BARRIE COURT FILE NO.: CV-14-1473-00ES DATE: 20200512

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Richard Froud, Plaintiff AND: Susan Mary Froud and the Estate of Mollie Froud, Defendants

BEFORE: The Hon. Madam Justice A.A. Casullo

COUNSEL: J.W. Switzer, for the Plaintiff D. Harris-Lowe, for the Defendants

HEARD: By written submissions

COSTS ENDORSEMENT

Overview

[1] Richard Froud and Susan Froud are siblings. In this action Richard sought disgorgement of certain proceeds received by Susan following their mother’s death. The statement of claim advanced various heads of damage, but the trial ultimately centered on the precise terms of an agreement entered into between Richard, Susan and their mother, and whether the agreement was breached by Susan.

[2] Following a six-day trial, Richard was wholly unsuccessful. In my Reasons for Decision, released February 3, 2020, I invited the parties to come to an agreement on costs. If that was not possible, they could make arrangements for a costs hearing through the Barrie Trial Co-ordinator. The parties were unable to agree on costs.

[3] On March 11, 2020, the World Health Organization officially categorized the COVID-19 virus a worldwide pandemic. Following this proclamation, the Superior Court of Justice suspended all in-person operations as of March 17, 2020. By Order of the Chief Justice of the Superior Court of Ontario, all civil matters were adjourned.

[4] By letter dated March 24, 2020, Mr. Harris-Lowe inquired of Mr. Switzer whether, inter alia, Mr. Switzer had any objection to Mr. Harris-Lowe’s asking me to consider costs submissions in writing. Mr. Switzer raised no objections, a request letter was sent to my attention, and I agreed to receive written costs submissions.

Parties’ Positions

[5] As noted earlier, the trial focused on one narrow issue. However, the initial claims against Susan included allegations of misappropriation, mismanagement and manipulation of the financial affairs of Mollie Froud’s estate, a request for an accounting back to March 2009, and a declaration that Mollie Froud’s will was invalid, in part due to the actions of Susan.

[6] Susan submits that as a result of these expansive claims, she incurred substantial and significant costs in defending the action. Susan seeks substantial indemnity costs of $94,374.00 (75% of her actual costs of $125,842.97), inclusive of disbursements.

[7] Susan served an Offer to Settle on June 24, 2015. In exchange for abandoning his claim, Susan would pay Richard:

• $4,546.56 arising from Richard’s interest in Mollie Froud’s account with Lloyd’s Bank;
• $7,767.71 from the residue of the Estate of Mollie Froud in accordance with her will;
• $50,000 in addition to the above-noted funds.

[8] There was a further provision where, if requested by Richard, Susan would pass her accounts for both the period during which she acted as Mollie’s attorney, and the period during which she acted as the estate trustee. The costs associated with passing the accounts were to be paid by the estate, or shared between Richard and Susan equally.

[9] Finally, if Richard accepted the offer within three weeks of it being made, each party would bear their own costs, failing which Richard would pay Susan’s costs in an amount to be agreed upon or assessed.

[10] Richard did not accept the offer.

[11] Rule 49.10(2) holds that where a plaintiff does not accept an offer to settle made by the defendant, and the plaintiff obtains a judgment that is as favourable or less favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date of the offer, and the defendant is entitled to partial indemnity costs from that date, unless ordered otherwise.

[12] Susan submits that 49.10(2) is not applicable in matters where a plaintiff’s case is dismissed, as held by the Court of Appeal in S&A Strasser Limited v. Richmond Hill (Town):

That rational does not fit a case where the plaintiff is totally unsuccessful because, without the rule, the defendant is normally entitled to party-and-party costs. The words in the rule “and the plaintiff obtains a judgment as favourable” make it clear that the rule has no application where the plaintiff fails to recover any judgment.

S&A Strasser Limited v. Richmond Hill (Town), , 1990 CarswellOnt 435, 1 O.R. (3d) 243, at para. 4.

[13] Susan submits that she was responsible for moving this matter to trial, including completing her affidavit of documents in November 2015 (containing approximately 580 documents), a discovery plan in February 2016, receiving Richard’s affidavit of documents in April 2016, answering undertakings promptly in the spring of 2016, following up on Richard’s undertakings into November 2016, setting the matter down for trial, serving a request to admit, drafting the agreed statement of facts, and preparing the exhibit book.

[14] According to Susan, Richard has engaged in conduct worthy of sanction, and the circumstances of this case “scream out for costs on a substantial indemnity basis” per the Court of Appeal in Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66, at para. 28. This is so because in seeking an exhaustive accounting back to 2009, Richard made the matter more complicated than necessary, and he only formally withdrew many of his claims shortly prior to the trial.

[15] Richard submits that he did not take any action prior to or during the trial which prolonged, inhibited or suggested his conduct was reprehensible, such that Susan would be entitled to substantial indemnity costs. Nor did he engage in conduct which unnecessarily lengthened the duration of the proceeding.

[16] Richard takes issue with the costs associated with support staff, being in the range of between $180 to $205 per hour, which he submits is not something he could have reasonably anticipated. He also states that he could not have reasonably anticipated Mr. Harris-Lowe logging 183.3 hours.

