COURT FILE NO.: CV-09-0382-00

DATE: 2015 Dec 23

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

WADE BRETT COBB and ERICA MAE COBB

Plaintiffs

– and –

THE ESTATE OF MARTIN T. LONG

Defendant

K. Bonn and A. Hussein for the Plaintiffs

S. Baldwin, for the Defendant

HEARD: Submissions in writing

Belch, J.

COSTS DECISION

[1] Both parties claim costs. The primary issues are who is entitled to costs and in what amount? The decision is divided into two Parts.

PART ONE

[2] The Plaintiffs originally calculated fees on a substantial indemnity basis in the total amount of $466,505 plus HST, and on a partial indemnity basis, fees of $284,758 plus HST plus disbursements in each case in the amount of $141,381.05. They reduced their claim to $300,000 for fees plus GST/HST of $39,000 together with disbursements of $140,000 for a total amount of $479,000.

[3] The Defendant requests:

a. based on the Defendant’s first offer of April 3, 2012, fees of $143,062 plus HST on fees of $18,598.06, disbursements of $50,267.56 and HST of $6218.49 on disbursements, for a total of $218,146.11 inclusive, or in the alternative;

b. based on the Defendant’s second offer of March 13, 2014, fees of $134,833 plus HST on fees of $17,528.29, disbursements of $35,201.55 and HST on disbursements of $4279.81, for a total of $191,842.65 inclusive.

[4] For the reasons that follow, it is the decision of this court the Plaintiffs are entitled to costs in the amount of $250,000.00 for fees and $126,598.48 for disbursements together with HST where applicable.

BACKGROUND

[5] The Plaintiffs in this action are Wade Cobb and his wife Erica. The Defendant is the Estate of Martin T. Long. On July 8, 2008, Wade Cobb was operating his truck on a public road with his son seat belted in the rear seat. Martin Long drove his truck while he was impaired by alcohol, exited his driveway and failed to stop before entering the public roadway. Both trucks were involved in what was described as a frontal collision. Martin Long was charged with impaired driving and later convicted on his plea of guilty. Wade Cobb was taken to hospital with injuries, transferred to a second hospital, and released the next day after a CT scan revealed no broken bones. Erica brought her claim pursuant to the Family Law Act.

[6] Wade Cobb sued, seeking compensation for the injuries received, for past and future income loss, housekeeping, household maintenance and repair. In their Statement of Claim issued December 8, 2009, Wade sought general damages in the amount of one million, two hundred and fifty thousand dollars while Erica’s family law claim was for two hundred and fifty thousand dollars. The four week trial was heard by a court composed of judge and jury. Martin Long died before the trial commenced.

[7] On the evidence and submissions, the Court was satisfied Wade Cobb had suffered a permanent serious impairment of an important bodily function. He had experienced and continued to endure chronic pain. He could no longer perform the physical requirements associated with his construction business. His career path had been frustrated and he found it difficult to work which was unusual given the evidence of his past positive work ethic. The only major change in his life had been the motor vehicle accident. Mr. Cobb bore no responsibility for this accident; Martin Long was solely at fault and he acknowledged this by pleading guilty to a charge of impaired driving. The accident occurred seven years ago and during that intervening period of time, the Plaintiff had attempted to cope with the fallout from the accident and I was satisfied his impairment was permanent and dismissed the defence motion on threshold.

[8] On October 5, 2015, the jury delivered answers to the questions posed and returned with the verdict Wade Cobb was entitled to $220,000 consisting of $50,000 for general damages, $50,000 for past loss of income, $100,000 for future loss of income, past housekeeping loss of $5000, future housekeeping loss of $10,000 and $5000 for Erica’s Family Law Act claim.

[9] On June 29, 2010, when represented by different counsel, the Plaintiffs agreed to accept $152,000 from their Statutory Accident Benefits (SAB) insurer allocated by mutual understanding as follows: $130,000 for income replacement benefits, $20,000 for medicals and $2000 for costs. Their agreement was silent on any allocation for housekeeping. Prior to June 29, 2010, the Plaintiffs had received $29,300 for income replacement benefits and $9150 for past loss of housekeeping expenses. In passing, the court observes the income replacement benefits negotiated with their own insurer before trial are not dissimilar from the jury’s award after trial almost five years later.

