Lawson v. Viersen et al. Lawson et al. v. Hart [Indexed as: Lawson v. Viersen]

108 O.R. (3d) 771

2012 ONCA 25

Court of Appeal for Ontario,

Sharpe, R.P. Armstrong and Rouleau JJ.A.

January 16, 2012

Costs -- Offer to settle -- Plaintiff suing defendant H and defendant V in two separate actions for damages arising out of two motor vehicle accidents -- Plaintiff taking position that both first and second accidents contributed to same injuries and damages -- Actions tried together -- Defendant H making offer to settle and defendant V making separate offer to settle or contribute -- Defendant V's offer to settle very substantially exceeding damages awarded against him -- Total of both offers to settle exceeding total amount of damages awarded to plaintiff -- Trial judge apportioning costs of 65 per cent against defendant H and 35 per cent against defendant V -- Defendant V's appeal allowed -- Trial judge not erring in declining to apply cost consequences of rule 49.10 against plaintiff as defendants were alleged to be jointly and severally liable and no joint offer to settle was made -- Trial judge erring in failing to take defendants' offers to settle into account pursuant to rule 49.13 and in giving little or no weight to defendant V's offer to contribute made pursuant to rule 49.12(1) -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 49.10, 49.12, 49.13.

The plaintiff brought two separate actions for damages arising out of two motor vehicle accidents. She alleged that both the first and second accidents contributed to the same damages and injuries she suffered. The actions were tried together. The defendant H offered to settle for $300,000 plus costs. The defendant V offered to settle or contribute by making a payment to the plaintiff of $100,000 plus costs. The plaintiff offered to settle the consolidated action for $1,250,000 plus costs. The jury found that the injuries suffered by the plaintiff in the two accidents were separate and distinct, and made separate damages assessments respecting each accident. The net amount awarded against V ($5,000) was substantially less than his offer to settle. The net amount awarded against H was $344,260.37. Because of V's offer, the total of both of the defendants' offers to settle exceeded the amount of damages awarded to the plaintiff. The trial judge declined to apply the costs consequences of rule 49.10(2) of the Rules of Civil [page772] Procedure with respect to the V offer. She held that, because the defendants were alleged to be jointly and severally liable for the plaintiff's injuries, only a joint offer to settle constituted an offer that complied with rule 49.11. She apportioned costs of 35 per cent against V and 65 per cent against H. She found that V should not cover his costs from H pursuant to rule 49.12. V appealed.

Held, the appeal should be allowed.

The trial judge did not err in declining to apply the costs consequences of rule 49.10 against the plaintiff, considering V's offer to settle. Section 1 of the Negligence Act, R.S.O. 1990, c. N.1 makes concurrent tortfeasors, that is, persons whose conduct causes a single loss to another, jointly and severally liable. The application of s. 1 has not been limited by recent jurisprudence to cases where the torts occurred at the same time. Because the defendants in the consolidated action were alleged to be jointly and severally liable to the plaintiff for indivisible injuries, rights of contribution or indemnity "may" exist between them. As a result, the V offer did not engage the costs consequences of rule 49.10 as it did not comply with rule 49.11 respecting a joint offer from multiple defendants.

The trial judge erred in failing to take the defendants' offers into account pursuant to rule 49.13 in making the costs order. It was significant that, because of the V offer, the combined offers exceeded the plaintiff's recovery and that the V offer substantially exceeded the damages awarded against him. The V offer was a genuine and generous offer to settle and complied with the spirit of rule 49.10. It was the type of offer that, as contemplated by rule 49.13, ought to be given considerable weight in arriving at a costs award. The plaintiff could have accepted that offer without compromising her right to recover against H. The trial judge failed to consider or to give adequate weight to those factors; as a result, the costs award against V could not stand. V was only responsible for the plaintiff's costs up to the date the V offer was served. Costs were ordered against V equal to 35 per cent of the plaintiff's costs incurred to the date of the V offer, less a reduction of 10 per cent in the amount claimed for fees to account for duplication in the work. V was entitled to recover his partial indemnity costs from the date of the offer.

The trial judge erred in giving little or no weight to V's offer to contribute made pursuant to rule 49.12. The V offer to contribute should have weighed heavily in favouring that H pay V's costs as contemplated by rule 49.12(2)(a). H was ordered to pay V his partial indemnity costs incurred from the date of V's offer to contribute.

APPEAL by the defendant from the costs order of Tucker J., [2010] O.J. No. 1718, 2010 ONSC 2465 (S.C.J.).