[17] With respect to the offer to settle, Richard posits it contained parts which were not entirely consistent with a clear offer to settle. It was unclear what he would receive if he accepted the offer, and it included elements that he was entitled to as of right. As was held in Davies, at para. 100:

It is beyond dispute that an offer to settle must have such clarity that the party presented with the offer can, with certainty, understand and calculate the amount being offered. It is a well understood principle when dealing with Rule 49, that offers must be crystal clear in order to attract the cost consequences attendant with the Rule: see Rooney v. Graham (2001), , 53 O.R. (3d) 685, and Malik v. Sirois, .

[18] Richard disagrees that Susan is entitled to substantial indemnity costs, arguing that while fixing costs is discretionary, it is also principled:

In summary, while fixing costs is a discretionary exercise, attracting a high level of deference, it must be on a principled basis. The judicial discretion under rules 49.13 and 57.01 is not so broad as to permit a fundamental change to the law that governs the award of an elevated level of costs. Apart from the operation of rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made.

Davies, at para. 40.

Analysis

[19] Determining costs is a discretionary function of the court, governed by section 131 of the Courts of Justice Act, R.S.O. 1990 c. C.43 and by r. 57.01 of the Rules of Civil Procedure.

[20] Rule 57.01 lists the following factors for the court to consider in the assessment of costs:

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer; (0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed; (a) the amount claimed and the amount recovered in the proceeding; (b) the apportionment of liability; (c) the complexity of the proceeding; (d) the importance of the issues; (e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; (f) whether any step in the proceeding was, (i) improper, vexatious or unnecessary, or (ii) taken through negligence, mistake or excessive caution; (g) a party’s denial of or refusal to admit anything that should have been admitted; (h) whether it is appropriate to award any costs or more than one set of costs where a party, (i) commenced separate proceedings for claims that should have been made in one proceeding, or (ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and (i) any other matter relevant to the question of costs.

[21] The court should look to fix costs that are fair and reasonable having regard to the expectation of the parties: Boucher v. Public Accountants Council for the Province of Ontario, , 2004 CarswellOnt 2521, 71 O.R. (3d) 291 (C.A.). Rule 57.01(0.b) confirms that the reasonable expectations of the losing party are to be considered.

[22] One way to determine the reasonable expectations of a losing party is to review the losing party’s costs. Mr. Switzer’s Bill of Costs, with disbursements, totals $41,085.23. This is almost $85,000 lower than Mr. Harris-Lowe’s total Bill of Costs. In other words, Mr. Harris-Lowe’s costs are three times that of Mr. Switzer.

[23] When the two bills are compared, a number of points stand out. First, Mr. Switzer’s bill contains only his docketed time. It is entirely possible that Mr. Switzer ran the file on his own, without delegating any work to a junior lawyer. However, it is less likely that no law clerk assisted on the file from the time it was opened in 2014 to the conclusion of the trial. Law clerks are integral to the administration of files, from photocopying, to drafting letters, to preparing for trial, and everything in between. Further, with no clerk time charged to the file, I am unable to conclude whether the hourly rates Mr. Harris-Lowe charges for his firm’s law clerks are inordinately high, as Richard suggests.

[24] A review of Mr. Switzer’s dockets, which are sparse, supports Mr. Harris-Lowe’s contention that his firm did all the heavy lifting in terms of moving the matter forward.

[25] While the costs consequences set out in r. 49.10(2) are not operable, because Richard’s claim was dismissed, I am entitled to consider Susan’s offer to settle when exercising my discretion (r. 49.13) as to costs. Richard submits Susan’s offer was inconsistent with a clear offer to settle. I disagree.

[26] The offer complied with the basic requirements of Rule 49. It was in writing, it was served, and it was made after the commencement of the proceeding and prior to seven days before the trial began. While the offer does not specify that it remained open until the commencement of trial, there is no evidence that Susan withdrew it.

[27] The offer contained concrete figures Richard could expect to receive if he accepted it. The only uncertainties, if any can be found, were (a) Richard’s share of cost of the passing of accounts, should he request a passing, and (b) what Susan’s costs would be if he did not accept the offer within three weeks.

[28] Finally, if Richard did find the offer to be unclear, there was no evidence before the court that he sought clarification of the terms.

[29] All that being said, the appropriate scale of costs here is partial indemnity. Richard was entitled to challenge Susan following their mother’s death. Simply pursuing an unsuccessful litigation does not warrant a substantial indemnity costs award. Richard’s actions fall far below the “malicious, counter-productive conduct” worthy of a court’s censure: Davies, para. 45. He was entitled to advance his position. In the end, I did not agree with his position, but he did nothing to abuse the process of the court.

[30] Mr. Harris-Lowe’s Bill of Costs is reasonable. As a lawyer with over 21 years of experience, his hourly rates are well in keeping with the tariff. Perhaps the law clerks’ hourly rate is high, but there is no evidence before me that it is inordinately high. Having waged a five-year battle, culminating in a six-day trial, it cannot be said that Richard did not reasonably anticipate facing a large costs award if he were unsuccessful.

[31] Having regard to the overarching principles of proportionality, fairness and reasonableness, I award Susan Froud costs in the amount of $75,000, inclusive of disbursements.

CASULLO J. Date: May 12, 2020