Superior Court of Justice - Ontario

COURT FILE NO.: 2016-757

DATE: 20220524

RE: MYLES O’REILLY, Applicant

AND:

GRYZNA SWIST, SHANNON O’REILLY, ALICJA MUZIOL, THE ESTATE TRUSTEE OF THE ESTATE OF IZABELLA SWIST, THE ESTATE TRUSTEE OF THE ESTATE OF MICHAL SWIST, THE ESTATE TRUSTEE OF THE ESTATE OF LESZEK SWIST, ADRIANNA PACYNA and the OFFICE OF THE CHILDREN’S LAWYER, Respondents

BEFORE: VERMETTE J.

COUNSEL: Mark Elkin, for the Applicant

Krystyne Rusek and Manpreet Kaur, for the Respondent Adrianna Pacyna

HEARD: In writing

ENDORSEMENT AS TO COSTS

[1] On March 14, 2022, I released reasons for judgment dismissing the Applicant’s Application for dependant support (2022 ONSC 1616). In paragraph 95 of my reasons, I set out a timetable for the delivery of costs submissions in the event the parties were not able to agree on costs.

[2] While the Respondent Adrianna Pacyna delivered costs submissions in accordance with the timetable, the Applicant did not. In fact, he has not delivered any responding costs submissions. This is particularly troubling given that Ms. Pacyna is seeking costs against the Applicant’s counsel personally.

[3] After the date for the delivery of responding submissions had come and gone, my assistant sent an e-mail to counsel for the Applicant to follow up and advise him that if he wished to file responding costs submissions, he had to do so by the end of the following week, or I would decide the issue of costs based on the submissions before me. More than three weeks after the second deadline given to counsel for the Applicant, he still has not filed responding costs submissions.

[4] This is my decision on costs.

Position of Ms. Pacyna

[5] Ms. Pacyna was entirely successful in the Application. She seeks her costs of the Application against the Applicant and a portion against the Applicant’s counsel personally “relating to time spent addressing various untenable positions and demands made before, during and after the hearing, as well as improper conduct.” She seeks costs against the Applicant in the amount of $129,562.99 on a substantial indemnity basis ($92,892.94 on a partial indemnity basis), and costs against counsel personally in the amount of $18,179.55 on a substantial indemnity basis ($12,119.70 on a partial indemnity basis).

[6] Ms. Pacyna notes that the litigation lasted over four years, with numerous court attendances and interlocutory events, including, she argues, last-minute attempts by counsel for the Applicant to complicate the proceedings.

[7] Ms. Pacyna’s submissions include the following summary of some of her complaints against the Applicant and his counsel:

Time was wasted preparing for and attending various pre-trial conferences that achieved little or nothing because the Applicant was not prepared for the attendances, or for next steps in the proceeding. More than two years into the litigation, it remained unclear what the Applicant was seeking. Two case conferences were squandered discussing and setting a 5-day trial, which was then vacated at the Applicant’s request.

Despite the hearing date being set well in advance, peremptory on the Applicant, and specifying that no further adjournments would be granted, shortly before the hearing, Applicant’s counsel indicated that he would be seeking an adjournment on various grounds, without serving material or a factum. Respondent’s counsel was forced to prepare arguments to address the anticipated adjournment request. These are further discussed below.

The Applicant attempted to adduce inadmissible medical evidence and viva voce evidence mere days before the hearing, which resulted in Respondent’s counsel preparing an additional factum and affidavit evidence the day before the hearing.

At the hearing, new legal issues and arguments were raised during oral submissions by Applicant’s counsel. These were dismissed in the Judgment as having no evidentiary basis.

Commencing in 2018, nine offers to settle were served on the Applicant.

[8] Ms. Pacyna submits that substantial indemnity costs are warranted as a result of unmerited attacks on the integrity of her counsel. Ms. Pacyna points out that in his post-hearing written submissions, the Applicant made improper allegations of sharp practice against her counsel in relation to her position on the admissibility of expert reports.

Liability of the Applicant’s lawyer for costs personally

[9] Rule 57.07 of the Rules of Civil Procedure provides as follows:

Liability of Lawyer for Costs

57.07 (1) Where a lawyer for a party has caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default, the court may make an order,

(a) disallowing costs between the lawyer and client or directing the lawyer to repay to the client money paid on account of costs;

(b) directing the lawyer to reimburse the client for any costs that the client has been ordered to pay to any other party; and

(c) requiring the lawyer personally to pay the costs of any party.

