Court File and Parties
COURT FILE NO.: CV-11-107460 DATE: 20170112 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
KENNETH GEOFFREY KIRBY Plaintiff – and – NURALI ANDANY, NISHA ANDANY, GURPREET SINGH, KK TRANS INC. and BULK TRANSFER SYSTEMS INC. Defendants
Counsel: George Siotas, for the Plaintiff Daniel Siu, for the Defendants Nurali Andany and Nisha Andany
AND BETWEEN:
KENNETH GEOFFREY KIRBY Plaintiff – and – REBECCA HOLLY WRIGHT Defendant
Counsel: George Siotas, for the Plaintiff Guy Sanders, for the Defendant
HEARD: In Writing
Reasons for Decision
Overview
1The Plaintiff was involved in two motor vehicle accidents. Two separate actions were commenced by the Plaintiff that were ultimately ordered to be tried by Master Brott, one after the other. The Andany Defendants served both an offer to settle and ultimately an offer to contribute, the terms of which required Andany to pay the Plaintiff $60,000 inclusive of interest, plus costs of the action on a partial indemnity basis to be assessed or agreed upon. The Offer to Contribute is dated May 7, 2016, and the identical Rule 49 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 offer was made on March 14, 2016. The Defendant Wright made a Rule 49 offer which required Wright to pay the Plaintiff $10,000 plus costs to be assessed or agreed upon.
2The Plaintiff has accepted the aforementioned offers and the issue that this Court is now called upon to decide is the appropriate award of costs, and the proportion of those costs to be paid by the Defendants Wright and Andany.
3The Plaintiff accepted the Defendants’ offers on October 18, 2016. The trial of the two actions was to have been heard during the May 2016 sittings, but ultimately was adjourned to the fall 2016 sittings which would have commenced in mid-November 2016. Essentially then, the Plaintiff accepted the Defendants’ offers on the eve of trial. Both of the Defendants offers’ were made pursuant to Rule 49.
Position of the Plaintiff
4Plaintiff’s counsel seeks partial indemnity costs fixed in the amount of $37,500 plus HST. The amount claimed by Plaintiff’s counsel is based on approximately 137 hours at a partial indemnity hourly rate of $300, which would result in a total of approximately $46,500. This has been reduced to the amount claimed of $37,500.
5In addition, the Plaintiff seeks his disbursements totalling approximately $62,000 inclusive of HST. While there is a breakdown of the aforementioned disbursements, none of the actual accounts rendered by the various service providers, doctors et cetera, have been provided, nor has there been any breakdown of the various expert hours expended or the hourly rates charged by the experts.
Position of the Defendant Andany
6As to the quantum of the fees claimed by the Plaintiff, counsel for the defendant Andany suggests that the “customary amount of 15% of the principle sum of $60,000” should be the appropriate amount awarded for partial indemnity costs. In the alternative counsel for the Defendant Andany, without expressly citing the proportionality principle, suggests that the amount claimed of approximately $42,000 for fees represents 60 percent of the combined principle settlement amount, and by implication suggests that the amount claimed is not proportional to the total amount of the settlement.
7With respect to the division between the two Defendants of the amount that each Defendant should contribute, counsel for the Defendant Andany suggests that simply apportioning the costs exposure to the amount paid by each Defendant will be inappropriate, given that both of the Defendants faced a total claim that far exceeded the amount that the Plaintiff ultimately settled for. As well, counsel for the Defendant Andany suggests that the offer made by the Defendant Wright merely served to “prolong the trajectory of the litigation”, and that the difference between the two offers “simply amounted to risk appetite in the context of the recent amendments to s. 267.5(9) of the Insurance Act, R.S.O. 1990, c. I.8”. By implication it is suggested that the offer made by the Defendant Andany took into account the statutory deductible, while the offer made by the Defendant Wright did not.
8As for the question of the Plaintiff’s disbursements, counsel for the Defendant Andany takes issue with many of the disbursement claims made by the Plaintiff after the date that the Defendant Andany made its offer. In that regard, it is noted that in excess of $20,000 of the Plaintiff’s disbursements were disbursements incurred after the time when the defendant Andany served their Rule 49 offer. As well, it is noted that one of the disbursements from Collision Analysis totalling $8,620.42 was a disbursement that specifically responded to the Biomechanical Report of the Defendant Wright and thus had nothing to do with the Andany defendant.
