IN THE SUPREME COURT OF NOVA SCOTIA
Citation: 23201072 Nova Scotia Ltd. v. Lienaux, 2004NSSC235
Date: 20040610
Docket: S.H. 93-6909
(Being the Consolidation of S.H. 93-5807 and 93-5909)
Registry: Halifax
Between:
2301072 Nova Scotia Limited
Applicant
[Plaintiff]
(Defendant by Counter-Claim)
-and-
Charles D. Lienaux and
Karen L. Turner-Lienaux
Respondent
[Defendants]
(Plaintiffs by Counter-Claim)
-and-
Marven C. Block, Q.C.
-and-
The Toronto-Dominion Bank
Applicant
Defendant by Counter-Claim
-and-
Wesley G. Campbell and
Grant E. MacNutt
Third Parties
Judge: The Honourable Chief Justice Joseph Kennedy
Heard: May 18, 2004, in Halifax, Nova Scotia
Oral Decision June 10, 2004 Award of Costs
Written Release of Costs Decision: November 18, 2004
Counsel: Gavin Giles for 2301072 Nova Scotia Limited, the Toronto-Dominion Bank and Wesley G. Campbell
Charles D. Lienaux, representing himself and Karen L. Turner-Lienaux
Marjorie Hickey (David Lewis, Articled Clerk) for Marven Block, Q.C.
By the Court: (Orally)
[1] This is a decision on an application with respect to costs.
[2] There were two applications that came before me in chambers, arising in the course of this action. By one application, 2301072 Nova Scotia Limited, the Toronto-Dominion Bank and Wesley G. Campbell sought to strike portions of defences and counter-claims which were pleaded against them by Charles D. Lienaux and by his wife Karen L. Turner-Lienaux. By the other application, Charles D. Lienaux and Karen L. Turner-Lienaux sought to amend their pleadings to include defences, counter-claims and third party claims, which are additional to those already pleaded.
[3] My decision dated January 22nd, 2004, allowed the application of the plaintiffs and struck those portions of the defences and counter-claims pleaded against them by Lienaux and Turner-Lienaux, which the plaintiffs had submitted, were res judicata and constituted an abuse of the court’s process. I did not allow the application to amend pleadings brought by the defendants, Lienaux and Turner-Lienaux.
[4] The other defendant, Mr. Block, is a lawyer who is a party to this proceeding, because he prepared the documentation on behalf of the then Central Guarantee Trust Company; the documentation that is now central to the action. The defendant, Turner-Lienaux, in responding to the plaintiffs’ claim, has alleged that Mr. Block, in his capacity as counsel, had a legal obligation to her to ensure that she received independent legal advice prior to the execution of the documentation, which obligation she claims he did not fulfill. And further she alleges that he failed to protect her from undue influence being exercised against her by her husband, the co-defendant Charles Lienaux. She had claimed that Mr. Block also had an obligation in that respect, that he failed to carry out.
[5] The plaintiffs, 2301072 Nova Scotia Limited and Wesley G. Campbell and the defendant Block, now seek solicitor-client costs against Lienaux and Turner-Lienaux, specific to that interlocutory application that was brought before me.
[6] I am satisfied that solicitor-client costs are potentially available on interlocutory applications, and I cite, just as an example, Starratt v. MacFie, [l994] N.S.J. No. 357, the decision Justice Saunders, when he was a judge of this Trial Court
[7] Justice Suzanne Hood of this Court had awarded solicitor-client costs against the defendant Turner-Lienaux as part of her decision involving the parties, reported at Campbell v. Lienaux et al.(2001), 195 N.S.R. (2d) 220 - I say the parties, Mr. Block was not involved at that time. That decision was central to my finding of res judicata and abuse of process.
[8] Before doing so, before awarding solicitor-client costs in that matter, Justice Hood reviewed the issue of solicitor-client costs, both generally and specifically in this Province, and I will quote some of what she said in that respect, commencing with p. 299 of her decision, para. 479:
It is not disputed that solicitor-client cost awards are made only in rare and exceptional circumstances. In Coughlan et al. v. Westminer Canada Limited et al. (1994), 127 N.S.R. (2d) 241; 355 A.P.R. 241 (C.A.), the Court of Appeal upheld the decision of Nunn, J., the trial judge, with respect to costs.
