Parent v Janandee Management Inc., 2016 ONSC 3899

Court File and Parties

COURT FILE NO.: 05-CV-286303 PD1 DATE: 20160629 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

DR. JOCELYNE PARENT and JOHN HENDRIX Plaintiffs – and – JANANDEE MANAGEMENT INC., DOWNTOWN BUILDING GROUP INC., CAMROST FELCORP, THE CAMROST CORPORATION, PETER GOYETTE, OPERATING AS TS CONTRACTING LIMITED, AND UPRIGHT SIGNS, BLUE APPLE DEVELOPMENTS, AND KINGS COURT DEVELOPMENTS INC., Defendants

Counsel: Adam Wagman and Brad Moscato, for the Plaintiffs James S. Schacter and Neil Searles, for the Defendants, Peter Goyette, operating as TS Contracting, Up Right Signs and Blue Apple Developments Barry A. Percival, for the Defendants, Janandee Management Inc., Downtown Building Group Inc., Camrost Felcorp and The Camrost Corporation

HEARD: March 8, 2016 and May 16, 2016,

G. DOW, J.

Reasons for Decision on Interest and Costs

1The parties seek a determination of the outstanding issues of interest and costs. I would summarize the situation as follows:

(a) The plaintiffs were struck by an A-frame sign at King and Bay Street, Toronto on March 23, 2002 owned by the defendants Janandee Management Inc., Downtown Building Group Inc., Camrost Felcorp and Camrost Corporation (“Janandee”) who contracted with the defendants T.S. Contracting Limited, Upright Signs, and Visual Reflections Inc. (“Upright”) for placement and pick-up of said signs;

(b) The trial proceeded on January 19, 2016 with a jury verdict of February 18, 2016 in which the plaintiffs were awarded:

General Damages – Dr. Jocelyne Parent $223,000.00 Losses of Income – Past $1,350,000.00 Loss of Income – Future $1,310,000.00 OHIP Subrogated Claim $10,000.00 Medical and Rehabilitation Expenses $7,169.60 Family Law Act damages – John Hendrix $8,150.00

TOTAL $2,908,319.60

(c) Liability was split between the defendants with Janandee found to be 94% at fault and the defendant, Upright 6% at fault. The Jury found the defendant Janandee negligent for failing to take sufficient steps to ensure the safety of the public when it knew of tunnel effect that could cause its signs to tip over. The Jury also found the defendant Upright negligent for placing the sign on a day when near gale winds were forecast and it was aware of a prior incident;

(d) The action was commenced March 22, 2005, (when the limitation period was greater than two years);

(e) The defendant Janandee defended with its pleading dated June 27, 2005;

(f) The defendant, Upright defended with its pleading dated October 5, 2006;

(g) The proceeding were protracted by actions (or inaction) by each of the parties;

(h) Regarding the plaintiffs; i) their counsel (not the first representative of the plaintiffs) were retained in December, 2002 and tendered evidence it was “investigating” the incident until October, 2003 when it sent the letter notifying the defendants of the claim including a claim for interest. The details of the investigation conducted was not provided to me; ii) plaintiffs’ counsel permitted the action to be administratively dismissed on August 21, 2008 which was brief and the action was restored September 11, 2008; iii) the plaintiffs decided to add as defendants the parties Upright identified and made Third Parties; iv) the plaintiffs amended their statement of claim on multiple occasions, the most recent appearing to be in accordance with the Order of Master Abrams dated July 19, 2011; v) the plaintiffs abandoned an appeal of an order of Master Short dated August 21, 2009 on March 16, 2010; vi) the plaintiffs served expert reports in April, 2015 which were a factor in the adjournment of the trial to January, 2016;

(i) Regarding the defendant Janandee; i) it adjourned examinations for discovery scheduled for May, 2007 until October, 2007 due to scheduling conflicts of counsel and again in October, 2008;

(j) Regarding the defendant, Upright; i) it initiated third party proceedings in July, 2007 against parties that it would ultimately discontinue proceedings against and, in fact, represent at trial; ii) the defendant Upright also delayed examinations for discovery scheduled for October, 2007 to January, 2008;

