Dawod v. Jasey, 2016 ONSC 7427
CITATION: Dawod v. Jasey, 2016 ONSC 7427
COURT FILE NO.: CV-11-17144
DATE: 20161209
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Rina Dawod, Plaintiff
AND:
Sumar Jasey, Defendant
BEFORE: Verbeem J.
COUNSEL: Dallas A. Lee, for the Plaintiff
Anne C. Davenport, for the Defendant
HEARD: September 23, 2016
ENDORSEMENT on costs
[1] In this action, the plaintiff claimed damages against the defendant for bodily injury and consequential economic loss she alleged to have suffered as a result of a motor vehicle accident which occurred on April 20, 2010, as follows:
a) $250,000 for non-pecuniary general damages;
b) $300,000 for past and future income loss and loss of earning capacity;
c) $150,000 for damages arising from loss of past and future housekeeping capacity, together with past and future medical and rehabilitation expenses;
d) $100,000 for special damages;
e) Pre-judgment interest; and
f) Costs.
[2] The trial of the action proceeded before me with a jury. Ultimately, the defendant admitted factual liability for the accident (a rear-end collision) subject to an allegation of contributory negligence against the plaintiff. The trial commenced on January 25, 2016. The jury delivered its verdict on February 11, 2016 and determined that the defendant was 100 percent liable for the collision. It awarded her $5,000 on account of non-pecuniary general damages. The jury declined to award her any damages on account of past or future loss of earning capacity and past or future loss of housekeeping capacity. The plaintiff did not ask the jury to award damages for medical and rehabilitation expenses.
[3] Throughout the proceeding, the defendant expressly and consistently relied on the general statutory immunity against liability for non-pecuniary general damages afforded to her pursuant to s. 267.5(5) of the Insurance Act, R.S.O. 1990, c. I.8, as amended, which provides the following:
Despite any other Act and subject to subsections (6) and (6.1), the owner of an automobile, the occupants of an automobile and any person present at the incident are not liable in an action in Ontario for damages for non-pecuniary loss, including damages for non-pecuniary loss under clause 61 (2) (e) of the Family Law Act, from bodily injury or death arising directly or indirectly from the use or operation of the automobile, unless as a result of the use or operation of the automobile the injured person has died or has sustained,
(a) permanent serious disfigurement; or
(b) permanent serious impairment of an important physical, mental or psychological function.
[4] The defendant brought a motion, at trial, for a finding that the evidence did not establish that the plaintiff’s claim fell within one of the exceptions to that statutory immunity against non-pecuniary general damages. It was anticipated that that motion would be argued while the jury deliberated; however, the jury returned its verdict before the argument commenced. Once the verdict was received, the plaintiff indicated that she would not oppose the defendant’s threshold motion because, from a practical perspective, even if she was successful on the issue, she would still receive a “nil judgment” through the operation of the statutory deductible (which would have been at least $30,000) applicable to non-pecuniary general damages.
[5] I granted the defendant’s motion and found that on the evidence, the plaintiff did not establish that her claim fell within one of the exceptions to s. 267.5(5) of the Insurance Act. I dismissed the action accordingly.
[6] The parties were not prepared to argue the issue of costs at the conclusion of trial. They were optimistic that the issue could be resolved through negotiation. It was not. Ultimately, the parties came before me on September 23, 2016 for a half-day costs hearing.
[7] Counsel referred me to a substantial number of authorities which are listed together with other authorities that I reviewed in Schedule “A” to these reasons. While I have reviewed those authorities, I will not specifically refer to the circumstances of each authority in these reasons.
[8] The defendant submits that she was wholly successful in her defence of the claim. From the outset, she has taken the position that the plaintiff suffered relatively minor soft tissue injuries in the accident that did not result in the requisite permanent functional impairment that would otherwise allow the plaintiff to successfully claim non-pecuniary general damages. In other words, the plaintiff did not meet the threshold. The defendant submits that she has conducted the proceeding, including the structure of offers to settle and the conduct of the trial, in a manner completely consistent with her position. As a result, she seeks the sum of approximately $104,000 as partial indemnity fees plus applicable HST and disbursements in the amount of $27,829.95.
[9] The plaintiff submits that, for a variety of reasons, which I will set out later, the court should exercise its discretion under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, and order that no costs are payable by either party.
Procedural History and “Offers” to Settle
[10] The quantum of the defendant’s cost claim is informed by the action’s procedural history, which is summarized below.
[11] The statement of claim was issued on January 4, 2011.
[12] The defendant delivered a statement of defence on February 16, 2012 in which, among other things, she denied liability for the subject accident, she suggested the plaintiff was at fault for the accident, she denied that the plaintiff sustained any injuries or losses as a result of the accident, and she denied that as a result of the accident the plaintiff sustained an impairment within the meeting of s. 267.5 of the Insurance Act (she did not cross the threshold). The defendant also delivered a jury notice.
[13] Examinations for discovery of both parties were held on June 11, 2012.
[14] On January 11, 2013, the parties participated in a mandatory mediation. The plaintiff made an offer to resolve the action, the terms of which required the defendant to make a monetary payment. Consistent with her threshold position, the defendant was unwilling to do so.
