Ontario Court of Justice (General Division)

 

 

Judge:  Austin J.

Supplementary Reasons: February 20, 1992

Docket:  Docs. Toronto 5236/86; 10453/86

 

Counsel:  Barry S. Wortzman, Q.C., for Sidney L. Jaffe and Ruth Jaffe.

Daniel S. Dearing, defendant solicitor appearing in person.

 

Subject:  Civil Practice and Procedure

 

Practice — Judgments and orders — Interest on judgments — Prejudgment interest — Rate of.

 

Practice — Judgments and orders — Interest on judgments — Postjudgment interest — Rate of.

 

Practice — Costs — Persons entitled to or liable for costs — Solicitor acting for self.

 

Practice — Costs — Taxation or assessment of costs — Forum for.

 

Costs — Persons entitled to or liable for costs — Solicitor acting for self — Defendant lawyer representing himself in actions that were dismissed — Ordinary rule disallowing costs for preparation for trial and counsel fee where party unrepresented not applying.

 

Costs — Taxation or assessment of costs — Forum for — Costs of motions, applications and uncomplicated trials to be fixed by judge rather than be referred to assessment officers for assessment.

 

Judgments and orders — Interest on judgments — Postjudgment interest — Rate of — Matter of procedure and governed by law of the forum — Rate varied to accommodate foreign law.

 

Judgments and orders — Interest on judgments — Prejudgment interest — Rate of — Foreign law applied — In event foreign law should not be applied, resort had to ss.137 and 138 of Courts of Justice Act — Courts of Justice Act, 1984, S.O. 1984, c. 11, ss. 137 and 138.

 

The plaintiffs' actions for damages against their lawyer were dismissed; however, in the first action, the solicitor's counterclaim for fees and disbursements was granted. A contract for legal services between them was governed by the law of Florida. The lawyer represented himself at trial and requested that he recover in costs his fees for preparation and appearance at trial. Florida law clearly entitled a lawyer to a counsel fee in the circumstances. Submissions were made on costs and interest.

 

Held:

 

Costs were to be fixed by the trial judge; prejudgment interest was allowed at the rate of 12 per cent; postjudgment interest was allowed at the rate of 12 per cent; the defendant was entitled to counsel fee for preparation for trial and appearance at trial.

 

Costs were to be decided by the law of Ontario. The general rule in Ontario was that a solicitor representing himself appeared before the court as a litigant, not as an officer of the court. A successful solicitor was entitled to the usual party-and- party costs but preparation for trial and counsel fee would not be allowed. Costs were intended to indemnify. If there was no expenditure incurred to pay a lawyer, then indemnity was inappropriate. In this case, however, the general rule should not be applied. If the defendant solicitor had retained counsel, the defendant could have been gainfully employed elsewhere in the time he was not giving evidence. A solicitor's time was his stock in trade. Why should he not be paid for it? Further, why should an unsuccessful party benefit merely because a solicitor acted for himself? The defendant should be allowed appropriate fees for preparation and for appearance at trial.

 

Regarding prejudgment interest, the applicable law was Florida law because Florida had been where the contract for legal services was performed. If this was incorrect, ss.137 and 138 of the Courts of Justice Act, 1984 (Ont.) and the principles of averaging led to the conclusion that it would be permissible to award 12 per cent. This was also the rate under Florida law.

 

Regarding postjudgment interest, the law of Ontario applied because this was a matter of procedural law. Discretion was exercised in favour of increasing the rate from 10 per cent to 12 per cent. The latter rate was the rate under Florida law.

 

To avoid delay, the trial judge should fix costs rather than refer them to the assessment officer.

 

Cases considered:

 

Endicott v. Halliday (1982), 28 C.P.C. 114 (Ont. Assess. O.) — applied

 

Fanaken v. Bell, Temple (1985), 49 C.P.C. 212 (Ont. Assess. O.) —

distinguished

 

Johnston v. Ryckman (1904), 7 O.L.R. 511 (Div. Ct.) — distinguished

 

McBeth v. Dalhousie College & University (1986), 10 C.P.C. (2d) 69, 72 N.S.R. (2d) 224, 173 A.P.R. 224, 26 D.L.R. (4th) 321, (sub nom. McBeth v. Governors of Dalhousie College & University) 23 C.R.R. 317 (C.A.) — considered

 

Spooner v. Spooner (1977), 3 C.P.C. 337, 16 O.R. (2d) 46 (Assess. O.) — distinguished

 

Watson v. Holyoake (1986), 15 C.P.C. (2d) 262 (Ont. H.C.) [affirmed (May 5, 1989), Doc. Toronto CA 67/87 Morden, Robins, Tarnopolsky JJ.A. (Ont. C.A.)] — distinguished

 

Wright & McTaggart v. Soapak Industries Ltd. (Receiver of) (sub nom. Wright & McTaggart, Re) (1990), 75 O.R. (2d) 394 (Assess. O.) — applied

 

Statutes considered:

 

Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B of the Canada Act 1982 (U.K.), 1982, c. 11.

