DiBattista et al. v. Wawanesa Mutual Insurance Co. et al. [Indexed as: DiBattista v. Wawanesa Mutual Insurance Co.]
83 O.R. (3d) 302
Court of Appeal for Ontario,
Sharpe, Armstrong and MacFarland JJ.A.
October 5, 2006
Insurance -- Subrogation -- Subrogated interest of Ontario Health Insurance Plan for cost of insured services received by plaintiffs included by plaintiffs in their claim -- Jury finding no liability on part of defendants and assessing plaintiffs' damages at zero -- Ministry of Health and Long-Term Care withdrawing its claim during trial and not attending or participating in trial -- Ministry's claim not assessed by jury -- Section 39(6) of Regulation 552 of Health Insurance Act not applying -- Ministry not required to pay costs of successful defendants -- Regulation 552, R.R.O. 1990, s. 39(6).
The plaintiffs brought an action against their property insurer and others after their home was destroyed by fire. They included in their claim the subrogated interest of the Ontario Health Insurance Plan for the cost of insured services which they received after the fire, as they were required to do by the Health Insurance Act, R.S.O. 1990, c. H.6. The Ministry of Long-Term Care withdrew its claim (which was for just over $8,000) on the 43rd day of the trial. The Ministry's counsel did not [page303] attend or participate in the trial, its subrogated claim was not presented at trial and the jury was not asked to make any assessment of the Ministry's damages. The jury found no liability on the part of the defendants and assessed the plaintiffs' damages at zero. The defendants sought to have the trial judge award costs jointly and severally against the plaintiffs and the Ministry. The trial judge found that only the plaintiffs were jointly and severally responsible for the defendants' costs. The defendants appealed, relying on s. 39(6) of Reg. 552 under the Act.
Held, the appeal should be dismissed.
Section 39(6) of Reg. 552 had no application on the facts of this case, where there had been no assessment of the Plan's interest and the plaintiffs' damages had been assessed at zero. The trial judge properly found that the Ministry's claim had no bearing on the plaintiffs' decision to go to trial, that the Ministry was not an equal partner in the litigation, and that to assess costs against the Ministry in the manner requested by the defendants would be unfair and unreasonable.
APPEAL from the order of Coats J. (2005), 2005 41985 (ON SC), 78 O.R. (3d) 445, [2005] O.J. No. 4865 (S.C.J.), with respect to costs.
Cases referred to Hamilton v. Open Window Bakery, [2004] 1 S.C.R. 303, [2004] S.C.J. No. 72, 235 D.L.R. (4th) 193, 316 N.R. 265, 2004 SCC 9, 40 B.L.R. (3d) 1; Marchand (Litigation Guardian of) v. Public General Hospital of Chatham (2000), 2000 16946 (ON CA), 51 O.R. (3d) 97, [2000] O.J. No. 4428, 138 O.A.C. 201, 43 C.P.C. (5th) 65, 101 A.C.W.S. (3d) 634 (C.A.), affg (1997), 1997 12142 (ON SC), 33 O.R. (3d) 570, [1997] O.J. No. 1990, 12 C.P.C. (4th) 373 (Gen. Div.) [Leave to appeal to S.C.C. refused [2001] S.C.C.A. No. 66] Statutes referred to Health Insurance Act, R.S.O. 1990, c. H.6, ss. 30(1), 31(1) Insurance Act, R.S.O. 1990, c. I.8 Rules and regulations referred to R.R.O. 1990, Reg. 552 ("Health Insurance Act"), s. 39(6) Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 23 [as am.], 23.05
David Zuber, for appellants Servicemaster of Oakville Inc. and Servicemaster of Oakville, a Division of 3310281 Canada Limited and Tuppen Construction Limited. Hans J.B.A. Dickie, Q.C., for appellant Wawanesa Mutual Insurance Company. Stanley C. Tessis, for respondent Ministry of Health and Long-Term Care.
The judgment of the court was delivered by
[1] MACFARLAND J.A.: -- The issue raised by this appeal is whether the Ministry of Health and Long-Term Care (the "Ministry") should pay the costs of the successful defendants following a trial by jury wherein the claims of the plaintiffs were dismissed. [page304]
[2] The facts which give rise to the appeal are not in dispute. On November 16, 1997, a fire severely damaged the plaintiffs' home and the contents thereof. The home was insured by the Wawanesa Mutual Insurance Company, which resolved the property damage claims through the appraisal process set out in the Insurance Act, R.S.O. 1990, c. I.8. Servicemaster and Tuppen Construction were hired to restore the plaintiffs' home and repair its contents.
