Court File and Parties

COURT FILE NO.: 12-55096 DATE: January 20, 2020 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: BON RATHWELL HOWLAND, by his litigation guardian MARGARET RATHWELL, AYESHA HOWLAND, MARGARET RATHWELL, and DONALD RATHWELL, Plaintiffs AND The Estate of PAMELA HOWLAND, deceased, by its litigation administrator John Johnson, SYLVIO GAUTHIER, and CECILE GAUTHIER, Defendants

BEFORE: Madam Justice H. J. Williams

COUNSEL: Laurie A. Tucker, Counsel for the plaintiffs, Bon Rathwell Howland by his litigation guardian Margaret Rathwell, Margaret Rathwell and Donald Rathwell Kerri Kamra, Counsel for the Defendants, Sylvio Gauthier and Cecile Gauthier

HEARD: In Writing

Endorsement Re Priority of Payment of Costs

Overview

[1] The successful defendants in a motor vehicle accident action have requested the following relief:

a) An order requiring the plaintiffs to pay the costs of the successful defendants before paying their own lawyers’ fees and disbursements; and

b) An order that the successful defendants’ costs be paid from the damages the jury awarded to the adult plaintiffs and from the costs the plaintiffs recovered from the unsuccessful defendant.

[2] The plaintiffs [^1] argue that there is no basis in law for the relief the successful defendants are asking for and that if the successful defendants want to enforce the costs order in their favour, there are procedures available to them in the Rules of Civil Procedure.

Background

[3] After a trial that lasted almost seven weeks, the jury found that Pamela Howland was entirely responsible for a two-car collision in which she and her husband were killed and their son, the minor plaintiff Bon Rathwell Howland, was injured. The jury found that the defendants Sylvio and Cecile Gauthier were not liable.

[4] The jury awarded Bon Rathwell Howland a net amount of $585,000.00 and the plaintiff Ayesha Howland a net amount of $8,495.39. The plaintiffs Margaret and Donald Rathwell recovered no damages; their claim was against the successful Gauthier defendants only.

[5] Following the trial, I made the following costs orders:

(i) The estate of Pamela Howland was to pay Margaret Rathwell, in her capacity as litigation guardian for Bon Rathwell Howland, fees of $375,000.00 plus disbursements and HST. The total amount was $603,800.73;

(ii) The estate of Pamela Howland was to pay to Ayesha Howland fees of $32,250.00 plus disbursements and HST. The total amount was $39,550.00.

(iii) The estate of Pamela Howland was to pay the Gauthier defendants’ costs to August 23, 2017 in the amount of $23,000.00 in fees plus disbursements and HST. The total amount was $31,433.75.

(iv) The plaintiffs were to pay the Gauthier defendants’ costs after August 23, 2017 in the amount of fees of $110,600.00 plus disbursements and HST. The total amount was $189,810.46. Margaret Rathwell as litigation guardian for Bon Rathwell Howland was to pay 98.57 per cent and Ayesha Howland was to pay 1.43 per cent.

[6] The issue that is now before me was raised by the lawyer for the Gauthier defendants during the parties’ post-trial costs submissions. In my January 29, 2019 decision dealing with post-trial issues, I said that if, given what I had decided, it remained necessary to deal with the priority of payment issue, counsel could make further submissions.

[7] The lawyers for the plaintiffs and the Gauthier defendants delivered written submissions in respect of the priority of payment issue in July 2019. They also informed me that the estate of Pamela Howland had sought leave to appeal my January 29, 2019 decision.

[8] In an endorsement dated August 13, 2019, I said that I would not decide the priority of payment issue until the outcome of the motion for leave to appeal and, if applicable, the appeal was or were known and any related further submissions had been filed.

[9] In early November 2019, the parties’ lawyers informed me that leave to appeal had been denied and that they would not be filing any further submissions.

The Gauthier defendants’ position

[10] In support of their argument that their costs should be paid before the plaintiffs pay their lawyers, the Gauthier defendants rely on three Ontario cases that considered charging orders to enforce solicitors’ liens: Bosnati v. Michaud, 2019 ONSC 2809, aff’d, 2020 ONCA 7; Canadian Imperial Bank of Commerce v. Gray, (1987), 59 O.R. (2d) 414 (Master); and Durall Construction v. J.K. O’Connell Ltd. (1977), 16 O.R. (2d) 713; Poulin v. Pettitt, [1992] O.J. No. 1387 (Gen. Div.).

[11] The Gauthier defendants also rely on a family law case from British Columbia, [^2] in which a lawyer unsuccessfully sought to enforce a solicitor’s lien against funds in her trust account in priority to her client’s former spouse’s claim for costs.

[12] The Gauthier defendants also rely on Whaley v. Dennis, [2006] O.J. No. 683 (S.C.J.), in which a costs order in favour of a successful defendant was made jointly against the plaintiffs and the unsuccessful defendants, in order to increase the likelihood that the successful defendant would be paid.

