COURT FILE NO.: 06-CV-315832PD3

DATE: 20130814

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Christopher Hoang and Danielle Hoang, both minors by their Litigation Guardian, San Trieu, and San Trieu, personally, Plaintiffs

AND:

Adriano Vicentini, Ford Credit Canada Leasing Company and Can Hoang, Defendants

BEFORE: Madam Justice Darla A. Wilson

COUNSEL:
L. Craig Brown & Robert Ben, Counsel for the Plaintiffs

David Zuber, Counsel for the Defendant Vicentini

Bruce Mitchell, Counsel for the Defendant Ford Credit

Todd J. McCarthy, Counsel for the Defendant Hoang

HEARD: July 11, 2013

ENDORSEMENT

[1] This is a motion brought by the Plaintiffs for an order staying the fixing of costs of the action until the Judgment dated March 9, 2012 has been satisfied or the issue of coverage of the Defendant Hoang by its insurer has been determined.

Background

[2] This action is a claim for damages sustained by the infant Christopher Hoang [“Christopher”] stemming from a motor vehicle accident that occurred on August 6, 2004. Christopher was a pedestrian who had been dropped off by his father, the Defendant Hoang. While crossing the street, he was struck by a car driven by the Defendant Vicentini, sustaining serious injuries.

[3] The action proceeded to trial with a jury before me over the course of 7 weeks, with the jury returning its verdict on March 9, 2012. The jury found the Defendant Hoang liable for the accident and awarded Christopher general damages of $150,000 plus future damages of $684,228.22. It found no liability against the other Defendants. The Plaintiffs have appealed the decision.

[4] Counsel appeared before me subsequently to deal with costs and other issues. I was advised that offers to settle had been delivered by the Defendants and that Vicentini and Ford are requesting payment of costs on the basis that their offers were more generous than the findings of the jury. The Defendant Hoang seeks payment of costs as do the Plaintiffs.

[5] The Defendant Hoang is the father of the injured infant. His automobile liability insurer, the Personal, takes the position that there is no coverage under the policy for the accident involving Christopher and consequently, it has not paid the judgment. Mr. McCarthy was trial counsel for the Defendant Hoang and it was clear at trial that he was defending Hoang pursuant to a duty to defend and that he was not counsel retained to deal with the coverage issue.

[6] The Defendant Hoang personally has not paid the judgment, and it is submitted that he does not have the financial means to do so. Following the jury verdict an action was commenced by the Defendant Hoang against his insurer, the Personal, for a declaration of coverage and indemnification for the judgment. The Plaintiffs have commenced an action against the Personal for payment of the judgment pursuant to section 258 of the Insurance Act, R.S.O. 1990, c.1.8. I am advised that those actions are at the discovery stage.

[7] As a result of the coverage issue, no funds have been paid to the Plaintiffs pursuant to the jury verdict.

Positions of the Parties

[8] The Plaintiffs argue that it is premature to deal with the issue of costs at the present time for several reasons. First, the verdict is under appeal so any costs order would be suspended as a result. Secondly, the issue of payment of the judgment has not been resolved and there are two outstanding actions that deal with this issue. Thirdly, it is submitted there is no prejudice to any Defendant to defer the determination of responsibility of costs since any costs order will attract interest. However, there is demonstrable prejudice to the Plaintiffs if the costs are decided now because costs will be sought from the Litigation Guardian who is using her own money to pay for treatment for Christopher. Finally, it is submitted that the Plaintiffs will be requesting a Sanderson order and thus, the ability to pay costs is a significant factor that must be considered by the court in these circumstances.

[9] The Defendants each argue that there is no reason that costs cannot be dealt with at the present time. The verdict has been appealed and the appeal will likely be heard in the Spring, 2014 so costs, if appealed, ought to be dealt with at the same hearing. Further, it is submitted, the ability of a party to pay costs is but one issue that ought to be taken into consideration by the court when fixing costs and determining if a Sanderson order is appropriate in the circumstances. Costs are fixed in the normal course following a trial and there is no reason to depart from this routine.

Analysis

[10] The award of costs is a matter for the court’s discretion: section 131 of Courts of Justice Act, R.S.O. 1990, Chap. C.43. Rule 57 of the Rules of Civil Procedure sets out the principles to be considered when fixing costs and instructs that the “court shall devise and adopt the simplest, least expensive and most expeditious process for fixing costs..” (Rule 57.01(7).

[11] The fact that a verdict has been appealed is no reason for delaying the issue of costs. Similarly, the fact that the issue of coverage for Hoang has not been determined cannot, in my view, form a basis for departing from the usual practice of fixing costs after an event. The trial went ahead for 7 weeks more than a year ago without the issue of coverage of a target Defendant being determined. It must have been abundantly clear to the parties and counsel, in particular the solicitors for the Plaintiffs, well in advance of the trial that there was potential for a finding of liability against Hoang and that the insurer had taken an off coverage position, which meant that if Hoang was found to be negligent, the insurer would not be paying the judgment. Notwithstanding this, the trial proceeded.