9It is also argued that the disbursement costs incurred by the Plaintiff’s future care expert and the economist that calculated the Plaintiff’s claims for future care are disbursement costs, should not be paid by the Defendants, as they would not be reflected in the amount for which the Plaintiff hoped to settle. In that regard, it is noted that the Plaintiff accepted two offers totalling $70,000 inclusive of interest, which bears no resemblance to the totality of the Plaintiff’s claim for future care costs which would have assessed out in excess of $577,000. As well the settlement bears no resemblance to the Plaintiff’s claims for past and future income loss.
Position of the Defendant Wright
10Counsel for the Defendant Wright does not take issue with the amount of the Plaintiff’s claim for partial indemnity costs. In the written submissions, counsel for the Defendant Wright notes that the amount claimed of $37,500 plus HST “does not seem unreasonable”.
11With respect to the disbursements incurred prior to the filing of the respective defendants’ Rule 49 offers, counsel for the Defendant Wright notes that while the merits of the Plaintiff’s damage claims might have been questionable, the Defendants were nonetheless aware of the disbursement costs prior to the Rule 49 offers and, thus, those disbursement costs would have been within the contemplation of the offering Defendants and included in the “costs to be agreed or assessed upon” provision of their respective Rule 49 offers.
12Counsel for the Defendant Wright takes issue, however, with respect to the disbursement costs incurred after the Rule 49 offers were made, disbursements totalling approximately $25,000. It is suggested that the $25,000 would not have been within the contemplation of the Defendants and should not be allowed.
13With respect to how the costs should be split between the Defendants, not surprisingly counsel for the Defendant Wright argues that the costs should be split on the basis of the proportionality between the two offers, i.e. 15 percent as against the Defendant Wright and 85 percent as against the Defendant Andany.
Analysis
14In assessing costs after a trial the Court of Appeal has made it very clear that those costs must be reasonable as viewed from the perspective of the losing party (See Boucher v. Public Accountants Council for the Province of Ontario). The costs must also be proportional to the result obtained at trial.
15The assessment that this Court is called upon to make, however, is not an assessment made after a trial, where the Court can look at the reasonableness of the positions taken by parties in the context of all of the requirements this Court is required to take into account under Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
16Both of the Defendants filed offers that remained open for acceptance up until the time that the trial commenced. It was open to the Defendants to stipulate in their offers with respect to costs, that the Defendants would only be responsible for the costs incurred by the Plaintiff up to the date of the offer, and that thereafter the Defendants would not be responsible for the Plaintiff’s costs. If the Defendants had inserted such a provision, the position taken by the Defendant Wright would have considerable merit, i.e. that the Defendants should not be expected to pay for costs incurred by the Plaintiff after the date of the offer.
17It is open to any party to insert terms in an offer to settle that provide certainty to the parties with respect to their potential exposure, in the event an offer is accepted prior to trial. Both of the Defendants in this case chose to insert a provision with respect to costs that allowed the parties to either agree upon the Plaintiff’s costs or, alternatively, to have the costs assessed by the Court. Neither of the Defendants chose to insert a provision that would have limited their exposure with respect to costs, to the costs incurred up to the time when the offer was made. By making that choice the Defendants, in my view, have exposed themselves to the potential for an award of costs that includes the time and disbursements incurred by the Plaintiff, from the time when the offers were made up to the time when the offers were accepted.
18By inserting a provision in their respective offers that allowed the parties to either agree upon costs or to have them assessed, the parties by implication have deemed that if the costs were to be assessed by the Court, they would be assessed in the manner required by the Rules and in accordance with the developed case law.
19I am satisfied that the quantum of the Plaintiff’s claim for partial indemnity costs is reasonable. Taking into account the time expended and the experience of Plaintiff’s counsel, as well as the concession made by counsel for the Defendant Wright, the Plaintiff’s claim for partial indemnity costs shall be fixed in the amount of $37,500 plus HST.
20Dealing with the argument raised by counsel for the Defendant Andany that the costs should be fixed on the basis of the “customary amount of 15% of the principle sum”, while I acknowledge that such an approach is one generally deemed reasonable by the Plaintiff’s Bar, defence Bar and the insurance industry, it is not an approach that necessarily guides the Court when the Court is required to “assess” costs as required by both of the defendants offers. Given that the Plaintiff accepted the Defendants’ offers essentially on the eve of trial, it would not in my view be appropriate to award the customary amount of 15 percent particularly as both offers contemplated an assessment of costs as opposed to something based on the customary amount of 15 percent.
21The disbursement claim of the Plaintiff is one, however, that does require some judicial scrutiny as it relates to the exposure of the respective Defendants in terms of what would have been within the reasonable contemplation of the parties. I agree with counsel for the Defendant Wright that both of the Defendants would have had knowledge, and did have knowledge of their respective exposures to the Plaintiff’s disbursements, and that the disbursements incurred to the date of the respective offers totalling approximately $37,000 were disbursements that were reasonably within the contemplation of both of the Defendants. The real issue comes down to the disbursements claimed after the Defendants served their respective offers, disbursements that are disputed in the amount of approximately $25,000.