[10] After two motions to determine what the Plaintiffs were entitled to when the jury’s award was necessarily adjusted to take into consideration what had been paid by the SAB insurer the court found the Defendant was obligated to pay a judgment in the amount of $34,000 including prejudgment interest of 3%. In arriving at the figure of $34,000, the court applied the former statutory deduction of $30,000 as opposed to the recently legislated $36,540 to the general damage award of $50,000. The prejudgment interest of 3% was determined with the court exercising its discretion under s. 130 of the Courts of Justice Act rather than accepting the Plaintiffs’ argument prejudgment interest should be calculated at 5%, the rate in place for much of period since the date of the accident and rejecting the Defendant’s position of .5% as set out in the current legislation.

OFFERS TO SETTLE

Plaintiffs

[11] On August 12, 2011, the Plaintiffs made an offer to settle of $575,000 including interest, for punitive, pecuniary and non-pecuniary damages, plus costs and disbursements to be agreed upon or assessed. This offer was open for acceptance for five days. It was not accepted by the defence. On November 19, 2012, the Plaintiffs made a second offer, increasing the amount to $750,000 and to remain open for acceptance until two minutes before the commencement of trial. On August 26, 2015, the Plaintiffs, through trial counsel, made a Rule 49 offer as follows: the Defendant shall pay to the Plaintiffs the total sum of $500,000 for all compensatory damages and interest; plus costs and disbursements to be agreed upon or as assessed by the trial judge. All punitive and exemplary damages against the Defendant are withdrawn. This offer to settle is open for acceptance until two minutes after the start of trial.

Defendant

[12] By correspondence dated April 3, 2012, counsel for the defence wrote, “we have instructions from our client to offer settlement in the amount of $40,000 plus consideration for interest and costs. This offer shall remain open for acceptance for a period of 30 days from its date.” That first offer was not accepted and on March 13, 2014, the Defendant made a second offer as follows:

(i) the Defendant shall pay the Plaintiffs the sum of $40,000 inclusive of all damages;

(ii) the Defendant shall pay the Plaintiffs’ prejudgment interest in an amount as assessed or agreed at 5% per annum on the amount in paragraph (i) from the date of notice of claim given to the Defendant from the Plaintiffs;

(iii) the Defendant shall pay the Plaintiffs their costs and disbursements in an amount as assessed or agreed on a partial indemnity basis incurred to the first day after this offer to settle is served;

(iv) the Plaintiffs shall pay the Defendant his costs and disbursements in an amount as assessed or agreed on a partial indemnity basis as incurred from the second day after this offer to settle is served;

(v) if this offer is accepted by the Plaintiffs within 30 days from the date it is served, the Plaintiffs shall not pay costs to the Defendant pursuant to paragraph (iv) of this offer.

(vi) this offer remains open for acceptance until five minutes after the commencement of trial of this matter.

[13] Neither party accepted an offer from the other and the matter proceeded to trial.

TRIAL

[14] The trial was vigorously contested by both sides. Numerous rulings on the admissibility of evidence were delivered with the defence being successful on most. Many motions were presented on issues ranging from the number of expert witnesses to be called to the use of demonstrative evidence, whether two witnesses from Alberta could testify via videoconference, punitive damages, whether both Dr. Lawson and Dr. Ko could testify in light of the fact they delivered one report signed by both, two motions for mistrial, a threshold motion on whether or not Mr. Cobb suffered serious and permanent impairments from the crash, one motion to settle the terms of judgment on the issues of deductibility for amounts received from the SAB insurer and statutory deductions for both general damages and the Family Law Act claim, a further motion after judgment regarding the deduction of housekeeping benefits received and disclosure of possible litigation insurance. The defence was successful on the motions dismissing punitive damages, house repair and establishing the credit for SABs received as against income replacement benefits awarded; the Plaintiffs were successful on all remaining motions.

[15] The defence called two witnesses; one was a spinal surgeon, the other a psychiatrist. The Plaintiff called 28 witnesses including a number of experts. The psychiatrist who testified for the defence interviewed Wade Cobb and administered psychological tests before delivering his report. In his report and as well, in his trial testimony, the psychiatrist opined Wade Cobb satisfied criteria for diagnosis as a malingerer according to DSM standards. He did not conclude Wade Cobb was a malingerer, testifying such a finding was within the exclusive prerogative of the jury. The issue, having been raised, meant the Plaintiffs felt compelled to respond with both psychiatric and psychological reports and testimony. This issue significantly increased the length of this trial and in the end no expert witness concluded Wade Cobb was a malingerer.

[16] The Plaintiffs’ original Statement of Claim sought general damages in the amount of one million, two hundred and fifty thousand dollars. The defence argued the Plaintiffs’ claims exceeded the Defendant’s policy limits and accordingly, the defence could not admit liability. Although liability was not vigorously pursued by the defence, the Plaintiffs were obliged to prove details of the accident, the criminal charge, plea and sentence. Two police officers and a toxicologist testified, all travelling from out of town.

[17] In pursuing the issue of costs, the defence submits several witnesses called by the Plaintiffs presented evidence of marginal value. It is the court’s observation those witnesses so identified by the defence did not consume much of the trial time in testifying.

PLAINTIFFS’ POSITION ON COSTS

[18] The Plaintiffs make the following submissions:

(i) Martin Long was convicted in August 2009 of driving while impaired on July 8, 2008 at the time of the collision. Therefore, Mr. Cobb is a victim of a Criminal Code offence within the meaning of “victim” under the Victims’ Bill of Rights Act which in section 3(6) directs that in a civil action for damages, a judge who makes an order for costs in favour of the victim shall make the order on a solicitor and client basis, unless the judge considers that to do so would not be in the interest of justice.

(ii) Statutory deductibles are not considered for costs. See Rider v. Dydyk, 2007 ONCA 687, para. 23. This means when considering costs and whether or not the Plaintiffs’ recovery exceeded the defence offer, the Plaintiffs here achieved a verdict of $69,875 plus solicitor and client costs based on the Victims’ Bill of Rights Act. This is to be measured against the defence offer of $40,000 plus prejudgment interest in an amount to be agreed upon or 5% per year, plus the Plaintiffs’ costs as agreed upon or assessed on a partial indemnity basis. Further, see Wilson v. Cranley, 2013 ONSC 4302.

(iii) The value of the diminishing defence offer was uncertain and certainly less than the Plaintiffs’ verdict plus costs.

(iv) The Defendants offer is not a Rule 49.10 offer to settle because it was a lump sum offer to multiple Plaintiffs.

(v) The Plaintiffs submit as the Plaintiffs were successful in all but one motion. They are entitled to their costs for these multiple motions.

(vi) Further, the Plaintiffs’ Rule 49.10 offer to settle of $500,000 including interest plus costs, while admittedly more than the jury verdict of $220,000 before interest, was certainly not nominal.

(vii) Chronic pain cases are complicated, the Plaintiffs submit, and this case was made more complex by the defence psychiatric expert introducing the issue of malingering.

(viii) Rule 57.01 requires proportionality be considered, however the Plaintiffs argue it is not the only consideration.

(ix) Finally, costs must be fair and reasonable but the fact costs exceed the damages awarded does not render those costs inappropriate.

DEFENDANT’S POSITION ON COSTS

[19] The Defendant makes the following submissions:

(i) The judgment is more favourable to the Defendant than the Rule 49 offer to settle made in March 2014 of $40,000 plus prejudgment interest at 5% per annum and costs to the date of the offer which gives rise to the implication of Rule 49.10(2).

(ii) While Rider permits the Plaintiffs to assert the Defendant’s offer does not exceed the award including the statutory deductibles, this court must still consider the ratio in Rider, the consequences of the Plaintiffs’ refusal to mediate, the Defendant’s April 2012 offer as required by Rule 49.13, and the effect of Rule 57.01.

