ARTHUR GAUTREAU Plaintiff – v. –, 2023 NBKB 068

Citation: 2023 NBKB 068 Date: April 28, 2023 Docket: FC-21-2015 IN THE COURT OF KING’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF FREDERICTON BETWEEN: ARTHUR GAUTREAU Plaintiff – and – MITCHELL L.H. FRASER, as Litigation Administrator for Frank Leriche, and GRACE LERICHE Defendants Date of Hearing: October 18, 2022 Date of Decision: April 28, 2023 Subject Matter: Settlement Agreement - Validity Before: Justice Terrence J. Morrison At: Burton, New Brunswick Appearances: J. Brent Melanson, for the plaintiff Emmy Chiasson, for the defendants

DECISION Morrison, J. I. INTRODUCTION [ 1 ] In this motion, the defendants advance multiple claims for relief, all of which stem from the plaintiff’s counsel purportedly accepting an offer to settle after the death of the plaintiff, but before the defendants were made aware of the plaintiff’s death. For the reasons that follow, the defendants’ motion is granted in part, and they are entitled to a declaration that the purported settlement between the parties is unenforceable and of no force and effect.

The plaintiff’s counsel shall forthwith return the “settlement” funds advanced, and the defendants are entitled to costs as set out herein. II. FACTS [ 2 ] On March 7, 2013, a motor vehicle collision occurred between the vehicle owned and operated by the plaintiff and the vehicle owned by the defendants and operated by one of them. [ 3 ] On January 23, 2015, the plaintiff issued his Notice of Action with Statement of Claim attached.

The defendants filed a Statement of Defence on July 10, 2015. [ 4 ] On April 9, 2020, the defendants issued an Offer to Settle to the plaintiff, in which they offered to settle the plaintiff’s claim for $15,000.00 plus taxable costs and disbursements. The Offer to Settle was served on the plaintiff’s counsel on April 9, 2020. The Offer to Settle did not have a time limit. [ 5 ] On August 20, 2020, the defendants filed an Amended Statement of Defence, in which they admitted liability for the collision. [ 6 ] On September 9, 2020, the action was set down for trial.

A settlement conference was set for March 25, 2021, and the trial scheduled for five days, starting on September 27, 2021. [ 7 ] On November 3, 2020, the plaintiff’s counsel had a telephone conversation with the plaintiff, wherein he confirmed his availability for the March 25, 2021 settlement conference, and they discussed exploring further settlement negotiations. [ 8 ] On November 10, 2020, the plaintiff died. [ 9 ] Between January and March 2021, there were exchanges of communications between the plaintiff’s counsel and the defendants’ counsel regarding possible settlement discussions.

Ultimately, on March 16, 2021, the defendants’ counsel advised that the defendants would make no further settlement offer before the settlement conference. [ 10 ] On March 11, 2021, in contemplation of the upcoming settlement conference, the plaintiff’s counsel attempted to contact the plaintiff by telephone, but the telephone number was not in service.

Also on that date, the plaintiff’s counsel wrote to the plaintiff, asking him to contact her office as soon as possible. [ 11 ] On March 18, 2021, the plaintiff’s counsel sent an email to the defendants’ counsel, advising that she had been unable to reach the plaintiff. On the same day, the plaintiff’s counsel contacted the plaintiff’s physician and learned that the plaintiff had

died in November of 2020. [ 12 ] Also on March 18, 2021, the plaintiff’s counsel made contact with the Moncton Law Courts and learned that Letters of Administration for the plaintiff’s estate had been issued to Michel and Josée LeBlanc (the “Administrator”). [ 13 ] On March 19, 2021, the plaintiff’s counsel called the Administrator and explained the history of the claim, the settlement negotiations, and the outstanding Offer to Settle of $15,000.00 plus costs and disbursements.

The plaintiff’s counsel advised the Administrator that they had authority to make decisions, and they instructed the plaintiff’s counsel to accept the Offer to Settle. [ 14 ] Subsequently, on March 19, 2021, the plaintiff’s counsel wrote to the defendants’ counsel, accepting the Offer to Settle. The defendants’ counsel was not advised of the plaintiff’s death at that time. [ 15 ] On March 22, 2021, the defendants’ counsel agreed that the trial could be removed from the court docket. [ 16 ] A dispute arose as to the amount of allowable disbursements, and an assessment by the Clerk was required.

