Court File and Parties
COURT FILE NO.: 12-55682 DATE: July 16, 2019
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: Ilinca Calin and Ana Calin, Plaintiffs – and – Liviu Calin, Defendant
Counsel: Charles Gibson and Alexander Gibson, for plaintiffs Ronald Caza and Andrea Baldy, for the defendant
COSTS ENDORSEMENT
Justice S. Gomery
[1] Following a trial, I granted Ana and Ilinca Calin’s action against their father, Liviu Calin. [1] I concluded that Liviu had physically and emotionally abused his daughters during their childhood and adolescence, and that he was liable for damages for civil assault and battery, negligence and breach of fiduciary duty. I awarded Ilinca and Ana $50,000 and $35,000 respectively in general damages. I also awarded them $10,000 each for punitive damages.
[2] Ana and Ilinca now seek to recover costs of $395,203.58 inclusive of fees, disbursements and HST. Liviu contends that the plaintiffs should be awarded no costs or much less than they claim.
[3] Section 131(1) of the Courts of Justice Act gives courts discretion in deciding who should pay costs and in what amount. As a general rule, a winning party is entitled to at least partial indemnity costs. But costs should not be awarded in a mechanistic way. The court must determine what is fair and reasonable in the particular circumstances of the case. There may not be one clear winner and one clear loser. A host of factors set out in rule 57.01 may come into play in determining who should pay costs and how much they should pay. Fair and reasonable costs may bear little relationship to the successful litigant’s actual costs. Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3rd) 291 (C.A.).
[4] In their cost submissions, the parties have raised the following issues:
(i) Should Ana and Ilinca have started or continued their action under the simplified procedure provided in rule 76? (ii) Did any of the parties get a result more favourable than their rule 49 offer? (iii) Does the Victims’ Bill of Rights apply? (iv) What are the relevant rule 57.01 factors?
[5] Having considered all of these issues, I conclude that the defendant should pay costs of $100,000 to the plaintiffs, minus costs of $17,000 that the plaintiffs were ordered to pay in 2014, for a total of $83,000.
Analysis
(i) Should Ana and Ilinca have started or continued the action as a simplified procedure?
[6] Rule 76.13 applies where a plaintiff recovers $100,000 or less in monetary damages, exclusive of interest and costs, at trial. If the plaintiff took the action under the rules of simplified procedure, she shall not recover any costs unless the court is satisfied that it was reasonable for her to have proceeded under the ordinary rules. If more than one plaintiff has sued, they must each be awarded more than $100,000 to avoid the presumptive cost consequences in rule 76.13.
[7] In this case, Ilinca recovered a total of $60,000 in general and punitive damages, while Ana recovered $45,000. They must therefore satisfy me that it was reasonable for them to pursue this action under the ordinary, rather than the simplified, rules of procedure.
[8] The reasonability of the plaintiffs’ decision to proceed under the ordinary procedure must be assessed based on the situation when the trial began. Garisto v. Wang, 2008 ONCA 389, at para. 21; and Tremblay v Ottawa Police Services Board, 2017 ONSC 2754 (“Tremblay”), at para. 10.
[9] In some cases, full pre-trial discovery rights are necessary to enable the plaintiffs to pursue their case, and a full oral hearing is needed “to gain a better appreciation of the dynamics at play”. Tremblay, at para. 10. Long trials involving complex expert evidence and significant credibility issues may not be suitable for a hearing under the simplified rules. Gaukel v. Thukral, at para. 18.
[10] The plaintiffs alleged physical and psychological abuse lasting over fifteen years. It would have been unrealistic for them to try to explore all of the allegations in the shortened discovery process available under rule 76. Credibility played a central role at trial. In deciding what testimony to accept, the court benefitted from hearing evidence in chief directly from the key witnesses, rather than trying to absorb it through lengthy affidavits. The court also had to assess the evidence of two expert psychiatrists who examined the plaintiffs and who testified about the nature and cause of their alleged depression, anxiety and PTSD.
