Doolittle v. Overbeek et al., 2015 ONSC 719

CITATION: Doolittle v. Overbeek et al., 2015 ONSC 719

COURT FILE NO.: 3743-11

DATE: 2015/02/02

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: MICHAEL GORDON DOOLITTLE, AMY MAY DOOLITTLE, and KYA OLIVINE DOOLITTLE, GRACE RENAE DOOLITTLE, COOPER MICHAEL DOOLITTLE AND OLIVER JACK DOOLITTLE by their Litigation Guardian Michael Gordon Doolittle (Plaintiffs)

• and –

WALTER OVERBEEK, 1675150 ONTARIO INC. c.o.b. as THE FLORAL EXPRESS INC. and THE STATE FARM MUTUAL INSURANCE COMPANY (Defendants)

BEFORE: JUSTICE I. F. LEACH

COUNSEL: James J. Mays and Cole S.C. Vegso, for the Plaintiffs

Ian Gerald T. Smits for the Defendants

HEARD: In writing

ENDORSEMENT (COSTS)

[1] This action stemmed from a motor vehicle accident on July 29, 2010 and proceeded to resolution by a civil jury trial.

[2] That trial formally began with selection of a jury on October 6, 2014, (approximately one month after the plaintiffs reached a settlement with the named insurance company defendant), but then awaited resumption of trial on October 14, 2014.

[3] The trial then continued on to conclusion with a jury verdict and corresponding judgment on October 24, 2014.

[4] In particular, although the remaining defendants were found entirely liable for the underlying accident, and despite the very substantial amounts claimed by the plaintiffs for alleged injuries and losses said to have been caused by the accident, (totaling $1,050,000), the jury awarded relatively modest sums, including the following:

i. For the plaintiff Michael Gordon Doolittle, (the principal plaintiff who sustained the alleged accident-related physical injuries):

a. general non-pecuniary damages in the amount of $30,000, (reduced to zero after application of the statutorily mandated deductible);

b. past loss of income from the date of accident to the date of trial in the amount of $29,200, (reduced to $3,800 after applying a credit for collateral income replacement benefits);

c. damages for loss of future income, (including loss of future overtime wages, loss as a result of shortened work life expectancy, and loss of competitive position in the market place), in the amount of $25,000;

d. damages for future health care costs, (including future medical, rehabilitation and out-of-pocket expenses), in the amount of $2,500; and

e. zero damages for other future care costs, (including housekeeping and other out-of-pocket expenses);

ii. For the plaintiff Amy May Doolittle, (Mr Doolittle’s spouse), damages for loss of care, guidance and companionship in the amount of $10,000, (reduced to zero after application of the statutorily mandated deductible);

iii. For the plaintiff Kya Olivine Doolittle, (Mr Doolittle’s eldest child), damages for loss of care, guidance and companionship in the amount of $7,500, (reduced to zero after application of the statutorily mandated deductible); and

iv. For each of the plaintiffs Grace Renae Doolittle, Cooper Michael Doolittle and Oliver Jack Doolittle, (Mr Doolittle’s three remaining children), damages for loss of care, guidance and companionship in the amount of $5,000, (with each $5,000 damage award reduced to zero after application of the statutorily mandated deductible).

[5] In the result, the jury assessed the plaintiffs’ total damages at $120,700. However, total judgment for the plaintiffs, after application of the statutory deductibles, and the further deduction required in relation to collateral income replacement benefits, came to only $31,300.

[6] As the parties were not prepared to make cost submissions in the immediate wake of the jury’s verdict and discharge, I made an endorsement, pursuant to Rule 57.01(7), inviting written cost submissions in the absence of party agreement.

[7] Those gradually were delivered by both parties. In particular, I received written cost submissions and a corresponding brief of authorities from the plaintiffs dated November 3, 2014, written responding cost submissions and a corresponding brief of authorities from the defendants dated November 10, 2014, and written reply cost submissions from the plaintiffs dated November 17, 2014.

[8] Other demands of my docket unfortunately have prevented me from addressing those submissions in a finalized cost ruling before now.

Overview of Positions

[9] In broad terms, the plaintiffs say they should receive an award representing their partial indemnity costs throughout this litigation, (i.e., from their retention of counsel on August 18, 2010, to date), and submit that those costs should be quantified at $112,334.00 for fees and $28,233.42 for disbursements, together with $18,192.85 in applicable HST, for a total all-inclusive cost award of $158,760.27.

[10] In the course of their submissions, the plaintiffs highlight various considerations suggesting, inter alia, that the resources devoted to the matter were necessary and appropriate in the circumstances, (having regard to the nature, importance and moderate complexity of the matters in dispute), that their case was advanced in an efficient and expeditious way, and that costs were incurred to address matters that ought to have been admitted by the remaining defendants, (such as their liability for the underlying accident, and their inability to demonstrate that any of the plaintiffs’ claims were barred by statutory litigation thresholds).

[11] However, most of the plaintiffs’ cost submissions were focused on an extended comparison between their willingness to compromise their formal claims and negotiate possible settlement, and what they regard as unreasonable intransigence on the part of the remaining defendants. For example, the plaintiffs emphasize:

• that the remaining defendants failed to participate as requested in a private mediation pursuant to s.258.6 of the Insurance Act, R.S.O. 1990, c.I.8, or any other settlement conference, (apart from the pre-trial conference mandated by the Rules of Civil Procedure, and the mid-trial settlement conference before a judge other than myself);

• that the plaintiffs made numerous settlement overtures and offers, (which were said to be reasonable in the circumstances, although none met or surpassed the result obtained by the plaintiffs at trial);

• that the remaining defendants did not make any offer to settle, at any time, during the entire course of the parties’ dispute; and

• that the result obtained at trial by the plaintiffs “betters what was offered by the [remaining] Defendants, which was nothing”.

[12] In response, the remaining defendants acknowledge that costs usually are paid by the unsuccessful parties to successful parties on a partial indemnity basis. However, they submit that the costs to be awarded to the plaintiffs in this case should be significantly less than the amount sought by the plaintiffs.

