SUPERIOR COURT OF JUSTICE – ONTARIO
COURT FILE NO.: 08-00662 (Hamilton)
DATE: 2014/06/16
RE: Anna Magnone et al (Plaintiffs) v. Brenda Dawson (Defendant)
BEFORE: The Honourable Mr. Justice R.A. Lococo
COUNSEL:
Pheroze Jeejeebhoy, for the Plaintiffs
Arthur R. Camporese, for the Defendants
HEARD: May 30, 2014
E N D O R S E M E N T – C O S T S
[1] The Plaintiffs sued to recover damages for injuries sustained as a result of a motor vehicle accident that occurred on May 31, 2007. Following a jury trial in November 2013, judgment was entered in favour of the Defendant, Brenda Dawson, and the action was dismissed. Costs were left to be determined at a later date following further submissions, which were heard orally some months later.
[2] For the reasons below, I have decided that the Defendant is entitled to partial indemnity costs, fixed at $100,000, including disbursements and tax.
[3] By way of background, the questions to be determined at trial related to damages only. Brenda Dawson, the driver of one of the vehicles involved in the accident, admitted liability prior to the trial. Anna Magnone, the driver of the other vehicle, claimed general damages as well as damages for past and future income loss. Her three children, who were passengers in the vehicle, claimed general damages as well as damages pursuant to the Family Law Act.[^1] Her husband, who was not in the vehicle at the time of the accident, claimed Family Law Act damages only.
[4] After an 11 day trial, the jury returned a verdict assessing Anna Magnone’s claim for general damages at $30,000, her claim for past loss of income at $46,779 and her claim for future loss of income at zero. Her daughter Vanessa was awarded $2,500 in general damages and zero for Family Law Act damages. The jury assessed the damage claims of the other Plaintiffs at zero. After deduction of the statutory deductible for general damages,[^2] the amount payable to each of Anna Magnone and Vanessa Magnone for general damages was reduced to zero. As well, Anna Magnone had previously received income replacement benefits in an amount equal to the amount assessed by the jury for past loss of income, which was also deducted from the amount assessed by the jury. Accordingly, judgment for the Defendant was entered, dismissing the action.
[5] As part of the submissions at the costs hearing, I was advised of two offers to settle by the Defendant. Under the first offer dated January 12, 2010, the Defendant offered to settle the action on the basis of dismissal of the action without costs if accepted prior to commencement of discoveries and with costs thereafter.
[6] The Defendant made a second offer dated April 26, 2012, in response to an offer made by the Plaintiffs a few days previously. Under the Defendant’s second offer, Anna Magone would have been entitled to the following:
(i) General damages: $80,000 ($50,000 net of the $30,000 deductible)
(ii) Past income loss: $10,000
(iii) Future income loss: $67,500
(iv) Loss of housekeeping services: $7,500
[7] As well, each of her husband and three children would have been entitled to Family Law Act damages of $17,500 ($2,500 each net of the $15,000 deductible). The offer did not include any amount for general damages for the children. The Defendant’s offer also provided for payment of costs and disbursements in an amount to be agreed on or assessed.
[8] As the successful party in the action, the Defendant sought payment by the Plaintiffs of her costs throughout. According to the Defendant, since the results achieved at trial were more favourable to her than under the terms of her second offer to settle, she should be awarded her costs on a partial indemnity basis up to the date of the offer, and on a substantial indemnity basis after the offer.
[9] The Plaintiffs’ position was that no costs should be payable by either party. In the Plaintiffs’ submission, there were several factors that justified offsetting any amount of costs that would otherwise be payable to the Defendants, notably the following:
(i) The jury award of general damages to Vanessa Magnone was more favourable than the terms of the Defendant’s second offer, and accordingly, she would be entitled to her costs for the relevant portion of the trial preparation and related disbursements;
(ii) The Defendant failed to admit facts and documents proven at trial;
(iii) A costs award against the Plaintiffs would cause hardship in the circumstances; and
(iv) The Defendant had not adequately proven the legal costs and disbursements.
[10] Alternatively, if I found the foregoing factors did not justify a complete offset of the costs that would otherwise be payable to the Defendant, the Plaintiffs argued that those factors should be taken into account by way of reduction to the amount of costs payable.
[11] Having considered the material before me and the submissions of counsel, I have concluded that the Defendant should be awarded her costs throughout on a partial indemnity basis, without any significant reduction to take into account the factors cited by the Plaintiffs.
[12] The setting of costs of an action is in the discretion of the court,[^3] having regard for the considerations set out in Rule 57 of the Rules of Civil Procedure.[^4] In this regard, the courts have recognized that the successful party on a motion has a reasonable expectation of being awarded costs in the absence of special circumstances.[^5] In my view, the costs order in this case should give effect to that expectation.