Cases referred to Misko v. John Doe (2007), 87 O.R. (3d) 517, [2007] O.J. No. 3615, 2007 ONCA 660, 286 D.LR. (4th) 304, 229 O.A.C. 124, [2007] I.L.R. I-4644, 51 M.V.R. (5th) 206, 160 A.C.W.S. (3d) 738, affg (2006), 2006 31300 (ON SC), 82 O.R. (3d) 535, [2006] O.J. No. 3624, 151 A.C.W.S. (3d) 818 (S.C.J.); O'Neil v. Van Horne (2002), 2002 41072 (ON CA), 59 O.R. (3d) 384, [2002] O.J. No. 1528, 212 D.L.R. (4th) 558, 158 O.A.C. 188, 113 A.C.W.S. (3d) 236 (C.A.), consd Other cases referred to Alderson v. Callaghan (1998), 1998 895 (ON CA), 40 O.R. (3d) 136, [1998] O.J. No. 2181, 111 O.A.C. 141, 42 C.C.L.T. 230, 21 C.P.C. (4th) 224, 80 A.C.W.S. (3d) 224 (C.A.); Athey v. Leonati, 1996 183 (SCC), [1996] 3 S.C.R. 458, [1996] S.C.J. No. 102, 140 D.L.R. (4th) 235, 203 N.R. 36, [1997] 1 W.W.R. 97, 81 B.C.A.C. 243, 31 C.C.L.T. (2d) 113, 66 A.C.W.S. (3d) 578; Blackwater v. Plint, [2005] 3 S.C.R. 3, [2005] S.C.J. No. 59, 2005 SCC 58, 258 D.L.R. (4th) 275, 339 N.R. 355, [2006] 3 W.W.R. 401, J.E. 2005-1925, 216 B.C.A.C. 24, 48 B.C.L.R. (4th) 1, [2005] R.R.A. 1021, 46 C.C.E.L. (3d) 165, 35 C.C.L.T. (3d) 161, 142 A.C.W.S. (3d) 1080, EYB 2005-96641; [page773] Martin v. Listowel Memorial Hospital (2000), 2000 16947 (ON CA), 51 O.R. (3d) 384, [2000] O.J. No. 4015, 192 D.L.R. (4th) 250, 138 O.A.C. 77, 48 C.P.C. (4th) 195, 100 A.C.W.S. (3d) 869 (C.A.) [Leave to appeal to S.C.C. refused [1992] 3 S.C.R. vii, [1992] S.C.C.A. No. 447, 105 D.L.R. (4th) vi, 163 N.R. 320n, 68 O.A.C. 320n, 19 C.P.C. (3d) 23n; Niagara Structural Steel (St. Catharines) Ltd. v. W.D. LaFlamme Ltd. (1987), 1987 4149 (ON CA), 58 O.R. (2d) 773, [1987] O.J. No. 2239, 19 O.A.C. 142, 19 C.P.C. (2d) 163, 3 A.C.W.S. (3d) 226 (C.A.); Pilon v. Janveaux, 2006 6190 (ON CA), [2006] O.J. No. 887, 211 O.A.C. 19, 29 M.V.R. (5th) 172, 143 A.C.W.S. (3d) 392 (C.A.); Resurfice Corp. v. Hanke, [2007] 1 S.C.R. 333, [2007] S.C.J. No. 7, 2007 SCC 7, 278 D.L.R. (4th) 643, 357 N.R. 175, [2007] 4 W.W.R. 1, J.E. 2007-333, 69 Alta. L.R. (4th) 1, 404 A.R. 333, [2007] R.R.A. 1, 45 C.C.L.T. (3d) 1, 153 A.C.W.S. (3d) 1012, EYB 2007-113553; Rider v. Dydyk (2007), 87 O.R. (3d) 507, [2007] O.J. No. 3837, 2007 ONCA 687, 286 D.L.R. (4th) 517, 231 O.A.C. 169, 53 C.C.L.I. (4th) 188, [2007] I.L.R. I-4649, 160 A.C.W.S. (2d) 968 [Leave to appeal to S.C.C. refused [2007] S.C.C.A. No. 594]; Rooney (Litigation Guardian of) v. Graham (2001), 2001 24064 (ON CA), 53 O.R. (3d) 685, [2001] O.J. No. 1055, 198 D.L.R. (4th) 1, 144 O.A.C. 240, 9 C.P.C. (5th) 50, 104 A.C.W.S. (3d) 43 (C.A.); Sale v. O'Grady's Restaurant, [2011] O.J. No. 2493, 2011 ONSC 2837; Walker Estate v. York-Finch General Hospital, [2001] 1 S.C.R. 647, [2001] S.C.J. No. 24, 2001 SCC 23, 198 D.L.R. (4th) 193, 268 N.R. 68, J.E. 2001-878, 145 O.A.C. 302, 6 C.C.L.T. (3d) 1, 5 C.P.C. (5th) 1, 104 A.C.W.S. (3d) 426, affg (1999), 1999 2158 (ON CA), 43 O.R. (3d) 461, [1999] O.J. No. 644, 169 D.L.R. (4th) 689, 118 O.A.C. 217, 44 C.C.L.T. (2d) 205, 31 C.P.C. (4th) 24, 86 A.C.W.S. (3d) 823 (C.A.) Statutes referred to Family Law Act, R.S.O. 1990, c. F.3 [as am.], s. 61(2)(e) Insurance Act, R.S.O. 1990, c. I.8 [as am.], s. 267.5(7), paras. 3, 4, (9) Negligence Act, R.S.O. 1990, c. N.1, s. 1 Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 49, 49.10, (2), 49.11, (b), 49.12, (1), (2), (a), (3), 49.13 Authorities referred to Williams, Glanville Llewelyn, Joint Torts and Contributory Negligence: A Study of Concurrent Fault in Great Britain, Ireland and the Common-Law Dominions (London: Stevens and Sons, 1951) Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (Toronto: Ontario Ministry of the Attorney General, 1988)

Jeffrey M.K. Garrett, for appellants. Mason Greenaway, for respondents Martha Lawson and James Lawson. Gordon L. Robson, for respondent Scott Robert Hart.

The judgment of the court was delivered by

[1] ROULEAU J.A.: -- This is an appeal of the costs ordered in the trial of the consolidated action of two claims involving [page774] successive motor vehicle accidents. The appeal concerns the costs consequences of a plaintiff's failure to accept an offer to settle and of a co-defendant's failure to accept an offer to contribute as well as a court's discretion in awarding and apportioning costs. More specifically, it involves the interpretation of s. 1 of the Negligence Act, R.S.O. 1990, c. N.1, the interplay between that section and rule 49.11 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and the interpretation and application of rules 49.12 and 49.13.

[2] Rule 49.11 provides that where two or more defendants are alleged to be jointly and severally liable and rights of contribution or indemnity may exist between the defendants, they must make a joint offer to settle to attract the costs consequences of rule 49.10(2). Rule 49.12 concerns offers to contribute in cases involving multiple defendants and rule 49.13 gives a trial judge residuary discretion to consider offers to settle that do not meet the specific requirements of rules 49.10 and 49.11.

