COURT OF APPEAL FOR ONTARIO
Doherty, Feldman and Cronk JJ.A.
BETWEEN
Margaret Ksiazek, Maria Ksiazek, Henrick Ksiazek,
Angella Ksiazek, by her Litigation Guardian, Maria Ksiazek,
and Christopher Ksiazek, by his Litigation Guardian, Maria Ksiazek
Plaintiffs (Appellants)
and
Newport Leasing Limited, The Regional Municipality of Halton
and Brian Farrell and Halton Regional Police Services Board
Defendants (Respondents)
Gregory P. McKenna and James P. Cavanagh, for the appellants
Douglas O. Smith and Paulette Pommells, for the respondents
Heard: April 6, 2010
On appeal from the judgment of Justice C. Raymond Harris of the Superior Court of Justice, dated November 1, 2006.
By The Court:
1The appellant, Margaret Ksiazek (“Ms. Ksiazek”), was injured in a motor vehicle accident. She sued the lessor, the lessee and the driver of the vehicle that struck the car in which she was a passenger, claiming damages for injuries she sustained in the collision. Various members of her family also claimed damages for loss of guidance, care and companionship under s. 61(2)(e) of the Family Law Act, R.S.O. 1990 c. F.3. The respondents admitted liability and a trial proceeded solely on the question of damages. The trial has generated two appeals.1
Appeal C44031
2At the opening of trial, the plaintiffs successfully moved to have the Halton Regional Police Services Board (the “Board”) added as a party defendant. The defendants appeal from that order.
3We are satisfied that there were “special circumstances” justifying the addition of the Board as a party defendant at the outset of trial. The addition of the Board as a defendant did not alter the nature of the litigation or the ultimate payor of any award to be made. Its only effect was to deny the defendants the benefit of the statutory deductible from any award of general non-pecuniary damages. That deductible was not available after the Board was added as a defendant because the Board is a “non-protected defendant” under the statutory scheme in the Insurance Act, R.S.O. 1990, c. I.8. Counsel for the defendants concedes, correctly, that the operation of a statutory provision to the disadvantage of the defendants in and of itself cannot be regarded as prejudice for the purpose of determining whether an order should be made adding a party defendant.
4Counsel could not point to any prejudice other than to suggest that the amendment opened new heads of damages in respect of which the defendants did not have adequate opportunity to prepare prior to trial. We cannot accept this submission. If the defendants had wanted to seek out further evidence relating to any claimed heads of damages after the order adding the Board, they could have requested an adjournment. Indeed, the trial carried on intermittently over the next three months. There was ample time to muster any new evidence needed in response to the order adding the Board as a defendant. No such evidence was gathered because, in our view, no such evidence was needed.
5The defendants also argue that by virtue of s. 50 of the Police Services Act, R.S.O. 1990, c. P.15, the Board’s liability for the tort committed by its police officer (the driver) is “derivative” and, therefore, limited to the officer’s liability. Under the Insurance Act, the officer is a protected defendant and the statutory deductible would apply to any award made against him.
6The Board’s position vis-à-vis the police officer under s. 50 of the Police Services Act is akin to that of an employer vis-à-vis its employee. The jurisprudence referable to an employer’s liability under the statutory scheme in the Insurance Act is applicable to the Board’s liability for the conduct of the officer in this case. Under that jurisprudence, liability as an employer is not subject to the statutory deductible available to protected defendants.
7The appeal from the order adding the Board as a party defendant is dismissed.
Appeal C46339
(a) The Main Appeal
8The plaintiffs appeal from the trial judge’s assessment of damages on several grounds. During oral argument, their attack on the assessment centred on the trial judge’s ruling that Ms. Ksiazek failed to mitigate her damages, thereby warranting a 25% reduction in the general and past loss of income damages awarded to her at trial. The plaintiffs contend that the trial judge misapprehended the evidence of the nature and duration of Ms. Ksiazek’s psychological injuries, which the plaintiffs claim prevented her from freely choosing to undertake treatment and medication regimes recommended by several of her health care providers. This error, the plaintiffs submit, fatally tainted the trial judge’s damages assessment and his adverse mitigation findings. We disagree.
