BRACEBRIDGE COURT FILE NO.: CV-05-300

DATE: 20130123

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

HUBA JANOS VANCSODY, MAGDOLNA VANCSODY, KRISTISZYTINA VANCSODY, ATTILA VANCSODY and ORSOLYA VANCSODY

Plaintiffs

– and –

STEVEN J. WRIGHTMAN

Defendants

Mr. D.K. Carroll, for the Plaintiffs

Mr. R.S. Baldwin, for the Defendant

Ms. S.J. Smith for Magdolna Vancsody and Attila Vancsody for the Defendants by Counterclaim

HEARD: by way of written submissions

Reasons For Decision On Costs

R. MacKinnon, J.

Background

[1] The parties advise they have been unable to agree on costs. I have now received and fully considered both their written submissions and their comments today by conference call.

[2] This was a personal injury trial which lasted ten days. Examinations for discovery were held over two days. The jury awarded $10,000 for general damages to Huba Vancsody, and $1,000 for Family Law Act damages to Magdolna Vancsody. I ruled neither award was recoverable by reason of Huba Vancsody’s injuries not having exceeded the Insurance Act threshold. In addition, the jury awarded Huba Vancsody $10,400 for past loss of income. Counsel for the defendant argues, and I find, that if prejudgment interest is allowed at the most favourable calculation to the plaintiffs, by assuming the past income loss was suffered in the year immediately following the 2003 accident, the cumulative interest entitlement is $2,475.

[3] The defendant Steven Wrightman was found wholly liable for the accident. He was, however, wholly unsuccessful in his counterclaim against Magdolna and Attila Vancsody.

[4] The plaintiffs seek costs on a partial indemnity basis from January 6, 2004 (date of Notice) to October 11, 2011 (date of one of the Offers to Settle of the defendant). The defendant seeks partial indemnity costs from October 11, 2011 to the end of trial. The successful defendants by counterclaim seek costs as a result of their total success on liability. All parties have filed Costs Outlines.

[5] Both liability and damages were in issue. At the commencement of trial, on consent, the claims of all plaintiffs except Huba and Magdolna Vancsody were dismissed. Huba Vancsody was the injured plaintiff in this accident. Magdolna Vancsody’s claim was derivative only under the Family Law Act. Counsel for all parties presented their clients’ cases to the jury in a focused, well organized fashion. Their trial preparation resulted in well prepared and focused witnesses.

Analysis

[6] In fixing costs, a judge is not assessing costs as if he or she were performing the function of an assessment officer. The object of fixing costs is to avoid the delay and added costs of a full assessment. A court determines what the services devoted to the proceedings are worth. The incurring of costs and time spent by counsel in litigation is essentially the exercise of judgment. The prudence, foresight and imagination of their judgment must be considered at the time the disbursement was incurred or the work was done. It is inappropriate to apply a test of hindsight to determine whether a service or charge was for an extra not reasonably necessary to advance the client’s position. The time to view the decision to commit services to the issue is before the trial.

[7] The plaintiffs made a number of offers to settle. The trial judgement was more favourable to the defendant than any of them. The defendant also made a number of offers to settle. Three were more favourable to the plaintiffs than the trial judgment. The earliest of these three was dated October 11, 2011 for the sum of $10,000 plus prejudgment interest and costs on a partial indemnity basis to that date. It was made more than one year prior to trial and would have resulted in a total payment, inclusive of interest, in the sum of $13,500 plus costs to the date of the offer.

[8] I have considered all of the terms of all of the offers of all of the parties in order to determine not only costs entitlement but also whether to exercise any costs discretion under Rule 49.13. Costs are always in the discretion of the court and cost consequences are result oriented. In addition to the result of the trial and the terms of all offers to settle, I have considered all of the factors in Rule 57.01 of the Rules of Civil Procedure. I keep in mind that the objective is arrive at an award that is fair and reasonable to all sides.

[9] Rule 49.10(2) provides that, in circumstances which I have found to apply to this case, (the plaintiffs having obtained a judgment less favourable than the terms of the defendant’s October 11, 2011 Offer to Settle), the plaintiffs are entitled to partial indemnity costs to the date of the offer and the defendant is entitled to partial indemnity costs from that date onwards to the end of trial, unless the court orders otherwise. I am not persuaded by any of the submissions of any of the parties to order otherwise. The plaintiffs’ limited means in this case should not be considered as a significant factor in the exercise of the court’s discretion to depart from the usual cost consequences of the Rule.

[10] The defendant’s counterclaim asserted that Magdolna and Attila Vancsody caused or contributed to the injuries of Huba Vancsody. The counterclaim was advanced as a claim for contribution and indemnity under the Negligence Act. The defendant argues it was the choice of the plaintiffs and/or their insurer (Allstate) to have separate counsel to defend the counterclaim. I disagree. Separate counsel was clearly required as there existed a clear conflict of interest that prevented plaintiffs’ counsel from also acting for Magdolna and Attila Vancsody on the counterclaim against them. They had the right to defend that claim and they did so. Allstate was required by law and by the terms of its policy of insurance to retain separate counsel for Magdolna and Attila Vancsody, and to defend, which it did. The defendant Wrightman and his insurer, (State Farm), could not have thought otherwise. A successful party is generally entitled to costs. In considering only the defendant’s counterclaim, the defendants-by-counterclaim were the successful parties. The jury found no liability on them, but rather found 100 percent responsibility to the defendant.

