Court File and Parties
COURT FILE NO.: CV-05-010263-00 DATE: 2016 06 22 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Paul Dimopoulos, Plaintiff - AND - Imad Tafaso Mustafa and Nizar Suleiman, Suncor Energy Products Inc. and Certas Direct Insurance Company and Lowell MacKay, Defendants
BEFORE: Tzimas J.
COUNSEL: Rosemary Book, Counsel, for the Plaintiff Nicholas Mester, Counsel, for the Defendant, Nizar Suleiman
HEARD: May 3, 2016
Endorsement
[1] A half-day hearing was held in this matter to address a number of issues raised by the defendant, Nizar Suleiman, following my decision on the threshold issue, which I released on January 19, 2016. The court also heard submissions on costs.
[2] The issues raised by the defendant were the following:
- What is the appropriate statutory deductible that is applicable to the Plaintiff’s award for general damages?
- What is the applicable rate of pre-judgment interest on the award of general damages?
- Should the award for future chiropractic care be deducted from the Plaintiff’s accident benefits settlement?
- Should the Court award a remedial penalty against the defendant insurer in addition to the costs to be awarded to the plaintiff for its conduct throughout the action and for its approach to mediation?
- What costs should be awarded to the plaintiff given his success at trial?
[3] I have reviewed and considered the parties submissions and I propose to address each of the issues separately below.
1. What is the appropriate deductible that is applicable to the Plaintiff’s award for general damages?
[4] The appropriate deductible that is applicable to the Plaintiff’s award for damages is $30,000. The reason for this is that the jury made its award in this matter on May 26, 2015, prior to the statutory amendment of August 1, 2015. According to the applicable legislation, the deductible attaches to an award for non-pecuniary damages. The threshold motion is not about making an award. It considers whether a claimant’s injuries meet the statutory threshold.
[5] The jury in this case awarded the plaintiff $37,000 for general damages and $28,800 for future chiropractic care on May 26, 2015. The court’s decision on the threshold issue was released on January 19, 2016. The amendments to the statutory deductible intervened in this period. Until August 1, 2015, the statutory deductible for incidents that occurred on or after October 1, 2003 was $30,000. On August 1, 2015, section 5.1(1) of the Regulations under the Insurance Act, R.S.O. 1990, c. I.8 increased the deducible to $36,540.00, with a provision that the deductible would be revised further every January. The incident that was the subject of this litigation occurred on October 18, 2003.
[6] In light of this chronology, the parties disagree on the applicable deductible to the facts of this case. The disagreement arises because the court’s decision on the threshold motion was released after August 1, 2015.
[7] The plaintiff argued that the applicable deductible in this case should be $30,000. That would mean that the plaintiff would be entitled to judgment for general damages in the amount of $7,000 plus applicable interest. The plaintiff based its argument on the fact that the jury reached its verdict and made its award on May 26, 2015, prior to the statutory deductible increase.
[8] The plaintiff also argued that the relevant amendment is silent on whether or not the increased deductible is to be applied retrospectively. Counsel highlighted the principles of statutory interpretation that as a general rule, statutes do not apply retrospectively unless the legislative intent for retrospective application is express or required by implication. The plaintiff submitted further that established or existing rights should not be taken away by enactments that reach back in time and that have a retrospective effect.
[9] In support of this submission, the plaintiff referred to Cobb v. Long State, 2015 ONSC 6799, and Vickers v. Palacious, 2015 ONSC 7647. Counsel sought to distinguish these cases from the current situation by underscoring the fact that in this case the award was made by the jury before the amendment of August 1, 2015.
[10] The defendant argued that the amendment to the applicable deductible is procedural in nature and therefore has a retrospective application. He argued that notwithstanding the jury’s award, the action remained pending until the court’s release of its decision on the threshold motion. Since the release of that decision post-dated the amendment to the deductible, the amended deductible should apply retrospectively to the original award such that the applicable deductible would be $36,540.00.