The required documentation (i.e., Notice of Appointment to Assess Costs, and Bill of Costs) was filed and exchanged between the parties. The assessment of costs hearing before the Clerk was held on November 2, 2021. On February 18, 2022, the Clerk issued her decision on assessment of costs and disbursements. [ 17 ] On March 1, 2022, the defendants’ counsel sent a letter to the plaintiff’s counsel, enclosing the settlement funds of $17,431.77, a draft Release and Consent Order for Discontinuance.

The correspondence also stated: Settlement funds are not to be released to your client until he has signed the attached Release and you have signed, executed, and undertaken to file the Consent Order for Discontinuance. Once these conditions have been met, you may disburse the funds. [ 18 ] On March 16, 2022, the plaintiff’s counsel wrote to the defendants’ counsel, advising that the plaintiff was deceased, and asking that the Release be amended for signature by the Administrator.

This is the first notice from the plaintiff’s counsel that the plaintiff had died. [ 19 ] On March 18, 2022, the defendants’ counsel sent an email to the plaintiff’s counsel, stating in part: Your email of Wednesday, below, is the first notice that you have provided advising that your client was deceased. We note from the Death Certificate that he passed away prior to the settlement agreement. It is our position that there is no valid settlement in this case, and we will be seeking instructions from our client on next steps.

This is notice that we require that you DO NOT disburse the settlement funds which were provided to your firm in trust. Please confirm promptly that the funds have not been disbursed. [ 20 ] Having received no response from the plaintiff’s counsel, the defendants’ counsel followed up with a letter sent by fax on March 18, 2022, and a further email on March 23, 2022, reiterating the points made in the March 18, 2022 email.

Finally, the defendants’ counsel sent a letter by fax on March 23, 2022, stating their position that the purported settlement was “unenforceable and of no force and effect”, and demanded return of the “settlement” funds.

On March 24, 2022, the plaintiff’s counsel wrote to the defendants’ counsel, rejecting the defendants’ position and advising that the defendants must make a motion regarding the disposition of funds held in trust by the plaintiff’s counsel. [ 21 ] On June 8-9, 2022, the plaintiff’s counsel was served with the present Notice of Motion and supporting affidavits. [ 22 ] On October 6, 2022, the plaintiff’s counsel submitted a draft Order to Continue to the Clerk. The Clerk signed the Order to Continue on October 11, 2022, but it has a handwritten notation, stating, “effective the 6 th day of October, 2022”.

[ 23 ] On October 7, 2022, the plaintiff’s counsel sent a letter by fax to the defendants’ counsel, enclosing a copy of the draft Order to Continue sent to the Clerk, together with a signed Acceptance of Offer to Settle (Form 49C). [ 24 ] On October 7, 2022, the defendants’ counsel sent a letter by fax to the plaintiff’s counsel, noting that no Order to Continue had yet been issued by the Clerk, and advised that, “Your purported acceptance is of no force and effect.

However, so that there can be no doubt about that matter, the offer is withdrawn and, out of an abundance of caution, please find attached our Revocation of Offer to that effect.” [ 25 ] The hearing of this motion proceeded on October 18, 2022. III. ISSUES [ 26 ] In his Notice of Motion, the plaintiff seeks the following relief: 1. A declaration that the purported settlement between the parties is unenforceable and of no force and effect, pursuant to the inherent jurisdiction of the Court, s. 26(9) of the Judicature Act , RSNB 1973, ch. J-2 , and Rule 13.01 of the Rules of Court ; 2.

That the plaintiff’s solicitors shall forthwith return the settlement funds, totaling $17,431.77, and all interest accrued thereon, to the defendants’ solicitors in trust; 3.

That the defendants are entitled to reimbursement of costs and disbursements, on a solicitor / client basis, pursuant to Rules 59.01 and 59.02, for all fees and disbursements incurred between the date of the plaintiff’s death (November 10, 2020) and the date that the plaintiff’s solicitors advised the defendants’ solicitors of his death (March 16, 2022), to be assessed payable by the plaintiff’s solicitors pursuant to Rule 59.13, or in the alternative by the plaintiff; 4.

