ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 54249 (London)
DATE: 2012/07/27

B E T W E E N:

PAMELA MICHIENZI

Douglas M. Bryce and Maciej Piekosz, for the plaintiff

Plaintiff

• and -

JENNIFER KUSPIRA

William G. Woodward , for the Defendant

Defendant

HEARD: June 15, 2012

Grace J.

COSTS ENDORSEMENT

[ 1 ] This well conducted trial concluded on May 3, 2012. It concerned serious injuries Pamela Michienzi suffered when thrown from her motorcycle as a result of Jennifer Kuspira’s negligence. The jury awarded Pamela Michienzi $225,000 for general damages, $133,000 for the loss of future care costs and $114,600 for the future loss of the capacity to perform household and maintenance tasks. With the addition of prejudgment interest on the general damages component, the aggregate award totaled $537,287.50. [1]

[ 2 ] The plaintiff seeks recovery of costs of the action on a partial indemnity basis in the aggregate amount of $271,103.19 which includes approximately $167k for fees and $80k for disbursements.

[ 3 ] The defendant concedes that partial indemnity costs are payable to the plaintiff until March 27, 2012. However, the defendant argues that she is entitled to partial indemnity costs thereafter. The defendant seeks costs of $94,855.67 for that period. It includes approximately $61k for fees and $26k for disbursements.

[ 4 ] The defendant’s lawyer Mr. Woodward relies on an offer served on March 27, 2012 (the “first offer”). [2]

[ 5 ] Ms. Michienzi recovered less money at trial ($537,287.50) than she would have received if the first offer had been accepted ($550k plus interest). Given the result and had the first offer fulfilled the three preconditions set forth in rule 49.10 (2) of the Rules of Civil Procedure , the cost consequences Mr. Woodward seeks would flow. [3] It is conceded the first offer did not comply.

[ 6 ] Rule 40.10 (2) (b) requires that an offer be available for acceptance when trial commences. [4] In this case, an error was discovered and the first offer was withdrawn on the eve of trial.

[ 7 ] On April 9, 2012, the defendant delivered a second offer (the “second offer”). It corrected the error which had been identified. Had that offer been accepted Ms. Michienzi would have received slightly more ($550k) than the judgment at trial ($537,287.50). However, it failed to satisfy rule 49.10 (2) (a). That sub rule requires an offer to be served at least seven days before the beginning of trial.

[ 8 ] Notwithstanding non-compliance with rule 49.10 (2), Mr. Woodward submits the same cost consequences should flow. He points to the court’s wide discretion under s. 131 of the Courts of Justice Act , [5] the long list of factors set forth in rule 57.01 and rule 49.13. The latter rule states:

Despite rules 49.03, 49.10…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.

[ 9 ] With respect, I disagree. In the case of the second (late) offer, the result advocated by the defendant would offend rule 49.03. [6] It provides in part that:

…where the offer to settle is made less than seven days before the hearing commences, the costs consequences referred to in rule 49.10 do not apply. [Italics added]

[ 10 ] The first offer is also problematic. During submissions Mr. Bryce said the first offer was the subject of discussion on April 4. He said an error was identified. He said he was advised the first offer was for more money than intended. Knowing the first offer contained unintended words, Mr. Bryce awaited clarification. That came on April 9, 2012 in the form of a notice of withdrawal of the first offer and the second offer. Trial commenced the next day. The second offer differed from the first in a material way. Interest was included in rather than excluded from the $550k figure.

[ 11 ] In responding submissions, Mr. Woodward said the conversation referenced by Mr. Bryce occurred on April 9, not 4. He maintains the first offer was open for acceptance until the day before trial. Had that occurred, the mistake would have been an item requiring the attention of Mr. Woodward and his client but not Ms Michienzi.

[ 12 ] I am not in a position to determine whether the conversation occurred on April 4 as Mr. Bryce recollects or April 9 as Mr. Woodward believes. Given the efficiency of the trial I have no doubt Mr. Bryce and Mr. Woodward had multiple discussions concerning a number of issues as trial approached. Without hesitation, I accept that both lawyers have a genuine – though different - recollection of the content and timing of conversations concerning settlement. I also have no doubt that upon learning the first offer included an unintended item Mr. Bryce refrained from acting upon it and stood by.