[15] On January 23, 2013, the defendant served an offer to settle by paying the plaintiff “zero dollars” and consenting to a dismissal of the action on a without costs basis provided the plaintiff executed a full and final release on terms agreeable to both parties.
[16] On June 24, 2013, the defendant’s counsel (at that time) wrote to plaintiff’s counsel indicating, among other things, the following:
I do not see much hope (read any hope) of this claim being considered anything other than “threshold defensible”. As such, no settlement funds will be forthcoming.
[17] By correspondence dated March 4, 2014, plaintiff’s counsel wrote to defence counsel providing his comprehensive assessment of his client’s claim. He indicated that he was prepared to recommend resolution on the basis of a total payment by the defendant of $70,822.50 (comprised of $55,000 in total “net” damages, pre-judgment interest on non-pecuniary general damages in the amount of $4,500 and the balance as fees, HST and disbursements). Later that day, counsel engaged in a telephone conversation in which defence counsel advised that the defendant’s insurer classified the claim as “defensible” and there would be no offers made.
[18] The defendant arranged for the plaintiff to be assessed by physiatrist Dr. John Clifford. On November 11, 2014, defence counsel served a copy of Dr. Clifford’s report.
[19] On November 25, 2014, plaintiff’s counsel served a copy of an independent medical report prepared at the plaintiff’s request by physiatrist Dr. Max Kleiman.
[20] On December 19, 2014, the defendant served an offer to settle in the amount of $30,000 less the statutory deductible of $30,000 for a net payment of zero dollars. That offer remained open for acceptance until one minute after the commencement of trial. Pursuant to the terms of the offer, the plaintiff was entitled to retain the benefit of any future collateral benefits otherwise available to her from her own insurer.
[21] A pre-trial conference was held on February 11, 2015. None of the issues in the action were resolved.
[22] On March 10, 2015, plaintiff’s counsel sent correspondence to defence counsel expressing his willingness to seek instructions from his client to settle the claim for the all-inclusive sum of $51,000. Defence counsel responded by correspondence dated March 12, 2015, indicating that she had discussed the offer with her client who was not agreeable. Instead, “a defensible file” position was being maintained. Defence counsel made an offer to consent to a dismissal of the action, on a without costs basis, open for acceptance for 30 days after which the defendant would only agree to a dismissal of the action with costs payable to her.
[23] On October 26, 2015, defence counsel served seven DVDs of surveillance with a running time slightly in excess of eight hours.
[24] On November 4, 2015, counsel spoke via teleconference. At that time, plaintiff’s counsel indicated that the plaintiff would proceed to trial if the defendant was not willing to increase its net zero dollar offer. Defence counsel confirmed that the defendant would not offer to pay any monetary amount to resolve the claim.
[25] On December 17, 2015, defence counsel served a supplementary report prepared by Dr. Clifford, secondary to his review of the surveillance evidence.
[26] On January 8, 2016, the plaintiff served her first Rule 49 settlement offer, the terms of which required the defendant to pay the following sums:
a) $45,000 less the statutory deductible of $30,000 for a net payment of $15,000 on account of non-pecuniary general damages;
b) Net $5,000 for past income loss;
c) $10,000 for a combined payment for future income loss, past and future loss of housekeeping capacity and home maintenance capacity and future care costs;
d) Applicable pre-judgment interest;
e) Costs.
[27] On January 11, 2016, plaintiff’s counsel sent correspondence to defence counsel requesting that the defendant admit liability in order to avoid unnecessary trial time. He did not receive a response.
[28] While not a formal Rule 49 offer, on January 18, 2016, plaintiff’s counsel advised defence counsel that the plaintiff “would consider” a settlement of the action on the basis that she would not meet the threshold and/or that her non-pecuniary general damages would not assess over the amount of the statutory deductible. He further advised that “an offer that fairly compensates the plaintiff for damages and costs, other than non-pecuniary general damages would be seriously considered.” He posited that it was “inconceivable” that the defendant’s insurer did not recognize “a risk of any kind to any damages in this case” and further stated the following:
Given the defendant has never made a legitimate offer to settle, the plaintiff will not be bidding against herself, so to speak. I would strongly encourage your client to make at least one genuine effort to resolve this action in accordance with Rule 49 before we end up in trial and it will have to justify its actions to the trial judge in due course, regardless of the outcome.
[29] Defence counsel responded the same day and confirmed that the defendant’s insurer did not recognize a “risk of any kind to any damages in this case.”
[30] Following a trial management conference held before me on January 18, 2016, plaintiff’s counsel advised defence counsel that the plaintiff was willing to attend a further pre-trial conference. On January 20, 2016, defence counsel advised plaintiff’s counsel that her instructions remained the same and the defendant was maintaining her formal offer to settle dated December 19, 2014. A further pre-trial conference was not held.
[31] The trial of the action commenced on January 25, 2016. It ended on February 11, 2016 with a dismissal of the action.
Position of the Parties
[32] The defendant submits that as the successful party, she is presumptively entitled to costs.
