



COURT OF APPEAL FOR ONTARIO

CITATION:
Galganov v. Russell
    (Township), 2012 ONCA 410

DATE: 20120615

DOCKET: C54486

Weiler, Sharpe and Blair JJ.A.

BETWEEN

Howard Galganov

Applicant (Respondent)

and

The Corporation of the Township of Russell

Respondent

BETWEEN

Jean-Serge Brisson

Applicant (Respondent)

and

The Corporation of the Township of Russell

Respondent

Allan OBrien and Ashley Deathe, for the appellant,
    Kenneth Bickley

Brian A. Crane, Q.C. and Matthew Estabrooks, for the
    respondents, Howard Galganov and Jean-Serge Brisson

Ronald F. Caza and Marc Sauvé, for the respondent, The
    Corporation of the Township of Russell

Heard: February 3, 2012

On appeal from the orders of Justice Monique Métivier of
    the Superior Court of Justice dated May 30, 2011 and September 23, 2011, with
    reasons reported at 2011 ONSC 3065 and 2011 ONSC 5609.

Weiler J.A.:

A.

Overview

[1]

This appeal respecting costs was heard immediately following the appeal
    in C52704 and these reasons are being released concurrently with the decision
    in that appeal.

[2]

The appellant, Mr. Kenneth Bickley, is a lawyer who represented Messrs.
    Howard Galganov and Jean-Serge Brisson in their respective applications to
    quash a by-law passed by the Township of Russell (the Township).  The by-law
    in issue, no. 49-2008, (the By-law) requires that the message or content of
    new exterior commercial signs be in French and in English.  After four days of
    hearing, the application judge dismissed both applications.  This court confirmed
    the application judges conclusion in C52704 and dismissed the appeal.

[3]

The application judges decision on costs was based both on written
    submissions and on a motion for costs brought by the Township against Bickley
    personally.
[1]
On consideration of the factors in rule 57.01(1) of the
Rules of Civil
    Procedure
, R.R.O. 1990, Reg. 194

applicable to the courts
    discretion to award costs, the application judge ordered costs of $180,000
    against Galganov and Brisson ($100,000 against Galganov and $80,000 against
    Brisson).  However, she ordered that 40 per cent of the costs order be payable by
    Bickley personally ($72,000) pursuant to rule 57.07(1) of the
Rules of
    Civil Procedure
.  She made the order against Bickley on a joint and
    several basis with Galganov and Brisson.

[4]

In respect of the order for costs against Bickley personally, the
    Township alleged that in preparation for and during the hearing, Mr. Bickleys
    conduct was often highly inappropriate, incompetent and the cause of
    unnecessary costs.  The application judge therefore considered several
    allegations of incidents which caused costs to be incurred without reasonable
    cause (see paras. 67-68 of the reasons reported at 2011 ONSC 3065).
[2]


[5]

Bickley submitted that he was prevented from responding to some of the
    allegations because of solicitor-client privilege and Galganov and Brisson refused
    to waive such privilege.  He submitted that he took no step in the proceeding
    without the proper instructions and authority of his clients.  The application
    judge accepted this submission and indicated that this was a reason why a costs
    order against a lawyer should be made sparingly, and only in the clearest of
    cases.

[6]

The application judge found that Bickley did not act in bad faith
    but also held that this was not a necessary element for a costs order under
    rule 57.07(1).  She then addressed each of the complaints and found that several
    incidents of Bickleys conduct caused costs to be incurred unreasonably,
    including: (1) the ongoing debate of whether the mayor of the Township, Mr. Ken
    Hill, would be called as a witness; (2) the decision to propose both Galganov
    as an expert witness in Brissons application as well as Dr. Conrad Winn, a
    Carleton University political science professor and public opinion researcher;
    (3) the attempted introduction of an article which had not been put to the
    Townships expert, Dr. Charles Castonguay, a retired University of Ottawa
    mathematics professor; and (4)
the request to turn the
    application into a trial relying on an erroneous reference to rule 39.5 (this
    rule does not exist in the
Rules of Civil Procedure
).

[7]

The application judge also held that Bickleys
    filing of additional affidavits and his disorganized manner in presenting his
    argument, together with his inability to find materials, was indicative of a
    serious lack of preparation.  She found that this amounted to negligence.

[8]

Finally, the application judge found that the
    Township incurred very significant costs as a result of various positions taken
    by Bickley and by his lack of preparation, which in some cases amounted to
    negligence.