[ 13 ] Given the error, the fuzziness with respect to the circumstances surrounding its identification and the late withdrawal and replacement of the first offer, I respectfully decline to give it the weight Mr. Woodward requested. This case is not like Thomas (Committee of) v. Bell Helmets Inc . [7] In that case, three written offers were made on behalf of the plaintiffs. The third offer withdrew the previous ones. The plaintiffs obtained a result at trial that was more favourable than all three offers.

[ 14 ] At trial, costs were awarded to the plaintiffs on a higher scale from the date of the first offer notwithstanding its withdrawal. The trial judge relied on rule 49.13. In upholding that decision, the Court of Appeal wrote:

In our opinion, when the three plaintiffs’ offers, their dates and their terms are taken into account in accordance with rule 49.13, those offers provide a basis upon which the trial judge’s award of solicitor and client costs from the date of the first offer…is justified.

All three…offers…would, if accepted, have resulted in a resolution of this action on terms more favourable to [the defendant] than the trial judgment. There was no time from…the date of the first offer, to…when trial began where there not a written plaintiffs’ offer on the table substantially more favourable to [the defendant] than the trial judgment. [8]

[ 15 ] A cautionary note was added.

We do not wish to be taken to have concluded that in all cases where rule 49.10(1) does not apply, sequential offers to settle, if less than the judgment in the case of plaintiffs offers, or more than the judgment in the case of defence offers, will automatically lead to an award of solicitor and client costs from the date of the first offer. Each case will have to be considered having regard to its relevant features and the provisions of rule 49.13 assuming, of course, that rule 49.10(1) does not apply. [9]

[ 16 ] The passages quoted lead to this conclusion. In principle, the cost consequences contemplated by rule 49.10 (1) or (2) may flow even if an otherwise qualifying offer is withdrawn before trial. However, the circumstances must be exceptional ones. They were not present in this case either in respect of the first or second offer.

[ 17 ] Mr. Woodward made an alternative argument based on the facts I have summarized and the plaintiff’s April 2, 2012 offer for $725k net of any applicable deductible and collateral benefits paid beforehand. He maintains that the key issue at trial was Ms. Michienzi’s future income loss claim. The jury awarded nothing on account of that item.

[ 18 ] Given the result, the defendant’s offers were more realistic and reasonable. Consequently, Mr. Woodward submits each party should bear their own costs of trial. [10]

[ 19 ] For the following reasons I disagree.

[ 20 ] Both parties made a genuine effort to resolve the matter before trial while reserving all rights and defences if unsuccessful. For example, the plaintiff did not agree to confine her claim to the policy limits and the defendant did not admit liability until late in the day.

[ 21 ] Claims for damages were asserted under various heads. The trial was factually complex. Thirty three witnesses testified.

[ 22 ] During closing argument, it became clear that the scope of the dispute in respect of general damages, future care costs and the future loss of capacity to perform housekeeping and home maintenance had narrowed considerably. However, none of those items were settled before or during the trial. A significant portion of the trial was devoted to those issues.

[ 23 ] On the ninth day of trial (April 23), Mr. Woodward advised the court that the “threshold” issue was not a “significant one”. He indicated he was awaiting instructions. Soon afterward, the issue was, appropriately, conceded.

[ 24 ] However, the plaintiff could not count on that position until half way through the trial. By then the evidence and arguments with respect to the threshold issue had been gathered and readied.

[ 25 ] The loss of future income issue was the most significant monetary claim. Some of the trial time was properly devoted to that issue as well. Its outcome seemed very much in doubt to me.

[ 26 ] In his written submissions, Mr. Woodward wrote “jury verdicts are notoriously difficult to predict”. That statement is an apt one in this case particularly with respect to the future income loss claim.

[ 27 ] My point is simply this: the general rule is that costs follow the event. In this case, the plaintiff was successful albeit not on account of every claim and therefore, not to the extent of the offer to settle delivered on her behalf.

