PETERBOROUGH COURT FILE AND PARTIES

COURT FILE NO.: 279/09
DATE: 2013-06-24

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Dean Wilson, Plaintiff

AND:

Stephen Cranley, Defendant

BEFORE: Mr. Justice B.G. MacDougall

COUNSEL:

Jasmine Daya, counsel for the Plaintiff

Michael Chadwick, counsel for the Defendant

HEARD: May 30, 2013

COST ENDORSEMENT

[1] The jury awarded the plaintiff $15,000 in general damages and $45,000 for future loss of income/loss of competitive advantage.

[2] The plaintiff made a Rule 49 Offer to Settle on April 19th, 2013 for $140,000, including PJI and costs to be agreed upon or assessed.

[3] The defendant made an Offer to Settle dated May 2, 2013 to pay $50,000 for all damages, plus interest thereon under the Courts of Justice Act, plus costs, HST, disbursements; such costs, HST and disbursements to be agreed upon or assessed.

[4] On May 3, 2013, the plaintiff’s Offer to Settle was for $95,000 plus PJI, and costs to be agreed upon or assessed.

[5] Jury selection occurred on May 13, 2013 and the trial commenced on May 16, 2013. The trial lasted for 6 days.

[6] Defendant’s counsel submits that this was a “defendant’s verdict”, in that the plaintiff had sought general damages in between $105,000 and $120,000, $96,000 for future loss of income for 2 years for the plaintiff’s retraining, $150,000 for loss of competitive advantage and between $25,000 and $35,000 for future housekeeping/home maintenance expenses.

[7] The defendant seeks partial indemnity costs.

[8] The plaintiff says that the jury’s award was greater than the defendant’s offer and therefore the plaintiff should be entitled to costs. The plaintiff seeks costs of $63,566.50 for fees plus HST and disbursements of $44,681.72, for a total of $108,248.22.

[9] With respect to the $15,000 award for general damages, this amount is subject to the $30,000 mandatory statutory deduction.

[10] Pursuant to the provisions of section 267.5(9) of the Insurance Act[^1] and the Ontario Court of Appeal decision in Rider v. Dydyk[^2], the statutory deductions in the plaintiff’s assessed damages are not to be considered when determining a party’s entitlement to costs.

[11] Cost consequences are result oriented. Pursuant to Rule 49.10, the terms of the offer are measured not against the claim advanced, but rather against the judgment obtained in order to determine whether such offer is “as favourable as, more favourable than or less favourable than” the judgment. See Lawson v. Vierson[^3] In para. 22, the court stated:

For the purpose of comparing the offer with the judgment, the court considers not the judgment awarded by the jury, but the amount finally awarded by the trial judge plus pre-judgment interest. Statutory deductions mandated by section 267.5(7) of the Insurance Act are treated differently. In Rider v Dydyk (citation omitted), leave to appeal to the SCC refused, this court noted that the deduction from a plaintiff’s assessed damages in a motor vehicle negligence case are not to be taken into account in determining whether a defendant is presumptively entitled to costs. As a result, pursuant to s. 267.5(9) of the Insurance Act, the court determines a party’s entitlement to costs without regard to the effect of the statutory deductions under s. 267.5(7)(3) of the Insurance Act on the amount of damages awarded for non-pecuniary loss and consider this amount against all the terms of the offer. [Emphasis added]

[12] In Lawson there is no discussion about whether notional pre-judgment interest should be calculated and taken into account on the non-pecuniary award of damages for “cost purposes”.

[13] Counsel have not provided any other case law directly on that point.

[14] Accordingly, for the purposes of determination of costs, and whether the jury’s verdict is “more favourable” than the defendant’s offer, the jury verdict totalling $60,000 is to be considered. The issue is whether the pre-judgment interest should be “notionally” calculated on the “notional” $15,000 General Damages when determining a party’s entitlement to costs.

[15] Section 128 of the Courts of Justice Act provides that a person who is entitled to an order for the payment of money is entitled to claim and have included in the order an award of interest thereon at the prejudgment interest date, calculated from the date the cause of action rose to the date of the order.

[16] Prejudgment interest is ordinarily awarded, absent special circumstances, to reflect the value of money wrongfully withheld from the plaintiff.[^4]

[17] Pre-judgment interest on the defendant’s offer of $50,000 under the Courts of Justice Act would result in the defendant’s offer totalling $61,609.56.

[18] With respect to the jury’s award, if interest is calculated on the notional general damage award of $15,000 plus PJI from the date of the Notice of the Claim, being May 3rd, 2010, pursuant to section 267.5(9) of the Insurance Act, this would result in notional general damages plus notional PJI totalling $17,299.31. Adding that to the $45,000 future claim award, would result in a total verdict of $62,299.31, thereby being “more favourable” than the defendant’s offer of $61,609.56 by $689.75.

[19] Applying a strict reading to the provisions of section 267.5(7) of the Insurance Act, as commented in by Lawson, supra, the statutory deduction is not to be taken into account in determining whether the defendant is presumptively entitled to costs. In my view, prejudgment interest would, in the ordinary course, follow, to be added onto the general damages. Accordingly, I find that the effect of the verdict, absent the statutory deduction and considering the applicable PJI, would result in the plaintiff receiving “a slightly more favourable verdict” than the defendant’s offer. Accordingly, the plaintiff is presumptively entitled to have costs fixed in his favour.

[20] Following the analysis of the Court of Appeal in Rider v. Dydyk, the purpose of section 267.5(9) seems to be protect plaintiffs from more onerous cost consequences from the statutory deduction and this section ensures the section as a whole is balanced and fair. [^5]

[21] In considering the factors as set out under Rule 57.01, I have taken into account, among other things, the following:

(i) As stated, the fact that the award of the jury was only slightly more favourable than the defendant’s offer;

(ii) On the other hand, the defendant did not respond to the plaintiff’s request for mediation, as required under the provisions of sections 258.6(1) and (2) of the Insurance Act, and that failure to participate in mediation shall be considered by the court in awarding costs.

(iii) The defendant did admit liability, although the plaintiff was required to bring a motion to require the defendant to attend for examinations.

(iv) I find that given the issues in the trial, it was not necessary to have assisting counsel present on behalf of the plaintiff throughout the trial.

[22] I fix the plaintiff’s costs at $40,000, plus HST, including preparation for and attendance on cost submissions. In reviewing the disbursement account proposed, I am reducing the charges for “photocopying” and “accommodation”. Therefore, the disbursements will be allowed, less $3,222.00 plus HST.

Mr. Justice B.G. MacDougall

Date: June 24th, 2013

[^1]: See Insurance Act, RSO 1990, c. I.8
[^2]: See: Rider v. Dydyk, 2007 ONCA 687
[^3]: See: Lawson v. Viersen, 2012 ONCA 25 at para 21.
[^4]: See: Andrew Kowalczewski Insurance Brokers Ltd. v. Hunt [2001] O.J. No. 4429 (Ont. C.A.)
[^5]: See: Keam v. Caddey, (2010) ONCA 565