Date: 20020205
NOVA SCOTIA COURT OF APPEAL
[Cite as: Murphy v. Claussen Walters & Associates Limited, 2002 NSCA 20]
Saunders, Hallett and Freeman, JJ.A.
BETWEEN:
DAVID A. MURPHY and SONIA MURPHY
Appellants
- and -
CLAUSSEN WALTERS & ASSOCIATES LIMITED
Respondent
REASONS FOR JUDGMENT
Counsel: Alan J. Stern, Q.C. for the appellants
Rubin Dexter for the respondent
Appeal Heard: January 23, 2002
Judgment Delivered: February 5, 2002
THE COURT: The appeal is allowed in part and dismissed in part per reasons for judgment of Saunders, Hallett and Freeman, JJ.A.
Saunders , J.A.:
[1] In a brief oral judgment at the conclusion of the hearing I indicated that written reasons would be filed. These are our reasons.
[2] Whether the trial judge erred in refusing to award costs to a co-defendant against whom the action was discontinued, or, in obliging the appellants to pay a significant disbursement incurred by the respondent in retaining an expert witness, are the two issues that arise in this appeal.
[3] The respondent sued the appellants in January, 1998 claiming that they had breached his contract after retaining him to develop and manage the subdivision of their lands located at Hell’s Point, Lunenburg County, Nova Scotia. The respondent also claimed, in the alternative, that the services he provided had increased the value of their property. He sued for breach of contract and unjust enrichment.
[4] The appellants have made two submission. First that the trial judge erred in law in the manner in which he exercised his discretion in declining to award any costs to the appellant Dr. Sonia Murphy. Second, that he erred in law in the manner in which he exercised his discretion when finding that the respondent was entitled to recover as a disbursement the full amount of $16,471.39 charged for the services of Mr. Charles Hardy, an expert in real estate appraisal.
[5] A trial judge’s decision whether or not to award costs is clearly discretionary and will only be disturbed where wrong principles of law have been applied or the decision is so clearly wrong as to amount to a manifest injustice. See, for example, Exco Corp. v. Nova Scotia Savings & Loan Co. et al (1983), 59 NSR (2d) 331 (CA); Conrad v. Snair (1996), 150 NSR (2d) 214 (CA).
[6] After considering the written submissions and oral arguments, we are not persuaded that the trial judge erred in declining to award costs to the appellant Dr. Sonia Murphy. Counsel for the appellants referred us to the provisions of Civil Procedure Rule 40.03(1) which deal with the potential consequences following a discontinuance of a claim or action against a party. They say that in accordance with that rule Sonia Murphy ought not to have been deprived of her costs by the trial judge. CPR 40.03(1) provides:
40.03(1) Subject to rule 40.02, a party, discontinuing a proceeding or withdrawing any cause of action therein, or withdrawing his defence or any part thereof, shall pay the costs of any opposing party to the date of giving notice of discontinuance or withdrawal to the party, and if before payment of the costs he subsequently brings a proceeding for the same, or substantially the same claim, the court may order the proceeding to be stayed until the costs are paid.
(2) When an opposing party produces a notice of discontinuance or withdrawal that was served on him, he may tax his costs and enter judgment for the costs.
[7] The appellants emphasize the words:
...a party, discontinuing a proceeding . . . shall pay the costs of any opposing party..(underlining mine)
[8] However, it must be remembered that CPR 40.03(1) is, explicitly, subject to rule 40.02. Further, as counsel acknowledged during oral argument, CPR 40.02 is applicable to the circumstances of this case in that it was during the trial that the plaintiff discontinued its action against the co-defendant Sonia Murphy. CPR 40.02 provides:
40.02 At any time after a proceeding is entered for trial or its hearing is commenced in chambers,
(a) a plaintiff may discontinue the proceeding or withdraw any cause of action therein, against any defendant;
(b) a defendant may withdraw his defence or any part thereof against any plaintiff;
with the leave of the court, and the order may contain such terms as to costs, the bringing of any subsequent proceeding, or otherwise, as are just. (Underlining mine)
[9] When comparing 40.03(1) to 40.02 it is clear that the latter prevails. Nothing in this or any other rule is to be seen as qualifying the well known principle that costs are in the discretion of the court.
