CITATION: Lauzon v. Axa Insurance (Canada), 2013 ONSC 2676
COURT FILE NO.: C-428-08 and C-428A-08
DATE: 2013-05-27
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Daniel Lauzon
Morris Manning Q.C. and Frederick A. Shuh, Counsel for the Plaintiff
Plaintiff
- and -
Axa Insurance (Canada), Darlene Skinner and Ron Williams,
Anthony Bedard and Tyler Kaczmarczyk, Counsel for the Defendants
Defendants
- and -
The Corporation of the City of Waterloo
James H. Bennett, Counsel for the Third Party (did not appear or participate in these motions)
Third Party
RULING ON COSTS
GLITHERO, J.
[1] This ruling deals with the issue of costs arising from several steps within this action.
[2] Two motions brought by the defendants came before me for hearing on October 22, 2012. I delivered written reasons on November 27, 2012, granting both of the defence motions, and inviting written submissions on costs.
[3] Those earlier written reasons summarized the history of this matter and gave details of the background behind the motions. I do not intend to repeat what is contained in those earlier reasons, partly because it is unnecessary, and partly because I am advised that my ruling is likely to be appealed and it would be inappropriate to comment further except as is necessary for this ruling.
[4] Suffice it to say that the first motion commenced, referred to throughout the materials as “the main motion”, was a motion brought by the defendants for an order compelling the plaintiff to either attend at an examination under oath pursuant to the Insurance Act, or alternatively, an examination for discovery, and in either case to answer questions pertaining to the scope and quantum of the plaintiff’s damages and to compel the plaintiff to produce documentation in support of those damages.
[5] The other motion before me on October 22, 2012 was a defence motion to quash a Summons to Witness served on Anthony J. Bedard on May 22, 2011 and returnable June 14, 2011, and subsequently adjourned to be heard before me. That Summons was issued pursuant to Rule 39.03 and sought to examine Mr. Bedard as a witness with respect to obtaining evidence for use on the “main motion”. That motion has been referred to throughout the proceedings as “the motion to quash”.
[6] It was agreed between the parties that the motion to quash should be determined first, as if it was not successful, the examination of Mr. Bedard would proceed and a transcript of whatever evidence was given by him would be available for use on the main motion. If the motion to quash succeeded, then the main motion could proceed to a determination.
[7] While counsel were in agreement as to the order in which those two motions were to be heard, both sides filed materials in respect of both motions returnable on October 22, 2012. I heard oral submissions as well with respect to both motions. I reserved and by the reasons released on November 27, 2012 determined firstly that the motion to quash would succeed, and secondly, that the main motion would succeed as well.
[8] In those written reasons, I invited written submissions as to costs.
[9] Shortly thereafter, counsel for the plaintiff contacted opposing counsel and I, taking the position that the main motion had not been argued and that I ought to have only ruled on the motion to quash. Counsel requested that I set aside my ruling as to the main motion and adjourn it to be heard by a different judge. I directed that the matter be brought back before me in open court so that there would be a record as to everyone’s position. The matter came back before me on February 13, 2013. After hearing from both sides and reviewing the materials filed by them, including a transcript of the October 22, 2012 original motion date, I ruled that my earlier ruling would stand in respect to both motions. I did so for reasons given orally on the record in which I expressed my view that both sides had made submissions on both motions, both in writing and orally. Again, submissions on costs in writing were invited.
[10] The other source of a claim for costs arises from the endorsement of Flynn J. on April 24, 2012. On that date, the main motion and the motion to quash came before him for hearing, but were adjourned at the request of the plaintiff on the basis that Justice Flynn ought to recuse himself. The costs thrown away as a result of that adjournment were reserved by Justice Flynn to the judge hearing the motions, namely myself, which took place on October 22, 2012.
[11] In total, the defendants claim costs on a substantial indemnity basis in the amount of $50,406.53 for fees and disbursements in the amount of $3,791.38, for a total of $54,197.91, inclusive of HST.
