Lawyer vindicated in cost award case

Solhi and Bagherzadeh have moved on to new ventures without paying the damages or costs awarded to the Jans.

The Toronto Star
September 12, 2006

Lawyer vindicated in cost award case
Chidley-Hill acted properly: Court. Made no gain in clients' pizza fraud.
James Daw


A Toronto lawyer was wrongly ordered to pay $140,000 in legal costs after a judge found his clients had defrauded the owner of a pizza parlour franchise, the Appeal Court for Ontario has unanimously ruled.

In a decision late last week, the province's highest court held John Chidley-Hill fulfilled his professional duties to his clients and the court when he represented companies of Farzad Bagherzadeh and Reza Solhi, founder of the defunct 3 for 1 Pizza &Wings (Canada) Inc.

"The reasons that could underpin the order (making Chidley-Hill jointly responsible for the legal costs of the winning parties) are fatally flawed," Justice Stephen Goudge wrote for the three-member court.

Before Chidley-Hill joined 3 for 1 Pizza in 2001, his future clients had terminated the lease and Mississauga franchise of Jaffer Jan and his family. However, when they were sued, Judge Victor Paisley of Ontario's Superior Court found the family was defrauded, and awarded $574,000 in damages. In a later costs ruling, he held Chidley-Hill jointly responsible with his clients for $140,000 in legal costs incurred by the Jans.

In overturning the cost order, Goudge emphasized that there was no suggestion Chidley-Hill had in any way been a participant in the actions of his clients that were found to be fraudulent.

The appeal court found "palpably wrong" the trial judge's conclusion that the lawyer had a common financial interest with his clients, noting Chidley-Hill would not benefit if the Jans' franchise was resold.

The top court also rejected the lower court's conclusion that such a common interest, even if it had existed, would result in a conflict of interest.

Goudge said Chidley-Hill would have been no different than a lawyer accepting a contingency fee: He could still uphold his duties to his clients and the court.

The only basis for a ruling that a lawyer pay the costs of the opposing party personally, the court held, is if his conduct of the litigation is at fault. This was never suggested by the trial judge.

"The reasons of the Court of Appeal vindicate me," Chidley-Hill wrote in lengthy response to the Toronto Star's request for comment.

Thanking the court "for going as far as they did to exonerate me," Chidley-Hill said having a judgment for $140,000 against him for 15 months affected his credit rating. He said coverage of the original cost ruling has also been harmful, and he has sued the Toronto Star.

The Court of Appeal has ordered Jan, his wife and daughter to pay $15,000 toward Chidley-Hill's legal fees in disputing the costs award. But Jan has returned to the Netherlands to live on a government pension. Solhi and Bagherzadeh have moved on to new ventures without paying the damages or costs awarded to the Jans.

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