[13] As part of their argument that any costs award to the Defendant should be offset or reduced, the Plaintiffs relied on subrule 49.10(2) of the Rules of Civil Procedure as it applies to the general damages award in favour of Vanessa Magnone. Subrule 49.10(2) provides that if the defendant makes an offer to settle that complies with that provision and the plaintiff obtains a judgment as favourable or less favourable than the terms of the offer, the plaintiff is entitled to partial indemnity costs to the date of the offer and the defendant is entitled to partial indemnity costs thereafter unless the court orders otherwise.
[14] In this case, as noted previously, the jury awarded $2,500 in general damages to Vanessa Magnona, whereas the Defendant’s second offer did not include any amount for general damages for Vanessa. The Plaintiffs argued that Vanessa had obtained a result more favourable than the Defendant’s offer in that respect, and accordingly, she should be entitled to her costs for that portion of the trial preparation and related disbursements, both before and after the date of the offer.
[15] I agree with the Plaintiffs’ analysis in one narrow respect. As determined by the Ontario Court of Appeal in Ryder v. Dydyk, 2007 ONCA 687, in order to determine whether an offer to settle is more or less favourable than the amount achieved at trial for the purposes of Rule 49.10 of the Rules of Civil Procedure, the amount awarded at trial is to be considered before application of the statutory deductible under the Insurance Act. Accordingly, I agree that with respect to the award of general damages to Vanessa Magnone, the results achieved by Vanessa at trial were more favourable than the terms of the Defendant’s second offer. However, it is a considerable leap to suggest that as a result there would be any significant amelioration of the Defendant’s total costs entitlement taken as a whole. Clearly, the portion of counsel’s time and disbursements reasonably attributable to Vanessa Magnone’s claim for general damages would dwarf in comparison to the aggregate costs for the claims of Anna Magnone and the other Plaintiffs.
[16] As well, the Plaintiffs’ argument relating to Vanessa’s costs fails to take into account the fact that the jury did not award any amount to Vanessa Magnone for Family Law Act damages. Under the Defendant’s offer, Vanessa would have been entitled to damages in this category in the amount of $17,500, which after application of the statutory deductible would have resulted in a net payment of $2,500. Clearly, when comparing the results achieved at trial to the terms of the Defendant’s second offer taken as a whole, Vanessa’s claims were no more successful at trial than those of the rest of the Plaintiffs.
[17] As well, I was not persuaded that there should be any significant reduction in the amounts claimed by the Defendant on the other bases argued by the Plaintiffs. Plaintiffs’ counsel cited a long list of facts that he claimed that the Defendant should have admitted in response to requests to admit. According the Plaintiffs’ counsel, the Defendant’s failure to do so unnecessarily required the Plaintiffs to lead evidence with respect to matters that he claimed the jury must have found in Plaintiffs’ favour, as indicated by the jury’s verdict. For example, Plaintiffs’ counsel argued the Defendant should have admitted that Anna Magnone suffered certain specific injuries as a result of the accident, and also should have admitted the extent of those injuries and their effect on Anna Magnone and her ability to function. However, in my view, it would make no sense for the Defendant to admit these facts since they were central to the case that the Plaintiffs were attempting to make. In my view, the Plaintiffs’ reasoning failed to recognize that the net effect of whatever findings of fact the jury made was the dismissal of the Plaintiffs’ action in its entirety. In these circumstances, I found the Plaintiffs’ argument that the Defendant should suffer costs consequences for her failure to admit such essential facts to be devoid of merit.
[18] The Plaintiffs also argued that I should reduce or completely offset any costs award against the Plaintiffs based on the hardship that such an award would cause. The evidence at trial indicated that the Magnone family was a working family of relatively modest means, and I have little doubt that the payment of a significant costs award would not have a favourable impact on the family finances. However, in my view, that does not mean that the Plaintiffs should escape the adverse costs consequences to unsuccessful litigants that are inherent in our civil justice system. In this case, there is no evidence of undue hardship on the Plaintiffs that would justify such a result.
[19] I also considered the Plaintiffs’ argument that the Bill of Costs and other material filed by Defendant’s counsel prior to the costs hearing were not sufficient to prove the basis of his retainer and his fees and failed to provide information to support the disbursements charged. During oral submissions, Defendant’s counsel clarified that the fee amount set out in the Bill of Costs was the actual amount charged to the client. Following counsel’s submissions, I was satisfied that the material filed by Defendant’s counsel prior to the costs hearing was sufficient to support his claim for costs, with appropriate adjustments as outlined further below. This conclusion was further supported by additional back-up material, including detailed time dockets, previously provided to Plaintiff’s counsel and filed on consent during the costs hearing.