[12] Separate Costs Outlines are provided for each of the heads of claim, and show partial indemnity rates, substantial indemnity rates, and actual rates, as follows:
Partial Substantial Actual
(a) Main motion
fees $19,159.40 $25,054.60 $29,476.00
HST 2,490.72 3,257.09 3,831.88
Disbursements 1,550.83 2,028.01 2,385.90 HST 190.86 249.59 293.64
Totals $23,391.81 $30,589.29 $35,987.42
This item contains a claim with respect to the original hearing on October 22, 2012 and the claim for attending the rehearing in court on February 13, 2013;
(b) The motion to quash
Fees $7,678.77 $10,041.47 $11,813.50
HST 998.23 1,305.38 1,535.75
Disb 989.06 1,293.39 1,521.64
HST 117.84 154.10 181.30
Totals $9,783.90 $12,794.34 $15,052.19
(c) Costs thrown away
Fees $7,273.50 $9,511.50 $11,190.00
HST 945.55 1,236.49 1,454.70
Disb 44.86 58.67 69.03
HST 5.83 7.62 8.97
Totals $8,269.74 $10,814.28 $12,722.70
Grand totals $41,445.45 $54,197.91 $63,762.31
[13] Section 131(1) of the Courts of Justice Act provides that costs are in the discretion of the court. Rule 57.01 of the Rules of Civil Procedure sets forth a number of factors which a court may consider in exercising that discretion as to costs.
[14] One of those factors is the result in the proceeding. Here, the defendants were successful in both motions, on both occasions, and are entitled to the costs thrown away. I also take into account the fact that throughout the defendants made their position clear, well in advance, on each of the issues, in writing, and offered authority and justification for the position they advanced.
[15] On the motion to quash, defendants’ counsel characterized the Summons as a fishing expedition, and that position prevailed on the hearing of the motion.
[16] As to the main motion, defendants’ counsel set forth its position in a clear and consistent manner from the outset. It took the position that the proof of loss was inadequate, but would be accepted “on condition that it is agreed that any further questions regarding the nature and extent of the loss, as outlined in Statutory Condition 6, can be addressed through the discovery process in this litigation, through productions, oral examinations for discovery of your client, undertakings and any follow-up thereon.” No timely response was received rejecting that notion. Throughout, counsel for the defendants made clear its position that it was entitled to particulars of the damages claimed and from an early date supported its position by reference to the Baig v. Guarantee Company of North America, case referred to in my reasons for granting the defendants’ motion.
[17] These motions involved important issues for the defendants. To be required to proceed to trial without being permitted to obtain particulars of the damages claimed, either through the examination for discovery process, or the examination under oath process, would have been highly prejudicial. The amounts claimed by the plaintiff in this action serve to heighten the importance of the issue for the defendants.
[18] Rule 57.01 suggests “the complexity of the proceeding” as a factor to consider. In my opinion, these were not complex issues. While it may be that there was not much case law on the issue of whether, after the appraisal process has been invoked, damage issues are to be explored by means of examination for discovery or instead by examination under oath pursuant to the Insurance Act, in my opinion it is clear that one or the other must be permissible. In the circumstances of this case, I don’t think it would matter much which process was utilized. The plaintiff’s position seems to be that the defendants were not entitled to particulars of the claims for damages either by means of examination for discovery, examination under oath, or through the vehicle of a proper and complete proof of loss. In my opinion, that position is untenable. Trial by ambush is no longer in vogue.
[19] In my analysis, the position taken by the plaintiff has unnecessarily lengthened the duration of these proceedings and has substantially added to the expense incurred by both sides. The main motion sought an order with the effect of allowing the defendants to acquire details of the damages either by discovery or by examination under oath. A motion to quash the Summons to the defendants’ appraiser, in my opinion, could not have produced any useful information for purposes of the main motion. It is clear from a review of the lengthy correspondence throughout that the defendants have consistently sought the particulars as to the damages. The defendants’ appraiser clearly had no evidence about such damages or the defendants would not have been pushing for such information throughout. As I said in my earlier reasons, in my opinion “the delay was entirely the fault of the plaintiff”.
