SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: CV-09-00096882
DATE: 20140714

RE: Harald Rapp and Suzanne Borisko, Plaintiffs

• and -

Ranjit Bhogal, K.H.M. Trucking Inc. and Calvin Hynes, Defendants

BEFORE: The Honourable Mr. Justice M.F. Brown

COUNSEL:
J. Patrick Brown & J. Nisker, for the Plaintiff, Harald Rapp

R. Donald Rollo & D. Visschedyk, for the Defendants, Ranjit Bhogal and
K.H.M. Trucking Inc.

HEARD: April 3, 2014

COSTS ENDORSEMENT

Overview

[1] On the early evening of November 29, 2007, the plaintiff, Harald Rapp, was involved in a serious motor vehicle collision. Mr. Rapp’s vehicle collided with the back of a dump truck driven by the defendant, Ranjit Bhogal, and owned by the defendant, K.H.M. Trucking Inc. Shortly thereafter, the defendant, Calvin Hynes, who was travelling behind the Rapp vehicle, collided with the Rapp vehicle. The back end of Mr. Hynes’ vehicle collided with the rear of Mr. Rapp’s vehicle when Mr. Hynes veered to the left to avoid the Rapp vehicle which was stationary due its previous collision with the dump truck. The plaintiff suffered serious personal injuries due to the aforementioned events.

[2] Mr. Rapp’s wife, Suzanne Borisko, has discontinued her Family Law Act claim and is no longer a plaintiff in this action. In addition, Mr. Rapp settled his claim with the defendant, Calvin Hynes, on the basis of a Pierringer Agreement.

[3] The trial of this action proceeded before a jury on the issue of liability only, commencing November 12, 2013 for jury selection. The jury returned their verdict on November 27, 2013. Jury selection on November 12, 2013 took half of a day. The trial of this matter thereafter lasted nine days. Not all of those days were full sitting days. The jury found that the plaintiff was 100% liable for his own injuries and determined that the remaining defendants did not have any liability in this action.

[4] The matter was then put over to April 3, 2014 to hear submissions on costs and to deal with the defendants’ motion for judgment. On April 3, 2014, I ordered that judgment was to issue in accordance with the jury verdict and endorsed the trial record accordingly.

[5] Counsel could not agree on costs and I received written submissions and heard oral argument on this issue on April 3, 2014. I reserved my decision on the issue of costs. The following are my reasons.

Background

[6] As mentioned earlier, the trial of this matter was on the issue of liability only. At the time of the collision, the dump truck driven by the defendant, Bhogal, had been stopped on Keele Street and the defendant was preparing to make a left-hand turn into the yard where he parked the dump truck.

[7] At trial, the plaintiff’s position was that the defendant, Bhogal, failed to activate his left turn signal and/or the lights of the dump truck were not turned on, were not working, were not visible or were broken. As well, there was the issue of contributory negligence on the part of the plaintiff as he was not wearing his seat belt.

[8] The defendants’ position at trial was that there was no evidence that the lights of the dump truck were not turned on or were not working at the time of the collision and, as such, the plaintiff had not met his burden to prove there was negligence on the part of either of the defendants that caused or contributed to the motor vehicle collision.

Position of the Parties Regarding Costs

[9] The defendants seek costs on a partial indemnity scale. They submit that, as the action was dismissed, the usual costs consequences are that the defendants are entitled to their costs on a partial indemnity basis throughout the action. The defendants submit that on two different occasions the plaintiff was offered the opportunity to go out of the action on a without costs basis, but on neither occasion did the plaintiff accept the defendants’ offer to do so.

[10] The plaintiff submits that the defendant should not receive any costs in this matter. Moreover, the plaintiff submits that this is a case where the plaintiff should receive its costs or some portion thereof. If there are costs to be awarded to the defendants, the plaintiff submits that they should be greatly reduced from the award sought in the defendants’ Amended Bill of Costs. The plaintiff makes these submissions on the basis of the following:

a. The defendants employed tactics which unnecessarily prolonged the proceeding, delayed the trial of the action, and increased litigation costs substantially.

b. The defendants did not give full complete and frank disclosure.

c. A costs award would cause undue hardship for the plaintiff who suffered catastrophic personal injuries, requires ongoing supervision and has been rendered unemployable as a result of the collision.

d. The defendants accepted the Rule 49 offer made by the plaintiff.

e. The costs sought by the defendants are excessive and duplicative.

