Court File and Parties
COURT FILE NO.: CV-22-89688-00ES
DATE: 2022/12/20
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Ronald Scott Robertson, Applicant
and
Martin Diegel, Respondent
BEFORE: Justice A. Doyle
COUNSEL: Kibondo M. Kilongozi, Counsel for the Applicant
Ronald F. Caza, Counsel for the Respondent
HEARD: In writing
Costs ENDORSEMENT
[1] On November 4, 2022, this court granted the motion brought by the Respondent, Martin Diegel, for an order striking out portions of the Application and the Applicant’s affidavit sworn June 30, 2022.
[2] The court also granted leave to the Applicant to amend his application and affidavit within 21 days from the date of the order setting out the relevant and material facts supporting the allegations in the paragraphs that were struck.
[3] If the parties were unable to agree on costs, they were to provide me with written submissions.
[4] After considering the parties’ costs submissions, Bill of Costs and Rules of Civil Procedure, R.R.O. 1990, Reg. 194, (“Rules”), I order the Applicant to pay costs to the Respondent the amount of $7,500 (inclusive of disbursements and HST) within 90 days.
Respondent’s Position
[5] The Respondent seeks costs on a full indemnity basis to be paid by the Applicant’s solicitor in the amount of $49,998.50 plus $6,499.81 HST.
[6] The Respondent submits that costs on a full indemnity basis should be awarded due to egregious actions of the Applicant and his counsel in not making any effort to correct the pleadings at the outset nor after the motion was brought. The Applicant refused to amend the pleadings. The high costs incurred by the Respondent was directly due to the improper and unintelligible pleadings which has been carried through to the final costs’ submissions.
[7] The Respondent submits that the Applicant has engaged in improper, vexatious, unnecessary conduct which has unnecessarily lengthened the proceedings and incurred unnecessary costs. The allegation of unsubstantiated and unfounded fraud, especially a reckless attack on the integrity of a lawyer, should attract costs on substantial indemnity. See Baird v. Kemp, Legear et al., 2020 ONSC 7579 para. 11, and 1623242 Ontario Inc. v. Great Lakes Copper Inc., 2016 ONSC 1002 para. 97.
[8] Much time was wasted, and costs incurred by the Applicant’s initial request to cross-examine the deponent (Jacob-Charles Diegel, a lawyer) on his affidavit which was merely identifying documents as exhibits, which should have been filed by the Applicant with the issuance of his application. After extensive communications to schedule cross-examination and time spent preparing a case conference brief in anticipation of a case conference, the Applicant advised the court at the hearing of this motion that cross-examination was no longer necessary.
[9] The Applicant also wished to cross-examine the Respondent Martin Diegel on a non-existent affidavit.
[10] The Applicant’s affidavit responding to the Respondent’s motion was replete with argument, referred to the case law and was not filed in a timely manner.
[11] Finally, the Respondent filed a Rule 49 offer on September 13, 2022, which provided for an offer that the Application and affidavit would be struck with no leave to amend. The Applicant never responded.
[12] There is no basis for the Applicant to be awarded costs.
Applicant’s Position
[13] The Applicant served an offer to settle with his costs submissions. It provided that he would accept $5,000 as payment for costs from the Respondent until December 5, 2022 and after that time costs would be paid on a partial indemnity basis and after January 5, 2023 costs would be payable on a substantial basis.
[14] The Applicant seeks costs against Mr. Diegel personally and in his capacity as a trustee and estate in the amount of $7,000 on the basis of partial indemnity basis.
[15] With respect to the claim that the Applicant’s counsel should be liable for the Respondent’s costs, the Applicant relies on the stringent and narrow test for awarding costs against the counsel personally “only on an exceptional basis where the lawyer’s acts have seriously undermined the authority of the courts or seriously interfered with the administration of justice”. See Carmichael v Stathshore Industrial Park Limited, 1999 3723 (ON CA).
[16] He argues that the fact that a lawyer has tendered a “defective affidavit” may demonstrate a mistake and is not a basis to award costs against the lawyer personally.
[17] In Carleton v. Beaverton Hotel, 2009 92124, the court found the mere fact that a lawyer “made assertions of unprofessional conduct against opposing counsel” that were not proved and groundless, is not a basis for an award against a lawyer personally. The lawyer should be able to raise concerns about inappropriate conduct of counsel, particularly when that conduct bears some relevance to an issue before the court.
[18] The fact that a party alleges fraud does not automatically result in the other party being entitled to costs on a substantial indemnity basis and that there is an absolute rule that an unsuccessful allegation of fraud automatically invokes a costs sanction. Crestwood Lake Limited v. Pizzey, 1990 18672 (ON CA), Plester v. Wawanesa Mutual Insurance Company, 2006 17918, E.S. Fox Limited v. Nordaria Enterprises Inc., 2006 6690.