[20] The main motion was originally returnable on May 4, 2010. That was then delayed when the plaintiff served the Summons to Examine, which in turn prompted the motion to quash the Summons.
[21] Both motions were then returnable on April 24, 2012. Without any prior notice whatsoever, plaintiff’s counsel attended and moved to have the motion judge recuse himself based on an allegation of reasonable apprehension of bias. The failure to give any notice of the plaintiff’s intended position obviously led to a waste of preparation time, travel time and counsel fee. This was recognized by the presiding motion judge who reserved costs as thrown away to the judge finally hearing the motion.
[22] The plaintiff’s motion to recuse the original motion judge was heard (and dismissed) on September 14, 2012. By reason of that fact, the scheduled trial date of September 19, 2012 had to be adjourned and a new trial date of February 4, 2013 was set.
[23] I then heard the motions on October 22, 2012, but as a result of the position taken by the plaintiff, the matter came back before me, as earlier indicated, on February 13, 2013, again delaying the trial.
[24] The defendants seek an award of costs on a scale higher than that of partial indemnity. The defendants rely on several factors. These include the unreasonable position taken by the plaintiff, as well as the resulting delay. The plaintiff also relies upon unfounded allegations of bad faith as against both counsel for the defendants, as well as the defendant insurer.
[25] In letters dated April 11, 2011, May 26, 2011 and June 22, 2011, plaintiff’s counsel indicated that the defendants’ appraiser had become interwoven with the insurer’s bad faith, that the insurer and its appraiser are “abusing and frustrating the appraisal process” and that constituted bad faith, and that the insurer and its appraiser are “abusing and frustrating the appraisal process by not acting in good faith”. In the motion material placed before me, the voluminous exchange of correspondence between the parties was produced. Having reviewed all of it, I agree with the defendants that these allegations appear to be unfounded.
[26] In the motion materials filed, plaintiff’s counsel advanced the contention that it was Mr. Bedard who had frustrated the appraisal process and that he or his client did so intending to delay the trial and “taken and run around the order of Justice Glithero”, which is a reference to an order I made earlier fixing the date for trial.
[27] In the materials filed by the plaintiff on the motion to quash, there are allegations that Mr. Bedard was not “an objective appraiser” and that the insurer had “secretly” appointed Mr. Bedard, who was also with the insurer’s law firm. The plaintiff’s materials allege that the defendants falsely assert that the plaintiff has failed to comply with statutory condition number 11, and that the insurer was using the appraisal process for an improper purpose. He pleads that the insurer was acting in bad faith. Unfounded allegations of improper conduct calling into question the integrity of a party can be taken into account in awarding costs on an increased scale: Murano v. Bank of Montreal (1998), 1998 CanLII 5633 (ON CA), 41 O.R. (3d) 222 (C.A.)
[28] In the argument before me on October 22, 2012, the transcript shows the submissions made on behalf of the plaintiff asserted that the defendants wanted the case to go on forever and brought to motions for that purpose, and that the plaintiff suspected that these motions were merely a ploy to keep the case from ever going to trial. In my assessment it was the actions of the plaintiff which delayed this action, rather than those of the defendants.
[29] In the costs submissions on behalf of the plaintiff, counsel take the position that the defendants’ position is misconceived, that there is no justification for costs on a substantial indemnity basis, and that the claim is excessive.
[30] In terms of costs thrown away, counsel for the plaintiff take the position that the only compensable portion of that claim relates to the costs of actually travelling to and attending for that aborted appearance, as preparation time for that should be reusable when the matter finally proceeded. I disagree, in part, where a delay of six months in the argument of a serious matter occurs as a result of the actions taken by the other side. In my opinion it is reasonable that counsel will require some time to review the preparation previously done so as to be in a position to effectively advance his client’s interests.
