Cassels Brock & Blackwell LLP can now feel some sense of security about recovering its legal costs in Mauldin v. Cassels Brock & Blackwell LLP after the Ontario Court of Appeal changed the terms of the cost orders in the investment fraud case.
The case, which saw Toronto businessman Robert Hryniak convicted of civil fraud, was back in the appeal court this week for a decision on who should pick up the legal tabs.
Cassels Brock and its former partner Jack Peebles were named as co-defendants for allegedly allowing Hryniak to access to the firm’s trust accounts as he wished. But while Hryniak was found guilty in a summary judgment and ordered to pay $2 million, the court dismissed a summary judgment motion against Peebles and the law firm, deciding the allegations against them must go to trial.
Two groups of plaintiffs, known as the Mauldin group and the Bruno group, sued Hryniak. Both groups had originally won in a summary judgment, but later, an appellate court reversed the decision in the Bruno case, which it sent to trial.
In October 2010, a Superior Court judge had ordered Hryniak to pay Cassels Brock and Peebles for their costs in both motions. The judge had used the Sanderson model to order costs, which follows that the losing defendant pays the cost of the successful defendants.
One of Hryniak’s grounds of appeal was that he shouldn’t have to pay the legal costs of his co-defendants in the Bruno motion. Cassels Brock and Peebles agreed with this appeal, arguing the Sanderson order is inappropriate since Bruno was unsuccessful with all three defendants.
The law firm also said “it is not fair and equitable for it to continue to bear the risk of non-recovery of costs payable by Hryniak under the Sanderson order,” according to the decision.
This week, the appeal court agreed.
“Since Bruno’s motion failed against all three defendants, we set aside the motion judge’s Sanderson order in respect of the costs of the Bruno motion,” the appeal court said.
“The Sanderson order reduced Bruno’s obligation to pay the costs awarded to Cassels Brock and to Peebles by $21,212.27 and $4,545.45 respectively. Bruno is now responsible for payment of these amounts. Hryniak’s obligations to Cassels Brock and Peebles are reduced accordingly.”
When reached by Legal Feeds, a Cassels Brock spokeswoman said the firm would not comment on matters before the courts.
The Supreme Court of Canada has heard and reserved Hryniak’s appeal in relation to the summary judgment in Mauldin case.
Upadate: May 13. Fixed comment from Cassels Brock.