[12] Counsel for the Plaintiffs candidly advised the court that this motion was brought because it is the position of the Plaintiffs that the costs ought to be paid by the Defendant Hoang pursuant to a Sanderson order. Consequently, it is argued, the ability to pay of the Defendant Hoang is a significant factor for consideration and until the coverage issue is decided, this fact cannot be ascertained.

[13] One of the cases referred to by counsel was Rowe et al. v. Investors Syndicate Ltd. et al., (1985), 1990 5402 (BC CA), 46 C.P.C. 209 (H.C.J.). In this case, counsel for the successful Defendant sought a Sanderson order against the unsuccessful Defendant: that instead of the Plaintiff paying the costs of the successful Defendant, the unsuccessful Defendant be ordered to pay them. In reviewing the law dealing with Sanderson type orders, Justice Henry noted that the court in exercising its discretion whether or not to make such an order was “ a practical question related to the ability of the Defendant to pay the costs…I believe it only right on such evidence as is before me to infer that he [the unsuccessful Defendant] will be unable at present to pay the costs of I.S.L. [the successful Defendant] or the Plaintiffs…” In that case, Justice Henry noted there was an inability to pay the judgment on the part of one Defendant but found there was no basis to delay the determination of costs.

[14] In Gardner v. Hann 2012 ONSC 2006, I reviewed the law on Sanderson and Bullock orders and stated:

“A Bullock order still requires the Plaintiff to pay the costs of the successful Defendant(s). However, it then requires, in turn, the unsuccessful Defendant(s) to reimburse the Plaintiff for costs that the Plaintiff has paid to the successful Defendant(s): Rooney (Litigation Guardian Of) v. Graham (2001), 2001 24064 (ON CA), 53 O.R. (3d) 685 (C.A.) at para. 6 [Rooney v. Graham].

A Sanderson order is a more direct solution; it requires the unsuccessful Defendant(s) to pay the costs of the successful Defendant(s), leaving the Plaintiff out of the process entirely: Rooney v. Graham at para. 6.

In Rooney v. Graham, Carthy J.A. explained at para. 6 that Bullock and Sanderson cost orders are appropriate in situations where it is unclear who is responsible for the Plaintiff’s loss:

The rational [sic] behind both orders is the same. Where the allocation of responsibility is uncertain, usually because of interwoven facts, it is often reasonable to proceed through trial against more than one defendant. In these cases, a Bullock or Sanderson order provides a plaintiff with an appropriate form of relief.

In Moore v. Wienecke 2008 ONCA 162 at para. 41, the Ontario Court of Appeal set out a two-part test for determining whether a Sanderson order is appropriate. This test also applies to Bullock orders.

a. Whether it was reasonable to join the several Defendants together in one action.

b. If so, whether courts should exercise their discretion to award such an order, i.e. would it be just and fair in the circumstances.

As part of the second consideration, the Court in Moore v. Wienecke set out four factors that are “relevant” to determine whether it is appropriate for the Court to exercise its discretion. However, the Court noted at para. 45 that they “need not be applied mechanically in every case” since a determination of costs is discretionary.

The Four Factors:

(a) Did the unsuccessful Defendant try to shift responsibility on the successful Defendant?

(b) Did the unsuccessful Defendant cause the successful Defendant to be added as a party?

(c) Are the causes of action independent of each other?

(d) Who has the ability to pay costs?

The question of whether to award a Bullock or Sanderson order is one of allocation of risk. A Bullock order places the risk on the Plaintiff of not recovering its costs from an impecunious unsuccessful Defendant and a Sanderson order places the risk on the successful Defendant of not recovering its costs from the impecunious unsuccessful Defendant.”

[15] While I agree it would have been preferable to have had the issue of insurance coverage determined prior to dealing with the issue of costs, in my view, the fact that it has not is not an impediment to the court fixing costs. The case law is clear that the ability of a party to pay costs is but one factor to be considered by the court when deciding if in all of the circumstances a Sanderson order is appropriate. The ability to pay costs, in isolation, is not determinative of the issue.

[16] I am not persuaded that there is any prejudice to the Plaintiffs by dealing with the costs issues at the present time. The usual practice is for the court to fix costs following the event. In this case, the verdict is under appeal so even without regard to the coverage actions, there is no prospect that the judgment will be paid in the near future. It is conceded that any costs order will bear interest.

[17] The successful Defendants, Vicentini and Ford, are not parties to and have no interest in the other actions dealing with coverage. In my view, there is no compelling reason why they ought to be forced to wait for the outcome of the other claims in order to have the issue of costs resolved.

Conclusion

[18] The motion by the Plaintiffs for a stay on the determination of costs is dismissed. Costs of today will form part of the costs submissions. Counsel are directed to contact me for a timetable for the delivery of materials and date for submissions on costs.

D.A. Wilson J.

Date: August 14, 2013