Court File and Parties

COURT FILE NO.: CV-14-0826 DATE: 20170623 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: KATHERINE PYATT, BRITNEY WHITE-YOUNG, TRAVIS WHITE and ADAM PYATT, minors by their Litigation Guardian, KATHERINE PYATT Plaintiffs – and – SUBODH MISHRA, Litigation Administrator for the estate of ROSA ROESSLE Defendant

Counsel: M. Bourque, for the Plaintiff G. Sanders and A. Wachna, for the Defendant

HEARD: March 7, 2017 J.R. McCarthy J.:

Decision on Costs

[1] The Plaintiffs were unsuccessful in an action seeking damages for personal injuries arising out of a motor vehicle accident which took place on October 20, 2008. On December 7, 2016, after a trial lasting three-and-a-half weeks, a jury returned a verdict of no negligence on the part of Rosa Roessle (“the Defendant”); although the jury assessed the damages of the Plaintiffs at over $300,000.00, the net result of the finding of no negligence resulted in no monetary recovery by the Plaintiffs. In line with the verdict, the court dismissed the action. The parties made submissions in respect of costs on March 7, 2017.

The Position of the Defendant

[2] The Defendant seeks costs in the amount of $485,552.41, made up of fees of $358,425.00, H.S.T. on those fees and $127,127.05 for disbursements as detailed in its Amended Bill of Costs. The Defendant seeks costs at a partial indemnity rate up to November 2, 2015 and at a substantial indemnity rate thereafter.

[3] The Defendant has furnished the court with two sets of offers to settle:

i. The first, dated October 27, 2015 (with an effective service date of November 2, 2015), containing offers of $160,310.00 plus costs to be agreed upon or assessed in respect of the claims of Katherine Pyatt and three separate amounts for the claims of her three children made under the Family Law Act, R.S.O. 1990, c. F.3 (FLA);

ii. The second, dated December 3, 2015, containing a reduced offer of $113,820.00 in respect of Katherine Pyatt and a reduced offer in respect of the FLA claims of the three children.

Both sets of offers were made under r. 49 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The second offer served to revoke the first offer. The second offer was never revoked. A letter dated May 11, 2016 from defence counsel to plaintiff’s counsel served to clarify the offer and to propose an alternative way of calculating an all-inclusive amount for settlement.

[4] The Defendant maintains that the proceedings were of moderate complexity and that the issues of both liability and damages needed to be ultimately determined by a jury after a lengthy and fulsome hearing. However, the adjournment requests by the Plaintiffs coupled with the Plaintiffs’ refusal to agree to non-controversial documents going into evidence on consent and to disclose a list of witnesses both served to lengthen the trial.

[5] The Defendant also notes that the Plaintiffs were well aware of the position being taken by the Defendant in respect of liability: that there was no negligence on the Defendant’s part because the damages were caused by an “inevitable accident”. They were in receipt of the Defendant’s accident reconstruction and human factors reports as well as the statements of lay witnesses, all of which supported the Defendant’s position. Having retained competent counsel, it could not have been lost on them that they ran a substantial risk of recovering nothing should the jury decline to find negligence as against the Defendant. One must presume that they also understood the risk they ran of being exposed to costs in the event that they failed to obtain an award more favourable than the offer made by the Defendant.

The Position of the Plaintiffs

[6] The Plaintiffs suggest that the parties should each bear their own costs of the proceeding. They argue that the finding of inevitable accident by any trier of fact was both unexpected and exceptional; it should serve as the basis to deny the Defendant its costs. Moreover, given Katherine Pyatt’s injuries and the circumstances surrounding the motor vehicle accident, it was not unreasonable for her to pursue her claim all the way to a jury verdict. Indeed, in spite of returning a verdict which found no negligence on the Defendant’s part, the jury did assess damages above $300,000.00, a figure much larger than either of the offers made by the Defendant. In these particular circumstances, an order that each party should bear its own costs is appropriate given the principles governing costs and access to justice. The Plaintiffs rely on the decision of Moorhouse J., in Drabik v Harris et al., 1956 ONSC 151, where the judge, having dismissed the Plaintiff’s claim on the basis of inevitable accident, nonetheless elected not to award any costs. The Plaintiffs also cite the decision of Dinham v Brejkaln, 2006 ONSC 12713, where Cumming J. found reason not to award costs because of the exceptional circumstances present in the case.

Analysis

[7] Pursuant to s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, 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.

[8] Rule 57.01 of the Rules of Civil Procedure sets out the general principles that a court may consider in exercising its discretion to award costs of a proceeding.

[9] Rule 49.10(2) provides the court with guidance for the exercise of that discretion when it is dealing with a result at trial whereby the Plaintiff obtains a judgement that is as favourable as or less favourable than the terms of a Defendant’s offer to settle:

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.