[3] The plaintiffs claimed: damages for Wawanesa's negligent, unfair and deceptive acts and practices in their adjustment of the plaintiffs' insurance claim; aggravated damages for mental stress and physical and emotional injury arising from the shoddy and negligent work of Servicemaster and Tuppen Construction in repairing their home and its contents; punitive damages for breach by Wawanesa of its fiduciary duties and duty of utmost good faith in the handling of the plaintiffs' insurance claim; and other related relief.
[4] The action was tried at Milton before a jury over 70 days. The jury found no liability on the part of the defendants and assessed the plaintiffs' damages at zero.
[5] The trial judge concluded that the defendants were entitled to costs on a substantial indemnity basis and fixed Wawanesa's costs at $564,998.73 and those of the remaining defendants, all of whom were represented by Mr. Zuber at trial, in the sum of $489,969.03. No issue is taken with either the scale of costs or the quantum.
[6] The defendants sought to have the trial judge award costs jointly and severally against the adult plaintiffs and the Ministry. The trial judge concluded that only the adult plaintiffs, John and Annette DiBattista, were jointly and severally responsible for the defendants' costs.
[7] The plaintiffs included in their claim the subrogated interest of the Ontario Health Insurance Plan (the "Plan") for the cost of insured services received by the plaintiffs following the fire as they were required to do by the following provisions of the Health Insurance Act, R.S.O. 1990, c. H.6:
30(1) Where, as the result of negligence or other wrongful act or omission of another, an insured person suffers personal injuries for which he or she receives insured services under this Act, the Plan is subrogated to any right of the insured person to recover the cost incurred for past insured services and the cost that will probably be incurred for future insured services, and the General Manager may bring action in the name of the Plan or in the name of that person for the recovery of such costs.
31(1) Any person who commences an action to recover for loss or damages arising out of the negligence or other wrongful act of a third party, to which [page305] the injury or disability in respect of which insured services have been provided is related shall, unless otherwise advised in writing by the General Manager, include a claim on behalf of the Plan for the cost of the insured services.
[8] The Plan's subrogated interest, which the plaintiffs included in their claim was for $8,057.98 plus interest. On the 43rd day of trial the Ministry withdrew its claim against the defendants with costs issues reserved to the conclusion of the trial. As the trial judge noted at para. 8 of her reasons:
The Ministry counsel did not attend the trial nor participate in the trial in any way. No one from the Ministry gave evidence at trial. The Ministry never presented its subrogated claim at trial and the jury was not asked to make any assessment of the Ministry's damages.
[9] The position of the defendants is neatly summarized in para. 9 of the reasons of the trial judge as follows:
The defendants rely on section 39(6) of R.R.O. Reg. 552 of the Health Insurance Act in support of their claim for costs against the Ministry. The defendants' position is that even though the jury was not asked to assess the Ministry's claim, that it can be assumed that it would have been assessed one of two ways. The first option is to assume the jury would have assessed the Ministry's claim in the full amount of $8057.98, in which situation the defendants argue on a proportionate basis the Ministry should be responsible for all of the costs of all defendants. The alternate assumption is that the jury would have assessed the Ministry's claim at zero, which would mean that on a proportionate basis, the plaintiff's and Ministry's claims would have been equal. Applying joint and several liability, the defendants argue that the Ministry should be jointly and severally liable to the defendants for all of the costs awarded to the defendants.
[10] The trial judge rejected the defendants' arguments. She carefully considered all of the particular circumstances of the case relating to the Ministry's involvement and concluded that no costs should be awarded against the Ministry. I agree with her conclusion. Analysis
[11] Section 39(6) of regulation R.R.O. 1990, Reg. 552 of the Health Insurance Act, supra, provides:
39(6) Subject to subsection (8), where an insured person obtains a final judgment in an action in which he or she includes a claim on behalf of the Plan, the Plan shall bear the same proportion of the taxable costs otherwise payable by the insured person, whether on a party and party basis or on a solicitor and client basis, as the recovery made on behalf of the Plan bears to the total recovery of the insured person in the action or, where no recovery is made, as the assessed claim of the Plan bears to the total damages of the insured person assessed by the court. [page306]
[12] I am of the view that s. 39(6) has no application on the facts of this case where there has been no assessment of the Plan's interest and the plaintiff's damages have been assessed at zero.
[13] As a matter of common sense, it would, in my view, be quite unreasonable to hold the Plan, with a subrogated interest of just over $8,000, liable for costs which total in excess of $1 million.
