COURT FILE NO.: 98-CV-160150

DATE: 20120111

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Bridgette Sagl

Plaintiff

AND:

Chubb insurance Company of Canada

Defendant

BEFORE: Marrocco J.

COUNSEL: Barry A. Percival, Q.C. , for the Plaintiff

Peter Griffin & Jamie Spotswood , for the Defendant

HEARD: January 10, 2012

COSTS ENDORSEMENT

Singer Kwinter LLP

[ 1 ] As indicated later on, litigation was a realistic possibility from the moment that the defendant was advised by the Ontario Fire Marshal that arson was suspected. At the same time, not all steps taken by the plaintiff were incidental to this litigation. For example, the plaintiff was required to submit a proof of loss in order to make a claim under Chubb’s insurance policy.

[ 2 ] Accordingly, the fees of Singer Kwinter LLP, in the amount of $78,703, are to be reduced by $2,600 for work done prior to the commencement of this action on December 8, 1998 which was not incidental to this litigation. The Singer Kwinter LLP disbursements, as outlined in the Summary of Substantial Indemnity Costs, are appropriate. Of course, the appropriate taxes are also to be paid.

Benson Percival Brown LLP-1st Trial

[ 3 ] It was not unreasonable for Mr. Percival to personally do the majority of work on this file. The matter was complex. In addition, while the question of arson was not alive in the second trial, the effect of raising that defence in the first trial certainly was.

[ 4 ] Subject to these reasons, the quantum of fees charged by Benson Percival Brown LLP seem reasonable to me. There is no evidence to suggest that the fees charged to Chubb Insurance Company of Canada, either at this trial or at the first trial, were substantially lower than the fees charged by Benson Percival Brown LLP.

[ 5 ] The evidence disclosed that Mr. Percival was initially retained in this matter and then replaced by the firm of Singer Kwinter LLP and then re-hired by the plaintiff. The costs associated with the hiring and re-hiring of Mr. Percival are not costs associated with this litigation for which Chubb should be responsible. Accordingly, the account of Benson Percival Brown LLP is reduced by $17,850, reflecting the thirty-four hours spent by Mr. Percival corresponding with Mr. Kwinter and reviewing the Singer Kwinter LLP file.

[ 6 ] Most of the time spent by Rebecca Balaban, an associate with Benson Percival Brown LLP at the relevant time, occurred when she had been at the bar for approximately three years. Ms. Balaban's hourly rate should have been $250 an hour and not $337.50 per hour. As a result, the account of Benson Percival Brown LLP will be reduced by $9,537 to reflect this hourly rate reduction.

Benson Percival Brown LLP- the 2nd trial

[ 7 ] The time spent by Mr. Percival dealing with Howard Winick, who was a creditor of the plaintiff, is not a cost that is incidental to this litigation. Accordingly, the account of Benson Percival Brown should be reduced by $2,625 to reflect the time spent by Mr. Percival with Mr. Winick.

[ 8 ] It was argued that, due to the fact that Mr. Percival's imputed hourly rate for a period of time during the currency of this matter was $500 per hour, he ought not to receive the substantial indemnity rate of $525 per hour during the same period. I do not accept this argument. Any premium over the imputed rate will reduce the cost consequences which fall upon the plaintiff.

[ 9 ] Grant Bodnaryk's hourly rate of $337.50 per hour is too high because, during the second trial, he only had two years’ experience having been called to the Bar in 2009. An appropriate substantial indemnity rate for Grant Bodnaryk is $225 per hour, resulting in a net difference of $8,700 from the amount being claimed, and this amount should be deducted from the fees of Benson Percival Brown LLP.

[ 10 ] There is no basis for increasing or inflating the Costs award of Master Glustein. Accordingly, the costs for the motion before Master Glustein should be reduced to $10,700.

Darragh Elliott-the 1st trial

[ 11 ] I should say, for the benefit of Mr. Elliott, that I am deciding the extent to which the Chubb Insurance Company of Canada is required to assist Bridgette Sagl with her obligation to pay Mr. Elliott for his services. I am not deciding how much Bridgette Sagl owes Mr. Elliott.

[ 12 ] Mr. Elliott indicated that he spent 1100 hours preparing his report. However, Mr. Elliott has difficulty being accurate about time measurement. For example, he billed seventeen hours for meeting with Mr. Percival and the plaintiff’s other expert witness, Mr. Daniel Soules, in Montréal. Mr. Percival, on the other hand, billed 10.6 hours, including travelling time for the same meeting. Mr. Elliott billed five hours for a meeting in August with Mr. Percival; Mr. Percival billed 1.3 hours for the same meeting.

