CITATION: Pilotte v. Gilbert, 2016 ONSC 1334

COURT FILE NO.: 04-CV-265494CM2

DATE: 20160303

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: JULIE PILOTTE, BRUCE KERR, LORNA KERR and JOANNA KERR

Plaintiffs

– and –

GILBERT, WRIGHT & KIRBY BARRISTERS & SOLICITORS, IAN D. KIRBY, RAPHAEL PARTNERS LLP BARRISTERS AND SOLICITORS and G. JOSEPH FALCONERI

Defendants

BEFORE: CHAPNIK J.

COUNSEL: Jeffrey Wm. Strype and Kyle Smith William S. Zener

for the Plaintiffs for the Defendants

ENDORSEMENT ON COSTS

[1] At the conclusion of the trial in this matter, I requested counsel submit brief written submissions on costs (or a costs outline) and they did so.

[2] Judgment was subsequently released to the parties on January 22, 2016, dismissing the action against the defendants with costs. Paragraph 646 of the judgment reads:

I received but have not read the parties’ costs submissions. If the parties cannot agree on costs or wish to make further submissions, they may contact me through my secretarial assistant within 15 days of the release of these Reasons. Unless I hear from counsel within that time frame, I shall assume they have resolved the matter of costs.

[3] I have indeed received counsels’ Supplementary Costs Submissions and this is my decision on costs, taking into account all of the submissions proffered by the parties on this issue.

the amounts claimed

[4] This action, which was commenced in 2004, was litigated over a period of 11 years and involved numerous documents, lawyers, expert reports and court time.

[5] In her Costs Outline, the plaintiff sought a total amount of $1,071,928.08 for costs on a partial indemnity scale, including fees of $754,554.48, HST of $98,092.08 and $219,281.52 in disbursements. The total amount claimed for substantial recovery was $1,498,251.36. The calculation included hourly rates for work done by seven lawyers, five law clerks and an articling student. The number of hours they expended on the file totaled 3,041.35.

[6] Counsel for the defendants, William Zener, assessed the defendants’ partial indemnity fees, disbursements and HST in the sum of approximately $435,000. This included a total of 1,840 hours of work, 1,250 hours attributable to Mr. Zener and 150 and 440 hours respectively for two articling students. Notwithstanding this assessment, due to the particular circumstances of this case, the defendants, through LawPro, seek “as against Juli Pilotte costs if demanded fixed in the amount of $250,000 inclusive of disbursements and HST;” as well as “costs if demanded in the amount of $7,500 as against the Family Law claimants, Bruce, Lorna and Joanna Kerr.”

the law on costs

[7] The parties did not produce any cases on the matter of costs. They did, however, allude to some relevant legal principles in their submissions. It is well-settled law that an award of costs is a matter in the discretion of the judge by virtue of s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, and in light of the factors set out in Rule 57.01(1) of the Rules of Civil Procedure. The discretion of the court must be exercised in accordance with the specific facts and circumstances of the case and in relation to the factors set out in Rule 57.01(1): see Andersen v. St. Jude Medical Inc. (2006), 2006 CanLII 85158 (ON SCDC), 264 D.L.R. (4th) 557 (Div. Ct.), at para. 22.

[8] It is important to note that a successful party may reasonably expect to be awarded costs on a partial indemnity basis in any motion or trial. At the same time, a successful litigant has no right to costs, but only a reasonable expectation of costs. Although costs are ultimately in the discretion of the court, costs follow the event. The principle that costs follow the event should only be departed from in exceptional circumstances such as misconduct of the party, miscarriage in procedure, or oppressive or vexatious conduct of proceedings: see Yelda v. Vu, 2013 ONSC 5903 (leave to appeal denied, 2014 ONCA 353), at para. 11.

[9] A consideration of experience, rates charged and hours spent is appropriate in determining the quantum of costs, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case and with a view to balancing compensation of the successful party with the goal of fostering access to justice: see Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.).

[10] Under Rule 57.01(1)(i), the court may consider "any other matter relevant to the question of costs." This includes a party's financial position or situation of hardship. While impecuniosity and hardship should not eliminate or reduce a party's liability for costs, it is one of the factors the court may consider in exercising its discretion under s. 131 of the Courts of Justice Act in determining a reasonable amount of costs: see Balasundaram v. Alex Irvine Motors Ltd., 2012 ONSC 5840, at para. 14; Walsh v. 1124660 Ontario Limited, 2007 CanLII 27588 at paras. 15-20; Agius v. Home Depot Holdings Inc., 2011 ONSC 5272.