22I have commented on the reasonableness of disbursements in an earlier decision of mine, Hamfler v. Mink, 2016 ONSC 3331, where in part I noted that the comments of the Ontario Court of Appeal in Boucher, supra, while often quoted in relation to the assessment of the fees component of a costs award, are equally applicable to the determination of whether a disbursement is both properly assessable and reasonable in the amount claimed. In Hamfler, supra, I noted that a disbursement to be recoverable must be both reasonable, not excessive, and has been charged to the client. While I have no doubt the disbursements claimed by the Plaintiff in this case have been charged to the client, my concern still remains the question of whether or not the disbursements are reasonable and not excessive.
23In Hamfler I went on to note that the comments of the Court of Appeal in Zesta Engineering Ltd. v. Gluchier, as they related to the assessment of partial indemnity fees, were equally applicable to the assessment of the reasonableness of a disbursement. In that regard I noted that the task of the trial judge, in reviewing a claim for disbursements, was not one of merely rubber stamping a list of disbursements put before the Court by counsel at the end of the trial. In determining the reasonableness of an expert’s fee, various factors should be taken into account before reducing the disbursements claimed. In Hamfler, I noted a number of questions that could focus the Court’s attention, many of which would apply to an assessment after a trial. One of the factors however, that I noted, was whether the cost of the expert or experts was disproportionate to the economic value of the issue at risk and whether or not the evidence of an expert was duplicated by other experts. Fundamentally, however, in assessing the Plaintiff’s claim for disbursements, the Court must direct itself to the question of whether the amount claimed is fair and reasonable. Reasonableness and fairness dictates whether a disbursement is recoverable, not simply whether or not an expert has rendered an account that he or she considers appropriate, which the expert can then expect to have paid.
24Before incurring the cost of an expert counsel need to fundamentally ask the question whether there is a reasonable probability that the plaintiff will succeed with respect to various heads of damages. Where there is little to no prospect that a plaintiff will recover an award of damages for future care costs or future loss of income, Plaintiff’s counsel cannot expect that the court will “rubber stamp” the disbursement cost of an expert retained to address claims that have little prospect of success. All too often one of the major impediments to settlement are the unrealistic disbursements that have been incurred by plaintiff’s counsel.
25In this case there are a number of experts who were engaged by the Plaintiff, whose reports are not reflected in the totality of the amounts for which the Plaintiff ultimately settled this case. The claim for future care costs as well as the claims in relation to past and future economic loss, which would be reflected in the reports from J.K. Economics and the Vocational Assessment Report, could be viewed with the benefit of hindsight as not being fair and reasonable and were disproportionate to the economic value for which the Plaintiff ultimately resolved this case. The Collision Analysis Reports totalling approximately $8,600 can also hardly be viewed as fair and reasonable in relation to the actual outcome of this settlement, and certainly cannot be viewed as fair and reasonable from the perspective of the Defendant Andany.
26Taking into account all of the aforementioned considerations, I am assessing the Plaintiff’s disbursements and fixing them in the amount of $45,000 inclusive of HST.
27There remains the question of how the Plaintiff’s partial indemnity costs which I have fixed in the amount of $37,500, and the Plaintiff’s disbursements of $45,000 should be paid by each of the respective Defendants.
28Neither of the Defendants provided in their offers, any mechanism by which they expected the Court would exercise its discretion in terms of how either of the Defendants would pay the assessed or agreed upon costs. It was again open to either or both of the Defendants to have made such a simple provision in their respective offers. They chose not to. In my view, while the Defendant Wright ultimately made an offer that was substantially less than the offer made by the Defendant Andany, the fact remains that both Defendants were exposed to a substantial claim that I am told exceeded, based on the expert’s reports, something in the order of approximately $1.2 million. While the suggestion made by the Defendant Wright that each of the Defendants should pay their proportionate share of the Plaintiff’s costs based on the totality of their respective offers, such an approach in my view would not be fair and reasonable and certainly was not provided for in the offer made by the Defendant Wright, which was something that was open to the Defendant Wright to have provided for in their offer.
29Under the circumstances, I am of the view that the fair and reasonable approach to the division of the respective parties to the payment of the Plaintiff’s costs is that they should be paid on an equal basis. As such, each of the Defendants shall pay 50 percent of the total costs award of $82,500, or $41,250 by the Defendant Andany and $41,250 by the Defendant Wright.
Justice M.L. Edwards Released: January 12, 2017