[11] Counsel for the defendant Wrightman argues that costs of a proceeding are determined on the overall result and that distributive costs work at cross purposes with the intended result of Rule 49. I find, however, that there is no distributive costs concern in this case since the main action and the counterclaim were separate proceedings. Counsel for the defendant-by-counterclaim argues, and I find, that a judgment in the counterclaim and a costs award in favour the successful defendants-by-counterclaim could not be set off against any costs award against Attila Vancsody. In any event, no costs were awarded against him. I have already noted that at the commencement of the trial, on consent, his claim was dismissed.

[12] As well, a judgment and costs award in favour of Magdolna Vancsody cannot be set off since her only trial claim was solely derivative. Costs should not be made payable for an entire action by a Family Law Act claimant in these circumstances. It was her counsel on the counterclaim that participated with defence counsel in the successful joint defence of the main action personal injury claim of Huba Vancsody. The defendants-by-counterclaim, having succeeded in defence of the main action, cannot now be required to pay for their success.

[13] I repeat that there is nothing in this record to justify a costs award against Magdolna Vancsody and I decline to make one. Her participation in the trial to assert her derivative claim, although unsuccessful by virtue of failure to meet the Insurance Act threshold, should not, and does not, expose her to a costs award. She and her insurer were thoroughly successful at trial on liability. I agree with the submission of her counsel on the counterclaim that if unsuccessful Family Law Act claimants were automatically exposed to costs, it would discourage their family members from making these claims (which are generally valued at low to moderate figures) in the face of legislation that clearly makes such claims available to them.

[14] Just prior to trial, the defendants by counterclaim made an offer to the defendant to contribute to any amount found owing at trial by the defendant Wrightman to the plaintiffs. Because of its timing it does not attract Rule 49 consequences. However, the defendants by counterclaim also offered on November 17, 2009 to consent to a dismissal of the action against them without costs and, that offer was later renewed in September 2012.

[15] I have considered all of the discretionary factors set out in Rule 57.01(1), the experience of counsel, the rates charged and the hours spent. I have also considered the principle of indemnity and the amount of costs that an unsuccessful party could reasonably expect to pay in relation to this proceeding. I have considered all of the offers that all of the parties have made, whether pursuant to Rule 49 or not. I am not satisfied on the material before me that any one of the parties was more single minded than the others in his or her efforts to obtain settlement before trial. That said, I keep in mind that a defendant or a defendant-by-counterclaim or their insurers are entitled to take the settlement positions they do – and to live with the successes or failures of their actions.

Conclusion

[16] From the commencement of the action through to the end of trial, the defendant maintained his position that Mr. Vancsody’s accident-related impairment failed to pass the Insurance Act threshold and failed to be as significant as the plaintiff claimed. In addition, he maintained his position that Magdolna Vancsody’s Family Law Act claim failed to meet the exception enumerated in the Insurance Act for the recovery of her derivative claim. He succeeded on both those positions. However, he failed in his further assertion that either or both of Magdolna or Attila Vancsody were responsible for the accident. Although nuanced in their presentation, the defence positions advanced consumed little extra time at trial. Liability was the only issue in the counterclaim which needed to be seriously defended, given Huba Vancsody’s injury claim and the quantum his counsel sought.

[17] I have already noted that the trial could have lasted much longer had all counsel not focused their efforts as they did. I am not persuaded that any counsel engaged in any excessive billing. The explanations related to each docket and to the items in each of the costs outline are sufficiently detailed to allow the court to properly assess the claimed items. I have a latitude under the Rule and do not consider it to be my role to second guess the time spent by counsel unless it is manifestly unreasonable in the sense that the total time spent or disbursements incurred were clearly excessive or that a matter was the subject of an unwarranted number of legal personnel. None of those exceptions are demonstrated in this case.

[18] I have considered the principle of indemnity and the amount of costs an unsuccessful party could reasonably expect to pay in relation to the proceeding. While judges should not attempt, in my view, to act as arbiters in the abstract of what disbursement amounts are appropriate, the charges in this case bear a reasonable relationship to prevailing market rates.

[19] In coming to the conclusions that I have, I have attempted to be fair to all sides. As I have noted, in fixing costs I am not meticulously assessing them as if I were performing the function of an assessment officer. However, I have conducted a critical examination of all the work performed by all counsel.

[20] I fix partial indemnity costs of the plaintiffs to October 11, 2011, against the defendant, in the sum of $20,000 inclusive of fee, disbursements and HST/GST.

[21] I fix partial indemnity costs of the defendant Wrightman against the plaintiffs Huba and Magdolna Vancsody from October 11, 2011 onwards to the end of trial in the sum of $75,000 inclusive of fee, disbursements, and HST/GST.

[22] I fix partial indemnity costs of the defendants by counterclaim against the defendant Wrightman in the sum of $30,000 inclusive of fee, disbursements and HST/GST. In arriving at that figure I have allowed nothing for the transportation costs of Attila Vancsody to attend trial in Ontario from his employment in Costa Rica. He was a party to the proceeding in any event and his claims as plaintiff remained before the court until just before to the commencement of trial.

R. MacKinnon J.

Released: January 23, 2013