BELLEVILLE COURT FILE NO.: CV-10-0081-SR

DATE: 20180528

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

LEONARD CANFIELD and SHEILA CANFIELD

Plaintiffs

– and –

BROCKVILLE ONTARIO SPEEDWAY and JOHN DOE (PSEUDONYMN)

Defendants

George Bonn and Joelle Briggs-Sears, for the plaintiffs

Michael D. Swindley, for the defendant, Brockville Ontario Speedway

HEARD: 18 April 2018, at Kingston.

MEW J.

COSTS DECISION

[1] In September 2017, more than 45 years after being called to the Ontario Bar and establishing his own law office in Belleville, George Bonn conducted what he says will be his last trial.

[2] The trial lasted seven days before a jury in Belleville. Liability and damages were contested. Liability was particularly contentious. At issue was whether a speedway was liable to a spectator who fell while jumping or stepping away to avoid a stock race car that had come from the track and was making its way to an overflow pit area. No contact was made between that vehicle and the plaintiff, Leonard Canfield.

[3] At the commencement of trial, the claim of the plaintiff, Sheila Canfield, made pursuant to the Family Law Act, was withdrawn.

[4] The jury assessed Mr. Canfield’s damages, exclusive of interest and before adjustment for contributory negligence, as follows:

Loss of past income $ 217,600
Loss of future income 149,000
General damages 60,000

Total: $ 257,000

These figures coincide exactly with the dollar amounts suggested to the jury by plaintiff’s counsel in his closing statement.

[5] However, the jury found the plaintiff to have been 25% contributorily negligent. As a result, the total amount recovered by him was $190,750 ($212,000 including interest).

[6] While the parties have been able to agree on the amount of the plaintiff’s assessable disbursements, they have been unable to agree on fees. The plaintiff asks the court to find the amount payable for fees on a partial indemnity scale to be $269,371 plus applicable taxes.

[7] The defendant, Brockville Ontario Speedway, submits that an appropriate amount for the plaintiff’s partial indemnity fees would be $150,000, inclusive of H.S.T.

[8] These reasons address only the criteria relevant to the fixing of costs which were in issue between the parties. It can be assumed that if no reference has been made to an enumerated factor under rule 57.01 of the Rules of Civil Procedure, that such factor was a neutral one for the purposes of this exercise.

General Principles Applicable to the Fixing of Costs

[9] The usual rule in Ontario is that costs follow the event. This is subject to the overarching discretion of the court to determine by whom and to what extent costs should be paid: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131(1).

[10] Rule 57.01 of the Rules of Civil Procedure provides specific guidance on the exercise of the court’s discretion to award costs. Costs are usually payable on a partial indemnity scale unless the Rules of Civil Procedure provide for, or the circumstances of the case warrant, costs on an enhanced (substantial indemnity or full indemnity) scale.

[11] The principle of proportionality is one of general application to the interpretation of the Rules of Civil Procedure (rule 1.04(1.1)) and therefore applies to the application of the rules governing costs. As a general proposition: (i) proportionality does not override other considerations when determining costs; and (ii) proportionality should not be used as a sword to undercompensate a litigant for costs legitimately incurred: Aacurate General Contracting Ltd. v. Tarasco, 2015 ONSC 5980, at paras. 13-17; Dang v. Anderson, 2017 ONSC 2150, paras. 12-15.

[12] Fixing of costs is not merely a mechanical exercise in reviewing the receiving party’s costs outline: Agius v. Home Depot Holdings Inc., 2011 ONSC 5272 at para. 11. The amount of costs should reflect an amount that the court considers to be fair and reasonable and within the expectations of the parties, rather than an exact measure of the actual costs of the successful litigant: Zesta Engineering Ltd. v. Cloutier (2002), 19 A.C.W.S. (3d) 341 (Ont. C.A.) at para. 4; Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.).

[13] Although commenced as a simplified procedure action, it became apparent some time ago that the amount of the plaintiff’s damages in this case might exceed the $100,000 limit applicable under the simplified procedure. Examinations for discovery and other aspects of trial preparation were predicated on the ordinary procedure being engaged. At the opening of trial, the prayer for relief was formally amended from $100,000 to $400,000.

