Court File and Parties

COURT FILE NO.: 03-CV-259888CM3
DATE: 20120126
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: VICTORIA NICOLAS and CARLOS NICOLAS, Plaintiffs

AND:

JOSEPH BOWERS, Defendant

BEFORE: Justice Gans

COUNSEL:
Carolyn V. Amendola, for the Plaintiffs
Bruce Day, for the Defendant

HEARD: In Writing

ENDORSEMENT

Introduction

[ 1 ] I am now proceeding to what I hope will be the denouement of the longest post jury verdict process I have encountered in close to 15 years as a judge of the Superior Court. I will deliver judgment on certain ancillary issues arising out of a jury verdict rendered in late March 2010 at the conclusion of a relatively straight forward “rear-end” soft-tissue injury case.

[ 2 ] Three issues remain:

(1) To what extent, if any, should statutory income replacement benefits (“IRBs”) be deducted from a jury award in respect of income loss;

(2) Is the plaintiff entitled to her costs of this action on a substantial indemnity basis or some portion thereof;

(3) Are previously fixed costs deductible from any amounts remaining payable by the defendants.

IRBs

[ 3 ] The plaintiff was injured in the subject accident in early December 2001. She did not return to work in any respect until the beginning of March 2002, returning full-time in May 2002. After her employee sick days were used up, she applied for and received IRBs totalling $5,261.09, which sum was received in late March 2002. She was not entitled to any more IRBs after March 2002.

[ 4 ] At the trial of the action, in addition to filing an agreed statement of facts, which curiously advised the jury of the matters described above, counsel for the plaintiff presented the jury in argument with a written summary of evidence. This document purported to set out a claim for lost over-time pay from the end of May 2002 to the date of trial, in the amount of $16,217.19. My recollection of the circumstances giving rise to this document being left with the jury is long since dimmed and I cannot recall what position counsel for the defendant took in that regard.

[ 5 ] The question put to the jury in respect of income loss was as follows:

Do you find the plaintiff, Victoria Nicolas, has suffered a loss of income to the date of trial?

The jury returned a verdict of “yes” and set the income loss at $4,250.

[ 6 ] It is the defendant’s position that nothing is payable under this aspect of the award by operation of s. 267.5(1) and s. 267.8(1) of the Insurance Act , R.S.O. 1990, c I.8. Having regard to the math that is generated by the deductions provided for in the aforesaid sections, he argued that I need not consider the impact of the jury’s finding of 15% contributory negligence on the part of the plaintiff since her net recovery is already zero. Counsel cites two cases in support of his argument, namely Karamzadeh v. Pierre , [2010] O.J. No. 1424 (Div .Ct) and Campbell v. Wood , [2011] O.J. No 930 (S.C.) .

[ 7 ] Plaintiffs’ counsel conceded that the award in respect of loss of income should be reduced by 20% as provided for in s. 267.5(1) , as aforesaid, which would yield a net amount of $3400. While she disputes the applicability of the deductions “prescribed” under s. 267.8(1) , I do not see anywhere in her written argument mention of a further deduction for contributory negligence, which would yield a net amount payable of $2890.

[ 8 ] Neither counsel provided me with any jurisprudence in respect of an interpretation of s. 267.8(1). I was left to my own devices to struggle with the interpretation of that section, and, regrettably, could not find any cases directly on point, although I did find one recent case that dealt with the section under review. The applicable subsection reads as follows:

Collateral benefits

Income loss and loss of earning capacity

267.8 (1) In an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, the damages to which a plaintiff is entitled for income loss and loss of earning capacity shall be reduced by the following amounts:

1. All payments in respect of the incident that the plaintiff has received or that were available before the trial of the action for statutory accident benefits in respect of the income loss and loss of earning capacity.

[ 9 ] It is the plaintiff’s position that because she did not make a claim for the period of time for which she actually received IRBs, temporally the post accident period up to and including the end of March 2002, the deduction anticipated by the subsection was not applicable. She argued that the jury award inferentially covers the period from May 2002 until the date of trial and not the period for which the IRBs were paid.

[ 10 ] This apparent conflict between the parties, one of many in this trial and in the aftermath of the trial, is left to be determined by an interpretation of the words in the preamble to the section, in particular, the words “...damages to which a plaintiff is entitled...” In my opinion, those words should take on the characteristic of what claim was made and put to the jury in the final analysis, which circumscribes the amount to which the plaintiff is “entitled.” In other words, if the plaintiff does not make a claim for income loss in the tort action for a certain period of time after the date of the accident, she cannot now be said to be entitled to any such amount as anticipated by the legislation, notionally or otherwise. Hence, the deduction called for in the immediately following paragraphs of the subsection would not, in my opinion, come into play.

