Court File and Parties

CITATION: Petruccelli v. Canadian Tire Corporation, 2015 ONSC 2783

NEWMARKET COURT FILE NO.: CV-09-097011-00

DATE: 20150428

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Antonio Petruccelli, Plaintiff

AND:

Canadian Tire Corporation, Auburn Retailing Limited, c.o.b. Canadian Tire 87, Defendants

BEFORE: THE HON. MR. JUSTICE G.M. MULLIGAN

COUNSEL: J. Kahane-Rapport and M. Strigberger, Counsel for the Plaintiff

D.A. Romano Reid, Counsel for the Defendants

HEARD: By written submissions

COSTS ENDORSEMENT

[1] Following a ten-day jury trial commenced on November 17, 2014, the plaintiff was awarded damages of $18,076. For reasons that follow, both plaintiff and defendants seek costs as a result of the jury’s verdict. Submissions have now been received from the plaintiff and the defendants.

[2] It is acknowledged that prior to trial, the defendants made an Offer to Settle in the amount of $25,000. The jury’s award to the plaintiff did not exceed this Offer to Settle, so the provisions of Rule 49 are engaged. Both counsel acknowledged that a failure to accept an offer to settle has costs consequences. Rule 49.10(2) deals with defendants’ offers and provides at para. 49.10(2):

Where an offer to settle,

(a) is made by a defendant …

(c) is not accepted by the plaintiff,

and the plaintiff obtains a judgment as favourable as or less favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer was served and the defendant is entitled to partial indemnity costs from that date, unless the court orders otherwise.

[3] The defendants submit that Rule 76.13 also merits consideration in this case. Although this trial did not proceed under the Simplified Procedure Rules, the award of damages was less than the amount specified in rule 76.02

[4] Rule 76.13(3) provides as follows:

The plaintiff shall not recover any costs unless,

(b) the court is satisfied that is was reasonable for the plaintiff,

(i) to have commenced and continued the action under the ordinary procedure;

[5] It would appear that rule 57.05(1) also merits consideration. That rule provides, “If the plaintiff recovers an amount within the monetary jurisdiction of the Small Claims Court, the court may order that the plaintiff shall not recover costs.”

The Plaintiff’s Submissions

[6] The plaintiff submits that he is entitled to costs for preparation for trial up to the date of the Offer to Settle. He seeks $82,263.15 on a partial indemnity basis for fees, disbursements and HST. In Reply Submissions, acknowledging that the defendants are entitled to costs for trial, the plaintiff suggests that the defendants claimed costs for fees, disbursements and HST as $62,000, should be reduced to $34,279.25. An acceptance of those calculations on their face would yield a costs award to the plaintiff of $48,000.

[7] The defence submits that its costs for trial, including fees, disbursements and HST amount to $62,000. The defence acknowledges that the plaintiff is entitled to costs up to the Offer to Settle, but submits that those costs should be $22,000, all inclusive. Accepting the defendants’ calculations at their face value would yield a costs award to the defendants of $40,000.

[8] Looked at another way, if the court accepted the plaintiff’s request of costs of $82,000 and the defendants’ request of costs of $62,000, that would yield an award of costs to the plaintiff of $20,000. Conversely, if the court accepted the defendants’ submissions as to the plaintiff’s costs of $22,000, and the plaintiff’s submissions of defence costs of $34,000, this would yield a costs award to the defendant of $14,000.

Analysis

[9] I am not satisfied that this is a case which would preclude the plaintiff from receiving any costs pursuant to the provisions of Rule 76.13. Given the nature of the plaintiff’s claim as pleaded and the medical evidence he marshalled in support of his claim, I am satisfied that it was reasonable to have commenced this action under the ordinary procedure.

[10] On the same basis, I would not exercise my discretion denying the plaintiff any costs based on Rule 57.05. In my view, that rule has application when it is plain and obvious that the plaintiff’s claim would not exceed the threshold of the monetary jurisdiction of the Small Claims Court. In the case before me, it was not plain and obvious that the award would not exceed the jurisdiction of the Small Claims Court.

[11] However, it is clear that the plaintiff did not achieve an award which exceeded the Offer to Settle. Therefore, the defendant was put to the cost and expense of defending a ten-day trial. The defendant was required to retain an orthopaedic surgeon to give evidence at trial in the face of the expert medical evidence that the plaintiff would be relying upon.

[12] Both sides took exception to the costs claimed by the other side. In requesting costs for preparation for trial, the plaintiff provided a Bill of Costs for $82,000. But it did not supply its costs to its client for two lawyers conducting a ten-day trial. The defendants did not submit their costs for preparation for trial by way of comparison to that sought by the plaintiff.