(2) An order under subrule (1) may be made by the court on its own initiative or on the motion of any party to the proceeding, but no such order shall be made unless the lawyer is given a reasonable opportunity to make representations to the court.

(3) The court may direct that notice of an order against a lawyer under subrule (1) be given to the client in the manner specified in the order.

[10] Rule 57.07 is not concerned with the discipline or punishment of a lawyer. It is designed to protect and compensate a party who has been subjected to costs being incurred without reasonable cause. See Galganov v. Russell (Township), 2012 ONCA 410 at paras. 14-16 (“Galganov”).

[11] Courts must be extremely cautious in awarding costs personally against a lawyer given the duties upon a lawyer to guard confidentiality of instructions and to bring forward with courage even unpopular causes. A lawyer should not be placed in a situation where their fear of an adverse order of costs may conflict with these fundamental duties of their calling. See Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3 at 135-136 and Galganov at para. 13.

[12] The following two-part test applies to determine the liability of a lawyer for costs under Rule 57.07(1):

a. The first step is to inquire whether the lawyer’s conduct falls within Rule 57.07(1) in the sense that it caused costs to be incurred unnecessarily. Rule 57.07(1) refers specifically to conduct that “caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default”. Mere negligence can attract costs consequences in addition to actions or omissions which fall short of negligence. Bad faith is not a requirement for imposing the costs consequences of Rule 57.07(1), but it is only when a lawyer pursues a goal which is clearly unattainable or is clearly derelict in their duties as an officer of the court that resort should be had to this Rule. Rule 57.07(1) requires an examination of the entire course of litigation so that the judge can put in proper context the specific actions and conduct of counsel. However, while the conduct as a whole must be considered, a court must consider specific incidents of conduct in determining whether the conduct falls within rule 57.07(1). See Galganov at paras. 18-21.

b. The second step is to consider, as a matter of discretion and applying the “extreme caution” principle, whether, in the circumstances, the imposition of costs against the lawyer personally is warranted. The “extreme caution” principle means that these awards must only be made sparingly, with care and discretion, only in clear cases, and not simply because the conduct of a lawyer may appear to fall within the circumstances described in Rule 57.07(1). See Galganov at para. 22.

[13] One factor that should be taken into account in determining whether the imposition of costs against a lawyer personally is warranted is whether the lawyer’s client has waived solicitor-client privilege. A court should be cautious in awarding costs personally against a lawyer where it would be necessary to infringe on solicitor-client privilege. See Galganov at para. 28. I note that there is no indication that the Applicant has waived solicitor-client privilege in this case.

[14] In assessing the conduct of the lawyer at the first step of the test to determine whether it caused costs to be incurred unnecessarily, the issue of whether the lawyer was acting in their personal capacity or as an agent for their client must be considered. The lawyer’s conduct must be assessed separately from their client’s conduct as the lawyer should not be responsible for advancing a weak case if instructed to do so by their client. Clients are not obliged to accept the judgment of their lawyer but are entitled to obtain the judgment of the court. See Galganov at para. 29.

[15] In the present case, the request for costs against the Applicant’s counsel personally is focused on two specific points: (1) the capacity issue that was raised at the last minute and the related request for an adjournment (“Capacity Issue”); and (2) evidentiary issues that were also raised at the last minute and concerned mainly the use of medical and expert evidence and the adducing of viva voce evidence at the hearing of the Application (“Evidentiary Issues”).

[16] I will deal with the Evidentiary Issues first. In considering all the circumstances of this matter, I cannot conclude, based on the information before me, that the Applicant’s counsel was acting in his “personal capacity” with respect to the Evidentiary Issues as opposed to acting pursuant to his client’s instructions. Therefore, I find that it would not be appropriate to order the Applicant’s counsel to pay costs personally with respect to the Evidentiary Issues.

