COURT OF APPEAL FOR ONTARIO
Laskin, Gillese and Pardu JJ.A.
BETWEEN
Dean Wilson
Plaintiff (Respondent)
and
Stephen Cranley
Defendant (Appellant)
Chris G. Paliare and Andrew Lokan, for the appellant
James L. Vigmond and Brian Cameron, for the respondent
Heard: October 15, 2014
On appeal from the judgment of Justice Barry G. MacDougall of the Superior Court of Justice, dated Sept. 6, 2013.
1When determining whether an offer to settle attracts the costs consequences of rule 49.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, should the court add notional pre-judgment interest to the jury’s general damages award? This appeal depends on the answer to that question.
BACKGROUND
2Dean Wilson (the “plaintiff” or the “respondent”) and Stephen Cranley (the “defendant” or the “appellant”) were involved in a motor vehicle accident on October 4, 2008. The plaintiff claimed damages of more than $800,000, plus interest and costs.
3Before trial, the plaintiff put forward two offers to settle. On April 19, 2013, he offered to settle for $145,000, inclusive of interest but excluding costs. And on May 3, 2013, he offered to settle for $95,000, excluding interest and costs.
4The defendant also made an offer to settle. His offer of May 2, 2013, was for $50,000 in damages, plus interest under the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “CJA“), costs, disbursements and taxes (the “Offer”). The Offer of $50,000 plus interest amounted to $61,609.56.
5Prior to trial, the plaintiff asked the defendant to participate in mediation, as required by legislation. The defendant did not respond. He did, however, admit liability for the accident after the plaintiff brought a motion to compel the defendant to attend for examination under oath.
6Following a six-day trial, the jury awarded the plaintiff $15,000 for general damages and $45,000 for loss of future income, for a total award of $60,000. After applying the $30,000 statutory deductible mandated by s. 267.5(7) of the Insurance Act, R.S.O. 1990, c. I.8, as amended by S.O. 1996, c. 21, s. 29 (the “Act”), the award for general damages was reduced to zero.
7The defendant sought partial indemnity costs from the date of his Offer. He argued that the plaintiff had obtained a judgment only as favourable as, or less favourable than, the Offer and therefore the costs consequences of rule 49.10 should apply. In making this argument, he compared the Offer of $61,609.56 (plus costs, disbursements and taxes) to the total jury award of $60,000 ($15,000 for general damages and $45,000 for loss of future income).
8The trial judge rejected the defendant’s argument because he found that the plaintiff “beat” the Offer. In so finding, the trial judge added notional pre-judgment interest of $2,299.31 to the $15,000 award for general damages. By notional, the trial judge meant the amount of prejudgment interest that would have accrued on the general damages award but for the application of the statutory deductible. The general damages award plus notional pre-judgment interest amounted to $17,299.31. When the trial judge added that sum to the award of $45,000 for loss of future income, the total amount was $62,299.31. The Offer was for $61,609.56. Thus, the trial judge reasoned, for the purposes of rule 49.10, the judgment was more favourable than the Offer by $689.75 and the plaintiff was presumptively entitled to costs.
9The trial judge stated that in considering the rule 57.01 factors, he took into account, among other things, the fact that the jury’s award was only slightly more favourable than the Offer and that the defendant did not respond to the plaintiff’s request for mediation, as required by the Act. He noted that a failure to participate in mediation shall be considered by the court in awarding costs.
10By judgment dated September 6, 2013, the trial judge awarded the plaintiff costs of $45,200 plus disbursements of $41,040.86, both of which sums included HST.
ISSUES
11The appellant submits that the trial judge erred by:
adding notional pre-judgment interest to the general damages award for the purposes of rule 49.10; and,
failing to properly consider the “near miss” Offer, even if notional pre-judgment interest was properly added to the general damages award.
Issue #1: Did the trial judge err by adding notional pre-judgment interest to the general damages award for the purposes of rule 49.10?
12The appellant begins his argument on this ground of appeal by pointing out that neither the CJA nor the Rules provide for interest to be applied to anything other than the judgment as issued and entered. He then points to s. 267.5(9) of the Act and says there is nothing in it that creates an entitlement to notional pre-judgment interest. Section 267.5(9) reads as follows:
In an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, the determination of a party’s entitlement to costs shall be made without regard to the effect of paragraph 3 of subsection (7) on the amount of damages, if any, awarded for non-pecuniary loss. [Emphasis added.]
13Thus, the appellant submits, as there is no statutory authority for adding interest to any amount other than the judgment, the trial judge erred by adding notional pre-judgment interest to the general damages award for the purpose of determining whether the Offer attracted rule 49.10 consequences.
14The appellant also maintains that adding notional pre-judgment interest is an unwarranted extension of the reasoning of this court in Rider v. Dydyk, 2007 ONCA 687, 286 D.L.R. (4th) 517, leave to appeal to S.C.C. refused, [2007] S.C.C.A. No. 594, and inconsistent with the reasoning in Pilon v. Janveaux, 2006 CanLII 6190 (ON CA), [2006] O.J. No. 887 (C.A.).
15I would not accept this submission. I agree with the trial judge that when determining whether the plaintiff obtained a judgment more or less favourable than the Offer, in calculating the judgment, the court shall consider the amounts that the jury awarded, without regard to the statutory deductible, together with notional pre-judgment interest added to the award for non-pecuniary loss.
16There can be no doubt that when determining a party’s entitlement to costs, the trial judge was correct to ignore the statutory deductible. In actions involving motor vehicle accidents, pursuant to s. 267.5(7), the award for non-pecuniary loss will be reduced by the statutory deductible, which is now $30,000. However, pursuant to s. 267.5(9) of the Act, the statutory deductible is not to be taken into account when determining whether the plaintiff obtained a judgment as favourable as, or less favourable than, a rule 49 offer: Rider, at para. 23.
