Court File and Parties

Court File No.: CV-17-73229 Date: 2020/06/22 Superior Court of Justice - Ontario

Re: 1062484 Ontario Inc., Plaintiff And: Williams McEnery, Williams Litigation Lawyers and Paul McEnery, by his litigation guardian, the Public Guardian and Trustee, Defendants

Court File No.: CV-17-73224 Superior Court of Justice - Ontario

Re: 1770650 Ontario Inc., Plaintiff And: Williams McEnery, Williams Litigation Lawyers and Paul McEnery, by his litigation guardian, the Public Guardian and Trustee, Defendants

Before: Justice R. Ryan Bell

Counsel: Christine G. Carter, for the Plaintiffs Stephen Cavanagh and Robin Brown, for the Defendants Williams McEnery and Williams Litigation Lawyers Craig O’Brien, for the Defendant Paul McEnery

Heard: In writing

Costs Endorsement

[1] The plaintiffs moved for summary judgment against Mr. McEnery and the defendant law firm Williams McEnery, now known as Williams Litigation Lawyers (the “law firm”). The plaintiffs were successful as against Mr. McEnery. They did not succeed against the law firm: I granted the law firm summary judgment dismissing the actions against it (1062484 Ontario Inc. v. Williams McEnery, 2020 ONSC 825).

[2] As the successful party, the law firm now seeks its costs of the actions and the summary judgment motions on a partial indemnity basis. The plaintiffs allege that the law firm engaged in a strategy of delay and should be denied its costs. In the alternative, they request that any costs in the law firm’s favour be paid directly by Mr. McEnery to the firm by way of a Sanderson order. The plaintiffs seek their costs against Mr. McEnery on a partial indemnity basis.

[3] The issues are: (i) the law firm’s entitlement to its partial indemnity costs; (ii) the appropriateness of a Sanderson order in the circumstances of this case; and (iii) the plaintiffs’ costs as against Mr. McEnery.

The Law Firm’s Costs

[4] The plaintiffs’ primary position is that the law firm should be deprived of its costs because its litigation conduct was “co-ordinated to delay and increase the [plaintiffs’] costs.” This submission is without foundation. There were delays in the proceedings. Some of the delay can be attributed to the plaintiffs. None of the delay was caused by the law firm. The law firm sought the intervention of the court on several occasions, including to transfer the actions from Toronto to Ottawa, to obtain a case management order, and to require affidavits of documents. In each case, the relief requested was reasonable and was granted by the court.

[5] There is some suggestion in the plaintiffs’ submissions that Mr. McEnery and the law firm ought not to have been separately represented, and that the separate representation contributed to delay. I reject this contention. Mr. McEnery and the law firm were in a conflict of interest. Separate representation was required.

[6] The plaintiffs also suggest that the law firm should bear the financial consequences of Mr. McEnery’s actions and be denied its costs because the firm benefitted financially from marketing using Mr. McEnery’s name. I found no evidentiary basis to support this submission when it was advanced on the motions for summary judgment (1062484 Ontario, at para. 68). The submission is without foundation now.

[7] The law firm is entitled to recover its partial indemnity costs.

[8] The law firm requests costs of $35,751.58 in the action commenced by 1062484 Ontario, and $20,646.64 in the action commenced by 1770650 Ontario. Through no fault of the law firm, counsel for the firm was required to prepare four times for the summary judgment motions. There were additional issues raised in the 1062484 Ontario motion that account for the additional time spent by counsel in that action.

[9] The plaintiffs dispute the law firm’s entitlement to costs, but they do not take issue with the hourly rates charged by counsel or the time spent. I note that the bill of costs for 1062484 Ontario is $28,675.53 while the bill of costs for 1770650 Ontario is $27,482.43. Together, the costs for both plaintiffs are the same as the total costs claimed by the law firm.

[10] Having regard to the complexity of the matter, the importance of the issues to the parties, and the experience of, and rates charged and hours spent by counsel for the law firm, as well as the amount of costs that the plaintiffs, as the unsuccessful parties, could reasonably expect to pay, I fix the law firm’s partial indemnity costs in the 1062484 Ontario action at $35,751.58 and in the 1770650 Ontario action at $20,646.64.

Sanderson Order

[11] In my view, a Sanderson order requiring Mr. McEnery to pay the law firm’s costs would not be just or fair in the circumstances of this case.

