BARRIE

COURT FILE NO.: CV-09-1026

DATE: 20140808

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Peter Yetman and Christine McKeachnie

Plaintiffs

– and –

Przemyslaw Marzec, Agnieszka Marzec, Jeffrey Goodman and The Dominion of Canada General Insurance Company

Defendants

-and-

State Farm Mutual Automobile Insurance Company, added by Order pursuant to section 258(14) of the Insurance Act, R.S.O., c.I.8, as amended

Statutory Third Party

R. Littlejohn/M. Lemieux, for the Plaintiff

E. Kent/M.A. Winterhalt, for the Statutory Third Party

HEARD: by written submissions

REASONS FOR DECISION RE COSTS AND PRE-JUDGMENT INTEREST

EBERHARD J.

[1] I was trial judge in this matter. The jury answered questions of liability and damages between the Plaintiff and Defendant Przemyslaw Marzec, drivers in a motor vehicle accident on August 7, 2007, granting judgment for the Plaintiff totaling $1,031,000.00. The participants in the trial were the Plaintiff and State Farm Mutual Automobile Insurance Company, the latter being referred to in the presence of the jury as the “party opposing the Plaintiff’s claim” or the party “participating as a result of order as if a party to the action”. State Farm is the Defendant’s insurer but has taken an off-coverage position.

[2] I have received written argument from the Plaintiff and the Statutory Third Party as contemplated on the record at the end of the trial.

[3] The Plaintiff addresses pre-judgment interest although that was not specifically discussed on the record. The Statutory Third Party has not addressed that issue in response. Entitlement to claimed pre-judgment interest pursuant to the Courts of Justice Act is hardly controversial. Calculated for general damages from the notice of claim August 8, 2007, the Plaintiff seeks $35,346.00. As for pre-judgment interest on the loss of income award at 0.5% annually, the Plaintiff proposes a rate of 1.713% calculated at $$2,497.55, to reflect that income loss is a “running loss” not incurred fully on the date of the collision.

[4] Once again putting all its reliance on its insurance limits position, the Statutory Third Party adopts a passive resistance approach that does not assist the court in determining why the Plaintiff’s position or calculation is unfounded. Pursuant to Insurance Act R.S.O. 1990 section 258, the basis for the Statutory Third Party’s full participation in the litigation and trial, the Statutory Third Party could have argued that the Plaintiff’s pre-judgment interest position is wrong. In the absence of such dispute, and having no intention to check the Plaintiff’s counting or arithmetic myself, I find that the pre-judgment interest owed is as claimed: $35,346.00 for general damages and $$2,497.55 on the loss of income award.

[5] As to costs, the Plaintiff has filed a brief with usual documentary backup supporting a claim for costs on a partial indemnity basis to trial and a substantial indemnity basis from preparation of the trial record through trial totalling $338,713.20, an averaging of staff time to add $34,631.89, then HST of $48,534.86 for total fees of $421,879.95. Disbursements of $113,050.56 charged to the Plaintiff were claimed and the Plaintiff’s travel costs to attend mediation and trial totalling $5,539.72.

[6] In reply, the Plaintiff recalculated HST and GST more specific to when the tax obligation was incurred at $47,788.17 instead of $48,534.86 for straight HST. The Plaintiff acknowledged that disbursements related to Lisa Wilson of $794.39 should be deleted but seeks to add $6,000 for a subsequently received disbursement from a trial witness and further fees and disbursements relating to directions totalling $11,337.31. On this distinct point I find Dr. Tanton’s invoice relates to the completed trial and should fall within these costs considerations. I reject claims at this stage for costs relating to directions. Such costs should be considered as part of the ongoing litigation to which they relate.

[7] The Statutory Third Party presents an array of disputes for individual items claimed by the Plaintiff based on excess (hourly rate, percentage of partial indemnity costs, unnecessary procedures) duplications (counsel and staff, an expert who filed an early report that was replaced when illness prevented his continued involvement). I take these commonplace disputes into account in my task to fix costs, recognizing the defending party’s role to shine light on the need and legitimacy of all steps for which costs are claimed. I emphasize however that I am fixing, not assessing, costs relying in my exercise of discretion on the Court’s collective experience with personal injury litigation, particularly in the motor vehicle context, and with the costs of litigation in bringing a matter to trial by jury over 12 days.

[8] Three interesting factors drive this costs consideration in addition to the usual rule 57 criteria: Firstly I must recognize that the Statutory Third Party asserts insurance limits in the context of a denial of coverage which has not yet been adjudicated. Secondly, the Plaintiff settled with another party for a $25,000 contribution towards costs. Thirdly, there are offers both by the Plaintiff and by the Statutory Third Party which were far exceeded by the jury award.

[9] The overarching answer to these three factors comes about by asking the question: Why did this trial, which generated the significant costs claimed, occur?

[10] The Defendant driver, Mr. Marzec, did not participate. The Statutory Third Party denies coverage to that driver, an issue that has not yet been determined. The Statutory Third Party’s total obligation, if denial is justified, under sections 258 and 251 of The Insurance Act would be $200,000. However there were two claimants for the this fund and the Statutory Third Party settled with the other one, Mr. Goodman for half, leaving only $100,000 for the Plaintiff to access. The Plaintiff settled his contest with Mr. Goodman for the above mentioned $25,000.

[11] The Plaintiff first offered to settle on October 23, 2013 for $200,000 plus interest and costs just before the first trial date. The Statutory Third Party offered $100,000 on October 14, 2013 with costs to be thereafter determined. Neither accepted. The trial did not proceed during those sittings.

[12] Just before the trial proceeding, the Plaintiff offered, on May 1, 2014, to accept $101,000 plus interest and costs.

[13] All of these offers have formal validity.

[14] Obviously, in light of the jury verdict, the Plaintiff was weighing his risk and expressing a willingness to settle far below his potential entitlement. The Statutory Third Party, I find, was limiting the assessment of risk by a confidence that an ultimate finding that the insurance limits were the extent of its exposure. Nevertheless the Statutory Third Party disputed the defendant’s liability for the collision and the extent of the Plaintiff’s damages. The effect of the failure of the Statutory Third Party to accept even the “low ball” offers of the Plaintiff was that trial was necessary to prove the liability and damages.

[15] It would be unjust to allow the Statutory Third Party full litigation rights under section 258 of The Insurance Act that generated the need for a trial while also excusing them from cost exposure for that trial.

[16] Further, in the conduct of the trial, positions were advanced by the Statutory Third Party in relation to liability that had no evidentiary support, thereby prolonging the length and complexity of the trial.

[17] I find that the $25,000 received by the Plaintiff does have to be applied to costs. I find on the evidence before me that $15,000 of that amount had already been reduced such that $10,000 remains to be applied to the costs award I make.

[18] I find that the effect of the offers is to award partial indemnity costs to trial and substantial indemnity thereafter as the Plaintiff has done.

[19] I find that the Plaintiff’s travel costs should be included inasmuch as in the passage of time it became appropriate due to the effects of the collision for the Plaintiff to move back to Newfoundland and it is there that he has obtained reliable employment that has impacted the income loss award.

[20] For all these reasons I fix costs payable to the Plaintiff by the Statutory Third Party as follows:

Fees inclusive of taxes: $350,000.

Disbursements and travel costs inclusive of taxes: $100,000.

EBERHARD J.

Released: August 8, 2014