Rochon v. MacDonald et al.; Sticky Fingers Bar & GrillInc. et al., Third Parties
[Indexed as: Rochon v. MacDonald]
Ontario Reports
Ontario Superior Court of Justice,
McCarthy J.
January 24, 2014
118 O.R. (3d) 491 | 2014 ONSC 591
Case Summary
Civil procedure — Costs — Apportionment — Uninsured motorist found 70 per cent liable for plaintiff's damages, commercial host found 5 per cent liable and plaintiff found responsible for 25 per cent of his damages — Plaintiff's automobile insurer defending action under [page492] uninsured and underinsured portions of policy — Plaintiff's costs ordered payable equally by commercial host and insurer.
In an action for damages arising out of a pedestrian/motor vehicle accident, the jury found a commercial host 5 per cent liable for the plaintiff's damages and the driver 70 per cent liable. The plaintiff was found to be responsible for 25 per cent of his damages. The plaintiff's automobile insurer had defended the action under the uninsured and underinsured portions of the automobile insurance policy. The parties asked the trial judge to fix the plaintiff's costs. The commercial host and the insurer disagreed on the apportionment of costs as between defendants.
Held, the plaintiff's costs were fixed in the amount of $635,500.
In the circumstances of this case, it was fair and reasonable to order that the costs were payable equally by the commercial host and the insurer. The case did not cry out for settlement. The involvement of an unlicensed and uninsured driver, the unresolved issue of vehicle ownership and insurance coverage, the ramifications of the commercial host's exposure to joint and several liability, and the peculiarities of underinsured motorist protection combined to produce a volatile and unpredictable landscape. All parties acted reasonably and efficiently. It would not be fair to saddle either of the defendants with a disproportionate share of the plaintiff's costs.
Cases referred to
Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291, [2004] O.J. No. 2634, 188 O.A.C. 201, 48 C.P.C. (5th) 56, 132 A.C.W.S. (3d) 15 (C.A.); Caton v. Devesceri, 2012 ONSC 4640 (S.C.J.); Stetson Oil & Gas Ltd. v. Stifel Nicolaus Canada Inc., [2013] O.J. No. 3702, 2013 ONSC 5213 (S.C.J.); Teno v. Arnold (1974), 1974 821 (ON SC), 7 O.R. (2d) 276, [1974] O.J. No. 2248, 55 D.L.R. (3d) 57 (H.C.J.)
Statutes referred to
Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131 [as am.]
Rules and regulations referred to
Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 57.01, (i)
RULING on costs.
R. Oatley, for plaintiff.
G. Dow, for defendant Pembridge.
B. Percival, for defendant Sticky Fingers.
J. Wilson, for third party Peel Mutual.
MCCARTHY J.: —
The Trial and Jury Verdict
[1] This was a claim for damages arising out of injuries sustained by the plaintiff in a pedestrian/motor vehicle accident which took place on February 8, 2009. After a trial lasting some three weeks, the jury returned a verdict awarding the plaintiff [page493] the sum of $1,866,825 net of contributory negligence. The parties have agreed on a figure for pre-judgment interest so that the amount owing to the plaintiff is $1,898,253.
[2] The jury found the defendant Sticky Fingers, a commercial host of the defendant MacDonald in the hours prior to the motor vehicle accident in question, 5 per cent liable for the plaintiff's damages. The defendant motorist MacDonald was found 70 per cent liable for the damages. The plaintiff was found responsible for 25 per cent of his damages. The defendant MacDonald was found to be uninsured by the court. MacDonald did not defend the action at trial. Pembridge Insurance Company ("Pembridge") defended the action under the uninsured and underinsured (OPCF 44R endorsement) portions of an automobile insurance policy issued by it to the plaintiff.
[3] No liability was found against the third party 55 Special Inc. Pembridge and 55 Special have resolved the issue of costs as between them. For reasons given in a ruling dated January 10, 2014, I dismissed the third party claim of the defendant Pembridge against Peel Mutual Insurance. Those parties have requested time to attempt a resolution of the issue of costs as between them.
