Court File and Parties

COURT FILE NO.: CV 98-3211 DATE: 2016-08-08 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

Future Health Inc., operating as Trauma Services as continued by its Trustee in Bankruptcy, Scott, Pichelli & Graci Ltd. Jane Poproski, for the Plaintiff Plaintiff

• and -

General Accident Assurance Company of Canada, Dorothy Lambert, Madeline Grady, Selwyn Gundy, Greg Somerville, Joy Vint and Becky Ostrum Elizabeth Bowker, for the Defendants Defendants

HEARD: Sept. 29, 30 & Oct. 2, 2015 The Honourable Justice C.D. Braid

RULING ON COSTS

I. OVERVIEW

[1] Future Health Inc. was a company that provided rehabilitation services to patients with injuries caused by motor vehicle accidents. Future Health submitted billing requests and care plans to General Accident Assurance Company for reimbursement. Approximately two decades ago, Future Health declared bankruptcy.

[2] In 1998, Future Health sued General Accident and six of its employees. Future Health claimed $2.5 million in damages for conspiracy to cause economic harm, and $2.5 million for punitive, aggravated and exemplary damages.

[3] This ruling addresses the costs of the action, which was dismissed on a motion for summary judgment (Future Health Inc. v. General Accident Assurance et. al., 2016 ONSC 2149). For the reasons that follow, I find that the defendants are entitled to costs in the amount of $250,000.

II. ANALYSIS

[4] The defendants seek substantial indemnity costs of $298,852.62. The substantial indemnity rate was calculated at 90 percent of the actual cost. The defendants have provided a detailed Bill of Costs that describes the fees and disbursements from two law firms. Numerous lawyers, law students and law clerks have worked on the file.

[5] Future Health argues that no costs should be awarded. It argues that elevated costs are not appropriate because Future Health’s conduct was not reprehensible. Future Health also challenges portions of the defendants’ Bill of Costs as being inappropriately claimed. It submits that the costs should be reduced because of duplicate work, and costs claimed for a motion in which the defendants were not successful.

[6] In determining quantum, the court is to consider the factors set out in Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as well as s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. I have considered those factors.

[7] I have also considered the principles in Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.). The fixing of costs should reflect what the court views as a fair and reasonable amount to be paid, rather than any exact measure of the actual costs to the successful litigant.

[8] In this action, the parties filed reciprocal motions for summary judgment. These motions were supported by extensive motion records, factums and books of authorities. The motions were argued over three days, followed by further written submissions from the parties. The conspiracy claim was legally and factually complex. The defendants were entirely successful on the motions for summary judgment, which resulted in the action being dismissed.

[9] While substantial indemnity costs are an exception to the general rule, unsubstantiated allegations of dishonesty, illegality and conspiracy can attract an award of substantial indemnity costs: Réno-Dépôt Inc. v. Wonderland Commercial Centre Inc., 2008 ONCA 786, 2008 CarswellOnt 6888; A-C-H International Inc. v. Royal Bank (2005), 254 D.L.R. (4th) 327, 197 O.A.C. 227 (C.A.), Susin v. Chapman, 2004 CarswellOnt 3055 (C.A.).

[10] In exceptional cases, elevated costs are available where the losing party has engaged in behaviour worthy of sanction: Davies v. Clarington (Municipality), 2009 ONCA 722, [2009] O.J. No. 4236 (C.A.), at para. 28. Unfounded allegations of improper conduct can attract substantial indemnity costs, particularly when the allegations are seriously prejudicial to the character or reputation of the individual: 1175777 Ontario Ltd. v. Magna International Inc., [2007] O.J. No. 2549 (S.C.J.) at para. 32, affirmed 2008 ONCA 406.

[11] In this case, the defendants were required to respond to a claim for $5 million in damages. The allegations of conspiracy and unlawful conduct, made in a public forum, had the potential to affect the business and reputation of General Accident as an insurance company. The allegations also challenged the personal and professional integrity of the individual defendants. For example, the Statement of Claim stated that the defendants:

a) Were “motivated by malice”; b) Acted “unlawfully” and “unfairly”; c) Had “dishonestly held beliefs”; and d) Were “engaging in wilful and deceitful conduct” that showed a “callous, cynical and reprehensible disregard” toward the plaintiff.

[12] Future Health made serious allegations of conspiracy and improper conduct that were entirely without merit. Future Health’s arguments on the summary judgment motion were replete with speculation, and were absent any evidentiary foundation. The defendants incurred legitimate expenses to defend against unfounded allegations that had the potential to detrimentally impact their reputation. I find that Future Health’s conduct was reprehensible and deserving of sanction.

[13] Having reviewed the detailed Bill of Costs filed in this case, I find that there was some duplication of work when a new law firm was retained. In addition, the defendants should not be reimbursed for work on a motion to compel their answers to undertakings.

[14] However, I find that the overall number of hours spent is reasonable and the rates claimed are commensurate with counsel’s experience. The second law firm retained by the defendants assigned work to junior lawyers or students, which moderated the costs. This action has also been before the court for 18 years, which is a significant consideration.

[15] I find that this is an appropriate case to award costs on a substantial indemnity scale. I find that $250,000 is a reasonable amount for costs.

[16] The defendants have asked that the costs order be made against the Trustee in Bankruptcy who has continued the action on behalf of Future Health. The plaintiff has made no submissions regarding the propriety of naming the Trustee. In the circumstances, it is appropriate that the costs be payable by the Trustee corporation.

III. CONCLUSION

[17] Costs of $250,000, inclusive of taxes and disbursements, shall be paid to the defendants. These costs are payable forthwith by the Trustee in Bankruptcy for the plaintiff, Scott, Pichelli & Graci Ltd.

Braid, J. Released: August 8, 2016