Facts

Background

[3] The respondent, Martha Lawson, was involved in two motor vehicle accidents that occurred approximately seven months apart. The first accident, on August 16, 1997, involved the appellants, Maria Viersen and John Viersen (collectively, the "Viersens"). The second, on March 21, 1998, was with the respondent, Scott Robert Hart.

Pleadings

[4] On March 13, 2000, Ms. Lawson and her eldest son, James Lawson (collectively, the "Lawsons"), commenced an action against Mr. Hart for injuries suffered by Ms. Lawson in the second motor vehicle accident and for damages claimed by James Lawson pursuant to the Family Law Act, R.S.O. 1990, c. F.3. On April 10, 2001, Ms. Lawson commenced an action against the Viersens for injuries she suffered in the first motor vehicle accident. Neither statement of claim made specific reference to the other motor vehicle accident. Both claims, however, claimed damages in respect of injuries to the same areas of Ms. Lawson's body.

[5] The position of Ms. Lawson, as well as her medical experts, was that both the first and second accidents contributed to the same damages and injuries she suffered. For instance, it was alleged that both accidents contributed to, among others, a mild traumatic brain injury, cognitive deficits, a major depressive [page775] episode, general anxiety disorder and chronic pain syndrome as well as to Ms. Lawson's income loss, both before and after the trial.

[6] Ms. Lawson's allegation that the first and second accidents contributed to overlapping injuries was also canvassed during the pre-trial conference before Riley J. on January 16, 2009. The pre-trial conference resulted in a consent endorsement that both actions be tried together as a single consolidated action.

Offers to settle

[7] The following offers to settle were made: (a) Mr. Hart offered to settle by making a payment of $300,000 to the Lawsons, net of any advance payments and the statutory deductible under the Insurance Act, R.S.O. 1990, c. I.8, plus costs on a partial indemnity basis to be agreed upon or assessed (the "Hart offer"); (b) the Lawsons offered to settle the consolidated action for $1,250,000 plus costs, to be agreed upon or assessed; and (c) the Viersens offered to settle or contribute by making a $100,000 payment to Ms. Lawson plus costs, as agreed upon or assessed (the "Viersens' offer" or the "Viersens' offer to contribute").

[8] Each offer remained open for acceptance until the beginning of trial. However, none of the offers was accepted.

Trial and result

[9] The trial commenced on March 23, 2009 and lasted approximately six weeks. The jury found that the injuries suffered by Ms. Lawson in the two motor vehicle accidents were separate and distinct. Therefore, the jury made separate damages assessments respecting each accident.

[10] The jury found the Viersens 100 per cent responsible for the first motor vehicle accident and awarded $20,000 for general damages (resulting in an award of $5,000 net of the statutory deductible) plus prejudgment interest. The jury did not award damages for past or future income loss.

[11] The jury found that Mr. Hart was 75 per cent responsible for the second motor vehicle accident and awarded $100,000 in general damages (resulting in an award of $85,000 net of the statutory deductible), $321,000 in past income loss and $192,000 in future income loss. The jury also awarded James Lawson [page776] damages of $12,000 pursuant to the Family Law Act. Each award carried prejudgment interest.

[12] Following the jury's award, the court found that, after taking into account the statutory deductibles, [See Note 1 below] Ms. Lawson's contributory negligence with respect to the second motor vehicle accident and the prejudgment interest, the total net amount awarded against the Viersens was $7,926.71 and the total net amount awarded against Mr. Hart was $344,260.37, for a total net damage award of $352,187.08. [See Note 2 below]

[13] The Lawsons sought costs of $519,378.92. The Viersens argued that they should not pay costs, but rather were entitled to recover their costs on the basis of rule 49.10(2). They argued that their offer of $100,000 far exceeded the judgment of $5,000 obtained by Ms. Lawson with respect to the first accident. In the Viersens' view, their offer could be considered as a stand-alone offer and did not have to encompass the claim being made in the action against Mr. Hart as contemplated by rule 49.11. The Viersens submitted that the accidents were separate, there was no issue between them and Mr. Hart and they did not attempt to shift the responsibility on Mr. Hart in making their case.

[14] The trial judge rejected the Viersens' position. She confirmed that both defendants made offers but that the offers had not been made jointly in accordance with rule 49.11. Although the Viersens' offer exceeded the jury verdict, the trial judge found that the Hart offer was less than the award made against [page777] Mr. Hart. Because the defendants were alleged to be jointly and severally liable for Ms. Lawson's injuries, only a joint offer to settle constituted an offer that complied with rule 49.11. As a result, the trial judge declined to apply the costs consequences of rule 49.10(2) with respect to the Viersens' offer and found that the Lawsons were entitled to their costs in the consolidated action.

[15] The trial judge accepted Mr. Hart and the Viersens' submission that there was duplication in the work due to the number of new lawyers involved on behalf of the Lawsons in the consolidated action. Accordingly, the trial judge reduced the amount of fees claimed by approximately 10 per cent. She then awarded the Lawsons a total of $482,278.09 in fees and disbursements.

[16] The Viersens submitted that the liability to pay the costs should be divided as between Mr. Hart and the Viersens on the same basis as the proportion of damages awarded against each of them. In the Viersens' view, since the Lawsons recovered $344,260.37 from Mr. Hart and Ms. Lawson only recovered $5,000 from the Viersens, virtually all of the costs should be paid by Mr. Hart. The trial judge, however, rejected their submission. She noted that it was a joint trial and that the time spent defending each action was similar. She then exercised her discretion and apportioned costs of 35 per cent against the Viersens and 65 per cent against Mr. Hart.

