ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 07-28760
DATE: 20130325
BETWEEN:
JAMES GODINA
Plaintiff
– and –
TRIPEMCO BURLINGTON INSURANCE GROUP LIMITED and LEILA MITCHELL
Defendants
L. Ferro and S. Oostdyk, for the Plaintiff
E. Bowker, for the Defendants
HEARD: September 12, 13, 18, and 19 2012
The honourable mr. justice robert b. reid
costs award
[1] The plaintiff sued the defendant Tripemco for its failure to properly advise him about the purchase of optional income replacement benefits in a motor vehicle insurance policy.
[2] Tripemco is a licensed insurance broker and Mr. Godina was one of its customers
[3] Mr. Godina did not purchase optional income replacement benefit coverage available under the Statutory Accident Benefits Schedule[^1] (“SABS”) to the Insurance Act.
[4] On December 11, 2004, Mr. Godina was involved in a serious motor vehicle accident, leaving him permanently disabled and wishing he had more than the basic $400.00 per week income replacement benefits. He would have qualified for $600.00 per week coverage based on his income at the date of the accident, if he had opted to purchase it.
[5] There were four pivotal issues to be determined in the case:
Did Tripemco owe Mr. Godina a duty of care in its relationship with him as an insurance broker?
If so, did Tripemco fall below the requisite standard of care in failing to make a proper offer of optional income replacement benefits to Mr. Godina?
Was it necessary for Mr. Godina to prove that he would have bought the optional income replacement benefits if properly offered?
Was the claim statute-barred under the provisions of the Limitations Act, 2002[^2]?
[6] A subsidiary issue was the rate at which interest is to be applied to any damages awarded: either the SABS interest rate or interest pursuant to the Courts of Justice Act[^3].
[7] In my decision dated February 12, 2013, I reviewed the issues. There was never a doubt about the presence of a duty of care, and so the evidence and argument was focussed on the last three issues and the interest rate question. I found in favour of the defendant on each of those disputed matters.
[8] The defendant seeks costs against the plaintiff on a partial indemnity basis up to the date of an offer to settle and thereafter on a substantial indemnity basis.
[9] The plaintiff acknowledges his responsibility for costs but submits that the amount should be reduced based on the fact that the claim represented a novel point of law. As well, the plaintiff suggests that his responsibility for costs should be reduced as an access to justice issue given that his own resources, while not outlined in detail, are presumably much less significant than those of the defendant. The plaintiff also submits that the hours claimed by the defendant are unreasonably high.
[10] There is no dispute that my discretion as to costs is found in section 131(1) of the Courts of Justice Act, and that I should exercise that discretion in accordance with the general principles set out in rule 57.01 of the Rules of Civil Procedure[^4].
[11] I have reviewed and take no issue with the hourly rates used by counsel for the defendant in calculating its Bill of Costs, and accept that the partial indemnity rate is properly claimed that 60% of the substantial indemnity rate.
[12] The original claim was for significantly higher damages than were ultimately agreed at trial and contained additional causes of action beyond negligence including wrongful infliction of mental distress and bad faith as well as a claim for punitive and exemplary damages. Those claims were abandoned at trial.
[13] The defendant submits that it had to bring a motion in March 2008 to compel production of an affidavit of documents. I note that a costs award was made in its favour on the motion. As well, the matter was removed from the trial list in 2010 based on the intention of the plaintiff to add a new defendant, although ultimately no change to the parties was made. The matter was dismissed for delay by the Registrar in 2011 and eventually restored to the trial list on consent. As a result, the defendant’s position is that the plaintiff unnecessarily lengthened the proceedings and further that there was a failure to admit a number of facts that should have been admitted prior to trial. For his part, the plaintiff notes that the issue at trial was quite narrow, the damages were agreed and that there was an agreed statement of facts which shortened the necessary trial time.
[14] In reviewing those factors as to responsibility for shortening or delaying the trial process, I do not consider the evidence so significant in favour of one party or the other that I should depart from a typical costs award in favour of the defendants.
