COURT FILE NO.: 11-50518

DATE: 2018/05/18

COURT OF ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

A.B.

Plaintiff

AND

KAITLIN WAITE and CAROL LEROUX

Defendants

Note: By order of the court, due to the nature of certain aspects of the evidence in this matter, the identity of the plaintiff is protected by a publication ban. It is forbidden for any person to publish information that may reveal the identity of the plaintiff or members of her family.

COUNSEL: David Cutler for the Plaintiff

Todd J. McCarthy, for the Defendants

BEFORE: Mr. Justice Calum MacLeod

HEARD: May 14, 2018

RULING ON COSTS

[1] This was a four week jury trial in which the plaintiff obtained a jury verdict of $42,250.00 for general damages and $76,121.00 for past wage loss but was unsuccessful in persuading the jury of any future loss.

[2] Following application of the statutory deductible for general damages and credit for income replacement amounts already received from other sources, I granted judgment for the net amount of $5,760.00. The award consisted of net general damages of $4,266.67 plus pre-judgment interest. The past loss was entirely eliminated by collateral benefits already received by the plaintiff.

[3] The facts underlying the decision are outlined in the threshold motion[^1] and in my post-trial rulings[^2]. I will not repeat them here other than to reiterate that this was a minor accident which allegedly triggered a lifetime of chronic pain. There was evidence to support the plaintiff’s case but the jury was not convinced. The net result of the trial is reflected in the post-trial rulings and is reflected in paragraph 1 above.

[4] I must now deal with costs. The question is whether it is reasonable for the plaintiff or the defendant to pay costs and in what amount. Given the result, the offers to settle, the timing of the offers and other factors, I have awarded costs to the defendants in the amount of $70,000.00.

Factors in Awarding Costs

[5] Trial judges in Ontario are expected to fix costs at the end of a trial.[^3] Fixing costs is intended to be a summary process in which the judge determines what is reasonable on an overall basis having regard various factors informed by his or her knowledge of the case. This is different than the kind of line by line analysis that might be conducted if the issue of costs was sent for assessment by an assessment officer.[^4]

[6] Although an award of costs is ultimately a matter of discretion pursuant to s. 131 of the Courts of Justice Act, it is discretion governed and guided by statutory provisions set out in Rule 57 and by the rules in relation to offers to settle. The court is to consider the result, any offers to settle, the factors set out in Rule 57.01 and any other matter the court considers relevant.

[7] Unless there are exceptional circumstances, a successful party is entitled to costs but the definition of successful is modified by the provisions of Rule 49. Rule 49 is a rule intended to foster settlement. Rule 49.10 creates a specific technical regime for “Rule 49 offers” while Rule 49.13 permits the court to consider any offers to settle. The policy underlying Rule 49 is to discourage parties from proceeding to trial when they are presented with a reasonable offer. In simplest terms this means that success at trial must be measured against offers to settle which might have achieved a better result for the party otherwise entitled to costs.

[8] Besides the result of the proceeding and the offers to settle, the other factors in Rule 57 require balancing of various considerations. The principle of indemnity in Rule 57.01 (1) (0.a) for example must be considered together with the principle of reasonable expectations in Rule 57.01 (1) (0.b). The court may also consider the amount recovered compared to the amount claimed, the complexity of the proceeding, the conduct of the parties, and the need to prove matters that should have been admitted amongst other factors.

[9] In the case at bar, the most significant factors are the offers to settle and the amount recovered. These are the factors which justify the defendant in asking for a net costs award.

Offers to Settle

[10] The defendants served three offers to settle pursuant to Rule 49 of the Rules of Civil Procedure. On July 28^th^, 2016 there was an offer to settle of $50,000.00 plus costs. On September 7^th^, 2016 that offer was withdrawn and replaced by an offer of $125,000.00 plus costs. The matter was scheduled to go to trial on September 19^th^, 2016 but was adjourned for lack of judicial resources and rescheduled for February 5^th^, 2018. On January 22^nd^, 2018 all previous offers were withdrawn and the defendant offered $250,000.00 plus costs. The trial commenced on February 5^th^, 2018.

[11] There is no doubt that the third of these offers meets the requirements of Rule 49.10 (2). It was made at least 7 days before the commencement of trial. It was not accepted and did not expire and was not withdrawn prior to the commencement of the hearing. The judgment was less favourable than the terms of the offer and that would be true even if the jury verdict was not reduced by operation of law. As a consequence, the plaintiff is entitled to partial indemnity costs to the date of the offer and the defendant is entitled to partial indemnity costs from that date unless the court orders otherwise.

[12] Although the previous offers do not technically comply with Rule 49.10 because they were each withdrawn when replaced by a subsequent offer, they may still be considered. Rule 49.13 permits the court to consider any offer to settle made in writing. [^5] These offers remain relevant because the plaintiff would have obtained more favourable terms than the judgment had she accepted any one of these offers. That is because each of the offers was made net of any deductible and net of any collateral benefits. In other words, with the benefit of hindsight, had the plaintiff accepted any one of those offers she would have recovered more than she will receive under the judgment.

Position of the Parties

[13] The defendants have submitted a bill of costs of approximately $160,000.00 from the date of the first offer to the end of trial inclusive of partial indemnity fees, disbursements and HST. The plaintiff has submitted a bill of costs of just under $130,000.00 to January 22^nd^, 2018. To put this in context, the plaintiff’s bill of costs includes all preparatory steps to the date of the last offer but does not include the cost of the trial. The defendants have included their trial costs, trial preparation costs and all costs incurred after the date of the first offer. Needless to say there are disputes about the quantum of costs sought by each party and the temporal aspects of the costs awards.