 

Courts of Justice Act, 1984, S.O. 1984, c. 11 [R.S.O. 1990, c. C.43] —

 

s. 137 [am. S.O. 1989, c. 67, s. 5] [ R.S.O. 1990, c. C.43, s. 127]

 

s. 138 [am. S.O. 1989, c. 67, s. 6(1)] [R.S.O. 1990, c. C.43, s. 128]

 

s. 138(1) [re-en. S.O. 1989, c. 67, s. 6(1)] [R.S.O. 1990, c. C.43, s. 128(1)]

 

s. 140(1) [re-en. S.O. 1989, c. 67, s. 7] [R.S.O. 1990, c. C.43, s. 130(1)]

 

s. 140(1)(b) [am. S.O. 1989, c. 67, s. 7] [R.S.O. 1990, c. C.43, s. 130(1)(b)]

 

Litigants in Person (Costs and Expenses) Act, 1975 (U.K.), c. 47.

Tariffs considered:

 

Ontario, Rules of Civil Procedure —

 

Tariff A, Pt. II

 

item 28

 

Words and phrases considered:

 

prejudgment interest rate — as used in s. 138(1) of the Courts of Justice Act, 1984, S.O. 1984, c. 11, is defined in s. 137 as "the bank rate at the end of the first day of the last month of the quarter preceding the quarter in which the proceeding was commenced, rounded to the nearest tenth of a percentage point." Thus, where an action was commenced on August 15, 1985, the applicable prejudgment rate is the rate for the second quarter of 1985 which was 13 per cent.

Adjudication on costs and interest of judgment dated November 14, 1991, Docs. Toronto 5236/85, 10453/86, Austin J. (Ont. Gen. Div.).

 

Austin J. (Supplementary Reasons, February 20, 1992):

 

1     These are actions by a client or clients against a lawyer for damages. On November 14, 1991, I gave reasons dismissing the actions and allowing the lawyer's counterclaim for fees and disbursements. I awarded interest on that claim, but as neither interest nor costs had been argued I invited submissions on them.

 

2     The submissions received deal with the following issues:

 

(1) From what date prejudgment interest is to run.

 

(2) At what rate prejudgment interest is to run.

 

(3) At what rate postjudgment interest is to run.

 

(4) On what scale are costs awarded.

 

(5) Are costs to be assessed by an assessment officer or fixed by me?

 

(6) Is Dearing entitled to recover his transportation and accommodation expenses?

 

(7) Is Dearing, who acted for himself at trial, entitled to fees for preparation and appearance at trial?

 

3     (1) In my reasons of November 14, 1991, I awarded prejudgment interest from the date the cause of action arose. I compounded it as of September 25, 1985, the date Dearing got judgment in Florida for his fees and disbursements. Both sides agree that as I dismissed the claim on that judgment, compounding was in error. I agree. Dearing is entitled to simple interest on $62,028.31 from the date the cause of action arose to November 14, 1991.

 

4     (2) As to the rate of prejudgment interest, I awarded 12 per cent in my earlier reasons. This was based upon an averaging of rates over the period in question, September 1983 to November 1991. Dearing submits that it should be 12 per cent, not on the basis of averaging, but because that rate is mandated by Florida jurisprudence and because Florida law applies, Florida having been the place of performance of contract.

 

5     Counsel for the Jaffes notes that Dearing did not claim interest in his accounts and that his counterclaim is said to be pursuant to the provisions of the Courts of Justice, 1984, S.O. 1984, c. 11.

 

6     If necessary, I would allow Dearing to amend his pleading to claim interest by virtue of Florida statute law as an alternative to the claim based upon the Courts of Justice Act, 1984.