[9]

While there was no causal connection between the
    complaints and specific actual costs as shown in the Townships bill of costs, the
    application judge held that nothing in rule 57.07(1) required that negligent or
    inappropriate conduct be related to specific costs.  She held that an amount of
    40 per cent of costs against Bickleys was warranted.

[10]

The
    primary issue on appeal is whether the application judge erred in ordering costs
    personally against Bickley.  If she did not, a number of ancillary issues are
    raised.  I must also fix costs of the appeal in C52704 as well as the costs of
    this appeal.

[11]

For
    the reasons that follow, I am of the opinion that the application judge did err
    in ordering costs against Bickley personally.  As a result, I would set aside
    the costs order against him. In view of my conclusion, I need not address the
    ancillary grounds of appeal.

B.

Basis for a Costs Order Against a lawyer Personally:
rule 57.07(1)

(1)

General principles

[12]

A
    lawyer whose conduct results in costs being incurred unreasonably, or wasted,
    may be deprived of his or her costs or required to pay the costs of any other
    party.  Rule 57.07 deals with orders for costs against a lawyer personally:

(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.

(2)
    An order under subrule (1) may be made by the court on its own initiative or on
    the motion of any party to the proceeding, but no such order shall be made
    unless the lawyer is given a reasonable opportunity to make representations to
    the court.

(3) The court may direct that notice of an order
    against a lawyer under subrule (1) be given to the client in the manner
    specified in the order.

[13]

The
    governing principles in awarding costs personally against a lawyer were set out
    by the Supreme Court of Canada in
Young v. Young
, [1993] 4 S.C.R. 3,
    at pp. 135-136:

The basic principle on which costs are awarded is as
compensation
for the successful party, not in order to punish a barrister. Any member of the
    legal profession might be subject to a compensatory order for costs if it is
    shown that 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. It is clear
    that the courts possess jurisdiction to make such an award, often under statute
    and, in any event, as part of their inherent jurisdiction to control abuse of
    process and contempt of court.... [C
]
ourts must be
    extremely cautious in awarding costs personally against a lawyer, given the
    duties upon a lawyer to guard confidentiality of instructions and to bring
    forward with courage even unpopular causes. A lawyer should not be placed in a
    situation where his or her fear of an adverse order of costs may conflict with
    these fundamental duties of his or her calling. [Emphasis in original.]

[14]

The
    court in
Marchand

(Litigation Guardian of) v. Public General
Hospital Society of Chatham
(1998), 16 C.P.C. (4th) 201
    (Ont. Gen. Div.), at para. 121,
recognized that the criteria on which
    an order for costs may be made against a solicitor personally pursuant to
[
r]ule 57.07 and pursuant to the inherent jurisdiction of the
court may differ.  Accordingly, rule 57.07(1
) is not
    simply a codification of the common law.  Rather, it is designed to protect and
    compensate a party who has been subjected to costs being incurred without
    reasonable cause, not to punish a lawyer: see also
Young
, at p. 135.

[15]

Similarly,
    in
Carleton v. Beaverton Hotel
(2009), 96 O.R. (3d) 391 (Div. Ct.), at
    para. 24, the court held that costs against a lawyer personally are intended to
    be compensatory and rule
57.07(1)
    clearly speaks to the issue of compensating parties for unnecessary costs.  The
    courts inherent power to order costs in rare cases for contempt or to control
    its officers in which punishment is an objective is a separate issue from a
    costs order under rule 57.07
(1).

[16]

Rule
    57.07(1) is therefore not concerned with the discipline or punishment of a
    lawyer, but only with compensation for conduct which has caused unreasonable
    costs to be incurred.

(2)

Legal test

[17]

The court in
Carleton
, at para. 21, approved a
    two-part test to determine the liability of a lawyer for costs under rule
    57.07(1).

[18]

The first step is to inquire whether the lawyers conduct falls
    within rule 57.07(1) in the sense that it caused costs to be incurred unnecessarily.
Rule 57.07(1) refers specifically to conduct that caused
    costs to be incurred without reasonable cause or to be wasted by undue delay,
    negligence or other default.  The court in
Marchand

held that mere negligence can attract costs consequences in addition
    to actions or omissions which fall short of negligence.  The court confirmed
    that bad faith is not a requirement for imposing the costs consequences of
    rule 57.07(1) and concluded, at para. 122, that [i]t is only when a lawyer
    pursues a goal which is clearly unattainable or is clearly derelict in his or
    her duties as an officer of the court that resort should be had to [r]. 57.07.

[19]

In determining whether a lawyers conduct falls
    within rule 57.07(1), the court must consider the facts of the case and the
    particular conduct which has been attributed to the lawyer: see
Marchand
, at para. 115.