Offers to Settle

[14] The plaintiffs made an offer to settle on 23 March 2015 for $300,000 plus interest and costs.

[15] The defendants made a number of offers:

a. October 2012 – dismissal without costs;

b. May 2014 - $15,000 all inclusive;

c. 13 July 2017 - $50,000 all inclusive; and

d. 8 August 2017 - $30,000 plus interest and costs.

[16] Although the parties did not make offers to settle which would engage the costs consequences provided for in rule 49.10, I make the obvious observation – although no costs consequences directly flow from it – that the outcome achieved by the plaintiff was significantly better than the last offer of the defendant, which was little more than a nuisance offer.

Discussion

[17] Both parties provided the court with detailed records of time spent and the hourly rates of the various fee earners involved.

The Principle of Indemnity (Including Experience and Hourly Rates)

[18] The plaintiff’s bill of costs shows 1,219 hours spent on the case, 864 of which were spent by the two counsel who appeared at trial. George Bonn is a senior advocate. For the purposes of the bill of costs, he claims an hourly rate of $850/hr. His co-counsel, Joelle Briggs-Sears, was called to the Bar in 2011. Her claimed hourly rate is $325/hr.

[19] The defendant argues that the time spent on the file is excessive. The defendant also takes issue with the hourly rates claimed which, during the course of argument, were described as “Torontoesque”.

[20] Mr. Bonn candidly acknowledged that he has never sent a client a bill based on an hourly rate of $850. Most of the work that he does is on a contingency basis. The hourly rate is therefore notional. Nevertheless, Mr. Bonn argues, it is a competitive rate having regard to other senior members of the personal injury bar, both in and outside of Toronto.

[21] An immediate problem with this argument is that the contingency fee agreement between the plaintiffs and their lawyers specifies a rate of $700/hr for Mr. Bonn and $250/hr for other lawyers in the firm. Although the contingency fee agreement had been entered into a number of years ago and the notional hourly rates had been increased each year in the firm’s accounting system, it was conceded that the plaintiffs had never been told that those notional hourly rates were being increased.

[22] The defendant argues that the court should apply, or at least be guided by, the “Costs Grid” which was formally in effect from 1 January 2002 until 1 July 2005. This, despite the fact that the costs grid no longer applies (see Murphy v. Bavarian Motors Inc. (2006), 2006 10218 (ON SC), 81 O.R. (3d) 65 (S.C.J.)). Regardless, the defendant says that there should be fairness and consistency in the amount that can be recovered for lawyers’ time across similar pieces of litigation involving similar conduct and counsel (see Manufacturers Life Insurance Co. v. Ward, 2007 ONCA 881 at para. 69).

[23] In my view, rates used for the purpose of fixing costs should have regard to what clients typically pay. That will vary with the type of work, geographic location and the type of client, among other factors.

[24] Having regard to the foregoing, in my view, appropriate guideline partial indemnity rates would be $400 for Mr. Bonn and $250 for Ms. Briggs-Sears.

[25] As to the number of hours spent, it is always easy, with the benefit of hindsight, and knowing the eventual outcome, to say that the time spent was excessive. There will always be cases which involve modest amounts but which are legally or factually complex and, hence, time consuming. The converse also applies.

[26] In the present case, significant preparation time was incurred. For example, senior counsel travelled to Hamilton on two occasions to interview the plaintiff’s employer and oversee the making of a video which demonstrated the plaintiff’s pre-accident employment duties. There was also a considerable expenditure of time rehearsing aspects of the case in front of jury focus groups. I will say more about the latter later on in these reasons.

[27] Suffice it to say, at this juncture, that the amount of time spent was significant, having regard to the nature and complexity of the case.

Amount of Costs an Unsuccessful Party Could Reasonably Expect to Pay

[28] The defendant’s printout of docketed time showed 559 hours spent on the case, for fees totalling $113,077. The lead lawyer involved in the defence of this action did not have the seniority of Mr. Bonn. And the hourly rates of the defendant’s lawyers were set by insurers, who are often able to negotiate preferential rates.