9The plaintiffs rely heavily on the fact that Ms. Ksiazek’s family physician appears to have prescribed anti-depressant medication for her shortly after the accident. They argue that this suggests the early onset of debilitating psychological injuries. But this fact, standing alone, is insufficient to establish that psychological injuries caused by the accident accounted for Ms. Ksiazek’s failure to adhere to certain of the treatment recommendations of her health care providers.
10At trial, Ms. Ksiazek acknowledged on cross-examination that her first complaint of any symptoms of psychological illness occurred in mid-January 1999, almost four months after the accident. Further, medical evidence at trial accepted by the trial judge indicated that her anxiety and depression developed in mid-1999.
11Yet, on the trial judge’s findings, Ms. Ksiazek declined various recommended treatments and medical care throughout the fall of 1998, well before the onset of any symptoms of psychological injury. The trial judge also found that Ms. Ksiazek did not suffer a head injury in the collision.
12These findings were open to the trial judge on the evidence. They amply supported his conclusion that Ms. Ksiazek failed to act reasonably in mitigating her damages, thereby prolonging and exacerbating her injuries.
13We also note that the trial judge accepted the evidence of one of Ms. Ksiazek’s treating physicians that if Ms. Ksiazek had followed the care recommendations made by her health care providers, there would have been a substantial improvement in her condition.
14In all these circumstances, we see no error in the trial judge’s mitigation findings.
15The plaintiffs also argue that, given the totality of the evidence, the trial judge erred in his overall evaluation of damages and in holding that Ms. Ksiazek did not sustain a head injury.
16Again, we disagree. The trial judge’s damages assessment attracts considerable deference from this court: see for example, Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, [2001] 2 S.C.R. 943, at para. 80. Further, as we have said, it was open to the trial judge to conclude on the evidence that Ms. Ksiazek did not suffer a head injury in the collision.
17In our view, given the whole of the evidence and the trial judge’s findings, it cannot be said that the trial judge’s damages assessment is so inordinately low that it is a wholly erroneous estimate of Ms. Ksiazek’s damages. We therefore dismiss the plaintiffs’ appeal concerning damages.
(b) The Cross-Appeal on Damages
18By way of cross-appeal, the defendants argue that the trial judge erred by failing to reduce the damages awarded to the Family Law Act claimants by 25% on account of Ms. Ksiazek’s failure to mitigate her damages. In support of this argument, they submit that derivative claims, like claims under s. 61(2)(e) of the Family Law Act, should “follow the main action”, on the basis that proper mitigation by Ms. Ksiazek of her damages would have reduced the degree of guidance, care and companionship lost as a result of her injuries. While this may be true in some cases, the defendants were unable to point to any authority in support of the proposition that a reduction of damages awarded under s. 61(2)(e) of the Family Law Act automatically follows from a reduction of an injured plaintiff’s non-pecuniary damages due to a failure to mitigate.
19The defendants also rely on s. 61(3) of the Family Law Act, which states: “In an action under subsection (1), the right to damages is subject to any apportionment of damages due to contributory fault or neglect of the person who was injured or killed.”
20In our view, s. 61(3) of the Family Law Act does not assist the respondents. That provision is concerned with contributory negligence, not mitigation of damages.
21Finally, we note that Ms. Ksiazek’s obligation to mitigate her damages was personal to her. Her failure to mitigate cannot be visited automatically on the Family Law Act claimants.
(c) The Defendants’ Costs Appeal
22The defendants also seek leave to appeal the costs order made at trial. The trial judge held that the plaintiffs were entitled to their costs on a partial indemnity basis throughout. He assessed those costs at $287,995, including disbursements of $101,997.
23The defendants made two offers to settle prior to trial. They argue that both offers, particularly the second, exceeded the judgment awarded and that they therefore should have had their costs on a partial indemnity basis from the date of the offers pursuant to rule 49.10(2). Alternatively, the defendants argue that even if the offers were technically deficient, the amount of the second offer was substantially higher than the actual judgment. Accordingly, the trial judge, in the exercise of his discretion, should have awarded the defendants their costs from the date of that offer.