[11] I accept the plaintiff’s submission that this case is to be distinguished from all the other cases that were referred to by the parties, some of which are under further review, on the basis that the jury made its award prior to August 1, 2015. In all of the examples that were put before the court, what existed were causes of action but the trials had not occurred and there were no awards. In light of this distinction, I do not find it necessary to engage in a consideration of whether the amendment is procedural or substantive and the implications of a conclusion on that point.
[12] The question comes down to a consideration of whether the deductible attaches to the court’s determination on the threshold or to the jury’s award. The answer to that question is found in the legislation. Section 267.5(7)(3)(i)(B) of the Insurance Act, R.S.O. 1990, c. I.8, holds that the court shall determine the amount of damages for non-pecuniary loss to be awarded against the protected defendant. That award may be reduced by the amount prescribed by regulation, which in accordance with Ontario Regulation 461/96, s.5.1(1) set the deductible at $30,000.
[13] In contrast to this direct connection between the legislation and the regulation, there is no similar connection between the determination of the award and the threshold test. The threshold analysis is not concerned with the determination of the appropriate award. Rather, it seeks to determine whether a claimant meets the criteria of a finding that he or she suffers from a serious impairment of an important physical, mental, or psychological function on the basis of certain defined criteria.
[14] In light of this legislative and regulatory framework, since the jury made its award on May 26, 2015, the deductible to be applied to the award is the one that applied on that date and not any subsequent amendment.
2. What is the applicable rate of prejudgment interest on the award of general damages?
[15] In my review of this issue, I conclude that the plaintiff is entitled to prejudgment interest at a rate of 5 per cent per year. In coming to this conclusion I accept the plaintiff’s analysis and reject the defendant’s submission that I follow the analysis in Cirillo v. Rizzo, 2015 ONSC 2440.
[16] As with the subject of the change in deductibles, changes were made to the legislation as it relates to the determination of prejudgment interest.
[17] Section 128(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 creates a presumptive entitlement to pre-judgment interest. Prior to January 2015, the prejudgment interest to accrue on damages for non-pecuniary losses in a personal injury action was governed by Rule 53.01 of the Rules of Civil Procedure, which set the rate of interest at 5 per cent per year. On January 1, 2015, the Insurance Act, R.S.O. c. I.8 was amended to include s.258.3 (8.1). That amendment had the effect of eliminating the application of Rule 53.01 for non-pecuniary damages. The defendant submitted that the amendment should be applied retrospectively, such that the prejudgment rate would then be calculated in accordance with s. 128(1) of the Courts of Justice Act, resulting in an interest rate of 2.5 per cent. The plaintiff disagreed and said that Rule 53.01 ought to govern.
[18] The underlying legal issue is whether the determination of prejudgment interest is procedural or substantive in nature, as that would determine whether or not the amendment in issue should apply retrospectively or not. In Cirillo, a 2015 decision of the Superior Court, prejudgment interest was held to be procedural in nature. However, the Court of Appeal of Ontario, in Somers v. Fournier, 60 O.R. (3d) 255, at paras. 30-31 had already concluded that prejudgment interest is a matter of substantive law, not procedural law. As such, absent an express reference in the legislation, the amendment could not have any retrospective application.
[19] I find the Ontario Court of Appeal’s decision in Somers to be binding on this court. As suggested by Justice Roccamo, in El-Khodr v. Lackie, 2015 ONSC 4037 at 47, in light of the Court of Appeal’s pronouncement in Somers, I fail to see how s. 258.3(8.1) of the Insurance Act, can be anything but substantive. In my review of Cirillo, I see nothing to distinguish it from Somers to allow for a reconsideration of this issue. See also, Carr v. Modi, 2016 ONSC 1300 at paras. 19 and 20 and Corbett v. Odorico, 2016 ONSC 1964. Accordingly, the applicable rate of interest in this case is 5 per cent.
