Hazell v. Motors Insurance Corporation, 2016 ONSC 804
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROBERT HAZELL Plaintiff
– and –
MOTORS INSURANCE CORPORATION Defendant
COUNSEL:
Stanley Razenberg, for Sokoloff Lawyers (former solicitors for the Plaintiff)
No one appearing for the Plaintiff
Mercedes Marin, for the Defendant
HEARD: January 29, 2016
ENDORSEMENT
1On November 3, 2015, the learned Master released an endorsement ordering Sokoloff Lawyers (“Sokoloff”, the former solicitors for the plaintiff) to personally pay the defendant’s (a) costs thrown away of an aborted examination for discovery (totaling $575.00) and (b) costs of the motion before him (totaling $1,000.00).
2Sokoloff now brings a motion seeking leave to appeal the Master’s decision pursuant to Section 133(b) of the Courts of Justice Act R.S.O. 1990 c. C.43.
3The facts before the Master were not in dispute. In December 2014, the parties agreed to conduct mutual examinations for discovery to take place on May 14, 2015. In accordance with the agreement reached between counsel for the parties, a law clerk employed by Sokoloff undertook to schedule the joint examinations for discovery with the official examiner’s office in Guelph, Ontario.
4Through inadvertence, the law clerk forgot or omitted to schedule those discoveries.
5Approximately three weeks before the scheduled (but not booked) discoveries, Sokoloff obtained an order removing itself as solicitors of record for the plaintiff. Counsel for the defendant intended to proceed with the examinations for discovery even if the plaintiff was now self-represented. Sokoloff was advised of that intention.
6On May 14, 2015, both the now unrepresented plaintiff and counsel for the defendant attended the official examiner’s office in Guelph, Ontario. Unfortunately, the examinations were not booked and the parties could not proceed. The official examiner’s office was in fact closed that day.
7While there was no cancellation fee, counsel for the defendant insisted that his time driving to and from Guelph be paid by Sokoloff personally, and brought a motion before the Master to that effect.
8As stated above, the defendant’s motion was successful. The Master ordered Sokoloff to pay the defendant its costs thrown away in the amount of $575.00 and its costs of the motion in the amount of $1,000.00, all payable forthwith.
9As the Master’s decision related to costs alone, leave to appeal to the Ontario Superior Court of Justice is required. As summarized by the Court of Appeal for Ontario in McNaughton Automotive Ltd. v. Co-Operators General Insurance Co. (2008) 2008 ONCA 597, 95 O.R. (3d) 365 (C.A.), leave to appeal a costs order is to be granted sparingly and only in obvious cases where there are strong grounds upon which an appellate court could find that the Master erred in exercising his/her discretion.
10Where a party seeks costs against a solicitor personally, the provisions of Rule 57.07(1) are invoked. The court may make an order requiring a lawyer to personally pay the costs of any party where the lawyer has “caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default”.
11The exercise of discretion under Rule 57.07(1) is governed by the principles set out by the Court of Appeal for Ontario in Galganov v. Russell (Township) 2012 ONCA 410, [2012] O.J. No. 2679 (C.A.). In Galganov, the Court confirmed a two part test with respect to the liability of a lawyer for costs under Rule 57.07(1). The first step requires an inquiry into whether a lawyer’s conduct falls within the provision of Rule 57.07(1) in the sense that it caused the costs to be incurred unnecessarily. Bad faith is not a pre-condition for imposing the costs consequences of Rule 57.07(1). The Court of Appeal further confirmed that “it is only when a lawyer pursues a goal which is clearly unattainable, or is clearly derelict in his/her duties as an officer of the court, that resort should be had to Rule 57.07(1)”.
12The second step requires the Court to consider, as a matter of discretion and applying the “extreme caution” principle enunciated by the Supreme Court of Canada Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3 (S.C.C.), whether, in the circumstances, the imposition of costs against a lawyer personally is warranted. In applying the “extreme caution” principle, the Court must be wary that costs awards against lawyers personally “must only be made sparingly, with care and discretion, in clear cases, and not simply because the conduct of a lawyer may appear to fall within the circumstances described in Rule 57.07(1)”.
13Sokoloff does not take issue with the Master’s conclusions under the first step of the Galganov test. Indeed, I agree with the Master that the (albeit inadvertent) failure to book the examinations is a basis for an award of costs against Sokoloff under Rule 57.07(1).
14Sokoloff submits that the Master failed to (a) consider and apply the second step of the Galganov test, and (b) even if the application of the second step can be inferred in the Master’s exercise of discretion, no reasons were provided explaining why he departed from the obligation to apply the “extreme caution” principle and only render a costs award against a lawyer sparingly and with care and discretion.