[31] With respect to the costs of the main motion, counsel for the plaintiff argues that it involved a novel issue of whether an insurer is entitled to explore the quantum of damages after the insurer has invoked the appraisal process. For this reason the plaintiff contends there should be no order as to costs. I may be proven to be wrong on appeal, but in my judgment, it is beyond dispute that the insurer is entitled to gain particulars of the loss claimed, either using the format of the examination for discovery, or the examination under oath, pursuant to the Insurance Act. While the point may be relatively novel, in my assessment it isn’t particularly germane as the overall outcome was totally foreseeable and the amount of expense to which the insurer was put to obtain the relief sought is out of all proportion to the importance of the “novel” issue. While sometimes there is no order as to costs in respect of a determination of a novel issue, this should not be routinely applied where the “novel” issue is one of more academic than practical importance. Here the particulars as to the loss could have been easily provided with the proof of claim as they ought to have been, or by exchange of correspondence as between counsel as they ought to have been, or failing that in a fairly short examination under oath or examination for discovery which in my judgment would have entailed no more than a tenth of the fees spent here litigating this “novel” issue.
[32] Similarly the plaintiff contends that the motion to quash raised novel issues. I don’t agree for the reasons previously given.
[33] The plaintiff submits that the issue he raised, namely whether I had any jurisdiction to make the order sought in the main motion “raised complex jurisdictional issues which were based on a novel set of facts and it became necessary to deal with the interpretation and application of the provisions of the Insurance Act, which is a matter of great importance to the parties and to others who utilize similar procedural processes allowed by the Insurance Act.” The submission continues that “the motion was one of social significance and public interest” and that “the within motion was one where the consideration of the important and complex issues brought for the first time were akin to public interest litigation.” Accordingly it is submitted that there should be no costs.
[34] I reject the submission that the motions raised novel issues or matters of public interest. This is not a situation of an insured seeking to right some legislative or industry wrong that an insurer seeks to use unfairly utilize. It is a situation where an insured seeks to insulate his damage claim for any scrutiny before trial. That was the motive behind the tactics which gave rise to these motions. The fact that it involves arguments never directly litigated before does not equate to notions of novelty or public importance within the jurisprudence on costs. These issues were previously untested, in my opinion, because they were ill conceived and unfounded, and of no practical importance to anyone.
[35] There is also a complaint in the plaintiff’s response that too many people came to deal with this matter from the office of counsel for the defendants. Those changes in counsel, it seems to me, are in part a result of the plaintiff having obtained an adjournment, without notice, on the first instance, a change of counsel being necessary in order to allow the motions to get on with a reasonable time thereafter, and then a further change back to the original counsel in order to accommodate the insistence by plaintiff’s counsel that the issues be revisited in February.
[35] Counsel for the plaintiff submits that costs should not excess $3,500 payable in the cause. With all due respect, the costs thrown away alone, on any reasonable basis have to exceed that given that it was a last minute, without notice, ultimately unsuccessful manoeuvre on the part of the plaintiff that led to such costs.
[36] Finally, it is submitted on behalf of the plaintiff that costs should be in the cause. I am of the view that would be inappropriate given what I had found to be unreasonable positions taken by the plaintiff in respect of these issues at each step.
[37] It must be remembered that this whole sorry procedure started with the refusal of the plaintiff to admit that it was required to disclose, by some vehicle or another, particulars as to its claim for damages. In my opinion, subsequent to that decision, came the unfounded Summons to the witness, the decision to seek the recusal of the original motion’s judge without any prior notice to the other side, or to the court, unsubstantiated allegations of bad faith and improper conduct by the defendant insurer and its counsel, unsubstantiated allegations of bias on the part of the original motion’s judge, as well as the demand for a re-hearing of the main motion after my reasons have been released. In my opinion, an award of costs in an amount higher than that based upon partial indemnity is warranted.
