ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-10-4812
DATE: 20140721
B E T W E E N:
DIANE LAUZON, ERNIE TESSIER and SUZANNE TESSIER, O/B BONFIELD FIRST SPIKE RESTAURANT AND GAS BAR
Michael C. Birnie, Counsel for the Plaintiffs
Plaintiffs
- and -
THE DOMINION OF CANADA GENERAL INSURANCE COMPANY and DEMARCO-LUCENTI INSURANCE BROKERS LIMITED
Christopher I.R. Morrison, Counsel for the Defendant, The Dominion of Canada General Insurance Company
A. Benson Forrest, Counsel for the Defendant, Demarco-Lucenti Insurance Brokers Limited
Defendants
HEARD: March 14, 2014
ellies j.
REASONS FOR DECISION ON COSTS
[1] For reasons released on March 27, 2014 (2014 ONSC 1886), I refused the plaintiffs’ request for leave to amend their pleadings and granted summary judgment in favour of Dominion of Canada General Insurance Company (“Dominion”). The parties were unable to resolve the issue of costs and have, instead, accepted my invitation to file written submissions on the issue, which I have now had an opportunity to review.
[2] There is no real question as to who should be paid. Dominion was the clear winner. The issues are: how much and by whom?
Quantum
[3] With respect to how much, no issue is taken by either the plaintiffs or Lucenti-Demarco Insurance Brokers Limited (“the broker”) concerning the time spent by counsel for Dominion defending the action, defending against the motion for leave, and bringing the motion for summary judgment. However, the broker does take issue with the hourly rates sought. It argues that the hourly rates awarded should be the same rates used by Dominion in the costs outlines (one for the motions and one for the balance of the time spent defending the claim and cross-claim) it provided to the other parties on April 4, 2014. In those outlines, the hourly rates sought on a partial indemnity basis were just over 50% of the actual rates charged to Dominion. In the outlines provided by Dominion to the court, however, the hourly rates are based on the maximum partial indemnity rates for lawyers of the experience levels of those involved. The broker submits that the action was straightforward and that there is no basis upon which to charge the higher partial indemnity rates set out in the outlines filed with the court.
[4] I do not believe that the lower rates should be used to determine the quantum. As counsel for Dominion points out, these were reduced by Dominion in the earlier outlines as part of an unsuccessful attempt to settle the issue of costs. The rates used in the outlines submitted to the court are more in keeping with the partial indemnity rates ordinarily used to award costs, even in straightforward cases.
[5] The plaintiffs submit that the amount of costs awarded to Dominion should be reduced because of the length of time it took Dominion to bring the motion for summary judgment. I am not persuaded that they should, for three principal reasons. First, despite the broker’s failure or refusal to admit it was the only party that owed a duty to the plaintiffs regarding coverage, it was always open to the plaintiffs to reduce their costs exposure to Dominion by discontinuing their action against it. Second, there was no pressing need for Dominion to bring the summary judgment motion until later in the proceedings, when it became obvious that the claim and cross-claim against were not going to be discontinued. Until then, Dominion was more-or-less on the sidelines in the litigation. It did not participate in the examinations for discovery, for example. Third, the costs Dominion incurred in defending the action have already been reduced by the less active role it played throughout.
[6] For these reasons, the costs to be awarded to Dominion shall be $7,288.54 for the motions, including the preparation of costs submissions, and $33,733.80 for defending the claim and cross-claim.
Apportionment
[7] The more difficult issue in this case is apportionment, in my view. Dominion says the plaintiffs and the broker should bear the costs jointly and severally. The broker says that the plaintiffs alone should bear one-half of the costs of their failed motion to amend and that the balance should be borne equally by it and by the plaintiffs. The plaintiffs say that the costs should be paid entirely by the broker, either via the plaintiffs (a Bollock order) or directly to Dominion (a Sanderson order).
[8] Bullock and Sanderson orders are generally appropriate where the plaintiffs have reasonably joined two defendants in an action; for example, where the allocation of responsibility between them is uncertain: M. Orkin, The Law of Costs, loose-leaf, 2d ed. (Toronto: Canada Law Book, 2012), at para. 209. That was the situation here. Based on the statement of claim, it was unclear to the plaintiffs whether the fact that they were inadequately insured resulted from a failure to request appropriate insurance, which might have been the broker’s fault, or a failure to provide it, which might have been Dominion’s fault. For example, paragraphs 6(d) and (e) of the statement of claim refer to a co-insurance clause in the policy that the plaintiffs allege was not brought to their attention and was not explained. In my view, it was reasonable, therefore, for the plaintiffs to join both defendants.
[9] As the Court of Appeal explained in Moore v. Wienecke, 2008 ONCA 162, whether the costs order should be a Sanderson-type order requires the court to take a further step after concluding that it was reasonable to join multiple defendants to the action. The court must go on to consider whether such an order would be fair and just in the circumstances of the case. The court made reference to four factors that might affect that determination, namely:
(a) whether the defendants tried to shift responsibility onto each other;
(b) whether the unsuccessful defendant caused the successful defendant to be added as a party;
(c) whether the cause of action against one defendant was independent of the cause of action against the other; and
(d) whether the losing parties can afford to pay.
[10] In my opinion, a consideration of these factors in this case leads to the conclusion that a Sanderson order would be fair and just.
[11] With respect to the first and second factors, the broker cross-claimed against Dominion, while Dominion did not cross-claim against the broker. After the discoveries of the plaintiffs and the broker were completed, the plaintiffs wrote to counsel for both defendants, advising that they were prepared to consider dismissing their claim against Dominion if the broker would agree that, if any duty was owed to the plaintiffs, it was owed by the broker and not by Dominion. Although the broker argues that the offer to discontinue was not a firm one, I can see no reason why the plaintiffs would not have acted on it, if it had been accepted. It does not appear, for example, that Dominion was added by the plaintiffs for the purpose of discovery, as it neither insisted on examining Dominion, nor on receiving productions. In fact, it was the broker that insisted on documentary production from Dominion. Eventually, at some point in 2013, it became too late for the plaintiffs to discontinue against Dominion without cost consequences, as Dominion insisted on payment of its costs. Lastly, I note that, although the plaintiffs conceded during the motions that their claim against Dominion should be dismissed if their motion to amend failed, the broker failed to make the same concession regarding its cross-claim.
[12] With respect to the third factor, the causes of action against both defendants completely overlapped. They both related to the same loss. As I have indicated, either the broker was liable for failing to request the right coverage, or Dominion was liable for failing to provide it.
[13] As to the last factor, counsel for the plaintiffs advises that his clients do not have the ability to pay a costs award. That is not difficult to accept. They lost their livelihood in the fire that created the loss and sued because they recovered much less than they believe they should have. Plaintiffs’ counsel advises the unrecovered property loss alone was in the range of $365,000.
[14] In my view, a Sanderson-type order is perfectly appropriate in this case. Accordingly, an order shall go, requiring the broker to pay to Dominion the costs referred to in paragraph [6], above, in the total amount of $41,022.34.
Ellies J.
Released: 20140721
COURT FILE NO.: CV-10-4812
DATE: 20140721
ONTARIO
SUPERIOR COURT OF JUSTICE
DIANE LAUZON, ERNIE TESSIER and SUZANNE TESSIER, O/B BONFIELD FIRST SPIKE RESTAURANT AND GAS BAR
– and –
THE DOMINION OF CANADA GENERAL INSURANCE COMPANY and DEMARCO-LUCENTI INSURANCE BROKERS LIMITED
REASONS FOR DECISION ON COSTS
Ellies J.
Released: 20140721