Lambert v. Khan; 2016 ONSC 1340
COURT FILE NO.: CV-11-428388
DATE: 20160224
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Annie Lambert, Plaintiff
AND:
Mohammed Khan, The Estate of Jack Shievitz, Mohammed Ibrahim, Lombard Insurance Company, John Doe and TD Insurance Meloche Monnex, Defendants
BEFORE: S. F. Dunphy, J.
COUNSEL: M. Yermus and N. Barron, for the Plaintiff T. MacDonald, for the Defendants/Moving Parties M. Khan, Estate of Shievitz, M. Ibrahim and Lombard Insurance Company D. Koehn for Defendant/Responding Party TD Insurance Meloche Monnex
HEARD: December 21, 2015
COSTS ENDORSEMENT
[1] I released my reasons for dismissing this claim as against the defendant TD on January 6, 2016 (reported at 2016 ONSC 103). In that decision I reserved the matter of costs pending written submissions. I have now had an opportunity to review those submissions and these are my findings on costs. The “Lombard” defendants (all besides TD) made no submissions as to costs and indicated that they sought none.
[2] The plaintiff was injured while a passenger in a taxi. She claimed the injuries arose as a result of the fault of an unidentified or underinsured motorist. She claimed as passenger against the taxi driver and owner for their liability and against her own automobile insurer, TD, for the excess. TD defended by denying liability under the unidentified motorist benefit and cross-claimed against the taxi driver alleging, in part, that the failure to identify the allegedly unidentified at-fault motorist was his fault. The taxi driver and owner were insured by Lombard. After a period of time, they agreed to settle their potential exposure at the policy limit and entered into what is known as a “Pierringer Agreement” with the plaintiff. Under such an agreement, the plaintiff agrees to accept the contribution of one defendant while pursuing claims for further compensation against the other(s), taking the risk that the non-settling co-defendant may later be found to bear no liability or be entitled to contribution from the settling defendant greater than the amount the plaintiff accepted. In this case, the plaintiff agreed to take steps to procure a dismissal of the cross-claim as a condition of her settlement with Lombard. As it turns out, I found that TD was not liable to the plaintiff at all and the cross-claim was therefore moot.
[3] Much of the expense incurred in this action thereafter arose from the plaintiff’s decision to pursue additional recovery from TD while seeking to discharge its obligation to obtain a release of the cross-claim. TD was of course not a party to the Pierringer Agreement and derived no benefit from it at all. The plaintiff submits that the costs of the false starts, delay and numerous motions occasioned by her attempts to discharge her obligations under the Pierringer Agreement ought to be laid at the door of TD. TD takes issue with that charge.
[4] The following are the main issues that arise for consideration:
a. Ought TD be permitted to seek costs of the motion only or costs of the entire proceeding?
b. Is the successful defendant TD entitled to claim costs with respect to motions where costs have been already been dealt with?
c. Has the defendant TD been responsible for lengthening or delaying proceedings and thereby increasing costs?
d. What weight if any should be given to the amendment to the statement of claim seeking punitive damages?
e. What weight ought to be given to an offer to settle the action as a whole where the outcome of the motion has also decided the outcome of the action?
f. Having regard to the foregoing and to the Costs Outline filed,
i. What scale of costs should be applied? And
ii. What amount of costs should be allowed?
(a) Costs of Motion or Costs of Action?
[5] The plaintiff suggests that she ought not to be assessed costs for the entire action as this was not a foreseeable outcome of her motion for summary judgment. I cannot accept that submission. Her motion sought to dispose of the issue of liability entirely, leaving only quantification of damages for trial. If her claim on liability was dismissed, the ordinary and natural consequence of that finding was that her claim for damages would follow.
[6] TD successfully defended the motion with the result that the case against it was dismissed entirely. The decision in TD’s favour left nothing further to be litigated between the parties and, following the case of King Lofts Toronto I Ltd. v. Emmons, 2014 ONCA 215 the case was accordingly dismissed.
[7] The plaintiff put the entire action on the line in bringing the motion for summary judgment and must accept the costs consequences of having done so. I can see no merit in this submission. The claim has been dismissed and the defendant TD is entitled to costs of the motion and costs of the action. Apart from ensuring there is no double-counting, I see no particular reason to assess them separately.
