Court File and Parties

COURT FILE NO.: CV-13-2155-00 DATE: 2023 07 07

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

THE ESTATE OF SULOCHANA SHANTHAKUMAR by her estate trustee, SANTHA KUMAR MYLABATHULA, Plaintiff

AND:

ROYAL BANK OF CANADA, SIVA GURRAPPADI, WILLIAM SYKES, USHA RADHAKRISHAN, SHEILA WILSON, ATTORNEY GENERAL OF CANADA, PHILIP CARVER, ALBERT YANG and THE ATTORNEY GENERAL FOR THE PROVINCE OF ONTARIO, Defendants

COUNSEL: P. Callahan, Counsel for the Plaintiff G. Bowden, Counsel for RBC Defendants K. Watt, Counsel for RCMP D. Yiokaris and N. Manwani, Counsel for LAWPRO

HEARD: In Writing

Costs Endorsement

LEMAY J

[1] I have been informally case-managing this matter for more than two years, and the underlying action has been going on for the better part of a decade. In April of this year, I released a decision (2023 ONSC 2209) addressing a motion to recuse myself from hearing a privilege motion (“the recusal motion”), the privilege motion itself and a motion brought by RBC to require the Plaintiff’s husband to pass the accounts of the Estate. For the purposes of this decision, I will refer to the Plaintiff, her husband and the Estate Trustee collectively as “the Plaintiff” throughout these reasons unless it is necessary to specify who I mean.

[2] The motions arose as a result of the death of the Plaintiff. At the time of her death, the Plaintiff owned a property. She and/or her Estate had accumulated costs awards that were owed to the Defendant, RBC. As far as I am aware, the costs awards remain unpaid. As a result, the Defendant RBC had registered writs against the property.

[3] The Plaintiff’s husband is her Estate Trustee. At some point in mid-2022, he transferred the property that the Plaintiff owned from the Plaintiff’s Estate to his name personally. The costs awards were never paid by the Estate and I understand that the writs were outstanding at the time that the property was transferred.

[4] The Defendant RBC alleges that the transfer was improper and sought production of various documents including documents in the possession of the real estate lawyer who had acted on the transfer of the property from the Plaintiff’s Estate to her husband. The Plaintiff opposed the motion and argued that the documents in the real estate lawyer’s file were privileged. The Plaintiff’s husband also opposed the requirement that he pass the Estate’s accounts.

[5] This led to the series of motions that I heard in April of this year. Given the Plaintiff’s claim of privilege, the law firm that acted for the Plaintiff’s Estate and her husband (LD Law) on the transfer of the property was separately represented. The Defendants were almost entirely successful on these motions. It is now time to fix the costs of this matter.

Positions of the Parties

[6] The Defendant RBC seeks costs on a substantial indemnity basis for the recusal motion and for the privilege motion on the basis that the position of the Plaintiff was unreasonable and caused delay in the prosecution of this action. The total sought for these two motions is $12,655.44. In addition, partial indemnity costs are sought for the motion to pass accounts in the sum of $3,421.98. Finally, RBC seeks costs in the sum of $737.50 plus HST for the preparation of the costs submissions.

[7] Counsel for the law firm that transferred the property from the Plaintiff’s Estate to her husband (LD Law) seeks full indemnity costs in the sum of $1,474.65 or, in the alternative, partial indemnity costs in the sum of $1,017.00 inclusive of HST and disbursements. The law firm seeks these costs on the basis that Courts have repeatedly held that the costs associated with the production of a solicitor’s records should be borne by the Estate. In the alternative, LD Law should be entitled to recover at least partial indemnity costs on the basis that the non-parties are awarded costs where their submissions assist the Court.

[8] In response the Plaintiff argues that there should be no substantial indemnity costs in this matter because no one acted in bad faith and there were no offers to settle. In addition, the Plaintiff argues that the time spent by the Defendant’s counsel was unreasonable and that even if costs are awarded, the costs should be no more than $3,500.00 inclusive of HST and disbursements for all three motions. The submissions of Plaintiff’s counsel do not specifically address the submissions of counsel for LD Law.

[9] I note that the Defendant RBC provided reply submissions. My timetable did not envision reply submissions and I do not normally permit them in cases such as these. Counsel for RBC has quite properly asked for leave to file reply submissions. I see no reason why additional submissions are necessary and leave to file these submissions is denied.

Law and Analysis

[10] In this case, there are no offers to settle. As a result, the principles that apply to my determination of costs in this matter are set out in Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Over and above the success of RBC, the most important of those factors in this case are:

a) The complexity of the issues b) The importance of the issues c) The conduct of any party that tended to shorten or lengthen the proceeding d) Was any step in the process improper, vexatious or unnecessary?

[11] I start by observing that RBC was almost entirely successful on these motions. They are entitled to their costs. Counsel for LD Law should also be entitled to costs for this matter as his participation was required by the Plaintiff’s position on privilege. The questions for me to determine are what the scale and quantum of costs should be.

The Scale of Costs

[12] RBC seeks costs on a substantial indemnity basis. As I have noted, there were no offers to settle in this case. As a result, to establish an entitlement to costs on a substantial indemnity basis, there must be egregious conduct on the part of the Plaintiff. As the Supreme Court noted in Young v. Young, [1993] 4 S.C.R. 3, costs above a partial indemnity scale are warranted “only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties.” See also Davies v. Clarington (Municipality), 2009 ONCA 722, (2009) 100 O.R. (3d) 66.

[13] I agree with counsel for RBC that the Plaintiff’s positions on all three motions were meritless. In particular, I am concerned with the Plaintiff’s position on the recusal motion. There was no basis in either fact or law for the Plaintiff’s position on that motion. The Plaintiff’s request for a recusal in light of the underlying factual matrix was a concerning claim. It is, however, not sufficient to justify elevated costs.