[13] The Gauthier defendants argue that, based on the principles in these cases, any charging order, solicitor’s lien or other order relating to the plaintiffs’ lawyers’ fees should only apply to the net funds awarded to the plaintiffs after all costs awards against them have been satisfied.

Analysis

[14] The Gauthier defendants have not persuaded me to exercise my discretion under s. 131 of the Courts of Justice Act to make the orders they have requested.

[15] The cases the Gauthier defendants have submitted in support of their position do not support it.

[16] Four of the cases, three from Ontario and one from British Columbia, deal with lawyers’ requests for a charging order to confirm a solicitor’s lien.

[17] In Ontario, these orders are available under s. 34(1) of the Solicitor’s Act. This section codifies the court’s inherent jurisdiction in equity to declare a lien on the proceeds of a judgment where there appears to be good reason to believe that the lawyer would otherwise be deprived of their fees. (Taylor v. Taylor, [2002] O.J. No. 2313 (C.A.) at para. 28, citing Siskind, Cromarty, Ivey & Dowler v. Ross, Bennett & Lake, [1994] O. J. No. 1807 (Gen. Div.))

[18] In the case before me, the plaintiffs’ lawyers have not requested a charging order. The plaintiffs’ lawyers submit that, although their clients are of modest means, they have never suggested that they do not plan to pay their lawyers from the proceeds of the trial.

[19] There is a further and significant factual distinction between the case before me and the solicitor’s lien cases the Gauthier defendants are relying on. In the Gauthier defendants’ cases the situation is the following:

(i) A party (“Party A”) obtains judgment against an opposite party (“Party B”);

(ii) Party A is ordered to pay costs to Party B;

(iii) Party A’s lawyer is asking for a charging order; and

(iv) The costs owed by Party A are or could have been set off against the judgement owed by Party B.

[20] The Gauthier defendants’ cases all held that, in the scenario above, the charging order requested by Party A’s lawyer could attach only to Party A’s net judgment, which was the amount left over after Party B’s costs were set off against it.

[21] As a general principle, if a judgment on its face creates mutual debt obligations from each party to the other, the debt obligations are set off or netted against each other to determine which party can enforce the net amount against the other, absent language to the contrary in the judgment. (Bosnati v. Michaud, supra, at para. 15, citing, generally, Martin v. McColl (1957), 10 D.L.R. (2d) 284 (Ont. C.A.), at p. 287.)

[22] The Gauthier defendants argue that they are effectively Party B to the plaintiffs’ Party A and that the plaintiffs’ (Party A’s) lawyers’ fees and disbursements should be paid only after the Gauthier defendants (Party B’s) costs have been set off against them.

[23] The flaw in the Gauthier defendants’ argument is that, in the case before me, the Party A (the plaintiffs) did not obtain judgment against the Party B (the Gauthier defendants.) The Party A obtained judgment against a Party C, the Howland estate. Therefore, unlike the Party A/Party B scenario in the Gauthier defendants’ cases, there is no basis for a set off of the judgment owed to the plaintiffs and the costs owed by the plaintiffs.

[24] For there to be such a set off, there must be a mutuality of debts between the parties: Guergis v. Hamilton, 2016 ONSC 4428 at para. 8. No such mutuality of debts exists in the case before me.

[25] None of the cases relied on by the Gauthier defendants supports their contention that “a solicitor’s claim to fees and disbursements from his/her client is only against the ultimate sum to which the client is entitled, net of adverse costs awards.” The Gauthier defendants’ cases do say that a lawyer’s charging order, confirming a solicitor’s lien against a judgment, is only against the ultimate sum to which the lawyer’s client is entitled, net of any costs award payable to the party against whom the client obtained the judgment.

[26] The decision in Whaley v. Dennis does not support the Gauthier defendants’ position. It was not a case in which a successful defendant was asking for costs, which had already been awarded, to be paid in priority to the fees and disbursements of the plaintiffs’ lawyer. It was a case in which a joint and several order for costs had been made in favour of a defendant against both the plaintiffs and the unsuccessful defendants.

Conclusion

[27] The Gauthier defendants have not convinced me that I should exercise my discretion to make the orders they have requested, and I decline to do so.

[28] The plaintiffs have indicated that they wish to file submissions in support of a request for approval of their account and a management plan and the appointment of a guardian for property. These submissions shall be delivered and may be filed by sending them to me, care of the Ottawa trial coordinator.

Date: January 20, 2020 Madam Justice H.J. Williams Released: January 20, 2020

Footnotes

[^1]: The plaintiff Ayesha Howland filed no submissions and took no position in respect of this, the “priority of payment of costs” issue. The reference to “the plaintiffs” in this endorsement is to Bon Rathwell Howland, Margaret Rathwell and Donald Rathwell. [^2]: Salminen v. Garvie, 2012 BCSC 1777.