SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-08-354317
DATE: 20121101

RE: Romani & Associates Insurance Brokers Ltd.

and

SurNet Insurance Group Inc.

BEFORE: Justice E.M. Morgan

COUNSEL: Enio Zeppieri and Gregory Gryguc, for the Plaintiffs
Richard J. Mazar, for the Defendant

DATE HEARD: October 15-17, 2012

C O S T S E N D O R S E M E N T

[ 1 ] The judgment in this matter was released on October 19, 2012. In that judgment I dismissed the Plaintiff’s claim and invited the parties to make written submissions on costs. Both parties’ counsel have now provided me with those submissions.

[ 2 ] Mr. Mazar, on behalf of the Defendant, indicates that he served a written offer to settle on February 14, 2011. The offer was based on a descending scale of compensation to be paid by the Defendant, depending on when the Plaintiff accepted it. The offer started at $25,000 and provided for decreasing amounts until the commencement of trial, at which point the offer stood at $10,000. This offer was never accepted by the Plaintiff. Since the claim was dismissed in its entirety, there is no question but that the Defendant did better at trial than what it had offered to the Plaintiff.

[ 3 ] Rule 49 of the Rules of Civil Procedure uses cost consequences to encourage parties to make settlement offers prior to trial. The general principle is that the party who serves an offer more than seven days in advance of trial should have its costs on a substantial indemnity basis if the offer is not accepted and the result of the trial is better for the offeror than the offer would have given it.

[ 4 ] Mr. Gryguc, on behalf of the Plaintiff, submits that the Defendant’s offer to settle should not be taken into account at all. He says that the Plaintiff did not accept the offer because “in effect it was a nuisance offer and did not properly accept it based on the facts and the information the Plaintiff had before it.” He also submits that his client was right to bring the action because, among other things, “the Plaintiff did not have the complete picture with respect to whether or not he received a proper bonus.”

[ 5 ] As I explained in my reasons for judgment, a claim requires a legally cognizable cause of action. The Plaintiff here went all the way to trial in order to learn what should have been self-evident all along: seeking information as to whether there is a valid claim is not a valid claim. In its cost submission, the Plaintiff reiterates this problem. Its point seems to be that it was justified in bringing the action and going to trial not because it had a cause of action, but because it did not yet know whether it had a cause of action.

[ 6 ] Under the circumstances, the Defendant’s offer to pay from $25,000 to $10,000 was more than a nuisance offer. It was a genuine offer to compromise its rights.

[ 7 ] The Court of Appeal has said that where a plaintiff fails to accept a Rule 49 offer and the action is then dismissed, the defendant should be awarded partial indemnity costs to the date of the offer and substantial indemnity costs after that point. S. & A. Strasser Ltd. v. Town of Richmond Hill (1990), 1990 6856 (ON CA) , 1 OR (3d) 243.

[ 8 ] The Defendant has anticipated this division, and has provided a Costs Outline that shows partial indemnity costs of $17,967 ($15,900 + HST) up to the time of the offer and substantial indemnity costs in the amount of $45,224.51 ($37,967.50 + HST + disbursements) thereafter.

[ 9 ] I therefor award costs to the Defendant in the total amount of $63,191.51, inclusive of HST and disbursements.

Morgan J.

DATE: November 1, 2012