CITATION: Empey v. Flindall, 2017 ONSC 4618

Kingston Court File No. CV-11-196-A1

DATE: 20170728

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Shawna Empey, Plaintiff

AND:

Jacqueline A. Flindall, Defendant

AND:

Janine M. Empey, Third Party

BEFORE: Mr. Justice Graeme Mew

COUNSEL: R. Steven Baldwin, for the Defendant

Mark Charron, for the Third Party

HEARD: in writing

COSTS ENDORSEMENT

mew j.

[1] On 3 May 2019, Shawna Empey was injured in a motor vehicle accident. She was in a car driven by her mother, Janine Empey, which was involved in a collision with another vehicle driven by Jacqueline Flindall.

[2] Shawna Empey sued Jacqueline Flindall who, in turn, brought third party proceedings against Janine Empey, alleging that Janine Empey`s negligence had contributed to the damages sustained by Shawna Empey.

[3] Shortly before the scheduled trial of all issues between the parties, the main action was resolved, with Jacqueline Flindall paying Shawna Empey $75,000, consisting of $45,000 for damages and $30,000 for the plaintiff`s costs.

[4] The third party, Janine Empey, agreed to the assessment of damages at $45,000. However, the apportionment of liability between the defendant and the third party could not be agreed and, accordingly, that issue alone was tried with a jury, culminating in a verdict, on 15 June 2017, which attributed 65% of liability for the accident to the defendant Jacqueline Flindall and 35% to the third party Janine Empey.

[5] Ms. Empey acknowledges that as a result of the jury verdict, she is obliged to indemnify the defendant for 35% of the $75,000 settlement between the defendant and the plaintiff, namely $26,250.

[6] She also acknowledges that the defendant is entitled “to reasonable and proportional partial indemnity costs of the third party action”.

[7] The defendant and the third party have been unable to agree on an appropriate amount for costs and have asked the court to fix those costs.

[8] The costs outline submitted by the defendant seeks $118,505.24, inclusive of H.S.T. and disbursements. The defendant’s calculation applies a partial indemnity scale to costs between 2011 and 18 April 2017 and substantial indemnity costs thereafter.

[9] The third party challenges the basis for any portion of the costs being determined on a substantial indemnity scale and argues that even on a partial indemnity basis throughout, the costs claimed are excessive and defend the principle of proportionality.

[10] The defendant points to the history of the litigation in which reports delivered by the plaintiff pitched a substantial claim including large general damages, income loss in excess of $500,000 and future care costs (plus, of course, prejudgment interest, costs and disbursements). The plaintiff’s disbursements alone amounted to $59,943.08. As noted in the defendant’s costs submissions, the plaintiff had sought to corroborate her demands by reference to her designation as “catastrophically injured” for the purposes of automobile statutory accident benefits and her entitlement to C.P.P. disability benefits.

[11] The defendant mounted an assertive defence, herself incurring disbursements related to the defence of the main action in the amount of $21,788.07.

[12] On 28 April 2017, after two pre-trials and further discussions between counsel, counsel for each the plaintiff, defendant and third party agreed to recommend to their respective clients that:

a. The plaintiff would accept an all-inclusive amount of $75,000;

b. The defendant would contribute the amount of $45,000;

c. The third party would contribute the amount of $30,000.

[13] Counsel for the plaintiff and defendant subsequently received instructions in accordance with those recommendations. However, counsel for the third party advised that his client would make no contribution to the settlement and would maintain a denial of liability on the third party claim for contribution to the defendant.

[14] On 12 May 2017, counsel for the plaintiff and the defendant agreed that the defendant would pay the plaintiff $75,000. This arrangement was memorialized in a “Settlement of Damages Between Plaintiff and Defendant with Contribution to Costs and Disbursements” agreement signed on 29 May 2017. It provided that the plaintiff was at liberty to have her costs and disbursements assessed by the trial judge and if the amount as assessed exceeded $30,000, the plaintiff could request the trial judge to order the third party to pay such amount in excess, directly to the plaintiff, subject to the discretion of the court regarding costs, but in no event would the defendant be liable to the plaintiff for any amount in excess of the $75,000 settlement.

[15] There was a third pretrial on 29 May 2017, which did not resolve the outstanding liability issue.

