COURT FILE NO.: CV-15-519879-0000
DATE: 2019/08/07
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Christina atkinson
Applicant
- and -
WHALEY ESTATE LITIGATION
Respondent
Joseph Kary for the Plaintiffs
Matthew Rendely for the Defendant
HEARD: In writing
PERELL, J.
REASONS FOR DECISION - COSTS
A. Introduction
[1] This is a costs decision after a reconsideration of a Rule 49 application, which was brought by Christina Atkinson.
[2] In her application, Ms. Atkinson sought, among other things, a judgment in the terms of the settlement agreement reached between her former lawyers Whaley Estate Litigation. By cross-application, Whaley Estate Litigation sought an Order dismissing the Rule 49 application with substantial indemnity costs. On April 16, 2019, I dismissed Ms. Atkinson’s Rule 49 application without costs, and I dismissed Whaley Estate Litigation’s cross-motion also without costs.[^1] The factual background to the Rule 49 application is set out at some length in my reasons for decision.
[3] The day after I released my decision, Ms. Atkinson’s counsel wrote me to say that I had denied her justice because I had decided the case on a point not argued by the parties. At my suggestion, Ms. Atkinson brought a motion for reconsideration of the Rule 49 application. Having reconsidered the matter, I again dismissed Ms. Atkinson’s Rule 49 motion.[^2]
[4] Whaley Estate Litigation now seeks full indemnity costs of $12,385.03, all inclusive, or, in the alternative, it seeks costs on a substantial indemnity basis of $8,783.15, all inclusive. It also seeks $4,000 in costs for preparing the costs submissions because Ms. Atkinson allegedly did not respond to Whaley Estate Litigation’s attempts to settle the matter of costs.
[5] For the reasons that follow, I award Whaley Estate Litigation $750, all inclusive, for the reconsideration motion.
B. Discussion and Analysis
[6] I begin the explanation of my award by mentioning again that I dismissed the original Rule 49 application and the cross-application without costs. In now seeking costs for the reconsideration motion on a full indemnity basis or on a substantial indemnity basis, Whaley Estate Litigation relies on the long and sorry history of the fee dispute between the parties.
[7] But this approach ignores the circumstance that I am only deciding the costs associated with the reconsideration of the Rule 49 application. It cannot be said that that the rehearing of the Rule 49 application was frivolous and vexatious, nor that the conduct of either party with respect to that reconsideration would justify a punitive costs award. I am not now going to revisit the costs award I made on the original application.
[8] Whaley Estate Litigation was successful on the rehearing and - subject to proof - it would be entitled to costs on a partial indemnity basis for the rehearing.
[9] The rehearing motion was argued by Matthew Rendely, who was called to the bar in 2015. He is an associate lawyer of Whaley Estate Litigation. He spent 22.5 hours in preparation and 3.0 hours in attendance for the motion. That Ms. Atkinson’s lawyer did not respond to “an attempt” to settle the matter of costs is not a basis to award $4,000 costs for the preparation of costs submissions. On a partial indemnity basis, Whaley Estate Litigation’s claim for costs is $6,621.98 all-inclusive.
[10] Ms. Atkinson submits, however, that the information provided about the hours and fees for the rehearing motion are inadequate and that there is no evidence of lost opportunity costs, and, therefore, I should make no order as to costs for the reconsideration of the Rule 49 application.
[11] Relying on Benarroch v. Fred Tayar & Associates P.C.,[^3] Charendoff v. McLennan,[^4] Mustang Investigations v. Ironside,[^5] and Fong v. Chan,[^6] Ms. Atkinson submits that although self-represented lawyers are entitled to costs including a counsel fee, they are not entitled to costs assessed in the same way as litigants who retain independent counsel. She submits that in the immediate case, Whaley Estate Litigation did not prove that it had an opportunity cost loss, and therefore, it is not entitled to any costs.
