CITATION: Nissen v. Durham Regional Police Services Board, 2015 ONSC 2442

COURT FILE NO.: 2602/02

DATE: 2015-04-14

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CHAD NISSEN, MARGARET STACK, both personally and as litigation guardians of CHRISTIAN NISSEN and MORGAN NISSEN, Plaintiffs

AND:

DURHAM REGIONAL POLICE SERVICES BOARD, JAMES LIEPSIG, MARK PRICE, AL SIRIZZOTTI, SEAN FITZGERALD, JOHN DOE OR JOAN DOE, BRENDA COWIE, ISABEL PARGANA, HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO, Defendants

BEFORE: Gray J.

COUNSEL: Margaret A. Hoy, Counsel for the Plaintiffs

Andra Maxwell-Baker, Counsel for the Defendants

ENDORSEMENT

[1] In my reasons for judgment, I invited the parties to file written submissions with respect to prejudgment interest and costs. Those submissions have now been filed.

[2] Ms. Hoy, counsel for the plaintiffs, requests prejudgment interest at the rate of 3.0 per cent from the date the action was commenced, October 2, 2002, to the date of judgment, February 26, 2015. That is the rate specified by s.128(1) of the Courts of Justice Act.

[3] Ms. Hoy submits that costs should be awarded on a substantial indemnity basis. She claims fees, inclusive of HST, in the amount of $281,991.50, and disbursements, inclusive of HST, in the amount of $16,401.49. She submits that costs on a substantial indemnity scale are justified because the defendants made no offer to settle, other than a proposal that the action be dismissed without costs, and the defendants had no regard for promises made to Ms. Stack.

[4] Ms. Hoy submits that her claim for costs reflects 593 hours of her time, 210 hours for law clerks, and 26 hours of “travel time”. She claims a substantial indemnity rate of $350 per hour for herself, $125 per hour for law clerks, and $125 for travel time. She submits that an appropriate partial indemnity rate is $300 per hour for herself, $80 per hour for law clerks, and $60 per hour for travel time.

[5] Ms. Maxwell-Baker, counsel for the defendants, submits that the prejudgment interest rates from 2002 to 2015 should be averaged. She submits that the court has discretion under s.130(1)(b) of the Courts of Justice Act to allow a rate of prejudgment interest that is higher or lower than what is provided by s.128. Furthermore, s.130(1)(c) empowers the court to alter the periods for which prejudgment interest are allowed.

[6] Ms. Maxwell-Baker submits that it would be unfair to apply a rate of three per cent as a prejudgment interest rate for the entire period. She submits that prejudgment interest should reflect market realities and inflation. She points out that the rates prescribed by s.128 of the Act have fallen significantly. By the time of trial, the rate was 1.3 per cent, and after 2009 the rate never exceed three per cent and was always much lower.

[7] Ms. Maxwell-Baker submits that there were many periods of delay that were the fault of the plaintiffs, and which were not attributable to the defendants. As a result, it would be appropriate to take the plaintiffs’ conduct into account in shortening the period during which prejudgment interest should be allowed.

[8] As for costs, Ms. Maxwell-Baker points out that the defendants have submitted their own bill of costs, which show that she docketed only 419.5 hours during the entire period of the action, while Ms. Hoy has apparently docketed 593 hours over approximately one half of that period. She submits that the amount of time claimed by the plaintiffs is excessive. She points out that the plaintiffs have not included any dockets to support the hours claimed.

[9] Ms. Maxwell-Baker points out that the plaintiffs were represented by other counsel early in the action, and as a result of ill-health on the part of their counsel, there was considerable delay. Even after the plaintiffs retained Ms. Hoy, there was still considerable delay.

[10] Ms. Maxwell-Baker points out that the plaintiffs have not identified any factor that should justify costs on a substantial indemnity basis. Ms. Maxwell-Baker submits that there is simply no basis for an award on that basis.

[11] Ms. Maxwell-Baker points out that while the plaintiffs were awarded non-pecuniary damages, they failed to recover any damages for real estate losses, income-related losses, breaches of the Canadian Charter of Rights and Freedoms, or punitive damages.

[12] Ms. Maxwell-Baker points out that the plaintiffs made not one offer to settle the action.

[13] Ms. Maxwell-Baker submits that the action was of moderate complexity.

