Recoskie v. Gutoskie, 2015 ONSC 1496

COURT FILE NO.: 12-410

DATE: 2015-03-06

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: RAYMOND RECOSKIE and KATHLEEN GOHR, Plaintiffs

AND:

DANIEL GUTOSKIE, Defendant

BEFORE: Honourable Justice Timothy Ray

COUNSEL: Counsel, for the Plaintiffs, Tracy Lyle.

Counsel, for the Defendant, Stephen Appotive

HEARD: In Writing

COSTS ENDORSEMENT

[1] The parties settled this Pembroke action. The terms of the settlement provided the defendant would pay $1,000,000.00 “plus costs on a partial indemnity basis (including applicable H.S.T. and assessable disbursements), to be agreed or assessed.” The parties have been unable to agree on the costs, but have agreed to have me fix the costs on a partial indemnity scale on the basis of written submissions. For the purpose of clarifying my jurisdiction, I am treating this as a motion in writing.

[2] The plaintiffs’ claims were for damages for serious personal injury incurred April 22, 2010. The action settled just before a scheduled pretrial in September, 2014 at the defendant’s policy limits. It would appear that all interlocutory steps were completed. A pretrial would procedurally have ensured that the case went on the Pembroke trial list.

[3] The submissions of the parties are detailed, and contain a full description of the various stages of the proceeding; and the times and billing rates of counsel. The briefs also contain references to various authorities to support their position.

[4] The plaintiffs seek costs of $105,000 for fees plus disbursements and HST, for a total of $142,595.09. They assess this both, on the basis of a percentage of the settlement amount in accord with what they claim is the practice in settlements of personal injury cases with insurers, and on the basis of an hourly rate approach while acknowledging that their counsel does not operate on an hourly fee basis and did not record her actual time. Their counsel has estimated her time at 300 hours. They say that either approach arrives at a very similar amount. They claim disbursements in the amount of $24,025.21. The plaintiffs contend that the case was a difficult one with both liability and damages being complex live issues throughout.

[5] The defendant’s position is that an appropriate sum is $80,000, which includes $46,000 for fees, disbursements of $17,075.00 and HST. This approach is based on a partial indemnity rate of $230.00 and an assumed time expended of 200 hours taking into account his own recorded time of 159.5 hours. Issue is taken with some of the disbursements as being overhead related or simply excessive. The defendant’s position is that while there might have been a division of responsibility, the serious issues were the past and future care costs – the issues were therefore not overly complex.

[6] Leaving aside the issue of assessment of the disbursements, the parties agreed that the plaintiffs would be paid their costs on a partial indemnity basis. The factors to be considered are listed in Rule 57. While the plaintiffs make a persuasive argument concerning the manner of arriving at costs generally paid in settlement of personal injury litigation by insurers, the parties in this case, by agreement, rejected that approach in favour of a partial indemnity assessment. I am bound to consider only the factors described in Rule 57 for their assessment in this case, and not give weight to the ‘percentage of recovery’ approach described by the plaintiffs in their submissions.

[7] Similarly, the contractual arrangements between the plaintiffs and their solicitor concerning the solicitor’s compensation, is not helpful unless they relate to one of the factors in rule 57. As a principle of law, costs always belong to the client; so those contractual terms simply comply with the regulation governing contingency fee arrangements, and the law on that point.

[8] I consider partial indemnity costs to be approximately 55% of a reasonable solicitor client bill having regard to the Rule 57 factors.

[9] The plaintiffs contend that the only reference to hourly rates is in the retainer agreement which provides for a substantial indemnity scale if the clients terminate the retainer. Furthermore the plaintiffs say that their counsel did not record her time, but estimated her time on the file at 300 hours. The plaintiffs contend that if the defendant disputes that estimation, then they should provide their own. It is unfortunate that Plaintiffs’ counsel has not kept reliable time records so as to avoid having to guess, particularly since the retainer with the clients anticipated that at some stage time records information might have been important had the clients terminated the retainer. In any event the defendant has provided both his recorded time information and copies of the solicitor client accounts. The defendant indicates total time of 100 hours for senior counsel and 60 hours for junior counsel for a total of 160. In the absence of time records, or a fuller description of the services, I have difficulty with doubling that time as an accurate estimation of plaintiffs counsel’s time. For the purpose of this exercise, and assuming that generally plaintiff’s counsel bear the burden of the work In a personal injury file, I will assume 250 hours to be reasonable. Taking the ‘corrected for inflation’ maximum partial indemnity rate from the costs grid at $348.15, (McLean v Knox[^1]), a projected complete indemnity rate would be $633.00. I note that in McLean v Knox, plaintiff’s counsel, a senior experienced personal injury practitioner gave his normal hourly rate as $500. Applying that rate here would generate an estimated solicitor client bill at $125,000. A partial indemnity calculation would result in costs of $68,750.00 before considering the rule 57.01 factors.

[10] The plaintiffs’ contention that the ‘percentage of settlement approach’ is dispositive of what an unsuccessful party could reasonably expect to pay is persuasive. That would have generated a payment of costs for fees in the amount of $105,000. As against that, however, must be considered that the defendant expressly did not accept that approach to the costs to be paid.

[11] The settlement represented the policy limits, not an assessed amount. The defendant claims that the amount presented by the plaintiffs as their claim was significantly higher. The plaintiff was rendered a paraplegic by the accident. This would render the damages calculation fairly complex, particularly for future and past care. The issues in the action were vitally important to the plaintiffs.

[12] Having regard to the enhancements and the reductions from considering the factors as above, I consider a fair assessment of the plaintiffs’ partial indemnity costs for fees to be $70,000.00.

[13] Disbursements are disputed. The plaintiffs’ seek $24,025.21 including HST. The defendant challenges some of the items but agrees to $17,075.00 plus HST for a total of $19,223. Unfortunately, I have no responding submissions from the plaintiffs regarding the defendant’s position on disbursements. In the absence of an explanation from the plaintiffs concerning their disbursements, I accept the defendant’s submission and assess the plaintiffs’ disbursements at $17,075.00 plus HST.[^2]

[14] In summary, I assess the plaintiffs’ costs at $87,075 plus HST.

Honourable Justice Timothy Ray

Date: March 6, 2015

[^1]: McLean v. Knox 2012 ONSC 1069, 109 O.R. (3d) 690; McLean v. Knox, 2013 ONCA 357, 306 O.A.C. 203(OCA- appeal partially allowed on other issues)

[^2]: For example, cost per page for copies and faxes would have been of assistance.