[17] The Viersens also sought to recover their costs from Mr. Hart pursuant to rule 49.12 on the basis that Mr. Hart ought to have accepted their offer to contribute $100,000 towards settlement of the consolidated action. The trial judge rejected this submission finding that "in the face of a $1 million 'joint' claim it would not [have been] logical to accept the Viersens' offer to contribute" and, although the award against the Viersens was substantially lower than the offer, making an award of costs based on "hindsight in the result" was not appropriate in this case.

[18] The Viersens appealed the costs order with leave of this court.

Issues

[19] The issues raised on appeal are as follows: (1) Did the trial judge err in declining to apply the costs consequences of rule 49.10 against Ms. Lawson considering the Viersens' offer to settle? [page778] (2) Pursuant to rule 49.13, should the Viersens' and Hart offers have been taken into account in making the costs order? (3) Did the trial judge err in giving little or no weight to the Viersens' offer to contribute made pursuant to rule 49.12? (4) Did the trial judge err in her apportionment of the costs awarded to the Lawsons?

Purpose of Rule 49

[20] The purpose of Rule 49 is to encourage parties to make reasonable offers to settle or to contribute by imposing costs consequences on those who do not reasonably assess the actual value of the case in advance of trial: see, e.g., Niagara Structural Steel (St. Catharines) Ltd. v. W.D. LaFlamme Ltd. (1987), 1987 4149 (ON CA), 58 O.R. (2d) 773, [1987] O.J. No. 2239 (C.A.); Rooney (Litigation Guardian of) v. Graham (2001), 2001 24064 (ON CA), 53 O.R. (3d) 685, [2001] O.J. No. 1055 (C.A.). This objective includes providing an incentive to plaintiffs and defendants to make settlement offers which represent some reasonable element of compromise: see Walker Estate v. York-Finch General Hospital (1999), 1999 2158 (ON CA), 43 O.R. (3d) 461, [1999] O.J. No. 644 (C.A.), affd without reference to this issue [2001] 1 S.C.R. 647, [2001] S.C.J. No. 24, 2001 SCC 23.

[21] Costs consequences are result oriented. Pursuant to rule 49.10, the terms of the offer are measured not against the claim advanced, but rather against the judgment obtained in order to determine whether such offer is "as favourable as", "more favourable than" or "less favourable than" the judgment.

[22] For the purpose of comparing the offer with the judgment, the court considers not the judgment awarded by the jury, but the amount finally awarded by the trial judge plus prejudgment interest: see Pilon v. Janveaux, 2006 6190 (ON CA), [2006] O.J. No. 887, 211 O.A.C. 19 (C.A.). This is the amount contained in the formal judgment that finally disposed of the action. However, statutory deductibles, mandated by s. 267.5(7) of the Insurance Act, are treated differently. In Rider v. Dydyk (2007), 87 O.R. (3d) 507, [2007] O.J. No. 3837, 2007 ONCA 687, leave to appeal to S.C.C. refused [2007] S.C.C.A. No. 594, this court noted that the deductions from a plaintiff's assessed damages in a motor vehicle negligence case are not to be taken into account in determining whether the defendant is presumptively entitled to costs. As a result, pursuant to s. 267.5(9) of the Insurance Act, the court determines a party's entitlement to costs without regard to the effect of the statutory deductions under s. 267.5(7), para. 3 of the Insurance Act on the amount of damages awarded for [page779] non-pecuniary loss and considers this amount against all of the terms of the offer. [See Note 3 below]

[23] With these general principles and policy objectives in mind, I turn now to the specific issues raised by this appeal.

Discussion

(1) Did the trial judge err in declining to apply the costs consequences of rule 49.10 against Ms. Lawson considering the Viersens' offer to settle?

[24] The parties agree that the Viersens' offer complied with the requirements of rule 49.10 in that the judgment obtained by Ms. Lawson with respect to the Viersens' liability was less favourable than the terms of the offer. The issue, however, is whether in the circumstances of this case, rule 49.11 operates such that the presumptive costs consequences of rule 49.10 do not apply in favour of the Viersens.

Rule 49.11: Multiple defendants

[25] Rule 49.11 provides that, where multiple defendants are "alleged to be jointly or jointly and severally liable to the plaintiff in respect of a claim and rights of contribution or indemnity may exist between the defendants, the costs consequences prescribed by rule 49.10 do not apply to an offer to settle" (emphasis added) unless, pursuant to rule 49.11(b): (i) the offer is an offer to settle the plaintiff's claim against all the defendants and to pay the costs of any defendant who does not join in making the offer, or (ii) the offer is made by all the defendants and is an offer to settle the claim against all the defendants, and, by the terms of the offer, they are made jointly and severally liable to the plaintiff for the whole amount of the offer.

[26] In the present case, Ms. Lawson argues that the claim she advanced included claims for damages she suffered as a result of the combined effect of both motor vehicle accidents. [page780] Therefore, she argues that the damages are indivisible and could not be attributed to one tortfeasor or the other. In other words, both accidents contributed to the injuries she suffered, such as her major depressive episode. Because of her claim that it was impossible to determine which defendant caused the damages and that each defendant materially contributed to her injuries, Ms. Lawson was of the view that the defendants should be jointly and severally liable for the entirety of her damages. The defendants would then have rights of contribution and indemnity between them.

[27] The fact that the jury found against Ms. Lawson on the issue of joint and several liability was, in Ms. Lawson's submission, of no moment because, to comply with rule 49.11, she need only advance a claim that may result in rights of contribution or indemnity.

[28] The Viersens argue that where, as in the circumstances of this case, there are two separate and distinct actions arising from two torts separated in time, there is no possibility of joint and several liability and, consequently, no rights of contribution or indemnity exist. In their view, rule 49.11 should have no application.