[19] It is not improper to request the cross-examination of a deponent on their affidavit. There is a prima facie right to cross-examine. Kaighin Capital Inc. v. Canadian National Sportsmen’s Shows et al., 1986 2696 (ON SC).
[20] The Respondent was not totally successful as the court permitted the Applicant to file an amended pleading and hence their costs should be reduced.
[21] The Respondent should have complied with the number of pages restricted in costs submissions as directed by the court.
Legal framework
[22] The costs of a proceeding are in the discretion of the courts(131(1) Courts of Justice Act). That discretion must be exercised on a principled basis (Davies v. Clarington Municipality, 2009 ONCA 722, 100 O.R. (3d) 66, at para. 40). Fixing costs is not merely a mechanical exercise; the amount awarded should, considering all the circumstances, be fair and reasonable (Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.)). In a proper case, costs may be awarded against a successful party (r. 57.01 (2) of the Rules).
[23] Rule 57.01(1) of the Rules contains a non-exhaustive checklist of factors that guide the court in its reasoning when awarding costs in the exercise of its discretion under s. 131 of the Courts of Justice Act.
[24] In Leaf Homes Limited v. Khan, 2022 ONCA 504, the Ontario Court of Appeal stated:
[126] Rule 57.07(1) empowers the court to order a lawyer to personally pay a party’s costs if the lawyer “caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default”. However, r. 57.07(2) imposes a mandatory requirement on the court: “no such order shall be made unless the lawyer is given a reasonable opportunity to make representations to the court.” Rule 57.07 is not concerned with the discipline or punishment of a lawyer but only with compensation for conduct that caused unreasonable costs to be incurred: Galganov v. Russell (Township), 2012 ONCA 410, 350 D.L.R. (4th) 679, at para. 16, leave to appeal requested but appeal discontinued, [2012] S.C.C.A. No. 382.
[127] A two-part test must be followed to determine the liability of a lawyer for costs under r. 57.07(1). First, the court must consider whether the lawyer’s conduct falls within r. 57.07(1), in the sense that it caused costs to be incurred unnecessarily. Second, as a matter of discretion and applying extreme caution, the court must consider whether the imposition of costs against the lawyer personally is warranted. Such awards are to 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 [r]ule 57.07(1)”: Galganov, at paras. 18, 22.
[25] It is therefore important that, before ordering costs against a solicitor, pursuant to r. 57.07(2), the court give the Applicant’s solicitor an opportunity to make representations.
[26] In Galganov v. Russell (Township), 2012 ONCA 410, the Court of Appeal referred to the governing principles in awarding costs personally against a lawyer were set out by the Supreme Court of Canada in Young v. Young, 1993 34 (SCC), [1993] 4 S.C.R. 3, at pp. 135-136:
The basic principle on which costs are awarded is as compensation for the successful party, not in order to punish a barrister. Any member of the legal profession might be subject to a compensatory order for costs if it is shown that repetitive and irrelevant material, and excessive motions and applications, characterized the proceedings in which they were involved, and that the lawyer acted in bad faith in encouraging this abuse and delay. It is clear that the courts possess jurisdiction to make such an award, often under statute and, in any event, as part of their inherent jurisdiction to control abuse of process and contempt of court.... [C]ourts 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 his or her fear of an adverse order of costs may conflict with these fundamental duties of his or her calling. [Emphasis in original.]
Analysis
[27] For the reasons that follow, the court will fix the amount of costs for the motion in the amount of $7,500 payable by the Applicant.
Respondent was successful
[28] The court finds that the Respondent was the successful party. He did not meet the criteria for costs under Rule 49 as he did not obtain a better result or the same result as the decision of this court. The court only struck portions of the Applicant’s affidavit and gave the Applicant leave to amend.
[29] Briefly, this case is about the Applicant’s claim against his mother’s estate and the estate trustee, Martin Diegel.
[30] His mother’s will provided that, other than some household effect, the residence of the deceased was to bequeathed to the Applicant’s sister.
[31] The application requests various and extensive relief including directions regarding the disposal of the assets of the estate; duties of the estate trustee; replacement of the estate trustee; an order appointing an estate trustee during litigation and that this person apply for a certificate of appointment of estate trustee and a waiver that they post a bond as security; a list of rights and powers to be conferred on the estate trustee during litigation; a certificate pending litigation, accounting of the estate; an order suspending the administration of the estate and a declaration that the respondent is in conflict of interest, biased and hence cannot act in the best interest of the estate.
