Butler et al v. Royal Victoria Hospital et al, 2017 ONSC 6022

CITATION: Butler et al v. Royal Victoria Hospital et al, 2017 ONSC 6022

BARRIE COURT FILE NO.: CV 09-0684

DATE: 20171002

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Sarah Butler, Luke Butler, James Butler and Isaac Butler, minors by their Litigation Guardian Jaye Butler and Robert Butler and the said Jaye Butler

Plaintiffs

– and –

Royal Victoria Hospital, P. Bates, K. Rina, K. Corvari, W. Dekleyne, A. Fenton, A.M. Cichowicz, T. Haney, J. Stuart, E. Reyes, C. Stewart, S. Causey, T. Whitty, V. Ho and M. Hazlett

Defendants

Hilik Y. Elmaleh, Jeremy Syrtash and Michael Hershkop for the Plaintiffs

Valerie Wise and Julia Lauwers, for the Defendants

HEARD: In Writing

REASONS FOR DECISION ON COSTS

McCarthy J.:

[1] On May 5, 2017, I granted judgment in favour of the Plaintiffs for an amount in excess of $5.2 million. I then invited counsel to make written submissions in respect of costs and other ancillary matters. On September 29, 2017, I released supplementary reasons which had the effect of increasing the damages award to $5,346,856 inclusive of pre-judgment interest.

[2] I have now had the opportunity to review the costs submissions. The Plaintiffs are presumptively entitled to costs. As well, having obtained a judgment in excess of their valid offer to settle of $4.5 million plus costs on a partial indemnity basis, the Plaintiffs are presumptively entitled to costs on a substantial indemnity basis from the date of that offer, namely April 29, 2016, through to the end of trial.

The Plaintiffs’ Position

[3] The Plaintiffs seek costs in a range of between $1,990,247 and $2,487,583 plus HST depending on whether the court awards costs on a substantial indemnity basis throughout or a combination of partial indemnity costs to the date of the offer together with substantial indemnity costs thereafter. In addition, the Plaintiffs seek recovery of both taxable disbursements and exempt disbursements totalling $526,903.11.

The Defendant RVH’s Position

[4] The Defendant Royal Victoria Hospital (“RVH”) does not dispute the Plaintiffs’ entitlement to costs but suggest a more modest amount of $1,170,000 for fees (inclusive of HST) and $330,000 in disbursements (inclusive of HST). Costs should be at a partial indemnity rate to the date of the offer to settle; the court may decide to award substantial indemnity costs after April 29, 2016.

The Approach to the Litigation Taken by the Defendant

[5] While I was generally unpersuaded and often unimpressed with some of the expert evidence proffered by the Defendants through its witnesses, there was nothing about the manner in which the case was defended which should form the basis of a costs sanction. Indeed the comportment of Defendants’ counsel at trial was professional and courteous. To be sure, the cross-examinations of the Plaintiffs’ many witnesses were thorough and at times, aggressive and robust. That is to be expected, however, and even welcomed when such large sums are being claimed for damages by the Plaintiffs. Defendants’ counsel had not only a right, but also, I would suggest, a duty to explore every aspect of the claim for damages, to contest the expert evidence presented, and to challenge the Plaintiffs’ evidence and theory of the case. That is the essence of advocacy.

[6] As much as the advocate is obliged to make an argument or advance a position, the court is equally obliged to make findings, draw inferences, and assess the credibility of witnesses and the reliability of evidence. A court may choose not to accept the evidence of any particular witness. A court may give limited weight to tendered evidence. A court may prefer the evidence of one expert over another. A court may find a witness, even an expert one, to be lacking in credibility, to be advocating or to be drifting outside his or her field of expertise. That is all within the purview and power of the court. Courts routinely make determinations of issues and findings of fact contrary to those advanced or suggested by an advocate. An adverse finding should neither serve to reduce that advocate’s argument to an absurdity or an abomination, nor serve to undermine the credibility of the person making the argument.