That the plaintiff’s action be dismissed for delay pursuant to Rule 13.02(3) for failing to obtain an Order to Continue within a reasonable time, and that such dismissal shall be a defence to any subsequent action pursuant to Rule 26.04(1); 5. That the plaintiff’s Statement of Claim be struck out for failing to disclose a reasonable cause of action pursuant to Rule 23.01(1) (b), and more particularly that no pecuniary losses or special damages have been plead or particularized in accordance with Rule 27.06(10); 6. That

summary judgment be granted in favour of the defendants pursuant to Rule 22.01(3); 7. Costs on the present motion, on a solicitor / client basis pursuant to Rule 59.01, 59.02 and assessed against the plaintiff’s solicitors pursuant to 59.13, or alternatively as against the Plaintiff; 8. Such further and other relief as this Honourable Court may deem expedient and fair. IV. ANALYSIS AND DECISION A. Is the settlement enforceable? [ 27 ] The defendants submit that upon the death of a plaintiff, two things occur:

(1) The plaintiff’s cause of action dies with him/her except as preserved by s.6(1) of the Survival of Actions Act , RSNB 2011, c. 227 ; and

(2) The action against the defendants was automatically stayed by virtue of the operation of Rule 13.01 of the Rules of Court until an Order to Continue is obtained.

[28] Section 6(1) of the Survival of Actions Act provides as follows: When a cause of action survives for the benefit of the estate of a deceased person, only damages that have resulted in actual pecuniaryloss to the deceased person or the estate are recoverable and, without restricting the generality of the foregoing, the damages recoverableshall not include damages for loss of expectation of life, pain and suffering or physical disfigurement. [29] Rule 13.01 provides as follows: Where, at any stage of a proceeding, the interest or liability of a party is transferred or transmitted to another person, the proceeding shallbe stayed until an order to continue by or against such other person has been obtained. [30] The defendants submit that upon the death of the plaintiff, the nature of the plaintiff’s claim was changed byoperation of the Survival of Actions Act, and the plaintiff’s action was stayed by operation of Rule 13.01.

Accordingly, any offer madeby the defendants prior to the death of the plaintiff cannot be accepted post-mortem. [31] In support of their position, the defendants refer to several cases. In MacKenzie et al. v. Carroll et al., (ON SC), the defendant’s solicitor made an offer to settle the plaintiff’s claim, not knowing the plaintiff had died. Theplaintiff’s solicitor, after learning of his client’s death, accepted the offer without informing the defendant’s solicitor of the death.

Indiscussing whether the death of the plaintiff terminated the authority of her solicitor to conclude the settlement, the Court stated atparagraphs 13-14: It appears that the doctrine of relation back can only apply in the case at bar so as to validate the authority of the plaintiffs’ solicitor toenter into a settlement for claim of the estate under the Fatal Accidents Act.

Because the offer of settlement was not made with respect to such claim but rather with respect to claims which the deceasedcould have pursued personally, consequently the parties were not ad idem and therefore no contract of settlement was concluded.[Emphasis added] [32] In Moss v. Chin, (BC SC), the Public Trustee (and solicitor for the infant plaintiff) becameaware that the plaintiff was likely to die within days and made an offer to settle to the defendant’s insurer. The infant plaintiff died thenext day.

Without advising the defendant’s insurer of the death of the plaintiff, the Public Trustee continued to negotiate settlement withthe defendant’s insurer and the settlement was concluded. When the defendant’s insurer later learned of the plaintiff’s death prior tosettlement, it moved to have the settlement set aside. The Court stated at paragraph 30: I agree also with the submission of defence counsel that since the plaintiff’s claims for pain and suffering, loss of amenities and costs offuture care did not survive her death, the action as regards those claims was at an end on her death.

Death terminated the causes as wellas the action. […] It seems to me as well, in particular in these circumstances, that on the death of the Plaintiff the Public Trusteeshould have immediately applied to the court pursuant to Rule 15(3) and (4) for leave to continue the action in her capacity as committee,with respect to causes or claims which she maintained survived the death and were vested in her. [33] In Sivret v.

NB Power, [1994] NBJ No. 95 (NBQB), the mother and litigation guardian of an infant plaintiff whowas thought to have died accepted a previously made offer to settle, and brought a motion confirming the settlement. In dismissing theMotion, the motions judge stated, at paras. 16-19: 16 Those provisions of the Survival of Actions Act appear to reflect a legislative compromise between the common law rule (“allpersonal rights die with the person”) and what the families of some plaintiffs might prefer (“all personal rights continue after death”).

