Swatridge v. Administrator of the Estate of the Late K. Waters, or K. Winter, deceased, et al.

[Indexed as: Swatridge v. Waters Estate]

Ontario Reports

Ontario Superior Court of Justice,

Ferguson J.

September 15, 2014

123 O.R. (3d) 157 | 2014 ONSC 5333

Case Summary

Civil procedure — Costs — Offer to settle — Defendant making offer to settle action arising out of motor vehicle accident for $5,000 — Jury awarding plaintiff $10,000 — Award subject to $30,000 deductible so judgment was effectively for zero dollars — Defendant's offer also effectively for zero dollars — Trial judge awarding costs to neither party.

The defendant in an action for damages arising out of a motor vehicle accident offered to settle the action for $5,000. The offer was not accepted. The jury awarded the plaintiff general damages of $10,000 and no other damages. The award was subject to a $30,000 deductible. Both parties sought their costs on a partial indemnity basis

Held, neither party should receive costs.

The positions of both parties displayed a high degree of artificiality. The defendant essentially made an offer to settle for $0, dressed up as an offer to settle for $5,000, subject to the deductible. The plaintiff obtained an award which, because of the deductible, resulted in a judgment for $0. The proper result was to award costs to neither party.

Peterson v. Phillips, 2008 19504 (ON SC), [2008] O.J. No. 1671, 62 C.C.L.I. (4th) 147, 167 A.C.W.S. (3d) 391 (S.C.J.), apld

Clark v. Zigrossi, [2010] O.J. No. 4954, 2010 ONSC 6357, 93 C.C.L.I. (4th) 317, 99 C.P.C. (6th) 179 (S.C.J.), not folld

Other cases referred to

Rider v. Dydyk (2007), 87 O.R. (3d) 507, [2007] O.J. No. 3837, 2007 ONCA 687, 286 D.L.R. (4th) 517, 231 O.A.C. 169, 53 C.C.L.I. (4th) 188, [2007] I.L.R. I-4649, 160 A.C.W.S. (2d) 968

Statutes referred to

Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131 [as am.]

Insurance Act, R.S.O. 1990, c. I.8, s. 267.5(9)

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rules 49 and 57

RULING on costs.

Todd J. McCarthy, for plaintiff.

David A. Zuber and Joshua J.A. Henderson, for defendants.

Reasons for Decision

[1] FERGUSON J.: — I have received costs submissions from counsel. Both parties seek costs on a partial indemnity basis. The plaintiff seeks $93,966.77, inclusive of fees, disbursements [page158] and taxes. The defendant seeks $143,567.43, inclusive of fees, disbursements and taxes.

[2] The defendant made four separate offers to settle:

(i) a consent to a dismissal of the action without costs sent by a letter dated February 24, 2011 with a time frame;

(ii) a consent dismissal of the action with partial indemnity costs paid to the defendant, sent by a formal offer also dated February 24, 2011;

(iii) a consent to a dismissal of the action without costs in the form of a letter dated February 8, 2013; and

(iv) an offer to pay $5,000, all inclusive, to settle the matter sent in the form of a letter dated November 11, 2013.

[3] The plaintiff made an offer to settle for $55,000 net of the $30,000 deductible ($85,000) plus costs and disbursements.

[4] On November 26, 2013, the jury rendered their decision awarding $10,000 gross for general damages, zero dollars for loss of income claim and zero dollars for housekeeping/home maintenance/medical rehabilitation claims. The $10,000 award was subject to the $30,000 deductible and the net result was zero dollars payable by the defendant to the plaintiff. I had earlier heard a motion and found that the plaintiff met the threshold.

[5] The plaintiff relies on Rider v. Dydyk (2007), 2007 ONCA 687, 87 O.R. (3d) 507, [2007] O.J. No. 3837 (C.A.), which confirmed that statutory deductions from the assessed damages are not to be considered in dealing with costs. If the amount awarded (in this case, $10,000) is more favourable than the offer (in this case, $5,000), the defendants are not presumptively entitled to costs from the date of the offer, it is within the trial judge's discretion to award partial indemnity costs throughout.

[6] The defendant distinguishes Rider v. Dydyk, in which case the plaintiff received $20,000 from the jury which resulted in a net $5,000 award after the $15,000 deductible. In Rider v. Dydyk, the defendants had offered $5,000. The Court of Appeal decided that costs should be awarded on the full amount before the deductible. The defendant submits that Rider v. Dydyk is distinguishable because in that case the plaintiff obtained a non-zero award after the deductible. In this case, the plaintiff obtained a zero award after the deductible. The defendants rely on para. 18 of Rider v. Dydyk, in which the court stated that even with s. 267.5(9) [of the Insurance Act, R.S.O. 1990, c. I.8], "[c]laims worth $15,000 or less are eliminated entirely". [page159]

[7] Further, the defendant relies on Peterson v. Phillips, 2008 19504 (ON SC), [2008] O.J. No. 1671, 62 C.C.L.I. (4th) 147 (S.C.J.). In that case, the defendant had offered zero dollars, all inclusive, essentially offering $30,000 less $30,000 net zero. The defendant submits that in this case the defendant had offered $5,000 net of deductible.