The Presentation of the Case

[7] Unquestionably, the Plaintiffs presented an enormously complex case in a highly structured, efficient, and focused manner. They did so within the allotted time frame. They sought limited indulgences from the court in respect of preparation time or rescheduling witnesses. In a word, the presentation of the case by Plaintiffs’ counsel was commendable, even remarkable. I have no difficulty in concluding that the presentation of the case required the attention and dedication of three lawyers plus a team of support staff from start to finish.

Litigation Tensions

[8] While the parties were generally able to maintain their civility before the court, it became apparent during the trial that tensions between the parties ran high and that there existed a fair degree of acrimony. This often expressed itself during the objections made by each side and the accompanying submissions. It was made manifest in the respective costs submissions which, although thorough and of great assistance to the court, were coloured by the palpable disdain each side had for the manner in which the claim was respectively prosecuted and defended.

[9] It was not surprising that tensions often ran high between the opposing sides. The stakes were obviously significant. Five weeks is a long time to spend in the company of persons who do not wish you or your client success. Add to this the more than eight years of litigation leading up to trial which included days of examinations for discovery, multiple pre-trials, and countless exchanges of correspondence, and one could only expect, regrettably, that the parties would have developed a profound dislike and distrust of each other. Such is civil litigation.

[10] On balance, however, it appears to me that, to use an old hockey expression, both sides “gave as good as they got.” I have therefore treated the various aspersions cast back and forth between the parties as offsetting, neutral factors in my costs consideration.

Rule 57.01

[11] Taking into account, then, the factors that a court may consider when awarding costs in a proceeding, I have concluded as follows:

a) The principle of indemnity weighs heavily in favour of ensuring that the Butler family’s legal bill is satisfied as much as possible by a costs award. This will assist in reserving the funds of the judgment for the losses the family has suffered and the needs that Sarah Butler will have.

b) RVH is a sophisticated litigant who must have well understood the costs exposure that loomed once litigation became inevitable. I am not persuaded by the argument made by counsel for the Defendants that the amounts charged to RVH by her firm ought to be the measure of what the losing side might be expected to pay in costs. It is well understood that “defence” billings are often fixed by the institutional client payor; that defence counsel often sets rates based partially upon an ongoing relationship with that institutional client; that defence can expect his or her fees will be paid regardless of the litigation’s outcome; and that r. 49.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“the Rules”), except in exceptional circumstances, does not call for a successful defendant to be paid the kind of costs a plaintiff might expect even if that defendant were to obtain a judgement that was more favourable than a settlement offer it had made.

c) It is true that the amount claimed by the Plaintiffs in the statement of claim was almost five times the amount of the judgment. It is also true that at trial, the Plaintiffs sought an amount that was well in excess of the damages actually awarded. However, the Plaintiffs did attempt to settle the claim prior to proceeding to trial with an offer to settle which was bettered by the judgement received at trial. Just as one should not be overly critical of Defendants for stoutly resisting claims under various heads of damages, one should not be critical of Plaintiffs advancing claims that were supported by expert evidence, which if accepted, might have yielded the numbers claimed.

d) The court found no failure to mitigate on the part of the Plaintiffs and no grounds upon which to reduce the amounts awarded for the contingencies advanced by the Defendants. In short, these affirmative defences were tried and found wanting. Having said that, the Defendants were not unjustified in advancing ultimately unsuccessful defences in respect of causation, damages, mitigation, and contingencies. In respect of the attention-deficit hyperactivity (ADHD) “defence”, the point is well-taken that the spectre of ADHD was first raised by an educational assessor, Dr. Johnston. Moreover, the possibility of ADHD playing a role in Sarah’s presentation was raised by the Plaintiff’s own expert, Dr. Marcovitch. Nor could the learning difficulties and behavioural problems exhibited by Sarah’s siblings be expected to escape the attention of diligent counsel. To raise at least some question as to whether some of Sarah’s problems might be related to this condition was fair play. Finally, it was clear that Sarah’s behavioural problems, whatever caused them, undergirded the suggestion by some of the Plaintiffs’ experts that she would require 24-hour care for the rest of her life.

