Court File and Parties
COURT FILE NO. 04-CV-273558CM1
DATE: 20121217
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN: PARANITHARAN BALASUNDARAM (Plaintiff)
AND : ALEX IRVINE MOTORS LTD., MURRAY K. WATSON and TIM FRAIL (Defendants)
BEFORE: M.A. SANDERSON J.
COUNSEL:
Mr. Robert Zigler for the Plaintiff
Mr. Robert S. Sutherland for the Defendants
C O S T S E N D O R S E M E N T
[ 1 ] The trial of two actions was held before me and a jury between January 16 and March 2, 2012.
[ 2 ] The Plaintiffs, Paranitharan Balasundaram and his wife Tharani Paranitharan, brought actions for personal injuries allegedly sustained in a motor vehicle accident that occurred on August 24, 2002.
[ 3 ] After seven weeks of trial, the jury did not award any damages to either of the Plaintiffs.
[ 4 ] Tharani Paranitharan was represented by separate counsel under a separate court file; the Endorsement dealing with costs in that action is being released simultaneously under citation 2012 ONSC 5839 .
The Quantum of the Defendants' Claim For Costs in Both Actions
[ 5 ] In their Bill of Costs, the Defendants set out their claim for costs on a partial indemnity scale and disbursements in both actions:
[ 6 ] They propose to split total fees of $270,275.50 evenly between the two Plaintiffs – $135,137.75 per Plaintiff.
[ 7 ] The Defendants claim total disbursements for both actions of $83,744.11. Of this amount, they propose that $59,547.06 be split evenly between the two Plaintiffs; Mr. Balasundaram's share would be $29,773.53. In addition, they claim disbursements specific to Mr. Balasundaram of $13,701.61.
[ 8 ] Therefore, they claim total fees and disbursements in the Balasundaram action of $135,137.75 + specific disbursements of $13,701.61 + half of general disbursements of $29,773.53 = $178,612.89.
[ 9 ] The Defendants submit they are entitled to full payment of these partial indemnity costs. Nevertheless, the Defendants are prepared to accept $275,000, to be split evenly between the Plaintiffs, a total of $137,500 each, with post-judgment interest beginning to accrue ninety days following the date of the costs Order.
The Actions
[ 10 ] These were both primarily cases that turned on credibility.
[ 11 ] Both Plaintiffs claimed to be suffering from serious physical and psychological sequelae from a motor vehicle accident on August 24, 2002, which they claimed rendered both incapable of working between the accident and the trial and would render them permanently unable to work in the future.
[ 12 ] The collision itself was minor.
[ 13 ] In the almost 10 years between the accident and the trial, the Plaintiffs were the subject of continuing surveillance and investigation. The Defendants relied on the surveillance of the Plaintiffs taken shortly after the accident and spanning the period up to the trial, which they submitted showed no evidence of pain behaviors or disability. The jury clearly did not believe the evidence of either Plaintiff about their significant ongoing pain and disability or their continuing inability to work. They must have rejected the evidence of their treatment providers on the basis that the Plaintiffs provided them with inaccurate information.
The Law Generally
[ 14 ] The general principles to be followed were set out by Ricchetti J. in Agius v. Home Depot Holdings Inc., 2011 ONSC 5272 , [2011] O.J. No. 4424 at paragraphs 8-17 :
8 . S. 131(1) of the Courts of Justice Act provides:
Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
- The relevant portions of Rule 57.01 of the Rules of Civil Procedure provide:
(1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(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;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(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.
(4) Nothing in this rule or rules 57.02 to 57.07 affects the authority of the court under section 131 of the Courts of Justice Act ,
(a) to award or refuse costs in respect of a particular issue or part of a proceeding;
(b) to award a percentage of assessed costs or award assessed costs up to or from a particular stage of a proceeding;
(c) to award all or part of the costs on a substantial indemnity basis;
(d) to award costs in an amount that represents full indemnity; or
(e) to award costs to a party acting in person.
(7) The court shall devise and adopt the simplest, least expensive and most expeditious process for fixing costs and, without limiting the generality of the foregoing, costs may be fixed after receiving written submissions, without the attendance of the parties.
- Cumming J. in DUCA Financial Services Credit Union Ltd. v. Bozzo , 2010 ONSC 4601 , [2010] O.J. No. 3758 at para. 5 , described the “normative approach” to an application for costs:
Costs are in the discretion of the Court: s. 131 , Courts of Justice Act , R.S.O. 1990, c. C. 43 and Rule 57.01 of the Rules of Civil Procedure . In Ontario, the normative approach is first, that costs follow the event, premised upon a two-way, or loser pay, costs approach; second, that costs are awarded on a partial indemnity basis; and third, that costs are payable forthwith, i.e. within 30 days. Discretion can, of course, be exercised in exceptional circumstances to depart from any one or more of these norms.
Fixing of costs is not merely a mechanical exercise in reviewing the receiving party’s Cost Outline. In Andersen v. St. Jude Medical Inc. reflex , (2006), 2006 85158 (ON SCDC) , 264 D.L.R. (4th) 557, the Divisional Court set out several principles to be considered in making an award of costs:
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 Refrigeration of Canada Ltd. v. Leveltek Processing LLC 2005 1042 (ON CA) , (2005), 75 O.R. (3d) 638 (C.A.).