[13] In that regard, the remaining defendants note and rely upon such matters as the following:

• The result obtained by the plaintiffs at trial fell far short of the claims advanced before the jury. (For example, the remaining defendants note that the jury implicitly rejected the vast majority of the substantial and time-consuming evidence and claims of the plaintiffs dealing with alleged future care costs and future income loss.) It is said that a comparison of the amount of costs sought by the plaintiffs, and the relatively modest sums recovered at trial, therefore gives rise to legitimate concerns of proportionality.

• The result obtained by the plaintiffs also fell short of the more substantial settlement offers made by the plaintiffs in advance of trial, thereby validating the remaining defendants’ perception before and during trial that the plaintiffs’ indicated settlement expectations were excessive.

• The remaining defendants say they declined to make any responding settlement offer, proposing resolution in exchange for payment much less than the “aggressive”, “significant” and “excessive” amounts sought by the plaintiffs, because the remaining defendants “were well aware that the offer would not be accepted”. Moreover, the remaining defendants say it “became obvious to the Defendants that the Plaintiffs were seeking a sum of money which was beyond the means of the Defendants to pay”. In that regard, reference was made to a “costly mistake” made in failing to insure the vehicle being operated by the defendant driver, the fact that driver was a young teenager at the time of the accident, and the relatively modest incomes of the owners of the defendant corporation, which was a family owned business.

• While the remaining defendants therefore “became resigned” to the necessity of dealing with the plaintiffs’ claims by way of trial, they say they did nothing to lengthen the proceedings unnecessarily. To the contrary, they say they acted reasonably, (e.g., by agreeing to the plaintiffs’ Request to Admit in its entirety, with one exception, and by accepting the plaintiffs’ quantification of past income losses).

• The remaining defendants say that the amount of costs sought by the plaintiffs is excessive for other reasons. For example, they say the proceedings were “not overly complex”, that excessive time and resources were devoted to the matter by plaintiff counsel in various ways, and that the costs sought are far beyond the remaining defendants’ reasonable expectations of what they could have to pay in relation to the litigation, given that the tendered bill of costs from their own lawyer comes to only $40,495.84, (inclusive of partial indemnity fees of $29,799.00, disbursements of $9.463.85, and applicable HST of $1,232.99).

[14] Bearing in mind all such concerns, the remaining defendants suggest that it would be more reasonable to award the plaintiffs costs fixed somewhere in the range of an all-inclusive amount of $50,000.

[15] In reply the plaintiffs say, inter alia:

• that the remaining defendants’ financial position is an irrelevant consideration, that there is no evidence to support such claims of impecuniosity in any event, and that evidence garnered by the plaintiffs, (and submitted with their reply costs submissions), suggests that the defendant corporation actually has substantial assets regardless of what its owners or the defendant driver may receive as income;

• that the bill of costs prepared by defence counsel significantly understates the time he actually devoted to the matter, (insofar as a review of separately tendered “client ledger” documentation indicates that defence counsel repeatedly chose to voluntarily waive or significantly reduce fees otherwise billable to his clients); and

• that various legal expenses incurred by the plaintiffs and questioned by the remaining defendants, (for example, in relation to the participation of junior counsel at trial), were justified in the circumstances.

Analysis

GENERAL PRINCIPLES

[16] Pursuant to section 131 of the Courts of Justice Act, R.S.O. 1990, c.C.43, as amended, and subject to the provisions of an Act or rules of court, “the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid”.

[17] This is supplemented by the provisions of Rule 57.01, subsection (1) of which lists a broad range of factors the court may consider when exercising its discretion to award costs pursuant to section 131.

[18] Our courts repeatedly have emphasized that cost awards must not be a simple mechanical or mathematical calculation; e.g., focused merely on details of time spent multiplied by hourly rates, or a tabulation of disbursements actually incurred.

[19] Rather, all cost claims are subject to the “overriding principle of reasonableness”, as applied to the factual matrix of the case, pursuant to the ultimate “cross check” required by such authorities as Boucher, Moon and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC (2005), 2005 1042 (ON CA), 75 O.R. (3d) 638 (C.A.), and Anderson v. St Jude Medical Inc. (2006), 2006 85158 (ON SCDC), 264 D.L.R. (4th) 557 (Ont.Div.Ct.).

[20] The overall goal is to award costs in an amount that is “fair and reasonable for the unsuccessful party to pay in a particular proceeding”, rather than a sum tailored to an exact measure of the actual costs of a successful litigant. See Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634 (C.A.), at paragraph 26, and Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. no. 4495 (C.A.), at paragraph 4.

[21] In arriving at a global determination of a cost award that is “fair and reasonable” in this particular case, having regard to all the circumstances, my considerations therefore include but are not limited to those outlined below.

AMOUNT CLAIMED AND RECOVERED – RULE 57.01(1)(a)

[22] Rule 57.01(1)(a) permits the court to consider “the amount claimed and the amount recovered in the proceeding”.

[23] In their statement of claim, the plaintiffs formally sought a total of $1,050,000 in damages, as well as pre-judgment interest and costs. In particular, the plaintiffs claimed:

• $300,000 in general damages for the plaintiff Mr Doolittle;

• $500,000 in special damages for the plaintiff Mr Doolittle; and

• a total of $250,000 in damages pursuant to the Family Law Act, R.S.O. 1990, c.F.3, (“FLA”), through a $50,000 claim for such damages in relation to each of the five remaining members of the Doolittle family.

[24] The specific amounts recovered by the plaintiffs are outlined in detail above. As noted, the jury assessed the plaintiffs’ total damages at $120,700. However, total judgment for the plaintiffs, after application of the statutory deductibles, and the further deduction required in relation to collateral income replacement benefits, came to only $31,300.

[25] I nevertheless am mindful that, in relation to certain aspects of the assessment of costs, (and analysis of the operation of Rule 49.10 in particular), collateral benefits must be subtracted while statutory deductibles are not taken into account. See Rider v. Dydyk, 2007 ONCA 687, [2007] O.J. No. 3837 (C.A.), at paragraph 23, and Ksiazek v. Newport Leasing Limited, [2010] O.J. No. 1922 (C.A.), at paragraphs 33-35.

[26] That in turn would result in the plaintiffs being viewed as having recovered $93,800, being the total of:

• $30,000 in general non-pecuniary damages for Mr Doolittle;

• $3,800 for past loss of income sustained by Mr Doolittle;

• $25,000 for loss of future income to be sustained by Mr Doolittle;

• $2,500 for future health care costs to be incurred by Mr Doolittle;

• $10,000 in FLA damages for Mrs Doolittle;

• $7,500 in FLA damages for Kya Doolittle; and

• $15,000 in additional FLA damages, to be divided evenly between the three remaining Doolittle children.

