Lawyers’ Professional Indemnity Company v Tiberi, 2021 ONSC 3441

COURT FILE NO.: CV-21-00655865-0000

DATE: 20210512

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

LAWYERS’ PROFESSIONAL INDEMNITY COMPANY

Applicant

– and –

AUGUSTA TIBERI, BRUNO TIBERI, IDA CAPORALE and DAVID YOUNAN

Respondents

Anna Husa, lawyer for the plaintiffs

Harvey S. Dorsey, lawyer for the respondents, Augusta Tiberi, Bruno Tiberi and Ida Caporale

David Younan, self-represented and acting in person

HEARD: May 10, 2021

ENDORSEMENT

DIAMOND J.:

Overview

1In this application, the applicant Lawyers’ Professional Indemnity Company (“LawPRO”) seeks, inter alia:

a) a declaration that the respondents Augusta Tiberi (“Augusta”), Bruno Tiberi (“Bruno”) and Ida Caporale (“Ida”) jointly and severally owe LawPRO the sum of $274,139.78 pursuant to a costs award issued by Justice Price on December 5, 2018, and later amended by Justice Price on June 30, 2020:

b) a declaration that in the event one or more of the above respondents is unable to contribute his/her respective share of the total debt owing to LawPRO, the remaining respondents shall be fully responsible for all or a portion of that shortfall; and,

c) an order that the proceeds from the sale of a property municipally known as 1038 Roosevelt Roard, Mississauga, Ontario (“the property”), currently held in the trust account of the co-respondent David Younan (“Younan”) for the benefit of the respondents August and Ida, be paid to LawPRO in partial or full satisfaction of the claimed $274,139.78.

2On April 27, 2021, Augusta filed a Notice of Intention to make a Proposal under the provisions of the Bankruptcy and Insolvency Act, R.S.C. 1985, C.B3. As a result, this application is currently stayed as against Augusta.

3The balance of the application was argued before me on May 10, 2021. At the conclusion of the hearing, I took my decision under reserve.

Summary of Key Facts

4In 2015, an estate proceeding (“the estate action”) was issued against the respondents Augusta, Bruno and Ida (collectively “the respondents”). Augusta and Ida are siblings, and Bruno is Augusta’s spouse. The respondents were alleged to have misappropriated funds, improperly transferred ownership of the property, and improperly encumbered the equity in the property.

5The respondents were represented in the estate action by Dorothy Hagel (“Hagel”). Ultimately, the estate action was settled at a mediation, but the parties could not resolve the issue of the costs of the estate action. The parties agreed to allow the Court to determine those costs at a formal hearing.

6The costs hearing proceeded before Mr. Justice Price over the course of six days. In his Costs Endorsement released on December 5, 2018, Justice Price made numerous findings of fact, including the following:

• Hagel pursued goals on behalf of the respondents that were unattainable, and in doing so Hagel misrepresented facts to the Court;
• Hagel caused misleading affidavits to be prepared and sworn by the respondents, as Hagel knew certain assertions in the affidavits were false;
• Augusta improperly transferred the property into her own name, and borrowed $250,000.00 against it to pay for debts owing by her, Bruno and Ida; and,
• While Ida played a limited role in the matter, she was not completely blameless.

7Ultimately, Justice Price awarded the plaintiffs in the estate action their costs on a full recovery basis fixed in the amount of $365,519.70. Justice Price held Augusta, Bruno and Ida and Hagel all jointly and severally liable for those costs payable to the plaintiffs in the estate action.

8Justice Price specifically made the following order with respect to the apportionment of liability between the respondents to pay the costs order:

“For the foregoing reasons, it is ordered that:

1. The defendants and their legal counsel, Ms. Hagel, shall be jointly and severally liable to the plaintiffs for their legal costs incurred on a full recovery basis, subject to a reduction of $50,000.

2. Accordingly, the defendants and Ms. Hagel shall jointly and severally pay the plaintiffs their costs on a full recovery basis, fixed in the amount of $365,519.70, inclusive of fees, HST and disbursements, calculated as follows:

(a) Fees in the amount of $301,941.41, being $351,941.41 to October 11, 2017, less a reduction of $50,000.00; plus

(b) $39,252.38, being HST on the said fees of $301,941.41 @13%; plus

(c) $981.92, being the plaintiffs’ estimated fees, including HST, in their Costs Outline of October 11, 2017, for the three further appearances that followed; plus

(d) Disbursements of $23,343.99, inclusive of HST;

Costs shall be apportioned as follows:

1. Ms. Hagel shall personally pay 25% of the plaintiffs’ costs.

2. The balance of the plaintiffs’ costs shall be apportioned as follows:

(a) 75% shall be paid by Ms. and Mr. Tiberi; and

(b) 25% shall be paid by Ms. Caporale.”

9Hagel unsuccessfully sought leave to appeal from Justice Price’s costs order. In 2017, both the respondents and Hagel commenced solicitor/client assessments with respect to amounts collected and owing to Hagel for legal services rendered to the respondents in the estate action. Hagel obtained charging orders against the respondents with respect to their respective interests in the net sale proceeds of the property.