[10] In spite of the clear wording of r. 49.10(2), the Plaintiffs do not seek partial indemnity costs to the date of the Defendant’s offers. Conversely, the Defendant seeks partial indemnity costs to the date of their offer as well as substantial indemnity costs thereafter. The Defendant furnished the court with no authorities in support of its request for partial indemnity costs to the date of the offer and substantial indemnity costs thereafter.

[11] While I am well aware that costs are discretionary and that the court is not bound to apply the costs rule set out in r. 49(10)(2), I am not satisfied that the court should depart from that tried and tested rule without good reason. I certainly can think of no reason why the Plaintiffs should be deprived of their costs, however modest they might be, up to the date of the Defendant’s first offer. Inexplicably, however, the Plaintiffs have failed to provide the court with any guidance or information with which to arrive at a partial indemnity award to the date of the offer. Given that the action was commenced well before the date of the Defendant’s first offer and that the dates on some of the expert reports filed as aide memoires for the court pre-date the offer dates, it is puzzling that the Plaintiffs should not have had had some “pre-offer” bill of costs to present to the court. The court cannot be asked to fill in the blanks left by the Plaintiff or to speculate on what the costs incurred by the Plaintiffs from the outset of the case to the Defendant’s offer might be. I find it just and appropriate, then, that the parties should bear their own costs of the proceeding up until the date of the offer to settle made by the Defendant (November 2, 2015).

[12] Though the Defendant is presumptively entitled to costs from the date of the first offer to settle forward, I am not prepared to award substantial indemnity costs. In my view, it is just and appropriate to award costs to the Defendant on a partial indemnity basis only. While I acknowledge the principle of indemnity and recognize that the Defendant has expended considerable time and monies in defending this matter, three principles (b, c, and e) under r. 57.01(1) argue against awarding substantial indemnity costs to the Defendant:

i. (b): given the plain wording of the costs consequences under r. 49(10), the Plaintiffs could not have expected to pay any more than costs on a partial indemnity basis once they were in receipt of the offer to settle.

ii. (c): the proceeding was not overly complex. It was a standard personal injury action arising out of a motor vehicle collision involving two principal parties. While the issue of liability was animated by the defence of inevitable accident, there was nothing particularly challenging or novel about that legal concept which required extraordinary effort on the Defendant’s part.

iii. (e): there was no conduct by either side that served to lengthen unnecessarily the proceeding. Given the issues of liability, inevitable accident, contributory negligence, general damages, past and future loss of income and future care costs, a trial lasting some 18 days was not unreasonable. Indeed, the time estimate for trial of both counsel proved to be accurate.

[13] To the above, I would add that, although unsuccessful in establishing liability for the accident itself, the Plaintiffs did receive an assessment of damages which reflected the seriousness of Ms. Pyatt’s injuries and the costs of future care associated with those injuries. Moreover, the jury did not find Ms. Pyatt in anyway responsible for the accident; this would have been impossible in any event because the structure of the questions for the jury permitted them to skip over any consideration of contributory negligence once it found no liability against the Defendant. Nevertheless, the point remains that Ms. Pyatt was not found to have caused or contributed to the accident or her injuries in any way.

[14] The net result of the jury’s verdict was that the Plaintiffs recovered none of the damages assessed because the Defendant was not found to be negligent. Given the evidence and arguments which went before the jury, one can reasonably conclude that the jury accepted the defence of inevitable accident as the basis for its answer to the negligence question. It is clear that there is a high threshold for establishing the inevitable accident defence: see Telfer v. Wright, 1978 ONCA 1262. For that reason, I cannot agree with the suggestion by the Defendant that the evidence in favour of inevitable accident was so strong that no other outcome on the issue of negligence was likely. Like any affirmative defence, it was the Defendant’s case to prove. Not only was the evidence open to a number of different inferences on the part of the trier of fact, but there was cogent expert evidence called by the Plaintiff which supported the deceased having experienced the cardiac event after the collision. The issue was by no means pre-determined. A judge sitting alone or another properly instructed jury could have rejected the defence and instead returned with a finding of negligence against the deceased for having failed to exercise proper care and control of her vehicle and allowing it to drift into oncoming traffic.

[15] Costs of a proceeding must, of course, be reasonable. In Boucher v. Public Accountants Council for the Province of Ontario, 2004 ONCA 14579, at para. 37, Armstrong J.A. cast the overriding principle of reasonableness as an access to justice issue:

The costs system is incorporated into the Rules of Civil Procedure, which exist to facilitate access to justice. There are obviously cases where the prospect of an award of costs against the losing party will operate as a reality check for the litigant and assist in discouraging frivolous or unnecessary litigation. However, in my view, the chilling effect of a costs award of the magnitude of the award in this case generally exceeds any fair and reasonable expectation of the parties.