3. Should the award for future chiropractic care be deducted from the plaintiff’s accident benefits settlement?
[20] Having considered the submissions of the parties I disagree with the defendant’s contention that the future care costs awarded to the plaintiff for chiropractic care costs be deducted from his accident benefits settlement.
[21] I recognize that section 267(1) of the Insurance Act, provides for a reduction of a damage award for “all payments that the person has received or that were or are available for statutory accident benefits, and by the present value of any statutory accident benefits to which the person is entitled.” But section 20(a) of the Statutory Benefits Schedule, O.Reg. 34/10 provides that the duration of an accident benefits claim is ten years. In other words, a claimant is entitled to benefits to a maximum of ten years, see Bannon v. McNeely, [1998] O.J. No. 1673 at page 23.
[22] In this instance, although the plaintiff settled his accident benefits claim on August 7, 2012, his entitlement to accident benefits would have ended in any event on October 17, 2013. It cannot be said, as defence counsel suggested, that the plaintiff released the insurance company for more than he could ever be entitled to claim. The jury’s award is for future chiropractic care costs and rests outside of the ten-year period anticipated by section 20(a) of the Statutory Accident Benefits Schedule. There is no risk of any double-recovery or over-compensation, which is the policy consideration underlying this issue. On the evidence before this court, the contention by the defense that the plaintiff will recover more damages than he has suffered is without foundation.
4. Should the Court award a remedial penalty against the defendant insurer in addition to the costs to be awarded to the plaintiff?
[23] Despite the astonishingly aggressive opposition by the defendant to the plaintiff’s claim, even down to this post-judgment period, and an obvious attempt to reduce the plaintiff’s award to zero, I am not inclined to award a remedial penalty against the defendant insurer.
[24] The plaintiff submitted that the basis for such a penalty rests with the defendant’s failure to mediate and to attempt to settle the plaintiff’s claim as expeditiously as possible. Counsel highlighted sections 258.5 (1) and (5) and 258.6(1) and (2) of the Insurance Act in support of her position. These sections require the court to consider the defendant’s failure to comply with these requirements when it awards costs following the trial. The sections have also been held by the Ontario Court of Appeal to reflect a “clear expression of the Legislature’s intention to promote the early and expeditions settlement of claims arising out of motor vehicle accidents, see Ross v. Bacchus, 2015 ONCA 41, at para. 41.
[25] Insofar as the requirements of s.258.5 (1) and (5) are concerned, the plaintiff argued that the defendant failed to attempt to settle the claim as expeditiously as possible. Instead, it advised the plaintiff that his claim would not meet threshold and that “Aviva Canada is committed to defending non-threshold claims and will not entertain nuisance value offers.” That perspective defined the defendant’s approach to this claim.
[26] The plaintiff further submitted that the defendant was not willing to participate in the mediation in a meaningful way. To demonstrate the degree to which the defendant’s determination to avoid any meaningful participation, the plaintiff asked this court to lift the cloak of privilege over the mediation process and the defendant’s mediation brief as it would be the only way that the court could appreciate the extent of the defendant’s failure to comply with section 258.6 of the Insurance Act. Especially important to the plaintiff on this point was the defendant’s conclusion in its mediation brief that stated: “it is the defendant’s position that the plaintiff will be shut out at trial and will be liable for the defendant’s costs. For the purposes of mediation, this defendant is only willing to negotiation the quantum of costs payable to this defendant.”
[27] In further support of the lifting of the privilege to the defendant’s mediation brief, plaintiff’s counsel argued that the purpose of the communication, i.e., the mediation brief, must be to attempt to effect a settlement. “Where that is not the bona fide or genuine purpose of the communications, the privilege does not protect the communications”, see Bercovitch v. Resnick, 2011 ONSC 5083, at p.29. See also East Guardian SPC v. Mazur, 2014 ONSC 6403 at paras. 35-38.