Determining joint and several liability and rights of contribution and indemnity

[29] Section 1 of the Negligence Act provides for a right of contribution and indemnity between concurrent tortfeasors. Specifically, s. 1 provides that:

1. Where damages have been caused or contributed to by the fault or neglect of two or more persons, the court shall determine the degree in which each of such persons is at fault or negligent, and, where two or more persons are found at fault or negligent, they are jointly and severally liable to the person suffering loss or damage for such fault or negligence, but as between themselves, in the absence of any contract express or implied, each is liable to make contribution and indemnify each other in the degree in which they are respectively found to be at fault or negligent.

[30] The question raised by this appeal is whether, in order to come within that section, the damages in issue need to be caused or contributed to by multiple tortfeasors acting together or at the same time. In other words, does s. 1 apply to create joint and several liability if (1) two torts are unrelated and separated in time, as they are in the present case; and (2) the damage suffered by the plaintiff as a result of both torts is indivisible and therefore cannot be divided as between the two tortfeasors?

[31] Tortfeasors whose torts are separate in time but concur in the sense that they run together to produce the same damage [page781] are described by Glanville L. Williams, Joint Torts and Contributory Negligence: A Study of Concurrent Fault in Great Britain, Ireland and the Common-Law Dominions (London: Stevens and Sons, 1951), at p. 1, as concurrent tortfeasors. These concurrent tortfeasors are distinguished from "nonconcurrent tortfeasors", where separate acts produce different damage to the plaintiff. This was explained in the Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (Toronto: Ontario Ministry of the Attorney General, 1988), at p. 8-9, as follows:

First, each of two or more concurrent wrongdoers . . . is liable in solidum for the whole of the loss suffered by [the plaintiff]. However, in the case of non-concurrent, several tortfeasors, whose acts have produced different damage, each tortfeasor is liable . . . only for the damage he has caused. . . . Secondly, because concurrent tortfeasors are responsible for the same damage, satisfaction by one discharges them all. Accordingly . . . there may be rights of contribution between such wrongdoers. (Footnotes omitted)

[32] The issue of joint and several liability was dealt with by this court in Alderson v. Callaghan (1998), 1998 895 (ON CA), 40 O.R. (3d) 136, [1998] O.J. No. 2181 (C.A.). In Alderson, the plaintiff sued her common law spouse as result of injuries she sustained in a motor vehicle accident while a passenger in an automobile driven by her common law spouse. The defence took the position that the extensive brain damage she suffered was not due to that accident but rather to a series of post-accident assaults inflicted on her by her common law spouse, a further assault committed by a stranger and her pre-existing conditions. Relying on Athey v. Leonati, 1996 183 (SCC), [1996] 3 S.C.R. 458, [1996] S.C.J. No. 102, this court held that, where damages caused by consecutive tortfeasors are indivisible, in that it is impossible to determine which tortfeasor caused which damages, the material contribution test applies. In those circumstances, any tortfeasor whose actions materially contributed to those damages is liable for all of the damages and, pursuant to s. 1 of the Negligence Act, each tortfeasor has a right of contribution and indemnity from the other tortfeasors who caused the damages.

[33] Subsequent case law, such as Blackwater v. Plint, [2005] 3 S.C.R. 3, [2005] S.C.J. No. 59, 2005 SCC 58 and Resurfice Corp. v. Hanke, [2007] 1 S.C.R. 333, [2007] S.C.J. No. 7, 2007 SCC 7, has made it clear that the material contribution test is the exception. It applies only if causation cannot be determined using the "but for" test. Further, even if untangling different sources of damage and loss may be difficult, it is nonetheless the obligation of the trial judge or the jury to do so. [page782]

[34] In Martin v. Listowel Memorial Hospital (2000), 2000 16947 (ON CA), 51 O.R. (3d) 384, [2000] O.J. No. 4015 (C.A.), leave to appeal to S.C.C. refused [1993] 3 S.C.R. vii, [1992] S.C.C.A. No. 447, this court described the purpose of s. 1 of the Negligence Act, at para. 34, as facilitating "full recovery of the loss for the plaintiff, while at the same time providing a mechanism for each of those who contributed to the loss to share the financial responsibility in the proportions of their respective degrees of fault". At para. 35, this court went on to state that, as between the defendants, they are "each entitled to contribution and indemnity to the extent of any overpayment to the plaintiff of their own proportionate share. Any defendant who successfully claimed over against a third party is also entitled to contribution from that third party to the extent of that party's fault."

[35] In summary, the Negligence Act makes concurrent tortfeasors, that is, persons whose conduct causes a single loss to another, jointly and severally liable. It also provides for the right of concurrent tortfeasors to claim contribution and indemnity from another tortfeasor provided the tortfeasor from whom he or she seeks contribution is, or could be if sued, liable to the plaintiff. The statute is not concerned with the acts of several tortfeasors whose actions produce different damage to the same person. In those circumstances, several tortfeasors are liable only for the damage they respectively caused.

Did subsequent decisions of this court change the law?

[36] The Viersens argue that O'Neil v. Van Horne (2002), 2002 41072 (ON CA), 59 O.R. (3d) 384, [2002] O.J. No. 1528 (C.A.) and Misko v. John Doe (2007), 87 O.R. (3d) 517, [2007] O.J. No. 3615, 2007 ONCA 660 have limited the application of s. 1 of the Negligence Act to cases where the tortfeasors are concurrent in time, that is, the torts occurred at the same time.

