[16] That is quite separate from whether Ferro & Company did anything wrong in advising the plaintiff to institute and pursue unfounded allegations of fraud.
[17] This is not the first time that this firm has participated in cases involving such unfounded allegations: see, for example, the Sagan case, Steele v. Intact Insurance Company, 2014 ONSC 6999 (CanLII), and, arguably, Blake v. Dominion of Canada General Insurance Co., 2013 ONSC 6069 (CanLII).
[18] Mr Oostdyk argues that the court should not punish a lawyer for good legal thinking. I think more to the point is whether it should punish bad legal thinking. Whatever I think of false accusations of fraud, I do not think that the lawyer’s conduct meets the threshold set in Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 SCR 3. I think that Rule 57.07 and the common law power discussed in Young v. Younghave more in mind abuse of process, delay and default by lawyers and conduct of that nature. The defendant cites Standard Life Assurance Co. v. Elliott, 2007 CanLII 18579 (ON SC), [2007] O.J. No. 2031, in which Molloy J. imposed costs on the lawyer. In that case the lawyer counterclaimed against an insurance company and added individual employees as defendants when the principal had already admitted that it was liable for their acts. The employees were added, therefore, for no other purpose than to vex them and their employer. That was an abuse of process. In the case at bar, the purpose of the action appears to have been to recover money for the plaintiff from the insurer with whom she had contracted. In the circumstances, a cost order against the unsuccessful party, augmented because of the unfounded allegation of fraud, is sufficient. I propose to follow the usual rule and impose costs against the party, not the lawyer.
[21] I order the plaintiff to pay the defendant’s costs of the action on a substantial indemnity basis, which I fix at $20,000 all inclusive.