Vickers v Palacious, 2016 ONSC 821

CITATION: Vickers v Palacious, 2016 ONSC 821

COURT FILE NO.: 12-57

DATE: April 5, 2016

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Jacqueline Vickers, Scott Kapitan and The Bloomfield Carriage House Restaurant Inc., Plaintiffs

AND

Ferrando Palacious and Gwendolyn Palacious, Defendants

BEFORE: The Honourable Mr. Justice Martin James

COUNSEL: Edward V. Bergeron and Warren WhiteKnight, Counsel for the Plaintiffs

R. Steven Baldwin, Counsel for the Defendants

HEARD: Written Submissions

COSTS ENDORSEMENT

James J.

1This is a costs endorsement following a 17 day trial. The total jury award was $563,800. The net amount of the judgment, after accounting for the statutory deductible and offsets for collateral deductions, was approximately $472,000.

2Written offers to settle were exchanged but they did not trigger the costs consequences of Rule 49.

Position of the Plaintiffs

3The plaintiffs claim the following rates and times for their legal team subject to a reduction from full indemnity to partial indemnity:

i) Senior Counsel 1993 call $550/$750 per hour 495.3 hours

ii) Junior Counsel 2014 call $175 per hour 240 hours

iii) Senior Law Clerk $125 per hour 293.4 hours

iv) Law Student $125 per hour 2 hours

4The plaintiffs do not specify the percentage used to adjust the actual rates to a partial indemnity rate but it appears to approach 65% of the actual rate. The total fees claimed are $287,317.50 plus HST. The total disbursements claimed are $122,531.90. The total fees and disbursements (including HST) requested by the plaintiffs is $445,729.78.

Position of the Defendants

5The defendants say that both the rates and the time spent are too high. They refer to the note to the profession prepared in or about 2005 when the sub-committee of the rules committee revoked the costs grid and the rates mentioned in the costs grid. The defendants suggest that these rates ought to apply in this case, subject to an adjustment for inflation.

6The defendants also note the absence of supporting documents or time sheets from the plaintiffs.

7The defendants also suggest that the partial indemnity rate should be 55% of the actual rate of the plaintiff’s lawyers.

8The defendants request that a costs sanction be imposed because the plaintiff did not agree to participate in mediation.

9The defendants take issue with the following disbursements:

i. Mr. Kumove--The amount claimed is $7,980. The defendants’ position on this disbursement ignores the ruling of the court that he was entitled to testify as an expert.

ii. Ms. Young--This disbursement is by far the largest account submitted by any of the experts. The report contained errors although it was of some use and provided assistance in determining the present value of the plaintiffs’ claims. No explanation was provided as to why the invoice was so high and no copy of the invoice or any back-up documentation was supplied in support of the request for payment.

iii. Trial expenses. The amount claimed is $38,038.36. There is no explanation as to what this includes, how it relates to the tariffs or why the defendants should have to pay it.

iv. Medical Credit. The defendants say they are entitled to a credit of $948.36 as this amount was previously reimbursed to the plaintiffs.

10The defendants submit that the allowable disbursements should total $32,061.47.

11The defendants also say that the plaintiffs’ failure to attend mediation should result in a penalty of $40,000 with the result that the total fees and disbursements should be $98,731.47.

Discussion and Analysis

12I am prepared to accept the total time spent by plaintiffs’ counsel but note the lack of dockets or time sheets supplied in support of this claim. Form 57(A) respecting bills of costs requires dockets to be provided. It seems to me that litigants, such as the defendants here, who are being asked to pay hundreds of thousands of dollars for legal fees, should be entitled to see the backup documentation. That did not occur here. There is no way to assess whether there has been duplication of effort or whether the time spent on a particular task was reasonable. For this reason I am reducing the plaintiffs’ claim by $6,000.

13The change in the rate for Mr. Bergeron during the course of the litigation was substantial-- from $550 per hour to $750 per hour. No explanation was offered for this increase and no evidence was tendered as to the reasonableness of such an amount. In my view, for the purposes of a party and party assessment, a rate of $550 per hour is at the upper end of the range for a Kingston-based specialist who was called to the bar in 1993. I am not persuaded that an increase beyond this amount is warranted.

14Aside from Mr. Bergeron, I am not inclined to adjust the rates shown for the other service providers for the purposes of assessing their party and party costs.