[29] The defendant acknowledges that the plaintiff’s lawyer would have spent more time in trial preparation than the defendant’s, given that the plaintiff bore the onus of proof and had more witnesses to prepare and call.

[30] Overall, however, I agree with the defendant that the number of hours spent, and the fees generated as a result – even applying the reduced rates I have indicated – are disproportionately high and would be beyond the reasonable expectations of the defendants.

The Amount Claimed and the Amount Recovered

[31] As previously indicated, until the commencement of trial, the prayer for relief was $100,000. That was amended to $400,000. This is not a case where the prayer for relief was nonsensical. It left a sufficient buffer to accommodate for the plaintiff having an extremely good outcome at trial, but did not massively exceed what was possible. The amount ultimately recovered, after application of contributory negligence, was about 50% of the amount claimed in the prayer for relief. There should be no costs consequences, negative or positive, arising under this heading.

The Apportionment of Liability

[32] At trial, the defendant took the position that the plaintiff was wholly responsible for his own misfortune. This position was consistent with the defendant’s position throughout.

[33] The plaintiff was substantially successful. The contributory negligence factor was 25%.

[34] In my view, the apportionment of liability against the plaintiff is not of a sufficient magnitude that it should have an impact on the recovery of costs.

Conduct of any Party that tended to lengthen or shorten unnecessarily the duration of the proceeding

[35] The defendant points to the fact that Sheila Canfield’s Family Law Act was only discontinued at the opening of trial. Some time was spent dealing with her claim at the discovery stage and during trial preparation.

[36] The late withdrawal of Sheila Canfield’s claim is neutral for the purposes of this review of costs because the parties have advised me that they addressed the issue of costs arising from the discontinuance of Ms. Canfield’s claim as part of the discussion which led to settlement of the disbursements claim.

Any other matter relevant to the proceeding

(a) Contingency Agreements

[37] The defendant, relying on Lawyers’ Professional Indemnity Co. v. Geto Investments Ltd. (2002), 17 C.P.C. (5th) 334 (Ont. S.C.J.) argues that the hourly rate awarded should not be more than that charged to the client. As there is often no hourly rate actually charged in contingency fee cases, the argument goes that there can be no indemnity for fees not paid, or payable, by the plaintiff.

[38] A similar argument was made to this court in Tossonian v. Cynphany Diamonds Inc., 2015 ONSC 766. In rejecting it, the court stated, at para. 17:

The defendants' submissions ignore the fact that contingency fee agreements are ubiquitous in modern litigation particularly in personal injury and many wrongful dismissal cases. Counsel have not directed my attention to any case in which the disclosure of a contingency fee agreement has been held to be a pre-requisite of a plaintiff's entitlement to recover partial indemnity costs of a proceeding. In the circumstances, the fact that the plaintiff had a contingency fee agreement with his lawyers is not a sufficient reason for not awarding him costs in this case.

[39] In the present case, the plaintiff has, albeit at the costs hearing, allowed defence counsel to review the contingency fee agreement. In addition, counsel filed an affidavit from Mr. Canfield in which he disclosed that the fee payable by him to his solicitors will be either (a) an amount equal to 33% of the total damages recovered by settlement or adjudication; or (b) the amount payable by the defendants for legal fees (i.e. costs).

[40] Consistent with the position taken by the court in Tossonian, the existence of a contingency fee agreement has no bearing on the determination of costs in this case.

(b) Failure to Mediate

[41] The plaintiff argues that the refusal of the defendant, or more specifically, the defendant’s insurer, to participate in mediation, should be a factor in determining costs. Mr. Bonn argues that this case would likely have settled with the assistance of a skillful mediator, thereby avoiding significant costs. He points to various exchanges that occurred between counsel on the subject of mediation. In April 2015, Mr. Bonn wrote to Mr. Swindley to confirm a telephone conversation in which the latter had advised that the defendant and its insurer were not willing to engage in a mediation settlement process. This was following delivery by the plaintiff of its offer to settle of $300,000.

