jeffrey j

4.29: Costs consequences of formal offer to settle
10.29: General rule for payment of litigation costs
10.31: Court-ordered costs award
10.33: Court considerations in making costs award

Case Summary

This was a Decision on Costs following a Trial. The Trial involved an allegation that the Defendant had attempted to Judgment proof himself in respect of a separate debt action (the “Debt Action”) by fraudulently conveying his home from being held jointly with his wife, to being owned by the wife alone (“Fraud Action”). The Fraud Action was commenced against both husband and wife. The Plaintiff was successful in the Debt Action, but unsuccessful in the Fraud Action. Global settlement offers (which involved resolution terms for the Debt Action and a third related Action) had been provided and rejected by the Plaintiff, and the Defendants issued Formal Offers for the Plaintiff to discontinue the Fraud Action on a without Costs basis.

The Defendants sought solicitor-client Costs in the Fraud Action, while the Plaintiff asserted it should be entitled to Costs, and alternatively that a single set of Column 1 Costs were appropriate but only incremental to the Costs already awarded in the Debt Action.

Justice Jeffrey noted that Costs are “first and foremost subject to judicial discretion”, and that the interpretation and application of the Rules respecting Costs (Rules 4.29, 10.29, 10.31, and 10.33) is to be done in a matter which does justice between the parties. Justice Jeffrey noted that solicitor-client Costs are exceptional, and only to be awarded where a party has conducted itself in a manner which is reprehensible, scandalous or outrageous. Justice Jeffrey held that such Costs are appropriate where a party has failed to prove fraud allegations at Trial with access to information sufficient to conclude that the other party was not fraudulent. Justice Jeffrey noted however, that even if a solicitor-client Costs award is appropriate, it is still subject to judicial discretion in the circumstances.

Justice Jeffrey denied the Plaintiff’s claim for Costs of the Fraud Action, noting that the Plaintiff lost, that sufficient evidence had arisen after Questioning to conclude that the matter should not have proceeded to Trial, and that the global settlement offers provided by the Plaintiff were inappropriate as the third related Action was ongoing and that the results and interests for each of the Defendants could not be neatly extricated from each other or the ultimate result.

Justice Jeffrey found that the Defendants’ interests were sufficiently independent that they required their own counsel and that separate Costs for each were appropriate. Jeffrey J. however, found that solicitor-client Costs were not appropriate in this Action as the evidence that the subject transaction was not fraudulent was not uncovered until late in the litigation process. Justice Jeffrey also noted that the Defendant husband had additional factors further militating against the appropriateness of a solicitor-client Costs award, which included: that all three Actions related to a valid debt against him which he had initially acknowledged yet failed to pay; his conduct delayed the litigation needlessly; he misled the Court; the allegation of fraud against him did not adversely affect him the same as the average Defendant.

Justice Jeffrey awarded the Defendant husband party-and-party Costs on Column 1 of Schedule C for the steps in which he used the services of counsel (excluding steps he took as a self-represented litigant), and granted double Costs pursuant to Rule 4.29 for all steps taken after the date he served the Formal Offer to discontinue the Fraud Action on a without Costs basis.

Justice Jeffrey awarded the Defendant wife enhanced Costs on Column 5 of Schedule C, and doubled those Costs for all steps taken after having served the Formal Offer to discontinue the Fraud Action on a without Costs basis.

Justice Jeffrey noted that the allegations against her were not substantiated and that they would have impaired her reputation, and that following Questioning, it was apparent to an objective reviewer that the claim against her would fail, but that she was “held hostage unnecessarily” in a “petty fight between her ex and his office subordinate”. Justice Jeffrey also noted Plaintiff counsel’s advocacy in respect of the Fraud Action which had “strayed too far”.

Justice Jeffrey allowed the claims for experts pursuant to Rule 10.31(2)(d) as having been a reasonable cost incurred by a “prudent litigant” despite the fact that the evidence of the expert at Trial ended up being “of little assistance”.

Justice Jeffrey directed, pursuant to Rule 10.31(4), that the Costs awarded to the Defendant husband be set off against the Costs and outstanding Judgment debt he was directed to pay in the Debt Action.

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