15After concluding his analysis of the first step of the Galganov test, the Master held as follows:
“The question then arises as to whether the circumstances warrant an order of costs against the lawyers. The defendant clearly sustained a loss arising from its lawyers’ wasted preparation time and travel time and expenses. The plaintiff’s former lawyers suggest that these could be costs in the action but the plaintiff should not have to pay the costs of an aborted examination at which he attended and which could not proceed owing to his former lawyers’ error. Similarly, the loss should not fall on the defendant’s lawyers who should reasonably have been able to expect that the plaintiff’s firm had booked the examiner’s office as promised. Accordingly, the plaintiff’s former lawyers shall pay the costs fixed at $500.00 for travel time and preparation and $75.00 for travel expenses.”
16It is important to consider other cases where the Court has been requested to exercise its discretion under Rule 57.07(1) and order costs against a lawyer personally. In Bégin v. Cameron (2014), O.J. No. 4794 (Master), Master Glustein (as he then was) found that the moving party did not satisfy the first step of the two part test. However, Master Glustein went on to state as follows:
“Even if Brett omitted to forward the notice of examination (assuming the first part of the Galganov test was met which it was not), such an omission cannot justify an order of personal costs. The court does not demand a standard of perfection from counsel in order to avoid personal costs. Brett explained to Sutherland his production obligations, and a failure to forward a notice of examination is not conduct which is ‘clearly derelict in his or her duties as an officer of the court’ to warrant personal costs.”
17In Gnys (c.o.b. Health Services Recovery Network) v. Narbutt, [2015] O.J. No. 5024 (S.C.J.) Justice Nightingale was asked to award costs personally against a lawyer whose conduct unnecessarily lengthened the duration of the proceeding and caused significant and unnecessary delays. Further, the lawyer arguably made false or misleading statements during her submissions to the Court. In rejecting the request to award costs personally against the lawyer, Justice Nightingale stated:
“However, bearing in mind the ‘extreme caution’ principle of Young v. Young as noted in Galganov and after much considered deliberation, I cannot say for the certainty required in the case law that the misleading and false statements made by Ms. Hoy in her costs submissions were deliberately and knowingly made so as to render her personally responsible for those costs either under Rule 57.01(1) or under the Court’s inherent power to do so to control its officers of the court. It goes without saying that the Court expects this type of conduct will not happen again in the future.”
18In my view, while leave to appeal a cost award is to be grant sparingly, a personal costs award against a lawyer is arguably to be granted even more sparingly in light of the limited discretion to be exercised under the Galganov test. To my reading, the Master did not consider the second step of the Galganov test, but rather reiterated his conclusions under the first step, namely that Sokoloff’s conduct fell within the circumstances prescribed in Rule 57.01(1).
19I am reminded of the words of Justice Quinn in Tayfour v. Deeb [1999] O.J. No. 3861 (S.C.J.) when he stated as follows (emphasis in bold):
“In my opinion, the defendant should be granted leave to appeal. The reasons for dismissing the motion for summary judgment by themselves would support an order for solicitor and client costs. The onus then moves to the plaintiffs to demonstrate that the making of the motion for summary judgment was reasonable. The motions judge had a discretion on this issue but not an unfettered discretion. The reasons given by the motions judge for exercising her discretion in favour of party and party costs (i.e. ‘the issues raised by the parties’ and ‘the court should await the outcome of the trial’) did not, in my opinion, respond to Rule 20.06. The reasons should have addressed why the motions judge thought that the making of the motion, although successful, was reasonable. Litigants are entitled to know on what basis a discretionary ruling was made.”
20The Master’s analysis of which party ought to bear responsibility for the costs thrown away, while understandable, did not address or explain why he chose not to apply the “extreme caution” principle as required by the Galganov test. An innocent error made by a law clerk, on its face, and in light of decisions such as Bégin and Gnys, ought not to attract a costs award against a lawyer personally in the absence of reasons addressing why such an award was necessary in light of the second step of the Galganov test and governing jurisprudence.
21For these reasons, leave to appeal the Master’s decision is granted. While Sokoloff may move to schedule its appeal of the Master’s decision in the Ontario Superior Court of Justice, given the amount at stake I would urge the parties to use their efforts towards a hopeful resolution of this issue.
22Costs of this motion are reserved to the Judge hearing the appeal of the Master’s decision.
Diamond J.
Released: February 2, 2016
CITATION: Hazell v. Motors Insurance Corporation, 2016 ONSC 804
COURT FILE NO.: CV-14-00499270-00
DATE: 20160202
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROBERT HAZELL Plaintiff
– and –
MOTORS INSURANCE CORPORATION Defendant
ENDORSEMENT
Diamond J.
Released: February 2, 2016