[28] The defendant strongly objected to this submission. Counsel argued that the defendant was entitled to advance a vigorous defense and that the applicable sections did not take that right away. Counsel also strongly objected to the lifting of the privilege on the mediation process, including the brief. In support of the argument that the mediation process was privileged, counsel referred to the four conditions contained in Wigmore on Evidence, that should be considered to determine whether communications are privileged or not, see Slavutych v. Baker (1975). In addition, counsel also sought to rely on the proposition that the ability of parties to engage in full and frank disclosure is fundamental to a mediation process if it is to increase the likelihood of a settlement. Absent the reassurance that such an exchange would remain confidential, the exchanges would be less than candid.
[29] The Court suggested to defense counsel that the court’s ability to admit the mediation brief may actually be something that would assist the Court in its evaluation of the defendant’s conduct in the mediation process and gave counsel time to obtain instructions on that particular point. Ultimately, counsel confirmed his original position and also confirmed that at no time did the defendant make any offer to settle to the plaintiff.
[30] In my assessment of this issue, I begin with my observation that insurers, like any defendant, are entitled to take a case to trial. If the defendant loses, it will be subject to a damages award and substantial indemnity costs. That is a risk that the defendant is entitled to take. I also note that an insurer’s statement that it is not prepared to settle a claim cannot necessarily be equated with an insurer’s failure to “attempt to settle the claim as expeditiously as possible.”
[31] On the subject of mediation, where an insurer actually participates in mediation, its indication that it is not prepared to settle may not be fatal to the requirements of the Insurance Act, see Ross v. Bacchus, 2015 ONCA 347. I also agree with the Ontario Court of Appeal’s observation that a clear statement of the insurer’s position in the mediation, even if it is a strong one, does not preclude meaningful participation in the mediation, see Ross at para. 46.
[32] In this instance, by suggesting that the defendant’s mediation brief failed to attempt to effect a settlement, the plaintiff put into question the bona fides of the mediation process. In light of such an allegation, even though the preservation of confidentiality of the mediation ought to be the court’s point of departure, in circumstances where the only way to evaluate the allegation is to look behind the process then it is appropriate to admit the evidence in question. I echo the concerns outlined in Marshall v. Ensil Canada Ltd. at para.22 that a mediation brief and evidence concerning the mediation ought to be admitted only “in rare cases where the importance of considering the evidence outweighs the importance of preserving confidentiality.” This case reflects such a rare case, and in any event the request is only with respect to the mediation brief and not the full contents of the mediation.
[33] Turning then to the defendant’s mediation brief, when read in isolation, its statement at the conclusion of the brief that the plaintiff will be shut out of the trial and will be liable for the defendant’s costs, with the further indication that it is only willing to negotiate the quantum of costs payable by the plaintiff to the defendant, is bold, aggressive, and appears to eliminate the prospect of any settlement. It is somewhat ironic that the defendant would advocate in favour of privilege and the virtues of full and frank disclosure as a means of promoting settlement, given its overall approach in this case. If there were nothing else in the defendant’s brief, it would be easy for the court to conclude that the defendant’s stance was akin to a failure to participate in mediation in a bona fides manner. However, the defendant’s comments were not made in isolation. In its mediation brief, the defendant reviewed its assessment of the plaintiff’s various claims in substantial detail and explained why it believed that the plaintiff’s evidence was weak.
[34] Whether or not the court ultimately agreed with the defendant’s assessment is immaterial to the court’s assessment of the defendant’s bona fides approach to the mediation. The mediation brief reflected a meaningful participation in the process by the defendant. Even if a settlement of the claim was not forthcoming, it enabled the plaintiff to obtain an understanding of the defendant’s position and the reasons for that position. That outcome, while obviously not optimal for the plaintiff, was nonetheless meaningful as it allowed the plaintiff to review his risks and trial strategy and approach. The defendant came to the mediation and explained the reasons for which it concluded that the claim would not succeed. Accordingly, I am unable to agree with the plaintiff’s contention that the defendant’s conduct in the mediation was contrary to the requirements of s.258.6 of the Insurance Act, such that it ought to attract punitive cost sanctions against the defendant.