15The next step is to determine an appropriate partial indemnity rate. In my experience, the rate of 60% of a lawyer’s actual rate is commonly used in the East Judicial Region to determine partial indemnity costs and therefore I shall apply this percentage to the hours claimed at the rates that I have allowed, namely, Mr. Bergeron at $550 per hour, Mr. WhiteKnight at $175 per hour, the law student at $125 per hour and the law clerk at $125 per hour.

16Turning to the issue of mediation under the Insurance Act, it appears from the cases that if one party requests the other to participate in a mediation process, the mediation is essentially mandatory in nature. In Keam v Caddey, 2010 ONCA 565, the Court of Appeal authorized a $40,000 remedial penalty (as the use of this costs provision is sometimes referred to) against an insurer who refused to participate in a mediation session. In that case Feldman J.A. pointed to the discretionary nature of such an order. Counsel for the defendants says that a remedial penalty ought to be imposed on the plaintiff here and that $40,000 is an appropriate amount. I do not agree. Not only is the measure discretionary, the remedial penalty ought to be proportionate to the financial strength of the party involved. If a $40,000 sum is appropriate for an insurance company, the amount to be imposed upon a litigant of relatively modest means, if any sanction is found to be appropriate, ought to be significantly less. Having considered the matter, I am exercising my discretion to not impose a remedial penalty against any party in this case on the grounds that early settlement possibilities were ignored.

17The defendants also argue that the rates used under the old grid system for determining costs continue to have relevance in the assessment of party and party costs. That may be the case, but using remnants of the old system is not mandatory. I note the commentary provided by the editors of the 2015-2016 edition of the Ontario Annual Practice that the current version of Rule 57 “takes the former jurisprudence defining the discretion available to the court in awarding costs, codifies it, and broadens its scope to the point of eliminating any outer limits” (pg. 1339) subject to the overarching requirement of reasonableness.

18Turning to the issue of disbursements, I agree with the defendants that the account of Matson, Driscoll and Damico Ltd. ought to be reduced. There was no explanation as to how this amount was calculated and no supporting documentation was provided. At $33,095.61, this charge was significantly higher than all the other experts who participated in the trial on behalf of the plaintiffs. In the absence of evidence establishing the amount claimed is reasonable, the court is empowered to make adjustments. In this case I am reducing the account to $15,000 plus HST.

19Respecting the invoice from Tracy Cupido, I do not recall this person testifying and the $500 charge is not allowed.

20Also the claim for trial expenses of $38,038.36, not being explained or supported in any way with receipts, invoices, etc., is disallowed. I have no way of determining what it consists of or the reasonableness of this claim.

21Similarly, the claim for “unbilled disbursements”, without backup documentation or any explanation whatsoever, must be disallowed as well. Curiously, this item was described as a “credit” on the list of disbursements and the amount of $3,785.57 was shown in brackets but it was then added to the amount claimed.

22To summarize, it is my view the costs granted to the plaintiffs herein ought to be consistent with the principle that a costs order should not just be an automatic tally of time spent but should reflect an amount that the losing party could reasonably expect to be asked to pay. In this case the defendants put the plaintiffs to the strict proof of their claims and in doing so exposed themselves to the costs that such a request involves.

23I will conclude with a comment respecting the trial briefs and memory aids prepared by counsel for the plaintiffs for use by the court. This documentation was well-prepared and very helpful. In answer to a suggestion that the total time spent by the plaintiff’s legal team is excessive, it can be said that these trial aids take time and effort to prepare. This effort deserves to be recognized as a relevant factor when assessing costs.

Disposition

24The plaintiff shall recover from the defendants an amount on account of legal fees fixed in the sum of $204,811.50 plus HST.

25The plaintiffs shall also recover from the defendants an amount on account of disbursements fixed in the sum of $42,545.30 plus applicable HST. This figure is derived by reducing the total pre-tax disbursements of $103,913.20 for the items and in the amounts referred above, which reductions total $61,367.90 including the sum of $948.36 for “reimbursements already paid” which I am assuming the defendants are correct in asserting were previously paid. I leave it to counsel to sort out whether the amount claimed by the defendant as a credit of $948.36 is correct or not.

26These amounts shall bear interest in accordance with the rules of court.