Legal Principles

[11] As Armstrong J.A. explained in Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634 (C.A.), the fixing of costs involves more than merely a calculation using the hours docketed and the costs grid. As Armstrong J.A. put it at para. 24 of Boucher, “it is also necessary to step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable.” He reiterated what the court had said in Zesta Engineering Ltd. v. Cloutier, 2002 45084 (Ont. C.A.), (2002) 164 O.A.C. 234 at para. 4:

In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.

[12] The relevant principles for the exercise of the court’s discretion were also canvassed by the Court of Appeal in Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 per Epstein J.A. at para 52:

… the overriding principle is reasonableness. If the judge fails to consider the reasonableness of the costs award, then the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. In Boucher, this court emphasized the importance of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding at para. 37, where Armstrong J.A. said “[t]he failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice.”

Analysis

[13] I have reviewed the Bill of Costs (including the Amended Bill of Costs) submitted by counsel for the defendants as well as the further written material filed by both counsel in addition to their oral submissions. I have considered the factors enumerated under Rule 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, including the time spent, the results achieved, and the complexity of the matter, as well as the application of the principle of proportionality: Rule 1.04(1). In considering the various factors set out in Rule 57, this action was of moderate complexity when both issues of damages and liability were live issues. However, once damages were settled, the case proceeded as a liability only trial and I did not view the liability trial as a complex one. In fact, I considered the issues to be determined at trial to be quite straightforward. There were no exceptional evidentiary issues at the trial, nor any exceptional legal issues with respect to negligence. The plaintiff admitted that he was not wearing his seat belt at the time of the collision.

[14] Furthermore, I have taken into account the principles set forth by the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario and Davies v. Clarington (Municipality), supra, specifically that the overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant.

[15] In my view, there is no cogent reason why, given the jury verdict in this case, costs ought not to be visited upon the plaintiff. The defendants are entitled to an award of costs given their complete success at trial. There is no reason that the plaintiff has put forward that would justify costs not following the event in this case. The defendants are entitled to partial indemnity costs throughout.

[16] In determining the appropriate quantum of costs, I do not propose to undertake a scrutiny of the dockets or to undertake a line by line analysis of the hours claimed. Rather, it is my function to fix an amount of costs that is fair and reasonable and in accordance with the principle of proportionality: Davies v. Clarington (Municipality), supra.

[17] The defendants seek costs of $210,390.33 inclusive of disbursements and taxes. In terms of the quantum of costs, I agree with the plaintiff’s submissions that the costs currently sought by the defendants should be reduced. I agree with the submissions of the plaintiff that:

i. the defendants unnecessarily prolonged the proceeding and increased the litigation costs, and

ii. portions of the costs sought by the defendants are excessive and duplicative.

I will deal with each of these issues separately. For reasons that I will expand upon later in my decision, I do not believe the other issues raised by the plaintiff have merit. Specifically, I do not accept that the defendant should not be awarded costs because of the unjust hardship that an award of costs would have on the plaintiff or because of the lack of candor and non-disclosure of the defendants. Nor do I believe that the defendants accepted the Rule 49 offer of the plaintiff of May 1, 2013.

Conduct of the Defendants which Unnecessarily Prolonged the Proceeding

[18] In my view, it is appropriate to give considerable weight to the conduct of the defendants that tended to lengthen unnecessarily the duration of the proceedings: Rule 57.01(1)(e). A review of the facts leading up to the trial of this action is significant for this assessment. The trial of this action was initially scheduled to proceed on May 13, 2013.

[19] A pre-trial was held before Boswell J. on April 12, 2013. The parties were unable to settle either the issue of liability or damages at this pre-trial.

[20] On April 23, 2013, counsel for the plaintiff wrote to counsel for the defendants and proposed that the parties settle the issue of damages. In that letter, counsel for the plaintiff indicated that resolving the issue of damages “will of course shorten the duration of the trial and reduce the amount of costs incurred in having the matter tried.” Counsel for the plaintiff further indicated that the trial of damages would take an additional 4 to 5 weeks.

[21] Following the delivery of this letter, counsel for the plaintiff had a conversation with counsel for the defendants. Counsel for the plaintiff again proposed that the parties either settle the issue of damages or, in the alternative, sever the issues of liability and damages so as to reduce the length and costs of the trial. Counsel for the defendants would not agree to settle the issue of damages or to bifurcate the trial.