[37] I disagree. In O'Neil, it was alleged that the defendant had sexually assaulted the plaintiff when she was three years old and he was 12. The defendant sought to add three third- parties: the plaintiff's parents, who allegedly abused her during childhood, and a former boyfriend who had allegedly sexually assaulted her some 16 years after the events at issue in the action. This court dismissed the appeal from the decision of the motion judge refusing to add the third parties. The court did so on the basis that, although the stream of damages caused by the defendant may "have come into confluence with other streams flowing from other tortious or non-tortious acts", each tortfeasor was nonetheless answerable for its individual conduct but not for the conduct of others (at para. 10). At para. 14, the court also [page783] noted that although "it may be difficult to separate out the consequences, if any, of the defendant's conduct from all the influences upon the plaintiff over the intervening years -- that is her task as a plaintiff". In other words, the court concluded that this was not a case where two or more tortfeasors had caused single indivisible damage. Rather, each tortfeasor may have aggravated the injury suffered by the plaintiff.

[38] It should also be noted that in O'Neil, the plaintiff only sought damages for which the defendant was solely to blame. There was no indication that the plaintiff was seeking damages from the defendant as a contributor to her injuries along with other tortious or non-tortious causes. As this court noted, at para. 14, because the "tortfeasors [were] each distinct", the plaintiff could not have attempted to seek contribution for any damages she suffered as a result of the proposed third parties' wrongdoing.

[39] In Misko, the plaintiff was involved in two motor vehicle accidents 11 months apart. He settled with the defendant in the first accident and gave him a standard form of release that included the usual term that he would not make any claim or take any proceeding against a person who might claim contribution or indemnity from that defendant. The driver responsible for the second accident was unidentified so the plaintiff sued his own insurer, Liberty Mutual, since his policy included unidentified motorist coverage.

[40] When Liberty Mutual became aware of the earlier accident, it brought a motion for leave to issue a third party claim against the tortfeasor in the first accident. The leave to issue the third party claim was initially granted by Heeney J. but later struck. In striking the third party claim, Desotti J., relying on O'Neil and Listowel, held that tortfeasors who are not concurrent tortfeasors (that he defined as "existing or happening at the same time") cannot third-party one another: Misko v. Doe (2006), 2006 31300 (ON SC), 82 O.R. (3d) 535, [2006] O.J. No. 3624 (S.C.J.), at para. 47. The Viersens rely on this statement as demonstrating that concurrent tortfeasors encompass only tortfeasors who were acting at the same time.

[41] The Viersens argue that because this court dismissed the appeal, it effectively adopted Desotti J.'s interpretation of concurrent tortfeasors. I disagree. Although this court [Misko (C.A.)] quoted, at para. 9, Desotti J.'s comment [at para. 47] that "if defendants are not concurrent tortfeasors (existing or happening at the same time) then they cannot third party one another", this was not part of the court's reasoning and the court did not rely on that statement in dismissing the appeal. [page784]

[42] In Sale v. O'Grady's Restaurant, [2011] O.J. No. 2493, 2011 ONSC 2837, Strathy J., in a thoughtful analysis, carefully reviewed the Misko decision and was of the view that this court was simply quoting Desotti J. without confirming the correctness of his statement. As Strathy J. explained, the basis of this court's conclusion that the third party claim should be struck was that Liberty Mutual could never be at risk of having to compensate the plaintiff for the damages sustained in the first accident. This was because the plaintiff had limited his claim against Liberty Mutual to the portion of damages for which Liberty Mutual would ultimately be responsible. As set out by this court [Misko (C.A.)], at paras. 17-18:

Assuming that, as alleged by Liberty Mutual, there is a single indivisible injury, this simply means that, applying Athey v. Leonati, both tortfeasors are fully liable for the injury. The court, however, must still apportion responsibility between the tortfeasors. Liberty Mutual will be responsible in the pending trial only to the extent that the unidentified driver caused or contributed to the damages claimed.

. . . Applying s. 1 [of the Negligence Act] to the circumstances of this case, at the trial between Misko and Liberty Mutual, the court will determine both the amount of damages suffered by Misko and the degree of responsibility attributable to the second accident. In view of the plaintiff's position that this is all he seeks from Liberty Mutual (and that he does not rely on the full compensation principle in Athey), judgment will go against Liberty Mutual only for the damages for which the second tortfeasor is responsible. If the damages are "indivisible" as is alleged by Liberty Mutual, this task may not be an easy one, but the court will have to make the determination. (Footnotes omitted)

[43] In Misko, the court was presented with a very specific situation. The plaintiff had conceded that he was not relying on the full compensation principle in Athey and did not seek compensation for the damages he sustained in the first accident since he had already reached a settlement in that regard. As such, any judgment against Liberty Mutual, if liable to the plaintiff, would go against it only for the degree of its responsibility for the plaintiff's injuries. In order to make it "absolutely clear" that the plaintiff was only claiming damages for the injuries for which the driver in the second accident was responsible, this court stated that the statement of claim should be amended in that regard.

[44] In my view, O'Neil and Misko did not narrow the concept of concurrent tortfeasors and, in the present case, the trial judge was correct to conclude that, because the defendants in the consolidated action were alleged to be jointly and severally liable to Ms. Lawson for indivisible injuries, rights of contribution or [page785] indemnity may exist between them. As a result, the Viersens' offer did not engage the costs consequences of rule 49.10 as the offer did not comply with rule 49.11 respecting a joint offer from multiple defendants. The O'Neil and Misko decisions did, however, indicate that a plaintiff can accept an offer to settle from a concurrent tortfeasor and, by limiting the claim against the other concurrent tortfeasor in the manner set out in Misko, proceed against that other tortfeasor without giving rise to a possible third party claim. As I will explain further in these reasons, this option was available to Ms. Lawson.

(2) Pursuant to rule 49.13, should the Viersens' and Hart offers have been taken into account in making the costs order?