[32] The contentious aspects of his affidavit are his allegations against the Respondent in that he acted with bias, defrauded the estate and colluded with the sister and neglected his duties by failing to provide disclosure and an accounting.
[33] The Applicant has failed to plead material facts to support the serious allegations of professional misconduct, fraud, conspiracy and unethical behaviour against the Respondent.
[34] The court found the following:
The Applicant’s affidavit lacks specificity and details setting out the facts that he intends to rely on in support of his application.
The crux of the Applicant’s case is that he is vehemently opposed to the Respondent acting as estate trustee of his mother’s estate. He brings many serious allegations against him: e.g., he is conspiring with the Applicant’s sister, he has committed fraud and he is dishonest;
His recent affidavit responding to this motion makes legal arguments, no doubt presented to him by his lawyer, and quotes legal arguments in a motion for striking pleadings; and
I exercised my discretion under Rule 25.11 to strike out or expunge parts of the Applicant’s affidavit on the ground that they were scandalous, frivolous or vexatious or an abuse of process, i.e., portions of paras. 6, 10, 11, 12, 13, 15, 17, 18, 19 and 21.
[35] In my view, this is one of the clearest of cases where the court should exercise its discretion.
[36] Therefore, the Respondent is entitled to costs. There is no basis to award the Applicant any costs.
Rule 57.07
[37] Should costs be ordered against the Applicant’s counsel?
[38] This is not one of those rare cases that costs should be awarded against the Applicant’s solicitor.
[39] The first step is to determine whether the Applicant’s counsel falls within Rule 57.07(1) in a sense that he caused costs to be incurred unnecessarily.
[40] 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”. The court does not need to find bad faith.
[41] Certainly, the pleadings were deficient and lacked details to substantiate the serious accusations made against the Respondent who is a senior lawyer practising in Ottawa.
[42] A court should be cautious in awarding costs personally against a lawyer where it would be necessary to infringe on solicitor-client privilege: see Nazmdeh v. Ursel, 2010 BCCA 131, 3 B.C.L.R. (5th) 277, at para. 110.
[43] In Rand Estate v. Lenton, 2009 ONCA 251, [2009] O.J. No. 1173, at para. 5, the Court of Appeal directs the court to review the entire litigation to obtain a proper context for the action of counsel.
[44] This action was instituted in July 2022. However, the Applicant had brought action against his mother (now deceased) in a previous action. In addition, the court heard that the estate also has ongoing litigation against the Applicant in another action. Complete details of that litigation are not before the court.
[45] The court should look at specific incidents rather than make general observations. The specific issues are the deficient pleadings which required this motion, further costs for an amended pleadings and costs to the Respondent in responding.
[46] Below are the findings made by this court in the motion to strike:
There were paragraphs that were irrelevant, argumentative or inserted for colour, or that constitute bare allegations and should be struck out as scandalous.
A fair trial requires that the defendant be able to put forward a "full" defence, not — as the motion judge erroneously concluded — a "reasonable" defence defined in advance by the plaintiff and the court.
Para. 6 alleges that the Respondent and his sister influenced his mother to sign her will. There are no details about how this was carried out. This is a serious allegation against the Respondent lawyer and there are no relevant and material facts to support it. The Applicant sets out a conclusion without providing the court and the Respondent with details. In my view, this is set out to embarrass the Respondent, and it is scandalous. This paragraph will be struck.
The last sentence in para. 11, and paras. 12 and 13 alleged a conspiracy between the Respondent and the Applicant’s sister. The Applicant alleges that they have sold 17 Rothwell and that they now “conspire(s) sic” to sell two more properties. The details of the conspiracy are not provided.
I find that some particulars regarding the conspiracy have been pleaded but not sufficiently so that a civil conspiracy could be determined based on these facts.
The Applicant alleges fraud by the Respondent and the Applicant’s sister but does not provide particulars. There is no information regarding the alleged fraud. This paragraph will be struck.
He alleges that the trustee abused his discretion and committed professional misconduct. There are no particulars regarding these allegations. He alleges conflict of interest, but the deceased would have been aware that he was representing her so that allegation does not make sense.
The last sentence of paras. 11, 12 and 13 are scandalous, intended to embarrass and fail to set out the facts that would support these conclusions. These portions of the affidavit will be struck.
Para. 15 reiterated his decision not to consent to any sale and indicates that the sale of 17 Rothwell is illegal without setting out the relevant and material facts. This paragraph will be struck.
Para. 17 provides a conclusion and fails to provide relevant and material facts. It will be struck.
