COURT FILE AND PARTIES

COURT FILE NO.: CV-07-CT051277
DATE: 20121009

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Jacqueline Rodas, Tiffany Rodas by her Litigation Guardian, Edil Rodas, Jennifer Rodas by her Litigation Guardian, Edil Rodas, James Rodas by his Litigation Guardian, Edil Rodas and Edil Rodas personally, Plaintiffs

AND:

Toronto Transit Commission and Vernon Wicks, Defendants

BEFORE: Madam Justice Darla A. Wilson

COUNSEL:
Michael Rubin , Counsel for the Plaintiffs

Chad Townsend & Laura Qaqish , Counsel for the Defendants

HEARD: September 4, 2012

ENDORSEMENT ON COSTS

[ 1 ] The trial of this action proceeded before a jury commencing June 4, 2012 with the jury returning their verdict on June 29, 2012. The jury was asked to answer eight questions. The first question was, “Did the accident of September 8, 2006 cause or contribute any injury to the Plaintiff, Jacqueline Rodas? Answer Yes or No.” The jury answered this question in the negative and thus, there was no need to answer any further questions.

[ 2 ] Counsel for the Plaintiffs moved for an order setting aside the jury verdict. I dismissed this motion for oral reasons given and endorsed the record that judgment was to issue in accordance with the jury verdict.

[ 3 ] Counsel could not agree on costs and I received written submissions and heard oral argument on this issue. In the interim, I delivered written reasons on the motion brought by the Defendants for an order that the Plaintiff’s claims were precluded by the applicable threshold set out in the legislation: that her injuries do not constitute permanent serious impairments of important physical, mental, or psychological functions. I granted the defence motion and dismissed the action as not coming within an exception to the threshold set out in the legislation.

Position of Toronto Transit Commission

[ 4 ] The Defendants seek costs on a partial indemnity scale to the date of their offer to settle in September 2009 and on a substantial indemnity scale thereafter. The costs of the Defendants on a partial indemnity scale up to the commencement of trial were in the sum of $61,070.85 for fees plus disbursements of $54,831.10 for a total of $115,901.95. The Defendant’s fees on a partial indemnity basis throughout including trial time are $253,786.26 plus disbursements of $99,852.90 for a total bill of $353,639.16.

[ 5 ] The Bill of Costs on a partial indemnity scale to September 2009 and on a substantial indemnity basis thereafter, including trial time, has fees of $354,263.48 plus disbursements of $99,852.90 for a total of $454,116.38.

[ 6 ] The Defendants served an offer to settle pursuant to Rule 49 of the Rules of Civil Procedure , R.R.O. 1990, Reg. 194, on September 29, 2009. The offer was made on the court file number in this action and had the following terms:

1. The Defendants offer to settle all issues in dispute in the two actions and prejudgment interest[] for the global sum of $65,000.

2. The Defendants offer to settle costs and disbursement[s] by assessment or agreement.

3. This offer is open for acceptance until one minute after trial has commenced.

[ 7 ] I understand that the reference to “two actions” in the first paragraph of the offer was an error; there were never two actions. On May 27, 2012, just prior to the commencement of this trial, the Defendants withdrew the offer to settle. The Plaintiffs served an offer to settle on April 23, 2012 in the sum of $350,000 plus interest and costs.

[ 8 ] The basis for the demand of the solicitors for the Defendants of costs on a substantial indemnity scale appears to be that the matter should not have proceeded to trial over the course of some five weeks. It is submitted that the Plaintiff and her family intentionally deceived the court in order to obtain compensation.

[ 9 ] Further, it is submitted, the conduct of the counsel for the Plaintiffs lengthened the trial unnecessarily and various examples are cited: the unsuccessful motion for a mistrial following the opening to the jury by the solicitor for the Defendants; the submission of Ms. Tanner following completion of the evidence alleging judicial bias; the motion brought by the Plaintiffs following the jury verdict requesting that it be set aside; the refusal to advise defence counsel of the identity of witnesses being called for the Plaintiffs; service of new expert reports during the course of the trial; and offensive, improper personal attacks on the solicitor for the Defendants.

[ 10 ] The fact that it took the jury a very short time to render its verdict is testament to the fact that the claims of the Plaintiff were outrageous and not supported on the evidence. This ought to have been obvious to the solicitors for the Plaintiff and had they been reasonable, the case would have settled without the necessity of a lengthy trial.

Position of the Plaintiffs

[ 11 ] Counsel for the Plaintiffs denies that there was inappropriate conduct and assert that they attempted to shorten the duration of the proceeding. It is submitted that the Plaintiffs have been punished by a newspaper article that was published following the jury verdict which resulted in the Plaintiffs being ostracized in their community. They note that a costs award may force the Plaintiffs to sell their house which would result in disruption in the lives of their children.

