COURT FILE NOS.: CV-21-00656995-0000 CV-21-00657670-0000

DATE: 20210913

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

FOGLER, RUBINOFF LLP

Applicant and Respondent in Cross-Application

– and –

CONRAD HOULE and SHEILA HOULE

Respondents and Applicants in Cross-Application

Milton A. Davis and Hailey Abramsky, for the Applicant and Respondent in Cross-Application

David Sischy and Maggie MacDonald, for the Respondents and Applicants in Cross-Application

HEARD: September 13, 2021

ENDORSEMENT AS TO COSTS

VERMETTE J.

[1] On August 19, 2021, I released reasons for judgment in these Applications: (a) granting the Application of Fogler, Rubinoff LLP (“Fogler”) to enforce a costs award made against the Respondents, Conrad and Sheila Houle (the “Houles”), by Arbitrator Ronald Dash on January 25, 2021 in the amount of $130,485.00 (“Costs Award”); and (b) dismissing the Houles’ Cross-Application to set aside the Costs Award or, in the alternative, for leave to appeal the Costs Award.

[2] The parties were not able to agree on costs and have delivered costs submissions and bills of costs.

Positions of the parties

a. Fogler’s position

[3] Fogler’s bill of costs is in the amount of $69,127.26 on a substantial indemnity basis, and $41,911.17 on a partial indemnity basis.

[4] Fogler submits that since the Houles refused to honour their debt to Fogler (i.e. unpaid accounts) and the Arbitrator’s awards and took unfounded positions on the Applications, awarding costs on a substantial indemnity basis would be just, fair and equitable. They argue that Fogler should not have to bear any costs of either Application and that an order of costs should not be “partial” as it would discount the net amount that the Houles have to pay and impose on Fogler a loss for the time and resources that the Applications demanded for no good reason.

b. The Houles’ position

[5] The Houles’ position is that this is not an appropriate case for substantial indemnity costs. They argue that Fogler’s submissions trivialize their legal rights and the statutory processes put in place that they lawfully exercised in challenging the Costs Award. They state that there is no evidence of any misconduct on their part. According to the Houles, the fact that they were unsuccessful does not mean that they acted abusively or improperly in any way.

[6] With respect to quantum, the Houles submit that the amount of costs and the total hours claimed by Fogler are excessive given the nature of the Applications, the limited materials prepared and filed by Fogler, the fact that there were no cross-examinations by either party and the length of the hearing (half a day). They state that in similar cases where the parties were not self-represented, courts have awarded $20,000 in costs on a partial indemnity basis.

[7] Finally, the Houles submit that Fogler, as self-represented counsel, is not entitled to costs calculated on the same basis as a litigant who retained external counsel. They refer to the 2019 decision of the Ontario Court of Appeal in Benarroch v. Fred Tayar & Associates P.C., 2019 ONCA 228 (“Benarroch”), and state that Fogler has not presented any evidence of lost opportunity costs nor has it made any attempt to distinguish “client time” from “counsel time”, as required by the Court of Appeal. Accordingly, they submit that Fogler is only entitled to nominal costs not greater than $5,000.00.

Scale of costs

[8] Substantial indemnity costs are only warranted in rare and exceptional cases where a party has engaged in behaviour worthy of sanction, such as where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties: Davies v. Clarington (Municipality), 2009 ONCA 722 at paras. 28-33. In my view, the conduct of the Houles in this case does not rise to the egregious level required to award costs on a substantial indemnity basis. Hard-fought litigation is insufficient to justify an elevated costs award: see Davies v. Clarington (Municipality), 2009 ONCA 722 at paras. 42-46.

Quantum

[9] In Benarroch at paras. 27-28 and 32-35, the Court of Appeal stated the following:

[27] Fong [Fong v. Chan(1999), 1999 2052 (ON CA), 46 O.R. (3d) 330 (C.A.)] explained that, where a litigant is self-represented, some compensation may be awarded for lost opportunity costs, even in the absence of payments made to a lawyer. That compensation, however, is not for the time and effort that any litigant would have devoted to the case. It is only for the work done by the self-represented litigant over and above the normal involvement of a client, and provided it concerns work that would ordinarily be accomplished by a lawyer. The self-represented litigant must also show that an opportunity cost was incurred because some remunerative activity was forgone.

[28] Where the self-represented litigant is a lawyer, he or she will not recover anything for the time spent on the matter that would necessarily have been devoted to the case had outside counsel been retained. There will likely be no clear way to differentiate between time devoted by the lawyer that would have been spent on the matter as “client” and time devoted in lieu of retaining an outside lawyer to deal with the matter. Some time is clearly either “client time” or “lawyer time”, but much of the time will be a blend of both.

[32] A further caution made in Fong is that an award of lost opportunity costs should be “only a ‘moderate’ or ‘reasonable’ allowance for the loss devoted to preparing and presenting the case”: at para. 26. This signals that the court should avoid a straight application of a lawyer’s hourly rate. Regular hourly rates are of course relevant, as would be the daily rate of a self-represented labourer or the lost profits of a self-employed business person. These amounts should be taken into account in the analysis of a proper costs award, but they cannot be recovered as they would if a lawyer had been hired as external counsel.

[33] In summary, as explained in Fong, a trial or application judge retains the discretion to award or not to award costs. Where the judge determines that an award is warranted and, based on the record, the judge is satisfied that lost opportunity costs have been suffered because the self-represented party has forgone remunerative activity, the judge is either to assess and fix “moderate” or “reasonable” costs, or to provide clear guidelines to an assessment officer as to the manner in which costs are to be assessed.

[34] Where, as here, the self-represented party is a lawyer, the lawyer will be treated in substantially the same way as any other self-represented litigant. In other words, the self-represented lawyer will receive no compensation for the time that the lawyer would have devoted to the matter as a client if external counsel had been retained. In addition, the lawyer will not necessarily recover his or her regular or even partial indemnity rate for all of the time devoted to the work ordinarily done by a lawyer retained to conduct the litigation. He or she will only get an “allowance” for the lost opportunity to devote the time to remunerative activities.

[35] […] Where there is little evidence of lost opportunity costs, any award the court may decide to make will likely be in a nominal amount. However, where the self-represented party has demonstrated that the lost opportunity costs were significant, as here, an award for an amount greater than mere nominal costs is justified. [Emphasis added.]

[10] The fact that Fogler was self-represented was an issue that was raised and argued before the Arbitrator. As part of its costs submissions in the arbitration, Fogler filed an affidavit to provide evidence that by acting in person in the arbitration, the opportunity to pursue other remunerative work had been lost. In his Costs Award, the Arbitrator reviewed the relevant case law and principles, including Benarroch. Thus, Fogler is aware of the principles that apply to the awarding of costs to lawyers who are self-represented parties, including the relevant appellate case law.

[11] I agree with the Houles that Fogler has failed to provide evidence of lost opportunity costs/forgone remunerative activity, and that it has made no attempt to distinguish “client time” from “counsel time”. In light of the principles set out in Benarroch, any costs award with respect to the Applications should be nominal.

Conclusion

[12] In light of the foregoing, and based on the nominal amount suggested in the Houles’ costs submissions and the disbursements in the amount of $525.47 set out in Fogler’s bill of costs, I order the Houles to pay to Fogler its costs of the Applications in the amount of $5,525.47.

[13] The costs are to be paid to Fogler by the Houles within 30 days.

Vermette J.

Released: September 13, 2021