Costs in the Main Action
[4] The plaintiff, Pembridge and Sticky Fingers appeared before me on January 15, 2014 to argue the issue of costs in the main action. The parties agree that the plaintiff is entitled to his costs on a partial indemnity basis. They cannot agree on the quantum of those costs. They agree that I am to fix those costs. Pembridge and Sticky Fingers disagree on the apportionment of costs as between the defendants.
The Apportionment of Costs
[5] Pembridge submits that it is not a joint tortfeasor but merely a party named as a result of its status as the uninsured and underinsured coverage provider for the plaintiff. As a result of the finding of 5 per cent liability against Sticky Fingers (a joint tortfeasor with the defendant MacDonald), Pembridge's exposure to the plaintiff's damages is a mere $200,000 or 10.5 per cent of the plaintiff's assessed net damages. Furthermore, this defendant relies on the decision in Caton v. Devesceri, 2012 ONSC 4640 (S.C.J.), wherein a joint tortfeasor was ordered to pay approximately 78 per cent of the plaintiff's costs even though that tortfeasor had only been found to be 10 per cent at fault for the accident in question. Pembridge asserts that the trial was made necessary because Sticky Fingers refused to [page494] admit any liability for the accident. The verdict should be interpreted as a severe reprimand of its conduct.
[6] Sticky Fingers relies on the line of cases beginning with Teno v. Arnold (1974), 1974 821 (ON SC), 7 O.R. (2d) 276, [1974] O.J. No. 2248 (H.C.J.) for its position that the plaintiff's costs should be allocated to the defendants on the same basis as their relative degrees of liability as determined at trial by the jury. Since, in this case, the defendant MacDonald was found to be responsible for 93.33 per cent of the plaintiff's damages, the court should find that this percentage of the plaintiff's cost should be payable by either that defendant, his insurer or by Pembridge, the plaintiff's uninsured carrier. This would leave Sticky Fingers to pay a mere 6.66 per cent of those costs.
Analysis
[7] It is important to distinguish between liability for the accident and liability to pay a judgment. The apportionment of liability is one of the factors that the court should consider in exercising discretion under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (see rule 57.01 [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194]). The practical obligation to pay a judgment is not one of the factors for consideration. I am not prepared to extend the meaning of "apportionment of liability" to include liability to pay the damages awarded in a proceeding. In my view, it would not be appropriate, as a matter of course, for a joint tortfeasor found to be minimally responsible for an accident to be ordered to pay costs strictly in accordance with its liability to pay the damages. In underinsured cases, this would permit the OPCF carrier to drive the litigation with little or no regard to costs exposure once it was foreseeable that some liability might attach to the actions of a jointly and severally liable co-defendant.
[8] On the other hand, the court is required to consider "any other matter relevant to the question of costs" [rule 57.01(i)]. Just as costs must serve as a deterrent to the underinsured carrier blithely encouraging the litigation forward, emboldened by the prospect that it will be largely relieved of the liability to pay the plaintiff if a joint tortfeasor is found even minimally liable, so too should a joint tortfeasor face its proper share of the costs when its failure to take some claim for the accident effectively guarantees that the matter will proceed to trial. The court recognizes that these are sophisticated parties who appear before it, well aware of the permutations that can result from unpredictable findings in insurance litigation. The costs of litigation must not serve as a deterrent to parties defending their legitimate interests [page495] in court; on the other hand, the spectre of those costs must continue to serve as an impetus to settlement.
[9] In the end, the court is granted discretion to award costs because every case is unique and must be considered in the context in which it was litigated.
[10] Sticky Fingers was very much the target of the litigation for both the plaintiff and the defendant Pembridge. This is understandable. For the plaintiff, any hope of recovering more than $1 million of his proven damages from a party with the means to pay those damages rested upon some finding of liability against Sticky Fingers. For Pembridge, assuming that its third party claim would be ultimately unsuccessful against Peel Mutual, a finding of even 1 per cent liability against Sticky Fingers would allow it to escape its contractual liability to pay the plaintiff $800,000 under the "underinsured" coverage of the plaintiff's auto policy. At no time could it have reasonably assessed this claim at anything less than its $1 million policy limits. In the absence of an admission of some liability by Sticky Fingers, Pembridge would undoubtedly be obliged to pay those policy limits. It had very real interests to protect.