[11] At the same time, there are other cases where hardship or impecuniosity have not been held to be relevant. Indeed, Lauwers J. in Greenhalgh v. Doura-Dummer (Township), [2011] O.J. No. 1675 (S.C.), at para. 36 referenced, “the problem posed for the system of justice if the costs disincentive established by the Rules were to be displaced by a rule that routinely advantaged a party's hardship in the exercise of judicial discretion over costs.”

the plaintiff’s supplementary costs submissions

[12] In her submissions, the plaintiff contends that this court should deny the defendants their costs in this matter despite the fact that, in the normal course, costs follow the event, for the following reasons (in summary):

1. In the interest of justice, the plaintiff submits that this court ought “not to order a paraplegic, whose condition will, according to the evidence, deteriorate into the future (and who will require additional money for future care), pay costs because she sought compensation from the only source left to her.”

2. Mr. Kirby was defended by LawPro and not personally financially disadvantaged any more than his deductible.

3. No offers to settle were made by the defendants while the plaintiff made multiple offers to settle “within the defendant’s insurance policy limits.”

4. While Kirby’s oral evidence was found to be credible, “if he had made any written note in his file documenting his instructions from the plaintiff not to pursue an accident benefits claim there would have been no lawsuit in the first place.”

5. The plaintiff cannot properly comment on the defendants’ claim for costs as they submitted no formal Costs Outline.

6. There is no basis upon which the court can make any costs award against the Family Law Act claimants since their claims were not pursued at trial “nor, for that matter, at all.”

[13] I will deal with each of the plaintiff’s submissions seriatim.

Julie’s Hardship

[14] The plaintiff’s first submission is based on the fact that Julie “has suffered enough loss as a result of her car accident.” This court and the defendants have never been unsympathetic to Julie’s unfortunate circumstances as an “incomplete paraplegic”, as a result of the accident. However, she was found to be an alert and intelligent person who made certain choices in life – she chose to spend monies on certain things of her own accord; she chose to abandon the lawsuit against the tortfeasors and others; and she chose to maintain the lawsuit against Kirby and his law firm over a period of eleven plus years. She was represented by competent counsel throughout. Moreover, no evidence was proffered regarding the plaintiff’s legal expenses or overall financial situation.

[15] This allegation of “suffering” may engage sympathy but is not sufficient in these circumstances to displace the well-known rule, established for compelling policy reasons, that costs of a lawsuit in Canada follow the event.

The Matter of LawPro

[16] The second claim asserted by the plaintiff is the fact that Mr. Zener was retained by LawPro on behalf of the defendants. Mr. Zener was called to the bar in 1974 and his hourly rate payable by LawPro on behalf of the defendants is $350. On a partial indemnity scale (at two-thirds), the rate would be $233 per hour which represents the amount claimed. The rate charged for the defendants’ articling students was $60 per hour. Disbursements exceeded $60,000 (as opposed to the plaintiff’s disbursements of $219,281.52).

[17] In reducing the defendants’ claim for costs from the partial indemnity amount in the range of $435,000 to $250,000 inclusive of disbursements and HST, the defendants have taken various factors into account such as the reasonable expectations of the plaintiff (as opposed to that of her counsel), the need to balance the indemnity principle with access to justice and the overriding principle of reasonableness, all of which this court vigorously endorses.

[18] Moreover, the courts have confirmed the principle that when LawPro is successful in defending a case, it is entitled to its reasonable costs. See, for example, Marino v. L-Jalco Holdings Inc., [2007] O.J. No. 1066, at paras. 33-34. In that case, the plaintiffs discontinued a claim made against a solicitor (a Mr. Lawrynowicz) for negligence. The court found that expenses were incurred to defend serious allegations and the defendant was thus entitled to his costs on a substantial indemnity basis. At paras. 33 and 34, the court explained its reasoning as it applied to LawPro, as follows:

33 I begin the analysis by saying that I have ignored the factor that Mr. Lawrynowicz's defence was provided by LawPro, an insurer. In my opinion, the presence of insurance is not an appropriate consideration in deciding whether costs should be paid or not paid. One purpose of costs is to indemnify a party for the legal expense that he or she is liable to pay to a lawyer to prosecute or defend a law suit, and it seems to me that it is a collateral matter that the party who is being indemnified also has insurance to cover the lawyer's costs.

34 Similarly, the fact that the insurer who pays the lawyer has a claim to be reimbursed should the insured recover costs, again is a collateral matter that should not make a difference to whether costs are paid by the opposing party. …

See also, Fong v. Chan (1999), 46 O.R. (3d) 3 30 (C.A.) at paras. 5-6 re: in-house salaried lawyers.

[19] There is no substance to the allegation that because Mr. Kirby is only at risk financially for the deductible, costs should be waived against the plaintiff. This claim by the plaintiff is without merit.

The Offers to Settle

[20] Regarding the offers to settle, I agree with the plaintiff that the duty to make valid attempts at settlement is entrenched in the Solicitors Act. However, where no liability or misconduct is found after a trial and a defendant is successful in having a claim dismissed against him, the fact that the innocent party declined to offer to pay money to settle a meritless claim is simply not relevant.

