SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO: CV-12-00451697
DATE: 20130403

RE: Zurich Insurance Company
Applicant

• and -

Chubb Insurance Company
Respondent

BEFORE: The Honourable Mr. Justice Robert F. Goldstein

COUNSEL:
Kevin S. Adams,
for the Applicant

George Kanellakos,
for the Respondent

HEARD: Written Submissions

COSTS

E N D O R S E M E N T

[1] On November 13, 2012 I allowed an appeal from the decision of Arbitrator Stanley Tessis and set aside the Arbitrator’s decision. I did so because I found that the Arbitrator committed an error in principle by failing to apply the “nexus” test set out in Kingsway General v. Ontario, 2007 ONCA 62, [2007] O.J. No. 290, 84 O.R. (3d) 507 (C.A.).

[2] The parties have submitted bills of costs and submissions. These materials have been of great assistance. There is no dispute that costs should be paid to the winner in this case. There is also no dispute that there is no basis to award substantial indemnity costs.

[3] Zurich requests that costs be paid on a partial indemnity basis in the amount of $15,587.26. Zurich’s position is summarized as follows:

• The matter was complex, involving statutory interpretation in the context of the highly regulated insurance industry;

• The issues were important because the judgment disposed of important issues regarding disputes between insurers;

• A full review of the facts and the law was necessary in order to properly prosecute the appeal.

[4] Three lawyers were involved in the appeal, including Mr. Adams and two junior counsel.

[5] Chubb’s position is that the costs sought by Zurich are excessive. Chubb points to the fact that most of the material had been harnessed and dealt with at the arbitration. Little additional work was necessary for the appeal. Chubb particularly points to the significant amount of time spent by junior counsel as unnecessary and excessive. It counters that it should not be required to be responsible for junior counsel’s “learning curve”.

[6] A Court fixing costs should set an amount that is fair and reasonable in the circumstances: Boucher v. Public Accountants Council for Ontario, 2004 14579 (Ont.C.A.), 71 O.R. (3d) 291, [2004] O.J. No. 2643 (C.A.). Costs should reflect a fair and reasonable amount to be paid by the unsuccessful parties rather than the amount actually paid: Zesta Engineering Ltd. v. Cloutier, 2002 25577 (C.A.).

[7] Costs are within the discretion of the Court: Courts of Justice Act, s. 131(1). Rule 57.01(1) sets out the factors that the Court may consider in awarding costs as follows:

57.01 (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.

[8] I agree with Chubb that it should not be expected to pay certain aspects of Zurich’s costs. For example, I agree that junior counsel’s time is more than could be expected. That said, I would not discount the costs as much as Chubb. The parties are large, sophisticated entities. They are intimately familiar with the costs and consequences of litigation. They hire specialized, high-quality counsel and know that they will have to pay costs if they lose. The award should reflect these factors.

[9] In my view, an amount of $11,000.00, inclusive of costs, GST, and disbursements would be an appropriate costs award and takes into account the factors that I have mentioned, including the reasonable expectations of the parties. Costs are, therefore, fixed in the amount of $11,000.00.

GOLDSTEIN, J.

DATE: April 3, 2013