[11] Conversely, Sticky Fingers was, in a very real way, in for a pound if it was in for a penny. The combined effect of joint and several liability, the 1 per cent rule applicable to Pembridge's underinsured coverage obligation and its own $2 million coverage limits left Sticky Fingers with the onerous task of deflecting away even a modicum of liability if it hoped to avoid having to bear the nearly full weight of the obligation to pay the plaintiff his damages. In short, Sticky Fingers had every reason to fight.
[12] I am prepared to depart both from the approach taken in the line of cases cited by Sticky Fingers and from what I see as the opposite approach taken by my brother judge MacDougall J. in Caton in favour of a more moderate approach. I do this because, in the circumstances of this case, it is fair and reasonable to do so. Discretion is afforded to the trial judge in the realm of fixing costs because the trial judge is in the best position to appreciate the aspects of a trial that make it unique: the utility of witnesses, the reasonableness of positions, the conduct of counsel and the unique and challenging mix of fact and law that leaves each party with its own set of interests to protect.
[13] Some cases cry out for settlement. This was not one of them. The involvement of an unlicensed and uninsured driver, the unresolved issue of vehicle ownership and insurance coverage, the ramifications of Sticky Finger's exposure to joint and several liability and the peculiarities of underinsured motorist protection all combined to produce a volatile and unpredictable [page496] landscape whereupon the parties were obliged to wage a titanic litigation struggle. From the standpoint of the trial judge, all parties, including the defendants Sticky Fingers and Pembridge, did so in a reasonable, efficient and admirable fashion. The fight, so to speak, was fair and the outcome far from certain.
[14] This is not a case where I am prepared to saddle either of the defendants with a disproportionate share of the plaintiff's costs. I am unable to agree with counsel for Pembridge when he suggests that the jury verdict was a clear reprimand of Sticky Fingers. Neither the degree of liability found nor the jury's details of their findings warrant such a conclusion.
[15] For the above reasons, I exercise my discretion to order that the costs of the plaintiff be borne equally by the defendants Sticky Fingers and Pembridge Insurance Company.
Quantum of Costs
Fees
[16] The proceeding was complex: it brought forth expert evidence in neurology, neuropsychiatry, neuropsychology, toxicology, occupational therapy, future care and quantification of damages. The issues were important: the jury was left to grapple with commercial host liability, vicarious liability, contributory negligence, and present valuation of loss of income and projection of future care costs. The trial judge was obliged to deal with issues of vehicle ownership, the fine detail of a complicated and lengthy jury charge and the applicability of the future collateral benefits trust provisions to non-protected defendants.
[17] There was no step in the proceeding that was improper, vexatious or unnecessary. To a varying degree, each witness added something of value to the case. There was no conduct by any party that hampered the smooth unfolding of the trial. Objections, when made, were thoughtful and articulate. Direct examination was focused and well-paced. Cross-examination was spirited and efficient. There were only minor transgressions in the realm of re-examination.
[18] I am not prepared to give much weight to the fact that the amount claimed greatly exceeded the amount recovered proceeding. The plaintiffs tendered evidence, which, if accepted, could have resulted in a much larger verdict. The opposing defendants were all sophisticated parties who were capable of assessing the value of the case, of evaluating their exposure, of setting up the necessary reserves, of planning a litigation strategy and of giving instructions to counsel. There were no offers to settle which can bear upon the court's discretion in determining costs. [page497]
[19] There is, therefore, no reason to discount the plaintiff's entitlement to his costs of the entire proceeding on a partial indemnity basis.
[20] Thankfully, neither the law nor the parties suggest that the exercise of fixing costs should be an exhaustive, line-by-line review of proposed charges. Rather, a court should exercise its discretion in awarding costs based upon what is fair and reasonable in each case, the factors set out in rule 57.01 and the enunciated principles from appellate courts. In Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291, [2004] O.J. No. 2634 (C.A.), the Court of Appeal stated that "the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant".
