SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-10-415838
DATE: XXXX

RE: SHIVAM BHATT, a Minor, by his Litigation Guardian, BINA BHATT, SAURABH BHATT and BINA BHATT, Plaintiffs/Defendants by Counterclaim

AND:

WILLIAM BEASLEY ENTERPRISES LIMITED and THE CORPORATION OF THE CITY OF TORONTO, Defendants/Plaintiffs by Counterclaim

BEFORE: Mr. Justice M. D. Faieta

COUNSEL:
Peter Cho and Luke Hamer, for the Plaintiffs

Chris T. Blom, for the Defendant/Plaintiff by Counterclaim, William Beasley Enterprises Limited

George Bekairis, for the Defendant by Counterclaim, Saurabh Bhatt

HEARD: September 30, 2015

M. D. FAIETA, j

COSTS ENDORSEMENT

[1] A seven day non-jury trial was held with respect to a personal injury claim brought by the Shivam Bhatt and his parents following an accident at the Defendant Beasley’s amusement park. Both liability and damages were disputed. The Plaintiffs were awarded $304,863.23 comprised of damages in the amount of $263,692.33 plus interest of $48,171.00. A counterclaim for contribution and indemnity brought by Beasley against the Plaintiff’s father was dismissed. The Plaintiffs seek their costs on a partial indemnity basis in the amount of $226,973.07. The Defendant by Counterclaim seeks costs of $48,833.15. For the reasons described below, I order that Beasley pay costs of $125,000.00 to the Plaintiffs and costs of $35,000.00 to the Defendant by Counterclaim.

ANALYSIS

[2] The Court has a broad discretion to determine by whom, and to what extent, costs of a proceeding shall be paid. However, this discretion is subject to the rules of the Court as outlined in section 131 of the Courts of Justice Act, R.S.O. 1990, c. C. 43.

[3] The Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provide the following direction to the Court when considering a request to award costs:

• In exercising its discretion to award costs under section 131 of the Courts of Justice Act, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

(i) any other matter relevant to the question of costs;[^1]

• In exercising its discretion with respect to costs, the court may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer;[^2]

• Where an offer to settle is: (1) made by a Plaintiff at least seven days before the commencement of the hearing; (2) not withdrawn and does not expire before the commencement of the hearing; and (3) not accepted by the Defendant, and the Plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the Plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise;[^3]

• Where an offer to settle is: (1) made by a Defendant at least seven days before the commencement of the hearing; (2) not withdrawn and does not expire before the commencement of the hearing; and (3) 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.[^4]

[4] While the traditional principle of indemnification is the paramount consideration in the assessment of costs, it is no longer the only consideration. An award of costs is informed by many other considerations as enumerated in Rule 57.01 and other provisions of the Rules of Civil Procedure. The consideration of these broader interests serves to further the efficient and orderly administration of justice.[^5]

[5] Rather than engage in a purely mathematical exercise, an award of costs should reflect what the Court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.[^6]

[6] Although a cost award is typically based on partial indemnity, an elevated costs award is warranted when: (1) an offer to settle is made under Rule 49.10 or (2) the party against which a costs award is being made has engaged in reprehensible conduct.[^7]

[7] The considerations raised by the Rules and the submissions of the parties are addressed below under the following headings:

1. The Amount Claimed and the Amount Recovered
2. The Importance of the Issues and the Complexity of the Proceeding
3. Offers to Settle
4. Principle of Indemnity
5. Proportionality
6. What Could the Unsuccessful Party Reasonably Expect to Pay?

The Amount Claimed and the Amount Recovered

[8] The Plaintiffs claimed $2 million in general damages and $1 million in special damages in their Statement of Claim. The most contentious issue at trial was liability. As noted above, the Plaintiffs recovered substantially less than they claimed.

The Importance of the Issues and the Complexity of the Proceeding

[9] The Plaintiff and the Defendant by Counterclaim submit that this action was complex and involved numerous evidentiary and legal issues: Occupiers Liability Act, best practices in the amusement park industry, causation and the thin-skull principle and the admissibility of lay and opinion evidence. Beasley submits that the legal issues were not numerous and complex. The parties agreed that Beasley was required to act reasonably in accordance with section 3 of the Occupiers Liability Act and that the Plaintiffs prepared extensive submissions on the issues of causation and the thin-skulled principle which were not at issue in this action. In my view, there were no complex legal issues raised in this proceeding. I agree with Beasley’s submission.