[16] Access to justice, for it to have any real meaning for the average person, must encompass, not only the ability of a litigant to walk through the doors of a court room, but also to exit through those same doors as near to financially intact as when they entered as is possible. So often, we speak of access to justice from a front-end perspective only: can a person with a legitimate claim, defence or complaint be heard in a timely, affordable and efficient manner? Yet, should the end result of the process prove to be ultimately ruinous for a person bringing a legitimate if unsuccessful claim through the system, the ideal of access to justice is undermined. Civil jury trials are often lengthy. They have become increasingly expensive. They are always unpredictable; so much so that the potentially nightmarish costs consequences for a Plaintiff of modest means proceeding through to the end of an unsuccessful jury trial has spawned the entirely new industry of costs insurance. While this is a development to be welcomed, for it cannot help but embolden and girder persons with legitimate claims, it also comes at a cost.

[17] Against this, of course, must be balanced the rights of Defendants, including insurance companies, who are obliged to defend and indemnify on behalf of their policy holders the vast majority of claims brought for personal injury claims. In my view, it would be unfair and inequitable to deny these insurers the recovery of some of their costs in successfully defended personal injury actions. Indeed, the spectre of costs is a motivating factor for settlement in most, if not all, personal injury accidents. Access to justice for personal injury plaintiffs should not be taken to mean unlimited and risk-free access. This is especially so when a Defendant in a personal injury action has made a legitimate and meaningful offer to settle. For r. 49(10) to have the desired effect of encouraging settlements and avoiding costly, time consuming and unpredictable trials, it must be respected and employed.

[18] In the circumstances of the case before me, I find that it is entirely inappropriate to saddle the FLA claimants with any costs for four reasons:

i. the FLA claims were derivative of the principal claim of Katherine Pyatt;

ii. the time spent presenting and defending the FLA claims was miniscule compared to that spent presenting and defending the principal claim;

iii. a significant portion of the testimony of each of the FLA witnesses bore on the issues of damages suffered by Katherine Pyatt, not on their respective losses of care, guidance and companionship; and

iv. to find any of the FLA plaintiffs liable to pay costs would be entirely out of proportion to the value of their claims and the importance of the FLA issues relative to the issues of inevitable accident, liability, damages for pain and suffering, past and future loss of income and future care.

[19] I would as well adopt the reasoning of my brother Perrell J., who, in Boyuk v. Loblaws Supermarkets Limited, 2007 ONSC 5522, declined to award costs against the Family Law Act plaintiff following an unsuccessful personal injury claim:

“…if unsuccessful Family Law Act claimants were automatically exposed to costs, it would discourage family members from making these claims, although the legislation clearly intended that such claims are available to them. Apart from the lack of success, which really depends upon the failure of her mother’s claim, there is nothing to justify a costs award against Peggy Ann Boyuk, and I decline to make one.”

[20] I have concluded that any costs award in favour of the Defendant should be against the Plaintiff Katherine Pyatt only.

Disbursements

[21] Turning to the Defendant’s Bill of Costs, for the reasons set out above, I am only prepared to award it costs from November 3, 2015 onwards. Dealing first with the claimed disbursements, I note that fees paid to Giffin Koerth (a.k.a. -30-) engineers exceed $55,000. These fees are comprised of analysis, correspondence, document review, reporting, site attendance, travel time and expenses, examinations, testing, drawings, meetings, preparation and court attendance. These fees strike me as wildly excessive and grossly disproportionate to the engineer’s participation in the trial. This is even more so because a pre-offer fee of nearly $10,000 appears to have been charged back in March 2013. The Defendant declined to furnish the court with one invoice from the engineering firm; therefore, there is nothing upon which the court can conduct an analysis of the reasonableness of these charges. In Hamfler v. 1682787 Ontario Inc., 2011 ONSC 3331, 38 C.P.C (7th) 398, at para. 25, M. Edwards J. correctly stated that, at a minimum, the court should be provided with the time spent and hourly rates. That was simply not done here. The amount claimed far exceeds what a person might reasonably expect to have to pay for that part of the proceeding. I find that a fair and reasonable sum for what Giffin Koerth provided to the proceeding should be limited to $25,000 only.

[22] The Defendant failed to provide the court with any supporting invoices with respect to any of its claimed disbursements. There are mystery disbursements which remain completely unexplained, either through submissions or back-up documentation:

i. KAP Litigation Services on August 8, 2016 for $1,894.40;

ii. “Fees for 2044004 Ontario Inc. re: reading reports, teleconference with counsel, court attendance and travel time” in the amount of $2860.62; and

iii. “Fee re: experts occupational therapy service (Karen Rucas)” in the amount of $350.00.