10Younan is the lawyer who acted on the sale of the property, and is currently holding the sale proceeds in trust. There is approximately $50,000.00 owing to Augusta and $135,000.00 owing to Ida from those trust proceeds.

11The respondents thereafter commenced a solicitor’s negligence claim against Hagel seeking damages in the amount of $400,000.00 in connection with the costs award made by Justice Price in the estate action. The respondents also sought repayment of the legal fees they had paid to Hagel.

12Once Hagel was sued by the respondents, LawPRO stepped in to represent Hagel’s interests. After providing the respondents with notice, LawPRO paid the entire costs order to the plaintiffs in the estate action with a view to avoiding any further interest accruing and potential additional execution costs from being incurred. LawPRO satisfied the respondents’ joint obligation for the entire costs award without prejudice to Hagel’s rights and interests against the respondents.

13LawPRO took the position (consistent with this application) that all of the respondents were jointly and severally responsible to pay that portion of Justice Price’s costs order which was not payable by Hagel (i.e. $274,139.81 being 75% of $365,519.70).

14Prior to this application being issued, counsel for the respondents wrote unilaterally to Justice Price seeking directions in connection with the costs order, and specifically the respondents’ apportioned liability. After receiving written submissions, Justice Price released a Supplementary Costs Endorsement on June 30, 2020.

15After revisiting his prior decision, Justice Price held as follows:

“I would have thought that this expressed the intention of the Court clearly enough. However, it appears that a dispute has arisen over whether the 25% to be paid by Ms. Caporale meant 25% of the entire unpaid costs of the plaintiffs or 25% of the 75% of the said costs not ordered to be paid by Ms. Hagel. The Court’s intention was that Ms. Caporale was to pay 25% of the 75% of the plaintiff’s costs not ordered to be paid by Ms. Hagel. This was intended to be conveyed by the Court’s use of the words, ‘The balance of the plaintiffs’ costs’ immediately following the reference to the 25% of the plaintiffs’ costs to be paid by Ms. Hagel.

In order to clarify the Order, and avoid further unnecessary litigation over the interpretation of my words, I am amending the Order by adding the words, ‘being 75% of the total of the said costs’ to follow the words, ‘The balance of the Plaintiffs’ costs’, so that it is clear that the 25% to be paid by the Defendant Ida Caporale is 25% of the 75% not ordered to be paid by Ms. Hagel.”

16To summarize, the costs order apportioned joint and several liability for the $365,519.70 between the parties as follows:

PARTY	SHARE OF RESPONSIBILITY	AMOUNT
Hagel	25%	$91,379.93
Augusta & Bruno	75% of 75%	$205,604.86
Ida	25% of 75%	$68,534.95
TOTAL		$365,519.70

17LawPRO submits that the respondents asked Justice Price to limit LawPRO’s recovery rights against Ida and/or the other respondents, and Justice Price’s Supplementary Costs Endorsement did not do so.

18After LawPRO issued this application, the respondents sought to transfer this application to Brampton in an effort to have this matter heard by Justice Price. The transfer motion was ultimately dismissed by Justice Trimble in an Endorsement released on April 26, 2021 (one day before Augusta filed her Notice of Intention to make a proposal). In dismissing the respondents’ transfer motion, Justice Trimble found that Justice Price was not seized of this matter, and putting this application before Justice Price “presumed that Justice Price has any memory of these cases other than what he may glean from his reading of the decisions and endorsements he signed and released”.

19Justice Trimble further found that since no party sought any further amendment of Justice Price’s costs order, any judge would be able to interpret the Costs Order and Supplementary Costs Endorsement.

20In addition to Augusta having recently filed a Notice of Intention to make a proposal, Bruno takes the position that he has no exigible assets other than the sale proceeds currently being held in trust by Younan. There is no evidence in the record to the contrary of Bruno’s assertion.

Position of LawPRO

21LawPRO argues that as it paid the entire $365,519.70, it is at a minimum entitled to recovery of the amounts apportioned to the respondents as set out in the table above. There appears to be no dispute that Augusta and Bruno on the one hand, and Ida on the other, are responsible for their respective shares of the costs order, and payment of those shares should be made from the amounts held in trust by Younan.

22However, due to Augusta’s proposal and Bruno being judgment proof, LawPRO takes the position that Ida must be ordered to pay more than her 25% of 75% share of the costs order. LawPRO submits that since it is now responsible for more than its 25% share (as Augusta has filed a proposal and Bruno has no assets), as a result Ida must be ordered to pay more than her 25% of 75% share.

Position of the Respondents

23The respondents argue that LawPRO is seeking to revisit Justice Price’s costs order, the terms of which are clear and limit Ida’s responsibility to pay only 25% of 75% of the total costs awarded to the plaintiffs in the estate action.

