Simon's Megalomaniacal Legal Resources

Civil Litigation - Costs - Against a Lawyer Personally

. Patrick Street Holdings Ltd. v. 11368 NL Inc.

In Patrick Street Holdings Ltd. v. 11368 NL Inc. (SCC, 2026) the Supreme Court of Canada considered 'cause of action estoppel'.

Here the court considers the award of solicitor-client costs, and personal costs against counsel:

[136] Costs on a solicitor-client basis are generally awarded only in the most exceptional circumstances, where there is “reprehensible, scandalous or outrageous conduct on the part of one of the parties” (Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3, at p. 134). Furthermore, courts must be exceedingly cautious in awarding costs personally against counsel. Lawyers have professional and ethical obligations to keep strictly confidential the instructions they receive from their client. They have further professional and ethical obligations to zealously and courageously advance arguments on behalf of their client where they believe such an argument will help their client’s case (pp. 135-36; see also Groia v. Law Society of Upper Canada, 2018 SCC 27, [2018] 1 S.C.R. 772, at para. 73).

[137] Ordering costs personally against counsel raises concern that fear of an adverse costs order or the ability to defend against it could come into tension with these obligations (Young, at p. 136). For this reason, costs should be ordered personally against counsel only exceptionally, where “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” (pp. 135-36; see also Schwisberg v. Perry Krieger & Associates (1997), 1997 CanLII 522 (ON CA), 33 O.R. (3d) 256 (C.A.), at p. 260).

[138] In arguing that Patrick Street’s counsel should personally bear 11368’s costs, 11368 relies on a 1992 decision of the Ontario Superior Court of Justice, Donmor Industries Ltd. v. Kremlin Canada Inc. (No. 2) (1992), 1992 CanLII 7543 (ON SC), 6 O.R. (3d) 506, where solicitor-client costs were ordered to be paid on a joint and several basis by the plaintiffs and their solicitor. The facts in Donmor Industries Ltd. were exceptional. Counsel for the plaintiffs drafted a 25-page statement of claim containing allegations of conduct that, if proven, would constitute crimes. The Court also found as fact that counsel knew advancing certain claims would run contrary to the doctrine of res judicata. Even after making these findings, the court did not go so far as to order solicitor-client costs to be borne solely by the plaintiffs’ counsel.

[139] In this case, there is no basis for an order of solicitor-client costs. Nothing in Patrick Street’s conduct as a litigant can be said to rise to the level of “reprehensible, scandalous or outrageous conduct”. In my view, it is not enough that Patrick Street has attempted to relitigate its claim for entitlement to payment under the $4 million mortgage despite the same cause of action having already been argued in 2016. If it were enough, solicitor-client costs would arise in every case where res judicata was found to apply. This cannot be the case; something more is required.

[140] Neither is there any basis to order costs payable by Patrick Street’s counsel personally. Such an order requires a finding that counsel acted in bad faith. The trial judge made no such finding, and there is nothing on the record before this Court that supports such a finding. It also bears repeating that 11368 has only now argued for costs to be payable on a solicitor-client basis and, similarly, has only now requested costs payable by Patrick Street’s counsel personally. In the courts below, 11368 was content to receive costs on a party-and-party basis payable by Patrick Street, as is standard. The conduct with which 11368 takes issue — the relitigation of Patrick Street’s claim for entitlement to the $4 million mortgage — first occurred in 2019, when Patrick Street advanced the argument before the application judge. It is telling that 11368 took no issue with counsel’s conduct in the courts below. For these reasons, I cannot accept that a personal costs order is appropriate in this case.

[141] I would thus dismiss the appeal, with costs payable by Patrick Street to 11368 on a party-and-party basis.

. Gefen v. Gefen

In Gefen v. Gefen (Ont CA, 2023) the Court of Appeal considered a (1) CJA 7(5) full panel set aside motion (a 'review'), this of (2) the dismissal of an earlier single-judge set aside motion, and (3) that of the granting of "an estate motion finding that a testator was "incapable of managing her property and instructing counsel. The motion judge also appointed a litigation guardian and guardian of property on her behalf."

In these quotes the court considered the rare issue of when a lawyer should be held personally responsible for costs:

[13] It is common ground that Harvey Gefen is responsible for Harry Gefen’s costs in relation to his unsuccessful review motion. The question is whether any order should be made personally against Mr. Moldaver in relation to the review motion that he purportedly brought on behalf of Henia Gefen.

[14] Rule 57.07(1) sets out the circumstances under which a lawyer for a party may bear liability for costs. The relevant provisions are as follows:

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.

[15] We do not agree that this is an appropriate case for ordering that Mr. Moldaver pay costs personally to Harry Gefen. Mr. Gefen’s motion did not add undue delay or expense to Harry Gefen because Harvey Gefen brought a similar motion. However, Mr. Moldaver should not be able to charge Henia Gefen any amounts for this motion given that he did not have authority to bring the motion and that accordingly there is no reasonable basis for him to charge her any fees for the motion.

[16] As earlier noted, Henia Gefen was declared to be incapable of managing her property and instructing counsel. As a result, a litigation guardian was appointed to represent her interests. Moreover, the order also provided that Mr. Moldaver was removed as Henia Gefen’s counsel and could no longer act for her. The motion judge ordered that Mr. Moldaver be responsible for a portion of the costs incurred by Henia Gefen as a consequence of pursuing an unattainable result and acting without the instructions of a competent client.