[17] As for the Capacity Issue, I noted in my reasons for judgment at paragraph 31 that “[i]t was unclear to me whether the Applicant’s counsel had any instructions from the Applicant regarding a court-ordered capacity assessment.” However, prior endorsements in this case have documented personal circumstances and life challenges faced by the Applicant (see, in particular, the endorsement of Justice Koehnen dated March 25, 2021), as well as difficulties in the lawyer-client relationship (e.g., references to a motion to be removed as lawyer of record). Based on this and the information that was before me at the hearing of the Application, I can infer that the Applicant was not an easy client to deal with (stated euphemistically). Given this, and applying the extreme caution principle, I conclude that this is not one of the clear cases in which an award of costs should be made against a lawyer personally.

[18] While I have concluded that the Applicant’s counsel should not be ordered to pay costs personally in this case, it was a close call. I have found the conduct of the Applicant’s counsel in this case to be very concerning, including his failure to provide responding costs submissions.

Scale of costs

[19] As has been observed in many cases, costs on the elevated scale are exceptional and are reserved for those situations when a party has displayed reprehensible, scandalous or outrageous conduct: see Quickie Convenience Stores Corp. v. Parkland Fuel Corporation, 2021 ONCA 287 at para. 4.

[20] Ms. Pacyna makes the following submissions with respect to the scale of costs:

Lastly, in his post-hearing written submissions, Mr. Elkin made improper allegations of sharp practice against Ms. Rusek for her position on the admissibility of the alleged expert reports. Further, he referred to Ms. Rusek’s attempts to enforce compliance with the Rules as “bringing the system of justice into disrepute”. Unmerited attacks on the integrity of counsel can and should attract substantial indemnity costs.

[21] Cases where substantial indemnity costs have been ordered as a result of allegations of fraud or other attacks on the integrity of a party or counsel, including the cases referred to by Ms. Pacyna, are usually cases where there has been a final determination on the merits against the party alleging fraud or improper conduct: see Hall v. Lou, 2021 ONSC 4018 at para. 14.

[22] Here, the impugned statements relate to the admissibility of the expert reports put forward by the Applicant. However, I did not rule on this issue in my reasons for judgment as the reports were only relevant in the event the Applicant was entitled to support and I found that he was not: see paragraph 92 of my reasons for judgment.

[23] Since I did not make any findings on the issue of the admissibility of the expert reports, I conclude that this is not an appropriate case for costs on an elevated scale. Further, I am of the view that the conduct of the Applicant in this case does not otherwise rise to the egregious level required to award costs on a substantial indemnity basis.

[9] While I decline to order costs on a substantial indemnity basis, the difficulties caused by the conduct of the Applicant and his counsel are a relevant factor to take into account when assessing the reasonableness of the quantum of costs sought by Ms. Pacyna.

Quantum

[24] Since I am not ordering the Applicant’s counsel to pay costs personally, the total amount of costs on a partial indemnity basis sought as against the Applicant is $105,012.64 (i.e. $92,892.94 + $12,119.70), inclusive of disbursements and taxes.

[25] Given that the Applicant has not filed responding costs submissions, I do not have any submissions regarding the Applicant’s expectations with respect to costs and the time spent by his own counsel on this matter.

[26] In my view, the number of hours spent by counsel for Ms. Pacyna and the amount of costs sought are generally reasonable in the circumstances and should have been within the reasonable contemplation of the Applicant in light of the length of this proceeding, the numerous interlocutory steps and court attendances, and the last-minute issues raised by the Applicant which needed to be addressed. I also find that the rates claimed are reasonable. However, I will apply a small reduction to ensure the overall reasonableness of the costs award in light of all the circumstances of this case and to take into account potential duplication of work given the number of timekeepers involved.

[27] Another factor supporting the reasonableness of the amount of costs sought by Ms. Pacyna is the numerous offers to settle she made to the Applicant which, in light of the result, should have been accepted by the Applicant. Because of the Applicant’s decision to decline to accept the offers despite the weakness of his claims and evidence, the parties had to incur additional and unnecessary costs.

Conclusion

[28] Taking the foregoing into account, as well as the factors set out in Rule 57.01(1) of the Rules of Civil Procedure, I find that the fair and reasonable award of costs in favour of Ms. Pacyna for the Application is on a partial indemnity basis in the all-inclusive amount of $100,000.00. In my view, this is an amount that the Applicant should reasonably have expected to pay in the event that he was unsuccessful on the Application.

[29] Accordingly, I order that the Applicant pay to Ms. Pacyna her costs of the Application in the all-inclusive amount of $100,000.00 within 30 days.

Vermette J.

Date: May 24, 2022