Itis a compromise that has been “fine-tuned” as recently as the 1992 session of the legislature. 17 On the death of the boy on December 19, 1993 the small portion of his cause of action for “actual pecuniary [financial] loss” wasby the Survival of Actions Act vested in his estate. Thus it was transferred or transmitted from him to his estate. All the rest of his causeof action for pain, suffering, loss of enjoyment of life and future losses died with him.

The Rules of Court provide: 13.01 Where, at any stage of a proceeding, the interest or liability of a party is transferred or transmitted to another person, theproceeding shall be stayed until an order to continue by or against such other person has been obtained.

18 Thus when the boy died, under Rule 13.01 the legal action against NB Power was automatically stayed or “frozen” until an orderto continue is obtained. Such an order has not been granted. As the boy’s interest in the proceeding has been transferred to his estate, thestep purporting to accept the Offer to Settle was in violation of the stay under Rule 13.01 and void. 19 Also, after the boy’s death, only an administrator of his estate or a litigation administrator could authorize or take any further stepin the action. No administrator has been appointed.

Thus neither the mother nor her solicitors could accept an Offer to Settle after theboy’s death. Thus their purported acceptance of the Offer to Settle was also void for lack of authority. [34] The Sivret case was overturned by the New Brunswick Court of Appeal (NB CA), [1995] NBJNo. 9) on the grounds that the motions judge erred in concluding that the plaintiff was dead, as the plaintiff’s disappearance did not meetthe criteria for a presumption of death. The Court of Appeal did not address the legal principles canvassed by the motions judge.

Leaveto appeal to the Supreme Court of Canada was denied. [35] The plaintiff’s counsel submits that, in the present case, there was a formal Offer to Settle which contained notime limit, and which was not revoked at the time of its acceptance. The plaintiff’s counsel submits that the Administrator had theauthority to instruct the plaintiff’s counsel to accept the offer, and he did so. Accordingly, says the plaintiff’s counsel, the settlement isenforceable. [36] With respect to the cases relied upon by the defendants, the plaintiff’s counsel submits that they aredistinguishable from the present case.

The plaintiff’s counsel submits that those cases all involve instances where the solicitor had noauthority to accept the offer due to the death of the plaintiff.

He argues that, in the present case, an Administrator of the Estate of ArthurGautreau was appointed and authorized the plaintiff’s counsel to accept the offer. [37] In support of his position, the plaintiff’s counsel also relies on Sivret and, in particular, paragraph 19 of the motionjudge’s decision which, for convenience, I will reproduce here: 19 Also, after the boy’s death, only an administrator of his estate or a litigation administrator could authorize or take anyfurther step in the action. No administrator has been appointed.

Thus neither the mother nor her solicitors could accept an Offer toSettle after the boy’s death. Thus their purported acceptance of the Offer to Settle was also void for lack of authority. {Emphasis added] [38] This suggests that an administrator does have the authority to accept an offer to settle. Recall, however, that in theprevious paragraph in Sivret the motions judge determined that, upon the death of a plaintiff, an action is “frozen” until an Order toContinue is obtained.

In my view, the case stands for the proposition that if an administrator obtains an Order to Continue, then anadministrator may authorize acceptance of a settlement offer made pre-mortem. In the present case, no Order to Continue was obtainedbefore the Offer to Settle was purportedly accepted.

Accordingly, in my view, the action was stayed pursuant to Rule 13.01 andtherefore the steps taken thereafter, including the purported acceptance of the Offer to Settle on March 19, 2021, are null and void. [39] In addition to the March 19, 2021 attempt to accept the Offer to Settle, the plaintiff’s counsel made anotherattempt.

On October 6-7, 2022, on the eve of the hearing of this motion and some seven months after the defendants notified theplaintiff’s counsel that the “settlement” was of no force and effect and demanded return of the settlement funds, the plaintiff’s counselmade a second attempt to accept the offer. On October 6, 2022, the plaintiff’s counsel forwarded a draft Order to Continue to the Clerkand then sent it, together with an Acceptance of Offer to Settle, to the defendants’ counsel.

In response, the defendants’ counsel restatedits previously stated position, that the proposed settlement of March 19, 2021 was of no force and effect. Out of an abundance ofcaution, the defendants’ counsel also sent a Notice of Revocation of Offer. This transpired on October 7, 2022. The plaintiff’s counselsubmits that, having obtained an Order to Continue and having accepted the offer before the defendants sent the Notice of Revocation,there is a valid and enforceable settlement.

