs award. Rule 24 (11) (b) requires a consideration of the reasonableness, or unreasonableness of a party’s behaviour. I find that it was unreasonable behaviour to seek orders that would effectively grant summary judgment of the applicant’s Statement of Claim [7], within this Rule 15 Motion to Change.

[12] In my view, Rule 24 (11) (b) also serves as a statutory doorway to the common law principle that unproven allegations of fraud and dishonesty ought to attract a greater recovery of costs. [8]

[13] I find that the applicable reasoning in Toth, supra is germane to this assessment of costs. Unnecessary, unfounded and potentially damaging allegations were made against CP. None were demonstrated. CP did nothing more nefarious than to earnestly and prudently provide legal services to Mr. Cozzi’s – a lawyer himself – former spouse. Costs are awarded against the applicant in the full recovery amount of $5,518.50, payable forthwith.

Justice H. McGee Date: April 18, 2016

Footnotes

[1] Fees of $4,840, disbursements of $43.63 and HST thereon.

[2] Applicant’s counsel objects to two hours being listed for the December 16 attendance, when the motion was argued in one hour. I accept that a court attendance includes an early arrival for check in, court vetting, set up time and any waiting – which in this case well covered a two hour period.

[3] The law clerk being the deponent, but also serving the materials and preparing the court’s confirmation.

[4] Neither party presented Offers to Settle within their respective Costs Submissions.

[5] The Chappell Partners LLP associate who registered the collateral mortgage on title.

[6] As set out in the reasons, Ms. Smith had received independent legal advice from a Newmarket lawyer prior to the collateral mortgage being registered on her home. The parties were not married. Ms. Smith owed no monies to Mr. Cozzi, and wished to secure her legal fees for the anticipated litigation. It was later determined that at the time of registration, Mr. Cozzi owed Ms. Smith ongoing arrears of child support.

[7] As of December 16, 2015 the relief sought within Mr. Cozzi’s 2014 Statement of Claim had not been pursued.

[8] A principle consistent with Rule 24 (8) of the Family Law Rules; which provides for a full recovery of costs if a party has acted in bad faith.