DIVISIONAL COURT FILE NO.: 249/16
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
R.S.J. SHAW, MOLLOY and PATTILLO JJ.
BETWEEN:
PHILLIP CARR Plaintiff/Respondent
– and –
NILAM R. MODI and RAJENDRA MODI Defendants/Appellants
COUNSEL: David Wilson, for the Plaintiff/Respondent Todd J. McCarthy and Marianne D. Davies, for the Defendants/Appellants
HEARD at Toronto: November 18, 2016
MOLLOY J. (Orally)
THE APPEAL
The Appeal
1The defendants appeal from a judgment of Lederer J. dated April 19, 2016. Prior to the motion before Lederer J., the parties had reached a settlement in respect of an action commenced in 2010 arising from a motor vehicle accident that occurred on January 30, 2008 in which the plaintiff sustained injuries.
2A settlement of the motor vehicle litigation was reached on September 25, 2015. The settlement provided that the defendants would pay $42,500.00 for all damages net of collateral benefits received or available and net of any statutory accident benefits received or available. The settlement further provided that the defendants would pay pre-judgment interest to be agreed upon or assessed, plus partial indemnity costs to be agreed upon or assessed.
3The parties were unable to agree on the interest rate or quantum of costs. A motion was brought for the determination of those two issues. Justice Lederer held that the applicable rate of interest was 5%. He awarded total costs of $99,800.11 inclusive of fees, HST and disbursements.
4The defendants have a right of appeal to this Court in respect of the interest rate pursuant to the Courts of Justice Act, because the appeal concerns a single payment of not more than $50,000.00.
5The defendants seek leave to appeal the costs disposition pursuant to s.133(b) of the Courts of Justice Act.
THE RATE OF INTEREST
The Rate of Interest
6On a question of law, the motion judge is required to be correct. However, issues of fact and issues of mixed fact and law can only be interfered with if there is a palpable and overriding error: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, 2002 S.C.C. 33.
7The first issue with respect to the applicable interest rate is whether a legislative amendment that came into force on January 1, 2015 has retroactive effect. Under the previous legislation, the pre-judgment interest rate would be 5%. If the amendment made in January 2015 applies, the interest rate would be 1.3%. This is a question of law. The motion judge is required to be correct. We agree with the motion judge that the new legislation is substantive not procedural and is presumed not to have retroactive effect. There is no language in the legislation, expressed or implied, to support giving the amendment retroactive effect. For the reasons stated by the motion judge, we find that the applicable rate is 5%.
8The motion judge then considered whether to reduce the rate as provided for under s.130 of the Courts of Justice Act. He considered the relevant factors and declined to exercise his discretion in that regard. The motion judge made no error of principle and no palpable or overriding error in making that determination. This was an exercise of discretion. There is no basis for this Court to substitute its discretion for that of the motion judge.
9Accordingly, the appeal with respect to interest rate is dismissed.
leave to appeal costs
Leave to Appeal Costs
10Two issues arise from the costs decision:
(1) whether the motion judge erred in awarding some costs to the plaintiff that were incurred in the course of a statutory accident benefit (“SAB”) arbitration and not recovered in that proceeding; and
(2) whether the motion judge erred in the quantum of costs ordered having regard to the principle of proportionality.
11On the first issue, a question of law is raised that has broad implications beyond this case. Further, the ultimate quantum of costs awarded is affected by this issue.
12Counsel for the appellants relies upon the decision of the Court of Appeal in Whittle v. Ontario (Ministry of Transportation) (1996), 31 O.R. (2nd ) 573, 1996 ONCA 10254, [1996] O.J. No. 3786, which he asserts is determinative of this issue and contrary to the conclusion reached by the motion judge. This case was not considered by the motion judge, nor by any of the judges in the other cases relied upon by the motion judge. Accordingly, we would grant leave to appeal in this case, but nevertheless are agreed that the appeal should be dismissed.
recoverability of costs of arbitration
Recoverability of Costs of Arbitration
13Whether or not the unrecovered costs of arbitration proceedings can be recovered as costs from a defendant in a tort claim is, as a threshold issue, a question of law. The motion judge considered the applicable law and ruled, in accordance with prior case authority, that where a defendant has derived a clear benefit from the accident benefit arbitration, the costs recoverable in the tort action may include the costs of recovering those benefits. He held as follows at para. 30 of his decision:
In the case I am asked to decide, the value of the income replacement benefit was said to be $95,000. The case settled for $42,500. Surely, it stands to reason that the plaintiff would have looked to the tortfeasor for a larger settlement had there been no statutory accident benefits to claim (s. 267.8(1)) of the Insurance Act). This being so, the tortfeasor is saved from that liability by the successful accident benefits claim.
14There is considerable authority supporting the determination of the motion judge that a plaintiff’s recovery of SABs may constitute a benefit to a defendant in the tort claim and accordingly, a plaintiff may be entitled to claim the unrecovered costs incurred in arbitration to obtain the SABs. See: Ananthamoorthy v Ellison, 2013 ONSC 4510; Moodie v. Estate of Delores Greenway, [1997] O.J. No. 6525; Anand v. Belanger, 2010 ONSC 5356; Intact Insurance Company v. Marianayagam, 2016 ONSC 1479; Siddiqui v. Siddiqui, 2015 ONSC 6260.
