2023 MBKB 148, 2023 MBKB 148

Date: 20231017 Docket: FD21-01-27054 (Winnipeg Centre) Indexed as: Ryan v. Ryan Cited as: 2023 MBKB 148 COURT OF KING’S BENCH OF MANITOBA (FAMILY DIVISION) B E T W E E N: JOSEPH RONALD Ryan, ) Carla B. Paul ) for the petitioner petitioner, ) ) - and - ) William S. Gange ) for the respondent PAULA DAWN RYAN, ) respondent. ) Judgment delivered: ) October 17, 2023 HATCH A.C. J. I. Introduction [ 1 ] I delivered reasons, cited as Ryan v.

Ryan , 2022 MBKB 198 , on a motion that was brought by the petitioner to remove the law firm of Thompson Dorfman Sweatman LLP (“TDS”) as counsel for the respondent. [ 2 ] The petitioner was successful. It is well accepted that costs normally follow the result. [ 3 ] The petitioner seeks partial solicitor-client costs or, alternatively, enhanced party and party costs in the amount of $20,000, which represents approximately 62% of his total solicitor-client costs.

He asserts that this amount is reasonable, given his success on the removal motion, the increased complexity, cost and delay occasioned by the respondent’s litigation strategy, and her unsubstantiated allegations of malfeasance. [ 4 ] The respondent argues that the petitioner’s request for partial solicitor-client costs, or enhanced party and party costs, is without merit.

She submits that a cost award to the petitioner of party and party costs according to the tariffs in the amount of $3,696 plus disbursements and taxes is appropriate for a motion for removal. [ 5 ] The parties agree that Class IV of Tariff A – Tariff of Recoverable Costs, respecting property issues is the correct classification of costs. However, they disagree as to the items that should be included in an award of party and party costs. II.

Position of the Petitioner [ 6 ] In support of his claim for partial solicitor-client costs, or enhanced party and party costs, the petitioner presented five statements of account for the period from May 14, 2021 to November 15, 2022. The accounts quantify counsel fees of $30,769.21 inclusive of taxes, and disbursements plus taxes of $1,649.36 for a grand total of $32,418.57. [ 7 ] The petitioner requests costs of $20,000.

He submits that the respondent split her case, which required the petitioner to prepare for two separate motions, causing delay, unnecessary complexity and costs to the petitioner. [ 8 ] The petitioner points out that he filed his notice of motion and his supporting affidavit to remove TDS on May 10, 2021 when his notice to the respondent of his objection based on the existence of a conflict sent on March 18, 2021 went unanswered.

[ 9 ] On June 25, 2021, the respondent filed three affidavits in opposition to the petitioner’s motion, which indicated that the petitioner had knowledge of the lawyers at TDS.

This material advanced the respondent’s submission that the petitioner was endeavouring to gain a tactical advantage by retaining a lawyer from TDS, which had represented the respondent’s family and her family’s corporation. [ 10 ] Following unsuccessful settlement negotiations, the petitioner filed his responding affidavit to these affidavits on December 16, 2021 and a motion brief on February 15, 2022. [ 11 ] On April 28, 2022, the removal motion hearing date of May 31, 2022 was confirmed by counsel by correspondence. [ 12 ] On April 29, 2022, without leave, the respondent filed the affidavit of counsel, Maria Lucia Grande, sworn April 28, 2022.

The respondent’s motion brief was subsequently filed on May 2, 2022. [ 13 ] The petitioner argues that the contents of the new affidavit presented a second case to meet. He says that the new affidavit (1) indicated that the petitioner’s counsel had initiated settlement negotiations; (2) described the issues discussed; and (3) stated that during settlement negotiations the petitioner’s counsel had not raised as an issue that TDS was relying upon confidential information shared by the petitioner with his former counsel, Mr.

Stewart, or any other member of TDS. [ 14 ] According to the petitioner, the respondent presented this new information to advance the argument that by initiating and engaging in settlement discussions, the petitioner had demonstrated that he had no concerns that TDS had received confidential information from him and that he had initiated the removal proceedings without a bona fide motive, in an attempt to gain a tactical advantage and to leverage a settlement in his favour.

The petitioner asserts that this new information was introduced to infer that he behaved in a deceptive and tactical fashion. [ 15 ] The petitioner’s counsel immediately set out her objections to the new affidavit in a four-page letter to the court, which prompted further correspondence from both counsel.

The petitioner was granted leave to file a responding affidavit and a supplementary motion brief. [ 16 ] On May 25, 2022, the petitioner filed a responding affidavit, which included email evidence that indicated that it was the respondent’s counsel, not the petitioner’s counsel, who had invited settlement negotiations.