24The plaintiffs maintain that the trial judge properly concluded that neither offer triggered the costs consequences of rule 49.10(2) and, in any event, the trial judge did not err in exercising his discretion in granting the plaintiffs their costs on a partial indemnity basis throughout.
25The damages as calculated by the trial judge were as follows:
Margaret Ksiazek:
General Damages $45,000
Past Lost Income $54,600
Future Care $7,500
Family Law Act Claimants:
Maria Ksiazek (mother) $10,000
Henrick Ksiazek (father) $8,000
Angella Ksiazek (sister) $3,000
Christopher Ksiazek (brother) $3,000
26Ms. Ksiazek’s own insurer made certain payments to her on account of lost income and future care. Those amounts had to be deducted from the awards made at trial under those headings. Those deductions reduced the amounts awarded for past lost income and future care to zero. Consequently, damages to Ms. Ksiazek in the total amount of $45,000 and damages to the Family Law Act claimants in the total amount of $24,000 were awarded. The total judgment was $69,000, plus prejudgment interest.
27The defendants’ first offer to settle was dated April 23, 2003. In that offer, the defendants offered to pay Ms. Ksiazek $75,000, plus prejudgment interest and costs on a partial indemnity scale. This offer made no reference to any of the Family Law Act claimants.
28The second offer was made in August 2005. However, by agreement of the parties, it was effective as of February 10, 2005. In this second offer, the defendants offered to pay Ms. Ksiazek a total of $140,000. The second offer also contained offers of compensation to three of the four Family Law Act claimants. Those offers totalled $7,000. No offer was made to the fourth claimant, Christopher Ksiazek. The second offer also provided for prejudgment interest and payment of costs in an amount to be agreed by the parties. Paragraph 9 of the second offer read, “The terms of this offer are not severable.”
29The plaintiffs offered to settle for a lump sum payment of $250,000, plus pre-judgment interest and costs. The plaintiffs did not apportion that amount among themselves.
30Two significant facts emerge from a comparison of the defence offers and the judgment:
Neither defence offer exceeded the amounts awarded to each of the Family Law Act claimants.
The total funds offered in both defence offers exceeded the actual amount of the judgment. The first offer was $6,000 higher than the amount awarded at trial. The second offer was $78,000 higher.
31We find it necessary to address three of the submissions advanced by the defendants:
Did the offers made to multiple plaintiffs in amounts that did not exceed the sums awarded at trial to each plaintiff fall within rule 49.10(2)?
What were the proper amounts to be compared for the purpose of rule 49.10(2), when assessing whether either defence offer exceeded the amount of the judgment?
What is the appropriate costs order?
(a) Did either of the defence offers qualify as a rule 49.10(2) offer?
32We agree with the trial judge that neither offer made by the defendants attracted the consequences of rule 49.10(2) because neither offer contained offers to each plaintiff that exceeded the sums awarded in favour of that plaintiff under the trial judgment. In particular, in the second offer, the defendants expressly provided that the terms of the offer were not severable. They cannot now ask the court to effectively treat the offer made to the main plaintiff, Ms. Ksiazek, as severable from the offers made to the Family Law Act claimants for the purpose of attracting the costs consequences of rule 49.10(2).
(b) What amounts should be compared for the purpose of determining costs?
33We agree with the defendants that the trial judge erred in comparing the aggregate amount of the defence offers with the amount assessed as damages at trial before deduction of the amounts paid to Ms. Ksiazek by way of accident benefits under s. 267.8(1) of the Insurance Act. The trial judge should have compared the amounts contained in the offers with the actual amount of the judgment: see Pilon v. Janveaux (2006), 2006 CanLII 6190 (ON CA), 211 O.A.C. 19 (C.A.), at para. 16.
34This court’s decision in Ryder v. Dydyk (2007), 2007 ONCA 687, 87 O.R. (3d) 507, relied on by the trial judge, turns on the express language of s. 267.5(9) of the Insurance Act, which addresses only entitlement to costs without regard to the statutory deductions to be made from general damages. That provision requires the court to ignore the amount that must be deducted under the statute from non-pecuniary damages when applying rule 49.10. Section. 267.5(9) is not applicable to first party insurer payments for lost income or future care.