[ 12 ] Further, counsel for the Plaintiffs submits that the amounts being claimed for fees are excessive and the hourly rates are inappropriate given that defence counsel are in-house at the Toronto Transit Commission. It is pointed out that there is time included for internal discussions and clerk time ought not to be part of the fees being claimed. It is the submission of Mr. Rubin that $147,635.29 in fees and disbursements ought to be excluded.

Analysis

[ 13 ] Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, along with rule 57.01 of the Rules of Civil Procedure , governs the award of costs and provides the court with discretion to fix costs. Rule 57 enumerates the various factors a court may consider when determining the issue of costs. The Divisional Court in Andersen v. St. Jude Medical, Inc. (2006), 2006 85158 (ON SCDC) , 264 D.L.R. (4th) 557 (Ont. Div. Ct.), at para. 22 , set out the principles which should guide the court exercising its discretion to fix costs:

1. The discretion of the court must be exercised in light of the specific facts and circumstances of the case in relation to the factors set out in rule 57.01(1): Boucher , Moon and Coldmatic .

2. A consideration of experience, rates charged and hours spent (formerly a costs grid calculation) is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case: Boucher . The quantum should reflect an amount the court considers to be fair and reasonable rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering .

3. The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining an amount that is fair and reasonable: rule 57.01(1)(0.b).

4. The court should seek to avoid inconsistency with comparable awards in other cases. “Like cases, [if they can be found], should conclude with like substantive results”: Murano at p. 249.

5. The court should seek to balance the indemnity principle with the fundamental objective of access to justice: Boucher .

[ 14 ] The court must take into account the principles set forth by the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA) , 71 O.R. (3d) 291 (C.A.), specifically, at para. 26, that the overall “objective [of fixing costs] is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.”

[ 15 ] Rule 57 and section 131(1) of the Courts of Justice Act grant the courts wide discretion over cost awards. I will set out for ease of reference the various factors for consideration pursuant to rule 57.01(1):

(0.a) the principle of indemnity…;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

(i) any other matter relevant to the question of costs.

[ 16 ] In my view, this is not a case where there ought to be an award of substantial indemnity costs made in favour of the Defendants. I do not find the conduct of the Plaintiff was reprehensible, justifying this type of costs award. Furthermore, while there was an offer to settle made by the Defendants, that offer was withdrawn prior to trial. Rule 49.10 states that an offer made by a Defendant at least seven days prior to trial and that has not been withdrawn attracts the cost consequences set out in that rule. In this case, the Defendants withdrew their offer prior to the commencement of trial so there is no compliance with the requirements of the rule. While there is discretion in the court to order cost consequences even if the rules have not been technically complied with, I am not persuaded there is any reason to do so in the case before me.

[ 17 ] Cases involving damages sought for chronic pain arising from an accident often have a large sway in terms of their value and this is particularly true when the case is being tried by a jury. One of the difficulties in assessing cases of this nature is the fact that there is generally nothing objective from a clinical perspective that one can look to as a reason for the severity of the patient’s complaints. Thus, the triers of fact must look to the credibility of the Plaintiff and the expert opinions of the medical witnesses when attempting to assess the damages. The outcome is highly unpredictable in cases involving this type of injury.

[ 18 ] It is a well-known principle that the purpose of Rule 49 is to encourage parties to make reasonable offers to settle to resolve litigation short of a trial. If a party chooses to proceed to trial in the face of a reasonable offer to settle from the adverse party, he or she does so knowing that there may be adverse cost consequences. The Court has a wide discretion with respect to making orders of costs and the particular facts of the situation giving rise to the entitlement of costs must be scrutinized.

[ 19 ] The Plaintiffs’ formal offer to settle going into trial was $350,000 plus interest and costs. The Defendants offered $65,000 including interest plus costs. In my view, the offer to settle of the Plaintiffs was not a reasonable compromise in an effort to avoid a lengthy trial. It must have been clear at the time the Plaintiffs served their offer that the defence had a very different view of the case, which was supported by the medical opinions of the experts they had retained who had examined Ms. Rodas. To put it another way, it must have been evident that if the defence theory of the case was accepted, the result at trial would be either a dismissal of the case or a very small award. Thus, the risk of proceeding through a trial of several weeks and the costs inherent in doing so must have been one that was considered by the Plaintiffs and their counsel prior to embarking on the trial. The Plaintiffs cannot now be heard to say that the outcome was not what they anticipated and since they recovered no damages, they should not have to pay costs.

[ 20 ] In my view, there is no cogent reason why, given the jury verdict as well as my decision on the threshold issue, costs ought not to be visited upon the Plaintiffs. The Plaintiffs were represented by experienced counsel during this litigation and would have been advised of the risks of proceeding through a trial, including potential cost ramifications if the verdict was unfavourable. Parties are certainly entitled to their “day in court” but they must understand that there may be adverse cost orders if the case does not turn out as anticipated.