[9] She went on to cite at para. 480 of her decision, the text, The Law of Costs Orkin, 2nd Edition, the authors say at pp. 2-144 to 146:
An award of costs on the solicitor-and-client scale, it has been said, is ordered only in rare and exceptional circumstances to mark the court’s disapproval of the conduct of a party in the litigation. The principle guiding the decision to award solicitor-and-client costs has been enunciated thus:
[S]olicitor-and-client costs should not be awarded unless there is some form of reprehensible conduct, either in the circumstances giving rise to the cause of action, or in the proceedings, which make such costs desirable as a form of chastisement.
[10] I continue to quote:
The Supreme Court of Canada has approved the following statement of principle.
Solicitor-and-client costs are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties.
...
At the same time, it has been said that an award of solicitor-and-client costs is not reserved for cases where the court wishes to show its disapproval of oppressive or contumelious conduct.
There is, as well, a factor frequently underlying such an award, although not necessarily expressed, namely, that the circumstances of the case may be such that the successful party ought not to be put to any expense for costs...
[11] Justice Hood goes on to say at para. 483, she makes reference to another Nova Scotia decision, decision of Justice Pugsley, of the Court of Appeal in Brown v. Metropolitan Authority et al., [1996] N.S.J. No. 146. Justice Pugsley in that decision speaks to the question of what is reprehensible and I will cite Justice Hood:
Pugsley, J.A. [in that case] referred to The Concise Oxford Dictionary (1990) [for the] definition of reprehensible as ‘deserving censure or rebuke’ (para. 96).
[12] Justice Hood says at para. 488:
The history of this action [she is now speaking of the action that was before her, it was the action that was central to my determination of res judicata in this matter] as it unfolded during the trial and as is evidenced in the voluminous court file, coupled with the unfounded allegations referred to above and the public nature of those allegation, combine to make this one of those “rare and exceptional cases” in which I conclude, in my discretion, that it is appropriate to award solicitor-client costs against Smith’s Field and Turner-Lienaux. Turner-Lienaux’s and Smith’s Field’s conduct in pursuing unfounded allegations of fraud and dishonesty against Campbell is the sort of reprehensible conduct that I feel must be rebuked through an award of solicitor-client costs.
[13] She goes on to say at para. 489:
Campbell should not, in the circumstances of this case, be put to any expense for his costs in defending the outrageous and scandalous allegations against him. He has been completely vindicated. Furthermore, I conclude that this action was pursued almost as a vendetta against Campbell. Little else can explain the course of this action since early 1996. Orkin refers to “harassment” and “fruitless litigation”. These words are apt for this action and its result.
[14] I will continue to cite Justice Hood at para. 490:
The action continued in the face of the decision of Bateman, J. (as she then was), in 1993 soon after the action started. In her decision (November 12, 1993, - unreported), she said at p. 9:
I am further satisfied that Mr. Lienaux acted unilaterally and without authority on a number of occasions. The evidence persuades me that he has taken improper advantage of his legal training and acted in a high-handed and deceptively manipulative way toward Mr. Campbell and the other directors and shareholders.
[15] This is Justice Bateman continuing at p. 10:
Mr. Lienaux, throughout his evidence, revealed a blind conviction in the righteousness of his position.
[16] Notwithstanding the rebukes given by Justice Hood specific to pleadings, specific to allegations and Justice Bateman who speaks generally of the relationship between the parties; notwithstanding those rebukes, given by Justice Hood and Justice Bateman, Charles Lienaux, on his own behalf and on behalf of his wife Karen Turner-Lienaux continues to promote and use those unfounded and discredited allegations against Campbell, albeit now as part of a defence strategy.
[17] He justified his actions in argument on costs before me on this application, by submitting that the Court of Appeal did not endorse all of what Justice Hood found and that as a result he, Mr. Lienaux, believed that some of the pleadings made before Justice Hood, should be available to be made again in defending this action.