[ 11 ] The rationale for the deduction or deductibility of IRBs and other benefits is to insure that a plaintiff in a tort action will not obtain double recovery due to amounts received from various insurers. Credit is therefore given to the tort insurer for payments received or which could have been received had the requisite application for payment been made. The avoidance of double recovery is at the root of most of the decisions interpreting these sections of the Insurance Act .

[ 12 ] To permit a deduction, however, in the instant case where a claim for entitlement was not left with the jury would, in my view, exact a penalty against the plaintiff for not making a claim in the tort action for which she had already been compensated, albeit on a net of tax basis, a result which the legislation was not designed to accomplish. If that interpretation were to prevail, it would also mean that prudent counsel would be obliged to make a claim for amounts already recovered under the IRBs regime, wage continuation plan or sick benefits received out of an abundance of caution, which might result in a marginal waste of trial time. It would as well, and more often than not, compel counsel to retain accountants to crunch numbers and perform “net income” calculations, as was suggested by defendant’s counsel, even when the amounts in issue do not warrant such an expense. I have come to the above noted conclusion after considering two decisions of the Court of Appeal, namely Cumming v Douglas, 2007 ONCA 615 and Bannon v. McNeely , 1998 4486 (ON CA) , [1998] O.J. No.1673 (C.A.) and more to the point, the recent decision of Sutherland v. Singh , 2011, ONCA 470 at paras. 21-23 , which speaks to the subsection in question.

[ 13 ] I have also rejected defendant counsel’s argument on the apparent inconsistency between the plaintiff counsel’s argument and my charge which on its face did not parse the time period for which the loss of income claim was being advanced. I am not sure one benefits from a nuanced analysis of one line in a jury charge rather than the period of income loss described and claimed in argument, which I can infer was not lost on the jury, in light of the Agreed Statement of Facts, filed as Exhibit 1.

[ 14 ] The plaintiff will therefore be entitled to the sum total of $2890 plus interest from and after the date of judgment for the loss of income award, without further deduction.

Substantial Indemnity Costs

[ 15 ] The whole issue surrounding the setting or settling of costs has taken on something of a life of its own. I rendered a decision on the “threshold” question in early April 2010, within days of the jury award. I gather from the exchange of e-mails between counsel over the next year plus, with which I have been furnished, that little or no progress was made in terms of resolving the outstanding costs. This turn of events was somewhat curious since defendant’s counsel apparently acknowledged that costs were payable by his client, albeit on a partial indemnity basis, but was awaiting the delivery of dockets and details of disbursements which he sought to review before making a costs offer. Little if any of the requested back-up material was furnished by plaintiff’s counsel, notwithstanding the fact that I made an order in December 2010 for its delivery at the end of February 2011.

[ 16 ] No progress was made on this or any other issue then in dispute until I convened a meeting of counsel on September 22, 2011, again at the request of defendant’s counsel. At that meeting, I was able to assist the parties in coming to an agreement on the amount of partial indemnity costs, which were fixed in an agreed upon amount of $92,500 for fees, plus $13,500 for assessable disbursements, plus applicable HST and GST, less any sums paid on account.

[ 17 ] As part of the agreement, plaintiff’s counsel was given leave to pursue a request for an increase in the agreed-to figure or costs on a substantial indemnity basis or some percentage thereof, if so instructed. I again set a timeline for the delivery of argument and material, which was extended on at least two occasions at the request of plaintiff’s counsel. The positions of the parties were finally received around the New Year.

[ 18 ] I do not intend to parse in this endorsement plaintiff counsel’s argument. It is best summarized in her written argument at paragraph 32, which I have reproduced below:

The Plaintiffs respectfully submit that in the interests of justice and in light of all the circumstances, as set out above, this is exactly the kind of case which cries out for a remedial penalty of increased costs against the Defendant. Do not reward the Defendant for its intransigence, its failure to settle the claim expeditiously and its total disregard for the Plaintiffs personal exposure and risk in this action.

[ 19 ] This summary is fleshed out in the antecedent paragraphs contained in counsel’s written submission, particularly at paragraph 21. Attempts thereafter are made to justify the amounts now sought by reference to jurisprudence which is of marginal applicability to the task with which I have been beset or which has otherwise been accepted by defendant’s counsel.