[ 21 ] The Defendants were successful at trial and I see no reason why costs should not follow the event. The Defendants are entitled to partial indemnity costs throughout. While Mr. Rubin argues that because Mr. Townsend and Ms. Qaqish are in-house counsel at the Toronto Transit Commission, their rates ought to be reduced, I do not accept this submission. Section 36 of the Solicitors Act , R.S.O. 1990, c. S.15, states that “[c]osts awarded to a party in a proceeding shall not be disallowed or reduced on assessment merely because they relate to a solicitor or counsel who is a salaried employee of the party.” See Grand & Toy Ltd. v. Aviva Canada Inc ., 2010 ONSC 372 .

[ 22 ] In determining the appropriate quantum of costs, I do not propose to undertake a scrutiny of the dockets or to review on an item by item basis the disbursements incurred. Rather, it is my function to fix an amount of costs that is fair and reasonable and in accordance with the principle of proportionality. See Davies v. Clarington (Municipality) , 2009 ONCA 722 , 100 O.R. (3d) 66.

[ 23 ] In considering the various factors set out in Rule 57, this action was of moderate complexity. Liability was not in issue at the trial, but damages and causation were. This necessitated calling numerous expert witnesses. The issues were clearly of importance to both parties. Counsel for the Defendants submits that the conduct of the solicitor for the Plaintiff unnecessarily lengthened the trial and this ought to be taken into consideration. I agree. The trial of this action had been scheduled for many months prior to the date it commenced. Ms. Tanner is well aware of the rules governing the timing for production of expert reports and the disclosure obligations concerning witnesses, yet new reports were served during the course of the trial. Furthermore, an attempt was made to have the accountant change the theory of his expert report based on a new report that was delivered the day before his testimony.

[ 24 ] Counsel for the Defendants submits that the solicitor for the Plaintiff, Ms. Tanner, refused to agree on basic evidentiary matters which led to delays and therefore increased costs. I agree. Rudimentary items such as documentation from the various insurers or from the employment file were not entered into evidence on a consent basis. The e-mail correspondence between Ms. Tanner and Mr. Townsend and Ms. Qaqish that are included in the written submissions of the Defendants provide an example of the lack of co-operation demonstrated by Ms. Tanner during the course of the trial and the disrespect she evinced towards opposing counsel and indeed, the court. I do not intend to set out in detail the various examples of disrespectful behavior demonstrated by Ms. Tanner but her comments were, in my view, inappropriate and unbecoming of an advocate.

[ 25 ] On long trials, particularly those tried with a jury, it is the obligation of counsel to work together to make the trial proceed as smoothly and efficiently as possible. There will always be matters upon which counsel disagree and the court must make a ruling. However, every effort ought to be made between counsel to co-operate in the filing of joint document briefs, the calling of witnesses and other trial management issues. When this is not done, the trial becomes protracted and the jury is required to retire while the court deals with fundamental issues which ought to have been the subject of agreement between counsel. This obviously results in longer trials, which are more costly to the parties.

[ 26 ] In looking at quantum of fees the Defendants are entitled to on a partial indemnity scale, Ms. Qaqish has 464 hours at $200/hour while Mr. Townsend has 484 hours at $250/hour. There is some duplication in the time that is being claimed between the lawyers. No specifics are provided so it is not clear who did what particular task. Both Ms. Qaqish and Mr. Townsend state: “Meeting with witnesses, examination of witnesses, preparation of various in trial motions, legal research, preparation of opening and closing, consulting with experts regarding cross examination…” Because the dockets are not produced it is difficult to be certain how the total numbers of hours are arrived at.

[ 27 ] In my view, it was appropriate to have two counsel present at the trial. However, the number of hours must be discounted to take into account the overlap of work and duplication that is unavoidable in such circumstances. The lawyers’ time being claimed is 948 hours with a further 176.5 hours of clerk time for total fees $228,020.00 plus HST of $25,766.26 for a total figure of $253,786.26. In my view, taking into account the factors enumerated in Rule 57 as well as the principle of proportionality and bearing in mind what the losing party could reasonably have expected to pay in costs if they were unsuccessful at trial, I am of the view that fees in the amount of $150,000 inclusive of HST are fair and reasonable. While Mr. Rubin submitted that there ought not to be HST ordered on any fees, I disagree. Mr. Townsend made a specific inquiry and was advised that the Toronto Transit Commission pays HST on all costs awards. Mr. Rubin contacted the Canada Revenue Agency and was told there was no ruling on this specific point. Thus, in my view, there is no reason to depart from the usual order and the quantum of fees that I have fixed is inclusive of HST. I have reviewed the list of disbursements and, in my opinion, they are in order and ought to be paid. Thus, I fix costs in the sum of $250,000 inclusive of fees, taxes and disbursements and this sum is to be paid by the Plaintiffs to the Defendants forthwith.

D.A. Wilson J.

Date: 20121009