[22] The plaintiff served a Rule 49 offer to settle on the defendants dated May 1, 2013. The offer contained three distinct offers which could be accepted separately. Included in the three offers was an offer by the plaintiff to settle the issue of damages with the defendants in the amount of $975,000 net of collaterals.

[23] On May 8, 2013, counsel for the plaintiff again wrote to counsel for the defendants and confirmed the defendants’ position that they would not consent to a bifurcation of the trial. Counsel for the plaintiff indicated that he would be relying on that position in relation to any submissions on costs at the end of the trial.

[24] A second pre-trial conference was held before Boswell J. on May 13, 2013, the day the trial was initially scheduled to proceed in Newmarket. At this second pre-trial conference Boswell J. advised the parties that the court was unable to accommodate such a long trial during the May trial sittings, though the court could hear a trial on the issue of liability only. He thus advised the parties that the trial would have to be adjourned if the parties were unable to settle the issue of damages or otherwise agree to bifurcate the issues of liability and damages.

[25] Again, the defendants would not agree to settle the issue of damages or to bifurcate the issues of liability and damages. Accordingly, the trial of the action was adjourned to a fixed date commencing November 12, 2013.

[26] On or about August 16, 2013, the defendants changed counsel and a new law firm and counsel commenced acting for the defendants.

[27] Sometime in October 2013, counsel for the plaintiff had a discussion with the new counsel for the defendants and enquired whether the defendants would consent to a bifurcation of the trial. By letter dated October 15, 2013, counsel for the defendants responded and indicated that his clients would not consent to bifurcation.

[28] Approximately one week before the commencement of the trial, a third pre-trial conference was held on November 4, 2013 before Edwards J.

[29] At the third pre-trial conference, the defendants tentatively agreed to settle the issue of damages and proceed on the issue of liability alone. The defendants indicated that they would confirm their agreement within 48 hours of the third pre-trial.

[30] On November 6, 2013, the defendants agreed with the plaintiff on the issue of damages and also that there would be a trial on the issue of liability alone. The trial proceeded before a jury on that basis.

[31] In my view, the actions of the defendants unnecessarily prolonged and delayed the trial of this action and increased costs substantially. To begin with, if the defendants had agreed on May 13, 2013 at the pre-trial before Boswell J. to bifurcate a trial on the issue of liability only, as the plaintiff had offered on a number of occasions previous to that date, then the trial could have proceeded at the May 2013 sittings in Newmarket. This is exactly what the defendants subsequently agreed to do on November 6, 2013. In my view it would be unfair to the plaintiff to have to assume two sets of preparation fees and disbursements to prepare for two trials when the trial on liability could have taken place in May 2013 as the plaintiff had offered to do.

[32] In addition, there was significant duplication of preparation time because, through no fault of the plaintiff, the defendants changed counsel in August 2013.

Excessive Costs and Duplication

[33] In my view, certain of the fees and disbursements sought by the defendants are excessive in the circumstances. As well, certain of the fees and disbursements are duplicative in part because they claim for fees and disbursements for preparation for a trial in both May 2013 and November 2013 which I believe, as I have indicated earlier, is unfair to the plaintiff.

[34] In considering the Bill of Costs, I find the hours billed and partial indemnity rates as reasonable regarding items (1) and (2). With respect to item (3) “Examination for Discoveries”, I find the amount claimed of $11,989.17 to be excessive in light of the moderate complexity of this case. Accordingly, I would reduce that amount to $8,000.

[35] With respect to item (4) “Mediations and Settlement Meetings”, I would not award any of those amounts claimed. The claimed amounts do not relate to a step in a proceeding authorized by the Rules of Civil Procedure. In the Central East Region, where this action proceeded, Rule 24.1 does not apply and, accordingly, mandatory mediation does not apply to this action. The amounts claimed relate to a voluntary mediation which is not a Tariff item and not properly the subject of a costs endorsement: Saltsov v. Rolnick 2010 ONSC 6645 at para. 13; Amaral v. Canadian Musical Reproduction Rights Agency Ltd., [2007] O.J. No. 3512 (ONSC) at paras. 21-22.

[36] With respect to item (5) “Trial Preparation (May 2013 trial date)”, I find the amount claimed of $42,596.40 to be excessive in light of the moderate complexity of this case. Accordingly, I would reduce that amount to $32,500.

