Court File and Parties

Court File No.: CV-17-573493 Date: 2018-02-07 Superior Court of Justice - Ontario

Re: Luigino Arconti, Plaintiff And: Lenka Fousek, Matt Lamb, Paul Fousek Jr., Paul Fousek Sr., Eva Fousek, Defendants

Before: Cavanagh J.

Counsel: Christopher D. Salazar, for the Plaintiff/Moving Party Matthew Giesinger, for the Defendants/Responding Parties

Heard: Submissions in Writing

Costs Endorsement

[1] The defendants and moving parties seek costs of two motions that were heard together on December 11, 2017. On one motion, the defendants moved to strike out the Statement of Claim in this action. The plaintiff opposed this motion, and moved for an order transferring the within action to the Superior Court of Justice, Family Court. The defendants’ motion was granted and the plaintiff’s motion was dismissed.

[2] The defendants seek costs of both motions from the plaintiff on a partial indemnity scale in the amount of $10,283.47. The defendants also seek costs in the amount of $5,141.74 against the plaintiff’s former legal counsel, Howard Manis and MacDonald Sager Manis LLP, jointly and severally with the plaintiff. This amount represents one half of the overall amount requested because the plaintiff’s former legal counsel were not involved in the plaintiff’s motion to transfer this action to the Family Court.

[3] I first address the claim for costs against the plaintiff. The defendants submit that the matter is an important one for the defendants because of the nature of the allegations. They submit that the costs sought are reasonable for the complexity and importance of the motion. Most of the time was spent by counsel (a 2012 call) and the partial indemnity rate claimed is $217. Some time was spent by a senior law clerk.

[4] The plaintiff submits that the amount claimed for costs is excessive and unreasonable, and that the defendant’s costs outline lacks sufficient detail to assess the reasonableness of the costs incurred. The plaintiff submits that the defendant should be denied costs on this basis.

[5] The fixing of costs is not a mechanical exercise and, in addition to the factors in rule 57.01 of the Rules of Civil Procedure, the court must consider the amount that would be fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant: Boucher v. Public Accountants Council (Ontario), 2004 CanLII 14579 (ON CA), 2004 CarswellOnt 2521 (C.A.) at para. 26.

[6] The defendants were required to bring their motion and to respond to the plaintiff’s motion, and they were successful on each motion. I do not agree that the defendants should be denied costs of these motions. I am able to do substantive and procedural justice by fixing costs based on the materials provided. I do not consider the time claimed or the partial indemnity rate used to be unreasonable for this case. Having regard to the factors in rule 57.01 and the guidance provided by the Boucher decision of the Court of Appeal, I fix costs payable by the plaintiff to the defendants in the amount of $8,389.20 for fees, $803.67 for disbursements, plus applicable HST.

[7] I now address the claim for costs against the plaintiff’s former legal counsel.

[8] Rule 57.07 (1)(c) of the Rules of Civil Procedure provides that “[w]here a lawyer for a party has caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default, the court may make an order ... requiring the lawyer personally to pay the costs of any party”.

[9] In Galganov v. Russell (Township), 2012 ONCA 410, the Court of Appeal cited the following passage from the decision of the Supreme Court of Canada in Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3 (S.C.C.) at pp. 135-136 which sets out the governing principles in awarding costs personally against a lawyer:

The basic principle on which costs are awarded is as compensation for the successful party, not in order to punish a barrister. Any member of the legal profession might be subject to a compensatory order for costs if it is shown that repetitive and irrelevant material, and excessive motions and applications, characterized the proceedings in which they were involved, and that the lawyer acted in bad faith in encouraging this abuse and delay. It is clear that the courts possess jurisdiction to make such an award, often under statute and, in any event, as part of their inherent jurisdiction to control abuse of process and contempt of court ... [C]ourts must be extremely cautious in awarding costs personally against a lawyer, given the duties upon a lawyer to guard confidentiality of instructions and to bring forward with courage even unpopular causes. A lawyer should not be placed in a situation where his or her fear of an adverse order of costs may conflict with these fundamental duties of his or her calling. [Emphasis in original]

[10] There is a two part test to determine the liability of a lawyer for costs under rule 57.07(1). The first step is to inquire whether the lawyer’s conduct falls within rule 57.07(1) in the sense that the lawyer caused costs to be incurred unnecessarily. The second step is to consider, as a matter of discretion, and applying the extreme caution principle enunciated in Young, whether, in the circumstances, the imposition of costs against the lawyer personally is warranted: Galganov at paras. 17-22.