[18] I will make reference to the Court of Appeal review of Justice Hood’s decision at this cite, (2002) 208 N.S.R. (2d) 277. Justice Gerald Freeman is speaking on behalf of the Court of Appeal, reviewing Justice Hood, p. 293, para. 68, he says:
I do not, however, endorse all of the numerous conclusions of the trial judge, for example her finding that a fiduciary duty would not have been owed by Campbell to the appellants in the present circumstances if their allegations had been proved, that the appellants were not proper parties to bring the action and the appeal, nor that causation of loss is a necessary factor when a claim is made for restitution on the basis of Hodgkinson v. Simms, [1994] 3 S.C.R. 377. These points are not material to the trial judge’s determination of the main issue, nor to the outcome of the appeal.
[19] So, I am citing Justice Freeman on the review of Justice Hood’s decision in response to Mr. Lienaux’s suggestion that he, Lienaux, felt empowered to revisit some of the allegations, because Justice Hood was not confirmed in all of her findings.
[20] I find that the reservation that Justice Freeman makes in his decision, does not in any way compromise Justice Hood’s findings, the findings that we are dealing with, that we dealt with, that I dealt with in this application. The findings that led to her awarding solicitor-client costs and I don’t think that it can reasonably be interpreted that Justice Freeman’s reservation would in any way affect Justice Hood’s findings that were the subject of this application.
[21] The fact that Justice Freeman by that same decision upholds the trial judge’s findings as to solicitor-client costs, is I think significant. And those findings of Justice Hood were the findings that I considered in determining the question of res judicata and abuse.
[22] To report, I concluded that there was no justification for the use of those pleadings which I found to be res judicata and an abuse of this Court’s process.
[23] In my decision at that hearing, I found the pleadings put in contest at that hearing, were examined and determined by Justice Hood, or could and should have been brought to her for determination. I found further, that there was a continuation of a theme of litigation that had previously been criticized and dismissed by this court.
[24] I found that in continuing to plead the subject allegations, that in continuing to plead those matters, that the defendants, Lienaux and Turner-Lienaux were in abuse of this court’s process.
[25] I now find that the actions of the defendants, Lienaux and Turner-Lienaux, resulted in this hearing, the pleadings in question, the proposed pleadings in question, combination of pleadings and proposed pleadings, the actions of the defendants Lienaux and Turner-Lienaux which resulted in this hearing, constitute the “rare and exceptional circumstances” necessary to justify a granting of solicitor-client costs, both as a form of chastisement, and because the plaintiffs, the 2301072 Nova Scotia Ltd. and Wesley G. Campbell, should not have been put to the expense of this hearing made necessary by the improper pleadings in question. As a result I will order solicitor-client costs against the defendants Lienaux and Turner-Lienaux in favour of the 2301072 Nova Scotia Ltd. and Wesley Campbell.
[26] As to the defendant Block, the defendants Lienaux and Turner-Lienaux argue that the defendant Block differs from the plaintiffs, in that he was not a necessary participant in the application, to the extent that Block participated, took part, the defendants Lienaux and Turner-Lienaux submit that he ran up costs, to use counsel’s terminology, “ran up costs” that he could have avoided. The defendant Block responded, that he participated out of necessity, because Turner-Lienaux has made those allegations of undue influence and in so doing has caused the defendant Block to be drawn into this action facing potential liability.
[27] The defendant Block claims that as a result of the defendants claim against him, that he has a real interest in what is happening in this plaintiffs’ action and particularly therefore, specifically had an interest in the outcome of the application. Let me say that I acknowledge and I agree that the defendant, Block had a reasonable and necessary participation in the application. I agreed the defendant Block’s participation in that application was both reasonable and necessary. However, I do not find that the elements that make the hearing a rare and exceptional case, with respect to the plaintiffs 2301072 Nova Scotia Ltd. and Campbell, I do not find that those elements apply to the defendant Block. He is a new party to this ongoing litigation and the allegations made against Block in the law pertaining thereto have yet to be tested at trial.
[28] I find therefore, that the defendant Block will have costs against the defendants Lienaux and Turner-Lienaux, those costs will be party and party costs in the cause.
Chief Justice Kennedy