[10] The Defendant by Counterclaim submits that the Bhatt family would have been financially compromised by Saurabh Bhatt having to pay any contribution and indemnity to Beasley. Further, he submits that he would have had to live with the stigma of being found negligent in the way he cared for his child. This point was not addressed by Beasley. Nevertheless in my view the potential financial impact is questionable as: (1) there was no evidence of his financial means; and (2) there was no evidence that he was not covered by liability insurance for this claim.

Offers to Settle

[11] There were two offers to settle.

[12] The Plaintiff made an Offer to Settle dated February 10, 2015 in the amount of $425,000.00 for all claims and interest plus costs to be assessed on a partial indemnity basis.

[13] Beasley made an Offer to Settle dated March 6, 2015 in the amount of $125,000.00 for damages and interest plus assessed costs on a partial indemnity basis, which also required the dismissal of the counterclaim on a without costs basis.

[14] No offers were exchanged between Beasley and the Defendant by Counterclaim.

[15] None of these offers were better than the amount awarded.

Principle of Indemnity

[16] Beasley raises the following issues.

[17] First, Beasley submits that the hourly rates claimed on behalf of counsel is excessive having regard to the former Costs Grid found in Tariff A of the Rules of Civil Procedure that was established in 2002 and repealed in 2005.[^8] The Court is no longer required by the Rules of Civil Procedure to apply the Costs Grid as reference to it was removed from Tariff A of the Rules in 2005. In its place, in July 2005 the Costs Subcommittee of Ontario Superior Court of Justice’s Civil Rules Committee published a guideline entitled “Information for the Profession” which stipulated the maximum hourly rates for legal services: 1) lawyers 20 years and over: $350; 2) lawyers – 10 to 20 years – $300; 3) lawyer – less than 10 years: $225; 4) student-at-law: $60; 5) law clerks: $80.

[18] Applying the former Costs Grid, Beasley submits that Peter Cho’s hourly rate should be $200 rather than $225 given his five years of experience; that Mr. Hamer’s hourly rate should be $180 rather than $200 given his three years of experience; and that the hourly rate for three law clerks with experience of between three and five years should not exceed $60 rather than be billed at $80. Beasley also submits that the hourly rate for Mr. Bekiaris should be $225 rather than $250 given that he was called to the Bar eight years ago.

[19] In my view, the former Costs Grid has little, if any, relevance given that its repeal and removal of any reference to it in the Rules. The 2005 guideline is also not incorporated by reference in the Rules.

[20] In my view, the hourly rates sought for legal services are reasonable rates on a partial indemnity basis and I make no adjustment to them.

[21] Second, Beasley submits that the outline of costs reflects an excessive amount of time spent by counsel, the articling student and law clerks as follows: (1) extensive legal research in the areas of causation and the thin-skulled principle: (2) the plaintiffs were not successful on a motion to introduce the chart of a family physician and a hospital and therefore any legal research was unnecessary; (3) the costs outline includes time and disbursements in relation to amend the Statement of Claim in September 2013 where the order was granted without any order regarding costs; (4) senior counsel (Mr. Smitiuch, 1998 Call) was not involved in the day to day handling of this file and therefore none of his time (about 24 hours in total) should be allowed; (5) total preparation time for Mr. Cho (the lead lawyer at trial), Mr. Hamer and clerks and student-at-law is an average of about 60 hours per day of preparation (after pleading, discovery, mediation and the pre-trial conference) for each day of trial.

[22] I accept Beasley’s submissions other than in relation to Mr. Smitiuch’s time. In my view, it was a responsible way of proceeding with this file for the relatively very junior Mr. Cho (2011 Call) and Mr. Hamer (2013 Call) to consult with senior counsel especially in relation to trial preparation (12 hours). I also reject the same argument made by Beasley in relation to the guidance (10 hours in total) provided by Mr. Grillone (1999 Call) to Mr. Bekairis (2007 Call).