A consideration of experience, rates charged and hours spent 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 Ltd. v. Cloutier (2002), 119 A.C.W.S. (3d) 341 (Ont. C.A.), at para. 4 .
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).
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 v. Bank of Montreal 1998 5633 (ON CA) , (1998), 41 O.R. (3d) 222 (C.A.), at p. 249.
The court should seek to balance the indemnity principle with the fundamental objective of access to justice: Boucher .
The Court of Appeal has identified the overriding principal to be that the amount of costs awarded be reasonable in the circumstances. In Davies v. Clarington (Municipality) (2009), 2009 ONCA 722 , 100 O.R. (3d) 66 Epstein J.A. stated at paras. 51-52:
As can be seen, the overriding principle is reasonableness. If the judge fails to consider the reasonableness of the costs award, then the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. In Boucher [ Boucher v. Public Accountants Council for the Province of Ontario 2004 14579 (ON CA) , (2004), 71 O.R. (3d) 291, [2004] O.J. No. 2634 (C.A.)], this court emphasized the importance of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding at para. 37, where Armstrong J.A. said "[t]he failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice."
Impecuniosity
- There are some cases where, because of the circumstances of the case, impecuniosity was a factor on the quantum of costs awarded.
Byers (Litigation Guardian of) v. Pentex Print Masters Industries Inc. reflex , (2002), 2002 49474 (ON SC) , 59 O.R. (3d) 409 (S.C.) Ochoa v. Canadian Mountain Holidays Inc. (1997), 10 C.P.C. (4th) 102, [1997] B.C.J. No. 1219 (B.C.S.C.) Capostinsky (Guardian ad litem of) v. Aurora Cycle Supply Ltd. 1994 8696 (BC CA) , (1994), 31 C.P.C. (3d) 144, 2 B.C.L.R. (3d) 66 (B.C.C.A. )
- In other cases, the courts have declined to reduce the quantum of costs awarded due to the impecuniosity of the paying party. Southey J. in Myers v. Metropolitan Toronto (Municipality) Chief of Police 1995 11086 (ON SCDC) , [1995] O.J. No. 1321 (Div. Ct.) stated at pp. 189-90:
Because of the importance of avoiding a situation in which litigants without means can ignore the rules of the court with impunity, and the distastefulness of creating a rule incapable of consistent application, the learned trial judge in the case at bar, in my opinion, acted reasonably in refusing to take into account the impecuniosity of the plaintiff.
- In an occupier’s liability case, DeP. Wright J. in Maher v. Great Atlantic & Pacific Co. of Canada , 2010 ONSC 1310 , [2010] O.J. No. 825, canvassed a number of hardship cases and declined to apply them, noting at para. 31:
Hardship or impecuniosity is not one of those factors mentioned in R 57.01 when considering liability for costs.
- Lauwers J. in Greenhalgh v. Doura-Dummer (Township), [2011] O.J. No. 1675 (Sup. Ct.) at para. 36 did likewise:
Southey J. and Wright J. are concerned about the problem posed for the system of justice if the costs disincentive established by the Rules were to be displaced by a rule that routinely advantaged a party's hardship in the exercise of judicial discretion over costs. I share that concern.
- It would appear that impecuniosity, as a rule , should not and does not eliminate or reduce a party’s liability for costs for the reasons expressed in Myers , Maher and Greenhalgh . Rather, impecuniosity of the paying party, if established, may be one of the factors the court could consider in the exercise of the courts discretion under S. 131 of the Courts of Justice Act in determining a reasonable amount of costs . This approach was described by Lane J. in Walsh v. 1124660 Ontario Limited 2007 27588 (ON SC) , [2007] O.J. No. 2773 (Sup. Ct.) at paras. 15-20 :
In the present case, unlike Myers , we are dealing with costs after the trial is over, so no issue of on-going non-compliance with orders, or defying the court exists. There is no future conduct of this plaintiff to deter. The simple question is whether there can be a consideration of the paying party's means in considering the disposition of costs. In my opinion, the answer to this question must be yes where impecuniosity is demonstrated. Any other answer creates a straightjacket which is inconsistent with the discretionary nature of all costs orders. In my opinion, impecuniosity falls within Rule 57.01 : "any other matter relevant to the question of costs." Whether to consider it as a factor in any particular case remains a matter within the discretion of the judge. (emphasis added)
[Text continues exactly as in source…]
M.A. SANDERSON J.
Released:
[^1]: In Rider v. Dydyk (2007), 2007 ONCA 687 , 87 O.R. (3d) 507, the Court of Appeal noted that any statutory deductions taken from a Plaintiff’s assessed damages in a motor vehicle negligence case are not to be taken into account in determining whether a Defendant is presumptively entitled to costs. As a result, pursuant to Section 257.6(9) of the Insurance Act , the court determines a party’s entitlement to costs without regard to the effect of the statutory deductions under the Insurance Act .