COURT FILE NO.: CV-15-530713
DATE: 20231031
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
799969 ONTARIO LIMITED, LEO EREZ and TZVI EREZ
Applicants
- and -
GREENSPAN PARTNERS, LLP
Respondent
APPLICATION UNDER ss. 4, 11, 23, 24 and 25 of the Solicitors Act, R.S.O. 1990 c. S.15.
Peter I. Waldmann for the Applicants
Nancy J. Tourgis and Melvyn L. Solmon for the Respondent
HEARD: In writing.
PERELL, J.
REASONS FOR DECISION - COSTS
[1] Tzvi Erez (“Mr. Erez”), Leo Erez, and 799969 Ontario Limited (the “Erezes”) disputed the legal fees charged by Greenspan Partners LLP, which firm acted as Mr. Erez’s criminal defence counsel between September 2009 and January 2015. The Erezes submitted that Mr. Erez did not receive the level of competent and vigorous advocacy that would justify the fees charged. Amongst other things, in a long list of alleged professional malfeasance, Mr. Erez says that the late Edward Greenspan did not follow instructions and his colleagues unprofessionally and unethically forced Mr. Erez to plead guilty to a crime he did not commit.
[2] The legal fees were paid by Mr. Erez, his father Leo Erez, and by 799969 Ontario Limited, a family business. On June 15, 2015, after repeatedly requesting that the law firm agree to have its accounts assessed, pursuant to the Solicitors Act,[^1] the Erezes commenced an application for leave for an assessment of the accounts of Greenspan Partners LLP. In the euphemisms of the administration of justice, the Erezes’ application, which began in 2015, has had a “time out” of 2,974 days (98 months), and the application was not heard on its merits until August 9, 2023.
[3] I dismissed the Erezes’ application for an assessment of Greenspan Partners’ accounts.[^2]
[4] I did not believe the Erezes’ versions of the history of the legal services provided by Greenspan Partners.
[5] I found that there was no “fixed price” contract with respect to the preliminary inquiry phase of the charges against Mr. Erez.
[6] I found that Greenspan Partners did not charge more than it was entitled to charge for the preliminary inquiry phase.
[7] Although there was a “maximum price” contract with respect to the trial phase of the charges against Mr. Erez, I found that Greenspan Partners did not breach the contract as to the quantity or the quality of legal services provided.
[8] I found that pursuant to the maximum price contract, Greenspan Partners did not charge more than it was entitled to charge and that it did not charge for legal services that it did not provide.
[9] I found that the recently abandoned allegations of Greenspan Partners’ services being unprofessional or incompetent were unfounded and, in any event, the issue was res judicata pursuant to the doctrine of issue estoppel.
[10] I found that there are no circumstances, and, in particular, there are no “special circumstances” that would justify a referral for assessment of the fees charged by Greenspan Partners.
[11] I undertook an assessment, and my own evaluation of the legal services provided by Greenspan Partners was that there was no basis for a refund of fees paid by the Erezes.
[12] I concluded that no purpose would be served by referring the matter to an Assessment Officer. The Erezes’ persistence in making scurrilous allegations against the integrity of the late Mr. Greenspan and of Greenspan Partners was long overdue to be over.
[13] The Erezes’ application having been dismissed, Greenspan Partners claims costs on a composite partial/substantial/full indemnity basis of $202,970.67 comprised of fees of $190,855.49, inclusive of HST, plus disbursements of $12,115.18.
[14] The partial indemnity portion is $11,351.53 for the legal services from the date of service of the Application Record in July 2015 to November 19, 2015 when an offer to settle was made. The substantial indemnity portion is $57,695.61 for November 19, 2015 to May 3, 2019, during which time Mr. Erez unsuccessfully attempted to set aside his guilty plea. The full indemnity portion is $121,808.35 for the period from May 3, 2019 to the hearing of the application.