The petitioner filed a second motion brief consisting of 184 pages addressing the issues of confidential information and estoppel in response to these issues that were raised in the respondent’s new affidavit and motion brief. [ 17 ] The petitioner submits that he is entitled to partial solicitor-client costs, or enhanced party and party costs, because he prepared double the materials normally required to litigate the singular issue before the court to address the new issues raised. [ 18 ] Further, the petitioner argues that the respondent failed to accept those matters that should have been accepted and were demonstrated by the facts, which included: (1) there was no factual basis to assert “tactical abuse” by the respondent; (2) the arguments submitted were based entirely on speculation; and (3) there was no legal basis to avoid the removal of counsel.

He asserts that the respondent’s “persistent assertion of dishonesty” of him supports an award of solicitor and client costs. III. Position of the Respondent [ 19 ] The respondent presented a draft bill of costs pursuant to Tariff A, Class IV. It quantifies counsel fees and taxes of $3,696 and disbursements and taxes of $679.56, for a total of $4,375.56. [ 20 ] The respondent submits that this was a simple, straightforward motion, based on affidavit evidence and that no cross- examination of witnesses took place.

It is the respondent’s position that there is nothing about the case that would justify departure from the usual adherence to the tariff. [ 21 ] Further, the respondent says that she was entitled to contest the petitioner’s motion for removal.

She points to the fact that the nature of the motion necessarily involved an analysis to decide between two competing legal concepts, being the need to protect the integrity of the court process where a conflict of interest is alleged and the right of a party to be represented by a lawyer of their choosing. [ 22 ] According to the respondent, the petitioner was aware that TDS was the law firm for the respondent’s family as indicated in her affidavit and the two supporting affidavits filed on June 25, 2021.

She submits that the fact that the court ruled in favour of the petitioner does not mean that she was not entitled to put her position forward for determination. [ 23 ] The respondent further argues that there is no basis for the petitioner’s submission that the respondent caused delay. She notes that (1) the petitioner’s motion was filed on May 10, 2021; (2) three affidavits in support of the respondent were filed on June 25, 2021; (3) the matter was put into abeyance while counsel had settlement discussions for a period of six months;

(4) Master Goldenberg refused to hear the motion at the Master’s List on March 17, 2022, and adjourned it sine die ; and (5) the removal hearing took place on May 31, 2022. [ 24 ] Further, the respondent points out that the petitioner’s request for a separate expungement hearing was denied by the court, and should be taken into account in assessing costs. IV. Costs: Statutory and Legal Principles [ 25 ] Section 96(1) of The Court of King’s Bench Act , C.C.S.M. c. C280 (the “ Act ”) governs Manitoba costs awards and grants the court broad discretion when assessing costs in a proceeding. [ 26 ] Section 96(1) of the Act provides:

Costs 96(1) Subject to the provisions of an Act or the rules, the costs of or incidental to, a proceeding, or a step in a proceeding, are in the discretion of the court and the court shall determine liability for costs and the amount of the costs or the manner in which the costs shall be assessed. [ 27 ] The entitlement of a successful party to costs was articulated by Scott C.J.M. in Gabb v. Gabb , 2001 MBCA 19 , 153 Man.R. (2d) 157 (at para. 12 ): No authority need be cited for the proposition that costs arising out of a court proceeding are peculiarly within the province of the trial judge. ....

There is absolutely no justification for depriving the successful party, the wife, of reasonable costs. She won her case. Costs normally follow the event. [ 28 ] King’s Bench Rule (“KBR”) 57.01(1) of the Court of King’s Bench Rules , M.R. 553/88 , outlines other factors that a court may consider in addition to a party’s success. It states: Factors in discretion 57.01(1) In exercising its discretion under

section 96 of The Court of King's Bench Act, to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle made in writing, (

a) the amount claimed and the amount recovered in the proceeding; (

b) the complexity of the proceeding; (

c) the importance of the issues; (

d) the conduct of any party which tended to shorten or lengthen unnecessarily the duration of the proceeding; (d.1) the conduct of any party which unnecessarily complicated the proceeding; (d.2) the failure of a party to meet a filing deadline; (

e) whether any step in the proceeding was improper, vexatious or unnecessary; (

f) a party's denial or refusal to admit anything which should have been admitted; (f.1) the relative success of a party on one or more issues in a proceeding in relation to all matters put in issue by that party; (

g) whether it is appropriate to award any costs or more than one set of costs where there are several parties with identical interests who are unnecessarily represented by more than one counsel; and

(

h) any other matter relevant to the question of costs. [29] King’s Bench Rule 57.01(3) notes that in exercising discretion under s. 96(1) of the Act, the court may evaluate costs with orwithout reference to the Tariffs in the Court of King’s Bench Rules: Court may fix costs 57.01(3) In awarding costs, the court may fix all or part of the costs, with or without reference to Tariff A or B, instead of referring themfor assessment, but in exercising its discretion to fix costs the court will not consider any tariff as establishing a minimum level for costs. [30] The court is entitled to consider the reality of the costs of litigation. (see Manufacturers Life Insurance Co. v.