[33] She says that she has incurred considerable legal fees and expenses defending the action. She claims partial indemnity costs based on the following expenditures of time:
| Name | Year of Call | Total Hours Claimed | Actual Rate | Partial Indemnity Rate at 60% | Amount claimed (based on partial indemnity rate) |
|---|---|---|---|---|---|
| Edward Tenki - rate 1 | 2004 | 42 | $225 | $135 | $5,670 |
| Edward Tenki – rate 2 | 2004 | 12.9 | $235 | $141 | $1,818.90 |
| Anne Davenport – rate 1 | 2009 | 45.4 | $175 | $105 | $4,767 |
| Anne Davenport – rate 2 | 2009 | 455.1 | $185 | $111 | $50,516.10 |
| Danielle Douek | 2010 | 266.7 | $185 | $111 | $29,603.70 |
| Law Clerk – rate 1 | N/A | 77.9 | $105 | $63 | $4,907.70 |
| Law Clerk – rate 2 | N/A | 102.9 | $110 | $66 | $6,791.40 |
| TOTAL | 1002.9 | $104,074.80 |
[34] In advancing her claim for partial indemnity costs, the defendant submits that the plaintiff was statutorily barred from bringing her action for non-pecuniary damages. She was unable to establish that she sustained an impairment as a result of the accident that exempted her from the effect of that statutory immunity. The court concluded that she did not cross the threshold and was not entitled to non-pecuniary damages, which was the only head of damages that the jury made a positive assessment with respect to. The result is consistent with her position throughout.
[35] While the Insurance Act mandates that in an action for bodily injury arising from use or operation of an automobile, the determination of a party’s entitlement to costs shall be made without regard to the effect of the statutory deductible, a similar provision mandating the court to determine a party’s entitlement to costs without regard to the effect of s. 267.5(5) of the Insurance Act (the threshold) does not exist. As a result, the defendant is entitled to costs on the basis that she was completely successful on the merits of the action.
[36] The defendant further submits the following:
a) The plaintiff could reasonably have expected to pay the quantum of costs sought in the event she was unsuccessful. The case was determined through a nearly three week jury trial. The amount of time and resources needed to try the matter was well known to all parties in advance;
b) There is a significant disparity between the amount claimed by the plaintiff and the amount recovered in the proceeding. At trial, the plaintiff resiled from the quantum of damages that she claimed in her statement of claim. However, she still asked the jury to award her general damages of no less than $75,000; damages for past loss of earning capacity of no less than $25,000; damages for future loss of earning capacity of no less than $75,000; and damages for loss of housekeeping capacity of $20,000. She recovered nothing;
c) While the jury ultimately apportioned liability completely against the defendant, she submits there was sufficient evidence to support that contributory negligence was a triable issue. In that regard, she relies on her successful opposition to the plaintiff’s trial motion for a directed verdict on the issue of liability;
d) With respect to complexity, the defendant submits that the plaintiff’s accident related injuries were not complex, in isolation. However, the evidence with respect to her accident related injuries had to be assessed in the context of a significant pre- and post-accident medical and employment history and post-accident surveillance. The documentary evidence was voluminous and sifting through that evidence was a laborious pre-trial and in-trial undertaking;
e) The issues in the action were exceptionally important to the defendant, particularly with respect to enforcing the intent of the threshold provisions set out in the Insurance Act;
f) The parties made concerted efforts to shorten the trial. Joint document briefs were prepared and surveillance video was filed without the necessity of a voir dire. While the plaintiff’s cross-examination was lengthy, it was necessary to fully explore issues related to her credibility and the reliability of her evidence;
g) The plaintiff advanced a number of “legal issues” during the course of trial that unduly lengthened the proceeding, including advancing a claim for transportation expenses that was not disclosed prior to the commencement of trial; seeking leave to advance a claim for damages related to potential losses arising from an unfortunate development in the plaintiff’s mother’s health which occurred during the course of the trial; her ongoing failure to articulate exactly how she purported to quantify her claim for past and future loss of competitive advantage and/or loss of earning capacity; and her unsuccessful motion for directed verdict on the issue of liability.
[37] Finally, the plaintiff submits that the court should not have regard to the plaintiff’s alleged “impecuniosity” or the financial hardship which may be visited on her through an award of costs against her. In that regard, the defendant relies on the Ontario Divisional Court decision in Myers v. Toronto (Metropolitan) Police Force (1995), 1995 CanLII 11086 (ON SCDC), 125 D.L.R. (4th) 184 (Ont. Div. Ct.), at para. 22:
Because of the importance of avoiding a situation in which litigants without means can ignore the rules of the court with impunity, and the distastefulness of creating a rule incapable of consistent application, the learned trial judge in the case at bar, in my opinion, acted reasonably in refusing to take into account the impecuniosity of the plaintiff. The Orders fell squarely within his discretionary power. The appeal is dismissed.
[38] The plaintiff submits that no costs should be awarded to either party because of the following:
a) Costs are in the discretion of the court;
b) The jury recognized that the plaintiff suffered injuries;
c) The defendant was determined to be 100 percent liable for the accident;
d) The claim was not complex;
e) The defendant breached its obligation under s. 258.5(1) and (5) of the Insurance Act by failing to settle the claim as expeditiously as possible and by failing to “participate” in a mediation of the claim;
f) The defendant failed to make appropriate admissions;
g) The jury verdict was perverse;
h) Any cost award would be unduly prejudicial to the “impecunious” plaintiff;
i) Exercising discretion to award “no costs” meets the requirements of proportionality and reasonableness, in the circumstances of this case.