17Further, when comparing the judgment in such a case with the rule 49 offer, the court is to consider not the judgment awarded by the jury but the amount finally awarded by the trial judge plus pre-judgment interest: Pilon, at para. 16; Lawson v. Vierson, 2012 ONCA 25, 346 D.L.R. (4th) 518, at para. 22.
18But, the appellant argues, the “amount finally awarded by the trial judge” would be reduced by the amount of the statutory deductible, so the trial judge erred in adding notional pre-judgment interest to the full amount of the jury’s general damages award.
19I disagree.
20As the trial judge noted, s. 128 of the CJA provides that a person who is entitled to an order for the payment of money is entitled to an award of pre-judgment interest on the amount ordered, from the date the cause of action arose to the date of the order. Pre-judgment interest is ordinarily awarded, absent special circumstances, to reflect the value of the money wrongfully withheld from the plaintiff: Andrew Kowalczewski Insurance Brokers Ltd. v. Hunt, [2001] O.J. No. 4429 (C.A.), at para. 13.
21As pre-judgment interest would, in the ordinary course, be added to the general damages award (Pilon) and the general damages award should be considered absent the statutory deductible (Rider), it follows that pre-judgment interest should be notionally added to the general damages award from the date of the notice of claim, for the purpose of determining whether the judgment was more favourable than the Offer. Thus, contrary to the appellant’s submission, adding notional pre-judgment interest is not an unwarranted extension of Rider and Pilon. Rather, it is the logical conclusion that flows from the reasoning in the two cases.
22Accordingly, in my view, this ground of appeal must fail.
Issue #2: Did the trial judge err by failing to properly consider the “near miss” Offer?
23The appellant conceded that in the recent decision of Elbakhiet v. Palmer, 2014 ONCA 544, 121 O.R. (3d) 616, leave to appeal to S.C.C. requested, this court makes it clear that there is no “near miss” policy for the purposes of rule 49.10. However, the appellant points out, the court also emphasized in Elbakhiet that rule 49.13 requires that any written offer to settle must be taken into account when the court exercises its discretion with respect to costs. The appellant says that just as in Elbakhiet, the trial judge in this case did not mention rule 49.13. Furthermore, the appellant contends, the trial judge did not take into consideration the rule 57.01(1) factors, such as the amount that the plaintiff had claimed and the amount that he was awarded. Therefore, the appellant submits, the costs order below cannot stand and this court should either reduce the costs order by 50% or order that no costs are payable after the date of the Offer.
24I would not accept this submission.
25As the appellant rightly concedes, Elbakhiet affirms that there is no “near miss” policy in respect of rule 49.10. At para. 31 of Elbakhiet, Rosenberg J.A., writing for this court, states:
I agree with the respondents that there is no “near miss” policy. A party that comes close to meeting the judgment is not thereby entitled to an award of costs as if they did provide a successful offer.
26However, at para. 32 of Elbakhiet, Rosenberg J.A. stresses that even where an offer does not attract rule 49.10 consequences, pursuant to rule 49.13 the court should consider such offers when exercising its discretion with respect to costs.
27And, at para. 33, Rosenberg J.A. explains the approach the court is to take pursuant to rule 49.13:
As this court pointed out in Lawson v. Viersen, 2012 ONCA 25, at para. 46, rule 49.13 is not concerned with technical compliance with the requirements of rule 49.10. Rather, it “calls on the judge to take a more holistic approach.” The appellants complied with the spirit of Rule 49 even if they failed for technical reasons to provide an offer that exceeded the judgment. As held in Lawson, at para. 49, this was the type of offer that ought to have been given “considerable weight in arriving at a costs award”.
28Although the trial judge in the present case did not expressly refer to rule 49.13, in my view, his endorsement complies with the approach mandated by Elbakhiet.
29At para. 21 of his endorsement, the trial judge states, “the award of the jury was only slightly more favourable than the [Offer]”. This is an express reference to the Offer and the fact that the result at trial barely exceeded it. Indeed, earlier in his reasons, the trial judge acknowledges that the difference between the Offer and judgment was a mere $689.75 and arose only because notional pre-judgment interest had been applied to the general damages award. In short, the trial judge was fully aware that the Offer was a “near miss” and he took that into consideration.
30At the same time, however, it is important to recognize that the trial judge took the requisite holistic approach. He considered the full circumstances surrounding the Offer, including the offers to settle that the plaintiff had made and, significantly, the appellant’s failure to participate in the statutorily mandated mediation, given the respondent’s request for the same. Under ss. 258.6(1) and (2) of the Act, the insurer has an obligation to mediate, at the request of the insured, and a failure to do so “shall” be considered by the court in awarding costs. Those sections read as follows:
258.6(1) A person making a claim for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile and an insurer that is defending an action in respect of the claim on behalf of an insured or that receives a notice under clause 258.3(1) (b) in respect of the claim shall, on the request of either of them, participate in a mediation of the claim in accordance with the procedures prescribed by the regulations.
(2) In an action in respect of the claim, a person’s failure to comply with this section shall be considered by the court in awarding costs.
31Further, unlike in Elbakhiet, the trial judge in this case made no error in principle in his approach to rule 57.01.
32Accordingly, I would reject this ground of appeal.
DISPOSITION
33For these reasons, I would dismiss the appeal with costs to the plaintiff (respondent) fixed at $9,500, all inclusive.
Released: November 27, 2014 (“E.E.G.”)
“E.E. Gillese J.A.”
“I agree. John Laskin J.A.”
“I agree. G. Pardu J.A.”