[21] The defendants object to the claimed hourly rates of the lawyers and employees who worked on the file on behalf of the plaintiff. The defendants assert that the court should be governed by the principal of reasonableness and by the "Information for the Profession" hourly rates grid for partial indemnity costs adopted by the rules committee in 2005. They claim that the rate for lead counsel Mr. Oatley must be capped at $350 on a partial indemnity scale. Without in anyway minimizing the expertise of Mr. Oatley, the defendants point to their own modest solicitor and client rates with their insurance clients as evidence of the value of litigation services in the market.
[22] The plaintiffs rely on the case of Stetson Oil & Gas Ltd. v. Stifel Nicolaus Canada Inc., [2013] O.J. No. 3702, 2013 ONSC 5213 (S.C.J.) and the suggestion by Newbould J. that the costs grid is outdated and unrealistic. The plaintiff suggests that, given that Mr. Oatley's actual rate is $990 per hour and in light of his level of experience and standing in the field of personal injury litigation, his hourly rate for partial indemnity costs should be set at $594 per hour (i.e., 60 per cent of his actual rate).
[23] It is difficult to conceive of lead counsel presenting a complex case in a more digestible, coherent and impressive fashion than what the court witnessed from Mr. Oatley. The court recognizes him as one of the leaders of the personal injury bar in Ontario. I do not feel bound by the costs grid for several reasons. First, there is no appellate authority that says I must be. Second, the court can take judicial notice of the fact that defence counsel charge the rates they do because of their ongoing relationship with their clients, insurers' corporate policies, competition in the industry and because of the very nature of insurance defence work, which is challenging to be sure, but is not fraught [page498] with litigation risk associated with the non-recoverability of fees and disbursements if a case must be abandoned or meets with an unsuccessful outcome. Third, the principal of indemnity requires the court to take into account the fact that the less the plaintiff is able to recover in costs from the defendants, the greater will be his contribution to his own solicitor and client account. In the context of this case, that would serve to create an injustice because the plaintiff will be using real future collateral benefits to satisfy the imposed trust obligations when a portion of the corpus of his tort recovery has been used to pay off his solicitor and client account.
[24] The court did not receive a copy of the solicitor and client account rendered by Oatley, Vigmond to Mr. Rochon. It is difficult to imagine that Mr. Rochon was ever going to be charged $990 per hour for Mr. Oatley's time. That might be a rate charged for appellate work, but realistically, the account is more likely governed by a form of contingency arrangement which limits or caps the amount which the plaintiff's solicitors can charge the client.
[25] In light of the above considerations and having regard to the principal of reasonableness and the cost expectations of the parties, I find that $450 is a fair partial indemnity rate to be allowed for Mr. Oatley's time. I see no reason, however, to depart from the cost grid rate applicable to Mr. Murray. My concerns with respect to risk and indemnity can be addressed by adjusting lead counsel's rates above the amount suggested in the grid. Mr. Murray's rate should be set at $225 per hour. Similarly, the clerks involved on the file should be subject to grid rates as well.
[26] The defendants also suggest that the employment of a third counsel by the plaintiff was unnecessary and excessive. The plaintiff retorts that the work done by the third counsel was appropriate in light of the complexity of the case and the numerical superiority of the forces facing him on the other side.
[27] In looking at the work performed by Ms. Samani, it is apparent that her contribution to the case included taking notes, researching law and assisting lead and secondary counsel with examinations and cross-examinations. In a trial of this magnitude, these types of services are reasonable and necessary and cannot be said to be unexpected but some of them could surely have been assigned to clerks or support staff. I am prepared to allow for Ms. Samani's involvement in this case as third counsel when it involved matters requiring the skills or expertise of a lawyer. The amount of allowed time must be adjusted to reflect that a portion of her contribution to the litigation effort could [page499] have been assigned to support staff. Fees for team meetings should be allowed as they serve to streamline and coordinate the work of a litigation team and avoid duplication. The preparation of treatment charts were undoubtedly painstaking and time consuming but it obviated the need to call extensive evidence of treatment and was therefore reasonable and necessary. Mr. Teggart's preparation time for discoveries is justified in light of the importance of gaining an understanding of the defendant MacDonald's activities and whereabouts on the night in question, his patterns of behaviour and his evidence on vehicle ownership.