Applicable Legal Principles
[39] The following principles are applicable to issues before me.
[40] An order of costs is discretionary. Section 131(1) of the Courts of Justice Act provides the following:
Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
[41] The discretion to award costs must be exercised in accordance with the facts and circumstances of the case and in accordance with the factors set out in r. 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”): see Andersen v. St. Jude Medical Inc. (2006), 2006 CanLII 85158 (ON SCDC), 264 D.L.R. (4th) 557 (Ont. Div. Ct.), at para. 22, leave to appeal refused, 2006 CarswellOnt 7749 (C.A.).
[42] Rule 57.01(1) of the Rules sets out the factors which may be considered by a court when exercising its discretion under s. 131 of the Courts of Justice Act, and specifically provides the following:
In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(i) any other matter relevant to the question of costs.
[43] A successful party does not have a right to costs but it does have a reasonable expectation that a costs award will be made in its favour. Normally, costs follow the event and are awarded on a partial indemnity basis payable forthwith (within 30 days). Discretion can be exercised in exceptional circumstances to depart from any of those “norms”: see DUCA Financial Services Credit Union Ltd. v. Bozzo, 2010 ONSC 4601, at para. 5; and Yelda v. Vu, 2013 ONSC 5903, at para. 11, leave to appeal refused, 2014 ONCA 353.
[44] Fixing costs is not a “mechanical” exercise. A consideration of experience, rates charged and hours spent is appropriate but is subject to the overriding principle of “reasonableness” as applied to the factual matrix of the particular case, 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 CanLII 14579 (ON CA).
[45] The quantum awarded should reflect an amount that the court considers to be fair and reasonable within the factual matrix of the particular case rather than a precise measure of the actual costs of the successful litigant: see Zesta Engineering Ltd. v. Cloutier, 2002 CanLII 25577 (ON CA), at para. 4.
[46] An unsuccessful party’s impecuniosity is one of the factors that the court may consider when exercising its discretion to award and fix costs. The relevant principles in that regard are set out by Chapnik J. in Pilotte v. Gilbert, 2016 ONSC 1334, 27 C.C.L.T. (4th) 137, at paras. 10-11, as follows:
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.
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.”
[47] The court’s discretion with respect to costs is circumscribed to some extent by the automatic cost consequences which flow from a “qualifying offer to settle” made pursuant to r. 49 of the Rules of Civil Procedure. Specifically, r. 49.10 provides the following:
Plaintiff’s Offer
49.10 (1) Where an offer to settle,
(a) is made by a plaintiff at least seven days before the commencement of the hearing;
(b) is not withdrawn and does not expire before the commencement of the hearing; and
(c) is not accepted by the defendant,
and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.
Defendant’s Offer
(2) Where an offer to settle,
(a) is made by a defendant at least seven days before the commencement of the hearing;
(b) is not withdrawn and does not expire before the commencement of the hearing; and
(c) is not accepted by the plaintiff,
and the plaintiff obtains a judgment as favourable as or less favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer was served and the defendant is entitled to partial indemnity costs from that date, unless the court orders otherwise.
[48] Further, r. 49.13 provides the following:
Despite rules 49.03, 49.10 and 49.11, the court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.
Disposition
Absent a Compelling Reason, Costs Should Follow the Event
[49] While the defendant does not enjoy a right to costs, as the successful party she has a reasonable expectation costs will be awarded in her favour and that the award will be payable within 30 days. The plaintiff says there are several compelling reasons to depart from a normative cost award in this instance, which I have summarized above and which I will address below.
[50] The plaintiff correctly observes that costs are in the discretion of the court. The plaintiff submits that pursuant to rr. 49.10(2) and 57.01(4) of the Rules and s. 131 of the Courts of Justice Act, the court is not bound by the principles of indemnity and it is vested with the inherent discretion to award, or refuse to award, costs in a manner that is proportionate and reasonable.
[51] The plaintiff’s position that no costs ought to be payable by any party is founded in three broad submissions.
[52] First, based on the jury’s determination that the defendant was completely at fault for the accident and its recognition that the plaintiff suffered some injury as a result of the accident (as evidenced by its assessment of non-pecuniary general damages), the plaintiff’s claim was not devoid of merit. She was justified in bringing it to trial.
[53] Second, the proceeding was unnecessarily lengthened by the defendant’s insurer’s failure to comply with its obligations to resolve the claim as expeditiously as possible and to meaningfully participate in mediation of the claim. The defendant’s tactical position in that regard was driven by a broader strategic position adopted by the defendant’s insurer, Aviva, to refuse to settle any case it deems will not cross the threshold. While the defendant made offers which appear in form to be “Rule 49 compliant”, they are, in effect, “nil offers” that are inconsistent with the objective of “compromise” illuminating r. 49. Acceptance of the defendant’s offers required total capitulation by the plaintiff. The court has a residual ability to depart from the “normal consequences” of settlement offers where doing otherwise might inflict exceptional hardship or result in a perceived manifest injustice: see Mayer v. 1474479 Ontario Inc., 2014 ONSC 2622, 33 C.C.L.I. (5th) 150, at para. 100.