5. What costs should be awarded to the plaintiff given his success at trial?
[35] I find that an appropriate cost award in all the circumstances of this case is $106,906.90. I come to this conclusion having regard for the parties’ respective submissions and the rules that govern the awarding of costs generally.
[36] The plaintiff’s counsel sought costs of $106,906.90 representing its costs of the whole litigation and inclusive of disbursements and HST, as calculated on a partial indemnity basis, and in accordance with Rule 57 of the Rules of Civil Procedure. The plaintiff also sought additional costs of $50,000 as a penalty for the approach the defendant took to settlement and mediation throughout the action. Together, that results in a claim for costs of $156,906.90.
[37] Leaving aside the claim for a penalty of $50,000, which I addressed in the previous section of this endorsement, the costs claimed reflect the time spent for the preparation of trial, the response to the defendant’s threshold motion and the work undertaken in the twelve years between the date when the accident occurred and the jury’s award. In that time period counsel drafted pleadings, attended on discoveries and a summary judgment motion, reviewed extensive medical records, attended a pre-trial, retained orthopaedic and functional abilities experts to prepare medical and legal reports and of course prepared for and attended a ten day trial. In this time period, counsel noted that the defendant did not make any offer to settle and instead indicated that it would be seeking its own costs from the plaintiff.
[38] The defendant objected to the quantum claimed as excessive. In his factum he put before the court the example of a fifteen day trial where the costs awarded in favour of the defendants came to approximately $70,000, see Jugmohan v. Royle, 2015 ONSC 4844. Counsel did not take issue with any particular aspects of the plaintiff’s Bill of Costs.
[39] I begin with my recognition that according to section 131(1) of the Courts of Justice Act costs are in the absolute discretion of the court. I then note Rule 57.01 of the Rules of Civil Procedure that identifies the factors a court may consider when it exercises its discretion to award costs.
[40] The principle that costs follow the event should not be departed from unless the successful party has engaged in misconduct, or oppressive or vexatious conduct, see Saleh v. Nebel, 2015 ONSC 3400. For an eight-day trial, the judge in that case found costs of $100,000 to be reasonable. I note parenthetically that counsel for Nebel was the same counsel for the defendant in this case, yet it was the plaintiff’s counsel who brought the case to the court’s attention. Since a core component of the defendant’s submission on costs was to attempt a comparative analysis of outcomes in other cases, Mr. Nester should have been the one to raise the Saleh case as an additional example for the court’s consideration. His failure to refer to this case did not appear to this court to be accidental.
[41] Turning to my review of the plaintiff’s Bill of Costs, and having regard for the demands of the ten-day trial, I find the costs claimed to be reasonable. They cover a twelve-year period in addition to the ten-day trial and they include disbursements of $34,020.49. I do not see any duplication in effort or counsel time. I also note that the billing rates are modest and reasonable.
Conclusion
[42] To sum up the court’s decision on the various issues discussed above, the court orders:
a) the statutory deductible is $30,000; b) the rate of prejudgment interest is 5 per cent per annum from the date of notice; c) the award for future chiropractic care is not deductible from the plaintiff’s accident benefits settlement; and d) costs are awarded in favour of the plaintiff in the sum of $106,906.90, payable within sixty days from the date of this order.
[43] Insofar as costs of this hearing are concerned, it is appropriate that the plaintiff be awarded his costs as he has been substantially successful, with the exception of the penalty issue. While I urge the parties to come to an agreement on the costs of this particular aspect of the case, should they be unable to do so, then the plaintiff’s counsel shall have until June 30 to file written submissions and the defendant shall have until July 8 to respond. Such submissions are to be limited to two pages double-spaced as well as a Bill of Costs from the plaintiff’s counsel.
Tzimas J. Date: June 22, 2016