[23] As submitted by Beasley, I also adopt the following approach in the assessment of preparation time: One day of trial preparation by senior counsel for each day of trial and two days of trial preparation by junior counsel for each day of trial. See Meady v. Greyhound Canada Transportation Corp., 2013 ONSC 5568, paras. 55‑56.

[24] Accordingly the claim for trial preparation is reduced from about 414 hours to 168 hours (7 days x 8 hours per day x 3). Beasley does not challenge the 40 hours claimed by Mr. Bekairis for trial preparation.

[25] Beasley also submits that there are numerous disbursements that should be excluded: (1) expense of $127.00 for filing a motion record to amend the Statement of Claim as there was no order for costs on the motion; (2) costs of $480.00 paid to Dr. Treasurer for trial preparation should be excluded as she did not testify or appear at trial; (3) cost to prepare present value calculations for future loss claims as opposed to obtaining future loss multipliers as was agreed upon by the parties: $1,500.00; (4) trial attendance allowance paid to Chen Chen ($53.00) and Quinn Wilson ($145.52) given that Beasley undertook to call them at trial.

[26] I accept Beasley’s submissions other than in relation to the trial attendance allowances paid to Chen Chen and Quinn Wilson. In my view, given the consequences for the trial of this action if these employees did not attend although requested to do so by Beasley, it was prudent for the Plaintiffs to summons these witnesses and thereby ensure that they were legally compelled to attend.

Proportionality

[27] Another relevant consideration is proportionality.

[28] Rule 1.04(1.1) provides that in applying the Rules of Civil Procedure the Court shall make orders that are proportionate to the importance and complexity of the issues, and to the amount of money involved, in the proceeding.

[29] While not brought to the Court’s attention, counsel should be aware of the Ontario Court of Appeal’s decision in Elbakhiet v. Palmer.[^9] In that case a Plaintiff in a personal injury action was awarded damages of $144,013.00 after a nine-week trial. An offer to settle of $145,000 was viewed as not more favourable than the jury’s award given the uncertainty in the interest provisions of the offer. The Defendant was awarded costs of $576,842. The Court of Appeal reduced the amount of costs to $100,000, inclusive of disbursements and HST. The Court stated at para. 38:

…this amount takes into consideration all the factors to be considered under Rules 49 and 57, including the complexity of the matter and the manner in which the litigation was conducted, and in particular that the offer to settle was virtually the same as the Judgment. This amount is more consistent with the objectives of fairness and reasonableness and especially gives some attention to the need for some proportionality.[^10]

What Could the Unsuccessful Party Reasonably Expect to Pay?

[30] Beasley has not provided the Court with its outline of costs which would have informed the Court what it reasonably expected to pay in costs given its own costs.

[31] In any event, it is Beasley’s submission that costs of $117,566.89 should be paid to the Plaintiffs and costs of $30,131.65 should be paid to the Defendant by Counterclaim. Given my decision described below, the award of costs should not come as surprise to Beasley.

Conclusion

[32] In Boucher,[^11] the Ontario Court of Appeal stated at para. 26 that “…the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the proceeding…”

[33] It is fair and reasonable for the Defendant to pay, within 30 days of today’s date:

• the Plaintiff’s costs in the amount of $125,000.00 inclusive of disbursements and HST;

• the Defendant by Counterclaim’s costs of $35,000.00 inclusive of disbursements and HST.

Mr. Justice M. D. Faieta

Released: October 22, 2015

[^1]: Rule 57.01(1).
[^2]: Rule 49.13.
[^3]: Rule 49.10(1), Rule 49.03.
[^4]: Rule 49.10(2); Rule 49.03.
[^5]: British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371.
[^6]: Davies v. Clarington (Municipality), 2009 ONCA 722, 312 D.L.R. (4th) 278, at para. 52.
[^7]: Davies, at para. 40.
[^8]: See Ontario Regulation 284/01 and Ontario Regulation
[^9]: 2012 ONSC 2529, [2012] O.J. No. 2890; rev’d 2014 ONCA 544, 121 O.R. (3d) 616 (C.A).
[^10]: Paragraph 38.
[^11]: Boucher v. Public Accountants Council for the Province of Ontario et al (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291.