[27] On any view, however, the plaintiffs’ recovery fell drastically short of the amounts formally being claimed in the action.

PRINCIPLE OF INDEMNITY – RULE 57.01(1)(0.a)

[28] Rule 57.01(0.a) permits the court to consider, in exercising its cost discretion, “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”.

[29] In their cost submissions, the remaining defendants questioned, to some extent, the billing rates underlying the plaintiffs’ bill of costs.

[30] In particular, it was suggested that the full hourly rates charged by two of the senior counsel working on the plaintiffs’ file, ($550 for Mr Mays and $450 for Ms Foreman respectively), were “high” and inappropriate for “a relatively routine motor vehicle accident and subsequent soft tissue injury”.

[31] In that regard, reliance was placed on certain observations made in Southworks Outlet Mall Inc. v. Bradley, [2009] O.J. No. 4212 (S.C.J.), at paragraphs 22-25, wherein Justice Flynn opined that, while litigants had the right to choose their own counsel and spend as much as they wished on their own legal bills, the “local legal market” in the Region of Waterloo “simply cannot bear billing rates substantially in excess of $400”.

[32] However, I note that Justice Flynn was dealing with two simultaneous actions, both brought under the “Simplified Procedure” rules, (as they involved modest claims arising in relation to a promissory note and a landlord-tenant dispute), wherein the court was being asked to fix costs on a substantial indemnity basis for various reasons, (including the plaintiff obtaining a result surpassing its offers to settle). The plaintiff had chosen to pursue the two matters using the services of a “premier litigator” and “very senior partner” from a “national law firm”, and therefore was seeking recovery of substantial indemnity costs based on billing rates “routinely accepted in a larger market such as Toronto”. Justice Flynn regarded the request as “way over the top” for cases “of this ilk” in the Region of Waterloo, as a “lesser light” could have pursued such matters just as successfully on behalf of the plaintiff.

[33] In my view, that case is readily distinguishable from the matter before me.

[34] In particular, this case involved more complex matters, (reasonably brought using the “ordinary” procedure), and the plaintiffs are claiming costs only on a partial indemnity basis, using partial indemnity rates for senior counsel, ($325 for Mr Mays who has been practicing for 27 years, and $225 for Ms Foreman who has been practicing for 12 years), that are not uncommon in Middlesex County for lawyers having such experience.

[35] I note that the partial indemnity rates employed in the plaintiffs’ bill of costs are also consistent with the guidelines suggested by the increasingly dated “Cost Bulletin”, (formerly entitled "Information for the Profession"), issued by the Costs Subcommittee of the Rules Committee when the “Costs Grid” was being repealed in 2005.

[36] In the circumstances of this case, I find that the partial indemnity rates underlying the plaintiffs’ claim for costs are reasonable and appropriate.

[37] In relation to the principle of indemnity, the plaintiffs relied on the general rule that a party who succeeds in recovery is entitled to its partial indemnity costs, subject to the discretion of the trial judge under s.131 of the Courts of Justice Act, supra, having regard to the factors in Rule 57 and related jurisprudence. See, for example: Foulis v. Robinson (1978), 1978 1307 (ON CA), 21 O.R. (2d) 769 (C.A.), at p.776; Mortimer v. Cameron, 1994 10998 (ON CA), [1994] O.J. No. 277 (C.A.), at paragraph 66; Joncas v. Spruce Falls Power & Paper Co., [2001] O.J. No. 1939 (C.A.), at paragraph 1; and Elbakhiet v. Palmer, 2012 ONSC 2529, [2012] O.J. No. 2890 (S.C.J.), at paragraph 30.1, in turn citing Norton v. Kerrigan, [2004] O.T.C. 559 (S.C.J.), at paragraphs 15-16.

[38] As noted above, the remaining defendants do not dispute that costs are usually paid by an unsuccessful party to a successful party on a partial indemnity basis.

[39] However, they question whether the plaintiffs’ net recovery should be viewed as entirely “successful”, (having regard to the considerable shortfall between the plaintiffs’ demands and the realities of the case as assessed by the jury). They also say that the indemnity principle must be balanced against other concerns and, in particular, that there has to be some proportionality between the amounts really in issue and cost awards.

[40] In that regard, I note that, however defined, “success” is not by itself any guarantee of cost recovery. In particular, included within Rule 57.01 are provisions expressly confirming, inter alia, that:

• a party’s success in a proceeding or step in a proceeding does not prevent the court from awarding costs against the party in a proper case – see Rule 57.01(2); and

• nothing in the rule, (or Rules 57.02 to 57.07 for that matter), limits the authority of the court under s.131 of the Courts of Justice Act to award or refuse costs in respect of a particular issue or part of a proceeding.

[41] Moreover, the need for all involved in our justice system to focus on cost control and proportionality is indeed something also emphasized by our Rules of Civil Procedure. For example, this is reflected in:

• Rule 1.04(1), the provisions of which include a direction to construe the rules, (and therefore Rule 57.01 as well), in a manner that will promote securing “the least expensive” determination of a civil proceeding on its merits; and

• Rule 1.04(1.1), which obliges the court to apply the rules and make orders, (including those relating to cost awards), in a manner “proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding”.

[42] Courts therefore understandably are concerned when requests for cost indemnification are markedly disproportionate to the trier of fact’s objective assessment of what a case really was worth.[^1]

[43] Having said that, the principle of proportionality does not create any kind of effective “cap” on the quantum of costs that reasonably may be awarded, having regard to all the circumstances of a case. The amount of damages recovered is only one of many elements to be considered, and courts frequently have awarded plaintiffs costs in excess of the damages recovered. See Doyle v. Sparrow (1979), 1979 2024 (ON CA), 27 O.R. (2d) 206 (C.A.), at paragraph 10, and Volchuk Estate v. Kotsis, [2007] O.J. No. 4790 (S.C.J.), at paragraphs 24-26.