[45] This case presented the trial judge with a very particular and somewhat unusual set of circumstances. Although neither the Viersens nor the Hart offer complied with rule 49.11, the total amount they offered in settlement exceeded the Lawsons' recovery at trial. [See Note 4 below] It was, therefore, important for the trial judge to consider the impact of rule 49.13.

[46] Rule 49.13 provides that "[d]espite rules 49.03, 49.10 and 49.11, the court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer". This rule allows a judge to consider offers even though the offers do not comply with rules 49.10 or 49.11. Rule 49.13 is not concerned with technical compliance with the requirements of rules 49.10 or 49.11. It calls on the judge to take a more holistic approach. [page786]

[47] The trial judge made no specific reference to this rule in her brief reasons on costs. Instead, the trial judge simply concluded that because the offers of Mr. Hart and the Viersens did not comply with rule 49.11, they should not recover costs and the Lawsons should recover their costs against both the Viersens and Mr. Hart. The only adjustment made was a 10 per cent reduction in the fees being claimed in order to adjust for duplication in the work carried out by the Lawsons' lawyers. The trial judge concluded that, because the offers made by the defendants did not comply with rule 49.11, she "[could not] consider them together, nor [could she] find that they [could] successfully stand on their own". Although the Viersens' offer exceeded the award made against them, the trial judge considered that

the [p]laintiff was being put in a position to make an impossible if not negligent choice of accepting one offer. Only a joint offer would have allowed the [p]laintiff to be reasonably in a position to accept such offer without compromising [her] ability to recover against either of the other defendants. Although the jury did not find a global assessment to be correct, [it] could have done so. If Ms. Lawson had settled with the Viersens and the jury found that the Viersens were the parties that were mainly responsible for the injuries, her ability to recover would have been compromised.

[48] In my view, the trial judge erred in the way she approached the issue of costs as between the Viersens and the Lawsons. Although she correctly concluded that the failure to comply with rule 49.11 meant that she could not consider the Viersens' offer alone or together with the Hart offer for purposes of rule 49.10(2), she was not prevented from considering the offers when exercising her discretion pursuant to rule 49.13.

[49] In the circumstances of this case, it is significant that the combined Viersens' and Hart offers exceeded the Lawsons' recovery. The reason that the combined total exceeded the Lawsons' recovery was because of the Viersens' offer. When the Viersens' offer is viewed in context rather than in isolation, it is therefore apparent that the offer was a genuine and generous offer to settle and, particularly when taken together with the Hart offer, complied with the spirit of rule 49.10. In these circumstances, the Viersens' offer is the type of offer that, as contemplated by rule 49.13, ought to be given considerable weight in arriving at a costs award.

[50] Further, the trial judge appears to have discounted the fact the Viersens' offer far exceeded the amount of the award made against them. Although the allegation of joint and several liability meant that pursuant to rule 49.11 the presumption of costs consequences in rule 49.10 did not apply, it would not, as the trial judge found, have been "impossible" or "negligent" for [page787] Ms. Lawson to have accepted the Viersens' offer. The claim of joint and several liability that made the Viersens' offer non-compliant with rule 49.11 was not made out at trial. In light of the jury's award, the Viersens' offer can, therefore, only be seen as having been very reasonable. Contrary to the view expressed by the trial judge, it would have been no more impossible or negligent for Ms. Lawson to have accepted the Viersens' offer than for any plaintiff to accept an offer to settle for an amount substantially less than the amount claimed. Given the outcome at trial, an accurate assessment of Ms. Lawson's claim was that there was no joint and several liability. As a result, accepting the Viersens' offer would not have prejudiced the claim against Mr. Hart and, therefore, would have been the correct decision.

[51] Additionally, as the cases of O'Neil and Misko show, even if there is a possibility of joint and several liability, a plaintiff can settle with one defendant and continue his or her action against a co-defendant provided that the plaintiff agrees to limit his or her recovery from the co-defendant to the damages caused by that defendant.

[52] In my view, the trial judge erred in failing to consider or in giving inadequate weight to the fact that the combined offers exceeded the Lawsons' recovery at trial, the fact that the Viersens' offer substantially exceeded the damages awarded against them and the fact that, given the outcome of the trial, Ms. Lawson could have accepted the Viersens' offer without compromising her right to recover against Mr. Hart. These were significant factors that weighed heavily in favour of limiting the award of costs against the Viersens to the costs incurred before the date of their offer and militated in favour of allowing the Viersens to recover some of their costs. As a result, the award of costs against the Viersens cannot stand.

[53] The Viersens should only be responsible for the Lawsons' costs up to the date the Viersens' offer was served. Using the allocation made by the trial judge, I would order costs against the Viersens equal to 35 per cent of the Lawsons' costs incurred to the date of the Viersens' offer less a reduction of 10 per cent in the amount claimed for fees to account for duplication in the work. I would also allow the Viersens to recover their partial indemnity costs from the date of their offer. For the reasons that follow, however, I would make these payable by Mr. Hart.

(3) Did the trial judge err in giving little or no weight to the Viersens' offer to contribute made pursuant to rule 49.12?

[54] The Viersens' offer to settle for $100,000 was also an offer to contribute to Mr. Hart pursuant to rule 49.12(1). Rule 49.12(2) [page788] provides that "[t]he court may take an offer to contribute into account in determining whether another defendant should be ordered, (a) to pay the costs of the defendant who made the offer; or (b) to indemnify the defendant who made the offer for any costs that defendant is liable to pay to the plaintiff or to do both". Pursuant to rule 49.12(3), rule 49.13 also applies to an offer to contribute made in accordance with rule 49.12(1) as if it were an offer to settle.

[55] According to rule 49.12(2), costs consequences pertaining to an offer to contribute are discretionary, not presumptive as is the case with rule 49.10. More specifically, rule 49.12(2) provides that the court may consider an offer to contribute in making an award of costs.