(k) The plaintiffs served an Offer to Settle by letter dated December 8, 2015 in the amount of “$1,950,000.00 for claims, any portion of which may be structured as Jocelyne Parent may decide through either McKellar Structured Settlements or Henderson Structured Settlement (choice of broker at the option of the Defendant or Defendants funding the structure portion of the settlement), plus costs, on a partial indemnity scale to be agreed upon or assessed, plus H.S.T. on costs as agreed or assessed, plus assessable disbursements to be agreed upon or assessed”;

(l) The defendant, Upright served an Offer to Settle as stated in its cover letter dated December 18, 2015 (but as an Offer to Contribute on the actual document) to pay “$300,000.00, inclusive of all claims and interest” plus “fifty percent (50%) proportionate of share of the plaintiffs’ partial indemnity, legal fees, G.S.T. and H.S.T., and assessable disbursements” or “$500,000.00 inclusive of all claims, interest and legal fees”;

(m) The defendant, Janandee served its Offer to Settle (Contribute) by a letter dated January 13, 2016 to offering to pay “$150,000.00 for claims and interest, plus proportionate partial indemnity costs”.

Pre-judgment Interest Rate and Duration

2Regarding the award of general damages and Family Law Act damages, the applicable rate is 5% per annum as set out in Rule 53.10 of the Rules of Civil Procedure. The concern is with the duration or from when the cause of action arose March 23, 2002 to the date of Judgment being (now) in excess of 14 years or 70%. The defendant, Janandee sought a reduction to 8 years based on delays occasioned by the plaintiff.

3There is some merit in this submission. While plaintiffs’ counsel correctly submitted “it is rare to deny” the amount of pre-judgment interest to which the plaintiff is entitled, it is also rare that a claim takes almost 14 years to proceed to trial.

4Plaintiffs’ counsel directed me to the decision in Molinaro v. Bamford & Lampman Auto Wreckers Ltd., 2011 ONSC 7240 in which recognition was given that a plaintiff’s claim requires some time to prepare and develop. However, and as an example of delay on the part of the plaintiff, the affidavit evidence from the senior plaintiff’s counsel of a need to investigate the claim after being retained in December, 2002 until October, 2013 (when the letter claiming pre-judgment interest was sent) rings hollow when one reviews the firm’s time dockets which indicate he and trial counsel docketed only 5.1 hours and two law clerks docketed only an additional 5.5 hours over this more than 10 month period.

5Further, plaintiffs’ counsel relied on the decision in Norton v. Kerrigan CarswellOnt 2635, a January, 2004 decision of Justice Valin in which that action was not commenced until six years after the cause of action arose and indicates (in paragraph 7) that the plaintiffs were “entitled to take advantage” of what the Limitations Act then permitted. I respectfully disagree, particularly in the circumstances. I am reinforced in this conclusion by the subsequent legislation which reduced the applicable limitation period from six years to two years.

6I was unsuccessful in identifying more than four years of delay occasioned by the plaintiff as submitted by counsel for Janandee. However, I also conclude the amount of time is excessive and reduce the prejudgment interest to 10 years or 50% in accordance with my discretion permitted under Section 130 of the Courts of Justice Act, R.S.O. 1990, c. C.43. By my calculation, this results in pre-judgment interest on $231,150.00 of General Damages and Family Law Act damages to be $115,575.00.

7Regarding the claim for interest on past loss of income, the dispute between the parties was with regard to the applicable rate being 2.6 or 2.8%. Counsel for Janandee relied on Section 127(1) of the Courts of Justice Act and the definition phrase for pre-judgment interest being the rate for the “quarter proceeding the quarter in which the proceeding was commenced”. Counsel for the plaintiffs relied on the wording of the Ministry of the Attorney General table which shows “the pre-judgment interest rates for actions commenced in the quarters indicated” to mean the adjustment had been made. I agree with the plaintiffs. As a result, the applicable rate is 2.8%.