[11] With respect to the first step, the defendants submit that the plaintiff’s action is an abuse of process and a vexatious claim. They submit that the action is not in the interest of justice in that, among other reasons, it taxed the resources of an already strained judicial system and that the plaintiff’s former legal counsel knew or ought to have known this, and this knowledge should have guided their judgment in accepting a retainer.

[12] The defendants submit that the plaintiff’s former legal counsel:

a. Accepted a retainer to pursue an unmeritorious action;

b. Acted on unreasonable instructions from their client or provided unreasonable advice to their client to commence proceedings;

c. Drafted a claim that was an abuse of process and used the courts as a mechanism for a vindictive action against the plaintiff’s estranged wife and family members;

d. Facilitated the advancement of the action by having the statement of claim issued and served;

e. Commenced the action in Toronto in the Civil Court despite the subject matter being clearly within the jurisdiction of the Family Court;

f. Prepared pleadings which are deficient and which offend the Rules of Civil Procedure;

g. Advanced serious and scandalous allegations of fraud and conspiracy against the defendants that were not properly pleaded and lacked any factual basis or particulars which could justify the allegation; and

h. Prepared a Response to Demand for Particulars which unreasonably contained less particulars than the Statement of Claim, only serving to further frustrate the proceeding and result in more confusion.

The plaintiff submits that, based on these submissions, the first part of the test is met.

[13] The plaintiff’s former legal counsel submits:

a. They did not cause costs to be incurred without reasonable cause or wasted by undue delay, negligence, or other default. They state that counsel with carriage of the case tried repeatedly to discuss matters pertaining to the procedural issues in relation to the litigation with counsel for the defendants, who refused to engage in such discussions.

b. There was no finding that the plaintiff’s claim was vexatious or an abuse of process, nor was it found to have been motivated by malice. The statement of claim was struck out because the court decided that it was properly within the jurisdiction of the Family Court.

c. The former lead counsel for the plaintiff did not file repetitive or irrelevant material nor did he bring excessive motions. He did not act in bad faith, nor did he encourage any abuse or delay.

[14] The defendants, in reply, challenge the submission made by the plaintiff’s former counsel that the conduct of counsel for the defendants in refusing to engage in negotiations involving a transfer of the Civil Court action to the Family Court has any bearing on whether costs should be awarded against the plaintiff’s former counsel.

[15] There was no finding made in my decision that the plaintiff’s claim was vexatious or brought maliciously or in bad faith. The decision on the motion was that the plaintiff’s claims must be brought in Family Court. However, the fact that the plaintiff was unsuccessful on the motion on the ground that the action was brought in the wrong court does not lead to the conclusion that the plaintiff’s former lawyers acted in such a way as to attract personal liability for costs. I am not satisfied that the defendants have shown that the plaintiff’s former lawyers caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default.

[16] The jurisprudence is clear that an award of costs against the lawyer for a party must be made sparingly and only in clear cases. This is not such a case.

[17] I find that the conduct of the plaintiff’s former legal counsel does not fall within rule 57.07(1). It is not necessary for me to consider matters that are relevant at the second step of the inquiry.

[18] The plaintiff’s former legal counsel submits that they had to incur significant expenses in responding to the defendants’ claim for costs against them personally. They seek costs on a partial indemnity scale against the defendants in the amount of $8,133.28.

[19] The defendants oppose an order for costs in favour of the plaintiff’s former legal counsel. The plaintiff submits that no authority was cited to support such an order as to costs and that it would be inequitable for costs to be awarded to the plaintiff’s former legal counsel in the circumstances.

[20] The plaintiff’s former lawyers prepared two affidavits as well as a factum and brief of authorities in opposition to the defendants’ claim against them for costs. As well, a representative of the law firm attended at court when the motions were heard to be able to make submissions as to costs, if necessary.

[21] I have reviewed the Bill of Costs submitted by the plaintiff’s former legal counsel. The descriptions of the services for which costs are requested relate to legal services performed for the defendants and include references to instructions from their client and communications with their client. I do not rely on this Bill of Costs in fixing costs.

[22] The plaintiff’s former lawyers were required to respond to the defendants’ claim against them for costs. They were successful. Under s. 131 of the Courts of Justice Act, the costs of a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs should be paid.

[23] Having regard to these considerations, I fix costs to be paid by the defendants to the plaintiff’s former lawyers, Howard Manis and MacDonald Sager Manis LLP, in the amount of $1,500 inclusive of disbursements and HST.

Cavanagh J.

Date: February 7, 2018