[20]

In
Rand Estate v. Lenton
, 2009 ONCA 251, [2009]
    O.J. No. 1173, at para. 5, this court noted that rule 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
    lawyers conduct produces an accurate tempered assessment.

[21]

Although the conduct as a whole must be considered, a court must
    consider specific incidents of conduct in determining whether the conduct falls
    within rule 57.07(1).  In
Carleton
, the court confirmed, at para. 20,
    that a general observation does not permit identification of what conduct may
    have contributed to delay and unnecessary costs.  Further, the abse
nce
    of s
pecific evidence or
circumstances considered in
    making a general observation precludes meaningful appellate review of the criteria
    of rule 57.07(1).
Above all, t
he
    legal test under rule 57.07(1) is not concerned with a lawyers professional
    conduct generally, but whether such conduct, including the conduct of the
    litigation, caused unreasonable costs to be incurred:
Carleton
, at para. 18.

[22]

The
    second step is to consider, as a matter of discretion and applying the extreme
    caution principle enunciated in
Young
, whether, in the circumstances,
    the imposition of costs against the lawyer personally is warranted.  The extreme
    caution principle, as stated in
Young
, means that these awards must
    only 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):
Carleton
,
    at para. 15.

C.

Analysis

(3)

Standard of review

[23]

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:
Hamilton v. Open Window Bakery Ltd.
, 2004 SCC 9,
[2004] 1 S.C.R. 303, at para. 27.

[24]

In
Rand Estate
,
    this court held, at para. 2, 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] judges findings unless they are clearly in error and clearly
    material to his ultimate determination.

[25]

As
    a result, this court owes a high degree of deference to the application judges
    holding that Bickleys conduct caused costs to be unreasonably incurred and, in
    the particular circumstances, the imposition of costs against him personally was
    warranted.

(4)

Whether Bickleys conduct caused costs to be incurred unnecessarily

(a)

Mayor Hill incident

[26]

The
    application judge found, at para 67 of her reasons, that the Mayor Hill
    incident ... clearly caused additional costs to this case.  The question is,
    however, whether Bickley personally caused the additional costs or whether he
    was acting as the agent of his clients.

[27]

For
    over a year, Bickley sought to examine Mayor Hill.  He first served a notice of
    examination of Mayor Hill in March 2009 seeking full disclosure.  When advised
    that full disclosure of the documents sought had already been made, were
    protected by solicitor-client privilege, or were publicly available, he served
    a notice of motion to have Mayor Hill examined.  In response, the Township
    filed a lengthy affidavit containing all the documents which set out details of
    how the By-law came to be, including the minutes of council meetings.  Nothing
    was done until a year later when a notice of intention to call Mayor Hill as a
    witness was served.  When the Township asked why this was necessary, the
    response was that Galganov and Brisson wanted to ensure the admissibility of a
    radio interview with Mayor Hill.  The Township offered to consent to the
    admission of the transcript of that interview if the summons was revoked.  This
    was refused.  The Township then offered to have Mayor Hill examined out of
    court.  This was also refused.  The Township prepared a factum in anticipation of
    Bickley bringing a motion at trial.  Bickley eventually changed his mind and said
    that he would not call Mayor Hill.  The summons was revoked.  The application
    judge commented that the evidence in issue was irrelevant to the matter.

[28]

As
    I have indicated, and the application judge acknowledged, in determining
    whether the imposition of costs against a lawyer personally is warranted, a
    factor is whether the lawyers clients have waived solicitor-client privilege.  A
    court should be cautious in awarding costs personally against a lawyer where it
    would be necessary to infringe on solicitor-client privilege: see
Nazmdeh
    v. Ursel
, 2010 BCCA 131, 3 B.C.L.R. (5th) 277, at para. 110.  Solicitor-client
    privilege was not waived in this case. Bickleys unchallenged affidavit
    contained a general denial, that [he] acted at any step in the proceeding
    without the instructions and authority of
[
his]
    clients.  In addition, at para. 29 of his affidavit, Bickley responded in part
    to the allegation of the Township:

As I explained to counsel for the Township of Russell, my
    primary reason to cross-examine Mayor Ken Hill was to ensure the admissibility
    of the transcript of the radio interview with Mayor Ken Hill which took place
    on June 18, 2008 and to expand upon his positions.  In seeking his attendance at
    the hearing, I deny that my intention was to embarrass Ken Hill as alleged by
    the Township of Russell in the within motion.
At all times, I was
    following instructions of my client.
[Emphasis added.]