[12] A self-represented law firm does not recover costs for the time and effort that any litigant would devote to his or her case. Costs are only awarded if the law firm demonstrates that: (a) it did the work ordinarily done by an independent lawyer; and (b) it incurred an opportunity loss by forgoing remunerative activity. Thus, in order to recover costs, the self-represented litigant is required to prove lost opportunities for remuneration and that he or she devoted time and effort to do the work ordinarily done by a lawyer retained to conduct the litigation.[^7] If an opportunity cost is proved, the self-represented litigant should receive a moderate or reasonable allowance for the lost of time devoted to preparing and presenting the case.[^8]
[13] In the immediate case, it is obvious that the law firm did the work ordinarily done by an independent lawyer and Ms. Whaley did not suggest otherwise. What she did submit is that there was no evidence that the firm had forgone remunerative activity, which is to say that it turned away work in order to work on the rehearing of the Rule 49 application.
[14] A similar argument was made in Benarroch v. Fred Tayar & Associates P.C., supra. In that case, quite similar to the case at bar, the clients brought an application against their former lawyers for an assessment of accounts to recover fees that they had already paid. The clients’ application for an assessment was dismissed, and the law firm sought costs. In their written costs submissions, much like the written submissions made in the case at bar, the clients argued that absent evidence of lost opportunity costs due to the time they spent responding to the application, the law firm could not recover any amount as costs.
[15] In the Benarroch case, in response to the written submissions, the application judge allowed the law firm to file reply submissions including an affidavit where two lawyers deposed that they had to turn away remunerative work because of the time they spent on their defence to the application. The clients filed a sur-reply arguing that the law firm had not demonstrated that the work required to respond to the application could not have been carried out during evenings and weekends and therefore there was no lost opportunity. The applications judge decided that there was sufficient evidence of a lost opportunity and awarded costs of $60,583 on a partial indemnity basis. The client appealed, and the Court of Appeal granted the appeal and replaced the costs award with an award of $20,000, all-inclusive.
[16] The Court of Appeal held that the application judge had erred by treating the law firm as counsel as opposed to making an award based on lost opportunity costs. The Court of Appeal, however, held that the application judge did not err in accepting that there were lost opportunity costs associated with the respondents' self-represented defence of the appellants' application based on their reply evidence. On the issue of evidence of lost opportunity costs, speaking for the Court, Justice Rouleau stated at paragraphs 16-18 of his judgment:
The appellants maintain that the application judge should not have allowed the respondents to file reply affidavits in which they claimed to have suffered lost opportunity costs. Further, as in their sur-reply, they submit that even if received in evidence, the affidavits did not establish lost opportunity costs. According to the appellants, the respondents could have done much of the work to respond to the application during the evenings or weekends. Had they done so, they would not have had to turn away clients, as the billable time available during business hours would not have been reduced.
I would dismiss this ground of appeal. It was open to the application judge to accept the reply evidence tendered by the respondents. The appellants suffered no prejudice, as they were given the opportunity to cross-examine on the affidavits and to make submissions in response.
I also see no basis to interfere with the application judge's finding that the respondents had suffered lost opportunity costs. Fong and later cases, such as Mustang Investigations v. Ironside, 2010 ONSC 3444, 103 O.R. (3d) 633 (Div. Ct.), stipulate that self-represented litigants must show that they incurred an opportunity cost by forgoing remunerative activity. In doing so, they do not suggest that claims for lost opportunity costs should become complex hearings where the self-represented claimant is called upon to account for every minute of the day and prove every penny of revenue that was lost. On the record before him, it was open to the application judge to find that the respondents had in fact turned away business and suffered a loss of revenue as a result.
[17] Returning to the immediate case, there was no evidence that Whaley Estate Litigation incurred an opportunity cost by forgoing remunerative activity, and thus I am, as submitted by Ms. Atkinson, not in a position to assess costs on a partial indemnity basis. Further, I see no purpose in prolonging the agony of this fee dispute by following the course adopted in the Benarroch case of allowing reply and sur-reply submissions and an opportunity for cross-examinations to determine the appropriate partial indemnity award.
[18] That said, I am nevertheless ordering Ms. Atkinson to pay $750 in costs for her failed motion. This order is not meant to indemnify Whaley Estate Litigation, and, therefore, I do not need evidence of lost opportunity costs. An order for costs serves more purposes than that of indemnification and for these other reasons it is appropriate to order her to pay costs.