[56] Although the Viersens acknowledge that rule 49.12(2) is permissive, they argue that the trial judge's reasons for declining to give effect to the offer would leave that rule devoid of any meaning and would also go against the policy objectives of that rule. Similar to rule 49.10, the purpose of rule 49.12 is to encourage parties to make reasonable offers to contribute to co-defendants by providing that, if the results after trial show that the offer should have been accepted, it will weigh in favour of awarding the party having tendered the offer a more favourable costs order than otherwise would have been the case. As a general rule, the reasonableness of an offer to contribute is measured against the judgment.

[57] The trial judge rejected the Viersens' submission that Mr. Hart should have accepted the offer to contribute stating that "in the face of a $1 million 'joint' claim it would not be logical to accept [the] Viersens' offer to contribute. In light of the decision of the jury, [the Viersens'] argument has some validity but to make the costs rest upon hindsight in the result in this case is not appropriate I find."

[58] In my view, the trial judge erred by refusing to consider the reasonableness of the Viersens' offer to contribute in light of the result obtained. Nothing in the record or her reasons explain why the offer should be viewed as anything but a good faith effort by the Viersens to extricate themselves from what would be a lengthy trial by offering to contribute significantly more than the award of damages ultimately awarded against them at trial. The trial judge's analysis failed to properly consider both the purpose and mechanism of offers to contribute under rule 49.12 as encouraging reasonable offers to contribute by exposing a co- defendant to possible costs consequences. [page789]

[59] In my view, the Viersens' offer to contribute should have weighed heavily in favour of ordering that Mr. Hart pay the Viersens' costs as contemplated by rule 49.12(2)(a). As a result, I would order Mr. Hart to pay the Viersens their partial indemnity costs incurred from the date of their offer to contribute.

(4) Did the trial judge err in her apportionment of the costs awarded to the Lawsons?

[60] The Viersens argue that the trial judge erred in not apportioning the Lawsons' costs on a pro rata basis in accordance with the proportionate amount of damages awarded against the Viersens and Mr. Hart and in failing to take into account the relative success of the Lawsons.

[61] The force of these submissions is substantially reduced in light of the changes I would make to the award of costs. In any event, the apportionment of costs is a discretionary order and I see no basis to interfere with the trial judge's order in that respect.

Conclusion

[62] In conclusion, I would allow the appeal and vary the costs order to provide that the Viersens are to pay 35 per cent of the Lawsons' costs incurred, but only up to the date of the Viersens' offer, less a 10 per cent adjustment to the fees component to account for duplication in the work. I would also order that Mr. Hart pay the Viersens' partial indemnity costs incurred from the date of the Viersens' offer to contribute in the agreed upon amount of $149,071. I would also award the Viersens their costs of the appeal fixed at $33,000, inclusive of disbursements and applicable taxes. Mr. Hart is to pay $16,500 of the costs and the Lawsons are to pay the balance of $16,500.

Appeal allowed.

Notes

Note 1: The applicable statutory deductibles under s. 267.5(7), para. 3 of the Insurance Act are as follows: (1) $15,000 in the case of damages for non-pecuniary loss other than damages for non-pecuniary loss under s. 61(2)(e) of the Family Law Act and (2) $7,500 in the case of damages for non- pecuniary loss under s. 61(2)(e) of the Family Law Act. Pursuant to s. 267.5(7), para. 4 of the Insurance Act, the award for damages is reduced by the statutory deductibles before the damages are apportioned for contributory negligence. Therefore, in this case, the total amount of statutory deductibles under s. 267.5(7), para. 3 of the Insurance Act is $37,500. Other deductions considered in the determination of the net damage award relate to the calculation of net income loss.

Note 2: Counsel for the respondents Lawsons provided a detailed calculation of the damage award and arrived at a slightly lower figure. Nothing turns on this difference. Counsel confirmed that, after reconciliation of the total damages awarded by the jury and the statutory deductibles under s. 267.5(7), para. 3 the Insurance Act, the deductions related to income loss, the deduction for contributory negligence, the deduction for Mr. Hart's advance payment of $10,000 and the addition of prejudgment interest, the net damage award against the Viersens was $7,167.50 and the net damage award against Mr. Hart was $344,268.37, for a total net damage award of $351,435.87.

Note 3: The effect of the statutory deductible in the case of the damage award against the Viersens is $15,000. In the case of the damage award against Mr. Hart, the effect of the statutory deductibles is 75 per cent of the total amount of the statutory deductibles of $15,000 and $7,500, considering that Mr. Hart's negligence was assessed by the jury at 75 per cent and Ms. Lawson's contributory negligence was assessed at 25 per cent. For this reason, the effect of the statutory deductibles on the damage award against Mr. Hart is $16,875. Therefore, the combined effect of the statutory deductibles on the total damage award is $31,875.

Note 4: According to the trial judge, the total net damage award with prejudgment interest was $352,187.08 (as noted earlier, the reconciliation provided by counsel for the respondents Lawsons uses the slightly lower figure of $351,435.87 for the total net damage award; however, this is of no consequence for the calculations that follow). While the offers were made net of the statutory deductible, even if the total amount of $31,875 with regard to the effect of the statutory deductibles under s. 267.5(7), para. 3 of the Insurance Act (see note 3, above) is added back to the net damage award of $352,187.08 in accordance with this court's decision in Rider, the combined Viersens' and Hart offers of $400,000 still exceeded the total net damage award plus the effect of the statutory deductibles, which amounts equal $384,062.08. Finally, counsel for the respondents Lawsons advised that Mr. Hart made a $10,000 advance payment. It is unclear as to whether this payment was made before or after the Viersens' and Hart offers; however, even if the $10,000 advance payment is added to the above amount, the combined Viersens' and Hart offers nonetheless exceeded this amount.