[10] Having presided during this five-day trial, Justice Carver would have been well aware of the legal issues in dispute and the trial dynamics that often tend to shape the evidence or positions advanced by the parties. Ultimately the matter of costs lay with the trial judge. After finding in favour of the respondent, he was left with the discretion as to the manner in which the opposing parties’ costs would be determined. Having the advantages afforded a trial judge he noted that Dr.Sonia Murphy shared the same lawyer with her husband and that any costs attributable to her were negligible. Given the claims advanced and relief sought by the respondent, as well as the defences both statutory and otherwise raised by the appellants, we think the trial judge was justified, for the reasons stated, in declining to award any costs to her. That ground of appeal is dismissed.
[11] We have reached a different conclusion with respect to the trial judge’s treatment of the $16,471.39 disbursement incurred to retain the services of the expert, Mr. Charles Hardy. As noted, the respondent sued in both contract and for unjust enrichment. This was undoubtedly a prudent strategy as there was no guarantee he would succeed in his primary claim alleging breach of contract against Dr. and Dr. Murphy. Were the respondent unsuccessful, he would be forced to rely upon his secondary position, that is that the appellants’ lands were enriched by virtue of the services he provided. In order to prove the extent of the “enrichment” it was perfectly reasonable for Mr. Walters to have engaged the services of an expert such as Mr. Hardy and we think the trial judge was right to rule - over the objections of counsel for the appellants - that the reports prepared by Mr. Hardy were relevant and admissible.
[12] A finding of relevance, however, did not end the matter. Before obliging the unsuccessful appellants to pay a significant disbursement of almost $16,500, the trial judge was required to consider whether the amount charged was just and reasonable. The proper approach was described by Chief Justice Cowan in J.D. Irving Ltd. v. Desourdy Construction Ltd. (1973) 5 N.S.R. (2d) 350 at p. 362:
In my opinion, Civil Procdeure Rule 63.37, Clause (5) is to the same effect as the old Order LXVIII, r. 23 (vii) and the taxing master is to allow any just and reasonable charges and expenses as appear to him to have been properly incurred in procuring evidence and the attendance of witnesses. Charges by experts and others who are called as witnesses or attend as witnesses are to be allowed, but the amount allowed is to be fixed by the taxing master, having regard to the test of what is just and reasonable in the circumstances.
[13] This case was cited by the trial judge and so it cannot be said that any wrong principles of law were applied. However, and with respect, I find that he erred in his disposition. There was simply no evidence before him upon which to conclude that the disbursements incurred by Mr. Walters in engaging Mr. Hardy were “just and reasonable”. The onus was on the respondent to justify this charge against the appellants. He did not.
[14] Three invoices make up the bill. The first, dated October 18, 1999, was for $9,244.10. The second, dated February 22, 2000 was for $2,483.54. The third, dated February 15, 2001, was for $4,743.75. No particulars of any of the “services rendered” are disclosed. The invoice simply records “for services rendered”. There is no basis upon which to deduce hourly rates, or the time spent, or the services provided. Thus, with respect, there was no evidence before the trial judge upon which he could have made the determination as to the “justness” or “reasonableness” of the Hardy disbursement.
[15] We cannot accept counsel for the appellants’ submission that all or a significant proportion of the Hardy invoices ought not to be recoverable because no use was made of the Hardy reports by the trial judge in his ultimate determination. In our view, this is immaterial. The particular “use” to which an expert’s report or opinion may be put by a trial judge may never be discerned. The only question is, as we have noted, whether in fact the disbursement is a “just” and “reasonable” charge against the opposing party.
[16] We also reject counsel for the appellants’ submission that by the time of trial the respondent did not “need” the Hardy report in order to quantify his damages. On the contrary, having regard to the relief sought and the defences raised, we are perfectly satisfied that retaining Mr. Hardy to prepare a report and to testify at the trial was prudent and necessary. Where the trial judge erred was in concluding that the amount of the Hardy disbursement was “just” and “reasonable” when there was no evidence before him on which he could make such a determination.
[17] In the result we find that his decision in this respect was so clearly wrong as to amount to a manifest injustice. The decision and order of the trial judge are set aside insofar as it obliged the appellants to pay - without a proper evidentiary foundation justifying the expense - the full amount of the Hardy disbursement.
[18] Upon being satisfied, as we are, as to the necessity of engaging Mr. Hardy to advance the respondent’s action and claims for relief, the taxing master need not be concerned with the question whether Mr. Hardy’s work on behalf of the respondent was required. We are satisfied it was for the reasons already given. We direct that the matter be referred to a taxing matter for the sole purpose of determining whether, upon a proper evidentiary basis, all or a portion of the Hardy disbursement totalling $16,471.39, is a just and reasonable charge against the appellants having regard to all of the circumstances.
[19] As success is divided there will be no order for costs.
Saunders, J.A.
Hallett, J.A.
Freeman, J.A.