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Costs Awarded Personally Against a Lawyer for Pursuing an Unattainable Goal on Behalf of the Clients and for Breaching the Rules of Professional Conduct

The costs awarded against the defendants’ lawyer, in the case of Beca v Tiberi [1] should be a cautionary tale for lawyers to be mindful of their duties owed to the Court, their client and the opposing party, as set out in the Rules of Professional Conduct.

Brief factual background

The Deceased, in his will, left his estate to his children in equal shares. Years before his death, he appointed two of his daughters (Augusta Tiberi and Ida Caporale) as his attorneys for property. In addition, the Deceased also appointed Augusta as a co-estate trustee with another sibling. Acting under the power of attorney document, Augusta misappropriated the Deceased’s funds to pay for personal debts, caused the Deceased to incur debts to benefit herself, her husband, and Ida (the Defendants in the proceeding). Augusta also transferred title of the Deceased’s home so it was jointly held and subsequently transferred it to herself alone after the Deceased’s death, and mortgaged the home to pay off her and her husband’s personal debts.

After the transfer of the property, the other beneficiaries under the will brought an application (which proceeding was later converted into an action) to require Augusta, to account:

  • for the property she managed for the Deceased as his attorney for property;
  • for the assets she managed as a co-trustee of the Deceased’s estate; and
  • to have her accounts passed by the

In terms of a Court Order, Augusta was to comply with the relief claimed by the Plaintiffs within specified timelines.

After delays which were caused by the Defendants’ lawyer whom pursued unreasonable positons in defending the action and who brought unnecessary motions, the matter was finally resolved through mediation.  The parties agreed to leave the issue of costs for the court to determine.

The terms of settlement reached at mediation were the same as those claimed by the Plaintiffs at the outset of the proceeding, which was to make the estate whole and distribute the assets in accordance with the uncontested will without further delay.

The costs hearing

At the costs hearing, the court had to determine whom, if anyone, is entitled to their costs. An issue at the hearing was whether the lawyer acting for the Defendants should personally pay for the costs.

The Plaintiffs’ position was that their costs in the amount of $394,727.40 was to be paid on a full indemnity basis, including punitive costs which should be paid by the Defendants’ lawyer personally, due to the Defendants putting forward deceptive affidavits, the Defendants’ lawyer taking unreasonable positions and that the outcome reached during mediation was no more favorable to the Defendants than the settlement offers that the Plaintiffs made from the outset of the proceedings.[2]

The Defendants waived privilege and the solicitor-client file was produced to the parties in order to determine the issue of liability for costs.

The solicitor’s file revealed that the defendant, Augusta, had advised her lawyer from the outset that she had misappropriated the funds to pay off her personal debts, that the lawyer was aware of this and that nonetheless, the lawyer deliberately evaded the judge’s questions and misrepresented the fact that the funds were held in trust when he enquired about the whereabouts of the funds. The lawyer further misrepresented facts relating to the funds to opposing counsel.

The judge, hearing the costs submissions, and having looked at the facts of the case and the manner in which the lawyer conducted herself, referred to a paragraph in the transcripts of an earlier motion related to the proceedings brought by the Defendants’ lawyer, which stated the following regarding her conduct:

“ this case leaves me somewhat breathless in terms of your conduct frankly. If time were more plentiful I would consider adjourning the matter and having you come back to explain why costs, or a portion of them, should not be paid by you personally. I think your conduct in responding to the Plaintiffs’ efforts to get this matter on in compliance with Justice Fragomeni’s order…is beyond the pale. It’s one of those very few cases, and I think there has only been one in the last eight years where I have actually sent some material to The Law Society to look at, but I was thinking that this might be one of those cases where the Court would have an obligation to do that.”[3]

The court determined the following in respect of the conduct of the Defendants’ lawyer:

  • she pursued a goal that was unattainable on behalf of her clients;
  • she failed to properly advise her clients;
  • she failed her duty of probity towards her clients;
  • she knowingly misrepresented facts and mislead the court;
  • she undermined the authority of the court; and
  • she severely interfered with the administration of justice.

The court thereafter reviewed the principles relating to costs as set out in the Rules of Civil Procedure, the circumstances where costs would be awarded on a full indemnity basis as well as the factors in which a court would award costs against an attorney personally.

The court noted that nearly all of the legal costs in this litigation could have been avoided if the Defendants’ lawyer had simply advised her clients to make the estate whole and distribute the assets of the estate pursuant to the uncontested will.[4]

[1] 2018 ONSC 7282 (CanLII)

[2] Para 52

[3]  Para 60.

[4]  Para 158.

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