[54] Third, while impecuniosity does not on its own eliminate or reduce a party’s liability for costs, it is a factor that may be considered in the court’s dispositive exercise of discretion. The plaintiff is of limited financial means. There is no utility to awarding costs against her in the amount sought by the defendant, or in any amount, because she does not possess the financial wherewithal to pay an award of costs and she is most unlikely to ever acquire that ability. Accordingly, when considered in the context of the other factors listed above, a no costs award position is justified: see Baines v. Hehar, 2013 ONSC 849, 114 O.R. (3d) 551, at para. 29.
[55] In addressing the plaintiff’s submissions, I observe the following.
[56] First, in relation to the “merits” of the plaintiff’s claim, I agree with the plaintiff’s submission that the jury’s assessment of non-pecuniary damages reflects that it accepted that the plaintiff suffered “some injury” as a result of the accident. However, under the provisions of the Insurance Act that govern the substantive issues in the action, the determination of whether the plaintiff suffered “some injury” as a result of the defendant’s negligent operation of a motor vehicle is not the determining factor in whether the defendant is liable to the plaintiff for non-pecuniary damages. Instead, the applicable legislation (and related regulations) focus the analytical inquiry on whether, as a result of the accident, the plaintiff has suffered “a disfigurement” or an “impairment” of a character prescribed by the legislation (and regulations) such that the plaintiff’s claim qualifies as an exception to the statutory immunity against non-pecuniary damages enjoyed by the defendant. Proof of injury is, therefore, not enough to make out a “meritorious” claim with respect to non-pecuniary general damages in an auto-related tort claim in Ontario.
[57] I am mindful that because of the quantum of the jury’s non-pecuniary assessment and the net “nil” result that would follow after the application of the statutory deductible, the plaintiff did not oppose the defendant’s threshold motion. However, for the purpose of determining the defendant’s entitlement to costs, I find that the judgment dismissing the plaintiff’s claim resulted from her failure to meet the threshold and not as a result of the application of the statutory deductible. In the result, she did not establish that she was entitled to non-pecuniary general damages. In addition, the jury determined that she was not entitled to any award on account of pecuniary loss as a result of the accident.
[58] In the result, the defendant was completely successful in her defence of the claim, on the merits. The plaintiff was unable to establish, to the requisite degree of proof, that she sustained economic loss as a result of the accident, and she did not establish that she was entitled to any amount on account of non-pecuniary damages.
[59] Based on the evidence adduced at trial, I conclude that the plaintiff’s action was not “frivolous.” However, I am not persuaded, in all the circumstances, that the jury’s finding of factual liability for the accident against the defendant and its extremely modest assessment of non-pecuniary damages should operate to displace the normative approach to costs. As the successful party, the defendant ought to receive her costs of the action.
Alleged Breach of Sections 258.5(1) and 258.6(1) of the Insurance Act
[60] Section 258.5(1) and 258.6(1) of the Insurance Act are designed to promote the timely resolution of tortious bodily injury claims arising from motor vehicle accidents in Ontario.
[61] Pursuant to s. 258.5(1) of the Insurance Act, an insurer of a defendant in a third-party liability motor vehicle action is required to “attempt to settle the claim as expeditiously as possible.” Specifically, the section provides the following:
An insurer that is defending an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile on behalf of an insured or that receives a notice under clause 258.3(1)(b) from an insured shall attempt to settle the claim as expeditiously as possible.
[62] Further, section 258.5(5) provides the following:
In an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, an insurer’s failure to comply with this section shall be considered by the court in awarding costs.
[63] The plaintiff submits that consistent with the defendant’s insurer’s systemic policy, which applies beyond the scope of this particular action, the defendant did not make any meaningful offers of settlement. From the plaintiff’s perspective, there was no reasonable prospect that the defendant’s offers to “pay nothing” would be accepted. The plaintiff was left with no choice but to proceed to trial. Contrary to the plaintiff’s many efforts to settle this matter, which were continuously rejected by the defendant, the defendant expressed a complete unwillingness to compromise. At para. 134 of her submissions, the plaintiff states the following:
The failure to make meaningful attempts at settlement by presenting unreasonable offers is in direct contravention of the statutory obligations set out in s. 258.5(1) of the Insurance Act and ought to attract the remedial cost consequences provided for in s. 258.5(5).
[64] In Ross v. Bacchus, 2015 ONCA 347, 126 O.R. (3d) 255, the Court of Appeal affirmed that the purpose of ss. 258.5 and 258.6 is to promote the early and expeditious settlement of claims arising out of motor vehicle accidents. The cost sanctions associated with those sections are intended to penalize insurers for non-compliance with their statutory obligations in the specific case and to encourage those same insurers to comply with their obligations in future cases: see Ross, at paras. 41 and 45.
