Rita Pytca died on January 14, 2004. Rita’s will directed her estate to be distributed equally among her four adult children. At the time of Rita’s death, her daughter, Marilyn, and her granddaughter, Miranda (a minor), were living with Rita. In March 2005, Marilyn commenced an application for dependant relief. A trial of issues was directed. However, on the eve of trial, the parties entered into a settlement agreement and judgment was granted embodying the terms of the settlement. The settlement required Marilyn and Miranda to vacate Rita’s house. However, Marilyn and Miranda ultimately failed to vacate the house as agreed. As a result, two motions came before Justice Brown on October 6, 2010. Marilyn sought to set aside the settlement and accompanying judgment on the basis that she signed the settlement documents under duress and the settlement was unconscionable. The estate moved for a writ of possession so that the house could be sold and the proceeds distributed in accordance with the settlement. The litigation was acrimonious and hard fought. At the end of the day, Justice Brown dismissed Marilyn’s motion and granted the estate’s motion. Justice Brown concluded that Marilyn had failed to demonstrate that she entered into the settlement under duress, that the settlement was unconscionable, or that any basis existed to set aside the settlement.
As is so often the case, the parties could not agree on costs and resort was had to Justice Brown, see Pytka v. Pytka, 2010 ONSC 6406 (S.C.J.). On December 31, 2010, Justice Brown released his costs decision. The estate sought substantial indemnity costs from Marilyn deduced from her share of the estate. For a variety of reasons, Marilyn argued that no costs should be awarded against her. However, Justice Brown held that there was no reason why the “loser-pay principle” should not apply in the circumstances. The two limited exceptions to the “loser-pay principle” as articulated in the McDougald Estate simply did not apply. In addition, Justice Brown held that Marilyn’s conduct in bringing and prosecuting her motion to resile from the settlement amounted to “malicious, counter-productive conduct” warranting an elevated or substantial indemnity cost award.
Justice Brown then considered the issue of quantum. Justice Brown found that the billing rates of the estate’s lawyers were “in line with prevailing market rates” for Downtown Toronto litigation and he accepted the substantial indemnity rates sought as reasonable. However, there was a “corollary” to accepting Downtown Toronto hourly rates. “The principle of proportionality as applied to the assessment of costs requires a demonstration by the party seeking an award of costs that reasonable efforts were made to delegate, where feasible, work from a higher billing lawyer to a lower billing one, or to articling students and to law clerks.” Unfortunately, Justice Brown found that no reasonable steps were taken to delegate work to lower billing timekeepers. Of the 160.3 hours of legal work recorded in the bill of costs, the senior lawyer on the brief performed 143 of them. “Rare is the case which would necessitate the singular attention of senior counsel, and this certainly is not one of those rare cases.”
While Justice Brown accepted that 160 hours was a reasonable amount of time to spend, a 50/50 split of time between the senior and junior lawyers (4 years or less) would have been reasonable in this case. Justice Brown therefore reduced the substantial indemnity costs sought by over 35%, and also reduced the photocopying charges which he felt were “too high”. The fine art of proportionality applied or hindsight run amuck? You decide.
Happy Thinking,
Justin