[28] It was suggested that $60,000 of the claimed fees are for services that pre-date trial. This seems reasonable in light of the complexity of the case, the marshalling of evidence required and the importance of the issues to be explored and argued before the court. For example, it was entirely reasonable to research the articles relied upon by Shauna Brown in her report as they formed an important basis for her overall opinion and deserved attention in cross-examination. No doubt, this thorough preparation before trial laid the ground for the focused and effective cross-examination that the court witnessed.
[29] In terms of trial time, I find that less experienced counsel could hardly have presented the plaintiff's case as efficiently and expeditiously as was done here. Unnecessary witnesses were not called. Once a matter was proven, the plaintiffs moved on. The plaintiffs did their best to provide a road map to the court of where the case was headed and adhered to it as best they could. The plaintiff has agreed that the fees related to the accident benefit portion of the file cannot be allowed. This amounts for more than $13,000 of claimed fees.
[30] I take into account, as well, the principle of proportionality. The verdict returned resulted in a damages recovery (inclusive of interest) of nearly $1.9 million. The plaintiff successfully recovered under all the heads of damages sought. He achieved the critical finding of liability against Sticky Fingers, the result of which is that damages were not just assessed but are entirely recoverable.
[31] Taking into account all of the circumstances, I fix the fees portion of the costs claimed on a partial indemnity basis at $350,000 plus HST of 13 per cent, for a total of $395,500.
Disbursements
[32] I agree that the disbursements must be reduced. The defendants should not be expected to fund the costs of focus [page500] groups. They should not be responsible for the expenses associated with the first future care cost expert who was not called at trial. Nor should the defendants be responsible for experts when they become embroiled in accident benefit issues. There was a capacity assessment at a cost of $1,943 which was redundant and not relied upon at trial by the plaintiffs.
[33] While the time associated with exploring the issue of blood alcohol and levels of intoxication with an expert is recoverable, the cost of a report that was never served cannot be the responsibility of the defendants. The plaintiff cannot look to the defendants for the recovery of the cost of a medical visual panel depicting the shoulder fracture when that panel was not used at trial. The same logic would apply to the CanDent functional shoulder joint. In my view, experts should not be entitled to charge their full rates for travel time and charge for mileage as well. Nor should the costs of transportation for the plaintiff's mother to and from any part of the trial be allowed. She was a mere spectator.
[34] On the other hand, I agree with Mr. Oatley that the costs of reports of experts such as Dr. Doxey should be allowed: it can be safely assumed that such a report satisfied the defendants about the psycho-vocational status of Mr. Rochon and obviated the need for a good deal of evidence on the subject. A plaintiff should not be deprived the cost of an expert report simply because the expert did not testify. Calling the expert merely to ensure that the cost of his report gets paid is something to be discouraged; nor does Tariff "A", item 26 state that calling the expert to testify is a precondition to recovery.
[35] I also agree that the plaintiff should be entitled to the costs of summons to witnesses who attended but were not called. This is consistent with my earlier comments that plaintiff's counsel ran an efficient trial and did not call evidence needlessly.
[36] The plaintiff's share of a mediator's fees after a failed mediation is recoverable: there is perhaps no better way to avoid the expense of a trial then to agree to participate in mediation. Mediation should be encouraged in every case.
[37] The cost of issuing a claim in an abandoned action is recoverable in this instance because there was some evidence that MacDonald consumed alcohol at Player's Cookhouse on the evening in question. It was reasonable for the plaintiff to launch a separate action rather than clutter the existing action with amendments and added parties until the details of MacDonald's gallivanting could be properly clarified.
[38] I am prepared to allow the plaintiff recovery of his disbursements from the defendants in the amount of $240,000. [page501]
Disposition on Costs
[39] In total, I allow the plaintiff his costs fixed in the amount of $635,500, inclusive of fees, disbursements and HST. For the reasons outlined above, it is ordered that the defendants Pembridge Insurance and Sticky Fingers shall each pay $317,750 in satisfaction of this costs award.
Order accordingly.
End of Document