[44] In this case, for example, the $158,760.27 in costs sought by the plaintiffs obviously exceeds the jury’s preliminary total damage assessment of $120,700, and greatly exceeds, (by a factor of five), the plaintiffs’ actual judgment for $31,300. However, I think it completely unrealistic to think that a claim of this nature could be properly advanced through to completion of a two week trial without incurring total partial indemnified legal costs, (including disbursements), well in excess of $31,300.

[45] While disproportionality between expenditure and result therefore must not be ignored, (e.g., because doing so would eliminate an important incentive for litigants to engage in ongoing cost-benefit analysis, risk assessment and self-restraint), it also cannot be elevated to a decisive and controlling concern without implications for access to justice.

[46] As for other concerns relating to the “hours spent” by plaintiff counsel, I am mindful of the general admonition, voiced by Justice Nordheimer in Basedo v. University Health Network, [2002] O.J. No. 597 (S.C.J.), but embraced by our Court of Appeal in Boucher v. Public Accountants Council (Ontario), supra, at paragraph 27, that “it is not the role of the court to second-guess the time spent by counsel unless it is manifestly unreasonable in the sense that the total time spent is clearly excessive or the matter has been overly lawyered”.

[47] In that regard, I am not troubled by a number of criticisms advanced by defence counsel. For example:

• I think the involvement of junior counsel before and at trial was reasonable, for a case of this nature, and no doubt helped to move the matter forward in a much more efficient and organized manner. (Based on my observations at trial, I agree with the plaintiffs’ submission that their claims generally were advanced in an expeditious, clear and concise manner. Examinations and cross-examinations were focused and to the point, which in no small measure helped to complete the trial in less than its allocated time.)

• Similarly, the total amount sought in relation to copying charges does not strike me as being unreasonable in the circumstances, even if plaintiff counsel failed to supply precise mathematical calculations.

[48] However, it seems to me that there are some legitimate concerns about a degree of effective over-lawyering inherent in one senior counsel (Mr Mays) assuming carriage of the matter from other senior counsel (Ms Foreman). In particular:

• a review of the time dockets provided by plaintiff counsel indicates that Ms Foreman was the lawyer principally responsible for the file over a period of four years, (from August of 2010 to August of 2014), without any involvement whatsoever of Mr Mays;

• apart from isolated docket entries on August 13 and 14, 2014, (totaling only 1.9 hours of time), Mr Mays apparently spent no time whatsoever on the file until September 3, 2014, which was the last day on which Mr Mays seems to have docketed any time to the matter; and

• in my view, that transfer of carriage from one senior lawyer to another almost certainly did not take place without duplication of effort as Mr Mays worked to acquire familiarity with the file before the scheduled trial date in October of 2014; familiarity already developed and possessed by Ms Foreman during more than four years of working on the matter.

[49] There no doubt may be an entirely reasonable explanation as to why Mr Mays assumed carriage of the file from Ms Foreman, shortly before trial, but it seems to me that the remaining defendants should not have to pay for duplication of effort inherent in the transfer, and no allowance seems to have been made for that.

[50] I also am troubled by numerous indications that, in preparation of the plaintiffs’ bill of costs, less than adequate care seems to have been taken to confine the current claim for costs to fees and disbursements incurred in pursuit of the plaintiffs’ tort claims against the remaining defendants.

[51] For example, time docket entries making up the total of $112,334.00 in partial indemnity legal fees sought from the remaining defendants include many entries relating to:

• an apparently extended dispute between the plaintiffs and their own accident benefits insurer, including time spent on communications with an adjuster and counsel representing the accident benefit insurer, completion of a FSCO arbitration, (with a corresponding disbursement also included in the plaintiffs’ current claim for costs), settlement negotiations, and settlement documentation; and

• pursuit of the plaintiffs’ separate claim against their own insurer pursuant to the “uninsured driver” of their own motor vehicle accident policy, (a claim simultaneously advanced in this same tort action against the remaining defendants but settled a month before trial), including communications with the insurer’s counsel, settlement negotiations, and settlement documentation.[^2]

[52] It is difficult to quantify the extent of such entries with precision, as the time dockets are sometimes specific but also frequently make generic reference to “counsel” and “opposing counsel”, but it seems clear to me that any and all costs of this nature should not be sought from the remaining defendants. Those defendants should be held accountable for the costs incurred by the plaintiffs in having to pursue a claim against those defendants, but not for the costs incurred by the plaintiffs primarily in pursuit of claims against others.

[53] A review of the time dockets offered in support of the plaintiffs’ cost claims raises other concerns as well, such as the thousands of dollars in time apparently devoted to research, discussion and preparation of a motion to strike the jury notice; a motion that was never advanced before or at trial. I feel to see why the remaining defendants reasonably should be obliged to pay for such costs.

[54] For the above reasons, I am not inclined to accept the time dockets or associated claim for legal fees at face value, in terms of justifying the plaintiffs’ cost claims against the remaining defendants.

[55] With the exception of the FSCO arbitration disbursement, the other disbursements incurred by the plaintiffs nevertheless seem properly sought from the remaining defendants. Moreover, apart from the copying charges, they were not really questioned or challenged by the remaining defendants, apart from general and overriding concerns expressed about proportionality and reasonable expectations.

REASONABLE EXPECTATIONS OF UNSUCCESSFUL PARTY – RULE 57.01(1)(0.b)

[56] As noted above, I have been provided with a suggested indication of the cost expectations of the remaining defendants, in the form of a partial indemnity bill of costs and supporting client ledger entries prepared by their counsel.

[57] The remaining defendants essentially rely on that bill of costs to say that they would have sought only $40,495.84 in partial indemnity fees, disbursements and applicable HST from the plaintiffs, (approximately one quarter of the total amount now sought by the plaintiffs from the remaining defendants), had they been the ones entitled to costs of the litigation.

[58] The reasonable expectations of an unsuccessful party are an important consideration.

[59] For a number of reasons, however, it seems to me that this proffered evidence of the remaining defendants’ “reasonable expectations” does not necessarily suggest a reliable indication of what the plaintiffs correspondingly and reasonably ought to receive as cost compensation, in the particular circumstances of this case.

[60] First, I agree with the submission by plaintiff counsel that their task was different and more complex than that of defence counsel. They were obliged to mount and present a complete case, through the preparation of numerous lay and expert witnesses. In contrast, defence counsel relied primarily on cross-examination of the plaintiffs’ witnesses, calling far fewer witnesses of his own.

[61] Second, as emphasized by the plaintiffs, defence counsel repeatedly seems to have voluntarily waived or reduced the fees he charged; i.e., not charging fees in relation to all the time actually spent on his file. This in turn means that the work actually done by defence counsel on the file may have been closer in extent to the efforts expended by plaintiff counsel.

[62] Third, it seems to me that there were “free rider” aspects to the manner in which the remaining defendants conducted their defence of the litigation. In particular:

• I could not help but notice at trial that the expert witnesses called by the remaining defendants had prepared their reports at the request of counsel representing the defendant State Farm Mutual Insurance Company, rather than counsel for the remaining defendants. The obvious inference is that it was the defendant State Farm that incurred much of the legal fees and disbursements associated with identification, retention, instruction and preparation of the experts for trial, (prior to the settlement reached between the plaintiffs and State Farm), with the remaining defendants then obtaining the free benefit of that ground work when they effectively were obliged to assume primary carriage of the defence following State Farm’s departure from the litigation.

• Similarly, as noted above, the remaining defendants apparently were content to have State Farm counsel initiate and carry out further oral discovery examinations shortly before trial, (presumably to supplement the somewhat dated information obtained during the original discovery examinations completed almost three years earlier). The remaining defendants accordingly did not have to pay their counsel to engage in such trial preparation and elicit such additional information, (although it then was equally available for use by their counsel when the matter went to trial).

• In the circumstances, I have no doubt that the remaining defendants’ legal fees and disbursements would have been much greater had they alone been compelled to identify, retain, instruct and prepare their own expert witnesses throughout the course of the litigation, and/or independently engage in advisable trial preparation such as further oral discovery examinations.

APPORTIONMENT OF LIABILITY – RULE 57.01(1)(b)

[63] Rule 57.01(1)(b) permits the court to consider, in exercising its cost discretion, “the apportionment of liability”.

[64] Strictly speaking, “liability” issues were decided entirely in the plaintiffs’ favour, insofar as the jury found the defendants 100 percent responsible for the underlying motor vehicle accident.

[65] I am mindful of the reality that, in exercising their discretion in relation to cost determinations, courts sometimes have had regard to the broader question of whether success in relation to particular issues was divided; i.e., either through a broad interpretation of Rule 57.01(1)(b) that does not restrict focus to “liability” per se, or resort to the court’s broad discretion under s.131 of the Courts of Justice Act, supra.

[66] In my view, certain aspects of the remaining defendants’ cost submissions invite such an analysis.

[67] For example, it was emphasized that the plaintiffs spent considerable time at trial trying to justify substantial claims for future loss of income, (through evidence suggesting that Mr Doolittle’s injuries had resulted in a failure to obtain a promotion, an inability to work overtime, and the probability of early retirement), but most of such claims were rejected by the jury. The obvious suggestion is that the plaintiffs should not recover costs for time and disbursements devoted to the advancement of such rejected claims and arguments.

[68] In making my cost determinations, I nevertheless am not inclined to place much reliance on such considerations in the circumstances of this case.

[69] As emphasized by our Court of Appeal in Oakville Storage & Forwarders Ltd. v. Canadian National Railway Co. (1991), 5 O.R. (3d), leave to appeal to the Supreme Court of Canada refused (1992), 6 O.R. (3d) xiii (note), and Skye v. Matthews (1996), 1996 1187 (ON CA), 47 C.P.C. (3d) 222 (C.A.), while distributive cost awards are still a possibility, they are rarely if ever appropriate.

[70] As indicated in Mayer v. 1474479 Ontario Inc., supra, I think that reticence is particularly appropriate in matters decided by a jury, which is not obliged to give reasons for their decision. In such circumstances, parties and the court inherently can do little more than speculate, (perhaps incorrectly), when it comes to assessment of whether the jury placed much if any value on certain evidence and arguments.

COMPLEXITY OF PROCEEDING AND IMPORTANCE OF ISSUES – RULES 57.01(1)(c) AND RULES 57.01(1)(d)

[71] Rules 57.01(1)(c) and 57.01(1)(d) permit the court to consider, in exercising its cost discretion, “the complexity of the proceeding” and “the importance of the issues”.

[72] For present purposes, I accept that certain aspects of this litigation involved moderately complex matters. The case realistically could not have been advanced or met without attention being devoted, for example, to issues of medical science, pension entitlements and present values well beyond the ordinary experience of an average juror.

[73] On the other hand, other aspects of the case, such as the credibility and reliability of the various liability witnesses, and the credibility and reliability of Mr and Mrs Doolittle in relation to their evidence concerning the pain, discomfort and restrictions experienced by Mr Doolittle, and their impact on relationships with his family, were not inherently complex.

[74] I also accept that the issues in this case were of fundamental importance to the parties, even if they did not raise matters of broader significance.

CONDUCT AND/OR STEPS THAT LENGTHENED PROCEEDING – RULES 57.01(1)(e) AND 57.01(1)(f)

[75] Rule 57.01(1)(e) permits the court to consider, in exercising its cost discretion, “the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding”.

[76] Rule 57.01(1)(f) permits the court to consider whether any step in the proceeding was “improper, vexatious or unnecessary”, or “taken through negligence, mistake or excessive caution”.

[77] In my view, there is nothing before me to suggest that the plaintiffs unnecessarily lengthened the proceedings in any way. To the contrary, and as noted above, plaintiff counsel presented the plaintiffs’ claim in an organized and efficient manner that helped to complete the trial in less than its allotted time.

[78] Defence counsel approached the case in a similarly efficient manner, and extended a large measure of co-operation in admitting various documents and facts.

[79] The remaining defendants nevertheless did choose to pursue an unsuccessful motion for a declaration that certain aspects of the plaintiffs’ claims were barred by the legislated statutory “threshold”, and that necessarily resulted in more time and expense being devoted to the matter, which should be taken into account.

[80] Plaintiff counsel also suggested that the remaining defendants somehow should be faulted for not agreeing to strike the jury notice filed by State Farm, after its departure from the litigation. This in turn was said by plaintiff counsel to have prevented a significant reduction in trial time and party costs; (i.e., by the remaining defendants’ supposedly unreasonable insistence on what plaintiff counsel had characterized as the “most expensive form of trial devised by our society”).

[81] In my view, however, that was not a proper submission, nor a relevant consideration in the determination of costs.

[82] Pursuant to s.108 of the Courts of Justice Act, R.S.O. 1990, c.C.43, and Rule 47 of the Rules of Civil Procedure, litigants in Ontario generally have the right to have issues of fact and/or damage assessments tried and determined by a jury, or by a judge sitting alone. Our law therefore regards both methods of dispute resolution as equally valid and meritorious, and neither that long-standing principle nor a party’s exercise of legislated rights in that regard should be undermined by indirect assaults mounted through requests for associated cost sanctions.

[83] In this case, the remaining defendants did not need to file their own independent jury notice once State Farm already had committed the matter to trial by jury. Nor were they obliged to agree with the plaintiffs’ desired mode of trial, after the claim against State Farm was settled.

[84] Different considerations apply in relation to the remaining defendants’ failure to admit liability, but this is something properly addressed under the next sub-heading of relevant cost considerations.

REFUSAL TO MAKE APPROPRIATE ADMISSIONS – RULE 57.01(1)(g)

[85] As emphasized by the plaintiffs, the remaining defendants refused to admit liability for the underlying motor vehicle accident until the trial was well underway.

[86] In particular, the young defendant driver, Walter Overbeek, maintained throughout the course of pleadings, oral discovery examinations, and his examination-in-chief that he had the right of away at the time of the accident, according to the traffic light controlling the relevant intersection.

[87] He held to that position despite considerable evidence to the contrary, including:

• evidence from Mr Doolittle and his passenger Mr Segui that they both definitely saw the green light facing them as Mr Doolittle proceeded into the relevant intersection, following a tractor trailer cab that similarly had responded to the green light before them;

• evidence from the investigating police officer, Constable Morris, that Walter Overbeek admitted to police on the day of the accident that he in fact ran the red light;

• evidence that Walter Overbeek was charged and ticketed under the Highway Traffic Act with failing to stop at a red traffic light, and subsequently entered a formal plea of “guilty” to that charge before then paying the ticket, notwithstanding time for reflection and consultation with legal counsel.

[88] It was only during cross-examination at trial that Walter Overbeek eventually admitted, in the context of this legal proceeding, that he was facing a red traffic light at the time of the accident and failed to stop. In particular, Mr Overbeek finally admitted that he indeed “had a red light”, went “through that red light”, and was “at fault for the motor vehicle accident”.

[89] Not surprisingly, the jury then found the remaining defendants 100 percent liable for the underlying accident.

[90] I do not share the view of defence counsel that “very little time at trial was spent dealing with the issue of liability”, or accept the corresponding suggestion that the belated nature of the defendants’ liability admission should have little bearing on determination of an appropriate cost award.

[91] It is true that, at trial, more evidence was directed towards the issue of damages than the issue of liability.

[92] However, the reality is that the possibility of an adverse or divided liability finding presented an additional significant risk to the plaintiffs.

[93] It therefore was a risk that had to be taken seriously, and addressed properly and repeatedly by plaintiff counsel through the course of this litigation; e.g., through investigation, (including efforts to obtain documentation and information relating to Walter Overbeek’s Highway Traffic Act charge and its disposition), oral discovery examinations, the preparation and calling of multiple liability witnesses at trial, (including Mr Segui and Constable Morris to supplement the liability evidence of Mr Doolittle), the preparation of exhibits and demonstrative evidence to confirm and explain the nature of the relevant intersection to the jury, and preparation for the cross-examination of Walter Overbeek.

[94] All of that effort and associated legal expense could have been avoided by a timely admission by the remaining defendants that Walter Overbeek was entirely responsible for the underlying accident.

ANY OTHER MATTER RELEVANT TO COSTS – RULE 57.01(1)(i)

[95] In this case, cost submissions under this broad residual heading focused primarily on the plaintiffs’ palpable frustration with the remaining defendants’ effective refusal, throughout the litigation, to respond to settlement overtures, participate in settlement discussions, or advance any settlement offers.

[96] Examples of the plaintiffs’ criticisms in that regard are described above, in a general way, in paragraph 11. However, further particulars of matters relied upon by the plaintiffs include the following:

• In September of 2010, counsel for the remaining defendants sent plaintiff counsel a letter advising that his client’s vehicle was not insured at the time of the accident, requesting information about the plaintiffs’ injuries and alleged damages, and indicating a willingness to negotiate “a fair resolution”.

• In January and February of 2012, plaintiff counsel and counsel for State Farm repeatedly suggested mediation of the parties’ dispute, indicating that their respective clients were agreeable to such a process. Counsel for the remaining defendants eventually responded in late February, through a letter indicating his opinion that scheduling of a mediation would be premature prior to receiving the results of a pending independent medical examination.

• In November of 2012, plaintiff counsel wrote again to counsel for State Farm and counsel for the remaining defendants, renewing the suggestion of mediation “pursuant to s.258 of the Insurance Act”.

• In late June of 2014, the matter proceeded to a pre-trial, during which the presiding justice made comments which prompted another letter from plaintiff counsel to opposing counsel, requesting participation in a mediation. The letter contained an indication that the plaintiffs intended to rely on a failure of either defendant to participate in a mediation when arguing costs following trial of the action.

• By early August of 2014, counsel for the remaining defendants still had not responded to written correspondence and telephone messages from plaintiff counsel, following up on the request for discussions to resolve the matter. Plaintiff counsel wrote again, on August 4, 2014, requesting an indication as to whether counsel for the remaining defendants had instructions concerning attendance at a mediation or settlement conference. Counsel for the remaining defendants responded with a letter the next day, advising that his present instructions were to proceed to trial, and indicating that he would notify plaintiff counsel if there was any change in those instructions.

• On August 18, 2014, the plaintiffs served the remaining defendants with a formal offer to settle pursuant to Rule 49. The terms of the offer included provisions whereby the remaining defendants would pay the plaintiffs “$350,000 on account of all claims for damages”, together with interest and costs on a partial indemnity basis.

• On September 18, 2014, (ten days after reaching settlement vis-à-vis State Farm), the plaintiffs gave the remaining defendants written notice that the plaintiffs’ earlier settlement offer was withdrawn, and served another formal offer to settle pursuant to Rule 49. That new offer included provisions whereby the remaining defendants would pay the plaintiffs “$160,000 on account of all claims for damages”, together with interest and costs on a partial indemnity basis.

• On September 30, 2014, (a week before jury selection), plaintiff counsel wrote counsel for the remaining defendants to confirm that they had not yet presented any form of offer, and to encourage the presentation of any such offer “sooner rather than later” as trial costs were about to escalate significantly.

• On October 4, 2014, (two days before jury selection), plaintiff counsel sent counsel for the remaining defendants an email confirming that the plaintiffs had once again offered to engage in settlement discussions, that the remaining defendants had once again refused, and that the remaining defendants still had never made any form of offer to settle. (The same email noted the remaining defendants’ rejection of the plaintiffs’ “offer” to proceed without a jury.) Plaintiff counsel confirmed that the plaintiffs accordingly had been left with no option except proceeding to trial with a jury.

• That same day, (October 4, 2014), counsel for the remaining defendants responded with an email apologizing that no offer was forthcoming from his clients, coupled with an explanation that his clients had “strong personal beliefs which will not permit them to make an offer”, and an acknowledgment that their position “may be contrary to their best interests”. This prompted a further email from plaintiff counsel, opining that the law governing civil cost awards seemed designed “to reward those who try to be reasonable and punish those that appear to be unreasonable”, that the plaintiffs were being reasonable while the remaining defendants were not “at any level”, and that the remaining defendants were “squandering public money”.

• On October 10, 2014, (between jury selection and the resumption of trial), plaintiff counsel sent a further email confirming, inter alia, that “despite a renewed invitation from the plaintiffs”, the remaining defendants had directed their counsel “not to negotiate this matter”, and had “not offered to pay any amount of money in an effort to resolve this matter”.

• On October 13, 2014, (the day before resumption of trial), plaintiff counsel then sent a further email, indicating that the plaintiffs had provided instructions to extend a further settlement offer, whereby the remaining defendants would pay the plaintiffs the all-inclusive sum of $150,000. The offer was to remain open until 9am the next morning, and all other offers would be withdrawn immediately after the commencement of evidence presentation.

• On October 19, 2014, (i.e., during the course of trial), counsel for the remaining defendants, (responding to an earlier email from plaintiff counsel about procedural matters), then sent an email mentioning that his clients’ principal did “not seem inclined to offer anything close to what [the plaintiffs] are seeking”, and that the parties seemed “too far apart to have meaningful resolution discussions”. Plaintiff counsel responded with a brief indication that the plaintiffs now felt better about their case than they had at the beginning of trial, and that, if anything, their settlement number now was higher than the plaintiffs’ last formal offer of $160,000, (plus interest and partial indemnity costs).

• On October 20, 2014, during a directed mid-trial settlement conference before another judge, the remaining defendants once again failed to put forward any offer to settle.

[97] The plaintiffs rely on such matters, (as well as the court’s ability to use costs as a sanction to deter abuse of process and unreasonable behavior, and authority emphasizing that litigants should engage in reasonable case assessment and settlement negotiation), in support of their request for partial indemnity costs in the amounts claimed.

[98] As noted above, the remaining defendants have proffered an explanation for their failure to make any settlement offers, and they generally deny having acted unreasonably in any manner relevant to a determination of the costs to be received by the plaintiffs.

[99] While I am not without sympathy for the obvious frustration experienced by the plaintiffs and their counsel, I find the plaintiffs’ submissions about their settlement overtures and offers, and the remaining defendants’ perceived intransigence in response, to be problematic for a number of reasons.

[100] First, although the plaintiffs fault the remaining defendants for not participating in a mediation pursuant to s.258.6 of the Insurance Act, supra, as requested, and s.258.6(2) directs the court to consider a person’s “failure to comply” with that section in awarding costs, the remaining defendants in fact had no obligations with which they had to comply pursuant to that section. In particular:

• Subsection 258.6(1) says that “a person making a claim for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile”, and “an insurer that is defending an action in respect of the claim on behalf of an insured or receives a notice under clause 258.3(1)(b) in respect of the claim”, shall participate in a mediation of the claim, in accordance with the procedures prescribed by the regulations, “on the request of either of them”. [Emphasis added.]

• The simple reality is that none of the remaining defendants was “a person making a claim” or “an insurer”. They were all uninsured defendants, who were responding to the action with their own resources, without the support of an insurer. The remaining defendants accordingly fell into neither of the two categories of litigants upon whom s.258.6 imposes an obligation to mediate.

• It follows that the remaining defendants cannot be penalized in costs, pursuant to s.258.6(2) of the Insurance Act, supra, for failing to comply with an obligation pursuant to s.258.6(1) which they never had.

[101] Second, as the plaintiffs themselves expressly acknowledge in their written cost submissions, “the Overbeek Defendants were not obligated to enter into settlement discussions”. In that regard:

• Our Court of Appeal repeatedly has emphasized that, under our system of law, defendants are entitled to put plaintiffs to the proof of their claims, and there accordingly is no obligation on defendants to admit liability, settle damages, or settle an action. In short, defendants are entitled to defend a case, and they are not required to settle it. Apart from the operation of Rule 49.10, such conduct therefore normally does not attract cost sanctions in the form of elevated or enhanced adverse cost awards, unless there is some other indication of inappropriate behavior, (such as use of the judicial process to harass an opponent, or some other demonstrated abuse of process). See, for example: Foulis v. Robinson, supra, at p.776; and Mortimer v. Cameron, supra, at paragraphs 66-68.

• In my view, the first instance authorities relied upon by the plaintiffs inherently are incapable of altering that settled appellate law, and otherwise offer little support for adoption of the cost approach suggested by the plaintiffs in the circumstances of this case. For example:

o The plaintiffs relied on certain comments in Shier v. Fiume, 1991 7188 (ON SC), [1991] O.J. No. 2367 (Gen.Div.), at paragraph 9, rhetorically asking whether a person, entitled to his day in court, was “entitled with immunity to force others into court with him, with all the attendance costs and expenses which litigation today involves”, “when he does not have an arguable case”. However, the presiding judge then expressly recognized, in the very next paragraph, that “a defendant is not required to admit to a plaintiff’s case nor is there an obligation on a defendant to settle a plaintiff’s claim”. As I read the decision, the judge awarded costs on an exceptional solicitor and client basis because the defendant, (who offered no relevant evidence whatsoever to challenge the plaintiff’s claim in any way), clearly had “no arguable case”, and thereby effectively abused the court’s process by obliging all concerned to engage in a wholly unnecessary proceeding.

o The plaintiffs relied upon certain comments in Hamelin v. Wells, [1993] O.J. No. 2987 (S.C.J.), at paragraph 14, indicating that “to avoid long trials, it is incumbent on the party who is liable to make an assessment and in my view, make an offer in writing”, as the possible imposition of costs “may well bring the other side into a position of then making a realistic demand”. However, other comments in the judge’s oral cost reasons make it clear that he was highlighting the defendant’s failure to make an offer in response to defence counsel suggestions that the plaintiff should be faulted for pursuing an “inflated and exaggerated” claim throughout the proceedings. Nothing in the reasons suggests that the defendant was penalized in costs for failing to make a settlement offer.

o The plaintiffs relied upon an indication in Kalla v. Wolkowicz, [1994] O.J. No. 257 (S.C.J.), at paragraph 17, that the presiding judge would take a “failure … to negotiate settlement in a realistic way” into account when determining costs. However, I note that the judge was criticizing the manner in which the plaintiffs had advanced their claims, and not the defendants who had exercised their right to defend the action. Moreover, the judge apparently used the consideration only in support of a decision to deny costs on an elevated scale, as requested.

o The plaintiffs relied on Samson v. Lockwood, [1996] O.J. No. 750 (S.C.J.), and a suggestion therein, at paragraph 4, that litigants who make offers to settle should be awarded a cost premium while litigants who fail to make settlement offers should have their cost indemnification reduced. With respect, however, no authority is cited for such a proposition, the decision makes no reference to the relevant appellate authorities mentioned above, and the trial decision underlying the cost ruling was overturned on appeal. See Samson v. Lockwood (1998), 1998 1920 (ON CA), 40 O.R. (3d) 161 (C.A.).

• In the case before me, I find nothing in the remaining defendants’ behavior that might be characterized as harassment through litigation, or an abuse of process. Moreover, in my view, this was not an occasion where the defendants did “not have an arguable case”.

[102] Third, while the perceived intransigence of the remaining defendants undoubtedly may have been frustrating at the time of requested negotiations and extension of settlement offers, with the benefit of hindsight I find it difficult if not impossible to fault them for their conduct. In that regard:

• This is not a case where a party’s consideration and acceptance of extended offers would have resulted in an outcome more favorable to the party refusing to accept the offers, without the necessity of trial.

• The final judgment obtained by the plaintiffs obviously fell far short of the payment amounts demanded by the plaintiffs in their successive settlement offers.

• Even the jury’s preliminary damage assessment, prior to the application of statutory deductions and allowance for receipt of collateral benefits, fell short of the payment for damages being demanded by the plaintiffs.

• The undeniable reality is that the plaintiffs’ assessment of their case was mistaken. The remaining defendants’ modest assessment of the case, and their corresponding approach to settlement, ultimately was vindicated.

• On any realistic view of the situation, (bearing in mind the sums sought in the plaintiffs’ pleading and at trial, as well as the plaintiffs’ settlement offers), I am quite certain that the plaintiffs quickly and firmly would have rejected any offer by the remaining defendants to settle the case in exchange for a payment of $31,300, plus interest and costs on a partial indemnity basis. It would have taken far more generous offers from the remaining defendants to resolve the matter, or even signal that further settlement discussions might be worthwhile – but how can the remaining defendants be faulted for declining to extend any such offers? Doing so effectively would fault the remaining defendants for failing to offer more than the case turned out to be worth, which in my view simply cannot be right.

• Frankly, it seems to me that the relatively poor result obtained by the plaintiffs actually should make them somewhat thankful, if not extremely relieved, that the remaining defendants did fail or refuse to make any settlement offers. In particular, had the remaining defendants made a Rule 49 settlement offer suggesting a payment of even $31,400 plus interest and partial indemnity costs, (which certainly would not have been accepted), the plaintiffs now would be facing the presumptive Rule 49.10(2) consequences of having their partial indemnity cost claims limited to the date of such an offer, coupled with an obligation to pay the remaining defendants’ partial indemnity costs thereafter. It was the remaining defendants’ intransigence, and their repeated failure to extend offers in response to the plaintiffs’ numerous complaints in that regard, which effectively and ironically spared the plaintiffs from such a fate.

[103] For the above reasons, and notwithstanding the broad cost discretion conferred on the court by s.131 of the Courts of Justice Act, supra, and my ability pursuant to Rule 49.13 of the Rules of Civil Procedure to “take into account any offer to settle made in writing”, (regardless of Rule 49.10 compliance and satisfaction), I find the settlement offers or lack thereof in this case to be an entirely neutral consideration.

CONCLUSION

[104] It has been said many times, and in many ways, that discretionary cost determinations are far from an exact science.

[105] Again, the overall goal is to award costs in an amount that is fair and reasonable in a particular proceeding – having examined various factors such as those outlined in Rule 57.01.

[106] Having regard to all the circumstances of this particular case, including the various countervailing considerations explored in detail above, I think justice will be served if my discretion is exercised so as to award the plaintiffs their costs of the action on a partial indemnity basis, fixed in the all-inclusive amount of $110,000.

[107] An order shall go accordingly.

“Justice I. F. Leach”

Justice I. F. Leach

DATE: February 2, 2015

[^1]: In my view, the same considerations apply in relation to jury trials, for the reasons set forth in Mayer v. 1474479 Ontario Inc., 2014 ONSC 2622, [2014] O.J. No.1984 (S.C.J.), at paragraphs 38-40.

[^2]: Similar concerns were raised by the remaining defendants in relation to the time spent by plaintiff counsel in dealing with further oral examinations for discovery requested by the defendant State Farm shortly before trial in June of 2014; i.e., to supplement the original but somewhat dated oral discovery examinations conducted in October of 2011. However, it seems to me that this inherently raises some of the “free rider” concerns addressed below. In particular, although the further oral discovery examinations may have been initiated by counsel for State Farm, the remaining defendants then had the benefit of such efforts and additional information available to them when they were obliged to assume sole carriage of the defence following State Farm’s departure from the litigation.