(iii) Rider stands for the proposition a Defendant is not presumptively entitled to costs from the date of the settlement offer if the amount of the award before the statutory deduction is more favourable than the Defendant’s offer to settle. It is a shield to protect the Plaintiff from paying costs by reason of an award reduced by the deductible. It is not a sword for a Plaintiff to claim costs when the net trial judgment is less favourable than a Rule 49.10(2) offer to settle. (See Swatridge v. Waters Estate, 2014 ONSC 5333)

(iv) The Defendant acknowledges Rider suggests it is not presumptively entitled to costs, however, the following factors support a finding the Defendant is entitled to costs of this proceeding.

(v) Regarding mediation, section 258.6 of the Insurance Act provides that parties to a bodily injury action arising from the use of an automobile shall participate in mediation on request.

(vi) The Defendant relies on Keam v. Caddey, 2010 ONCA 565.

(vii) The purpose of Rule 49 is to encourage parties to make reasonable offers to settle.

(viii) Rule 57.01 provides the court may consider conduct that lengthened the duration of the proceeding.

(ix) Depending on which of the Defendant’s offers the court accepts, the Defendant claims costs of $218,146.11 or in the alternative, costs of $191,842.65.

REPLIES OF THE PARTIES

[20] On December 1, 2015 counsel for the Defendant replied as follows:

(i) The Plaintiff improperly relies upon the Victims’ Bill of Rights Act.

(ii) The Plaintiffs improperly rely upon Rider for entitlement to costs.

(iii) Regarding offers that diminish, the case of Hayden states that diminishing offers do not necessarily disqualify an offer from Rule 49 consideration.

(iv) The Plaintiffs’ bill of costs was challenged for several reasons including excessive hours, lack of docket entries, and questionable disbursements.

[21] On December 2, 2015, the Plaintiffs reply:

(i) The Defendant fails to acknowledge cases that follow Rider awarding costs to plaintiffs where the verdict exceeded the defence offer before application of the deductible.

(ii) Swatridge is distinguishable.

(iii) The Plaintiffs’ verdict is more favourable than the defence offer to settle.

(iv) The costs provision in the Victims’ Bill of Rights is section 3(6), not 3(1).

(v) The Plaintiffs never refused to mediate.

(vi) In Elbakhiet v. Palmer, 2014 ONCA 544, the Court of Appeal rejected a “near miss” policy regarding offers to settle.

(vii) The Defendant never clarified its offer before trial.

(viii) There is no law supporting the Defendant’s request for costs.

(ix) The time spent by counsel was reasonable given the length and complexity of the case.

(x) Expert witness costs were reasonable.

(xi) Medical illustrations were helpful.

(xii) Witness fees and travel expenses were reasonable.

(xiii) Trial transcripts were useful.

(xiv) Transportation of expert witnesses was necessary.

ANALYSIS AND CONCLUSION

[22] The positions of counsel for the parties and their respective replies, which have been abbreviated for inclusion here, demonstrate just how vigorously counsel pursued each and every piece of evidence and issue introduced at trial.

[23] Rule 57.01(3) provides when the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs.

[24] Addressing the Plaintiffs’ disbursements, I restrict my findings to the Defendant’s concerns.

[25] Likewise, I have no issue with the $6500 paid for Dr. Shapero.

[26] I disallow the disbursement of $5900 for experts not called as well as the disbursement for Lisa Terry also not called.

[27] The Defendant questions the disbursement for medical art in the amount of $7380.

[28] I would disallow the Plaintiffs’ disbursement for service of summons to witness upon their experts in the amount of $407 as unnecessary.

[29] The Plaintiffs’ disbursement for transporting expert witnesses from Toronto to trial in Belleville and return in the amount of $2300 is questioned as being too high.

[30] The court accepts the witness meals/refreshments disbursement as reasonable.

[31] The Defendant objects to the cost of mid-trial transcripts in the amount of $2332. This disbursement is disallowed.

[32] Applying the court’s findings to the Plaintiffs’ request for disbursements in the amount of $140,000, the court reduces the total claim for disbursements to $126,598.48.

[33] Had Plaintiffs’ counsel taken issue with the Defendant’s bill of costs, the court would have disallowed some expenditure for persons who did not testify.

