• Ellen Vandergrift

Beware the potential cost consequences of pleading intentional torts

Lawyers are very aware of the negative cost consequences of an unfounded pleading of fraud, and may avoid pleading fraud in an effort to avoid those cost consequences. Lawyers should also beware of the cost consequences of pleading the other intentional torts.

In Hawkins v. Hawkins Estate, 2015 ONSC 1106, the chambers judge awarded substantial indemnity costs for unproven claims of conspiracy, inducing breach of contract, and intentional interference with economic relations, where the parties agreed to a dismissal of those claims in response to a summary judgment application.

It is significant that the chambers judge did not award the increased costs on the basis that there was no evidence to support the claims or that they were made for an improper purpose. He specifically found that he was unable to determine that the claims were made without evidence or for an ulterior motive, because there was no decision on the merits (at para. 14).

He awarded substantial indemnity costs for the sole reason that allegations of conspiracy, inducing breach of contract, and intentional interference with economic relations have been found to be prejudicial to characters or reputations of those to whom they are directed and that they therefore attract a higher scale of costs (at para. 15).

This case provides a further cautionary note: it is imperative to file a discontinuance to stop the accrual of costs. In this case, the party seeking to avoid paying costs for the motion for summary judgment argued that his counsel had indicated before the motion was filed that he would consent to the dismissal of his claims. The chambers judge did not accept this. As he stated: “A claim is alive until it is disposed of. Ian Hawkins could have discontinued his claim at any time by serving a simple notice. He did not, and it took the summary judgment motion to obtain a resolution” (at para. 19).

In this case, one lawyer represented the two persons against whom the intentional tort claims were made, and they sought costs of $47,174.85 each, representing half of the lawyer’s total bill. This gives some idea of the costs incurred in this type of litigation, even where no trial on the merits takes place. The chambers judge held that the fees claimed up to the summary judgment motion were generally valid, although higher than what should have been reasonably expected given that the claims did not have to be judicially determined. The combined fees of $23,500 sought for the summary judgment motions that were not argued were found to be excessive because there must have been some sense “that just bringing the motions would force the responding parties to finally capitulate.” The chambers judge awarded $35,000 each (at para. 21).

It is important to ensure that your clients are aware of the potential cost consequences of making a claim of conspiracy, inducing breach of contract or causing loss by unlawful means. Also, if you act for clients who have successfully defended themselves against such claims, be sure to seek increased costs.

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