[38] In examining the Bills of Costs presented, I remind myself that fixing of costs is not simply a mechanical exercise. As held in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O. R. (3d) 291, the fixing of costs involves more than calculating the hours spent and an hourly rate. Instead, at para. 24 it was held that “In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.”
[39] It was held in Larcade v Ontario (2006), 2006 CanLII 17943 (ON SCDC), 211 O.A.C 247 that the overriding principle is on of fairness and reasonableness. The court should have regard to what would be the reasonable expectations of the parties. That last concept is included in the factors identified in Rule 57.
[40] In assessing what the reasonable expectations on costs might have been on the part of the plaintiff, and in assessing the complaints as to excessive time being spent, I am hampered by the lack of useful comparators from the plaintiff. Rule 57 does not require a bill of costs or a cost outline from a party who isn’t seeking costs. It would be helpful to have such information. Appellate authority suggests that it should be provided. As held in Smith Estate v. Rotstein (2011), 2011 ONCA 491, 106 O.R. (3d) 161 (C. A.) a losing party is not required to provide a bill of costs but it is preferable that they do so. The case also held that failure to do so is a factor that may be taken into account is assessing the reasonable expectations of the losing party. Indeed this makes good common sense—when assessing how much is too much, it is useful to know how much is demonstrated to be enough. Where one side acts in a way which leads to unduly protracted and unnecessary proceedings within an action surely that impacts on that party’s reasonable expectations as to costs. Where a step in an action can be done in a simple and cost effective method, in my opinion if one side chooses to magnify the issue into “public interest” proportions, it cannot reasonably expect the other side to forego its costs when the other side offered so many times to resolve the issues in such a reasonable fashion.
[41] The Bills of Costs are very detailed and complete. The hourly rates sought in respect of Mr. Bedard and Mr. Kryworuk, as well as others within their firm, are all expressed in terms of a partial indemnity rate, a substantial rate and an actual rate, all of which in my assessment are reasonable. It is clear that Mr. Bedard was intended to be the counsel for the defendants, who not only prepared the main motion material, but would argue it. This was thwarted when the plaintiff moved to have the original motion judge recuse himself, without notice. Mr. Kryworuk then stepped into the breach and spent approximately 2/3 of the amount of time that Mr. Bedard had already spent in preparing for the eventual argument and attending for that argument. Then, Mr. Bedard had to get back into the picture as Mr. Kryworuk was unavailable during any reasonable time period that would permit the re-argument of the main motion as scheduled at the insistence of counsel for the plaintiff.
[42] In my opinion the hourly rates claimed in the Cost Outlines are reasonable on all 3 levels. I accept that the hours claimed were indeed spent.
[43] The amounts claimed are indeed substantial. I am satisfied however that a substantial investment of time was warranted given the opposition raised in response to the motion relief claimed. Having regard to the various factors and principles considered above, I am of the opinion that a “fair and reasonable amount” for costs of each of the matters is as follows:
Main motion, including February re-attendance, $22,00 for fees plus HST, and disbursements of $2,028.01 plus HST of $249.59;
Motion to quash, $7,500 for fees plus HST , and disbursements of $ 1,293.39 plus HST of $154.10; and
Costs thrown away, fees of $7,000 plus HST, and disbursements of $58.67 and HST of $7.62.
[44] Accordingly I fix the costs of these motions in those amounts and order they be paid by the plaintiff to the defendants within 30 days as provided in Rule 57.03 (1) (a).
Released May 27, 2013.
C. Stephen Glithero, J
CITATION: Lauzon v. Axa Insurance (Canada), 2013 ONSC 2676
COURT FILE NO.: C-428-08 and C-428A-08
DATE: 201-05-27
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Danielle Lauzon
Plaintiff
- and –
Axa Insurance (Canada), Darlene Skinner and Ron Williams,
Defendants
- and –
The Corporation of the City of Waterloo
Third Party
RULING ON COSTS
Glithero J.
Released: