SUPERIOR COURT OF JUSTICE
CITATION: 495793 Ontario Ltd. et al v. Barclay et al, 2015 ONSC 602
COURT FILE NO.: CV-05-0766-00
DATE: 2015-01-27
ONTARIO
B E T W E E N:
495793 ONTARIO LTD., c.o.b. as CENTRAL AUTO PARTS and RICK MERCURI
Robert E. Somerleigh, for the Plaintiffs
Plaintiffs
- and -
FRANK BARCLAY and CITY OF THUNDER BAY POLICE SERVICES BOARD
Eugene Prpic, for the Defendants
Defendants
HEARD: December 10, 2014,
at Thunder Bay, Ontario
Madam Justice H.M. Pierce
Reasons on Costs and Prejudgment Interest
[1] This hearing raises two issues for determination:
What is the appropriate allowance for an expert’s fees at trial when the expert’s evidence was found to be unhelpful?
What is the appropriate amount of prejudgment interest in the circumstances of this case?
Costs
[2] The within action involved a seven week trial at which the plaintiffs claimed damages for negligent police investigation. The plaintiffs succeeded in their claim at trial and obtained a judgment of approximately $1,581,000. Counsel agreed that the plaintiffs were entitled to costs as follows:
• fees, including GST and HST of $440,000;
• disbursements of $77,141.59.
What is not agreed is the amount of disbursement due for the expert called by the plaintiffs. The expert invoiced the plaintiffs $34,422.60.
[3] Tariff A of the Rules of Civil Procedure, articles 26 and 28, provides for lawyers’ fees and disbursements allowable under Rules 57.01 and 58.05 as follows:
For experts’ reports that were supplied to the other parties as required by the Evidence Act or these rules and that were reasonably necessary for the conduct of the proceeding, a reasonable amount.
For an expert who gives opinion evidence at the hearing or whose attendance was reasonably necessary at the hearing, a reasonable amount not exceeding $350 a day, subject to increase in the discretion of the assessment officer.
[4] There is little guidance from the appellate courts on the standard to apply when reviewing the reasonableness of a disbursement. Counsel have referred me to Hamfler v. Mink, ONSC 3331 which considers the question. In that case, the expert’s fee was reduced by half for an expert that was of little assistance to the court. Fundamentally, the court must consider whether costs are fair and reasonable: Boucher v. Public Accountants Council for the Province of Ontario et al, 2004 CanLII 14579 (ON CA), [2004] O.J. No. 2634 (Ont. C.A.).
[5] At para. 13 of Hamfler, Justice Edwards observed that:
…a disbursement will be recoverable provided that it is both reasonable, not excessive and has been charged to the client.
[6] At para. 17, Justice Edwards went on to cite some of the following factors in determining the necessity and reasonableness of an expert’s fee:
Did the evidence of the expert make a contribution to the case, and was it relevant to the issues?
Was the evidence of marginal value or was it crucial to the ultimate outcome at trial?
Was the cost of the expert or experts disproportionate to the economic value of the issue at risk?
Was the evidence of the expert duplicated by other experts called by the same party? Was the report of the expert overkill or did it provide the court with the necessary tools to properly conduct its assessment of a material issue?
[7] The plaintiffs’ position is that when Mr. Somerleigh was retained in 2008, he could not have anticipated how the evidence would unfold at trial in 2014. They also submit that it was reasonable to retain an expert to discuss issues of professional standards in a case involving negligent police investigation.
[8] In this case, the report produced was prepared by one man who became ill and was unable to testify at trial. His associate, who joined in the report but was not the primary author, actually testified at trial, instead of both men as was originally anticipated. The plaintiffs argue that the evidence of the primary author of the report might have been more helpful than that of the expert who actually testified at trial. The account rendered by the expert who did testify was slightly more than $350 per day.
[9] The defendants submit that the reasons for judgment confirm that the court attached little weight to the expert evidence because:
a) the expert did not review all relevant material before rendering his report;
b) certain aspects of the expert’s testimony were ruled inadmissible because they were not in the report;
c) the report was incomplete in that it did not comment on industry standards; and
d) the report provided little assistance on the standard of care.
[10] The defendants submit that the disbursement for expert fees should be disallowed in these circumstances, or alternatively, reduced to $10,000.
[11] In addition to the above criticisms of the expert evidence, the judgment reflects that the expert’s evidence was contradictory, such that it was not helpful.
[12] While I agree that it was reasonable that counsel obtain an opinion as to the standard of care, in a case such as this, that opinion evidence was of little help for the reasons set out above. In Hamfler, the first two factors identified are relevant in this case. First, did the expert make a contribution to the case and was it relevant to the issues? Second, was the evidence crucial to the outcome of the trial or of marginal value?
[13] In this case, the expert’s evidence was of little value for the reasons set out above. The reasonableness of the disbursement must be measured against that fact.
[14] If it is reasonable for counsel to consult an expert on standard of care, then a disbursement to reflect these costs is appropriate. However, the defendants cannot be expected to pay full tariff for the plaintiffs’ expert where the court did not get full evidentiary value from the evidence. I conclude, therefore, that the amount of the expert’s fee recoverable in costs should be reduced by half. The defendants’ shall pay to the plaintiffs the sum of $17,211.30 on account of disbursements incurred by the plaintiffs for expert evidence.
Prejudgment Interest
[15] Section 128(1) of the Courts of Justice Act provides:
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.
[16] When did the cause of action arise? The plaintiffs claim an entitlement to prejudgment interest from April 22, 1999, the date the search warrant was executed at the plaintiffs’ premises, to June 10, 2014, the date when reasons for judgment were released. The plaintiffs submit that, as set out in the judgment, the harm dated from 1999 as a result of the police search and arrest of Mr. Mercuri, and does not date from his acquittal. They contend that the plaintiffs should not be penalized for the glacial pace of the criminal proceeding, which took about 6 years.
[17] Further, the plaintiffs submit that they should not be penalized by the failures of their previous counsel over the first three years of this action, as the plaintiffs paid the defendants costs as ordered.
[18] The elements required to prove the tort of negligent investigation are the existence of a duty of care; a breach of that duty of care; compensable damage; and causation: Hill v. Hamilton-Wentworth Regional Police Services Board, 2007 SCC 41, para. 96. These elements, based on the civil standard of proof, are distinct from the burden of proof in a criminal prosecution: proof beyond a reasonable doubt, in which the burden lies on the Crown. The two proceedings should not be conflated. In a criminal proceeding, the accused can invoke relief under the Charter of Rights and Freedoms, for breaches of his or her constitutional rights in connection with a prosecution.
[19] In Hill, at para. 92, the Supreme Court of Canada recognized that not every unsuccessful criminal prosecution would lead to a compensable loss. The court held:
… lawful pains and penalties imposed on a guilty person do not constitute compensable loss. It is important as a matter of policy that recovery under the tort of negligent investigation should only be allowed for pains and penalties that are wrongfully imposed. The police must be allowed to investigate and apprehend suspects and should not be penalized for doing so under the tort of negligent investigation unless the treatment imposed on a suspect results from a negligent investigation and causes compensable damage that would not have occurred but for the police’s negligent conduct.
[20] At para. 96, of Hill, the court held that the limitation period for negligent investigation begins to run when the cause of action is complete.
[21] I agree with the defendants’ position that until the criminal proceedings have run their course, it is not possible to know whether “pains and penalties” were wrongfully imposed.
[22] Upon the facts of this case, the plaintiffs could not have known they had a cause of action until the criminal proceedings ended and Mr. Mercuri was acquitted. The cause of action therefore started on June 9, 2005, the date of Mr. Mercuri’s acquittal.
[23] The second issue for determination is whether the plaintiffs are entitled to prejudgment interest from the date the cause of action arose to the date of the judgment, as prescribed in s. 128 of the Courts of Justice Act, or whether the court should exercise its discretion pursuant to s. 130 of the Act, to treat prejudgment interest in another fashion. The parties agree that interest at the rate of 5% applies to non-pecuniary damages and at the rate of 2.8% for pecuniary loss.
[24] Section 130(1) of the Courts of Justice Act gives the court discretion to disallow interest payable under sections 128 or 129 of the Act; allow interest at a higher or lower rate than provided in either section; or allow interest for a period other than that provided in either section.
[25] One of the factors for the court to consider in exercising its discretion under s. 130(2) of the Courts of Justice Act is “the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding.”
[26] The defendants submit that the court should reduce the period for which prejudgment interest is payable because the plaintiffs’ first counsel, (not Mr. Somerleigh), did nothing to move the case forward, with the result that the action was not properly framed until Mr. Somerleigh was retained some three years after the proceeding commenced. The defendants submit that the clock should begin running for prejudgment interest when the fresh statement of claim was delivered in August, 2008.
[27] The plaintiffs counter that the defendants had the use of the money throughout, and if there was delay, the penalty should be in costs. They argue that the defendants could have paid money into court in order to avoid liability for interest.
[28] As well, the plaintiffs concede that the action languished for three years after it was commenced because of dilatoriness of counsel; however, they argue that the defendants recovered costs to re-plead their defence once a fresh statement of claim was served.
[29] The first statement of claim was issued on December 14, 2005. In August, 2007, the court struck portions of the initial statement of claim and ordered the plaintiffs to pay the defendants costs fixed at $4,000. There is no indication why the defendants took so long to challenge the first statement of claim.
[30] In March, 2008, portions of the amended statement of claim were struck. During the same motion, the plaintiffs sought a litigation timetable from the court. That motion was dismissed as being premature. The plaintiffs were ordered to pay the defendants’ costs of $2,713.40.
[31] Mr. Somerleigh took over the file from the plaintiffs’ previous counsel on July 3, 2008. He moved for an order to file a fresh statement of claim, which order was granted on August 6, 2008. A condition of the order was that the plaintiffs pay the defendants costs of $10,000 thrown away. Thereafter, the defendants make no complaint about the pace of the litigation.
[32] In my view, some delay is attributable to the defendants in challenging the first statement of claim. As well, there is some evidence that the plaintiffs’ counsel attempted to move the action along by seeking a litigation timetable. For reasons that are not clear, the court refused that request. The defendants cannot now complain about the delay in the litigation which the court did not think was problematic in 2008. Therefore, I decline to exercise my discretion to shorten the period of prejudgment interest as set out in s. 130(2)(f) of the Courts of Justice Act.
[33] The defendants shall pay prejudgment interest to the plaintiffs commencing June 9, 2005, in accordance with s. 128 of the Courts of Justice Act. If counsel cannot agree on the calculations, I may be spoken to.
___”original signed by”
The Hon. Madam Justice H.M. Pierce
Released: January 27, 2015
CITATION: 495793 Ontario Ltd. et al v. Barclay et al, 2015 ONSC 602
COURT FILE NO.: CV-05-0766-00
DATE: 2015-01-27
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
495793 ONTARIO LTD. c.o.b. as CENTRAL AUTO PARTS and RICK MERCURI
Plaintiffs
- and –
FRANK BARCLAY and CITY OF THUNDER BAY POLICE SERVICES BOARD
Defendants
REASONS ON COSTS AND PREJUDGMENT INTEREST
Pierce J.
Released: January 27, 2015
/mls