[11] The plaintiffs’ failure to obtain the range of damages that they wanted does not necessarily mean that they should have proceeded under rule 76. Had their claims for loss of competitive advantage been accepted, they would have recovered damages well above $100,000 each. The determination of these claims was based largely on an appreciation of the plaintiffs’ credibility, which was not tested until trial. In my view, the plaintiffs’ loss of income claims and their evaluation of general and punitive damages were unrealistic. This will be relevant to my review of rule 57.01 factors. I do not however think that the plaintiffs’ claim for damages over the rule 76 threshold was far-fetched or that, more generally, this was the kind of case that would be suitable for a summary trial.
[12] I agree that, in the circumstances, it was reasonable for the plaintiffs to have commenced this action under the ordinary procedure. As a result, the amount of damages awarded does not automatically disentitle them to costs.
(ii) Did any of the parties beat a valid rule 49 offer?
[13] Rule 49.10 applies where a party made a valid offer to settle at least seven days before the trial begins, and the offer remained in effect until trial, because the offering party did not withdraw it and it was not accepted by the other party. If the party who made the offer obtained a judgment at trial as favourable or more favourable than the terms of the offer, they are presumptively entitled to certain cost consequences.
[14] None of the offers to settle by the parties met the technical requirements of rule 49.10. They may still however be relevant to the determination of costs under rule 57.01.
(iv) Does the Victims’ Bill of Rights apply?
[15] Ana and Ilinca argue that they are entitled to their costs on a substantial indemnity basis under the Victims’ Bill of Rights, 1995, SO 1995, c 6. The Bill’s preamble states that:
The people of Ontario believe that victims of crime, who have suffered harm and whose rights and security have been violated by crime, should be treated with compassion and fairness. The people of Ontario further believe that the justice system should operate in a manner that does not increase the suffering of victims of crime and that does not discourage victims of crime from participating in the justice process.
[16] Section 4(6) of the Bill provides that “[a] judge who makes an order for costs in favour of a victim shall make the order on a solicitor and client basis, unless the judge considers that to do so would not be in the interest of justice”.
[17] Under section 1 of the Bill, a victim is defined as “a person who, as a result of the commission of a crime by another, suffers emotional or physical harm, loss of or damage to property or economic harm”. A crime is defined as an offence under the Criminal Code.
[18] In my view, section 4(6) of the Bill does not require me to make a cost award in the plaintiffs’ favour. The same acts founding a civil lawsuit for battery may also form the basis for a criminal assault charge. Ana and Ilinca did, in fact, file a police complaint against Liviu on March 27, 2005. But they declined to press charges. As a result, Liviu has not been charged with or found guilty for any offence under the Criminal Code.
[19] Ana and Ilinca proved some allegations on a civil standard of balance of probabilities. They made many other allegations against the defendant that I rejected. There has been no finding that a crime was committed.
[20] As noted in Macleod v. Marshall, 2018 ONSC 5100, judges dealing with the Bill in the context of abuse claims have debated whether section 4(6) imposes mandatory cost consequences in cases where the defendant has not been charged with or convicted of a crime. The analysis in Milne v. Betts, 2012 ONSC 5565 (“Milne”) is helpful. In that case, two women claimed that their uncle had sexually abused them when they were children. The uncle did not defend the action and they obtained a default judgment. Stevenson J. held that, although there had been no criminal trial or conviction in the case, “the same principles underlying the Victims' Bill of Rights should apply here in that [the plaintiffs] should be treated with compassion and fairness”. He concluded that it would be unfair, in all of the circumstances, to make them bear the costs of the litigation.
[21] I conclude, like Stevenson J. in Milne, that the principles of the Bill should inform my decision on costs. The nature of the conduct giving rise to Liviu’s liability is a relevant factor to consider. I do not however find that section 4(6) triggers mandatory cost consequences in the plaintiffs’ favour. The plaintiffs in a civil battery claim are not automatically entitled to recover substantial indemnity costs, which remain the exception rather than the rule. If I conclude that Ana and Ilinca are entitled to costs, the costs award should take into account all relevant factors.
(iii) What are the relevant rule 57.01 factors?
[22] I will review each of the rule 57.01(1) factors that the parties have raised or which I consider relevant.