[29]

The
    application judge accepted Bickleys assertion that he was prevented from
    responding to some of the allegations because of solicitor-client privilege and
    also that he took no step in the proceeding without the instructions and
    authority of his clients.  Given this, it was incumbent on the application judge
    to consider not only whether the Mayor Hill incident caused unnecessary costs
    but whether, in doing so, Bickley was acting in his personal capacity or as an
    agent for his clients.  The application judge made no attempt to distinguish
    Galganov and Brissons conduct from Bickleys conduct.  She erred in principle
    in failing to make such distinction.  Their conduct must be assessed separately
    as Bickley should not be responsible for advancing a weak case if instructed to
    do so by Galganov and Brisson.  Specifically, clients are not obliged to accept
    the judgment of their lawyer but are entitled to obtain the judgment of the
    court: see
Walsh v. 1124660 Ontario Limited
, 2007 CanLII 4789 (Ont.
    S.C.), at para. 23.

(b)

Decision
to propose Galganov as an expert witness in
    Brissons application as well as Dr. Winn

[30]

After Bickley obtained leave to have the Brisson
    and Galganov applications heard together, Bickley proposed Galganov as an
    expert in Brissons application.  The application judge commented, at para. 68
    of her reasons, that: The Township wasted time and money in cross-examining
    Mr. Galganov as to his expertise and researching the state of the law on
    biased expert witnesses.  The application judge also rejected Dr. Winn, the
    other expert witness proposed by Galganov and Brisson and concluded that this
    amounted to wasted time and money on the part of the Township.

[31]

In his affidavit, Bickley explained that the
    order providing for the applications to be heard together made it clear that it
    would be in the application judges discretion to determine whether the
    evidence submitted in one application could apply to the other.  It was for
    this reason that he proposed to have Galganov provide expert evidence for use
    in Brissons application.

[32]

It appears from Bickleys affidavit that it was
    his idea to propose Galganov as an expert witness in the Brisson application
    although Galganov was an interested party and clearly lacked any qualifications
    as an expert.  Such conduct would fall below the standard of care expected of a
    reasonably competent lawyer in Bickleys position.  Again, however, accepting
    his affidavit, his clients approved of it.

[33]

The rejection of Dr. Winn is not in the same
    category and the application judge erred in attributing the proposal of this
    expert to Bickley rather than to Galganov and Brisson.  While the application
    judge did not ultimately accept Dr. Winn as an expert, this does not mean he
    should never have been proposed.  Nor does this mean that Bickley should be
    held personally responsible for the costs the Township incurred in
    cross-examining Dr. Winn and in preparing submissions against the admissibility
    of his evidence at trial.  Hindsight cannot be used to evaluate Bickleys
    decision: see
Rand Estate
,
at para. 5.

(c)

Attempted
    introduction of an article; erroneous reference to rule 39.5; and whether
    Bickleys negligence added to costs

[34]

Bickley sought to introduce an article that
    appeared to contradict some of the assertions of one of the Townships experts,
    Dr. Castonguay, without an evidentiary foundation.  After reviewing the
    article, Dr. Castonguay prepared a supplementary affidavit.  The application
    judge did not permit the article to be entered as evidence.

[35]

The application judge found that Bickley sought to convert the application
    to a trial under rule 39.5, which does not exist in the
Rules of
    Civil Procedure
, because he contested facts in the
    affidavits of the Townships experts and contended they were not admissible.  The
    Township was aware of Bickleys position and prepared a factum in response to
    this argument.  Eventually, after being directed to read Rule 39 of the
Rules
    of Civil Procedure
, Bickley agreed his position was not
    tenable.  The application judge held that this was indicative of a lack of
    preparation which caused costs to be wasted.

[36]

Overall,
    the application judge found, at para. 90 of her reasons, that some time was
    wasted during the hearing, but very significant costs were incurred by the
[Township]
as a result of the various positions taken by Mr.
    Bickley, by his lack of preparation, which in some cases amounted to
    negligence.

[37]

In
    oral submissions before us, Bickleys counsel submitted that the application
    judges reasons are contradictory because in subparagraph 84(7) of her reasons
    she held that:

Mr. Bickleys disorganized manner of presenting his argument,
    together with his inability to find materials, did not add costs.  However,
    this was clearly indicative of a serious lack of preparation amounting to
    negligence.

[38]

The
    application judges comments in this subparagraph are in response to the
    Townships allegation, at subparagraph 68(7), that, at the hearing, Bickley
    often could not find cases to which he referred, had not always brought the
    materials he needed with him and did not understand that the joint book of
    authorities filed by the Township referred to the Galganov and Brisson
    applications being heard jointly and were not intended for the joint use of
    counsel.