I disagree. [40] First, at the time that the plaintiff’s counsel served the Acceptance of Offer to Settle, the Order to Continue hadnot been issued. The Order to Continue was not signed by the Clerk until October 11, 2022, by which time the defendants had revoked the offer. In my view, the annotation to the order “effective the 6th day of October 2022” does not retroactively alter the fact that theoffer was revoked before the order was signed. [41] In any event, it is clear that the defendants had notified the plaintiff’s counsel on March 18, 2022 that thesettlement was of no force and effect.

I appreciate the importance that our Court of Appeal places on compliance with Rule 49, notably

because of the cost consequences ( Sivret , para. 16 ). However, I am also cognizant of Rule 1.03(2). While the defendants’ notification that the purported settlement was a nullity may not strictly comply with Rule 49.01, the various correspondence from the defendants’ counsel to plaintiff’s counsel between March 18 and March 23, 2022 constitutes, in my view, written notification that the offer was withdrawn. In short, there was no offer on the table on October 7, 2022 to be accepted. B.

Did the plaintiff’s counsel have an obligation to notify of death? [ 42 ] As mentioned, upon the death of the plaintiff all causes of action except those preserved by s. 6(1) of the Survival of Actions Act were extinguished. The plaintiff’s claim as set out in para. 13 of the Statement of Claim largely claims for pain, suffering, loss of earning capacity, costs of future care, et cetera . These are claims for general damages which died with the death of the plaintiff.

The claim does include a claim for special damages, but these were not particularized before the matter was entered for trial as required by Rule 27.06(10). There was no subrogated claim. Nonetheless, the plaintiff’s evidence is that the plaintiff’s counsel provided the defendants’ counsel with itemized lists of special damages. The defendants’ evidence is that, had they been made aware of the plaintiff’s death, they would have immediately withdrawn the Offer to Settle as their assessment of the claim was limited to general damages. The Offer to Settle itself is not itemized.

It is a non-particularized “all-in” offer to settle. It is therefore impossible to determine what part of the global settlement offer relates to general damages as opposed to pecuniary losses. Nevertheless, it is fair to say that the nature of the plaintiff’s claim changed significantly upon his death and the surviving claims, if successful, would undoubtedly result in a significantly reduced recovery. [ 43 ] In MacKenzie v. Carroll , the Court address the relationship between the change in the nature of the claim and the duty of a plaintiff’s counsel to disclose the death.

At paragraph 16-17 the Court stated: 16 After Mrs. MacKenzie’s death, the only claims available with respect to her were under the Trustee Act and the Fatal Accidents Act . A claim under the latter Act is wholly distinct from, and based on totally different considerations than, any claims which she herself could have pursued.

Therefore, the fact of her death was material with respect to the change of the nature of the claim from that which she would have had, to one under the Fatal Accidents Act . […] 17 In view of the position which I have taken as to issue number one, it is not necessary for me to deal more extensively with this issue. However, in the event that it may become necessary, it is my view that the defendants were entitled to rely on the allegations in the statement of claim and if there has been a change since the filing and serving thereof, the defendants’ solicitor should have been told about such change.

It is further my view that the plaintiffs’ solicitor was bound to tell the defendants’ solicitor of the death of Etta MacKenzie before purporting to accept the offer and to allow the defendants’ solicitor an opportunity to withdraw such offer. [Emphasis added] [ 44 ] In Moss v.

Chin , the Court stated, at paragraph 52: It is my opinion, given the substantial factual and legal change which occurred as a result of the death of the plaintiff, before the defendant’s counter-offer was made, and settlement completed, there was a duty at that time on the Public Trustee’s solicitor to inform the defendant, here the corporation with whom counsel was dealing, that the plaintiff had died . If counsel had any authority to act from the plaintiff, that authority died with the plaintiff. [Emphasis added] [ 45 ] In McCallum Estate v.

Trans North Turbo Air (1971)(Ltd.) , [1978] NWTJ No. 1 (SC) , money had been paid into court on behalf of the plaintiff. Two years later, the plaintiff died, and the following day his solicitors attempted to accept the money paid into court as full settlement of the plaintiff’s claim. The Court commented as follows at paragraphs 22-24: Applying the principles enunciated in MacKenzie v.