8Plaintiffs’ counsel retained the litigation accountant used at trial to calculate the amount of interest by taking the past loss of income award and comparing it to the (greater) amount claimed by the plaintiff at trial and proportioning it on the same basis in accordance with Section 128(3) of the Courts of Justice Act over each six-month period as provided for in this subsection.

9The resulting calculation to February 18, 2016 was $231,230.66 (on the award of $1,350,000.00.) Counsel for Janandee acknowledged this is less than the alternative approach sometimes used of taking the entire amount of the loss over half of the time period. During submissions (and in the face of the need to draft reasons on this and the other issues raised), I asked for and received from counsel a daily amount of pre-judgment interest for this head of damages and was provided, with a figure (with which I agree) of $51.78 per day. By my calculation, the additional 132 days from February 18 until June 29, 2016 results in an additional $6,834.96 or a total of $238,065.62.

Costs to December 8, 2015

10The plaintiffs’ claim partial indemnity fees to the date of its Offer to Settle, dated December 8, 2015 is in the amount of $140,000.00 plus H.S.T. Counsel for Janandee noted a significant discrepancy between the docketed time spent by plaintiffs’ counsel and the time his firm docketed in defending the matter to that date. In addition, it was submitted the hourly rates claimed were excessive. Reference was made to the no longer required to be used Cost Grid.

11It is clear counsel for the plaintiffs’ kept time dockets. It is not clear as (plaintiffs’ counsel chose not to disclose) that they were acting under the terms of a contingent fee agreement and whether the hourly rates had been agreed upon between the firm and the client.

12The position of counsel for Janandee (supported by counsel for Upright) was that the plaintiff should not be allowed fees greater than $125,000.00 plus H.S.T. of $16,250.00 for a total of $141,250.00 for the time and effort expended to December 8, 2015. Given all of the circumstances and mindful of the direction from the Court of Appeal in Boucher v. Public Accountant’s Council for the Province of Ontario, [2004] O.J. No. 2634 at paragraph 26 to “fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant”, I conclude the plaintiffs are entitled to recover from the defendants the sum of $130,000.00 for fees plus H.S.T. of $16,900.00 for a total of $146,900.00 to December 8, 2015.

Offer to Settle-Plaintiffs

13The plaintiffs seek substantial indemnity costs pursuant to Rule 49 of the Rules of Civil Procedure on the basis the jury verdict exceeds their December 8, 2015 offer. The defendants, particularly Janandee, opposes this position on the basis the plaintiffs’ offer lacked sufficient clarity with regard to whom or how the amount demanded would be split between the plaintiffs. It should be noted the claim for the personal injury damages by John Hendrix, who was also struck by the sign, was not abandoned until the eve of trial. In addition, the reference to the plaintiff Jocelyne Parent retaining the right to structure any portion of the settlement funds complicates the effectiveness of the offer. This is because, as the court is aware, should a portion of the funds paid be placed in a tax free annuity, one of the defendants’ liability insurers would be required to be the guarantor of the stream of payments generated by the annuity subject to that being avoided by payment of a fee to another insurer (who assumes that role) which is not raised or detailed in the plaintiffs’ offer.

14Overall, I conclude the plaintiffs met the spirit if not the technical requirements of Rule 49.10 of the Rules of Civil Procedure and is entitled to substantial indemnity costs after December 8, 2015.

Plaintiffs’ Costs December 8-18, 2015

15The first time frame to determine quantum is until the December 18, 2015 Offer to Settle/Contribute by the defendant, Upright. The additional substantial indemnity fee being sought by the plaintiffs was less than $4,000.00 and suggested by the defendants at $2,000.00. For reasons indicated in greater detail below as to appropriate hourly rates and the amount of time as well as a fair and reasonable expectation of the unsuccessful party, I conclude and award the sum of $3,000.00 plus H.S.T. in the amount of $390.00 for a total of $3,390.00 for this time period.