e) The proceeding was enormously complex, requiring a thorough knowledge of issues including neo-natal health complications, hypoxic-ischemic encephalopathy, ADHD, operational defiant disorder (ODD), genetic testing etc. Counsel for the Plaintiffs impressed the court with an almost encyclopedic knowledge of medical terminology and literature. Counsel was clearly well-prepared to challenge all aspects of the Defendants’ experts’ opinions. This could have only been made possible by hundreds of hours of research, review, and preparation.

f) The issues of causation, damages, mitigation, and contingencies were of the utmost importance to the Plaintiffs. Indeed, the litigation, being a one-time opportunity at receiving compensation for Sarah’s condition, might well serve as the most important event in her life.

g) Although there was a suggestion by the Plaintiffs that there was some initial obfuscation and tampering with medical records by the Defendants, I am satisfied that by September 2007, before litigation commenced, the hospital had admitted that the nurses had artificially ruptured Sarah Butler’s membranes and that to do so was outside their scope of practice. Whether that rupturing of the membranes fell below the standard of care was more problematic. Having heard no expert opinion, it would be inappropriate for this court to conclude that the hospital ought to have admitted, at any particular time, that a breach of the standard of care occurred.

Proportionality

[12] Proportionality must also be considered. It cannot be said that the time, effort, and expense put in by the Plaintiffs’ solicitors was in any way disproportionate to the importance of the issues and the result achieved. A combined total of 61 expert reports were commissioned by the two sides on the issues of liability and damages (38 for the Plaintiff and 23 for the Defendants). While less than half of those experts were required to testify in court, liability was not admitted until the eve of trial. Of course by that time, not only were the disbursements for expert reports on liability incurred, but also time and disbursements for preparation of direct examination, cross-examination, research and preparation by and with experts would have been well advanced. Any good advocate knows that the staging of a complex trial, like that of a polished stage play, requires endless hours of preparation, practice, and repetition.

[13] While percentages cannot always be used to establish a barometer in respect of the proportionality of costs to a result, I would take into account that the factor of between 15 and 20 percent is often used in the insurance industry as a reasonable contribution for partial indemnity costs (the higher end being reserved for matters that are close to trial). Substantial indemnity costs must of course attract a higher return for the successful party. As in Rochon v. MacDonald, 2014 ONSC 591, 118 O.R. (3d) 491, I would take judicial notice of the fact that in most cases, contingency fee agreements between solicitor and client in personal injury claims leave it highly unlikely (especially because any ultimate fees charged would have to survive court scrutiny under r. 7.08 of the Rules) that a lawyer would elect to charge or would succeed in recovering the kind of hourly rates claimed by senior counsel. Conventional percentages in such agreements range between 30 and 33 percent of the overall recovery plus disbursements. The higher end of the range is usually reserved for matters that have proceeded to trial with a successful outcome. Courts have routinely approved such fees in r. 7.08 applications. This of course would be all that could be charged to the client and would represent 100 percent of the total of costs to be charged. It follows that awarding costs to the Plaintiffs in excess of what would be the high end of allowable contingency fees percentages would have the effect of over-compensating for costs.

[14] This matter did proceed to trial and the Plaintiffs were successful. In my view, 30 percent is appropriate for “substantial indemnity” costs that a losing party should be expected to pay. “Substantial” carries with it the idea that recovery is near to, but not equal to, total recovery. The successful party must still be expected to pay some of their own legal bill. Assuming for a moment that Plaintiffs’ counsel will be entitled to charge the Butlers 33 percent on the $5,568,393 recovery (inclusive of pre-judgment interest), which results in fees of $1,837,570 plus HST, and given that I have found that full substantial indemnity costs are only appropriate in the post-offer period, I find it reasonable and appropriate to blend the partial indemnity and substantial indemnity factors and to apply an overall factor of 27 percent to the award made to the Plaintiffs (inclusive of pre-judgment interest). This results in a total of $1,503,466 (rounded) for the fees portion of costs. When one adds HST to that amount for fees, the total for fees inclusive of HST is $1,698,917 (rounded).