The principle of indemnity
[23] Liviu contends that Ana and Ilinca should not be indemnified for their costs. Although their action was granted, many of their allegations were rejected. They were not awarded any damages for loss of income and got only an insignificant percentage of the general and punitive damages they sought. In my decision on the action, I expressed significant concerns about the plaintiffs’ credibility and the reliability of their evidence.
[24] The shortfall between the plaintiffs’ claim and what they achieved, and their decision to pursue some claims that were rejected, are factors relevant to costs. I will deal with this further below. I do not however accept the defendant’s argument that the rejection of some of Ana and Ilinca’s claims, or even the majority of them, disentitles them to any costs at all. I also reject the suggestion that their claim to costs is fundamentally undermined by their inability to prove events that took place up to thirty years ago. I did not conclude that the plaintiffs consciously lied to the court. I also had issues with Liviu’s credibility.
The level of effort and experience of the plaintiffs’ lawyers
[25] In my view, given what was at issue, the plaintiffs’ lawyers had appropriate experience and exerted a reasonable level of effort.
[26] The lawsuit began in 2012 and went to trial six and a half years later. Each of the parties produced thousands of documents. Examinations for discoveries lasted several days. The plaintiffs retained medical and accounting experts. The trial lasted eighteen days. The court heard testimony from seventeen witnesses. Counsel had to contend with objections based on hearsay and other grounds over the course of the trial.
[27] The plaintiffs’ legal team was led by senior counsel, Charles Gibson. It included Ian Houle, another lawyer with over fifteen years of experience, various junior lawyers and law students. Their hourly rates were consistent with their years of call and the local market. The plaintiffs’ legal team did not include any law clerks or paralegals for the purpose of document review. This work was instead done by Richard Léger, a lawyer with a 2012 call. This staffing decision arguably increased the plaintiffs’ costs. On the other hand, Mr. Léger was also involved in many other aspects of the work, and his knowledge he gained of the evidence through document review avoided a duplication of effort. So I cannot conclude that the staffing was inappropriate.
[28] At trial, Mr. Gibson was assisted by his colleague Alexander Gibson. Given the extent of the evidence and the number of witnesses, it was reasonable to have two counsel attend the hearing. The defendant was also represented by two lawyers at trial.
The amount of costs that the defendant could reasonably expect to pay
[29] The plaintiffs’ costs outline shows that their legal team recorded $332,125.50 in fees and $26,309.48 in disbursements. With HST, total fees and disbursements totalled $404,585.93.
[30] The defendant did not submit a costs outline, so I do not know whether this amount is consistent with what he had to pay his own lawyers. This is often a good gauge of a party’s expectations of what they would expect to pay in costs. In the absence of this information, I infer that the defendant’s costs were similar to the plaintiffs’ costs.
[31] The plaintiffs’ counsel seeks costs on a substantial indemnity basis. The costs outline does not state what substantial indemnity rate was used but, by my calculation, it was 97.5% of actual fees. This is effectively full recovery as opposed to substantial indemnity. In my view, an appropriate substantial indemnity rate is 80% to 85% of the actual fees. Factoring in HST, the plaintiffs’ maximum recovery would therefore be $300,000 to $319,000 for fees plus $29,284 for disbursements, for a total range of $329,000 to $348,000.
[32] The plaintiffs propose a partial indemnity rate of 65%. This is an appropriate rate. Fees awarded on a partial indemnity rate would amount to $244,000, for total costs of $272,230.49 with disbursements.
The amount claimed and the amount recovered
[33] At rule 57.01(1)(a), one of the factors identified as potentially relevant to costs is “the amount claimed and the amount recovered in a proceeding”. A shortfall between these two amounts may indicate that the plaintiff overestimated the overall value of their claim or pursued clearly meritless claims. A cost award should not be wholly disproportionate to the amounts recovered. Elbakhiet v. Palmer, 2014 ONCA 544 (“Elbakhiet”), at para. 36.
[34] In their amended statement of claim, the plaintiffs claimed a total of $10,150,000 in damages. They were awarded a total of $105,000, or about 1% of this amount.