[65] At para. 46, the court states the following:
The costs sanctions in ss. 258.5 and 258.6 can only serve their intended purposes if the facts justify the imposition of those sanctions. An insurer’s statement on the eve of trial that it is not prepared to settle a claim cannot be equated with an insurer’s failure to “attempt to settle the claim as expeditiously as possible.” Nor can an insurer who actually participates in a mediation be declared to have failed to participate simply because the insurer indicated prior to the mediation that it was not prepared to settle the claim. A clear statement of the insurer’s position going into the mediation, even a strong statement, does not preclude meaningful participation in a mediation.
[66] Finally, at para. 51, the court states the following:
Insurers, like any other defendant, are entitled to take cases to trial. When an insurer rejects a plaintiff’s offer and proceeds to trial, the insurer risks both a higher damage award at trial and the imposition of substantial indemnity costs after the date of the rejected offer. Both risks came to pass in this case. The insurer paid a significant financial penalty for its decision to proceed to trial. The costs provisions in ss. 258.5 and 258.6 do not address those risks, but instead address the failure to meet the specific obligations identified in those provisions. The trial judge’s assumptions about the insurer’s motivation for rejecting the respondent’s offer and proceeding to trial had no relevance to the determination of whether augmented costs should be awarded under the Insurance Act provisions.
[67] In my view, it cannot be said the defendant’s insurer failed to attempt to settle the claim as expeditiously as possible, in this instance. The evidence adduced at trial establishes that during the course of this proceeding, the defendant, through counsel, obtained and considered a substantial volume of documentary productions concerning the nature and extent of the plaintiff’s accident and non-accident related injuries and her alleged losses. Defence counsel conducted a detailed examination for discovery of the plaintiff. The defendant obtained surveillance. The defendant’s insurer concluded that the evidence did not establish that the plaintiff “crossed the threshold” and her claim for non-pecuniary damages was, therefore, defensible. It also concluded that the plaintiff had not demonstrated that she sustained economic loss, compensable in tort, as a result of the motor vehicle accident. Consistent with its view of the evidence, the insurer offered to settle without offering to make a monetary payment to the plaintiff. For certain time periods it offered to settle by agreeing to a dismissal of the action without costs. In the factual matrix of this claim, that offer, in my view, was a reasonable attempt at compromise. The defendant’s insurer made ongoing attempts to settle the claim throughout the proceeding; however, the proposed terms were not acceptable to the plaintiff. That does not equate to a failure, by the insurer, to attempt to settle the claim.
[68] Attempts by the defendant to settle a claim that do not find favour with the plaintiff are not necessarily akin to failing to attempt to settle the claim as expeditiously as possible. As Tzimas J. observes in Dimopoulos v. Mustafa, 2016 ONSC 4119, at para. 30:
[A]n insurer’s statement that it is not prepared to settle a claim cannot necessarily be equated with an insurer’s failure to “attempt to settle the claim as expeditiously as possible.”
[69] Section 258.5(1) of the Insurance Act does not necessarily obligate an insurer to make an offer to pay a sum of money to a plaintiff alleging bodily injury as a result of a motor vehicle accident in order to discharge its statutory obligation to “attempt to settle the claim as expeditiously as possible.” In this instance, the insurer took a “hard line” position with respect to its assessment of the merits of the plaintiff’s claim and the parameters of the offers it was prepared to extend. Based on the evidence that was adduced at trial, its hard-line position was one that could reasonably be taken. Ultimately, the result at trial vindicates the insurer’s consistently expressed view of the merits of the plaintiff’s claim.
[70] The plaintiff also submits that by failing to advance an offer at the mandatory mediation, the plaintiff’s insurer contravened its statutory obligation pursuant to s. 258.6(1) of the Insurance Act, which states the following:
A person making a claim for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile and an insurer that is defending an action in respect of the claim on behalf of an insured or that receives a notice under clause 258.3(1)(b) in respect of the claim shall, on the request of either of them, participate in a mediation of the claim in accordance with the procedures prescribed by the regulations.
[71] Section 258.6(2) provides that a person’s failure to comply with the foregoing section shall be considered by the court in awarding costs.
[72] I find that the defendant, and its insurer, did not breach s. 258.6(1) of the Insurance Act. Based on the documentation filed by the plaintiff in support of her cost submissions, it is clear that a mediation occurred and that the defendant delivered a statement of issues in relation to the mediation. The defendant did not make an offer to pay a sum of money in order to resolve the claim at mediation, or ever. However, it was not required to do so in order to discharge its statutory obligation to “participate in a mediation of the claim.” As the court held in Ross, a firm position going into mediation does not preclude meaningful participation in the mediation.
Impecuniosity
[73] Through the evidence adduced at trial, I am satisfied that the plaintiff is of “modest” financial means. She earns a relatively low hourly wage working in a dry cleaner operation, where she maintains part-time employment. She remains in receipt of Ontario Works despite her employment. She is a single mother. She does not own a home. She provides care of her aging disabled mother. While I am reluctant to make a finding of “impecuniosity” in the absence of full financial disclosure, I accept that the plaintiff is of “limited” financial means and that an adverse costs award will result in additional financial difficulty for her. Nonetheless, the plaintiff’s financial position is not a sufficient reason to refuse to make a costs award against her. Instead, it is a factor that may be considered in determining a proportional and reasonable costs award against her, in all of the remaining circumstances.