Pitblado &Hoskin, 2009 MBCA 83, 245 Man.R. (2d) 111) Solicitor-Client Costs [31] King’s Bench Rule 57.01(6) permits the court to award all or part of the costs on a lawyer and client basis. It provides: Authority of court 57.01(6) Nothing in this Rule affects the authority of the court, (

a) to award or refuse costs in respect of a particular issue or part of a proceeding; (

b) to award a percentage of assessed costs or award assessed costs up to or from a particular stage of a proceeding; or (

c) to award all or part of the costs on a lawyer and client basis. [32] The test for awarding solicitor-client costs is a stringent one. Solicitor-client costs are awarded in general where a party hasacted in a “reprehensible, scandalous or outrageous” manner. (see Young v. Young, (SCC), [1993] 4 S.C.R. 3 at p. 134;Fernandez v. Tan, 2009 MBCA 113 at para. 7; Judges of the Provincial Court (Man.) v. Manitoba et al., 2013 MBCA 74, 294 Man.R.(2d) 273 at para. 165) [33] Exceptional circumstances are required for “substantial indemnity costs”. (see Fontaine et al. v.

Canada (Attorney General)et al., 2015 MBCA 41, 319 Man.R. (2d) 45 at paras. 12 and 14; Panesar v. Panesar, 2007 MBCA 133 at para. 3) V. Costs [34] I do not agree with the petitioner’s submission that he is entitled to partial solicitor-client costs because the respondent delayedthe proceedings. The removal hearing proceeded on the scheduled date. Nor do I accept his assertion that the respondent did notprovide evidence of the petitioner’s knowledge of the law firm and its connection to the respondent’s family.

The affidavit evidencesubmitted on behalf of the respondent indicated that the petitioner was aware that TDS was the law firm for the respondent’s familywhen he retained the firm. The court preferred the evidence of the petitioner in this regard. [35] However, the filing of the new affidavit of Maria Lucia Grande, sworn April 28, 2022, without leave was improper andbreached the Court of King’s Bench Rules that govern affidavits in support of a motion. Further, the contents of the new affidavitunnecessarily complicated the proceeding and added additional costs to the petitioner.

Breach of Court of King’s Bench Rules [36] King’s Bench Rule 70.20(8)(9)(10) and (11) states: One affidavit by party 70.20(8) A party to a motion or application is entitled to file one affidavit of the party in support of or in opposition to the motion orapplication. Affidavits by non-parties

70.20(9) A party may also file one affidavit from each person who is not a party, without leave, if that person has evidence relevant to the proceeding. Affidavit responding to new matters 70.20(10) In addition, the party who commenced the motion or application is entitled to file a second affidavit of the party to respond to new matters contained in an affidavit that was filed by a responding party.

Leave required to file additional affidavits 70.20(11) Other than the affidavits referred to in subrule (8), (9) or (10), a party to a motion or application is not entitled to file any other affidavits without obtaining leave from a master or a case conference judge or the presiding judge at the hearing. [ 37 ] The petitioner filed his motion for removal and his affidavit in support on May 10, 2021. [ 38 ] On June 9, 2021, Senior Master Clearwater directed, “Affidavit materials in reply by June 25, 2021 – and for parties to discuss agreement on timelines”. [ 39 ] The respondent filed her affidavit and two supporting affidavits on June 25, 2021 as directed.

Her Answer and Petition for Divorce and Financial Statement were filed on June 11, 2021. [ 40 ] On December 16, 2021, after settlement discussions had concluded, the petitioner filed his second affidavit pursuant to KBR 70.20(10) to respond to new matters contained in the three affidavits filed by the respondent, and his motion brief on February 15, 2022. [ 41 ] On April 29, 2022, without leave and in breach of KBR 70.20(11), the respondent then filed a further affidavit being the affidavit of Ms.