 

7     I agree with Dearing that the contract for legal services was and is governed by the law of Florida. The argument that the contract was governed by the law of Ontario because Mrs. Jaffe was in Ontario when she telephoned Dearing, is, with respect, absurd. The proposition can be tested by asking what law would have governed the arrangement between Jaffe's kidnappers and their Toronto counsel when the kidnappers were in prison and before the court in Ontario. Why would Florida law have any application in those circumstances?

 

8     Counsel for the Jaffes also argues that, although the prejudgment interest rate varied between 9 per cent and 15 per cent during the period 1983 to 1991, "the fluctuation is not sufficient to justify a higher rate of pre-judgment interest than that prescribed by s. 138." Many cases have examined and approved the principle of averaging and I see no reason why it should not be applied here, in the event that I am in error in finding that the law of Florida is applicable.

 

9     If I understand counsel's argument, he is arguing in favour of the rate of interest prescribed by s. 138. Section 138(1) simply refers to "the prejudgment interest rate." That rate is defined by s.137 as "the bank rate at the end of the first day of the last month of the quarter preceding the quarter in which the proceeding was commenced, rounded to the next higher whole number where the bank rate includes a fraction, plus 1 per cent." The proceeding was commenced on August 15, 1985. That was the third quarter of the year. The Ontario Annual Practice 1991-92, p. CJA-97, gives the rate for the second quarter of 1985 as 13 per cent.

 

10     I confirm that the prejudgment interest rate is to be 12 per cent.

 

11     (3) In my earlier reasons I ordered that postjudgment interest run at the rate established by statute in Florida, namely, 12 per cent. Postjudgment interest is classified as a matter of procedure and hence governed by the law of the forum, i.e., Ontario. J.-G. Castel, Canadian Conflict of Laws, 2nd ed. (Toronto: Butterworths, 1986) at p.115. On the date of judgment that rate was fixed in accordance with the provisions of the Courts of Justice Act, 1984 at 10 per cent. That rate can be increased or decreased in the discretion of the court. Courts of Justice Act, 1984, s. 140(1)(b). Before varying the statute rate, however, the party seeking the variance must show that it would be just in all the circumstances. As 12 per cent is the rate set by Florida law and as that is the place where the contract was made and the vast bulk of it was carried out, it seems to me just in all the circumstances to award 12 per cent rather than 10 per cent as the postjudgment interest rate.

 

12     (4) In my earlier reasons, I made no award of costs. The usual rule in Ontario is that costs follow the event. In this case the plaintiffs' claims were dismissed. So was Dearing's claim on his Florida judgment for fees and disbursements. His parallel claim for fees and disbursements was, however, allowed. No reason has been suggested why he should not be allowed his costs.

 

13     Counsel on behalf of the Jaffes argues that these costs should be on a party-and-party basis rather than on a solicitor-and-client scale. I am inclined to agree.

 

14     (5) Counsel for the Jaffes also raised the question how the quantum of costs was to be determined — whether by an assessment officer or by me. Since September 1990, judges of this court, and particularly those in Toronto, have been encouraged to fix the costs of motions, applications and uncomplicated trials, and to order them paid forthwith, rather than order them to be assessed. There were and are two main reasons for this approach. The first and most important was delay: assessment officers were then giving appointments for assessments two years and more in the future. The second reason was to bring home to litigants, quickly and forcefully, the cost of proceedings without merit. That policy is still in effect, and it was my intention, if at all possible, to fix the costs of this proceeding.

 

15     Most of the required information I have already received from Dearing by letter. What is lacking is a statement or bill of costs from Dearing's former counsel in Toronto, setting out those items in which they were involved and the appropriate fees chargeable and disbursements made. These would appear to include delivery of a statement of defence in each action, delivery of a counterclaim in the 1985 action, production of documents, examination of documents produced by the Jaffes, examinations for discovery, and possibly some interlocutory motions.

 

16     I also need to know what agreements there were, if any, as to fees or expenses when Dearing attended in Toronto for discovery, cross-examination, pre-trial or other proceedings. I also need copies of any orders made that awarded costs to Dearing either at the time or in the cause.

 

17     In his written argument, counsel for the Jaffes stated that "the plaintiffs are entitled to examination with respect to the reasonableness of fees and disbursements incurred." I am not aware of any basis for such an examination. Frequently, on an assessment, counsel will testify and be subject to cross-examination. More frequently, issues are resolved by discussion or argument. Dearing indicated his willingness to be cross-examined on his material. In the circumstances, I see no reason why he should come to Toronto at his own expense. If he is to be cross-examined, that should take place at his convenience, in Florida, with counsel for the Jaffes attending there. An alternative would be to do it by written questions and answers or by telephone. If counsel needs to have the Jaffes available for instructions and Mr. Jaffe is unwilling to go to Florida, presumably instructions could be had from him by telephone. I may be spoken to in this regard if counsel are unable to agree. If there is to be examination or cross-examination, it must occur soon. This matter has already been dragged out excessively.