Quantum
[74] After considering the totality of the plaintiff’s submissions during the costs hearing and the content of her single spaced 38-page written costs submissions, I am not persuaded that there is a compelling reason to depart from the normative approach to costs in the particular factual matrix of this case. I do not find that the defendant or its insurer engaged in oppressive or vexatious conduct or other misconduct during the course of the proceeding that acts to displace the normative approach to costs, or at all.
[75] I do not intend to relive the trial through these reasons; however, I observe that generally, the plaintiff claimed to suffer chronic pain as a result of soft tissue injuries sustained in a relatively low speed motor vehicle accident. She presented with a history of pre-existing physical and psychological complaints, some of which were chronic. She presented with some post-accident physical problems, including a pulmonary embolism, which were unrelated to the motor vehicle accident. Each party presented a different theory and differing evidence with respect to the nature and extent of the plaintiff’s accident-related injuries and the cause of the ongoing symptoms to which the plaintiff deposed. Each party called a physiatrist. Each party was aware of the content of the surveillance. Each party was aware that the plaintiff’s credibility and the reliability of her evidence were essential issues in the action.
[76] Prior to trial, the defendant assessed the available evidence and determined that it did not warrant an offer to pay the plaintiff any amount in order to resolve the claim. Prior to trial, the plaintiff assessed the available evidence and determined that she would not resolve the claim unless she received a monetary payment from the defendant. Each party was locked into its respective position. A trial was held and after 13 days the defendant prevailed and the plaintiff’s action was dismissed.
[77] In my view and based on the nature of the evidence at trial, the plaintiff reasonably ought to have appreciated that such a result was a very real possibility. She ought to have expected that should that result occur, she would presumptively be ordered to pay costs to the defendant.
[78] The defendant seeks total costs including HST and disbursements in the approximate amount of $153,300. The plaintiff did not make extensive submissions with respect to quantum other than to observe that any award of costs as against her will render her destitute. I have previously set out the relevant legal principles applicable to fixing the quantum of costs which I will now apply.
[79] First, in considering the factors set out in r. 57.01(1) of the Rules of Civil Procedure, I find as follows:
a) The plaintiff claimed damages in the amount of $800,000, in the aggregate in her statement of claim. She asked the jury to assess her damages, in the aggregate, at no less than $195,000. She recovered nothing.
b) Liability was apportioned completely against the defendant. The jury did not accept the defendant’s theory of contributory negligence.
c) The claim was not a complex one. Each side called one medical expert. Neither called an “economic loss” expert. While I am mindful that the plaintiff had unrelated “pre” and “post” accident medical issues, based on the evidence at trial with respect to those conditions, I do not find that they significantly added to the complexity of this matter.
d) The issues involved in the action were important to both the plaintiff and the defendant, particularly with respect to the assessment of damages and the determination of the threshold issue.
e) Neither party conducted themselves inappropriately in the course of the proceeding or in a manner which tended to unnecessarily lengthen the duration of the proceeding. The parties attempted to shorten the length of trial by filing joint document briefs and agreeing on the admissibility of surveillance evidence. Each party critiques certain aspects of the other party’s strategic and tactical conduct, which they say, respectively, tended to lengthen the trial. In my view, all counsel conducted themselves professionally and represented their respective clients exceptionally well during the trial. I do not find the manner in which either party conducted the trial, including the “in-trial” motions brought by the plaintiff and the manner in which the defendant presented the surveillance evidence, constitutes grounds to appreciably alter the quantum of costs to be awarded.
f) Neither party took steps in the proceeding that were improper, vexatious or the result of negligence, mistake or excessive caution.
g) While I determined that there was sufficient evidence to allow the issue of contributory negligence to go to the jury, the plaintiff was ultimately successful on the issue. As a result of the defendant’s refusal to fully admit liability, the plaintiff incurred additional litigation expenses. In my view, the plaintiff’s success on that issue ought to influence the quantum of costs awarded against her.
h) The plaintiff is of very limited financial means. She continues to receive Ontario Works despite working part time in a low paying, unskilled position.
i) Contrary to the plaintiff’s submission, I do not find that the jury verdict was “perverse”. During the course of submissions, plaintiff’s counsel conceded that the verdict rendered was reasonably available on the evidence.
j) The defendant refused to make an offer to pay any amount to resolve the action. The plaintiff made a formal offer to resolve the case on the basis of a net payment to her of $20,000 in damages plus costs and interest. Prior to her formal offer, the plaintiff attempted to explore a resolution of the action on the basis of a payment of approximately $70,000 all-inclusive and later for $50,000 all-inclusive. While the plaintiff repeatedly attempted to initiate resolution negotiations, she was unwilling to settle the proceeding on the basis of a dismissal of the action on a without costs basis when she had the opportunity to do so.
[80] While I am mindful that a trial judge should be slow to second guess the tactics and conduct of a successful litigant, I am unable to conclude, on the factual matrix of this case, that the quantum of costs requested by the defendant accords with the overriding principle of reasonableness. I wish to be clear that both of the counsel that appeared for the defendant at trial represented their client in an exemplary manner (as did both counsel who appeared for the plaintiff). I have no doubt that they, together with others in their office, spent the amount of time that is claimed in the defendant’s costs outline. However, given the relatively straightforward nature of this modestly complex matter, I am unable to conclude that the quantum of costs claimed by the defendant is a fair and reasonable result, after considering all of the relevant factors set out in r. 57.01, in the context of the factual matrix before me.
