SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 04-CV-265984CM2

DATE: 20150911

RE: NOEL MORGAN, TONIKA MORGAN, ANTHONY MORGAN and EMYLE MORGAN, a minor under the age of 18 years by his Litigation Guardian, NOEL MORGAN, Plaintiffs

AND:

ROBERT L. SAQUING, Defendant

BEFORE: Glustein J.

COUNSEL:
Daniel I. Reisler and Christine M. Galea, for the Plaintiffs

James V. Maloney and Ryan O’Leary, for the Defendant

COSTS ENDORSEMENT

[1] After a ten-day trial, I dismissed the action by the plaintiff, Morgan,[^1] by Reasons for Decision, dated June 4, 2015 (the “Reasons”).

[2] I reviewed the written costs submissions of the parties received following the Reasons[^2].

[3] At trial, liability was admitted. The only issue before the court was damages. I dismissed all claims for damages. In brief:

(i) I held that Morgan had not satisfied the threshold for non-pecuniary damages;

(ii) If all of Morgan’s pain and suffering was caused by the accident, I assessed general damages at $30,000, less the statutory deductible of $15,000 which would apply under Bill 59;

(iii) I dismissed Morgan’s claim for past income loss since: (a) Morgan’s decision to leave his job was not reasonable, as he was capable of performing the functions of a secondary school physical education teacher; and (b) even if Morgan’s decision was reasonable, the basis for his decision to leave work was carpal tunnel syndrome which was not caused by the accident; and

(iv) I dismissed Morgan’s claim for future income loss since:

(a) Morgan did not establish that there was a “real and substantial” possibility that (1) he would have retired at age 65; or (2) he would be required to retire earlier as a result of the injuries caused by the accident. Morgan was required to establish both aspects of this “early retirement” contingency, and he failed to do so. Consequently, I held that this contingency could not support a claim for future income loss; and

(b) Morgan did not establish that there was a “real and substantial” possibility that (1) he would have become a vice-principal; or (2) he could not do so as a result of the accident. Morgan was required to establish both aspects of this “vice-principal” contingency, and he failed to do so. Consequently, I held that this contingency could not support a claim for future income loss.

[4] I adopt the comments of Matheson J., in Basandra v. Sforza, 2015 ONSC 5059 (“Basandra”), at para. 7, in which the court set out the general principles to be applied to a determination of costs:

The general principles applicable to costs are not disputed. Costs are discretionary. Rule 57.01 of the Rules of Civil Procedure sets out factors I may consider in exercising my discretion, in addition to the result of the proceeding and any written offers to settle. Overall, the objective is to fix an amount that is fair and reasonable, having regard for, among other things, the expectations of the parties concerning the quantum of costs: Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA) , [2004] O.J. No. 2634, 71 O.R. (3d) 291 (C.A.) at paras. 26, 38.

[5] The defendant seeks costs on a substantial indemnity basis, in amounts varying between $257,233.60 and $279,369.82 (inclusive of HST and disbursements). Morgan submits that costs should be on a partial indemnity scale, and should be limited to a range between $102,893.44 and $111,747.93 (inclusive of HST and disbursements) (a 60% reduction from the costs claimed by the defendant).

[6] The defendant does not submit that there was “any form of reprehensible conduct, either in the circumstances giving rise to the cause of action, or in the proceedings, which makes [substantial indemnity] costs desirable as a form of chastisement” (see Mortimer v. Cameron, 1994 10998 (ON CA), [1994] OJ 277 (CA), at para. 67). The defendant relies only on his attempts to resolve the matter as the basis to support his claim for substantial indemnity costs.

[7] In McBride Metal Fabricating Corp. v. H&W Sales Co., 2002 41899 (ON CA), [2002] OJ 1536 (CA) (“McBride”), Abella J.A. (as she then was) held (at para. 39):

Apart from the operation of rule 49.10 (introduced to promote settlement offers), only conduct of a reprehensible nature has been held to give rise to an award of solicitor and client costs. In the cases in which they were awarded there were specific acts or a series of acts that clearly indicated an abuse of process, thus warranting costs as a form of chastisement. The conduct of the parties relating to the circumstances giving rise to the litigation or to their actions during the trial can be used to justify an award of costs.

