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Costs - Against a Lawyer Personally

. 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.]



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