[39]

While
    the reasons are not entirely clear, I am of the opinion that at para. 90 of her
    reasons, the application judge was referring to the Townships complaints
    respecting Bickleys conduct both before and at the hearing.  At subparagraph
    84(7) she was solely referring to the Townships complaints of Bickleys
    conduct at the hearing.

[40]

In
    summarizing Bickleys conduct at paras. 92 and 93 of her reasons, the
    application judge again appears to be referring to Bickleys conduct prior to
    the hearing:

This situation is far different from the facts in
Rand
    Estate v. Lenton
, where discrete issues arose: for example, there was no
    merit to a particular will issue; or, there had been a particular motion which
    was found to be needless, and costs could be attributed to those specific
    events.

While a precise accounting would be preferable, the moving
    target presented by Mr. Bickleys conduct of the case meant that positions,
    documents, and the law, had to be constantly examined, re-examined, and
    re-considered, only to then find a particular position was changed, a motion
    would not be brought, a stated ground not argued at the hearing, etc.  all
    over a period of two years.  The prime example is the to-ing and fro-ing over
    the cross-examination of Mayor Hill. Mr. Bickley directly and negligently
    caused additional costs to be incurred.  [Citations omitted.]

[41]

Reading
    the reasons as I have, the application judges reasoning is not entirely
    contradictory.  While there may be some overlap in her reasoning, her decision
    to order costs against Bickley personally is mainly based on his conduct vis-à-vis
    the Township prior to the hearing.

(5)

Whether an award of
    costs should have been made against Bickley

[42]

The
    application judges decision to award costs personally against Bickley is based
    on the cumulative effect of what she found to be his negligent conduct which caused
    the Township to incur costs unnecessarily.  As I have indicated, the
    application judge erred in principle in respect of the Mayor Hill incident by not
    separating Bickleys conduct from that of his clients.  She also erred in using
    hindsight with respect to the costs related to proposing Dr. Winn as an expert.
     These incidents are so important to, and so intertwined with, her overall
    conclusion, that the award of costs against Bickley personally must be set
    aside.  I cannot discretely quantify what remains nor am I of the opinion that,
    even if Bickley were negligent, his conduct would merit an award of costs
    against him personally, given the dictate of the Supreme Court of Canada in
Young
.

[43]

Finally,
    if an order of costs is to be made against a lawyer personally on the basis of
    negligence, then that negligence must be based on a breach of the objective
    standard of care of a reasonably competent lawyer in the same position. Here,
    that position would be of a lawyer acting on instructions or with the approval
    of his clients. The court must also bear in mind to whom the lawyers duty of
    care is owed. That duty is primarily to the client and to the court.
The rule was not intended to allow the frustration of the opposing partys
    counsel to be taken out against a counsel personally because he or she went
    down a series of blind alleys with his or her clients instructions or
    approval. Rather, resort is to the general principles governing costs between
    parties, which include deterrence of unnecessary steps that unduly prolong
    litigation: see
1465778 Ontario Inc. v. 1122077 Ontario Ltd.,
(2006)
    82 O.R. (3d) 757 (C.A.).  The application judge appears to have taken the
    blind alley factor into account in awarding party and party costs of the
    litigation.

D.

Conclusion

[44]

For
    these reasons, I would allow the appeal respecting the order of costs against
    Bickley personally and set it aside.  In view of my conclusion, it is
    unnecessary for me to deal with the ancillary issues raised.

[45]

I
    would award Bickley the costs of the motion before the application judge, the
    motion for leave to appeal and this appeal on a partial indemnity basis. I
    would fix those costs at $25,000, inclusive of disbursements and all applicable
    taxes, and order that those costs be paid by the Township.

Released: June 15, 2012

KMW                                                                Karen
    M. Weiler J.A.

I
    agree Robert Sharpe J.A.

I
    agree R.A. Blair J.A.





[1]
Galganov and Brisson retained independent counsel for their written submissions
    regarding the quantum of costs, Mr. Martin Mason of Gowling Lafleur Henderson
    LLP.  They were represented by Mr. Mason on the motion for costs against
    Bickley personally, while Mr. Allan OBrien and Ms. Ashley Deathe represented
    Bickley.  Gowling Lafleur Henderson LLP also represents Galganov and Brisson in
    their underlying appeal.  Although this was a motion for costs, that motion was
    further to the application and for consistency, I refer to the judge at first
    instance in C52704 and in these reasons as the application judge.



[2]

All references hereinafter to the application judges reasons
    refer to the reasons reported at 2011 ONSC 3065.