[15] Approaching the matter in this way is reasonable and fair because: (a) the principle of proportionality has been respected and applied; (b) the principle of indemnification has been respected to the extent possible. In this regard, I note that the Butlers will be able to partially offset their residual contribution to the contingency fee (which I would estimate to be in the neighbourhood of $377,537) with the amount awarded for pre-judgment interest; (c) the bettering of the offer to settle and the intended effect of r. 49.10 of the Rules has been recognized; (d) the enormous complexity of the litigation and the importance of the issues has been acknowledged; (e) the Defendants, having been unsuccessful in prevailing upon the court with respect to some of their defences and theories, nevertheless succeeded in limiting the damages assessment to an amount well below what the Plaintiffs sought at trial; and (f) no costs sanction against the Defendants is appropriate in this case.

[16] While it might be suggested that the existence of a contingency fee agreement should not affect the Plaintiffs’ recovery of costs, I was referred to no binding authority that this should be the case. Indeed, not only are costs left in the discretion of the trial judge under s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, but r. 57.01(1)(i) of the Rules invites the court to consider any other matter relevant to the question of costs. In attempting to provide reasonable indemnity to the Butler family, I must presume, unless advised otherwise, that a contingency fee arrangement governs the solicitor and client arrangement.

Disbursements

[17] I move to the disbursements claimed. As stated by my brother Edwards J. in Hamfler v 1682787 Ontario Inc., 2011 ONSC 3331, 211 A.C.W.S. (3d) 803, at para. 14, disbursements, like fees, must be subject to the overriding principles of reasonableness and proportionality. As well, the onus remains on the party asserting entitlement to payment to satisfy the court that the particular item is one contemplated under the Tariff “A” of the Rules, which was reasonably necessary for the case: See Gutbir (Litigation Guardian of) v. University Health Network, 2011 ONSC 7635, 211 A.C.W.S. (3d) 793, at para. 46.

[18] The disbursements claimed by the Plaintiffs are, by and large, reasonable. I would reduce the photocopying amount by approximately 30 percent, given that some proportion of photocopies was for internal use only. No adequate explanations were given for the following disbursements: Ellen Rosen, Eric Paul Diamond, Evergreen Rehabilitation, and Dynamic Educational Services. On the other hand it was entirely reasonable for the Plaintiffs to retain the opinions of an Obstetrician (Dr. Barret), a medical researcher, as well as standard of care experts Dr. Wood and Dr. Farine. I am unable to find that any of the remaining claimed disbursements claimed by the Plaintiffs were unreasonable or unnecessary for the successful prosecution of the claim.

[19] The Defendants’ decision not to admit a breach of the standard of care until the eve of trial fully justified the Plaintiffs preparing to litigate this case on an “all issues” basis. As well, by raising the inheritability, ADHD, and genetic defences, the Defendants took a calculated risk and lost: the Plaintiffs were obliged to enlist the assistance of the litany of experts who were paraded before the court. Moreover, the Defendants’ experts, having formulated, adhered to, or adopted the Defendants’ theories of causation and mitigation, needed to be challenged and not just by some surface level cross-examination. The Plaintiffs were obliged to dive well below the surface of the reports in researching the sub-facial literature and materials which formed the bases of these opinions. I have no doubt that the Plaintiffs were forced to expend thousands of hours locating, obtaining, and analyzing hundreds of technical and complex medical studies, books, and literature. The Plaintiffs point to the July 8, 2015 report of Dr. Finegan, containing 292 footnotes, as an extreme yet compelling example of the challenge they faced and met. I could not agree more. Faced with Dr. Finegan’s extensive and impressive C.V. and her carefully formulated, researched, and supported expert opinion linking most of Sarah’s problems to genetically inherited ADHD, the Plaintiffs were entirely justified in preparing for a cross-examination, which in the end, eviscerated her expert opinion and left her with little credibility in the eyes of the court. In light of the above, I would reduce the Plaintiffs’ claim for disbursements by $21,735 and allow the Plaintiff disbursements in the amount of $441,198 for taxable disbursements plus HST for a sub-total of $498,553.74. To that I would add the non-taxable disbursements claimed for a grand total of $502,342.

Disposition

[20] For the reasons set out above, the Defendants shall pay the Plaintiffs costs of the action in the amount of $2,201,259 (rounded) inclusive of fees, HST, disbursements. Those costs are fixed and payable forthwith.

J. R. McCarthy, J.

Released: October 2, 2017