[35] Ana and Ilinca each sought $750,000 in general damages. They reduced this claim to $125,000 each at trial, and were awarded $35,000 and $50,000 respectively. They sought $1,000,000 each in punitive damages, and were each awarded $10,000. I rejected their claims for millions of dollars for past and future loss of income as well as their claim, in the alternative, for $300,000 apiece for loss of competitive advantage. They abandoned their claims for aggravated damages and cost of future care at trial.
[36] Proportionality is an even greater concern in this case because the shortfall in the plaintiffs’ recovery was predictable. By abandoning and reducing various claims at trial, the plaintiffs recognized that they had no basis for a significant amount of the damages they had claimed. But the amounts they continued to claim at trial remained unrealistic.
[37] First, Ana and Ilinca sought general damages outside the range available for civil battery in a case like theirs. As mentioned in my decision, even in a case involving the daily torture of children causing serious physical injuries and permanent scarring and disabilities, the plaintiffs received only $100,000 apiece. Cho v. Cho (2003), 36 R.F.L. (5th) 79 (Ont. S.C.). A victim of domestic violence typically receives modest damages unless she has a permanent injury. S. (L.N.) v. K. (W.M.), 1999 ABQB 478, 246 A.R. 60; Wandich v. Viele (2002), 24 R.F.L. (5th) 427 (Ont. S.C.); Van Dusen v. Van Dusen, 2010 ONSC 220, [2010] O.J. No. 313. Neither Ana nor Ilinca led any evidence of any physical injury, at any time, that required medical attention. The physical and psychological effects of Liviu’s abuse were not trivial, but an award of $125,000 each was unrealistic.
[38] Second, even if I had accepted it over the evidence presented by the defendant, the plaintiffs’ expert evidence did not establish that Liviu’s abuse caused their current psychological conditions. In his written report, their expert Dr. Jetly stated that it was “plausible” that their PTSD and major depressive disorders were caused by the defendant’s battery. He repeated this opinion at trial. This evidence was, on its face, insufficient to satisfy the civil standard of proof on a balance of probabilities.
[39] The plaintiffs’ evidence on their loss of income claim similarly fell short. They did not call any evidence from a vocational expert. Dr. Jetly admitted that it was impossible to predict whether Ana and Ilinca would have had more education and professional success in the absence of their psychological conditions. Their actuarial evidence assumed that they could only claim 40% of the lost income they claimed.
[40] The disparity between the amount claimed by the plaintiffs and the amount recovered has a significant impact on the determination of reasonable costs in this case.
The complexity of the proceeding
[41] The case did not present particularly complex legal issues. The parties had to deal, however, with events that spanned decades and a significant volume of evidence, including many handwritten records in English, French and Romanian.
The importance of the issues
[42] The issues did not have any wider importance. The outcome of the lawsuit was, however, vitally important to the parties. Ana and Ilinca believed that they had been subject to abuse throughout their childhood. They sought vindication. Liviu denied their allegations. His personal reputation was at stake.
Conduct which unnecessarily lengthened the proceedings
[43] The plaintiffs’ conduct unnecessarily lengthened the proceedings.
[44] I have already referred to the plaintiffs’ pursuit of claims despite tepid or nonexistent expert evidence to support them. The evidence of Dr. Jetly, Dr. Bourget and Guy Martel consumed two and a half days of trial time. Ana and Ilinca also testified at length about facts supporting their loss of income claims.
[45] Ana and Ilinca also chose to pursue allegations of physical abuse by their father during their early childhood in Romania. Evidence about this period consumed many hours, if not days, of court time. Proving these allegations was inherently challenging, given the passage of time and the fallibility of childhood memories. I concluded that none of the plaintiffs’ allegations of abuse in Romania has been proved.
[46] The plaintiffs argue that the defendant also lengthened the proceedings unnecessarily, by refusing to admit to the allegations of physical abuse. I do not accept this argument. First of all, the defendant did acknowledge spanking the plaintiffs during the confrontation that led them to leave the Calin house in March 2005. Second, the defendant had the right to require the plaintiffs to prove their case. I accepted significant parts of his evidence. I concluded that Ana and Ilinca significantly exaggerated the frequency, extent and duration of their father’s violence towards them. I also concluded that he did not isolate them from their peers or deprive them of any chance to experience a normal adolescence, as they claimed.