[ 13 ] At the same time, I have to consider that Mr. Stephen Sweeting, who testified for the defence, indicated to Bridgette Sagl in a 1995 estimate that it would take him between forty-five and fifty-five hours to estimate the value of sixty articles of her artwork. Mr. Elliott purported to value some 2,580 articles of artwork, although some of these articles were prints. Mr. Sweeting was, of course, attempting to evaluate pieces of art which he was able to examine; Mr. Elliott was estimating the value of artwork which was wholly or partially destroyed.

[ 14 ] Finally, I have had the opportunity to very carefully consider Mr. Elliott’s Appraisal Report while writing my reasons.

[ 15 ] After weighing these considerations, I am satisfied that Mr. Elliott's estimate of the time he spent preparing his report should be reduced to 900 hours.

[ 16 ] Mr. Elliott purported to charge $250 per hour in 1998-1999 in connection with the preparation of his report. Mr. Elliott sent an invoice to Bridgette Sagl, dated January 26, 1993. The date on this invoice is incorrect; the date should have read January 26, 1994. This invoice was obviously rendered prior to the events which bring us here. In that invoice, Mr. Elliott charged US$250 per hour for his time. Mr. Stephen Sweeting, who gave expert evidence on behalf of Chubb Insurance Company of Canada, provided a fee estimate in 1995 to Bridgette Sagl in connection with the valuation of sixty pieces of artwork. Mr. Sweeting quoted an hourly rate of $150 per hour.

[ 17 ] I am satisfied that the US$250 per hour is consistent with Mr. Elliott's billing practices prior to this matter arising and that it is a reasonable rate for him to charge.

[ 18 ] I am satisfied that a portion of the work associated with the preparation of Mr. Elliott's Appraisal Report is fairly attributable to Bridgette Sagl's obligation to file a proof of claim in order to be compensated. It was Mr. Elliott's expectation that his report alone would result in the payment of the plaintiff’s claim without an actual court case. Mr. Elliott confirmed this fact in his Costs Submissions which were filed by Mr. Griffin at the court's direction. At page six of his Costs Submissions, Mr. Elliott states that Mr. Croft, of the National Fire Adjustment Co., explained to him prior to the preparation of his report that "what was required was an appraisal of Mrs. Sagl’s works of art that were lost in the fire and that after the statement of claim was filed with the Chubb Insurance Company of Canada it would only be a matter of a couple of months at the most before the claims would be paid by Chubb." At the same time, it was always clear, at least to Chubb, that litigation was a realistic possibility.

[ 19 ] I am satisfied that it is reasonable, therefore, to attribute two-thirds of the cost of Mr. Elliott's report to this litigation.

[ 20 ] Finally, Mr. Elliott claims interest at the rate of 2% per month. He does this on the basis of an agreement reached with Bridgette Sagl. It is completely unreasonable to expect Chubb to pay pre-judgment interest at the rate of 2% per month. On the other hand, it does appear that pre-judgment interest is appropriate. Accordingly, Mr. Elliott will be entitled to pre-judgment interest at the rate of the average annual pre-judgment interest rate for the years 1999-2010, inclusive.

[ 21 ] Mr. Elliott claimed a fee for preparation and attendance at the first trial $32,721.66. This seems reasonable given the length and complexity of the first trial. Mr. Elliott is entitled to GST.

Darragh Elliott-the 2nd trial

[ 22 ] Mr. Elliott claims $179,695.44 for his supplementary report, preparation and attendance at the second trial. It is not clear why the cost of preparation and attendance at the second trial should have been any different than the preparation and attendance at the first trial. Mr. Elliott’s second report was received as Exhibit 37B. The first page is a title page; the next four-and-a-half pages are an elaboration of Mr. Elliott's credentials and background; the balance of page five and a portion of page six deal with Mr. Elliott's initial instructions from Bridgette Sagl and a description of the sequence of events following the fire. Pages seven-nine elaborate on the reference sources utilized by Mr. Elliott in his 1999 Appraisal Report. The last page of the report is page nine.

[ 23 ] Ultimately, I am satisfied that no satisfactory explanation emerges for the difference between the cost of Mr. Elliott's attendance at the first trial and the cost of his attendance at the second trial. Mr. Elliott's claim for his supplementary report, preparation and attendance at the second trial will be reduced to an amount approximating the amount he claimed for his preparation and attendance at the first trial; namely, $30,000.

Chubb’s Partial Success

[ 24 ] It is true that the defendant successfully defended the punitive damages claim. For costs purposes, the defendant’s success is coloured by its failure to produce the Phillips memo until it was referred to in evidence in a jury trial. In my view, these two factors cancel each other out and no reduction in costs for this reason is appropriate.

Conclusion

[ 25 ] Counsel will prepare an order concerning costs in accordance with this endorsement.

[ 26 ] Elements of the submissions of both parties were incorporated into this endorsement and so, therefore, there will be no order for costs on this motion.

MARROCCO J.

RELEASED: 20120111