[ 20 ] In the first place, I am not persuaded that the plaintiff’s final offer before trial comes close to the amount of the award ultimately received. The plaintiff’s offer of $100,000, net of deductible, or $121,500 gross, is not close to the jury award net of contributory negligence of $67,362. 50. Even if I were to gross up that figure by the 15% factor of contributory negligence, such would still not put the plaintiff in any substantial indemnity ball park. Hence, rule 49 (10) of the Rules of Civil Procedure , R.R.O. Reg.194 does not apply.

[ 21 ] That said, I now turn to the conduct of the defendant throughout the course of these proceedings to determine if such conduct warrants sanctioning by this court. The starting point for this analysis, in addition to the cases cited by counsel for the defendant, is the decision of the Court of Appeal in Davies v. Clarington (Municipalit y), 2009 ONCA 722 (“ Davies ”), at paragraphs 40 and 46 , which provide as follows:

40 In summary, while fixing costs is a discretionary exercise, attracting a high level of deference, it must be on a principled basis. The judicial discretion under rules 49.13 and 57.01 is not so broad as to permit a fundamental change to the law that governs the award of an elevated level of costs. Apart from the operation of rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made. [Emphasis added.]

46 Here, there is no finding or evidence in the record of "harassment...by the pursuit of fruitless litigation". The settling defendants were entitled to advance their position; they were not required to settle. In the end, the trial judge did not agree with their position but the settling defendants did nothing to abuse the process of the court. In short, there was no wrongdoing on the part of the settling defendants that warranted a rebuke from the court.

[ 22 ] In the first place, I have not been provided with any evidence that defendant’s counsel refused or neglected to attend any requested mediation and therefore s. 258.5(1) of the Insurance Act and the decision of the Court of Appeal in Kearn v Caddey , [2010] ONCA 565 are not brought into play. Indeed, the evidence on the record with which I have been provided is all to the contrary.

[ 23 ] The fact that the defendant chose to put the plaintiffs to the strict proof of their claim, including whether or not Victoria Nicolas’s claim for non-pecuniary damages passed the threshold is of no moment in the circumstances of this case. While I hold the personal view that all cases have an economic settlement threshold, as it were, beyond which it might be prudent to settle, and I urge party litigants to consider settling even during the trial process, failure to yield to the suggestion of a judicial officer does not necessarily lead to an adverse costs consequence.

[ 24 ] This notion is best expressed by Epstein J.A. in Davies at paragraph 45 where she made the following observation:

Of course, a distinction must be made between hard-fought litigation that turns out to have been misguided, on the one hand, and malicious counter-productive conduct, on the other. The former, the thrust and parry of the adversary system, does not warrant sanction: the latter well may. In Apotex v. Egis Pharmaceuticals (1991), 1991 2729 (ON SC) , 4 O.R. (3d) 321 (Ont. C.J.), substantial indemnity costs were justified as a means "to discourage harassment of another party by the pursuit of fruitless litigation...particularly where a party has conducted itself improperly in the view of this court."

[ 25 ] Even if I were satisfied that the amount now sought by plaintiff’s counsel could be supported on the basis of dockets, which were never forthcoming, or if the manner in which the case was organized, argued and presented cried out for the exercise of a judicial discretion, I am not persuaded that there is any principled reason for me to accede to the plaintiff’s request for an increase in the award of costs from that agreed upon. Again, the conduct of the defendant does not warrant such an exercise of discretion. Furthermore, I am satisfied that the other arguments set out in paragraph 21 of plaintiff counsel’s factum have been adequately traversed by the observations made by defendant’s counsel in paragraph 14 of his response argument. I am also of the view that many of the matters now argued by plaintiff’s counsel are irrelevant and unsupported at law, or at least the law with which I was provided.

[ 26 ] In the circumstances, the plaintiff’s request for an increase in the amount of costs beyond the partial indemnity basis agreed upon is denied.

Previous Costs Award

[ 27 ] The previous costs order for costs thrown away made by Low J. has not been dealt with in Ms. Amendola’s argument. I see no reason why the award of costs should not be deducted from any amounts yet to be paid in satisfaction of the judgment, any order for costs, and accrued interest.

[ 28 ] As previously indicated, the ancillary issues associated with this action have not been resolved and we are quickly approaching the second anniversary of the trial. While arguably the issues canvassed in this endorsement, if only monetarily, fall on the defendant’s side of the ledger, I am not sure that any award of costs would do anything but launch the parties into another in a long line of disputes. Hence, I decline to make any order as to costs of the September attendance before me and the preparation and delivery of written argument and material.

GANS J.

Date: January 26, 2012