24The respondents submit that LawPRO does not have an independent cause of action to seek reimbursement for its payment of the entire costs order, and any ability to collect payment must arise from LawPRO’s subrogated rights (a position disputed by LawPRO). As Hagel did not assign any cause(s) of action vested in her to LawPRO, this application ought to be dismissed on subrogation principles alone.

25The respondents further submit that this application is an abuse of process, and the plain and clear wording in the Justice Price’s Costs Endorsement and Supplementary Costs Endorsement acts as a bar to the relief sought by LawPRO on this application.

Decision

26To begin, the respondents submit that LawPRO does not have standing to bring this application, as the application ought to have been brought in the name of Hagel. I agree with both parties that the facts of this application render the issues to be somewhat unique. However, this application does not concern a subrogated claim made on behalf of LawPRO, as LawPRO is not attempting to recover funds paid to indemnify Hagel as its insured for any losses caused by a third party. As such, I agree with LawPRO that the law of subrogation is not relevant or applicable to the issues set out in this application.

27I adopt and rely upon Justice Trimble’s comments in his recent endorsement:

“In the Application, LawPRO is not seeking from the Moving Parties repayment of any monies for which Hagel was held liable under the Costs Order or Amended Costs Order. LawPRO only seeks recovery of the amount which LawPRO paid for the benefit of the Moving Parties, in excess of the monies which it paid for the benefit of Hagel. In other words, LawPRO seeks the Moving Parties’ ‘several’ or apportioned obligation under the Costs Order as a result of LawPRO satisfying the Moving Parties and Hagel’s ‘joint’ obligation to the Baca Parties. Recovery of such funds belongs solely to LawPRO as LawPRO paid the entirety of the joint obligations, including the several obligation of the Moving Parties.”

28The respondents further submit that there is no evidence of an assignment from Hagel to LawPRO, and the absence of such an assignment undermines LawPRO’s standing to bring this application. While I agree that no actual assignment document was tendered in the record before the Court, why else would LawPRO have paid the entire amount owing under Justice Price’s costs award unless it agreed to stand in Hagel’s shoes? Had LawPRO only paid Hagel’s 25% share of the costs order, LawPRO would have no standing to collect funds from the respondents. However, these are not the facts before the Court, and I do not view the lack of an actual assignment document to be fatal to the issue of LawPRO’s standing to commence this application.

29LawPRO’s primary position is that in addition to Ida’s obligation to pay LawPRO the sum of $68,534.95 (being 25% of 75% of the costs order), LawPRO and Ida should share equally in the obligation to pay the balance owing by Augusta and Bruno (being the sum of $205,604.86, or $102,802.43 each). In my view, this is not an equitable result given that Justice Price (twice) expressly delineated each parties’ allocated share of responsibility for the costs order. While I agree with LawPRO that, given the inability of Augusta and Bruno to contribute their (75% of 75%) share of the costs order, debtors who can pay a costs award must make good the share of a co-debtor who cannot pay.

30The respondents argue that it would be unfair to saddle Ida with the obligation to pay any amounts over and above her 25% of 75% share as ordered by Justice Price. In my view, this argument rings hollow as LawPRO has voluntarily paid far more than its 25% share as ordered by Justice Price, and liability between Hagel and the respondents was several thereby permitting LawPRO to seek contribution from the respondents. As held in Lowe & Sons v. Dixon & Sons (1885) 16 Q.B. 455, “in equity, those who can pay must not only contribute their own shares, but they must also make good the shares of those who are unable to furnish their own contribution.”

31I find that the just and equitable result is for LawPRO and Ida to share rateably in their obligation to fund payment of the $205,604.86. Using the allocated shares in Justice Price’s costs order, Ida is responsible for 18.75% (i.e. 25% of 25%) of the costs order, whereby LawPRO is responsible for 25% of the costs order. As such, using those same figures Ida would be responsible for 42.9% of the amount owing by Augusta and Bruno, and LawPRO would be responsible for 57.1% of that same amount.

32Accordingly, Ida’s share of the $205,604.86 owing is $88,204.49. Adding Ida’s share of the $205,604.86 to her own 18.75% share of the costs award, I thus order Ida to pay LawPRO the sum of $156,739.44.

33Subject to (a) the disposition of the costs of this application (including Younan’s costs, if any), and (b) the claims of LawPRO and Ida in the face of Augusta’s current proposal (and potential bankruptcy), Younan is hereby directed to release the proceeds of sale owing to Ida from his trust account in partial satisfaction of the above debt owing by Ida to LawPRO.

Costs

34I would ask the parties to exert the necessary efforts to try and resolve the costs of this application. If those efforts prove unsuccessful, the parties may serve and file written costs submissions (totaling no more than five pages including a Costs Outline) in accordance with the following schedule:

a) LawPRO may serve and file its written costs submissions within 10 business days of the release of this Endorsement; and

b) the respondents, including Younan, may serve and file their written responding costs submissions within 10 business days of the receipt of LawPRO’s written costs submissions.

Diamond J.