Applicable Principles

[13] The principles in Rule 57.01 and principles in various decisions from the Court of Appeal are well known. The court has discretion under s. 131 of the Courts of Justice Act to award costs. The court can consider the amount of costs that an unsuccessful party could reasonably expect to pay, the amount claimed, and the amount recovered in the proceeding, among other factors. As Armstrong J.A. stated for the Ontario Court of Appeal in Boucher v. Public Accountants’ Council for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634 at para. 24:

Overall, as this Court has said, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in a particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.

[14] In my view, given the limited result achieved by the plaintiff, the factors of reasonableness and proportionality ought to be applied to this case.

[15] The issue of proportionality was discussed by The Honourable Colter A. Osborne, Q.C. in his Civil Justice Reform project for the Ministry of the Attorney General. With respect to proportionality, he recommended in his report:

The Rules of Civil Procedure should include, as an overarching principle of interpretation, that the court and the parties must deal with a case in a manner that is proportionate to what is involved, the jurisprudential importance of the case and the complexity of the proceeding. Counsel should be required to prepare a litigation budget and review it with a client prior to commencing or defending any proceeding.

[16] After the report was received and considered, rule 1.04(1.1) was added. It provides:

In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.

[17] Both counsel relied on various decisions to support their Costs Submissions. With respect to proportionality, the plaintiff relied on Denny v. Hamilton, 2008 5964 (ONSC). In a motor vehicle case, the plaintiff sought damages in excess of $1,000,000. The plaintiff received $20,000 for general damages and $20,000 for future housekeeping capacity in that case. The plaintiff was awarded costs of $106,255 plus GST. However, in that case, there was no defence offer to settle. The plaintiff was awarded costs for trial preparation and an eleven-day trial.

[18] The plaintiff also relied on Burhoe v. Mohammad, 2012 ONCA 499. In awarding costs of $166,695, the Court of Appeal stated at para. 8:

In the present case, we agree with the trial judge that having recovered more than the offers of settlement, the plaintiff is entitled to costs. However, in our view, the amount awarded by the trial judge cannot stand. In light of the previous decision of this court, setting aside his earlier costs award, the principle of proportionality made a reduction in the plaintiff’s costs, similar to the reduction made in Denny, necessary and appropriate.

[19] Therefore, it appears that once again, the costs award was for trial preparation and for the costs of a sixteen-day trial on a partial indemnity basis.

[20] Similarly in Gentles v. City of Toronto Non-Profit Housing Corp, 2012 ONSC 1929, a successful offer to settle by the defendant was not a consideration. The costs awarded to the plaintiff were for trial preparation and for a six-week trial. However, the Court substantially reduced the amount claimed by the plaintiffs for costs, noting that, “The plaintiffs’ conduct of the action tended to prolong the litigation.”

[21] In its submissions, the defence relied on a number of fundamental costs principles as set out in Rule 57.01, and in Court of Appeal cases such as Boucher v. Public Accountants’ Council for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634.

[22] Defence counsel also relied on Rimmer v. Lehey, 2013 ONSC 7109. In that case, the plaintiffs achieved only limited success at trial, receiving an award of damages of $18,645, but the plaintiffs sought costs of $139,274 on a full indemnity basis, or $80,500 on a partial indemnity basis. The plaintiffs exceeded the offer to settle submitted by the defendants, so the issue to be considered for costs was trial preparation and the trial itself. After considering the issue of proportionality, the court limited costs to $10,000 plus HST to the plaintiffs.

[23] I have considered the Costs Submissions of the plaintiff for preparation for trial, together with the submissions of the defence as to the reasonableness of the amount sought. After considering these principles and the jury’s limited award to the plaintiff, I am satisfied that the plaintiff should be awarded costs of $34,000, all inclusive for trial preparation costs incurred up to the Offer to Settle on a partial indemnity basis.

[24] The defence is entitled to its costs for defending a ten-day trial. This was a trial that it could not avoid because the plaintiff refused to accept the defence Offer to Settle. I am satisfied that the costs claimed, including fees and disbursements are fair and reasonable under the circumstances. I therefore award the defendants costs of $62,000 all in on a partial indemnity basis.

[25] Offsetting these two awards of costs, yields a costs award to the defence of $28,000, all inclusive. Both parties claimed $1,000 for preparation of Costs Submissions. As both achieved some success, I would not order any further costs award for Costs Submissions.

[26] It is therefore ordered that the plaintiff pay costs to the defendants forthwith, in the amount of $28,000, all in.

MULLIGAN J.

Date: April 28, 2015