[37] With respect to item (9) “Preparation for Trial (November 2013 trial date)”, I would not award any of this amount. For the reasons I have articulated earlier, it seems unreasonable to me that the plaintiff should have to pay costs to the defendants for the duplication of trial preparation in circumstances where the defendants have: (i) switched counsel through no fault of the plaintiff, and (ii) counsel could have had a trial six months earlier by agreeing to proceed on the basis of liability only. If that had happened, it would not have been necessary to prepare a second time for trial.

[38] With respect to item (10) “Trial Attendance”, I find the amount claimed of $46,845 to be excessive given the uncomplicated nature of the liability only trial. Accordingly, I would reduce that amount to $30,000. While I appreciate the fact that the defendants had two counsel at trial, the number of hours must be discounted to take into account the overlap of work and duplication that is unavoidable in such circumstances, especially for such a straightforward trial as this one.

[39] I find the hours billed for partial indemnity rates for item (11) “Bill of Costs” to be reasonable.

[40] In summary, therefore, I fix the fees at $75,169.94.

[41] I now turn to the issue of disbursements which total $19,810.58. I have reviewed the disbursements set out in the Amended Bill of Costs. The total disbursement for photocopying in the Amended Bill of Costs is $4,596.95. In my view, that number is excessive and I would reduce the amount for photocopying by $1,500. As well, the amount claimed for 2013 Process Server is $2,943.65. Again, I view that number to be excessive and I would reduce that figure by $1,000. In addition, the mediator fee of $3,995.81 is not a fee that may be claimed under the Tariff given that the Central East Region is not subject to Rule 24.1 and does not have mandatory mediation (see paragraph 35 above). Accordingly, I would reduce the disbursements by $6,495.81 and fix the total disbursements at $13,314.77.

Additional Plaintiff Submissions

[42] As noted earlier, the plaintiff raised a number of other issues regarding why either the defendant should receive no costs award or, in the alternative, why the plaintiff should receive a portion or all of its costs. As I indicated earlier, I would not give effect to these submissions. I will deal with each of these issues separately.

i. The Plaintiff’s Rule 49 Offer

[43] The plaintiff argues he is entitled to at least a portion of his costs pursuant to Rule 49.07 on the basis that the defendants accepted offer number 3 of the plaintiff’s Rule 49 offer that was made on May 1, 2013.

[44] Offer number 3 was an offer by the plaintiff to settle with the defendants on the issue of damages in the amount of $975,000 net of collaterals. The plaintiff submits that this offer was accepted by the defendants by letter of November 6, 2013 and accordingly he is entitled to a portion of his costs.

[45] In my view, the terms of the proposed settlement on damages set out in the defendants’ counsel’s letter of November 6, 2013 does not constitute an acceptance of the plaintiff’s Rule 49 offer of May 1, 2013.

[46] To begin with the terms of the proposed damages settlement that were set out in the letter of November 6, 2013, came about as a result of the third pre-trial that was held with Edwards J. on November 4, 2013.

[47] In the letter of November 6, 2013, defendants’ counsel offered to settle damages on the following terms:

Damages will be capped at $975,000. The defendant is liable to pay a percentage of the total of $975,000 ($975,000 being 100%) to the plaintiff in accordance with the jury verdict. There will be a liability only trial commencing next Tuesday, November 12, 2013 in Newmarket. Contributory negligence is an issue.

[48] Importantly, there was also an additional component to the defendants’ settlement proposal which was set out in the following paragraph of the letter of November 6, 2013. It reads as follows:

You have agreed to call the following people, at your expense, on the issue of liability only, meaning that they can give evidence about their professional qualifications, area of expertise, the reason Rapp was there to see them, and what each was told by Mr. Rapp about what he recalls about the accident.

• Tenley Kelly

• Leah Davidson

• Dr. Voorveld

• Dr. Ali

• Dr. Dost

• Dr. Yee

[49] This term of the defendants’ settlement proposal which was ultimately agreed to by the plaintiff, was not mere surplusage. The plaintiff’s agreement to calling six professional witnesses at the liability trial was a key component to the defendants agreeing to settle the issue of damages. From the perspective of the defendants, those witnesses were important witnesses for the defence in terms of the jury’s assessment of the evidence of the plaintiff.