35Rule 49.10 should be applied according to its wording and purpose. It is designed to encourage settlement by forcing the plaintiff who is offered money beyond that received by way of statutory accident benefits, to compare the amount of the “new money” offered with the amount of the actual judgment that may be obtained after trial. The actual judgment will be the net of the amount assessed as damages minus any statutory accident benefits paid on account of lost income or future care.
(c) What costs order should have been made?
36Costs of a proceeding are in the discretion of the court: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131(1). In exercising its discretion, the court may take into account offers to settle even if those offers do not fall within rule 49.10: rule 49.13.
37The trial judge exercised his discretion in favour of granting the plaintiffs costs on a partial indemnity basis throughout. He did so even on the assumption that the defendants’ offers did trigger rule 49.10(2). That rule directs that even where the defendant would be entitled to its costs given the offer made, the court may “order otherwise”. The trial judge referred to several factors in exercising his discretion as he did, including the fact that “the difference between the offer and the judgment is not large”. In coming to that conclusion, the trial judge mistakenly compared the amount of the defendants’ offers to the amount of the damages calculation ($134,000) before deducting the amount of the paid statutory accident benefits, rather than the actual amount of the judgment ($69,000). On a comparison of the proper numbers, the defendants’ first offer ($75,000) was only slightly higher than the actual judgment, but their second offer ($147,000) was more than double the amount awarded.
38When the amount set out in the second offer is compared to the actual judgment, that second offer must carry considerable weight in assessing costs. While the offers did not exceed the amounts awarded to the Family Law Act claimants, the total offered was generous and much more favourable to the plaintiffs as a group than was the judgment eventually obtained after trial. In this case, the plaintiffs’ claims properly can be considered as a single unit. Looked at in that way, the second offer was in substance much better than the judgment and should have been accepted by the plaintiffs. There is no suggestion that the amounts offered to the individual Family Law Act claimants were in any way relevant to the plaintiffs’ decision to refuse the second offer. Although the plaintiffs believed, not unreasonably, that they could do much better at trial, it turned out, after a 25-day trial, that the plaintiffs’ assessment was wrong. In exercising its discretion regarding costs, a court should accord significant cost consequences to such a miscal-culation.
39The plaintiffs were successful at trial. Consequently they are prima facie entitled to their costs. The question is how much should the plaintiffs’ refusal to accept the defendants’ second offer tell against the plaintiffs in the exercise of the court’s discretion concerning costs?
40Having regard to the purposes underlying the rules with respect to settlement offers, the fact that the non-compliance with rule 49.10(2) was more technical than substantive and the reality that the amount of the defendants’ second offer greatly exceeded the judgment, we think that the interests of justice would be served by requiring the parties to pay their own costs after the operative date of the second offer, subject to our comments below regarding disbursements. The plaintiffs, of course, are entitled to their costs on a partial indemnity basis prior to that date.
41In coming to this conclusion, we have exercised a discretion independent of that of the trial judge. The trial judge’s misapprehension as to the appropriate numbers to be used when comparing the defendants’ settlement offers to the judgment obtained constitutes an error in principle allowing this court to exercise its own discretion. However, we have also considered the other factors identified by the trial judge. In our view, those factors considered with the actual timing of the second offer (the eve of trial) justify awarding the plaintiffs their disbursements throughout ($101,997) but no part of their legal fees after the agreed effective date of the second offer.
42Accordingly, we would grant leave to appeal the costs order, allow the costs appeal, and vary the costs order in accordance with these reasons.
Costs of the Appeals
43The results on the appeals are mixed. The defendants failed on their appeal (C44031). Both the plaintiffs and the defendants failed on their appeals from the damages awards. The defendants were successful on their costs appeal. In light of these results, there should be no costs with respect to either appeal.
RELEASED:
“MAY 11 2010” “Doherty J.A.”
“DD” “K. Feldman J.A.”
“E.A. Cronk J.A.”
Footnotes
- Ms. Ksiazek and the Family Law Act claimants are hereinafter referred to as the “plaintiffs” and the respondents are hereinafter referred to as the “defendants”.
