DATE: 20050221

DOCKET: C42505

COURT OF APPEAL FOR ONTARIO

RE:

CORNELIS SPEK, IDSCHE SPEK, ANDREW SPEK and JUDITH SPEK (Plaintiffs (Appellants)) – and – HENDRIK VAN ALTEN and HYNDMAN TRANSPORT [1972] LIMITED (Defendants (Respondents))

HYNDMAN TRANSPORT [1972] LIMITED (Plaintiff (Respondent)) – and – CORNELIS SPEK, Litigation Administrator of the Estate of Steven Spek (Defendant (Appellant))

BEFORE:

FELDMAN, CRONK and LAFORME JJ.A.

COUNSEL:

Richard C. Halpern and Aleks Mladenovic

for the appellant

Robert B. Ledgley

for the respondent

HEARD & RELEASED ORALLY:

February 16, 2005

On appeal from the costs order of Justice Johanne Morissette of the Superior Court of Justice dated May 25, 2004.

E N D O R S E M E N T

[1] The appellants appeal the costs disposition made by the trial judge.

[2] The trial proceeded only on the issue of liability, the parties having agreed on the quantum of damages at $125,000. Following the trial, the trial judge found the defendants liable to the plaintiffs and awarded the agreed upon $125,000 damages.

[3] Prior to reaching the agreement as to the quantum of damages, the plaintiffs had served an offer to settle the case for $85,100. When considering costs, the trial judge concluded that because the plaintiffs failed to specify that their $85,100 offer to settle the case remained open for acceptance when the parties agreed to the quantum of damages, the agreement on the quantum of damages “invalidated” that initial offer. The trial judge, therefore, concluded that the costs consequences of rule 49.10 of the Rules of Civil Procedure were not applicable and ordered partial indemnity costs throughout.

[4] In our view, the trial judge erred in that conclusion. There were no words in the plaintiffs’ letter accepting the offer to settle the quantum of damages that indicated that their original offer to settle the entire case for $85,100 was withdrawn or had expired. Furthermore, in that letter, counsel for the plaintiffs specifically noted that the issue of costs remained outstanding.

[5] The respondent argues on the appeal that, as a matter of principle, where parties have agreed on the quantum of damages no pre-existing offer under rule 49.10 would continue to operate because the quantum of damages was no longer in dispute. We reject this argument. Rule 49.10 was intended to impose costs consequences on the decision of either side to proceed to trial in the face of an existing offer.

[6] Accordingly, we would allow the appeal on the costs issue and order partial indemnity costs to the date of the $85,100 offer and substantial indemnity costs thereafter. The agreed damages in this case were $125,000. The appellants’ costs bill on the substantial indemnity scale is $122,000 net of a claimed premium i.e. the costs claimed almost equal the value of the action. In light of those circumstances, we would refer the determination of the amount of costs back to the trial judge to be determined in accordance with the recent jurisprudence from this court that the basis for an order of costs is to be what is a fair and reasonable amount that should be paid by the losing party in the circumstances of the particular case.

[7] The appellants also appeal the trial judge’s refusal to award a premium to them to compensate for the risk of the trial. The issue of a premium is part of the determination of costs and was considered and rejected by the trial judge. We see no basis to interfere with her exercise of discretion on that issue.

[8] The appeal is therefore allowed in part. The appellants are entitled to costs of the appeal, fixed in the amount of $15,000, inclusive of disbursements and G.S.T.

Signed: “K. Feldman J.A.”

“E.A. Cronk J.A.”

“H.S. LaForme J.A.”