Plaintiffs’ Substantial Indemnity Fees after December 18, 2015

16The plaintiffs are seeking an award of $450,000.00 plus H.S.T. ($58,500.00). This is a reduction from the materials filed in which the docketed claim was $581,021.00 reduced by 10% to reflect substantial indemnity rates or $522,918.90. As part of this calculation, senior counsel on the file, James Howie, called to the Ontario Bar in 1980 utilized an hourly rate in 2015 of $1,025.00 per hour. In my view, this is excessive. While Mr. Howie is a named partner in the firm representing the plaintiffs, he did not appear at trial. The trial counsel was Mr. Wagman, called to the Ontario Bar in 1996 and Mr. Moscato, called to the Ontario Bar in 2004. They sought hourly rates for 2015 of $750.00 and $550.00 respectively. The firm claimed for the lead law clerk, with over 35 years of experience, an hourly rate of $270.00 per hour for 2015. Again, in my view, this is excessive.

17By contrast, the substantial indemnity hourly rate proposed by counsel for the defendant, Janandee was as follows:

Mr. James Howie $550.00 per hour Mr. Adam Wagman $450.00 per hour Mr. Brad Moscato $450.00 per hour Law Clerk $125.00 per hour

18The firm representing the plaintiffs at trial is one of the leading personal injury firms in the province. The examination and cross-examination of witnesses was shared between trial counsel. The trial generally moved forward in an efficient fashion. Each case has or develops its own complexities. In this matter, the subtle nature of Dr. Jocelyne Parent’s minor traumatic brain injury was a hotly contested issue along with liability. Dr. Jocelyne Parent’s inability to work full time at her pre-accident level and the economic loss that resulted was clearly accepted by the jury given their verdict. However, the substantial concession from the docketed time to the $450,000.00 amount sought made by counsel for the plaintiff in submissions suggests there is some merit in the position taken by the defendants that the docketed time is excessive.

19Fortunately, neither the law nor the parties indicate my fixing costs should take the form of a hearing before an assessment officer where there is scrutiny of each moment of time submitted. The guiding principle, as noted in Boucher v. Public Accountants Council for the Province of Ontario, supra is reasonableness with the expectations of the parties concerning quantum a relevant factor.

20The defendant, Janandee also raised conduct by counsel for the plaintiff with regard to the existence or reliance on an engineering expert as an issue to fit within Rule 57.01 (1)(e) and (f) of the Rules of Civil Procedure and as a basis to reduce the plaintiffs’ entitlement to costs. The basis for this position begins with the examination for discovery of the representative of Janandee on December 3, 2008 when the plaintiffs’ counsel obtains an undertaking to have the A-frame sign in question or a similar one available for “inspection by our engineer”. No such inspection occurred. Counsel for these defendants followed up on the eve of trial with an email on January 11, 2016 specifically asking if an engineer was retained and if so, “was a report ever prepared”. The response from plaintiffs’ counsel on January 12, 2016 was “we do not have an engineer expert, nor a report, nor do we have any findings, opinions or conclusions from an engineer”. This evidence was elicited from the plaintiff, John Hendrix at trial with prior submissions on the proprietary of such questions made before me.

21This compares with the time dockets produced which includes an April 28, 2008 entry by the lead law clerk of “telephone call to Craig Wilkinson regarding engineering report” and a January 11, 2016 entry by trial counsel of a discussion amongst counsel and the law clerk “re engineer evidence previously sought”. (Craig Wilkinson is a mechanical engineer with a leading forensic engineering firm). In my view, this information is not sufficient to permit me to conclude there was any conduct that lengthened unnecessarily the duration of the proceeding or was improper.

22Counsel for the defendant Janandee submitted this claim ought not to exceed $374,697.00 for fees. This figure was arrived at using the hourly rates defence counsel suggested was appropriate and accepting the hours claimed (which the defendants submitted was excessive).

23My conclusion is that the fair and reasonable amount and within the expectations of the parties is $400,000.00 plus H.S.T. of $52,000.00 for a total of $452,000.00.

Assessable Disbursements

24The plaintiff is seeking $140,319.06 plus an additional $3,876.12 of disbursements not subject to H.S.T. With applicable H.S.T. of $18,241.48, the total is $162,436.66. The defendants took exception to multiple aspects of this amount. For example, the hourly rate charged by some experts, such as Dr. Ouchterlony at $500.00 per hour when other physicians used $300.00 per hour was submitted to be excessive. Her accounts for her report and attendance at trial totaled $13,714.25 including $974.25 for her flight from Florida to give evidence.

