Handscomb v. TD Home and Auto Insurance, 2015 ONSC 2938

COURT FILE NO.: CV-14-513300
DATE: 20150511

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DOUGLAS HANDSCOMB, Plaintiff

AND:

TD HOME AND AUTO INSURANCE COMPANY, Defendant

BEFORE: F. L. Myers, J

COUNSEL: Sari Feferman, for the Plaintiff

Wendy Breuer, for the Defendant

READ: May 05, 2015

COSTS ENDORSEMENT

[1] This matter came before me in Civil Practice Court for scheduling of a summary judgment motion concerning approximately $10,000 - $13,000 in income replacement benefits. It was apparent from the amount of discord and the amount of motion practice said to be required that the forest had long since been lost for the trees.

[2] By Endorsement dated February 12, 2015, reported at 2015 ONSC 975, I encouraged the parties to meet to resolve the issues. I required that they report back to me at a Case Conference. Just prior to doing so, the plaintiff produced information sought by the defendant and the defendant agreed to pay the benefits sought (although some dispute may remain regarding the quantum of retroactive benefits I am told). Accordingly, the plaintiff withdrew the motion subject to argument concerning costs.

[3] Both sides want their costs and point at the other. Both bear a degree of responsibility for wasted fees and time for their clients due to the tactics of both obscuring the merits.

[4] The plaintiff was slow to produce information. On its side, the defendant required a swath of information well beyond anything reasonably necessary or proportionate to the task. It knew that the plaintiff was a 10% shareholder in his employer and it sought evidence to establish that he was properly to be treated as an employee rather than an owner for the purposes of statutory accident benefits. In order to examine the issue, the defendant retained a major outside accountant firm who demanded significant amounts of information about the business including, for example, the average weekly hours worked and duties performed by all employees at the plaintiff’s employer.

[5] If the plaintiff’s employer was even a moderately sized business, the information sought would have been (a) immense; and (b) wholly beyond the plaintiff’s possession, power, or control.

[6] Ultimately, it turned out that there were only two employees of the business – the plaintiff and another. Although this information was as adverse to the plaintiff’s position as could be, the defendant still determined to pay the benefits as claimed. So why was so much information required? More particularly, why was it still sought after I expressly stated in my endorsement that:

The breadth of inquiry must be narrowed to what is truly necessary so as to attend a brief meeting and be done with the issue.

[7] The defendant points to case law entitling it to require production of such information under the SABs regime. But having the right to something does not compel one to demand it. That is the whole point of proportionality. Not every case demands that every possible alley be investigated. “I can” does not mean “I should.” Insurers should resent unnecessary legal and accounting fees and delays just as much as plaintiffs should. The point of my endorsement was to ask people to exercise some common sense business judgment to get to the bottom of the issue without expending the amount in issue. I was unsuccessful. The amounts sought for costs by the competing parties in the aggregate nears the amount that was in issue.

[8] Rather than exercising judgment, people proceeded so they could tick off the metaphorical box on their file management forms that says “s.33 info obtained.”

[9] Now, what about the plaintiff? I heard how cumbersome the defendant’s requests had become. I heard that the plaintiff’s boss was only willing to spend so much time on the plaintiff’s behalf. The plaintiff was worried about abusing the President of the company’s largesse. The plaintiff’s counsel never mentioned that the plaintiff knew perfectly well how many employees there were. Lets’ see, with the President and the plaintiff; that makes two. If the plaintiff’s counsel was trying to frustrate the defendant’s inquiry so as to shield the harmful evidence, she should have known that the court would ensure production of sufficient information to ensure that the issue received a fair airing on summary judgment. Proportionality is the right amount of process to ensure fairness in light of all of the circumstances. The fair assessment of the issue required some discussion of the structure of the company and the plaintiffs’ role in it. It was counsel’s duty to provide relevant information for the issue to be fairly resolved.

[10] It is counsels’ duty to ensure a fair hearing. That means that process issues like production and scheduling are to be approached in a cooperative basis to reduce cost and aid the most expeditious resolution on the merits available. The commentary under Rule 5.1-1 of the Rules of Professional Conduct of the Law Society of Upper Canada provides:

The lawyer must discharge this duty by fair and honourable means, without illegality and in a manner that is consistent with the lawyer’s duty to treat the tribunal with candour, fairness, courtesy and respect and in a way that promotes the parties’ right to a fair hearing in which justice can be done. Maintaining dignity, decorum and courtesy in the courtroom is not an empty formality because, unless order is maintained, rights cannot be protected. [emphasis added]

[11] In Authorson (Litigation Guardian of) v. Canada (Attorney General), 2002 CarswellOnt 1724, the Divisional Court per curiam put it this way:

A party is entitled to a fair opportunity to present its case in a focused way. Counsel, as officers of the court, are expected in furthering the best interests of their clients to present their case on its merits, its true merits.

[12] Neither side focused on presenting the case in a focused, efficient way that was proportionate to the amounts in issue. Neither side, even after being cajoled by the court, simply sat down and discussed the problem openly to work through it. Neither worked towards a fair, expeditious, proportionate resolution. It was the same old same old. The culture shift required by the Supreme Court of Canada requires change in how cases are handled. It is not good enough for counsel to just make demands in nasty emails while ignoring their own obligation to be available to produce, talk, meet, and cooperate to make issues soluble fairly and quickly. It is no longer good enough for insurance company lawyers to sit back and just wait for clerks and juniors to fill in their tick boxes on forms before dealing with the merits of an issue. At every step along the way, counsel are required to apply professional judgment to clear the way for the resolution of issues as quickly, cheaply, and proportionately as possible. Counsel are expected to bring their clients to such resolutions or to bring the issues to the court for early, proportionate, fair hearings.

[13] The plaintiff should have openly and quickly disclosed the structure of the company and provide enough information to allow the defendant to fairly make the decision of whether the plaintiff ought to be considered an employee or an owner of the company. The defendant, for its part, ought to have exercised the judgment to make a $10,000 decision and not turned the issue into an inquiry fit for a $5 million case. There was no issue of principle at play. People just needed to sit down and talk to each other instead of talking at and around each other.

[14] It follows that I am disinclined to award costs to either side.

[15] The culture shift is trying to move a mountain. It will happen one shovelful at a time.

[16] No costs.

________________________________ F.L. Myers J.

Date: May 11, 2015