Any other relevant matter
[47] Any written settlement offer may be taken into account in making a cost award, even if it did not meet the technical requirements set out in rule 49.10. A party may have made an offer that came close to beating the result that the other party achieved at trial, or which was offered just outside the time limits to qualify as a valid rule 49.10 offer. If a party has complied with the spirit if not the letter of rule 49, their offer ought to be given “considerable weight”. Elbakhiet, at para. 33.
[48] In their submissions, the plaintiffs mention a 2018 offer in which they apparently proposed payment by Liviu of a total of $300,000 inclusive of all damages, costs and disbursements. Their counsel has not however provided me with a copy of this offer, so I cannot analyze its potential impact either for the purpose of rule 49.10 or rule 57.
[49] Liviu made a written offer to settle for $75,000 in April 2018. It was not a valid rule 49.10 offer since it only remained open for acceptance for ten days. Liviu served a further written offer to settle on the plaintiffs on December 31, 2018. He offered to pay them $85,000 as well as their out of pocket disbursements. He did not offer to pay their legal costs, but waived any claim for interest on interim costs of $17,000 that the plaintiffs had been ordered to pay in 2014. The plaintiffs did not accept this offer, and Liviu withdrew it prior to trial.
[50] The plaintiffs made a counter-offer on January 2, 2019. They were ready to accept $125,000 plus disbursements of approximately $20,000. Apparently this counter-offer was withdrawn when Liviu withdrew his offer.
[51] The defendant argues that his December 31, 2018 offer, if accepted, would have put the plaintiffs in almost the same position they achieved at trial. They would have received a settlement of $85,000 plus compensation for their disbursements, which totaled about $19,247 at the time, putting their total recovery at about $104,000.
[52] This analysis ignores the impact of costs on the plaintiffs’ recovery. The December 2018 offer required the plaintiffs to pay an outstanding cost award of $17,000 and to pay all of their own costs to the date of acceptance of the offer. Based on the costs outline provided by the plaintiffs’ counsel, they incurred fees of close to $54,000 before starting any trial preparation. If the plaintiffs had accepted the defendants’ offer, they would have netted only $33,000.
[53] The plaintiffs’ counter-offer of $125,000 plus disbursement came closer to the result at trial. Since the defendant would have waived his right to recover the outstanding $17,000 cost award, the total cost of settlement would have been $142,000. This is more than 25% higher than the damages they were awarded at trial, but it was nonetheless a meaningful settlement offer. Its impact is mitigated because it was withdrawn prior to trial.
Conclusion
[54] Taking all of the relevant rule 57 factors into account, I conclude that the costs sought by the plaintiffs are disproportionately high and therefore unreasonable.
[55] In Elbakhiet, a motor vehicle case, the plaintiff claimed damages of almost $2 million but was awarded $144,013.07 by a jury. The trial judge ordered the defendants to pay her partial indemnity costs of over $578,000. The Court of Appeal reduced the costs to $100,000. It held that, having regard to rule 57 factors, this amount was fair and reasonable, and respected the need for proportionality between the costs of litigation and the award.
[56] I likewise conclude in this case that costs of $100,000 are appropriate. The plaintiffs’ action was granted, but they were awarded costs that were a very small percentage of what they sought, even taking into account the claims they abandoned at trial. While I reject the defendant’s argument that they should have started the action under the rules of simplified procedure, I agree that they pursued claims at trial that had no reasonable prospect of success, notably the claims for past and future income loss and the claims relating to incidents in Romania. The plaintiffs’ pursuit of these claims inevitably increased both pre-trial and trial costs. The costs of Mr. Martel’s expert evidence could have been avoided altogether.
[57] The result achieved by the plaintiffs is a little less than the damages granted in Elbakhiet, but I give some weight to their attempt to settle the action before trial.
[58] Since there is an outstanding cost order against the plaintiffs for $17,000, I order the defendant to pay costs of $83,000.
Justice Sally Gomery Released: July 16, 2019