Grande, and her motion brief on May 2, 2022. [ 42 ] This rule breach placed the petitioner in the position of not being able to respond to a new issue raised by the respondent late in the day that had significant ramifications respecting the case law in removal cases. [ 43 ] The filing and the contents of Ms.

Grande’s affidavit prompted extensive correspondence from counsel to the court. [ 44 ] In the interests of retaining the scheduled hearing date for the removal motion and securing the just, most expeditious and least expensive determination of the family proceeding pursuant to KBR 70.02.1, the petitioner was granted leave to file a further affidavit and supplementary motion brief to address the new issue that had been raised by Ms. Grande’s affidavit and the respondent’s motion brief.

Contents of New Affidavit [ 45 ] The new issue raised in the affidavit was that the petitioner’s counsel had initiated settlement negotiations, which triggered issues related to confidential information and estoppel. Ms. Grande deposed (at para. 7): Following receipt of the Notice of Motion, I received an e-mail from Ms Paul dated May 20, 2021 inviting me to provide a settlement proposal on behalf of Ms. Ryan. This request for a settlement proposal was sent to me subsequent to the filing of the Notice of Motion regarding conflict of interest.

Attached and marked as Exhibit “A” is a copy of the e-mail from Ms Paul dated May 20, 2021. [ 46 ] The highlighted sentence on Exhibit “A” reads: ... If you wish to recommend a fulsome settlement that addresses all of the issues identified in the pleadings I am, on a without prejudice basis, happy to entertain same at any time. ... [ 47 ] Ms. Grande further deposed (at para. 12): At no time during the settlement negotiations did Ms Paul raise an issue that Thompson Dorfman Sweatman LLP was relying upon confidential information shared by Mr. Ryan with Alan Stewart or any other member of Thompson Dorfman Sweatman.

[ 48 ] The respondent’s motion brief states (at paras. 15, 16, 20): 15. Ten days after filing the Motion to Disqualify, Ms. Paul invited Ms. Grande to submit a settlement proposal to address all of the issues identified in the pleading. .... 16. It is impossible to reconcile a motion brought to disqualify counsel on the basis of possession of confidential information with an invitation to the law firm that has the confidential information to resolve the dispute.

If the concern truly was that confidential information might be used to the prejudice of [the petitioner], there would be no ability for [the petitioner] to negotiate with the law firm that was in possession of the damage and confidential information. 20. It is the position [of] [the respondent] that [the petitioner] is estopped from proceeding with a motion to disqualify on the basis of confidential information held by [TDS]. ...

The behaviour of [the petitioner] in attempting to negotiate a settlement while the threat of removal of [TDS] as counsel for [the respondent] was outstanding is an intolerable use of the conflict of interest disqualification principles. [The petitioner] was prepared to negotiate with [TDS] in order to obtain a beneficial settlement.

It is submitted that there was no genuine concern about [TDS] using confidential information. [Emphasis Added] [ 49 ] However, the petitioner, in his responding affidavit, affirmed May 24, 2022, deposed that it was the respondent’s counsel, not his counsel, who had initiated settlement negotiations. He deposed (at para. 3): In response to paragraph 7 and the presentation of Exhibit “A” attached thereto, I state that it is incorrect that Ms Paul initiated settlement discussions. The e-mail by Ms Paul was written at 4:38 p.m. and was responsive to an earlier overture at 8:58 a.m. that day by Ms.

Grande in which she said: We would appreciate your taking up all of the above with Mr. Ryan and advising us if we can move forward in a positive manner to resolve matters, and thereafter proceed to an uncontested divorce. In addition, if you believe moving to a Case Conference and/or JADR would be of assistance, please advise.

Attached hereto and marked as Exhibit “A” is a copy of the e-mail by Ms Grande with the time of delivery indicated to be at 8:58 a.m. on May 20, 2021. [ 50 ] The respondent could have either sought leave to file a further affidavit, or cross-examined the petitioner, to establish that the parties had participated in settlement discussions. As a result of the respondent’s litigation decision to file a further affidavit in breach of the Court of King’s Bench Rules , the petitioner incurred additional costs.

These costs, which included the preparation of an affidavit and a 184-page motion brief responding to the new material that had been filed by the respondent, should be borne by the respondent. [ 51 ] Litigation choices have consequences. In assessing costs in Horch v. Horch , 2017 MBCA 97 , Mainella J.A., writing for the court stated (at para. 147): The principle of proportionality is a feature in all judicial decision making in family law .... On my review of the record, the reason for the unnecessary length and complexity of the proceedings in family court was the petitioner’s litigation strategy. VI.