[81] Instead, after considering all the factors in r. 57.01, I find that the amount of $40,000, inclusive of HST and disbursements, is a fair and reasonable amount for Ms. Dawod to pay in the factual matrix of this proceeding. Considering Ms. Dawod’s limited financial circumstances, an order for more substantial costs would carry little or no utility and would not be consistent with the interests of justice in this case.
[82] Accordingly, an order will go that the plaintiff is liable to pay costs to the defendant in the total amount of $40,000 inclusive of applicable taxes and disbursements as costs of the action. Such costs are payable within 30 days, if demanded.
Original signed by Justice Gregory J. Verbeem
Gregory J. Verbeem
Justice
Date: December 9, 2016
SCHEDULE “A”
TABLE OF AUTHORITIES
Agius v. Home Depot Holdings Inc., 2011 ONSC 5272
Andersen v. St. Jude Medical, Inc. (2006), 2006 SCC 6, 264 D.L.R. (4th) 577 (Ont. Div. Ct.)
Argyropoulos v. Toronto Transit Commission, 2014 ONSC 3261
Ayub v. Sun, 2015 ONSC 2369
Baines v. Hehar, 2013 ONSC 849, 114 O.R. (3d) 551
Bell Canada v. Olympia & York Developments Ltd., 1994 CanLII 239 (ON CA)
Boucher v. Public Accountants Council (Ontario), 2004 CanLII 14579 (ON CA)
British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371
Capela v. Rush, 2002 CanLII 49470 (ON SC)
Cimmaster v. Piccione, 2010 ONSC 846
Cimmaster Inc. v. Piccione, 2011 ONCA 486, 336 D.L.R. (4th) 506
Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66
Dennie v. Hamilton, 2008 CanLII 5964 (ON SC)
Dimopoulos v. Mustafa, 2016 ONSC 4119
Dinham v. Brejkaln, 2006 CanLII 12713 (ON SC)
Dinham v. Brejkaln, 2006 CanLII 19942 (ON SCDC)
DUCA Financial Services Credit Union Ltd. v. Bozzo, 2010 ONSC 4601
Euteneier v. Lee, 2005 CanLII 44375 (ON CA)
Fellowes, McNeil v. Kansa General International Insurance Co., 1997 CanLII 12208 (ON SC)
G.C. v. Ontario (Attorney General), 2014 ONSC 1191
Gohm v. York, 2014 ONSC 4459
Hamfler v. Mink, 2011 CanLII 86201 (ON SC)
Igbokwe v. Price, [2004] O.J. No. 4667
Keam v. Caddey, 2010 ONCA 565, 103 O.R. (3d) 626
Lakew v. Munro, 2014 ONSC 7316
Lawson v. Viersen, 2012 ONCA 25, 108 O.R. (3d) 771
Loffredi v. Simonetti, [1988] O.J. No. 1340
Magnone v. Dawson, 2014 ONSC 3548
Mayer v. 1474479 Ontario Inc., 2014 ONSC 2622, 33 C.C.L.I. (5th) 150
Mullin v. Legace, 2015 ONSC 4267, 78 C.P.C. (7th) 165
Myers v. Toronto (Metropolitan) Police Force (1995), 1995 CanLII 11086 (ON SCDC), 125 D.L.R. (4th) 184 (Ont. C.A.)
Necrovore Inc. v. Andover Land Corporation, 2007 CanLII 34849 (ON SC)
Niagara Structural Steel (St. Catharines) Ltd. v. W.D. Laflamme Ltd., 1987 CanLII 4149 (ON CA)
Peterson v. Phillips, 2008 CanLII 19504 (ON SC)
Pike's Tent & Awning Ltd. v. Cormdale Genetics Inc. (1998), 27 C.P.C. (4th) 352 (Ont. Gen. Div.)
Pilotte v. Gilbert, Wright & Kirby Barristers & Solicitors, 2016 ONSC 1334, 27 C.C.L.T. (4th) 137
Ross v. Bacchus, 2015 ONCA 347, 126 O.R. (3d) 255
Saleh v. Nebel, 2015 ONSC 3680, 50 C.C.L.I. (5th) 203
Salehi v. Tawoosi, 2016 ONSC 540
Swatridge v. Waters Estate, 2014 ONSC 5333
Tucci v. Pugliese, 2010 ONSC 2144
Van Winckle v. Siodlowski, 2009 CanLII 63127 (ON SC)
Walsh v. 1124660 Ontario Limited, 2007 CanLII 27588 (ON SC)
Watts v. Benvenuti (2006), 2006 CanLII 17920 (ON CA), 80 O.R. (3d) 721 (C.A.)
Wicken (Litigation Guardian) v. Harssar, 2004 CanLII 18856 (ON SCDC)
Yelda v. Vu, 2013 ONSC 5903
Zesta Engineering Ltd. v. Cloutier, 2002 CanLII 25577 (ON CA)