Prejudgment Interest

[14] The ordinary rule respecting prejudgment interest is reflected in s.128(1) of the Courts of Justice Act, which provides as follows:

128. (1) A person who is entitled to an order for the payment of money is entitled to claim and have included in the order an award of interest thereon at the prejudgment interest rate, calculated from the date the cause of action arose to the date of the order.

[15] The prejudgment interest rates referred to in that subsection are published quarterly. In the last quarter of 2002, the published prejudgment interest rate was 3.0 per cent. From that date until the first quarter of 2009, the rates were either at, slightly lower than, or exceeded that rate. The lowest rate during that period was 2.3 per cent, and went as high as 4.8 per cent. From the second quarter of 2009 to date, the rate has never exceeded 1.3 per cent, and has been as low as 0.5 per cent. From the first quarter of 2011 to date, the rate has been 1.3 per cent.

[16] I am not persuaded that the rate prescribed by s.128(1) of the Act should be varied in the circumstances of this case. Nor am I persuaded that the period of time during which interest is to run should be shortened.

[17] In Kinbauri Gold Corp. v. Iamgold International African Mining Gold Corp. (2004), 2004 36051 (ON CA), 246 D.L.R. (4th) 595 (Ont. C.A.), it was argued that the prejudgment interest rate should be varied. The gap between the commencement of the action and judgment was more than ten years. The prescribed prejudgment interest rate was ten per cent. During the ten year period, the interest rates were volatile, reaching as low as 2.3 per cent. The average interest rate during that period was 5.6 per cent.

[18] Both the trial judge and the Court of Appeal agreed that the prescribed interest rate should prevail. At para. 120, Cronk J.A. stated “This court has recognized that the legislature’s policy in providing for the payment of prejudgment interest is intended to encourage early settlements and the timely compromise of litigation.” After citing caselaw, she continued:

“In this case, the awarded rate of interest of 10% was 4.4% higher than the average rate of interest that prevailed during the relevant period. The possibility that the trial judge would award prejudgment interest in accordance with s.128 at the rate applicable at the time of Iamgold’s breach of the Agreement was a risk of the damages assessment litigation from the outset, especially where, as here, the trial judge had already concluded that Iamgold had wrongfully breached the Agreement and that it had acted in questionable good faith.

[19] In this case, neither party made any meaningful offer to settle the litigation. The possibility of a prejudgment interest award in accordance with s.128 was a risk from the outset.

[20] I note that in this case, prejudgment interest rates were generally higher than three per cent for over half the relevant period. I see no unfairness in applying the rate prescribed by s.128 of the Act.

[21] In Novakovic v. Kapusniak (2008), 2008 ONCA 381, 52 R.F.L. (6th) 9 (Ont. C.A.), the Court of Appeal considered the issue of delay as well as the appropriate rate.

[22] The relevant period in that case between the date of commencement of the action and the delivery of judgment was approximately five years. It was argued by the defendant that the plaintiff had delayed in bringing the matter to trial.

[23] At para. 42, Doherty J.A. stated:

A trial judge should consider the conduct of the proceeding and delays attributable to particular parties to those proceedings in determining the rate of prejudgment interest. Prejudgement interest is not, however, intended as a means of punishing or rewarding parties for the manner in which they have conducted the proceedings. Its role is compensatory. I see no basis to interfere with the trial judge’s finding that Mr. Novakovic’s conduct of the claim should not deprive him of the compensation due him under the Courts of Justice Act provisions relating to prejudgment interest.

[24] At para. 44, Doherty J.A. stated:

Trial judges sometimes average prejudgment interest rates over the time period between the commencement of the action and the obtaining of judgment. This is particularly appropriate where the prejudgment interest rates fluctuate wildly. The onus is, however, on the parties seeking a different rate than that imposed by the statute to justify the imposition of that different rate. I do not think the fluctuations in interest in this case are sufficient to hold that some averaging of the prejudgment interest rates was essential. Clearly, the trial judge could have averaged the rate, but, in my view, she did not err in not doing so.

[25] In this case, I do not think any delay attributable to the plaintiffs is sufficient to deprive them of prejudgment interest for the entire period between the commencement of the action and the date of judgment. Some of the delays were attributable to illness of counsel. Some delay was attributable to the desire of the Crown defendants to bring a summary judgment motion, which was never brought. Some delay was said to have occurred because of the delay on the part of the defendants in making people available for discovery. A short period was attributable to maternity leave on the part of one of the defendant’s counsel. As is often the case, it is not possible to fix any one party with all of the responsibility for delay.