[14] I should also address Plaintiff’s counsel’s submission that “the purpose of the recusal motion was not to delay the matter.” I made no such finding. Instead, I stated (at para 65) “I am not, at this point, concluding that the purpose of the recusal motion was to delay this matter.” It is a question that remains open and may very well be revisited if there are further delays in this matter. Indeed, the aggressive attempt by Plaintiff’s counsel to prevent LD Law from disclosing their file to me as set out in the e-mails filed by counsel for LD Law raise further concerns about the bona fides of the Plaintiff’s conduct. It is not, however, sufficient to justify elevated costs for RBC. RBC should be entitled to costs on a partial indemnity basis.

[15] LD Law, however, is in a different position. They were counsel to the Estate and their involvement in this motion was required because of their involvement as counsel to the Estate. Counsel for LD Law points to the decision in Verch v. Weckwerth, 2010 ONSC 1234 to support a claim for substantial indemnity costs. In that case, there was a dispute over a will between potential beneficiaries of the Estate. The Court permitted the examination of the lawyer who had prepared the will, but ordered that this lawyer would be entitled to attend the examination with counsel and would be compensated on a full indemnity basis.

[16] I am of the view that the same principle should apply here. LD Law is only involved in this case because of the fact that they were retained by the Estate and the Plaintiff’s husband to transfer the property. The costs of their involvement should be paid on a full indemnity basis. As the Plaintiff was the unsuccessful party, those costs are the Estate’s responsibility.

The Quantum of Costs for RBC

[17] Counsel for the Plaintiff argues that the behaviour of the Plaintiff in these motions was reasonable. I disagree. The Plaintiff’s position on all three motions was without merit. Further, as I noted at paragraph 64 of my reasons, Plaintiff’s counsel should have raised the issue of his claim of a recusal earlier. In other words, at least some of the Plaintiff’s positions were unnecessary, and the Plaintiff’s approach tended to lengthen the litigation. Both of these factors suggest an enhanced award of costs to RBC.

[18] This brings me to the issue of complexity. The claim for recusal, in particular, was a complex one because there was no case law to support the Plaintiff’s position. To defend against this claim, counsel for RBC was required to conduct significant research and argue by analogy. The remaining motions were less complex.

[19] The Plaintiff argues that the time spent in preparation for these motions by RBC was unreasonable. I reject this argument for two reasons:

a) A close review of the bills of costs suggests that the time spent on these various matters was reasonable and proportionate to the nature of the work. b) The Plaintiff’s counsel did not produce his detailed docket entries for comparison purposes. That lack of information makes it difficult for the Court to accept any challenges to the amount of time that counsel for RBC spent on these matters.

[20] Mr. Callahan also argues that the Plaintiff is of very limited financial means. Impecuniosity, if proven, is a factor that may be taken into consideration in assessing the costs. However, impecuniosity as a rule does not and should not eliminate a party’s obligation to pay costs. See the discussion in Balasundaram v. Alex Irvine Motors Ltd., 2012 ONSC 5840. I decline to consider the Plaintiff’s financial means in fixing the costs payable in this case for two reasons:

a) The Plaintiff has failed to prove impecuniosity. The Court should not blindly accept a claim of impecuniosity when assessing costs. Indeed, other than Mr. Callahan’s assertion that the Plaintiff is of very limited financial means, I have no evidence as to what assets the Estate trustee has. b) Even if the Plaintiff were able to prove impecuniosity, I have concerns that accepting the Plaintiff’s claim of impecuniosity as a ground for reducing costs in this case would lead to the problems described by Southey J. in Myers v. Metropolitan Toronto (Municipality) v. Chief of Police, [1995] O.J. No. 1321 (Div. Crt.). Specifically, I am concerned that it is important to avoid “a situation in which litigants without means can ignore the rules of the court with impunity…”

[21] This brings me to the one area where I am prepared to reduce RBC’s claim for costs. There were three counsel fees claimed in this matter, but the motions were all argued together. As a result, there should be a modest deduction from the costs sought for the recusal motion and the motion to pass accounts. I see no basis to reduce the partial indemnity costs sought for the motion to produce LD Law’s file.

[22] Finally, I note that counsel for RBC argued that he should be entitled to costs for preparing the costs submissions. In support of this request, he notes that counsel for the Plaintiff failed to respond to any communications from counsel for RBC in order to discuss the costs. Plaintiff’s counsel did not challenge that assertion in his responding costs submissions. I am of the view that costs of $750.00 for the preparation of the costs submissions is reasonable. I would remind counsel for the Plaintiff that I had specifically directed the parties to attempt to resolve the issue of costs. This would have required timely communications between the parties. Going forward, I expect that communications between counsel will be done promptly and professionally.

Conclusion

[23] As a result, I am ordering that the Plaintiff pay costs as follows:

a) To LD Law, the sum of $1,474.65 inclusive of HST and disbursements. b) To RBC on account of the costs of the recusal motion, $3,000.00 inclusive of HST and disbursements. c) To RBC on account of the costs of the privilege motion, $4,019.04 inclusive of HST and disbursements. d) To RBC on account of the motion to require a passing of accounts, $2,668.64 inclusive of HST and disbursements. e) To RBC on account of the preparation of the costs submissions, $750.00 inclusive of HST and disbursements.

[24] All costs are due and payable within thirty (30) days of today’s date. If the Plaintiff fails to pay any of the costs orders, then the failure to pay may be relied upon by the Defendants in their motion to stay the Plaintiff’s action.

LEMAY J

Released: July 7, 2023