[17] George J.A. declined to order a stay of the motion judge’s order. He declined to order costs of the unsuccessful stay motion against Mr. Moldaver personally and stated:

As for who is responsible for the payment of Harry’s and the Yehuda Gefen Estate’s costs, while there is some merit to Harry’s position that costs should be ordered against Mr. Moldaver personally, I decline to do so. This was, however, a close call as Henia has been found to be incapable, and there is an order in effect that prevents Mr. Moldaver from representing Henia in all matters related to the Estate. [Emphasis added.]

[18] For the reasons already noted, the review motion of George J.A.’s order was dismissed.

[19] As a result, it should have come as no surprise to Mr. Moldaver that he had no authority to bring the review motion on behalf of Henia Gefen. Moreover, he was put on notice by Harry Gefen that costs would be sought against him personally. It is, therefore, appropriate that Mr. Moldaver should bear responsibility for the costs of the review motion that he purportedly brought on behalf of Henia Gefen and that he should not be permitted to recover them from her because he has caused costs to be incurred without reasonable cause by bringing the unsuccessful review motion without the requisite authorization of a competent client and in breach of a court order: Salisbury v. Sun Life Assurance Company of Canada, 2013 ONCA 182, at para. 3.

[20] In the circumstances of this case, Henia Gefen should be completely immunized from the costs of the review motion brought by Mr. Moldaver. Given the agreement of the parties, it is agreed that Henia Gefen should not be responsible for Harry Gefen’s costs of the review motion. We also make an order, under r. 57.07(1)(a) and (b), disallowing costs in relation to the review motion brought by Mr. Moldaver between Mr. Moldaver and Henia Gefen and, in the event that those costs have already been paid, directing that Mr. Moldaver reimburse Henia Gefen any money paid on account of those costs.

. Leaf Homes Limited v. Khan

In Leaf Homes Limited v. Khan (Ont CA, 2022) the Court of Appeal considered an issue of personal costs made against a party's lawyer by the court under R57.07:

[125] The Personal Costs Order cannot stand. In making it, the motion judge purported to act under r. 57.07 of the Rules. However, she breached the procedural requirements in r. 57.07(2) and, as a result, was without jurisdiction to make the order. Further, she made the order based on palpable and overriding errors of fact.

A. The Breach of Rule 57.07(2)

[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.

....

[133] The language of r. 57.07(2) is mandatory: no personal costs order shall be made unless the lawyer is first given a reasonable opportunity to make representations to the court. Because the motion judge did not give Mr. Farooq such an opportunity, she did not have the right or power to make the Personal Costs Order.

. Best v. Ranking

In Best v. Ranking (Ont CA, 2016) the Court of Appeal considered factors applicable to the decision to award costs personally against counsel in a proceeding:

[50] I agree with the submission of the appellant that the fact that a lawyer starts an action which is unlikely to succeed is not, on its own, a basis to award costs personally against that lawyer.

[51] Rule 57.07 is “designed to protect and compensate a party who has been subjected to costs being incurred without reasonable cause, not to punish a lawyer”: Galganov, at para. 14.

[52] The motion judge here did not make Mr. Slansky liable for costs personally simply because he started a case that was weak. As the motion judge pointed out, the nature of the proceedings is an important contextual factor in assessing whether costs wasted by a solicitor justify an order that he pay costs personally.

[53] As this court held in Galganov, at para. 20:

[R]ule 57.07(1) requires an examination of “the entire course of litigation that went on before the application judge so that the application judge can put in proper context the specific actions and conduct of counsel.” This holistic examination of the lawyer’s conduct produces an accurate tempered assessment. [Citation omitted.]

[54] The motion judge examined the entire course of the litigation in assessing the specific actions and conduct of counsel, as she was required to do. In particular, she focused on the vexatious or abusive nature of the proceeding. This is not a necessary element of an award of costs against counsel personally but is not unfamiliar in this context. (See e.g. Soderstrom v. Hoffman-LaRoche Limited (2008), 2008 CanLII 15778 (ON SC), 58 C.P.C. (6th) 160 (Ont. S.C.J.); Donmor Industries Ltd. v. Kremlin Canada Inc. (No. 2) (1992), 1992 CanLII 7543 (ON SC), 6 O.R. (3d) 506 (Gen. Div.); and Baryluk (Wyrd Sisters) v. Campbell (2009), 81 C.P.C. (6th) 172 (Ont. S.C.J.).)

[55] On appeal, Mr. Slansky argues that Action 2 was not abusive. It was against many different parties and for different causes of action. That issue has now been conclusively determined by the dismissal of Mr. Best’s appeal from the decision striking Action 2 as an abuse of process. Action 2 made similar allegations of impropriety as had been voiced in the course of Action 1. The motion judge did not err in considering that Mr. Slansky incorporated into the pleading in Action 2 accusations of criminal misconduct against opposing counsel that had repeatedly been judicially rejected as baseless.

[56] Finally, as this court indicated in Galganov, at paras. 23-25, deference is owed to a motion judge’s decision as to whether a lawyer should pay costs personally:

The determination as to costs is a matter within the discretion of the application judge. An appellate court may set aside a costs award if the application judge made an error in principle or if the costs award is plainly wrong.

In Rand Estate, this court held that:

The application judge who managed the proceedings was in a much better position than this court to make the necessary assessments underlying the findings of fact he eventually made. Those findings are, by their nature, somewhat subjective and the cold paper record cannot, in our view, capture all of the considerations that would be relevant to those findings. We defer to the [application] judge’s findings unless they are clearly in error and clearly material to his ultimate determination.

As a result, this court owes a high degree of deference to the application judge’s holding…. [Citations omitted.]