[15] The Erezes submit that the amount sought by Greenspan Partners is utterly exorbitant. They say that it is approximately fivefold their own costs for the application. They say that the amount claimed is far beyond any reasonable expectation of the costs that might be incurred in such a proceeding. The Erezes submit that the appropriate award is $130,000 all inclusive. As it happens, that sum is the amount being held in trust as security for costs pursuant to a consent resolution of Greenspan Partners’ motion for security for costs.
[16] For the reasons that follow, I award Greenspan Partners $150,262.92, all inclusive.
[17] I arrive at this costs award by the following line of reasoning.
[18] I agree with the Erezes that costs on a full indemnity basis is a punitive award reserved for the most egregious cases of misconduct in the conduct of litigation.
[19] In Davies v. Clarington (Municipality),[^3] the Court of Appeal held that full indemnity costs should only be awarded when there was a clear finding of reprehensible conduct on the part of the party against which the cost award is being made. Costs on a full indemnity scale are exceptional and rare and require particularly egregious conduct that goes beyond that would merit an award of substantial indemnity costs and entail that the innocent party should not have to pay a penny toward the costs of a litigation that should never have been brought before the court.[^4]
[20] Where I differ from the Erezes is their assertion that a full indemnity is not appropriate in the immediate case. In the immediate case, the Erezes launched and persisted in a full-throated attack on the integrity of the late Mr. Greenspan and on members of his law firm. A litigant’s persistence in unfounded allegations that impugned the integrity, competence, or good reputation of his or her foes is a justification for an award of full or substantial indemnity costs;[^5] and that is what occurred in the immediate case. The Erezes’ challenge to the accounts of Greenspan Partners calls for a punitive costs award.
[21] In the immediate case, Greenspan Partners’ Bill of Costs reveals that the full indemnity costs for the litigation from beginning to end is $206,601.29 inclusive of HST.
[22] I reduce that costs claim for legal fees to $138,147.74, inclusive of HST.
[23] This $68,453.55 reduction is justified, in part, because the law firm claimed $17,204.25 for Ms. Christie’s work preparing her own affidavit for the application, and it claimed $8,750 for Ms. Greenspan’s contribution to the file. Ms. Christie and Ms. Greenspan were represented clients. While they undoubtedly saved the Erezes a great deal of legal fees by this delegation of legal work, costs are awarded to indemnify the client for the legal services it paid for and not to indemnify the client for the legal services it provides for itself.
[24] The reduction is also explained in part by the disallowance of $42,499.30, the costs claimed with respect to Greenspan Partners’ motion for security for costs. That motion was settled on consent and the Order does not provide for the payment of costs.
[25] Adding the disbursements to a full indemnity award of $138,147.74 yields a costs award of $150,262.92.
[26] I would also award Greenspan Partners $1,500, all inclusive, on a partial indemnity basis for the preparation of the costs submissions.
[27] Order accordingly.
Perell, J.
Released: October 31, 2023
COURT FILE NO.: CV-15-530713
DATE: 20231031
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
799969 ONTARIO LIMITED, LEO EREZ and TZVI EREZ
Applicants.
- and –
GREENSPAN PARTNERS, LLP
Respondent
REASONS FOR DECISION - COSTS
PERELL J.
Released: October 31, 2023
[^1]: R.S.O. 1990 c. S.15.
[^2]: Erez v. Greenspan Partners, 2023 ONSC 4986.
[^3]: (2009), 2009 ONCA 722, 100 O.R. (3d) 66 at paras. 28–40 (C.A.).
[^4]: Multicultural Consultancy Canada Inc. v. Central 1 Credit Union, 2023 ONSC 1525; NDRive, Navigation Systems v. Zhou, 2021 ONSC 7772, aff’d 2022 ONCA 602.
[^5]: Hawley v. Bapoo (2006), 2006 CanLII 24333 (ON SC), 82 O.R. (3d) 382 (S.C.J.); Waxman v. Waxman, 2003 CanLII 32907 (ON SC), [2003] O.J. No. 87 (S.C.J.); Total Credit Recovery v. Sellors, [2000] O.J. No. 793 (S.C.J.); Murano v. Bank of Montreal (1998), 1998 CanLII 5633 (ON CA), 41 O.R. (3d) 222 (C.A.).