(b) Costs of Prior Motions
[8] The plaintiff notes that costs are claimed in respect of a number of court attendances where, as is the normal practice, costs were dealt with. Obviously, the successful party cannot claim costs for a motion that have already been dealt with and ordered to be paid or received as the case may be. TD claims that it has not been paid all amounts ordered in prior motions and that in any event it is not double counting. Some matters of research and preparation for those motions related to the issues decided at the summary judgment motion.
[9] To a degree, both parties are right.
[10] Obviously, TD cannot purport to collect twice for preparing and appearing on the same motion where it has already been awarded costs. I don’t understand TD to be making that claim. As well, TD does not need a new order for payment of costs already awarded or some sort of “consolidation” award of costs. Prior orders can and should be taken out and may be enforced if unpaid in the usual way.
[11] There are two outstanding costs awards. One of them was made on June 10, 2015 for $1,500 for costs thrown away arose as a result of a motion that was adjourned due to an error of the plaintiff in confirming it. This had nothing to do with TD. Those costs were payable forthwith and remain unpaid. There is no need for me to deal with them further here – TD already has an enforceable order in its hands.
[12] The second award of costs was made by Justice Perrell on June 12, 2015 in the amount of $8,622.19. This arose from a withdrawal of a Rule 21 motion seeking to dismiss TD’s defence. I shall discuss that motion further below. Justice Perrell awarded costs for the withdrawn motion in any event of the summary judgment to be brought or in the cause if that motion was not brought. My judgment dismissing the action and motion for summary judgment is all that was required to make this costs award payable and I am not required to rule upon it here.
[13] These orders are payable whether or not the orders have been formally taken out. That being said, those orders should be issued and entered.
(c) Responsibility for lengthening or delaying proceedings
[14] The plaintiff takes the position that TD bears some responsibility for having lengthened the claim. In my view, the plaintiff’s position is misguided. TD was not required to dance to a tune called for by a Pierringer Agreement that it was not a party to. The plaintiff sought through a flurry of motions as well as a rather significant amendment to her Statement of Claim to turn the heat up on TD and cause it to abandon its defence of the action on the merits. While the plaintiff’s claim against TD was certainly not frivolous, it was frail and was ultimately dismissed. TD was entitled to defend the claim and, of course, its defence was successful. A significant amount of the costs incurred by TD appear to me to be directly attributable to TD’s reaction to initiatives undertaken by the plaintiff designed in some fashion to box TD out on the issue of liability.
[15] The plaintiff takes issue with the TD’s having resisted the Rule 21 motion. This motion was brought by the plaintiff to determine the issue of liability under TD’s policy without reference to any evidence. That motion was returnable on June 12, 2015. TD resisted the motion and filed affidavit evidence to demonstrate the facts that were in dispute. The plaintiff ultimately decided she could not succeed under the Rule 21 motion and withdrew it in favour of a motion for summary judgment instead.
[16] I cannot fault TD for resisting the Rule 21 motion. Testing the issue of liability in the absence of evidence would have put it at a considerable disadvantage. This motion could not have been decided under Rule 21. The fact that TD did not make its entire argument known in advance so that the plaintiff could choose a different path is putting too high an onus on the defendant to guide the plaintiff’s case for her. The plaintiff tried to take a shortcut motion that carried a potentially significant tactical advantage. TD parried that effort. The delay and costs attributed to that failed initiative are not the fault of TD in any way.
[17] Costs of this withdrawn motion have already been dealt with by order of Perrell J. and been awarded to TD. That matter has already been disposed of. TD cannot claim more costs for that motion any more than the plaintiff can, in effect, try to get some of those costs back here by re-arguing the costs liability already decided by Perrell J.
[18] There is no merit to the plaintiff’s submissions concerning TD’s response to the Rule 21 motion.
[19] The plaintiff also brought a motion to enforce the case timetable that was returnable on June 10, 2015. By the time the motion came to be heard, all of the issues had been resolved: the mediation had taken place and TD had been discovered. There remained only the issue of the cross-claim (which was only the plaintiff’s concern by virtue of the Pierringer Agreement).
[20] The June 10 motion had to be adjourned to October 8, 2015 due to an error of the plaintiff’s in failing to confirm it properly by listing TD’s responding material. I can hardly fault TD for the plaintiff’s error particularly where the costs have already been dealt with.
[21] As to the overall motion – being a motion to enforce a case timetable – it appears to have been quite unnecessary based upon the material before me. The discovery request was agreed to within a week and mediation was scheduled and held before the motion was returnable. I make no finding about this motion either way as I have neither heard it on its merits nor seem more than the parties’ divergent description of it in their submissions. Nothing in those descriptions would raise any issues in my mind that would impact upon TD’s claim for costs positively or negatively.