[50] I agree with counsel for the defendants that there was not acceptance of the plaintiff’s May 1, 2013 Rule 49 offer because the terms of the defendants’ settlement proposal in the November 6, 2013 letter did not mirror the terms of the plaintiff’s Rule 49 offer in an important detail. The additional term of requiring the plaintiff to call six professional witnesses was an important aspect of the defendants’ proposal and, as a result, it cannot be said that the Rule 49 offer was accepted. Accordingly, the provisions of Rule 49.07(5) in relation to the costs consequences of accepting a Rule 49 offer are not invoked and the plaintiff is not entitled to a portion of its costs.

ii. Unjust Hardship

[51] The plaintiff submits that a costs award would result in extreme hardship to him, both financially and personally and that a costs award will severely compromise his physical and emotional well-being.

[52] I acknowledge that a party’s impecuniosity and other circumstances or hardship are proper considerations in the exercise of a court’s discretion in awarding costs. As well, I accept that there are cases where courts have refused to award costs against the party where the imposition of costs would result in an unjust hardship to that party: Williams v. Thunder Bay (City), 1993 Carswell Ont. 4361 (Ont. Gen. Div.). However, in my view, on the basis of the record before me, this is not one of those cases.

[53] On the basis of the evidence filed, there is no sworn evidence showing the plaintiff’s impecuniosity or demonstrating his inability to pay an award of costs. While I acknowledge it may well be a hardship for the plaintiff to pay an award of costs, as is indicated in the affidavit of Mr. Nisker at paragraph 36 of the plaintiff’s motion record on costs, that mere assertion falls short of discharging the onus on the plaintiff claiming to be impecunious to substantiate that claim.

[54] I am not persuaded that the plaintiff has met a reasonable onus of establishing that he is financially unable to pay an award of costs. Nor has he established the size of the award that he would be able to pay: Iannarella v. Corbett et al., 2012 ONSC 6536, at paras. 7-9. In my view, the failure to adduce adequate evidence on this point is fatal to the plaintiff’s position on this issue and distinguishes this case from the cases relied upon by the plaintiff in this regard.

iii. Conduct of the Defendants

[55] The plaintiff submits that the defendants should not be awarded costs on the basis that the defendants failed to give full, complete and frank disclosure. The plaintiff also submits that the defendant Bhogal’s lack of candor and improper disclosure restricted the ability of the plaintiff to properly assess the case. The plaintiff submits that the defendant Bhogal repudiated much of his discovery evidence at trial and never corrected his answers on discovery. The plaintiff also submits that the defendants produced for the first time at trial the light switch to the truck and, additionally, the defendants failed to produce certain repair records for the trial. As well, the plaintiff submits that the defendant’s ongoing inconsistencies and improper disclosure restricted the ability of the plaintiff to assess the case, especially in light of the plaintiff’s inability to remember details of the collision due to his traumatic brain injury.

[56] I would not give effect to this argument. The conduct of the defendant Bhogal and his credibility were live issues for the jury to assess at trial. I am not persuaded that the conduct of the defendant Bhogal deprived the plaintiff of the opportunity to assess the case. It was open to counsel for the plaintiff to challenge the credibility of the defendant Bhogal at trial, which he did. It was also open to plaintiff’s counsel to cross-examine the defendant Bhogal on any inconsistencies between his evidence on discovery and his evidence at trial. Again, this was an avenue that counsel for the plaintiff pursued in the course of the trial.

[57] The Rules of Civil Procedure provide remedies to a party in circumstances where an opposing party has not made full, complete and frank disclosure. See Rules 30.08, 31.07 and 31.09 as examples. The plaintiff’s counsel did not seek to have the court invoke any of these remedies in this case.

[58] I acknowledge that there are cases such as Capela v. Rush, 2002 49470 (Ont. S.C.J.) where courts have ordered that costs should not be paid in the face of improper conduct and cases such as Singh v. Singh, 1992 Carswell Ont. 322 (Ont. Gen. Div.) where courts have awarded costs against a successful party as a result of misconduct by the successful party. However, in my view, the conduct of the defendants in this case does not warrant such an extreme remedy.

[59] None of the actions of the defendants could reasonably be characterized as being sufficient to deprive the plaintiff of his ability and that of his counsel, to properly assess the strengths and weaknesses of this case. Nor could any of the actions of the defendants be construed as procedural misconduct as was the case in Singh v. Singh, supra, such that an award of costs to the unsuccessful party needs to be made to protect the integrity of the process and act as a signal to other litigants. In my view, this is not a case where an order under Rule 57.01(2) should be made awarding costs to the plaintiff or an order made