Para. 18 alleges that the estate trustee did not keep his property separate from the estate property. No details are provided. This is scandalous and does not set out the relevant and material facts to support this conclusion. This will be struck.
In para. 19, the Applicant does not specify the hostility nor provide details. Reading the affidavit generously as a whole, one can discern that the Applicant believes that the Respondent has an animus towards him. However, the pleadings do not specify the examples of the hostility and hence should be struck.
Para. 20 states that the estate trustee “greatly abused the exercise of his discretion”. Again, this is a serious allegation against the estate trustee and a conclusion based on selling off real properties without disclosure and consent of the heirs. This is a conclusion. No details are provided. Reading the affidavit generously, one notes that the Applicant disputes the sale of the Rothwell property which was done without notifying him or obtaining his consent. This paragraph will not be struck.
These are serious issues against the estate trustee. It is not clear whether any material and relevant facts exist to support the very serious allegations of fraud, professional misconduct and conspiracy.
[47] I also note that time was spent for the preparation of a case conference that proved to be unnecessary and attempting to set dates for cross-examination which never occurred.
[48] The court is not concerned with the lawyer’s professional conduct generally, but whether the Applicant’s conduct, including the conduct of the litigation, caused unreasonable costs to be incurred: See Carleton, at para. 18.
[49] I find that the lawyer, through his absolutely deficient pleadings with serious allegations of conspiracy and fraud against a lawyer, caused unnecessary costs.
[50] I must now consider whether I intend to exercise my discretion to award costs against the Applicant’s lawyer personally in light of the cautionary directions set out by the Supreme Court in Young v. Young 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 [r]ule 57.07(1)”: Carleton, at para. 15.
[51] I find that this is not one of these rare cases as set out in Young. Certainly, costs were incurred needlessly. However, I am also mindful that lawyers should not be put in a position as gatekeepers on whether there is a meritorious claim and preventing them from taking the tough cases. In my view, the conduct of the Applicant’s counsel does not rise to the egregious conduct that necessitates a costs award against him personally, at least at this stage.
Quantum
[52] Finally, this is not a case that costs should be awarded on a full indemnity basis nor on a substantial indemnity basis.
[53] In reviewing the Respondent’s bill of costs, I note the following:
There are various accounts submitted: Diegel accounts, Caza Saikaley LLP accounts and a Shibley Righton Account to Law Pro;
There is also mention that due to the allegations of fraud against the Respondent lawyer, a separate counsel will need to be retained given that LawPro will cover it;
Six individuals worked on the file: Martin Diegel at $525 per hour (call 1982), Jacob-Charles Diegel at $275 per hour (call 2017), Ronald Caza at $660 per hour (call 1989), a paralegal at $150 per hour, Sean Lawler from Shibley Righton billed LawPro directly and Mr. Deigel's legal assistant at $160 per hour;
It is not clear if there is duplication amongst the individuals;
Martin Diegel’s account of $41,895.50 (66.2 hours for Martin Diegel, 34.3 hours for Jacob-Charles Diegel, and 2.5 hours for paralegal)
Mr. Caza’s account of $8,103; and
Inclusive of Disbursements and HST, the accounts total $56,498.31.
[54] The court notes numerous correspondence (sometimes several a day from counsel) on Mr. Diegel’s account; and many memos (sometimes several on one day) on Mr. Caza’s account. There is no explanation for this.
[55] I agree that the preparation for the motion commenced from the outset of this litigation when the Respondent first received the pleadings and reviewed them and the application of Rule 25.11.
[56] This motion was not complex but important for the litigation and its process. The hearing was not lengthy nor were there volumes of material filed.
[57] The fixing of costs is not simply an arithmetic function dependent on the hours worked or hourly rates used. The party paying the costs should be subjected to an order which is fair and predictable.
[58] Accordingly, a fair and reasonable amount of costs to be awarded against the Applicant is $7,500 (inclusive of taxes and HST) payable by the Respondent within 90 days.
[59] Finally, the Respondent has requested that I hear their motion to strike, the freshly amended application and affidavit recently filed by the Applicant. I am not seized of this matter. The Respondent may proceed to obtain a motion date in the usual fashion.
Justice A. Doyle
Date: December 20, 2022
COURT FILE NO.: CV-22-89688-00ES
DATE: 2022/12/20
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Ronald Scott Robertson, Applicant
and
Martin Diegel, Respondent
BEFORE: Justice A. Doyle
COUNSEL: Kibondo M. Kilongozi, Counsel for the Applicant
Ronald F. Caza, Counsel for the Respondent
Costs ENDORSEMENT
Justice A. Doyle
Released: December 20, 2022