15As a question of law, we agree with the conclusion of the motion judge that the recovery of SABs may be a benefit to a defendant and therefore the costs of obtaining same may be recoverable by the plaintiff against the defendant. We find this to be a correct statement of the law.
16We have considered the appellant’s argument with respect to the binding nature of the Court of Appeal decision in Whittle. The Court of Appeal decision is a brief, cryptic endorsement. All that is said on this subject is:
Finally, we are of the view that there was no reasonable basis for awarding against the appellant the costs of the arbitration of the dispute between the respondent and his insurer. In accordance with this conclusion, that part of para. 5 in the formal judgment which relates to the attendance on June 20, 1996 should be deleted.
17There is no indication in the Court of Appeal endorsement as to the basis upon which that determination was reached. An examination of the two prior decisions of the trial judge (McLean J.) in that case, one following trial (1995) 1995 ONSC 7078, 24 O.R. (3rd) 394 and the other on subsequent motion in September 1996 ONSC 8225, 1996 31 O.R. (3rd) 16, shows that there were quite unusual facts underlying McLean J.’s decision to grant costs as special damages. Therefore there could easily have been other justifiable grounds for denying costs to the plaintiff in respect of an arbitration that occurred after the trial decision. Accordingly, the Court of Appeal decision cannot be taken as having conclusively determined the issue before this Court. It is distinguishable on its facts.
18Having determined that there can be a correct legal basis for a plaintiff recovering the costs of a SAB arbitration from a tort defendant, the next issue was whether the motion judge in this case was entitled to do so. This is a question of mixed fact and law and exercise of discretion.
19In applying the law to the facts of this case, the motion judge determined that the defendants did derive a benefit because the settlement was net of SABs and the plaintiff would have demanded more from the defendants were it not for the quantum of accident benefits already recovered.
20The motion judge then went on to determine the quantum of costs from the arbitration that could be recovered in the tort action. He did not award the whole amount of $44,000 claimed, but rather awarded $24,000 for fees plus disbursements of approximately $6,000, leaving therefore some of the costs of the arbitration to be absorbed by the plaintiff.
21We see no error in principle and no overriding or palpable error in the motion judge making this award.
quantum of costs – proportionality
Quantum of Costs – Proportionality
22Of the approximately $100,000 in costs awarded by the motion judge, $24,000 was for fees in the arbitration and approximately $6,000 for disbursements in respect of the arbitration award. Appellants’ counsel takes no issue with the quantum of those costs. His objection is as to whether it can be recovered at all. In relation to the $95,000 recovered for SABs, the total costs awarded to the plaintiff for pursuing same is, in our view, proportionate.
23When the $30,000 in costs for the SABs arbitration is deducted from the $100,000, the remaining costs attributable to the court action are approximately $70,000. The question is whether that is a proportionate award in all the circumstances. There was no issue with respect to the time spent and the rates charged. These were all conceded by counsel to be reasonable. The total costs claimed by the plaintiff were just over $114,000. The motion judge, looking at the totality of the circumstances, determined that this amount offended the principle of proportionality. Accordingly, he reduced the amount of costs he would otherwise have awarded by $15,000, bringing the total costs to just under $100,000 (of which $30,000 was for the arbitration). This was an exercise of discretion by the motion judge. As was stated by Arbour J. in Hamilton and Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303 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.
We can see no error in principle by the motion judge nor can we say that the award is clearly wrong. We note that the settlement was for $42,500 and when 5% interest is added, the total recovery is $60,000. We also note that disbursements alone were $27,000. Accordingly, the appeal with respect to costs is dismissed.
costs of the appeal
Costs of the Appeal
24The respondent has been wholly successful and claims costs of $8,866.42 being $7,846.39 plus HST of $1,020.03. If successful, the appellant would have claimed $6,212.68 before HST. The difference between the two bills of cost is largely in respect of the billing rate. The costs claimed by the respondent are reasonable in respect of the time spent and the rate charged. Further, the costs claimed are within the range that would be reasonably expected by the appellant. They are therefore awarded at $8,800 all in.
___________________________ MOLLOY J.
I agree
R.S.J. SHAW
I agree
L.A. PATTILLO J.
Date of Reasons for Judgment: November 18, 2016
Date of Release: December 1, 2016
CITATION: Carr v. Modi, 2016 ONSC 7255
DIVISIONAL COURT FILE NO.: 249/16
DATE: 20161118
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
R.S.J. SHAW, MOLLOY and PATTILLO JJ.
BETWEEN:
PHILLIP CARR Plaintiff/Respondent
– and –
NILAM R. MODI and RAJENDRA MODI Defendants/Appellants
ORAL REASONS FOR JUDGMENT
MOLLOY J.
Date of Reasons for Judgment: November 18, 2016
Date of Release: December 1, 2016