25There are also expenses for experts and their reports not used at trial as such as Dr. Doxey (who was unable to give evidence due to ill health) and required the plaintiff to retain Dr. Philip Miller who did give evidence. Focus Rehabilitation tendered a report regarding future care costs which was not advanced at trial. These expenses totaled over $15,000.00.

26The largest amount and issue with regard to expert reports is that of the litigation accountant, Daniel Edwards, who submitted invoices for reports totaling $28,611.70. His firm also submitted invoices totaling $11,371.30 for preparation and attendance at trial for a total of $39,983.00.

27The defendants also contested the amount claimed for photocopying at 25 cents a page which resulted in a claim for $16,009.28.

28I was referred to and agree with the comments of Justice Edwards in Hamfler v. Mink, 2011 ONSC 3331 and the need for judicial concern over the rising costs of disbursements and that it is not “the task of the trial judge in reviewing a claim for disbursements as merely rubber stamping a list of disbursements as put before the court by counsel at the end of a trial”. I do not wish to fetter the selection, creativity or access to experts by counsel but rather empower counsel to confront experts about their billing practices. I would echo the comments of Justice Edwards (in paragraphs 17 and 18 of his Reasons). That is, if counsel wish to claim the full amount of an expert’s expense they should insist on receipt of an invoice that sets out:

(a) the amount of time spent by the expert(s) and those in his or her employ, if utilized; (b) the hourly rate being used for those involved; (c) any included expenses or disbursements in an itemized fashion; (d) any other relevant details, such as with a physician, having to cancel or postpone all of his or her schedule and the deferred revenue relating to same.

29It is also important that the rates being proposed are put in context with information from the expert’s governing body as to appropriate hourly rates or, if not available, comparable hourly rates of other experts in the same field. It is also open to the party opposing the amount of disbursements to provide this information.

30In this matter, the accounts and material placed before me, and particularly the account of the litigation accountant, Mr. Daniel Edwards, failed to provide either the time spent or any other basis for the amount charged within the invoices submitted. This also occurred in the reports of Dr. Ouchterlony, Dr. Doxey and Dr. Miller.

31With regard to preparation and attendance at trial, Dr. Ouchterlony claimed eight hours of preparation in the sum of $4,000.00 ($500.00 per hour) which, in my view, is excessive. The claim by the family physician, Dr. Kelley at $300.00 per hour is acceptable but 20 hours spent preparing and giving evidence (which, by my notes occurred on January 25, 2016 for less than one half of the court day) is excessive. By comparison, the preparation time for Dr. Miller at eight hours (and $250.00 per hour) is appropriate.

32The accounts of Mr. Edwards are particularly noteworthy given the amount claimed is in the absence of either an hourly rate or the amount of time spent. He was also the only expert witness I was required to admonish at the trial and ask the jury to disregard a portion of his evidence when it was non-responsive to the question asked and inappropriate.

33I would include a portion of Dr. Doxey’s report in the circumstances, that being counsel cannot know months or years in advance that an expert will be unable to attend trial. I would exclude the Focus Rehabilitation expense as claim for future care and treatment to which this report pertained was not advanced at trial and should not be payable by the defendant.

34Overall, the claim for disbursements should be reduced. I am prepared to and award $125,000.00 inclusive of H.S.T.

35The total amount recoverable by the plaintiffs for fees, H.S.T. and disbursements is $727,290.00.

Costs of Defendant Upright

36The defendant, Upright seeks its partial indemnity costs after its December 18, 2015 Offer to Contribute/Settle given the result. It seeks these costs from the plaintiffs or the defendant, Janandee by my discretion or by application of a Bullock or Sanderson Order. These defendants are seeking $205,223.85 inclusive of G.S.T./H.S.T. and disbursements totaling $28,541.71 for a total of $233,765.56.