[14] The defendants argue that the Ministry knowingly participated in a trial fraught with risk and was a full participant in the litigation. In this respect they rely on the words of Granger J. in Marchand (Litigation Guardian of) v. Public General Hospital of Chatham (1997), 1997 12142 (ON SC), 33 O.R. (3d) 570, [1997] O.J. No. 1990 (Gen. Div.), affd (2000), 2000 16946 (ON CA), 51 O.R. (3d) 97, [2000] O.J. No. 4428 (C.A.) (costs order varied on different basis), leave to appeal to S.C.C. refused [2001] S.C.C.A. No. 66. In Marchand, the Ministry withdrew its claim for past and future insured services on the 70th day of a 165- day trial. The issue of costs was reserved to the conclusion of trial.
[15] Granger J. assessed the plaintiff's damages exclusive of the interest of the Plan at $1,139,873.92. He assessed the Plan's interest as of April 22, 1994 (the date of withdrawal of its claim) for past and future services at $158,694.9, 12.22 per cent of the total assessment.
[16] The plaintiff's action in Marchand was dismissed and the defendants' costs were fixed in the total sum of $2,154,448.29. As Granger J. noted in his reasons, had the plan continued in the action and had its claim assessed in the sum of $158,964.69, it would have been responsible for 12.22 per cent or $263,273.58 of the costs payable by the plaintiffs. He accepted that as of the date of the Plan's withdrawal from the action the defendants' cost totalled $1,036,836. Granger J. found that to April 22, 1994 the Plan was a full partner in the litigation, that it was a sophisticated insurer with substantial resources and that it understood the risks of the litigation including its liability for costs in the event the action was dismissed. He further found that although the Plan had discontinued its claim, it was nevertheless liable for costs under rule 23.05. Being satisfied that the Plan was an equal partner in the litigation, he concluded that it should be responsible for its proportionate share of the costs payable by the plaintiffs. He considered the formula set out in s. 39(6) of Reg. 552 to be an appropriate basis on which to determine the Plan's liability for costs as of April 22, 1994.
[17] In distinguishing Marchand from the case before her, the trial judge noted that the Ministry did no more than forward a few pieces of correspondence, payment summaries and [page307] updates. Ministry counsel did not attend or participate in the trial in any way. The Ministry did not take a position on liability, nor did it lead any evidence. Its subrogated claims occupied very little trial time, and the jury was not asked to make any assessment of the Ministry's damages. The Ministry did not participate in pre-trial or settlement negotiations, did not complicate the proceedings or cause any delay and took no steps to prolong the dispute. Finally, there was no indication that the Ministry's claim had any bearing on the plaintiffs' decision to go to trial. On the facts before her, the trial judge could not find that the Ministry was an equal partner in the litigation.
[18] She concluded that to assess costs against the Ministry in the manner requested by the defendants would be unfair and unreasonable. Further she concluded that if Rule 23 [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] was applicable any costs awarded against the Ministry would be negligible because its claim added no time or complexity to the trial, the subrogated claims were minor compared to the plaintiffs' other claims, and any costs she might award would be more than offset by the Ministry's costs of filing two factums and having its counsel attend for the costs submissions. She therefore ordered that no costs be awarded against the Ministry.
[19] In fixing costs a trial judge enjoys a broad discretion. As Arbour J. noted in Hamilton v. Open Window Bakery, 2004 SCC 9, [2004] 1 S.C.R. 303, [2004] S.C.J. No. 72, at para. 27, "[a] court should set aside a costs award on appeal only if the trial judge has made an error in principle or if the costs award is plainly wrong" (citation omitted).
[20] In my view, s. 39(6) of Reg. 552, supra, has no application where the Plan's claim has not been assessed. It would be dangerous to assume what the jury might have done had the claim been submitted for their consideration. It was not. There was no assessment of the claim and in these circumstances s. 39(6) does not apply.
[21] In such circumstances it is appropriate for the court to look to rule 23.05 which provides:
23.05 Where a plaintiff discontinues an action against a defendant,
(a) the defendant is entitled to the costs of the action; . . .
. . . unless the court orders otherwise.
[22] The trial judge here carefully considered the nature of the case before her and weighed the relevant factors. She made no error in principle and her award cannot be said to be plainly wrong. [page308]
[23] The appeals are dismissed. Costs to the Ministry (of both appeals) are fixed in the sum of $8,500 inclusive of disbursements and GST which sum includes the costs of both the applications for leave to appeal and the appeals.
Appeals dismissed.