Tariffs A & B [ 52 ] In fixing costs, I have reviewed the draft Bill of Costs presented by each party pursuant to Tariff A, Class IV. [ 53 ] The draft Bill of Costs submitted by the petitioner quantifies counsel fees of $7,150 plus GST and RST, as well as disbursements of $813.74 plus taxes, for a grand total of $8,858.18. [ 54 ] I accept the position of the respondent that the following items claimed in the petitioner’s draft Bill of Costs which total $800

are not appropriate tariff costs and should be deducted: • Item 5(1)(i) – There were no court adjournments (with appearance) on April 7 and May 11, 2022 ($150). April 7, 2022 relates to a telephone meeting between counsel and the court in response to a request for direction. May 11, 2022 is the date that Master Goldenberg entered her disposition sheet with respect to the appearance of March 17, 2022. • Item 5(1)(m) – Preparation is included under item 5(1)(

k) of the Tariff, which governs attendance on a contested motion ($500). • Item 5(1)(n) – No Offer to Settle or Request to Admit was made ($150). [ 55 ] I find that the following Tariff items on the petitioner’s draft Bill of Costs that the respondent objects to are appropriate items: • Item 5(1)(t) – Preparing Written Argument ($425). I acknowledge that the preparation of a motion brief is already included in s. 5(1)(h).

Following the hearing on May 31, 2022, I sent correspondence to counsel asking if they would like the opportunity to comment on the relevancy of a recent decision of this court, which referenced two decisions of the Supreme Court of Canada. The petitioner presented a 203-page brief addressing the cases referred to and the evidence in the present case. I found the brief to be helpful and, as such, I will allow this claim. • Item 5(1)(u) – Assessment of Costs (Contested) ($625).

It is clear from the motion briefs of the parties that it was necessary to attend to have costs assessed in this case. • Tariff “B” – Tariff of Disbursements. The respondent objects to courier and facsimile charges of $89.99 and $72.50 respectively claimed by the petitioner, on the basis that there is no justification for courier and facsimile charges in the age of e-mail. ➢ Three motion briefs were filed on behalf of the petitioner in these proceedings. Each motion brief was bound and tabbed, and consisted of extensive case law and argument.

I accept the petitioner’s submission that costs to courier briefs of this volume, which have appropriate tabbing and binding, are appropriate costs. ➢ KBR 16.05 permits service of a document on the lawyer of record of a party by facsimile. The court file confirms that documents and correspondence were sent by facsimile to the court by both counsel. The correspondence included confirming hearing dates, seeking direction after the Master had declined jurisdiction to hear the motion, and addressing concerns respecting the new affidavit.

The petitioner’s counsel sent 12 letters to the court by facsimile in this regard from April 7, 2022 to the hearing date of May 31, 2022. The statement of account dated June 7, 2022, confirms facsimile charges of $68 under that account alone. ➢ The courier and facsimile charges claimed are reasonable and I will allow them. [ 56 ] The respondent points out that the petitioner claimed costs of $2,000 under item 5(1)(

h) for the notice of motion to the Master dated May 10, 2021, and is not entitled to claim a further $2,000 for the n otice of motion to a judge, filed on May 20, 2022, for the same relief. [ 57 ] I have removed the second motion claim of $2,000.

I will quantify the additional costs that the petitioner is entitled to receive given the exceptional circumstances which required the petitioner to prepare a further affidavit and a second motion brief when the respondent filed a new affidavit without leave. [ 58 ] Class IV costs amounts to $5,722.18, being Tariff A costs of $4,350, plus taxes and Tariff B disbursements of $850.18. I am mindful that the Tariff A costs which is applicable in this proceeding has not been revised for approximately 12 years. VII.

Conclusion [ 59 ] The statement of account dated June 7, 2022, details the additional work and resultant legal costs of $7,695 that the petitioner incurred from May 2 to 25, 2022, in connection with addressing the issue of the respondent’s new affidavit and motion brief. The legal costs incurred by the petitioner for the preparation of a responding affidavit and a second motion brief alone total $4,680. [ 60 ] In exercising my discretion, I find that the petitioner is entitled to an award of costs in the sum of $11,000, inclusive of fees, disbursements and taxes.

This award recognizes the success of the petitioner on his removal motion and the need for proportionality. The award also takes into account the added costs that the petitioner was subjected to as a result of the respondent’s litigation decision to file an affidavit without leave in breach of KBR 70.20(11). This decision added to the preparation costs and complexity of this case. [ 61 ] Litigation strategies have costs consequences. The Court of King’s Bench Rules protect the integrity of the litigation process and breach of these rules should not be tolerated. ____________________________ A.C.J.