37Plaintiffs’ counsel maintained that any award of costs in favour of the defendant, Upright be passed on to the defendant Janandee. They did not dispute the quantum sought. Counsel for the defendant Janandee generally accepted the hours spent and hourly rates proposed. It sought minor reductions for certain disbursements and the amount of time expended late in the trial and a day of delay occasioned by this counsel.

38By my calculation, the defendant, Upright is responsible to pay 6% of the jury verdict and interest as calculated above which is ($2,908,316.60 plus $115,575.00 plus $238,065.62 which equals $3,261,957.22) or $195,717.43. This is significantly less than its willingness to contribute the $300,000.00 towards damages and 50% of the plaintiffs’ costs to a maximum of $200,000.00. As a result, it achieved a result better than its offer. That is, the defendant Janandee had the opportunity to accept this offer and either negotiate a settlement with the plaintiffs or proceed to trial which then would have been shorter given less evidence about liability would have been required. Overall, it is clear the defendant, Janandee failed to accurately predict the result and as a result should pay the partial indemnity costs of the defendant Upright after December 18, 2015.

39In my view, the fair and reasonable amount in the circumstances is $210,000.00 inclusive of fees, H.S.T. and disbursements. This appears to be within the contemplation of the parties and I award same payable by the defendant Janandee to the defendant, Upright directly.

Division of the Plaintiffs’ Costs

40The defendant Upright sought to limit its responsibility to contribution towards the plaintiffs’ costs which I have assessed total $727,290.00 to the liability finding of 6% or, by my calculation, the amount of $43,637.40. In submissions, the defendant Janandee relied on the decision of Justice McCarthy in Rochon v. MacDonald, 2014 ONSC 591 where, at paragraph 7 and 8, he was required to distinguish between liability for the incident giving rise to the damages and liability to pay a Judgment.

41The apportionment of liability is one of the specifically described factors that the court is to take into account in exercising its discretion under Rule 57.01 of the Rules of Civil Procedure in Section 131 of the Courts of Justice Act R.S.O. 1990, c. C43. Justice McCarthy was dealing with the situation where a joint and several defendant was found to be only 5% at fault but would have to pay the lion’s share of the Judgment given the co-defendant found 70% at fault was uninsured and not collectable. The plaintiff’s uninsured insurer in that event had only a legislative responsibility to pay about 10% of the damages awarded.

42The decision to be made is whether to depart from the usual approach where the responsibility for costs follows the split of liability. Having considered the relevant principles, it would appear the defendant Janandee took the position, as it was entitled to do, that it was not liable and that the damages sought (by virtue of the plaintiff’s Offer to Settle) were excessive. This was reflected in the defendant Janandee’s Offer to Settle. The defendant Janandee had the opportunity to accept the Offer to Contribute made by the defendant Upright of what amounted to, by my calculation, 15% of the plaintiffs’ Offer to Settle or about 10% of the jury assessment.

43As a result, I conclude the fair and reasonable result is not to depart from the standard approach of the responsibility for costs following the split in liability. That is, the defendant Upright is responsible for 6% of the $727,290.00 costs awarded to the plaintiffs which I calculate to be $43,637.40 with the balance of $683,652.60 payable by the defendant Janandee.

Costs for Post Verdict Submissions

44Counsel for the plaintiffs raised this as a separate claim and submitted additional costs should be awarded for attendances on March 8, 2016 and May 16, 2016. The full indemnity claim was for $43,000.00 and plaintiffs’ counsel was seeking the sum of $30,000.00, inclusive of fees, H.S.T. and disbursements. This was opposed by counsel for the defendants.

45The plaintiffs sought costs exceeding $830,000.00 and filed materials attempting to support fees in excess of this amount. The amount I have awarded is significantly less. The issues were not difficult or unique and the parties were encouraged to resolve these issues between themselves. In my view, the costs award in favour of the plaintiffs totaling $727,290.00 is sufficient in all of the circumstances and in accordance with the principles set out in Boucher v. Public Accountant’s Council for the Province of Ontario. As a result, I decline to make any additional or specific award in this regard but would include same in the assessment determined above.