Law Times

LAW TIMES COVERING ONTARIO'S LEGAL SCENE | APRIL 8, 2019 5 www.lawtimesnews.com BY JULIUS MELNITZER For Law Times LAWYERS who represent themselves aren't entitled to any greater costs awards than lay persons acting on their own ac- count, says the Ontario Court of Appeal by way of reducing a self- represented law firm's recovery to $20,000 from $60,000. "It doesn't pay for lawyers to represent themselves," says Eli Karp, the litigation prin- cipal at Morganti & Co., PC in Toronto, who successfully acted for George Benarroch, Credifinance Capital Corp. and Donabo Inc. (the appellants) in Benarroch v. Fred Tayar & As- sociates P.C. Arguably, however, that's only partly correct. "It's true that, as a result of this decision, it may not pay for lawyers to represent themselves if they win," says Colby Linth- waite, the commercial litigation lawyer at Fred Tayar & Associ- ates PC, who represented him- self and his firm in Benarroch. "But that's not true if they lose, because then they won't be enti- tled to any third-party costs that they can apply to their legal fees." The irony here is that the Ta- yar firm was in fact successful all the way along in this protracted litigation — at least right up until the end. "We were confident in our prospects, wanted to keep the costs down and perhaps naively believed that we would be able to cover a realistic portion of our expenses," Linthwaite says. In overturning the partial indemnity costs award of some $60,000, the OCA ruled that the award was inappropriate because it allowed Tayar to recover for the time spent in work that would ordinarily be done by a client. Lawyers, the court stated, were to be treated no differently than other self-represented litigants who were not entitled to costs on a partial indemnity scale. Moreover, to the extent that self-represented lawyers were en- titled to costs, the costs had to be "moderate and reasonable" and could not take into account their professional status as lawyers. "Lawyers are now in the same boat as the CEO of a large com- pany, whose time may be worth $2,000 an hour," Linthwaite says. "If the CEO represents herself, she's not going to get anywhere near $2,000 for her time." The case arose after the ap- pellants brought an unsuccess- ful application to assess Tayar's accounts after the two-year pe- riod for doing so without leave had expired. Tayar subsequently sought costs of the application. In written submissions to Justice Markus Koehnen of the Superior Court of Justice, Karp argued that Tayar could not re- cover costs at all absent evidence of opportunity costs caused by the time spent on the assessment application. In response, Tayar filed affi- davits to the effect that the firm had to turn away remunerative work while working on the case. Karp responded that the "vague statements" in the affidavit were insufficient to prove opportu- nity costs and that the firm had not shown that the work on the application could not have been done on evenings and week- ends, making it unnecessary to turn clients away. Finally, Karp argued that the firm should not be compensated for tasks that would normally have been performed by Tayar in its ca- pacity as client rather than its role as lawyer. Ultimately, Tayar claimed some $60,000 in costs. "The clients made some very serious allegations, and we had to deal with them," Linthwaite says. Karp submitted that if the firm were entitled to costs at all, they should not exceed $5,860. Koehnen granted Tayar the full amount sought. In doing so, he applied the OCA's decision in Fong v. Chan, found that all the work done was appropriately performed by a lawyer, accepted the allegation of lost opportu- nity costs and found that the firm's partial indemnity rates between $300 and $350 hourly were "moderate" or "reasonable." Karp's clients appealed. A unanimous bench com- posed of justices Paul Rouleau, Gary Trotter and Ben Zarnett agreed with Koehnen that Tayar had suffered opportunity costs. "Fong and later cases stipulate that self-represented litigants must show that they incurred an opportunity cost by forgoing remunerative activity," Rouleau wrote for the court. "In doing so, they do not suggest that claims for lost opportunity costs should become complex hearings where the self represented claimant is called upon to account for every minute of the day and prove every penny of revenue that was lost." But, having found that there was opportunity cost, Koehnen had misapplied Fong. "As Fong makes clear, self-represented litigants, in- cluding lawyers, 'are not entitled to costs calculated on the same basis as those of the litigant who retains counsel,'" Rouleau wrote. "By awarding the respondents their costs on a partial indem- nity basis, without making any adjustment for time that the re- spondents would have had to de- vote as 'clients' if they had hired external counsel, the application judge effectively treated the re- spondents as counsel rather than as self represented litigants." The upshot was that "the law- yer will not necessarily recover his or her regular or even partial indemnity rate for all of the time devoted to the work ordinar- ily done by a lawyer retained to conduct the litigation." Rather, the lawyer was only entitled to an "'allowance' for the lost opportunity to devote the time to remunerative activities." That did not mean, however, that only nominal costs were ap- propriate. ". . . Where the self-repre- sented party has demonstrated that the lost opportunity costs were significant, as here, an award for an amount greater than mere nominal costs is jus- tified," Rouleau wrote. In this case, the correct award was $20,000. Ironically, the OCA also awarded the appellants $10,000 in costs for the success they had had on the appeal — presumably on a partial indemnity basis. LT Eli Karp says it 'doesn't pay for lawyers to represent themselves.' 'It doesn't pay for lawyers to represent themselves' Lawyers not entitled to greater costs NEWS Untitled-5 1 2019-04-03 4:23 PM LawTimesNews.com Fresh Ontario legal news and analysis available on any device. Get More Online

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