[14] The plaintiff agrees that Rule 49.10 applies to the third offer and argues that the plaintiff should have costs until the date of that offer, January 22^nd^, 2018. I am urged to give little weight to the earlier offers because although it is apparent with the benefit of hindsight the plaintiff would have been better off to accept them, they do not trigger Rule 49.10 and viewed in context, they were not serious offers to settle. I am also asked to find that the bulk of the plaintiff’s trial preparation costs were incurred prior to January 22^nd^. In that case, the plaintiff argues that there is a net balance in her favour and she should have a modest costs award. The plaintiff suggests she is entitled to $28,952.00.

[15] The defendants argue that their offers were Rule 49.10 compliant when they were made and should be given effect under Rule 49.13 in the same manner because clearly the plaintiff could have accepted any one of those offers and extracted herself from the litigation. The defendants seek an award of $110,000.00 if all of the offers are considered or at least $80,000.00 even if I only consider the last offer. The plaintiff argues that the most she should have to pay is $19,469.00.

Analysis

[16] There is some merit to the plaintiff’s position. Firstly, this case was scheduled for trial in 2016 and it was cancelled only at the last minute due to a lack of judicial resources. Accordingly, the parties were proceeding towards the original trial date and had largely readied the case for trial when it was adjourned. This fact should be taken into account when examining the time dockets reflected in the bills of costs.

[17] The offers made in 2016 were not nearly as generous as that made prior to the 2018 trial. I understand the argument that a $50,000.00 offer made over 6 years post-accident and 5 years into the litigation was not intended as a serious offer. Given the advanced stage in the litigation, the defendant could not have had any expectation it would be accepted. If that offer was made at a settlement conference, for example, I would not have regarded the defendant as motivated to settle given the position taken by the plaintiff, the possibility of significant damages and the cost and risk of trial. Be that as it may, hindsight is part of the analysis in a costs award.

[18] The hard fact is the plaintiff would have been better off if she had accepted even that first offer. Not only would she have recovered more than the judgment, the costs of both parties would have been lower and she would not have been facing a demand to pay costs to the defendant. While I will not treat these earlier offers as Rule 49 offers (although they were at the time), neither can I ignore them.

[19] Both parties argued that the other party unnecessarily lengthened the trial by failure to make admissions. Of course the trial could have been shortened. Liability was only admitted at the 11^th^ hour. There were unnecessary disputes over business records. There were tactical manoeuvres over which party would call certain witnesses. Admissions were made during the trial which could have been made in advance. Neither party behaved improperly. In my view there was no conduct at the trial which should attract an unusual costs award.

[20] The plaintiff argues that she should not have to subsidize travel costs for out of town counsel. I agree with that. Of course, the defendants are entitled to their choice of counsel and it was entirely reasonable for Mr. McCarthy to take over carriage of this matter when he did. The defendants benefitted greatly from the expertise and experience of Mr. McCarthy and he like many trial counsel has a province wide practice. The question is not whether it is reasonable for the defendant to use counsel based in the GTA. The question is whether the cost of doing so should be imposed on the plaintiff. It should not. In any event, Flaherty McCarthy LLP have an Ottawa office. How they choose to service or staff that office is a matter internal to the firm. I would reduce the defendants’ travel costs for this reason. Similarly, I would not require the plaintiff to absorb 100% of the travel costs of experts coming from far afield.

[21] This was not a frivolous case. As I stated to the jury in my charge, there was evidence that would have supported findings in favour of the plaintiff. The plaintiff should not be penalized unduly for proceeding with the action and taking it to trial. This is not a case for substantial indemnity costs.

[22] I have not applied Rule 49.10 to the earlier offers. Had I done so, the plaintiff’s costs would be truncated as of the January 2016 date and she would be liable for the defendants’ costs thereafter. Instead I have attempted to find a number that is greater than that which might have been generated had I ignored those offers entirely but still appears fair to both parties and in keeping with the objective of the rules. I have fixed the costs after reviewing the bills of costs, applying Rule 49.10 to the fully compliant offer and having regard to the earlier offers under Rule 49.13. Subject to the adjustments discussed above, the bills of costs are not unreasonable

[23] The ultimate objective is fairness to the parties. The defendants are entitled to a level of indemnity for beating their offers. The objective is not to penalize the plaintiff unduly or to terrorize future plaintiffs. Ultimately, however, it is the price of admission to our litigation system that proceeding to trial carries with it the risk of costs.

[24] I have fixed the net costs at $70,000.00 on a partial indemnity scale inclusive of fees, disbursements and HST. This amount shall be paid by the plaintiff to the defendants and may be set off against the amount of the judgment previously granted.

[25] I thank counsel for their helpful submissions.

Mr. Justice Calum MacLeod

Released: May 18, 2018

COURT FILE NO.: 11-50518

DATE: 2018/05/18

Note: By order of the court, due to the nature of certain aspects of the evidence in this matter, the identity of the plaintiff is protected by a publication ban. It is forbidden for any person to publish information that may reveal the identity of the plaintiff or members of her family.

ONTARIO

SUPERIOR COURT OF JUSTICE

RE: A.B., Plaintiff

AND

Kaitlin Waite and Carole Leroux, Defendants

BEFORE: Mr. Justice Calum MacLeod

COUNSEL: David Cutler, for the Plaintiff

Todd J. McCarthy, for the Defendants

ruling on costs

Mr. Justice Calum MacLeod

Released: May 18, 2018

[^1]: 2018 ONSC 1456 [^2]: 2018 ONSC 2151 [^3]: Rule 57 (3) [^4]: See Laws v. Berry, (1997) 68 ACWS (3d) 27 (Ont. Gen. Div.) [^5]: König v. Hobza, 2015 ONCA 885