[20] With respect to the scale of damages awarded, I considered the Defendant’s argument that costs after the date of the Defendant’s second offer should be awarded on a substantial indemnity basis. As noted by Defendant’s counsel during his submissions, I retain the discretion to award substantial indemnity costs from such date, even though subrule 49.10(2) of the Rules of Civil Procedure presumptively provides for partial indemnity costs in those circumstances.[^7] However, the case law makes it clear that as a general rule, substantial indemnity costs are awarded only on an exceptional basis, saved for extenuating circumstances such as situations where there has been egregious conduct or where the proceedings were brought unreasonably.[^8] There was no evidence of such extenuating circumstances in this case.
[21] The Defendant filed a Bill of Costs indicating fees of $127,414 as well as disbursements of $70,781 (both figures including tax), for a total of $198,195. That amount would constitute full indemnity costs, given Defendant’s counsel clarification that the fee amount was the actual amount charged to the client. The fee amount should therefore be reduced in order to arrive at an appropriate figure for partial indemnity costs.
[22] The Plaintiffs also questioned a number of individual time charges on various bases. I considered the time spent to be generally reasonable and attributable to matters that should properly be the subject of a claim for costs. However, in the fixing of costs, I am not bound by the calculation of hours and time rates.[^9] In order to arrive at a result that is fair and reasonable to all parties, I am entitled to take into account other factors set out in subrule 57.01(1) of the Rules of Civil Procedure, including the reasonable costs expectations of the unsuccessful party.[^10]
[23] The Plaintiffs also disputed a number of the disbursements claimed, the most significant being: $13,602 for an expert report from a psychologist relating to Vanessa Magnone; a total of $9,980 relating to surveillance that was ultimately not used at trial; and $7,325 for consultations with economic loss claim expert who was not called as a witness.
[24] Having considered the submissions of counsel on these disbursements, I consider the disbursement for the psychologist’s report relating to Vanessa Magnone to be justified, but would disallow the disbursements for the surveillance in their entirety and for the economic loss expert in part.
[25] In this regard, given the matters the jurors were required to determine, I considered it appropriate for the jury to hear the testimony of the psychologist relating to Vanessa Magnone, who also provided expert testimony with respect to Vanessa’s brother Anthony. I see no basis for concluding that the psychologist’s testimony relating to Vanessa would have been unnecessary had certain admissions been made before trial. As well, as previously indicated, I saw no basis for adverse costs consequences for the Defendant in the circumstances of this case based on the jury’s assessment of modest for general damages in favour of Vanessa.
[26] I would, however, disallow the entire amount charged for surveillance. Those disbursements constituted a substantial portion of the total disbursements, and the surveillance was not sought to be placed in evidence at trial.
[27] With respect to the economic loss consultations, even though that expert was not called as a witness at trial, I was persuaded by the Defendant’s argument that the information provided by the expert was useful in the cross examination of the economic loss expert called by the Plaintiffs. However, as noted by Plaintiffs’ counsel, the Defendant was unsuccessful in a pretrial motion to permit the service out of time of an economic loss report from that expert, with the result that the Defendant was precluded from calling that expert as a witness at trial. In these circumstances, it is reasonable to reduce the amount of the disbursement by half, based on the likelihood of resulting inefficiencies that, in my view, should not be visited on the Plaintiffs.
[28] Taking the matters outlined above into account, I fix the Defendants costs on a partial indemnity basis at $100,000 including disbursements and costs, payable by the Plaintiffs within 30 days.
The Honourable Mr. Justice R.A. Lococo
Released: June 16, 2014
COURT FILE NO.: 08-00662 (Hamilton)
DATE: 2014/06/16
SUPERIOR COURT OF JUSTICE - ONTARIO
BETWEEN:
Anna Magnone et al
Plaintiffs
- and -
Brenda Dawson
Defendant
BEFORE: The Honourable Mr. Justice R.A. Lococo
COUNSEL: Pheroze Jeejeebhoy, for the Plaintiffs
Arthur R. Camporese, for the Defendant
ENDORSEMENT – COSTS
Lococo J.
Released: June 16, 2014
[^1]: R.S.O. 1990, c. F.3, s. 61(2)(e).
[^2]: Insurance Act, R.S.O 1990, c. I.8, s. 267.5(7).
[^3]: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131(1).
[^4]: R.R.O. 1990, Reg. 194.
[^5]: See Bell Canada v. Olympia & York Developments Ltd. (1994), 17 O.R. (3d) 135 (C.A.) at para. 21.
[^6]: 2007 ONCA 687 at para. 23.
[^7]: See Rules of Civil Procedure, rule 49.13.
[^8]: Empire Life Insurance Co. v. Krystal Holdings Inc., [2009] O.J. No. 1095 (S.C.) at para 19.
[^9]: See Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.) at para 26.
[^10]: See in particular paragraph 57.01(1)(0.b) of the Rules of Civil Procedure.