[15] The plaintiff submits that the issues involved were novel and that the court should consider novelty to be another matter “relevant to the question of costs” described in rule 57.01(i). In my view, the issues were not particularly novel. The limitations defence was prosaic. The requirement of the plaintiff to prove damages in a negligence case is standard. In a professional negligence claim, the requirement for proof that the defendant fell below a required standard of care is a normal prerequisite for success. The fact that the plaintiff unsuccessfully attempted to short-circuit those standard terms of a negligence action or ignore the significance of the limitations issue should not relieve him of normal cost consequences.
[16] As to access to justice, I acknowledge that it is important for members of society to have reasonable access to the court system for the resolution of civil disputes. The potential of an adverse costs award may have a chilling effect on a person's ability to litigate through to the end of the trial. Conversely, the costs shifting provisions contained in the rules, particularly when supported by a rule 49, offer play a very specific role in limiting unreasonable or frivolous litigation and encouraging settlement. Rule 57.01(1)(0.a) acknowledges that one of the factors to be considered by the court in exercising its discretion is the amount of costs that unsuccessful party could reasonably expect to pay. There is no provision that suggests to a plaintiff that he or she will be relieved of the normal cost consequences of unsuccessful litigation based on the relative financial means of the parties or because of a societal value that encourages litigation. Here, the plaintiff went forward to trial with a case that had obvious legal and factual difficulties that made success unlikely. I consider that the amount that the plaintiff could reasonably be expected to pay is not out of keeping with the claim contained in defendant’s Bill of Costs.
[17] As to offers to settle, the provisions of rule 49 combine with the provisions of rule 57(1) to allow the court to award costs to a successful defendant on a partial indemnity basis up to the date of an offer and on a substantial indemnity basis thereafter where the action is dismissed. This is consistent with the provisions of rule 49.10(1) where a plaintiff obtains a judgment more favourable than the terms of an offer to settle made by it.
[18] The defendant made a formal offer dated June 4, 2009 to settle the proceedings by way of a dismissal without costs. In its letter dated November 18, 2010, the defendant offered $35,000, all-inclusive to settle. In e-mail messages dated August 30 and August 31, 2012, counsel for the defendant again offered to dismiss the action without costs. Finally, the defendant made a rule 49 offer dated September 4, 2012 for $20,000 damages and interest plus $10,000 costs. The two rule 49 offers were said to remain open until 1 minute following the commencement of trial. Arguably, the later offers resulted in a withdrawal of the earlier ones although all of them represented a superior result to that achieved by the plaintiff at trial.
[19] As a result, the defendant will have a costs order based on a partial indemnity scale up to November 18, 2010 and thereafter on a substantial indemnity scale.
[20] Finally, I note that in relation to preparation for and attendance at trial, counsel for the defendant has claimed over 120 hours time and over 100 hours of time by a law student. The total trial preparation, attendance at trial and costs submissions results in a substantial indemnity amount of $45,055.35. I acknowledge that the trial presentation was indicative of careful and thorough preparation. However, as an exercise of my discretion, I consider a more appropriate total for that portion of the costs claim to be $37,500, a reduction of $7,555.35.
[21] Therefore, and for the reasons set out above, there will be a costs order in favour of the defendant to be paid by the plaintiff in the claimed amount of $77,780.74, inclusive of GST, HST and disbursements less an adjustment as noted above which including HST totals $8,587.54 for a net amount payable of $69,193.32.
Reid J.
Released: March 25, 2013
COURT FILE NO.: 07-28760
DATE: 20130325
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JAMES GODINA
Plaintiff
-and-
TRIPEMCO BURLINGTON INSURANCE GROUP LIMITED and LEILA MITCHELL
Defendants
REASONS FOR JUDGMENT
Reid, J.
Released: March 25, 2013
[^1]: O.Reg. 403/96, as amended
[^2]: S.O. 2002, c. 24
[^3]: R.S.O. 1990, c. C.43
[^4]: R.R.O. 1990, Reg. 194, as amended