[8] In Peterson v. Phillips, Gray J. considered the defendant's net zero award, concluded that they had matched their offer and declined to award any costs to the plaintiff. The court stated the following [at paras. 8, 9, 12, 14, 24-26]:

The amount awarded by the jury was $ 10,000. As a result of the combined effect of s. 267.5(7), sub-sub-paragraph 3 i B and s.5.1(1) of Ontario Regulation 461/96, as amended, the deductible for a claim for non-pecuniary loss is $30,000. As a result, the judgment recovered by the plaintiff is nil.

On April 10, 2008, the defendant served an offer to settle. In substance, the offer proposes non-pecuniary damages in the amount of $30,000, for a net award of zero dollars. The defendant also proposes an order dismissing the action without costs.

Counsel for the plaintiff submits that his client is entitled to costs. Pursuant to s. 267.5(9) of the Insurance Act, the determination of a party's entitlement to costs is to be made without regard to the effect of the deductible provisions of the Act on the amount of damages awarded for non-pecuniary loss. He submits that the defendant's offer to settle was zero dollars, and the jury's award is $10,000. The deductible is not to be taken into account in determining the plaintiff's entitlement to costs, and thus, he submits, the award of the jury is superior to the offer to settle. In the result, he submits, the plaintiff is entitled to costs . . . . Rider v. Dydyk (2007), 2007 ONCA 687, 87 O.R. (3d) 507 (C.A.).

On the matter of costs, Ms O'Brien submits that her client should be awarded costs. Although her offer to settle amounted to zero dollars in the result, it actually consists of an offer of $30,000, less the deductible of $30,000. As far as the plaintiff is concerned, she was awarded $10,000 by the jury, less the deductible of $30,000. Technically, it is submitted, the defendant's offer is superior to the jury's award, although the net result is the same.

On the question of costs, it seems to me that to a large extent the positions of both parties display a high degree of artificiality. The defendant made an offer to settle for zero dollars, dressed up as an offer of $30.000, subject to a deductible of $30.000. The plaintiff obtained an award of $10,000 which, because of the deductible, results in a judgment for zero dollars. Thus, an offer for zero dollars has resulted in a trial, which has then resulted in a judgment for zero dollars.

The plaintiff points to s. 267.5(9) of the Insurance Act, which says, in effect, that the deductible is not to be taken into account in determining the entitlement to costs. The plaintiff may have a point. However, technically the [page160] defendant has a point in saying that her offer is superior to the plaintiff's recovery, even though the result is the same.

The proper result, in my view, is to award costs to neither party. Both Rule 49 and Rule 57, as well as s. 131 of the Courts of Justice Act, recognize an overriding discretion in the Court on the question of costs. The Court cannot be blinded by the somewhat artificial characterizations of both the offer to settle and the result of the trial. In reality, an offer to settle for zero dollars was made and rejected, a trial was held, and the result is a judgment for zero dollars. The fairest disposition, in my view, is that each party bear her own costs.

[Emphasis added]

[9] I choose to adopt the reasoning of Gray J. The court cannot be blinded by the somewhat artificial characterizations of both the offer to settle and the trial result. As in Peterson v. Phillips, the reality is that an offer to settle amounting to zero dollars was made and rejected, a trial was held and the result is a judgment for zero dollars.

[10] In Clark v. Zigrossi, [2010] O.J. No. 4954, 2010 ONSC 6357 (S.C.J.), the court ordered partial indemnity costs to the defendant because costs follow the event and the defendant was successful in dismissing the action.

[11] I decline to follow that decision and prefer the reasoning as is set out in Peterson v. Phillips. To a large extent, the positions of both parties display a high degree of artificiality. The defendant essentially made an offer to settle for $0, dressed up as an offer for $5,000, subject to the deductible of $30,000. The plaintiff obtained an award of $10,000, which because of the deductible, resulted in a judgment for $0. Thus, an offer for $5,000 has resulted in a trial which has then resulted in a judgment for $0.

[12] I find that in this case the proper result is to award costs to neither party. Both Rules 49 and 57 [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194], as well as s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, recognize an overriding discretion in the court on the question of costs. The court cannot be blinded by the somewhat artificial characterizations of both the offer to settle and the result of the trial.

Order accordingly.

End of Document