[12] Sanderson and Bullock orders are exceptions to the general rule that in a multiple-defendant case in which the plaintiff succeeds against some defendants but not against others, the “normal course” is for the unsuccessful defendant to pay the plaintiff’s costs and the plaintiff to pay the successful defendant’s costs (Moore v. Wienecke, 2008 ONCA 162, at para. 37). In some circumstances, application of the “normal course” can lead to an unjust result; Sanderson and Bullock orders alleviate that injustice (Moore, at para. 38). A Bullock order directs an unsuccessful defendant to reimburse the plaintiff for the recovered costs of a successful defendant, while a Sanderson order directs that the payment go directly to the successful defendant. The rationale behind both orders is the same: where the allocation of responsibility is uncertain, usually because of interwoven facts, it is often reasonable to proceed through trial against more than one defendant (Rooney (Litigation Guardian of) v. Graham (2001), O.R. (3d) 685 (Ont. C.A.), at para. 6).

[13] The test for determining whether a Sanderson order is appropriate is the following: (i) was it reasonable for the plaintiff to join the several defendants together in one action; and (ii) if it was reasonable, would it be just and fair in the circumstances to make a Sanderson order (Moore, at para. 41).

[14] It was reasonable that Mr. McEnery and the law firm were brought together as defendants in the same action because the claims resulted from the same series of transactions. However, I reject the plaintiffs’ submission that it would be fair and reasonable to impose a Sanderson order because the plaintiffs “quite reasonable trusted” Mr. McEnery and they were “innocent victim[s]” of a set of circumstances that was “entirely within the purview of both defendants to avoid.” This is a renewal of the plaintiffs’ argument on the motions that the law firm should be liable under s. 15(1) of the Partnerships Act, R.S.O. 1990, c. P.5 because Mr. McEnery was held out to be a partner in the law firm. In granting the law firm summary judgment, I rejected the plaintiffs’ arguments (1062484 Ontario, at paras. 90-108).

[15] The plaintiffs imply that they pursued their claim against the law firm because Mr. McEnery did not consent to judgment. However, the plaintiffs’ own submissions make clear that their claims against the law firm could only have been avoided if they had recovered their claims from Mr. McEnery.

[16] The plaintiffs made a deliberate decision to pursue their claims against the law firm. The law firm succeeded in meeting the plaintiffs’ case against it. Mr. McEnery, on the other hand, did not respond to or take a position on the summary judgment motions. This is not a case where the application of the general rule that costs should follow the event would yield an unjust result. The plaintiffs shall be responsible for the law firm’s costs.

Plaintiffs’ Costs Against Mr. McEnery

[17] The plaintiffs were successful against Mr. McEnery. On this basis they say that they are entitled to recover their partial indemnity costs from him: $28,675.53 in the case of 1062484 Ontario and $27,482.43 in the case of 1770650 Ontario.

[18] The plaintiffs’ bills of costs and the conduct of the summary judgment motions evidence that substantially all the costs incurred by the plaintiffs in this litigation had nothing to do with Mr. McEnery. Mr. McEnery ceased practising law in November 2015. His licence to practise was later suspended and then revoked by what is now the Law Society of Ontario. Statements of defence were filed on Mr. McEnery’s behalf. However, he filed no responding materials and he was not examined or cross-examined in connection with the motions. Mr. McEnery was represented in these proceedings by his litigation guardian, the Public Guardian and Trustee; he took no position on the motions.

[19] The plaintiffs’ position that Mr. McEnery should be responsible for the entirety of their partial indemnity costs incurred in the conduct of the actions and the motions is not reasonable. The bills of costs submitted by the plaintiffs do not particularize counsel’s efforts specifically attributable to Mr. McEnery’s defence of the actions; I infer that each plaintiff would have incurred only modest costs in relation to Mr. McEnery. In my view, a fair and reasonable amount of costs for Mr. McEnery to pay to each plaintiff would be $1,250.

Disposition

[20] I fix the law firm’s partial indemnity costs in the 1062484 Ontario action at $35,751.58, and in the 1770650 Ontario action at $20,646.64, inclusive of disbursements and HST. These costs are to be paid by the plaintiffs within 30 days.

[21] I fix 1062484 Ontario’s costs and 1770650 Ontario’s costs against Mr. McEnery at $1,250 each, inclusive of disbursements and HST. These amounts are to be paid within 30 days.

Justice R. Ryan Bell Date: June 22, 2020

Released: June 22, 2020 Ryan Bell J.