[ 28 ] Is that a reason to deprive the plaintiff of all of the costs of the trial? On the particular facts here, no. Given the plaintiff’s injuries, her status emotionally, physically and vocationally, this case involved factual and – until the issues of liability and threshold were conceded - legal complexity. Preparing for the trial was obviously a mammoth undertaking. While I do not know much about the efforts made to resolve this action, there appear to have been at least two in person attempts. However, written offers were not generated until shortly before commencement of a multi-week trial.

[ 29 ] Given the analysis I have already undertaken with respect to the first and second offers and the parties’ positions at trial with respect to liability, threshold and damages, this is a case where the general rule should be applied. Throughout the plaintiff should receive her costs of the action on a partial indemnity basis.

[ 30 ] I turn to the factors delineated in rule 57.01.

[ 31 ] A detailed analysis of them is not necessary. No one disputes that significant costs were incurred. Mr. Woodward provided me with the defendant’s bill of costs for the period from March 28, 2012 onward reflecting the modest hourly rates the defendant sought. As noted, it includes approximately $61k for fees and $26k for disbursements. Had his arguments carried the day, I would have awarded the entire amount claimed.

[ 32 ] Mr. Woodward acknowledged, begrudgingly, that the higher hourly rates claimed by the plaintiff’s counsel were appropriate given their experience and the now somewhat dated report of the Costs Subcommittee of the Civil Rules Committee.

[ 33 ] Rightly, Mr. Woodward’s concerns with the amount claimed on behalf of the plaintiff focused on specific items: the number of hours claimed on account of research, the fact block time (12 hours) was claimed for each day of trial, an observation that evidence seemed, at times, to be repetitive and hence unnecessary and that some of the disbursements – particularly the amount claimed with respect to the chiropractor called at trial – were inappropriate or excessive.

[ 34 ] I have taken those submissions into account. I have also considered Mr. Bryce’s response: that the disbursement specifically mentioned reflects the amount invoiced by the chiropractor, a block charge was appropriate because, on balance, twelve hours per day was spent on attendance at or preparation for the next day of trial, that research time was significant because the “threshold” and liability issues were not conceded until late and that every witness was integral and necessary.

[ 35 ] I do not need to be reminded that I commended counsel at the conclusion of trial. The time devoted to preparation was obvious and appreciated. Witnesses were at the ready in a continuous line. There were minimal – if any – interruptions. I did intervene at times during the plaintiff’s case to comment on length and repetition. However, on balance, the conduct of the trial was a model and I am thankful to all who participated in it.

[ 36 ] Taking all of the above into consideration – the result, the hourly rates, the steps taken, the amounts in issue, legal and factual complexity, the offers, the positions taken by the parties, the result at trial, the importance of the issues and the quality of the work performed, I am of the opinion that the fair and reasonable amount payable by the defendant to the plaintiff on account of costs is the all inclusive sum of $225,000.

[ 37 ] I do not want the discussion concerning costs to suggest that the human side has been forgotten. The jury’s verdict completed a leg in a painful journey for Pamela Michienzi and those who care about her. Their lives were tragically and permanently altered by the events of August 10, 2006. To say that Ms. Michienzi has battled valiantly and admirably since is an understatement.

“ Justice A. D. Grace”

Justice A. D. Grace

Released: July 27, 2012

[1] That award was made as directed by rule 53.10.

[2] The offer was dated March 20, 2012.

[3] The consequences are not automatic. The court retains jurisdiction to make an order to the contrary in appropriate circumstances.

[4] Rule 49.10 (2) (b).

[5] R.S.O. 1990, c. C.43 .

[6] Begum v. Miah , [2002] O.J. No. 3389 .

[7] 1999 9312 (ON CA) , [1999] O.J. No. 4293 (C.A.).

[8] Ibid. at paras. 78-79.

[9] Ibid. at para. 81. Rule 49.10 (2) should also have been mentioned given the reference to defence offers.

[10] That was the result in Datamex Ltd. v. Eberline International Corp., [1986] O.J. No. 2314 (H.C.J.) .