[22] The plaintiff suggests that this motion had some merit at its origin at least because she was seeking to fulfill her obligations under the Pierringer Agreement with Lombard. While that may be so, TD was not a party to that agreement and cannot be asked to bear the cost of freight for it.
[23] There is no merit in the plaintiff’s allegations of fault attributed to TD for delay. I will of course ensure that there is no double counting of costs.
(d) Relevance of Punitive Damages Amendments
[24] The plaintiff suggests that no account of the punitive damages allegations against TD should be taken into account when I assess the scale or amount of costs. The December 2014 amendment was clearly designed to place added pressure on TD to settle the case. TD chose not to settle and was justified in so choosing. The fact that TD did not resist the amendment is of no consequence since few grounds to resist such amendments can be raised.
[25] The case timetable motion was not unrelated to this amendment. The plaintiff sought a full day of discovery from TD whose witness could have no conceivable evidence on the matter of liability and but little on the matter of damages that would not already be known to the plaintiff. A short discovery to “check the boxes” on confirming that the plaintiff would face no surprises was in order, but little more. However, by amending the Statement of Claim to seek punitive damages for failure to settle with the plaintiff, the plaintiff was placing the administration of the claim itself into the litigation. The plaintiff was clearly trying to “up the ante” and apply further pressure on TD to abandon a defence that turned out to be meritorious.
[26] Our courts frequently award damages on a higher scale where fraud or similar allegations are made but not proved. The punitive damages claim in this case was made relatively late in the case and made similar allegations about TD’s conduct in resisting the plaintiff’s demands. The claim was not in fact justified and TD has been entirely successful in resisting it.
[27] The plaintiff sought to put TD at higher risk than her actual damages for having sought (successfully) to defend this claim. There is a certain symmetry in holding that she should bear some greater risk in advancing claims designed to increase the risks to TD in defending against her. There was no evidence before me of high-handed behaviour or any other factors that might have reasonably justified such a pleading. The punitive damages amendment was overreach.
[28] The casual invocation of punitive damages is not to be encouraged and ought not to be ignored when the allegations made to support it are not proved. Where advanced without justification, the court can and should take notice when assessing costs. That does not mean that “punitive costs” are the response to punitive damages. It does mean that this conduct of the unsuccessful party to an action is an appropriate factor to be considered along with all others in considering both the scale and amount of costs.
[29] I propose to weigh it along with other factors in making my determination.
(e) Relevance of Offer to Settle Action
[30] TD made an “Offer to Contribute” whereby it would have paid the plaintiff a substantial sum of money to settle the entire action and all damages claims. The Offer to Contribute was made on July 15, 2015 before the plaintiff and co-defendant filed their coordinated motions for summary judgment. Pursuant to the offer, TD would have contributed $150,000 towards settlement of the claim and waived any right to an assignment of future collateral benefits under s. 267.8 of the Insurance Act. The plaintiff takes the position that an Offer to Contribute should be taken into account in determining costs as between the co-defendants but should not be a factor in determining costs payable by the unsuccessful plaintiff. I disagree.
[31] The plaintiff could have accepted this offer and put an end to the litigation then and there. She had her accepted settlement agreement with Lombard in hand. That settlement wanted only the dismissal of the cross-claim to be completed. This was not a transaction between co-defendants – the object of the Offer was the plaintiff and the decision to reject it was the plaintiff’s as well.
[32] There is a school of thought that suggests that only offers to settle a motion for summary judgment ought to be considered in determining costs arising from the motion. That is an error.
[33] When a motion for summary judgment is made, the entire disposition of the action is in play. Where the outcome of the motion is judgment – for either side – costs of the entire action and offers to settle the entire action are both up to be determined. The Rules Committee will doubtless need to address refinements to Rule 49 in due course due to the huge increase in Rule 20 motions that has been the product of Hryniak v. Mauldin, 2014 SCC 7, particularly as regards the time for acceptance of offers to settle an action when a motion for summary judgment of the entire action is being argued. It may be that Rule 49 ought to contemplate an offer to settle that is open until the commencement of trial or a motion for judgment providing the offer can be revived (without losing the advantage of the offer) if the outcome of the motion for judgment does not involve a judgment. That is not a matter before me today.
