ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 09-15319 (Hamilton)
DATE: 2013-01-14

BETWEEN:

Mirjeta Dervisholli, Fatmir Dervisholli,
Fatlum Dervisholli, Flamur Dervisholli,
and Leonora Dervisholli by their Litigation
Guardian Hamide Dervisholli, the said
Hamide Dervisholli,

Plaintiffs

– and –

Roman Cervenak and State Farm
Mutual Automobile Insurance Company

Defendants

Ben Fortino, for the Plaintiff/Moving Party

Robert Franklin/Jonathan Barr, for the
Defendant, State Farm

THE HONOURABLE MR. JUSTICE P.B. HAMBLY

RULING ON COSTS

[1] I rely on the facts set out in the reasons released on December 17, 2012 and will repeat only those facts relevant to the issue of costs.

[2] The plaintiff alleges that she was injured in a motor vehicle accident on October 29, 2007 by a motor vehicle owned and driven by Cervenak. He had a policy of motor vehicle insurance with State Farm. The plaintiff issued a statement of claim on October 15, 2009, in which she claimed damages against Cervenak in relation to these injuries. It is the position of State Farm that the motor vehicle accident was staged by the plaintiff and Cervenak.

[3] The order of Justice Carpenter-Gunn dated February 22, 2011 added State Farm as a statutory third party under the Insurance Act, s. 258 (14), to permit it to defend Cervenak’s liability in the claim which the plaintiff brought against him, without admitting liability to Cervenak under its policy of insurance with him.

[4] The plaintiff has a policy of motor vehicle insurance with State Farm. The plaintiff claimed accident benefits from State Farm on her policy with State Farm in relation to the injuries which she claims to have suffered in the motor vehicle accident on October 29, 2007. State Farm retained Reisler Franklin to represent it on the plaintiff's claim for accident benefits and to defend the plaintiff’s claim against Cervenak .

[5] In the motion brought by the plaintiff I held that Reisler Franklin was in a position of conflict of interest in defending Cervenak and in defending State Farm in the plaintiff's claim for accident benefits. I granted the plaintiff's motion removing Reisler Franklin as solicitors for the statutory third-party, State Farm, in the plaintiffs action against Cervenak.

[6] Both the plaintiff and State Farm claim costs of the motion. Reisler Franklin notified the solicitors for the plaintiff on October 13, 2010 that they were representing State Farm for the purpose of defending the plaintiff's claim against Cervenak. On January 7, 2011, Reisler Franklin advised the solicitors for the plaintiff that they were representing State Farm in defending the plaintiff’s claim for accident benefits. On February 22, 2011, State Farm was added as a statutory third-party. Reisler Franklin filed a statement defenCe on November 17, 2011 on behalf of State Farm to defend the plaintiff's claim against Cervenak. It was not until July 16, 2012 that the solicitors for the plaintiff notified Reisler Franklin that it was the plaintiff’s position that Reisler Franklin was in a possession of conflict of interest by representing State Farm both on the plaintiff’s claim for accident benefits pursuant to the plaintiff’s policy of motor vehicle insurance with State Farm and in defending Cervenak in relation to his policy of motor vehicle insurance with State Farm as a statutory third party.

[7] The plaintiff claims to have been injured in a second motor vehicle accident on December 14, 2008. She issued a statement of claim on November 18, 2010 to recover damages in relation to the injuries which she alleges to have suffered in this motor vehicle accident. Counsel agreed that there should be a single examination for discovery in relation to these two motor vehicle accidents. Dates for an examination for discovery were scheduled and cancelled several times before counsel for the plaintiff announced on July 16, 2012 that the plaintiff would take the position that Reisler Franklin was in a position of conflict of interest and could not represent State Farm as statutory third party in the plaintiff’s claim.

[8] State Farm submits that the delay in the plaintiff taking the position that State Farm was in a position of conflict of interest should result in it rather than the plaintiff recovering the costs of the motion. This is because Reisler Franklin did substantial work on the case which State Farm will now have to retain new counsel to duplicate. If the issue of whether State Farm could defend the plaintiff’s claim against Cervenak had been decided earlier this would be unnecessary.

[9] The plaintiff’s solicitors received the affidavit of documents of State Farm on July 21, 2012 after the plaintiff’s solicitors had advised the defendant's solicitors that they believed that State Farm was in a position conflict of interest. The affidavit of documents contained many documents which State Farm had accumulated in the plaintiff's accident benefits file. This was in direct contradiction of State Farm's publicly stated policy “We do not share customer medical information with anyone within the State Farm family of companies, unless you expressly authorize it …” (para. 5 of judgment). Reisler Franklin made no attempt whatsoever to maintain “… institutional mechanisms such as Chinese Walls and codes of silence.” (para. 5 of judgment quoting from MacDonald Estates v. Martin) between the accident benefits file and the tort file. In my view the delay argument does not have merit. The plaintiff, having been successful on the motion, is entitled to its costs on a partial indemnity scale.

[10] The factors that I must consider in assessing the plaintiff’s claim for costs are set out in Rule 57.01. The motion raised a novel point of law on which there does not appear to be any authority directly on point. It was of some complexity and was important to the parties. I must consider the factors of reasonableness and access to justice as stated by Justice Armstrong for the Court of Appeal in Boucher v. Public Accountants 2004 14579 (ON CA), [2004] O.J. No. 2634 at para. 37. I must also consider the principles set in Tri-S Investments v. Vong, [1991] O.J. No. 2292 by Justice Feldman (as she then was, now Feldman J.A.) as follows:

A judge's function in fixing costs (as contrasted with the role of an assessment officer on a full assessment) is to perform a summary analysis of the cost of the services of counsel for the successful party, then to apply the party/party scale of indemnification to that figure. The purpose of the summary analysis is for the trial or motions judge, familiar with the nature of the proceeding as well as with its substantive and procedural complexity, to ensure that the magnitude of the claimed costs is in keeping with what is warranted in the circumstances. I do not view it to be the court's function when fixing costs to second-guess successful counsel on the amount of time that should or could have been spent to achieve the same result, unless the time spent is so grossly excessive as to be obvious overkill. (quoted with approval by the Court of Appeal by Justice Morden A.C.J.O. in Murano v. Bank of Montreal 1998 5633 (ON CA), [1998] O.J. No. 2897 at para. 91)

[11] The plaintiff claims a total of $8,708.26 including fees, disbursements and HST. According to the bill of costs presented by Ms. Singh, she and Mr. Fortino, who has carriage of the file, spent a total of 37 ½ hours on the matter. Mr. de Jong, who is their student, spent 22 hours including six hours in court. The rates claimed per hour are $175 for Ms. Singh, $215 for Mr. Fortino and $75 for Mr. de Jong. The written materials were well prepared and useful to the court. The amount claimed, although substantial, does not appear to me to be “overkill”. Ms. Singh presented her argument competently. I see no reason why the plaintiff should not have her costs as asked.

[12] There will be an order that State Farm pay to the plaintiff costs fixed in the amount of $8,708.26, within 30 days.

P.B. Hambly J.

Released: January 14, 2012