Carroll , it is my view that the solicitors for the plaintiffs as officers of the Court were also under a duty to inform the clerk of the Court of the death of the plaintiff Laurence Gilbert McCallum when they purported to file a notice of acceptance and praecipe for payment out, he is impliedly representing to the clerk of the Court that there has bene no change in the status of the parties that he represents which would affect their right to payment out at that time.

I adopt, with respect, the approach of Lord MacMillan in The Ethics of Advocacy , at p. 17 where he said: In the discharge of his office the advocate has a duty to his client, a duty to his opponent, a duty to the court, a duty to the state and a duty to himself. In this particular matter, it seems to me that insufficient regard was paid to the duty owed to the Court and to the defendants and their solicitors. [Emphasis added]

[46] The plaintiff’s counsel submits that there is no legal or ethical duty to disclose the death of the plaintiff. Theplaintiff’s counsel submits that the cases relied upon by the defendants are dated and emanate from other jurisdictions. [47] Further in response, the plaintiff’s counsel points to Rule 13.02(1), which provides that the Order to Continue canbe sought and obtained “without notice to any of the other parties to the proceeding”. The plaintiff’s counsel also points to the fact thatthere are no rules of court requiring a lawyer to notify the other parties of a party’s death. Also, the plaintiff’s counsel refers to LawSociety of New Brunswick Code of Professional Conduct,

Article 5.1-1, commentary [3] thereof: 5.1-1 When acting as an advocate, a lawyer must represent the client resolutely and honourably within the limits of the law, whiletreating the tribunal with candour, fairness, courtesy and respect. […] [3] The lawyer’s function as advocate is openly and necessarily partisan. Accordingly, the lawyer is not obliged (except as requiredby law or under these rules and subject to duties of a prosecutor set out below) to assist an adversary or advance matters harmful to theclient’s case. [48] By may of rejoinder, the defendants’ counsel submits that

Article 2.1-1 of the Code of Professional Conductsupersedes and informs all the others: 2.1-1 The lawyer shall discharge with integrity every duty owed by the lawyer to the administration of justice and its institutions,clients, and other lawyers, the legal profession and the public, and shall adhere to the principle of integrity in the non-professional life ofthe lawyer. [49] The plaintiff also refers to Hodder Estate v. Insurance Corp of Newfoundland Ltd., . In thatcase, the plaintiff died one hour after her counsel concluded a settlement with the defendant.

The issue was whether the lawyer had aprofessional obligation to disclose his knowledge that the death of his client was imminent. The Court found there was no duty todisclose, and distinguished the cases referred to above (MacKenzie, McCallum Estate, Moss v. Chin). In coming to its conclusion, theCourt recognized the lawyer’s duties under the Code of Professional Conduct and the inherent tension between the lawyer’s duty to befrank and candid in his dealings with others and his duty to his client. The Court acknowledged that there is an issue as to where the linebetween the two duties is to be drawn.

The plaintiff’s counsel submits that, in the circumstances of this case, the duty to his clientprevails over the duty of candor. I disagree. [50] The cases referred to by the defendant in support of a duty to disclose have a common element. In each of thecases, the duty to disclose was related to the fact that the death of the party caused a material change in the nature of the claim to benegotiated. It is that change in the factual and legal nature of the claim, brought about by the death of the plaintiff, which triggered theduty to disclose.

That is precisely the situation in the present case and that distinguishes it from Hodder. In Hodder, the plaintiff diedafter the settlement was concluded. This fact animated the Court’s decision that no duty to disclose arose. At paragraph 10, the Courtstated: “In this situation, unlike the cases noted above, there was not a fundamental change in the nature of the claim prior to a settlementagreement being concluded”. Once Arthur Gautreau died there was a fundamental change in the nature of his claim by virtue of theSurvival of Actions Act.

In that circumstance, the plaintiff’s counsel had a duty to disclose the death of his client before concluding thesettlement. The silence of the plaintiff’s counsel led the defendants to conclude a settlement ignorant of fundamental material factswithin the knowledge of the plaintiff’s counsel. In those circumstances, the parties cannot be said to have been id idem as to the terms ofthe settlement.

The purported settlement in this case is not enforceable. [51] Parenthetically, the plaintiff’s argument that an Order to Continue may be obtained ex parte under Rule 13.02(1)is procedural and has no bearing on the substantive duty of disclosure. [52] I digress to address an issue raised by the plaintiff’s counsel. The evidence is that one of the defendants, FrankLeriche, died on January 10, 2022. The defendants’ counsel did not advise the plaintiff’s counsel or the court of the death.

Theplaintiff’s counsel suggests that it is hypocritical of the defendants to attack the plaintiff’s counsel for failing to disclose when thedefendants’ counsel failed to communicate the death of Mr. Leriche. The defendants’ counsel has a simple answer: until March 18, 2022they believed that the action had been settled so there was no reason to notify. This is a red herring and nothing turns on it.

C. Is the defendants’ Insurer entitled to the return of the “settlement” funds with interest? [ 53 ] The settlement funds have been, and continue to be, held in the trust account of the plaintiff’s counsel. For the foregoing reasons, the settlement is not enforceable and the settlement funds shall be returned to the defendants’ counsel forthwith. With regard to interest, the defendants’ counsel advised the plaintiff’s counsel on March 23, 2022 not to disburse the settlement funds and “to hold the funds in your trust account”. The defendants’ counsel did not indicate that she wished the funds held in an interest- bearing account pursuant to

section 8.1 of the Uniform Trust Account Rules. In the circumstances, I do not believe the plaintiff’s counsel acted unreasonably in maintaining the funds in his normal trust account. The defendants are not entitled to interest on the settlement funds. [ 54 ] This is dispositive of the motion and it is not necessary for me to address the alternative claims for relief advanced by the defendants, namely: (1) dismissal for delay pursuant to Rule 13.02(3); (2) that the plaintiff’s statement of claim be struck for failing to disclose a reasonable cause of action pursuant to Rule 23.01(1)(b); and

(3) summary judgment pursuant to Rule 23.01(3). [ 55 ] I will not address these alternative claims in any depth, other than to say that I have considered them and see no merit in the defendants’ arguments on these issues. V. COSTS [ 56 ] The defendants seek two sets of costs: costs on this motion and recovery of costs incurred for legal proceedings unnecessarily continued since the death of the plaintiff. They seek both sets of costs on a solicitor-client basis.

They also seek an order that the plaintiff’s counsel personally pay the costs pursuant to Rule 59.13 of the Rules of Court . [ 57 ] The defendants point to numerous legal steps undertaken after the plaintiff’s death, including settlement discussions, preparation of settlement conference briefs, exchanges of correspondence, and preparation and attendance at the assessment of costs hearing, which they say was unnecessary and arose from the failure of plaintiff’s counsel to disclose the plaintiff’s death and obtain an Order to Continue.

It must be remembered that the plaintiff’s counsel only became aware of the plaintiff’s death on March 18, 2021. In my view, the plaintiff’s counsel and, indeed, the Estate of the plaintiff cannot be held to account for any steps taken before the plaintiff’s counsel became aware of the plaintiff’s death. [ 58 ] The legal steps taken, and the costs incurred after March 18, 2021 are another matter. It is clear from the record that, had the defendants been advised of the plaintiff’s death, no settlement would have been concluded. In particular, the assessment of costs process would have been rendered moot.

I reject the submission of plaintiff’s counsel that the assessment of costs was necessary in any event since the defendants would not agree to the amount of disbursements. That is pure speculation. Had the purported settlement not been concluded, the matter would likely have proceeded to trial, where the plaintiff could have proven his claim, including his costs and disbursements. In my view, the costs incurred by the defendants after March 18, 2021 (the date they should have been advised of the plaintiff’s death) are akin to throw-away costs for which substantial indemnity is commonly provided.

My review of the billing records of the defendants’ counsel (Record, p.10-12) indicates that legal fees and disbursements incurred subsequent to March 18, 2022 amount to approximately $3,400.00. The defendants are entitled to recover that amount from the plaintiff. [ 59 ] With respect to the costs on this Motion, the defendants submit that the cost award should be on a solicitor-client basis. In Tepper Holdings Inc. (Re) , 2011 NBQB 336 , the court canvassed the leading authorities with respect to the issue of solicitor- client costs.

The court summarized that solicitor-client costs are exceptional and only awarded when the conduct of a party is “reprehensible, scandalous or outrageous”. The defendants submit that the plaintiff’s counsel failed in their duty to adverse counsel and the court when they omitted to seek an Order to Continue, and then proceeded to the assessment of costs, thereby impliedly representing to counsel and the Clerk that there was no change in the status of the plaintiff. The defendants submit that this conduct is reprehensible, scandalous and egregious, thereby meeting the test for an award of solicitor-client costs.

I disagree.

[ 60 ] Clearly, the plaintiff’s counsel was wrong not to immediately inform the defendants’ counsel of the plaintiff’s death and to immediately seek an order to continue. The plaintiff’s counsel also, in my view, misconstrued their ethical obligations under the Code of Professional Conduct. As mentioned earlier, the line between competing ethical duties is not always a bright one. There was no New Brunswick case law directly on point to guide the plaintiff’s counsel.

I am prepared to accept that the plaintiff’s counsel honestly, if mistakenly, believed they had lawful authority from the Administrator to enter into an enforceable settlement offer. I am also prepared to accept that the plaintiff’s counsel mistakenly, and not wantonly, crossed the line of what is acceptable ethical conduct under the Code of Conduct.

Accordingly, I am not satisfied that the conduct of the plaintiff’s counsel rose to the level of “reprehensible, scandalous or egregious” to justify an award of solicitor-client costs. [ 61 ] The defendants have also sought that both sets of costs be awarded against the plaintiff’s counsel personally pursuant to Rule 59.13. This issue, too, was addressed in Tepper Holdings , para. 39, where the Court quoted from Young v. Young : [39] The leading case on the issue of costs against counsel personally is Young v. Young .

The Supreme Court in holding that costs were not to be paid personally by counsel, held at paragraph 254: 254 (…) The basic principle on which costs are awarded is as compensation for the successful party, not in order to punish a barrister. Any member of the legal profession might be subject to a compensatory order for costs if it is shown that repetitive and irrelevant material, and excessive motions and applications, characterized the proceedings in which they were involved, and that the lawyer acted in bad faith in encouraging this abuse and delay.

It is clear that the courts possess jurisdiction to make such an award, often under statute and, in any event, as part of their inherent jurisdiction to control abuse of process and contempt of court. But the fault that might give rise to a costs award against Mr. How does not characterize these proceedings, despite their great length and acrimonious progress. Moreover, courts must be extremely cautious in awarding costs personally against a lawyer, given the duties upon a lawyer to guard confidentiality of instructions and to bring forward with courage even unpopular causes.

A lawyer should not be placed in a situation where his or her fear of an adverse order of costs may conflict with these fundamental duties of his or her calling. [Emphasis added] [ 62 ] And further, at para. 42, quoting from Desjardins v. Côté , 2003 NBQB 437 , at para. 63 : [42] In Desjardins v. Côté , 2003 NBQB 437 , at paragraph 63 , this Court stated: 63. In my opinion, for a solicitor to be personally liable for costs, there must be a serious dereliction of the solicitor’s duty to the court, something which justifies the use of the word gross.

A mistake, error of judgment or mere negligence on the part of the solicitor is not sufficient… [ 63 ] It must be remembered that a costs award against a solicitor personally under Rule 59.13 is not intended to discipline a solicitor. Discipline of solicitors is the purview of the Law Society of New Brunswick ( Tepper Holdings , para. 43). For the reasons stated previously, I am not satisfied that the conduct of the plaintiff’s counsel rises to the level where an award under Rule 59.13 is justified. [ 64 ] In

summary, the defendants are entitled to recover their throw-away costs incurred between March 18, 2021 and March 16, 2022 which I assess at $3,400.00. These costs are recoverable from the plaintiff and not from the plaintiff’s solicitors personally. The defendants are also entitled to recover party-and-party costs with respect to this motion, which I fix at $2,500.00. Again, these costs are recoverable from the plaintiff, and not from the plaintiff’s solicitors personally. VI. CONCLUSION [ 65 ] The purported settlement between the parties is unenforceable and of no force and effect.

The plaintiff’s counsel shall forthwith return the settlement funds. [ 66 ] The defendants are entitled to costs as against the plaintiff as follows:

(

a) recovery of costs incurred for legal fees and disbursement incurred between March 18, 2021 and March 16, 2022 in the amount of $3,400; and (

b) cost on this motion in the amount of $2,500.00 ______________________________ Terrence J. Morrison, J.C.K.B.