[34] All of the conditions of Rule 49.10 are satisfied in this case save the title of the document. The plaintiff had the opportunity to resolve the litigation on terms that would have been more favourable and chose to seek better terms at a hearing. She was not successful and her decision resulted in more costs being incurred by the offering defendant. Whether I were to apply Rule 49.10 or simply exercise my discretion to do so by analogy in light of these circumstances is a distinction without a difference.
[35] In my view, the plaintiff’s submissions in relation to the Offer to Contribute are without merit and I am entitled to consider the imposition of substantial indemnity costs from the date of the offer whether pursuant to Rule 49.10 or by analogy to it.
(f) Overall Assessment of Costs: Scale
[36] In my view, the aggressive tactics of the plaintiff primarily including the late (December 2014) assertion of a claim for punitive damages were designed to pressure if not coerce TD into abandoning a defence that was meritorious. The plaintiff’s subsequent actions drove up the costs incurred by TD at the same time. This factor along with the existence of the Offer to Contribute in my view are sufficient to warrant my assessment of costs on a substantial indemnity scale in relation to the summary judgment motion and thereafter with the remainder of costs on a partial indemnity scale before that time. Since I am relying upon the Offer as well as the other factors noted above to make this determination, I have not sought to draw a hard and fast line in the sand on July 16, 2015 (the date of the Offer) but have instead considered the all of the items in (C) – (G) of TD’s Outline to be covered by this determination. In my view, this adequately balances the factors that I have considered.
(g) Overall Assessment of Costs: Quantum
[37] It has often been repeated that assessment of costs is not an automatic numbers game of multiplying hours and approved rates and that remains the case where substantial indemnity costs are being applied for a portion of the time frame.
[38] Overall, the action and the motion were of reasonable but not undue complexity. The issues decided on the motion decided the action and were of course of considerable importance to the parties. TD’s requirement to respond to unjustified allegations of bad faith in the handling of this claim required a vigorous defence. I have found no fault in TD’s conduct of the proceeding – the plaintiff was the one bringing a multiplicity of motions and TD responded to these appropriately. There is no need to compensate TD more than I have already determined to do via the scale of costs.
[39] The plaintiff provided its own Outline evidencing $30,400 of actual fees (i.e. full indemnity costs) for the motion alone, assuming regular rates (i.e. without accounting for a contingency arrangement). No Outline for the entire action was provided. Allowing a 90% ratio of substantial indemnity costs relative to actual costs, the plaintiff would have claimed $27,360 plus HST for the motion alone on a substantial indemnity scale were the tables turned.
[40] TD’s outline of costs claims substantial indemnity costs for the entire action of $111,000 (plus the costs awarded in any event of the cause on June 10, 2015 of $8622.19) and partial indemnity costs of the whole action at $84,000 (plus the June 10 costs). The above amounts are rounded and include HST.
[41] The breakdown provided by TD is not perfect, but I have done the best I can with the clay provided. I have allowed items C through G on a substantial indemnity scale. The total of these amounts claimed in TD’s Outline is $34,104.90 before HST. This amount compares reasonably to the substantial indemnity estimate that I have extracted from the plaintiff’s own Outline of Costs. That being said, the plaintiff’s proposed rates are considerably higher whereas TD’s claimed hours are much higher.
[42] I find that $30,000 including HST is a reasonable figure to cover the efforts of TD in relation to the motion for summary judgment and forward on a substantial indemnity scale. I partially accept the plaintiff’s objections that the hours appear somewhat excessive when viewed overall and from the perspective of what the unsuccessful party can reasonably be expected to pay (at that scale).
[43] There remains the matter of the costs for the remainder of the action. These I would award on a partial indemnity scale only. TD’s claim for parts A and B of the Outline on a partial indemnity scale was $45,373 plus HST. I have determined that a reasonable amount for partial indemnity costs of TD for the balance of the action is $35,000 including HST. In reaching that figure I have had regard for the submissions of the parties, the reasonable expectations of the losing party and the reasonableness of both the rates claimed and those rates relative to the hours expended.
[44] TD has also claimed $7,070.93 in disbursements which I would allow as claimed.
Disposition
[45] I am therefore fixing costs of the action at $72,070.93 exclusive of the two costs awards outstanding. The condition for the payment of the award of costs of Perrell J. on June 12, 2015 was that such costs are payable in any event of the cause of the summary judgment motion or action as the case may be. That condition has now been satisfied and his award of $8,622.19 is now also payable along with the $72,070.93 ordered by me today.
[46] There is no order as to costs in favour of or against the co-defendants Lombard et al.
Sean F. Dunphy, J.
Released: February 24, 2016