Second Chance for Lawyer Ordered to Pay Costs Personally?

Rule 57.07 of Ontario's Rules of Civil Procedure gives the court (including a Master of the court) discretion to award costs of a proceeding against a lawyer and to require the lawyer to pay the costs personally. Specifically, the rule provides that where a lawyer for a party has caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default, the court may make an order, (a) disallowing costs between the lawyer and the client or directing the lawyer to repay the client money paid in respect of costs; (b) directing the lawyer to reimburse the client for any costs that the client has been ordered to pay to another party; and (c) requiring the lawyer personally to pay the costs of any party.   Such an order may be made by the court on its own initiative or on the motion of any party to the proceeding but the court has no discretion to make such an order unless the lawyer is given a reasonable opportunity to make representations to the court. 

In the case of Haider Humza Inc. v. Rafiq [2012] ONSC 6161, Master Dash of the Ontario Superior Court of Justice ordered the plaintiff's lawyer, Murray Teitel, to personally pay the defendant's lawyer costs in the sum of $3,000 for conduct which Master Dash defined as "sharp practice".  Master Dash held, among other findings, as follows: 

In my April 23rd endorsement I had contemplated costs personally against Mr. Teitel for the earlier motion, but elected not to do so. ... This time a line has been crossed.  Mr. Teitel has breached his duty to another lawyer not to take steps without fair warning and to take advantage of Mr. Datt's (the other lawyer) mistake.  He lulled Mr. Datt into believing the costs would be paid in accordance with the order and on time, while taking steps to frustrate that payment by informing the Ministry without any warning to Mohammed or Mr. Datt until after payment was made to the Ministry.  The decision not to warn was his decision alone.  Even if I am wrong and he acted on his client's instructions, a lawyer should not take instructions from a client that would cause him to breach his professional obligations to another lawyer.  It appears that no lesson had been learned from my criticism of the plaintiff's scorched earth policy set out in my earlier endorsement.  It has instead been taken to a new level.  Mr. Teitel has engaged in share practice and is no longer entitled to the benefit of the doubt.  A message must be sent that the court will not abide such behaviour.  This is an appropriate case for the costs award to be made personally against the plaintiff's lawyer. 

Mr. Teitel sought leave of a single judge of the Superior Court of Justice to appeal the Master's order to another judge of the Superior Court.  In granting leave, Justice Morgan held that the Master had exceeded his jurisdiction in what amounted to making a determination under the Rules of Professional Conduct that Mr. Teitel had engaged in sharp practice.  The judge held that it is one thing to use a phrase such as "sharp practice" in the way that it is commonly used - meaning an aggressive tactic that is disapproved of by the court.  It is another thing for a Master, sitting in motions court and writing an endorsement on a question of costs, to cite a specific provision of the Rules of Professional Conduct to analyze a lawyer's conduct in reference to the terms of that rule and to make a specific finding that the lawyer has breached the rule. 

Justice Morgan held that under the Law Society Act only a discipline panel of the Law Society has jurisdiction to make a determination that a lawyer has breached the Rules of Professional Conduct.  Such a determination was not one that the Master could make.  The judge held that in his view, Master Dash's venture into an area that was not in his jurisdiction needs to be revisited by an appellate court given its centrality to his assessment of costs against Mr. Teitel.  Accordingly, Justice Morgan granted Mr. Teitel leave to appeal from Master Dash's order. 

While I make no comment on Mr. Teitel's conduct or whether it constituted sharp practice, it seems surprising that although the rule empowers a Master to make findings of "negligence or other default" when awarding costs against a lawyer personally, Justice Morgan didn't appear to consider whether conduct that may amount to professional misconduct (regardless of whether a finding of professional misconduct was made) fell within the meaning of "other default".   

Regards,

Blair