The Court in Gadula v Leroux, 2016 ONSC 6990 provided quite an interesting discussion regarding the entitlement of costs for all parties involved in a guardianship application and from where the costs were to be taken from. The issue of costs is unsurprisingly common in estate litigation and in litigation in general, because let’s face it, nobody likes spending money.
The court made some especially intriguing comments regarding the entitlement of costs for section 3 counsel, who is appointed per section 3(1)(a) of the Substitute Decisions Act, 1992, SO 1992, c 30 to provide the incapable persons’ position to the Court. It was emphasized in Gadula that s. 3 counsel are a vital piece of the puzzle for protecting incapable people in court, and if they can prove that they provided significant assistance to both the court and the incapable person, they will likely be awarded their costs on a full indemnity basis.
Section 3 Counsel’s Claim in Gadula
Mr. Bergart was appointed as s. 3 counsel for Paulette Leroux, who was the incapable person in a guardianship application. Mr. Bergart sought his costs on a full indemnity basis for a total amount of $8,291.03, inclusive of disbursements and HST.
Mr. Bergart claimed that because he was appointed to represent Ms. Leroux’s position to the court, he did not have a client per se and that if he were to be reimbursed the costs for his work, this would have to be done through one of the parties or the estate. Mr. Bergart emphasized that he believed he was entitled to recover his costs on a full indemnity basis for his efforts and participation as s. 3 counsel in the application. Interestingly, in his submissions, Mr. Bergart admitted that he has no legal source from which to seek the recovery of his fees on a full indemnity basis in his role as s. 3 counsel. He stated that in his “extensive experience” acting as s. 3 counsel, the Court’s have generally awarded him costs on a full indemnity basis.
The Court’s Rhyme and Reason
The Court did not raise any issue with the quantum of Mr. Bergart’s requested costs and the main issue fell to the entitlement of those costs, whether it be in full, partial, or not at all.
In his ruling, Justice Goodman highlighted that just as Mr. Bergart had claimed he had no source for his costs claim, there was indeed no binding authority that clarified the issue of whether s. 3 counsel was entitled to recovery of their costs on a full or reduced basis. Even in light of this fact, Justice Goodman was convinced that in order to get lawyers to willingly accept the position and perform the duties of s. 3 counsel diligently and responsibly, it is good public policy for those acting as s. 3 counsel to recover their costs on a full indemnity basis. He stated that this should be the case as, generally, s. 3 counsel does not have any other recourse for reimbursement of their fees. Justice Goodman went on to say that s. 3 counsel play an invaluable role in providing important information to the parties, and, most importantly, s. 3 counsel aid the court in the most fundamental issue in any application of this kind, which is the best interests of the incapable person.
With that being said, Justice Goodman also made it clear that before costs are awarded, it is essential that s. 3 counsel in any case prove to the court that their fees in relation to their efforts and work done for the incapable person are reasonable in the circumstances. If this is not the case, full costs may not be awarded.
Justice Goodman had no doubt that Mr. Bergart’s efforts were valuable to both the court and Ms. Leroux. Similarly, he found the costs sought by Mr. Bergart to be fair and reasonable in the circumstances and Mr. Bergart was awarded his costs on a full indemnity basis to be paid from the estate of Ms. Leroux.
Future Application of the Ruling in Gadula
The decision in Gadula was referenced years later in the recent case of Adam v Adam, 2023 ONSC 3093, where the costs of s. 3 counsel was again at issue.
Mr. Urback was appointed s. 3 counsel for the incapable person, Shyam Adam. Just as in Gadula, Mr. Urback in his role as s. 3 counsel sought recovery of his fees on a full indemnity basis in the amount of $14,238.00.
In his submissions, Mr. Urback relied on the decision by Justice Goodman in Gadula and specifically on his comments regarding how it is good public policy to allow s. 3 counsel to recover their costs in full as it is unlikely that they will have any other recourse for the reimbursement. Justice Sanfilippo agreed with using this approach in the circumstances but re-iterated that the recovery of full costs is contingent upon the fact that the costs being sought are fair and reasonable. Justice Sanfilippo found that not only were the hourly rate and number of hours spent on the matter by Mr. Urback fair and reasonable, but also that Mr. Urback had provided valuable information on multiple occasions to the Court and parties. Mr. Urback supplied the Court and parties with four different Statements of Position over the course of the Application that expressed the wishes, beliefs, and preferences of Mr. Adam as they were changing due to Mr. Adam’s circumstances.
As a result of his valuable work done as s. 3 counsel, Mr. Urback was awarded his costs on a full indemnity basis from Mr. Adam or on behalf of Mr. Adam’s property.
From the decisions in both Gadula and Adam, it seems as though the Courts are willing to allow s. 3 counsel to recover their costs on a full indemnity basis so long as their fees are fair and reasonable, they have contributed to the litigation in a valuable way, and they have put the best interests of the incapable person first throughout.
For more information regarding the role of section 3 counsel, see Joanna Lindenberg’s post “Understanding the Role of Section 3 Counsel”.