10.50: Costs imposed on lawyer

Case Summary

The Appellants appealed a Chambers Judge’s Decision which had found a conflict of interest arising from the representation of three shareholders and their company by one law firm, directed that the law firm cease representing the company, and awarded solicitor-client Costs against the Appellants. The Respondents cross-appealed on the basis that the Chambers Judge erred in not ordering the Appellant’s counsel to cease acting for the individual shareholders, in addition to the company.

The Court of Appeal noted that the question of whether there is a conflict of law involves findings of mixed fact and law, and therefore the standard of review is palpable and overriding error. After reviewing the facts and Decision below, the Court held that the Chambers Judge did not err in finding a conflict. 

With respect to solicitor-client Costs, the Court noted that Appellate Courts should only intervene respecting Costs where the Chambers Judge “misdirected himself or herself on the applicable law or made a palpable error in his or her assessment of the facts”, or exercised discretion “in an abusive, unreasonable or non-judicial manner”. In this case, the Respondents’ counsel had initially raised the issue of conflicts in a letter to the Appellants’ counsel, but received no substantive response, requiring the Application now under Appeal. The Appellant had then responded by letter, characterizing the Application respecting the conflict as frivolous, vexatious, and abusive, and stating that he would seek solicitor-client Costs against the Respondents and their counsel pursuant to Rule 10.50, which permits Costs to be awarded against counsel where there has been serious misconduct. The Appellants’ counsel later “sent more personal threats” alleging serious misconduct after receipt of the Respondents’ brief. The Court of Appeal held that based on these actions, there was no basis to interfere with the Chambers Judge’s Costs award.

The Court of Appeal allowed the cross-Appeal and ordered that the Appellants’ counsel be removed as solicitor for both the company and the individual shareholders.

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