I am not prepared to allow for any of these.

[23] I am not prepared to allow for subpoena fees for the following witnesses whose evidence the court did not receive at trial: Jilian Leblanc, Mark Foris, Micahel Briscoe, Peter Tan Hardy, Serge Babineau, Luwina Hui, Robert Arthur Brown, Grant Pickess, Anabelle Garland, Dr. Shari Gellar, Dimitirios Dimitraskoudis, Brian Renken, Serge Babineau, Sarah Braun, Barry J. Robinson and Evan Caves. The court should have been advised why these persons were summonsed, what they might have had to offer in evidence and why they were not ultimately called to testify. If these witnesses were not obliged to attend court pursuant to the various summonses, then the Defendant should be able to recoup these costs since the cheques should not have been cashed by the witnesses until their attendance at court was called for. It follows that process fees to serve the summons on witnesses who did not attend court should similarly be disallowed.

[24] I am mystified why the Defendant felt the need to serve a summons on Dr. Alpert, Philip Nafekh, Dr. Gottlieb or Stephen Mader, all of whom were experts called to testify by the Plaintiffs. I am not prepared to allow for these charges nor the process fees for service of the subpoenas. I am also not prepared to allow for the fee for Dr. Kreder’s attendance at trial. If anything, his testimony served to bolster the strength of the Plaintiffs’ case in that he opined that the injury to Katherine Pyatt was serious and permanent.

[25] I am not prepared to allow for the cost of transcripts for the evidence at trial of various witnesses. No reason was provided for why this expense was necessary or how it added to or assisted the trial process. Indeed, with two counsel representing the Defendant, one would expect that one of them would be able to maintain careful notes while the other counsel was engaged in either direct or cross examination.

[26] Nor am I prepared to allow for subpoena fees for Dr. McCall or Dr. Sauriol, neither of whom attended trial, or the costs of serving the respective subpoenas.

[27] I am not prepared to allow the charges related to filing or attendances at Oshawa court. There was no information provided as to why an attendance in Oshawa was necessary, what motion the Defendant was responding to, what the outcome of the motion was or how the motions judge ruled on costs.

[28] The claims for the remaining experts are reasonable. The claims for rental cars, accommodations and meals are allowed. Although not receipted, these do not strike me as exaggerated or excessive in any way. The charges for parking, copying, trial exhibits, transportation for witness Spon and the subpoena fees and charges related to the witnesses who did attend are also allowed.

[29] I am therefore prepared to allow the balance of the items claimed in the amount of $17,725.00. There was no back-up documentation for any additional taxes claimed. I would then allow the amount of $25,000 for Giffin Koerth, to arrive at a total of $42,750.00 for disbursements.

Fees

[30] I turn now to the claim for fees. The “Ledger” provided by the Defendant is of little utility to the court given that all explanations for the time spent on the file have been redacted because of solicitor-client privilege. Not only is this frustrating to the court in attempting to fix costs, it is also largely if not entirely unnecessary. Rarely would a brief description of work done on a file such as “preparation of witnesses” or “discussions with experts” be captured under solicitor-client privilege.

[31] The Plaintiffs, for their part, did not file a bill of costs. This would have been helpful for the court as it might have provided some insight as to what the Plaintiffs might reasonably have expected to pay for proceeding to trial. At the very least, it might have provided a comparable of the number of hours the losing side spent preparing and prosecuting the case.

[32] The Defendant provided greater detail in its Bill of Costs, although most of the entries are simply summaries of file activities carried out by certain individuals over large tracts of time. This is not ideal, to say the least. From that, I am nevertheless able to extrapolate that the claim for fees on a partial indemnity basis from November 3, 2015 to the end of the trial is approximately $212,000. The hourly rates charged for the various lawyers and clerks who worked on the file appear to be conventional and reasonable.

Disposition

[33] While the claim for fees is not unreasonable for the preparation and prosecution of a multi-issue case, I am not prepared to award that sum to the Defendant. In my view, reasonableness and access to justice demand that a good degree of moderation is called for on the part of the court in order to arrive at a proper costs award. Bearing in mind the overall result, the exceptional circumstances of inevitable accident, the damages assessment by the jury, the offers to settle and the principles set out in r. 57.01, I have arrived at the conclusion that a fair and reasonable amount for a costs award is $125,000.00. I would add H.S.T. to that of $16,250.00. Adding those amounts to the total allowed for disbursements, I order the Plaintiff Katherine Pyatt to pay the Defendant its cost of the action, inclusive of fees, H.S.T. and disbursements, in the total amount of $184,000.00.

J.R. McCarthy J. Released: June 23, 2017