[42] In July 2017, the plaintiff suggested mediation again. The availability of a number of mediators was provided. No mediation resulted.

[43] In situations where participation in mediation is mandatory, a failure to mediate may be relevant. For example, section 258.6(2) of the Insurance Act, R.S.O. 1990, c.I.8, provides that a person’s failure to comply with the mediation requirements of the Act “shall be considered by the court in awarding costs”. In Williston v. Gabriele (2013), 2013 ONCA 296, 115 O.R. (3d) 144 (C.A.), at para. 25, it was held that where a party repeatedly requested mediation and the insurer never agreed to participate, despite its statutory obligation to do so, “an augmented costs award was warranted”.

[44] Unlike actions commenced in Toronto, Ottawa or Essex County, actions brought in Belleville are not subject to the mandatory mediation provisions of rule 24.1 of the Rules of Civil Procedure. There is, accordingly, no requirement that a party mediate.

[45] In Baldwin v. Daubney, (2006) 2006 33317 (ON SC), 21 B.L.R. (4th) 232 (Ont. S.C.J.), at para. 12, Spence J. declined to consider a refusal to mediate as a factor in the exercise of his costs discretion:

The plaintiffs say that the defendants refused the request of the plaintiffs to mediate and thereby caused the motion to proceed with its attendant costs, which a successful mediation would have avoided. The defendants say they considered they had a good defence and were not obliged to mediate. Mediation is most likely to be successful where each party considers it has something material to gain from a settlement and appreciates that to achieve a settlement it will need to accept a compromise of its position. Where one litigant is confident that its position will succeed in court, it has little reason to take part in a process that would yield it a lesser result and it is not bound to do so. Indeed, to take part in a mediation in such circumstances could simply prolong the process and add to the cost.

[46] However, in David v. Transamerica Life Canada, (2016) 2016 ONSC 1777, 131 O.R. (3d) 314, at para. 97, Price J. took a different approach, saying this concerning the costs consequences of an insurer’s refusal to participate in a mediation over disputed insurance proceeds:

In cases where each of the parties has an arguable case, and each faces a risk of loss in the proceeding, mediation can offer a reasonable prospect of settlement. In such cases, a refusal to participate in mediation is a factor that the court can properly consider in determining whether the party has engaged in unreasonable conduct that has caused unnecessary costs to be incurred and that warrants rebuke by means of a costs sanction. This determination requires a case-by-case analysis.

[47] I agree with Price J.

[48] Following the initial costs hearing, I provided counsel with the opportunity to comment on the practice that has developed in England and Wales which, while not binding on a court in Ontario, is nevertheless worthy of consideration given some the similarities in practice and procedure between the jurisdictions and, in particular, what in England and Wales is called the “overriding objective” of the rules which is to enable the court to deal with cases justly and at proportionate cost, which can be compared with the general principle in rule 1.04 of the Rules of Civil Procedure that the rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits and, that in applying the rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues and to the amount involved in the proceeding.

[49] The position in England and Wales is conveniently summarised by Professor Zuckerman (Adrian Zuckerman, Zuckerman on Civil Procedure, 3ed (London): Sweet & Maxwell, 2013 at p.1335) as follows:

The court may take the view that had the parties engaged in ADR, the dispute would have settled without proceedings and therefore disallow all or some of the costs of the party who declined ADR even if that party was successful. Experience shows, as Brooke L.J. explained in Dunnett v Railtrack Plc [2002 EWCA Civ 303, [2002] 2 All E.R. 850 at para. 14], that:

When the parties are brought together on neutral soil with a skilled mediator to help them resolve their differences, it may very well be that the mediator is able to achieve a result by which the parties shake hands at the end and feel that they have gone away having settled the dispute on terms with which they are happy to live.