(See also, Lococo J., in Henderson (Trustee of) v. Pitters, [2015] OJ 10 (SCJ), at paras. 11-12 (“Henderson”))

[8] Morgan relies on Dunstan v. Flying J Travel Plaza, 2007 44819 (ONSC) (“Dunstan”), in which R. Smith J. relied on an earlier decision of the Court of Appeal in S&A Strasser Ltd. v. Town of Richmond Hill et al. (1990), 1990 6856 (ON CA), 1 OR (3d) 243 (CA) to the effect that “the court in exercising in [sic] discretion pursuant to Rule 57.01(1) may find it appropriate to award costs on a substantial indemnity basis from the date of the defendant’s offer to settle, if the defendant made an offer to settle and the plaintiff did not recover a judgment of any value after trial” (Dunstan, at para. 13).

[9] In the present case, there were numerous attempts by both parties to settle the action. There was an unsuccessful mediation in April 2006. After a second mediation in July 2008, the defendant thought that there had been a settlement reached with both the tort insurer (for $55,000) and long-term disability insurer (for $35,000). However, Morgan did not complete the settlement with the tort insurer since he took the position that he had mistakenly understood that the agreement was open for 30 days. The defendant brought a motion to enforce the settlement which was dismissed and leave to appeal was denied.

[10] The defendant also made offers to settle of (i) $50,000 (all inclusive) on November 2, 2009, (ii) $80,000 (all inclusive) on November 22, 2013, and (iii) a consent to dismissal without costs on September 15, 2014.

[11] Morgan made an offer to settle of $240,000, plus interest and costs, on February 6, 2015.

[12] I do not find that the above attempts at settlement justify an award of costs on a substantial indemnity scale, although I do consider the offers as part of my discretion under rule 57.01 when I make my order of costs. The parties had a legitimate dispute as to the extent of the injuries alleged to have been suffered by Morgan, whether his claims for past and future loss of income could be supported under the evidence, and causation issues based on expert evidence. The settlement positions taken by the parties were not unreasonable as each party’s offers constituted fair attempts to assess their risks.

[13] Since there are no factors relied upon by the defendant with respect to “conduct of a reprehensible nature … to give rise to an award of solicitor and client costs” (McBride, at para. 39), I rely on McBride and Henderson and find that an order of costs on a partial indemnity scale is appropriate.

[14] Under rule 57.01 (and under the principles summarized in Basandra), the court must consider the costs an unsuccessful party could reasonably expect to pay in setting an amount that is fair and reasonable. On a partial indemnity scale, the defendant sought $208,285.66 (inclusive of HST and disbursements). The plaintiff submitted that a range between $102,893.44 and $111,747.93 (inclusive of HST and disbursements) would be appropriate.

[15] While Morgan did not provide his own costs outline, I do not accept the defendant’s submission that I must therefore find the defendant’s costs to be reasonable. Even if Morgan had provided the same costs outline as the defendant (who sought almost $280,000 at 90% of the actual rate, for a total of more than $300,000 in actual fees, disbursements, and taxes), it would still remain to the court to determine a reasonable amount for a ten-day trial on the basis of the factors I discuss below. However, I do consider the lack of a costs outline from the plaintiff as a factor to consider when assessing costs.

[16] Under rule 57.01, I exercise my discretion and fix costs at $170,000 (inclusive of HST and disbursements). I consider the following factors:

(i) The action was not particularly complex. Morgan sought payment of general damages and pecuniary damages for losses of past and future income. Liability for the motor vehicle accident was admitted prior to trial. The only issue for trial was damages, which included determinations on causation and threshold;

(ii) There were relatively few witnesses. The parties worked collaboratively to avoid the need to call witnesses to produce documents;

(iii) Morgan gave evidence and was cross-examined at length. Morgan called one medical expert, one treating physician, and an expert accountant. Morgan also called his wife and three friends as witnesses, and their testimony was very brief;

(iv) The defendant called his medical expert as his only witness;

(v) Costs of the motion to enforce the settlement were set by the court on the motion in favour of Morgan and ought not to be claimed as a trial cost;

(vi) 20 hours of time for the defendant to prepare for two settlement conferences appears excessive with respect to the reasonable expectations of the unsuccessful party;

(vii) Some law clerk time spent preparing for mediation and trial appears excessive with respect to the reasonable expectations of the unsuccessful party;

(viii) The parties prepared written submissions;

(ix) The litigation was protracted over ten years;

(x) The plaintiff did not provide a costs outline although asked to do so by the court; and

(xi) There were several settlement opportunities available to Morgan which could have avoided the necessity of a trial.

GLUSTEIN J.

Date: 20150911

[^1]: All terms used in this Costs Endorsement are as defined in the Reasons.

[^2]: The written costs submissions were received between July 2 and August 18, 2015.