Law Times

February 27, 2012

The premier weekly newspaper for the legal profession in Ontario

Issue link:

Contents of this Issue


Page 0 of 15

HIGHWAY EXPANSION IP practitioners skeptical of latest change P3 Follow on ELECTED SENATORS Critics out of sync with constitutional history P7 $4.00 • Vol. 23, No. 7 Untitled-3 1 COVERING ONTARIO'S LEGAL SCENE • WWW.LAWTIMESNEWS.COM February 27, 2012 L AW TIMES 5/5/10 3:55:30 PM ntitled-3 1 BY KENDYL SEBESTA Law Times T he Ontario Court of Appeal made a key decision this month holding that law fi rms working un- der a contingency-fee agreement don't have to post security for costs when representing cash- strapped clients. In Indcondo Building Corp. v. Sloan, the appeal court de- termined that requiring law fi rms to post security for costs would signifi cantly dissuade them from entering into con- tingency-fee agreements and increase the risk that lawyers couldn't be paid at all. Th e decision is also the fi rst time the court has recog- nized the risk law fi rms face in being stuck with disburse- ment costs in contingency-fee agreements and the signifi - cant barrier that could create for lawyers involved in them, according to appeal court Justice Robert Armstrong. "In my view, as a matter of principle, the lawyer who acts on a contingency-fee basis is already carrying the signifi cant risk of not being paid and, as in this case, being stuck with the costs of paying the disbursements," Armstrong wrote in Indcondo. "To add the additional burden of posting security for costs would no doubt have a chilling eff ect on those lawyers who might otherwise make their services available on a con- tingency basis — thus creating another problem for access to justice." In Indcondo, Cave Hill Properties Ltd., the main defen- dant in the matter, argued that Ontario should adopt the U.S. approach to the matter and require law fi rms in some circumstances to post security for costs on behalf of a client. As a result, Cave Hill Properties and the remaining de- fendants in the case sought an order requiring the law fi rm The ruling is good news for lawyers who operate on a contingency-fee basis, says Antonin Pribetic. 5/4/10 2:49:21 PM Contingency-fee lawyers get reprieve Appeal court rules firms don't have to post security for costs Brauti Th orning Zibarras LLP, which was acting for Indcon- do Building Corp., to pay into court $300,000 as security for costs of the action, which was dismissed as an abuse of pro- cess. Th ey also sought a similar order of $75,000 as security for costs of the appeal. But Brauti Th orning Zibarras partners James Zibarras and Trung Nguyen successfully argued that doing so would create a signifi cant barrier to access to justice and cause law fi rms to shy away altogether from contingency-fee agree- ments with clients. Indcondo originally launched an action to reverse sev- eral fraudulent conveyances entered by the defendants in 2010 aimed at circumventing a $9-million court order. Cave Hill Properties Ltd. then declared bankruptcy. Th at stayed the action and prevented Indcondo from seeking enforce- ment of the judgment. But in March 2011, the appeal court delivered another major decision that found that a creditor must fi le a claim within two years of discovering it and thus found in Ind- condo's favour. Th e new ruling is good news for lawyers who operate on a contingency-fee basis, says Toronto litigator Antonin Pribetic. "Justice Armstrong's decision seems to say you can't look to lawyers to pay for a client's costs and recognizes that they are already taking on signifi cant fi nancial risks without the added burden of posting security," says Pribetic. "So in a sense, it's saying lawyers can't be held responsible for their client's costs simply because they are representing clients in a contingency-fee agreement." Pribetic believes that if a future decision were to impose an order for security for costs against lawyers or law fi rms operating on a contingency basis, those arrangements See Motion, page 4 FOCUS ON Labour & Employment Law P9 Billions of dollars invested, not a penny lost. BY KENDYL SEBESTA Law Times fi ed rules of civil procedure may apply in defamation cases where it awards full indemnity costs. Writing in Moberg v. Patafi e, Jus- T tice Toscano Roccamo found a full indemnity cost award in a defama- tion case where a claimant isn't seek- ing a monetary award could be made under an exception in the simplifi ed rules where there's evidence that a party in the case behaved unreason- ably or prolonged the matter to in- crease the costs of the action. In Moberg, Patafi e's Moving Supplies Inc. owner Peter Patafi e he Ontario Superior Court has delivered a rare deci- sion that places a limit on when and how the simpli- appealed an assessment decision by a regional assessment offi cer that awarded $72,500 in costs under the simplifi ed rules and $20,400 in costs for the assessment itself against him. According to the decision, Pa- tafi e had allegedly defamed Kevin But Roccamo found the assess- ment offi cer didn't err in her decision, writing instead that the simplifi ed rules allowed the principle of propor- tionality to be fl exible in cases where there was considerable future dam- age to a plaintiff 's earning potential. The exceptions prevent a less wealthy client from being abused under the Trafalgar rule when they are up against a wealthier client in court. It also prevents the wealthier client from stopping the less wealthy client from gaining justice under the simplifi ed rules. Moberg by making several negative remarks about him. Patafi e argued the assessment of- fi cer's cost award against him violat- ed the principal of proportionality under the simplifi ed rules and ex- ceeded what the losing party should reasonably expect to pay. Roccamo also found a "rigid ap- plication" of what the losing party should reasonably expect to pay in costs under the simplifi ed rules "must be avoided" and noted the as- sessment offi cer didn't err in basing her costs award on a less stringent approach. "In my opinion, Ms. Bender's de- cision does not refl ect any breach of principle as related to the application of the factors listed in Rule 58.06 (1)," wrote Roccamo in Moberg. "In both of her decisions, she considered the conduct of the defendant which lengthened the proceedings, includ- ing the lack of co-operation received from the defendant's insurer and its counsel in response to the plaintiff 's attempts to simplify the action and contain costs." Th e decision is welcome news and marks the largest cost award in Ontario under the simplifi ed rules in the province's history, one labour and employment lawyer suggests. Alan Riddell of Soloway Wright LLP, who represented Moberg in the case, says the court's decision See Exceptions, page 4 FEEDS LEGAL LegalFeeds_Cl_Jan_11.indd 1 A daily blog of visit 1/6/11 11:44:49 AM Canadian Legal News canadianlaw legalfeeds Major costs award under simplified rules PM #40762529

Articles in this issue

Links on this page

Archives of this issue

view archives of Law Times - February 27, 2012