[26] I also do not think averaging of the rates is appropriate, for the reasons mentioned by the Court of Appeal in Kinbauri and Novakovic. As noted, for over half of the relevant period, prejudgment interest rates were largely over three per cent.

[27] Before leaving this issue, I note that Ms. Hoy did not argue that the rate of interest should be that specified by s.128(2) of the Courts of Justice Act, which reads as follows:

128 (2) Despite subsection (1), the rate of interest on damages for non-pecuniary loss in an action for personal injury shall be the rate determined by the rules of court made under clause 66 (2) (w).

[28] The interest rate prescribed by s.128(2) is set out in Rule 53.10, which provides as follows:

53.10 The prejudgment interest rate on damages for non-pecuniary loss in an action for personal injury is 5 per cent per year.

[29] What was awarded in this case was for non-pecuniary loss. Whether it was for “personal injury” is debatable. Some support for the proposition that it was for personal injury is found in the judgment of McLachlin C.J.C. in Mustapha v. Culligan of Canada Ltd., 2008 SCC 27, [2008] 2 S.C.R. 114, at para.9, where she stated “psychological disturbance that rises to the level of personal injury must be distinguished from psychological upset. Personal injury at law connotes serious trauma or illness.” At para.10, she held that the psychological injury in that case “qualifies as personal injury at law.”

[30] However, as noted, counsel for the plaintiffs has not advanced an argument based on s.128(2) of the Act so I will say nothing more about it.

[31] The period of time between the date of issuance of the statement of claim and the date of judgment is twelve years, four months and 24 days. I calculate the prejudgment interest on the sum of $345,000 awarded to Ms. Stack at $128,330. I calculate prejudgment interest on the $65,000 awarded to Mr. Nissen at $24,178. I calculate prejudgment interest on the $25,000 awarded to each child at $9,300.

[32] Accordingly, I award the following, inclusive of prejudgment interest:

Prejudgment

Damages Interest Total

Margaret Stack 345,000 128,330 473,330

Chad Nissen 65,000 24,178 89,178

Christian Nissen 25,000 9,300 34,300

Morgan Nissen 25,000 9,300 34,300

TOTALS 460,000 171,108 631,108

[33] Pursuant to Rule 59.03(5), the amount awarded for Morgan Nissen shall be paid into Court and, pursuant to Rule 72.03(7), shall be paid out to him, together with accumulated interest, upon his attaining the age of majority.

Costs

[34] There is nothing in the circumstances of this case that would justify costs on a substantial indemnity basis. Costs will be awarded on a partial indemnity basis.

[35] In her reply submissions, Ms. Hoy has included dockets and invoices from prior counsel.

[36] Ms. Hoy was called to the Bar in 1987. Ms. Maxwell-Baker was called to the Bar in 2001. She was assisted to some extent by Ms. Marotta, who was called to the Bar in 2013. An examination of Ms. Hoy’s recently-filed dockets discloses that at least some of the time expended was in connection with the action as against the Crown defendants. The action in that respect was resolved before trial, and I see no reason why the police defendants should be responsible for any time expended in pursuing the case as against the Crown defendants.

[37] Some of the time docketed by Ms. Hoy appears high. She has docketed 10.5 and 11 hours per day for attendance at some examinations for discovery. She had docketed 12, 14, 15, and even 16 hours per day for preparation for trial and attendance at trial on a regular basis.

[38] I am willing to assume that Ms. Hoy had to spend somewhat more hours on the case than did counsel for the defendants, because it was her onus to prove the case at trial.

[39] I think a reasonable number of hours to be attributed to Ms. Hoy is 475. I think a reasonable partial indemnity rate for her is $275 per hour. A reasonable allowance to be attributed to the plaintiffs’ former counsel, and for disbursements and HST, would produce a reasonable amount for costs for the plaintiffs, all inclusive, at $175,000.

[40] In the final analysis, my task is to fix costs that are reasonable in the circumstances: see Boucher v. Public Accountants Council of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.). I think that for a ten-day trial, preceded by the usual pre-trial procedures including examinations for discovery, $175,000 is a fair and reasonable amount for the costs of the plaintiffs.

[41] Accordingly, I award to the plaintiffs costs of this action fixed in the amount of $175,000, all-inclusive.

Gray J.

Date: April 14, 2015