RESPECTIVE OFFERS

[34] Neither party met or bettered its Rule 49 offer and the offers will not determine costs.

THE DECISION OF Rider v. Dykyk

[35] While the statutory deductions are subtracted from a jury verdict for the purpose of determining the amount payable for judgment purposes, the court is satisfied the same statutory deductions are included when fixing costs.

PROPORTIONALITY

[36] Rule 1.04 mandates the least expensive and most expeditious process and requires proportionality in all aspects of civil litigation.

[37] There is no doubt the issue of damages including quantum was important to both sides in this case.

[38] What is meant by the reference to “amount involved” in the Rule?

[39] This case satisfies both importance and complexity of the issues suggested by Rule 1.04(1.1).

[40] There are always questions when costs requested exceed the damages awarded at trial.

[41] The trial judge in Bonaiuto held that the mere fact costs exceed damages does not render the award inappropriate.

[42] After reviewing the bill of costs and Rule 57.01 criteria, the trial judge in that case found the claim reasonable.

[43] In our case, the Plaintiffs submitted bills of costs on substantial and partial indemnity bases.

[44] I find it unnecessary to determine the applicability of the Victims’ Bill of Rights Act.

[45] The Defendant, having not met or bettered its Rule 49 offer, makes it unnecessary to address which of its offers is correct and the court dismisses the Defendant’s claim for costs.

MEDIATION

[46] The Defendant argues the Plaintiffs should be censured for failing to mediate.

[47] It is the court’s view mediation obligations apply to both parties.

CONDUCT

[48] The Defendant submits the Plaintiffs’ conduct unnecessarily lengthened the proceedings.

[49] During the trial, the Defendant raised the issue of a person recording defence witness evidence.

[50] The court ordered seizure of the recording devices.

[51] The person recording was a member of the Law Society and advised the recording was for another case preparation.

[52] The mistrial motion lengthened the trial by approximately one day.

[53] A second mistrial motion concerned the Plaintiffs’ closing address and PowerPoint presentation.

[54] Finally, the Defendant submits the Plaintiffs failed to assess the value of their case.

CONCLUSION

[55] Taking all submissions into consideration, the court awards the Plaintiffs their costs and fixes their fees at $250,000.00 plus disbursements of $126,598.48 and HST where applicable.

PART TWO

[56] On the eve of releasing this decision, the court discovered section 267.5(9) of the Insurance Act had been amended effective August 1, 2015.

[57] Prior to August 1, 2015 section 267.5(9) read:

in an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, the determination of a party’s entitlement to costs shall be made without regard to the effect of paragraph three of subsection (7) on the amount of damages.

[58] Counsel for the defence submits the amendment changes the law governing costs.

[59] The Plaintiffs submit the amendment should not apply retroactively.

[60] In the event the Court of Appeal decides the amendments apply retroactively, each party should bear its own costs.

[61] Earlier rulings of this court are supported by authorities including Carlton Condominium Corporation No. 21 v. Minto Construction Limited and Ontario (Minister of Finance) v. Progressive Casualty.

[62] The parties conducted litigation under the law as it stood prior to the amendments.

[63] Authorities on statutory interpretation support the presumption against retroactivity.

[64] Justice Aitken wrote that applying new cost rules retroactively may unfairly alter the legal significance of past conduct.

[65] The court notes no transition provisions were included in the amendment.

[66] Interference with vested rights is generally avoided absent clear legislative direction.

[67] Justice Brown cited Hislop v. Canada, 2007 SCC 10.

[68] These litigants pursued their positions believing Rider remained good law.

[69] The issue is also addressed in El-Khodr v. Lackie, 2015 ONSC 4766.

[70] This was a complex case with numerous motions and expert witnesses.

[71] The late Martin Long was the sole cause of the motor vehicle accident and was convicted of impaired driving.

CONCLUSION

[72] The conclusion set out in Part One remains the court’s decision. However, if the amendments to the Insurance Act were applied retroactively, the court would exercise its discretion so that each side pays its own legal fees and disbursements.

Honourable Mr. Justice Douglas M. Belch

Released: December 23, 2015