[21] In any event, I am advised that the defendants offered a withdrawal of the action without costs on September 2, 2010, open for acceptance for 45 days. Since the offer was made some six years into the litigation, if accepted, as it turns out, it would have saved the plaintiff considerable costs; but it was not accepted.

[22] It is also noted that, although the plaintiff made submissions on closing to accept, if successful, the limits of the defendants’ insurance coverage, being $1 million plus costs, the last written demand proffered by the plaintiff was for $3.75 million, delivered on December 18, 2012 and open for acceptance until January 7, 2013. This claim by the plaintiff, based on the respective offers, does not hold water.

Written Instructions

[23] The plaintiff contends that if Kirby had obtained written negative instructions not to assert a claim for accident benefits, this lawsuit would have been avoided. It seems to me this is an attempt by the plaintiff to re-litigate this case. Not only is the plaintiff’s contention rooted in a very simplistic view of this rather complex case and set of circumstances, but this court has made findings of fact with respect to this issue based on the evidence and the relevant law.

[24] I confirm those findings of fact made pursuant to the Reasons for Judgment in this matter released January 22, 2016.

No Formal Costs Outline

[25] The plaintiff contends that she cannot review the hours or disbursements claimed by the defendants to determine if they are reasonable, since the defendants did not submit a formal Costs Outline. However, the defendants set out the reasons for this in their costs submissions as follows:

OVERVIEW: The actual costs incurred by the defendants in responding to the plaintiff’s claims have been very high. Due to the several adjournments sought by counsel for the plaintiff which necessitated final preparation for trial on three occasions and the other factors detailed below, a very large number of hours of counsel's time were consumed over the more than eleven years that elapsed from the time of issuance of the Statement of Claim. However, the defendants if successful will not be asking the Court to award costs on a mechanical calculation of hours and hourly rates. Rather, the defendants recognize that it may well not have been within the reasonable expectation of the plaintiff that costs for both sides would mount to the levels they did, levels which the defendants submit resulted not only from the delays and adjournments, but also the unfocussed approach taken by plaintiff’s counsel and their misunderstandings of the law in a number of key areas.

[26] I do not intend to reiterate the defendants’ claims of delays and adjournments and the plaintiff’s “unfocussed approach”. Suffice it to say that the amount of costs sought by the defendants represents approximately one sixth of the amount sought by counsel for the plaintiff; and in my view the amount is reasonable.

[27] Not only have the defendants not claimed costs on a substantial indemnity scale but they have significantly reduced the amount they are claiming on a partial indemnity scale. There is no hard and fast rule or form that must, in all cases, be adhered to when asserting a claim for costs. In this case, all of the required information necessary for the court to make an informed decision on costs is contained in the parties’ submissions. This argument of the plaintiff is without merit.

The Family Law Act Claims

[28] The Family Law Act claims were asserted by the plaintiff’s family members and abandoned at the commencement of trial. According to the plaintiff, the defendant “has not even shown that any time was spent on defending the Family Law Act claims that would not have been spent regardless to defend the main action.”

[29] It is the defendants’ submission however, that “preparation for all elements of the trial, including those claims remained necessary long after the Family Law Act claims should have been abandoned.” I accept the defendants’ submissions first, that it was made clear to plaintiff’s counsel that such claims would be resisted on the basis of a limitation defence and the merits prior to the amendment in 2008 to add those claimants to the plaintiff’s Statement of Claim; and second, that this necessitated three additional examinations for discovery, extensive review of the evidence, a limitations defence, and the delivery of a fresh Statement of Defence.

[30] These actions taken by the defendants after 2008 based on the plaintiff’s pleading amendment disprove the plaintiff’s statement that the defendants incurred no additional costs related to the Family Law Act claims. In my view, the sum of $7,500 in the circumstances, representing costs of the defendants related to the three Family Law Act claims, is, in my view, both reasonable and modest.

conclusion

[31] The overall objective of fixing costs is to arrive at an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: see Zesta Engineering Ltd. v. Cloutier, 2002 CanLII 25577 (ON CA), [2002] O.J. No. 4495, 21 C.C.E.L. (3d) 161 (C.A.).

[32] The plaintiff asks this court to exercise its discretion to order no costs payable to the successful defendant (or by inference, to reduce the amount of costs claimed).

[33] I have considered her submissions in light of the specific facts and circumstances of this case and in relation to the factors set out in Rule 57.01(1) of the Rules of Civil Procedure.

[34] In my view, the defendants’ claim for costs on a partial indemnity scale (and then reduced) is fair and reasonable, and within the reasonable expectation of the plaintiff given the volume of material filed and the factual complexity of this case. Further, there are no extraordinary circumstances that would lead this court to displace the longstanding principle that costs follow the event.

[35] Accordingly, an order shall issue that the plaintiff pay costs to the defendant in the all-inclusive sum of $250,000 plus $7,500 for the Family Law Act claims.

CHAPNIK J.

DATE: March 3, 2016