[16] On 30 May 2017, the defendant’s lawyer sent a letter to the third party’s lawyers in which they affirmed and repeated their offer to settle for the all-inclusive amount of $30,000, which would finally resolve all outstanding issues. The third party did not accept the offer.

[17] The defendant submits that the trial result entitles the defendant to the following contributions from the third party:

a. 35% of the damages, interest, costs and disbursements payable by the defendant to the plaintiff, being $26,250;

b. 35% of the partial indemnity costs and disbursements incurred by the defendant in the defence of the main action;

c. Partial indemnity costs from the commencement of the third party action to 28 April 2017 (the date of the proposal for the third party to contribute $30,000);

d. 100% of the disbursements relating to the successful prosecution of the third party claim; and

e. Substantial indemnity costs from 28 April 2017 to the conclusion of the proceeding for the successful prosecution of the third party claim by reason of the jury verdict was more favourable to the defendant than the offer of the defendant to settle the third party claim for the all-inclusive amount of $30,000.

[18] Of the disbursements incurred by the defendant, $18,511.78 was solely referable to the third part claim.

[19] Placing great emphasis on the ultimate agreement to settle the plaintiff’s damages for $40,000, the third party argues that the costs claimed by the defendant offend the principle of proportionality, being two and a half times greater than the total damages paid to the plaintiff.

[20] Furthermore, the trial of the third party action consisted of approximately two to three hours for jury selection, one and a half days of trial evidence, half a day for closing submissions and jury charge, and one day awaiting the jury verdict, a total of three and a half days.

[21] The third party also argues that notwithstanding similar seniority on the part of lead counsel, and the employment by the third party of junior counsel in addition, the total fees charged by the defendant’s lawyers are 50% higher than those charged by the third party’s lawyers.

Discussion

[22] It is quite clear that at the end of April, there was an opportunity for the entire litigation to be resolved on the basis of a $45,000 contribution from the defendant and a $30,000 contribution from the third party. Evidently, whoever was instructing the third party did not accept counsel’s recommendation.

[23] While it is debatable whether the documentary record of the settlement proposals at the end of April 2017 would constitute a formal offer to settle pursuant to rule 49.02, the record is sufficient to support the conclusion that there were at and around that time offers that would engage the discretion of the court pursuant to rule 49.13. And I am satisfied that the letter of 30 May 2017 constituted a rule 49.12 offer and that the defendant, by obtaining a jury verdict entitling it to $26,250 plus costs, achieved a better outcome at trial than her offer to settle.

[24] While always mindful of the principle of proportionality and of the criteria set out in rule 57.01 of the Rules of Civil Procedure, I cannot ignore the fact that the third party decided to play hardball over a low value claim and opted to go to a jury trial for three and a half days, rather than contribute $30,000 to settle the case in its entirety.

[25] I see no reason for the defendant not to be substantially indemnified for being required to go through a trial because of what I presume to be the third party’s insurer’s refusal to accept a recommendation from highly experienced counsel to settle for $30,000, and then not accepting the defendant’s rule 49.02 offer of 30 May 2017.

[26] I would add that proportionality is a two way street. A party who elects to have a jury trial in the Superior Court rather than settle an action for $30,000, who is subsequently adjudged to be responsible for a payment of $26,250 on the claim (excluding costs) should be held accountable. The plea of “proportionality” rings hollow when, as here, a party elects to roll the dice, then loses, but seeks to avoid more fully indemnifying the successful party for the costs it incurred as a result.

[27] The fact that the claim for costs greatly exceeds the value of the damages payable by the third party is not in and of itself a reason to decline the defendant her reasonable costs: Steelseal Waterproofing Inc. v. Kalovski, 2010 ONSC 2652, at para. 21. Indeed, to quote, Lane J. in 163972 Canada Inc. v. Isacco, [1997] O.J. No. 838, “to reduce the plaintiff’s otherwise reasonable costs on this basis would simply encourage the kind of intransigence displayed by the defendants in this case”.

Disposition

[28] Having regard to an appropriate amount to reflect a reasonable contribution by the third party towards the defendant’s costs incurred defending the main action as well as the costs of prosecuting the third party claim, applying a substantial indemnity scale for fees incurred immediately before and during the trial, I fix the costs of the third party action, payable by the third party to the defendant, in the all-inclusive amount of $75,000.

Graeme Mew J.

Released: 28 July 2017