[19] Modern costs rules are designed to advance five purposes in the administration of justice: (1) to indemnify successful litigants for the costs of litigation, although not necessarily completely;[^9] (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences;[^10] (4) to discourage and sanction inappropriate behaviour by litigants in their conduct of the proceedings;[^11] and (5) to encourage settlements.[^12]
[20] While I did not think that Ms. Atkinson’s behavior throughout this fee dispute and in particular with respect to the rehearing of the Rule 49 application was frivolous or vexatious, she does not have a license to prosecute her action free of the normal consequences of litigation, including the normal rule that an unsuccessful party will pay costs.
[21] Section 131(1) of the Courts of Justice Act,[^13] provides that “[s]ubject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid. I believe that I have the discretion to order costs in all of the circumstances of the immediate case and that it is appropriate that Ms. Atkinson to pay $750 in costs for her failed motion.
[22] In Benarroch v. Fred Tayar & Associates P.C., supra, Justice Rouleau envisioned that costs award could be made to a self-represented law firm even in the absence of lost opportunity costs although the award might be nominal. He stated at paragraph 35 that: “where there is little evidence of lost opportunity costs, any award the court may decide to make will likely be in a nominal amount”. In the circumstances of the immediate case, practically speaking, I am awarding a nominal amount for costs, which I think is appropriate.
[23] Order accordingly.
Perell, J.
Released: August 7, 2019
COURT FILE NO.: CV-15-519879-0000
DATE: 2019/08/07
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
christina atkinson
Applicant
- and -
WHALEY ESTATE LITIGATION
Respondent
REASONS FOR DECISION – COSTS
PERELL J.
Released: August 7, 2019
[^1]: Atkinson v. Whaley Estate Litigation, 2019 ONSC 2383. [^2]: Atkinson v. Whaley Estate Litigation, 2019 ONSC 3708. [^3]: 2019 ONCA 228. [^4]: 2012 ONSC 7241. [^5]: 2010 ONSC 3444 (Div. Ct.). [^6]: (1999), 1999 CanLII 2052 (ON CA), 46 O.R. (3d) 330 (C.A.). [^7]: Benarroch v. Fred Tayar & Associates P.C., 2019 ONCA 228; Edelstein v. Monteleone, 2017 ONSC 7446 (Ont. Div. Ct.); Mustang Investigations v. Ironside, 2010 ONSC 3444 (Div. Ct.). [^8]: Mitchinson v. Marshall Kirewskie, Barristers and Solicitors, 2018 ONSC 7419; Charendoff v. McLennan, 2012 ONSC 7241; Mustang Investigations v. Ironside, 2010 ONSC 3444 (Div. Ct.). [^9]: Hamilton-Wentworth (Regional Municipality) v. Hamilton-Wentworth Save the Valley Committee, Inc. (1985), 1985 CanLII 1957 (ON SC), 51 O.R. (2d) 23 (H.C.J.). [^10]: Standard Life Assurance Co. v. Elliott (2007), 2007 CanLII 18579 (ON SC), 86 O.R. (3d) 221 (S.C.J.); Benquesus v. Proskauer, Rose LLP, 2005 CanLII 21097 (ON SC), [2005] O.J. No. 2418 (S.C.J.). [^11]: Standard Life Assurance Co. v. Elliott (2007), 2007 CanLII 18579 (ON SC), 86 O.R. (3d) 221 (S.C.J.). [^12]: Reynolds v. Kingston (City) Police Services Board (2007), 2007 ONCA 375, 86 O.R. (3d) 43 (C.A.); 1465778 Ontario Inc. v. 1122077 Ontario Ltd. (2006), 2006 CanLII 35819 (ON CA), 82 O.R. (3d) 757 (C.A.); British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371; Somers v. Fournier (2002), 2002 CanLII 45001 (ON CA), 60 O.R. (3d) 225 (C.A.); Fong v. Chan (1999), 1999 CanLII 2052 (ON CA), 46 O.R. (3d) 330 (C.A.); Fellowes, McNeil v. Kansa General International Insurance Co. (1997), 1997 CanLII 12208 (ON SC), 37 O.R. (3d) 464 (Gen. Div.). Skidmore v. Blackmore (1995), 1995 CanLII 1537 (BC CA), 122 D.L.R. (4th) 330 (B.C.C.A.). [^13]: R.S.O. 1990, c. C.43.