 

18     (6) Counsel for the Jaffes takes the position that Dearing is not entitled to his expenses for travel and accommodation incurred attending in Toronto for trial. This submission is based upon Spooner v. Spooner (1977), 3 C.P.C. 337, 16 O.R. (2d) 46, (Assess. O.), a decision of Taxing Officer McBride. The difficulty created by that decision can be overcome by my making an order pursuant to the present Tariff A, Pt. II Disbursements, item 28 that Dearing, as a party, be entitled to "such travelling and accommodation expenses incurred by him ... as appear[s] reasonable." Such an order is entirely appropriate in the present circumstances.

 

19     (7) In my original reasons I raised the question whether Dearing, being a lawyer acting for himself, is entitled to a counsel fee at trial.

 

20     Dearing submits that in Florida the law is quite clear that a lawyer is entitled to a counsel fee in these circumstances. This, however, is a matter of costs and falls to be decided by the law of Ontario.

 

21     Counsel for the Jaffes takes the position that under Ontario law there is no such entitlement. M.M. Orkin, The Law of Costs, 2nd ed. (Aurora, Ont.: Canada Law Book, 1991) at p. 2-52, s. 209.15 states that:

 

A solicitor who successfully appears on his own behalf is entitled to assess solicitor's fees and disbursements, i.e., the usual party-and-party costs, although preparation for trial and counsel fee at trial will not be allowed.

 

According to Orkin the rule is based upon the proposition that costs are intended to indemnify: if you have not had to pay a lawyer, then indemnity is inappropriate.

 

22     Reference was also made to Fanaken v. Bell, Temple (1985), 49 C.P.C. 212, (Ont. Assess. O.), Watson v. Holyoake (1986), 15 C.P.C. (2d) 262 (Ont. H.C.) and Johnston v. Ryckman (1904), 7 O.L.R. 511 (Div. Ct.). In the latter case, Boyd C.J. said of a barrister's entitlement to counsel fee at trial [at p. 521]:

 

He is not in Court as an officer of the Court, but as a litigant. The necessary factor in the taxation of counsel fees is that the money must be disbursed for the payment of them as a condition precedent, and the barrister-litigant cannot pay money or be liable to himself.

 

While the rule may make a great deal of sense in many cases, it makes none in the present circumstances. To follow it would be to confuse form and substance. Had Dearing retained counsel he would have had to pay counsel. That payment would have been earned by Dearing, in theory at least, during the time that the case was being tried and Dearing himself was not in the witness box. He could or would have been gainfully employed elsewhere. To quote Dearing, "an attorney's time is his stock in trade"; why in principle should he not be paid for it?

 

23     Dearing also raised what he calls the "windfall factor. Why should an unsuccessful party, subject to [an order for costs] benefit merely because the prevailing party, an attorney at law, acts for himself?"

 

24     This aspect of the law has received a good deal of attention in recent years. In McBeth v. Dalhousie College & University (1986), 10 C.P.C. (2d) 69, 72 N.S.R. (2d) 224, 173 A.P.R. 224, 26 D.L.R. (4th) 321, (sub nom. McBeth v. Governors of Dalhousie College & University) 23 C.R.R. 317 (C.A.), its possible relationship with the Charter was examined. In Endicott v. Halliday (1982), 28 C.P.C. 114 (Ont. Assess. O.), counsel was allowed a fee for preparation time. In Wright & McTaggart v. Soapak Industries Ltd. (Receiver of) (sub nom. Wright & McTaggart, Re) (1990), 75 O.R. (2d) 394, (Assess. O.), Master Clark allowed counsel representing his former firm a counsel fee. In the process he reviewed the jurisprudence on this point, including the Litigants in Person (Costs and Expenses) Act, 1975 (U.K.), c. 47 which abolished the rule in the United Kingdom.

 

25     At the risk of increasing the likelihood of an appeal, I propose to allow Dearing appropriate fees for preparation for and appearance at trial.

 

26     The next step is for Dearing to let me have the material referred to earlier in these reasons.

 

Order accordingly.