[50] Professor Zuckerman does, however, go on to note, again, consistent with the sentiments expressed by Price J. in David v. Transamerica:

The Court of Appeal has accepted, however, that not all disputes are suitable for mediation and that a refusal of mediation may well be justified. It was held [in] Halsey v Milton Keynes General NHS Capital Trust; Steel v Joy, [2004 EWCA Civ. 576, [2004], 1 W.L.R. 3002] that before making an adverse costs award for a refusal to participate in mediation the court must consider whether the refusal was justified. Depriving a successful party of his costs is justified only if the unsuccessful party shows that the successful party acted unreasonably in refusing to agree to ADR. The reasonableness of ADR refusal, Dyson L.J. explained, must be judged by reference to all of the circumstance [sic.], including the following: (i) the nature of the dispute; (ii) the merits of the case (the factor that a party reasonably believes that he has a strong case is relevant to the question of whether he has acted reasonably in refusing ADR); (iii) whether other methods of settlement have been attempted; (iv) whether the costs of the ADR would be disproportionately high; (v) delay in suggesting mediation which may have the effect of delaying the trial of the action; and (vi) whether the mediation had a reasonable prospect of success.

[51] The court in Halsey was concerned that plaintiffs should not be able to use the threat of a costs sanction to extract a settlement from defendants even when the claim was without merit.

[52] The defendant in the present case maintains the position, which it argues is consistent with the English practice and with David v. Transamerica, that it genuinely believed it had a strong position on liability and, hence, that its refusal to participate in mediation was not unreasonable.

[53] I disagree. Although juries are not required to give detailed reasons, the jury in this case did provide the following particulars in response to the question of whether the Brockville Ontario Speedway had breached its legal duty to take such care as in all the circumstances of the case was reasonable to see that Mr. Canfield was reasonably safe while on its racetrack premises:

Staff at the west gate did not advise patrons of the overflow pit.

There was [sic] no signs to warn patrons of the overflow pit or the movement of sprint cars in the public area.

The potential existed to require an overflow pit as the number of sprint cars attending races is not known. Therefore a protocol should have been in place for establishing the overflow pit.

We feel it is reasonable that sprint cars be pushed by an ATV when proceeding into, or through, a public area on the grounds.

It would be reasonable for all sprint cars to stop at the pit gate before proceeding.

It would have been reasonable to expect that sprint car traffic and pedestrian traffic be separated to the overflow pit.

[54] With the respect to the contributory negligence of Mr. Canfield, the particulars provided by the jury were:

Mr. Canfield had a responsible to be aware of his surroundings while walking through the grounds, particularly as he is familiar with race tracks and was a race car owner.

Through inattention, Mr. Canfield failed to heed the warnings of track staff at the pit gate.

[55] Not only were these findings that it was open to the jury to make based on the evidence at trial, but more importantly, they underscore that neither side had such a strong position on liability that it would have been reasonable to decline an offer to mediate. Although, in Halsey, Dyson L.J. stressed that the court should be sensitive to the fact that large organisations are vulnerable to pressure from plaintiffs who, having weak cases, invite mediation as a tactical ploy, the converse also applies. Courts should be aware that insurers, who are in the business of litigating, can, and do, take hardball positions against economically more vulnerable opponents.

[56] The present case is not one of those circumstances where a plaintiff was trying to shake down an insurer by demanding mediation of a wholly unmeritorious case. To the contrary, it is a case where the insurer took a tough and uncompromising stance. That, of course, is a defendant’s prerogative. Defendants do not have to settle. But if reasonable opportunities to mediate are spurned, that can be a relevant factor when fixing costs.

[57] It was, in my view, unreasonable for the insurer to decline mediation in this case. That should be reflected in the disposition of costs. Had a mediation occurred in 2015 or even in 2017, substantial costs could have been avoided.

(c) Adverse Costs Insurance

[58] The defendant points to the fact that the plaintiff purchased an adverse costs insurance policy, for a premium of $1,450, which provided coverage of up to $100,000 for “own disbursements and opponent’s costs and disbursements in lost or abandoned cases”. The defendants argue that the purchase of $100,000 of coverage should be a factor in determining whether the plaintiff’s claim for partial indemnity fees of $269,371 plus taxes is appropriate.

[59] In my view, the amount of adverse costs insurance purchased is irrelevant. Plaintiffs are not able to recover the cost of obtaining adverse costs insurance as an assessable disbursement: Valentine v. Rodriguez-Elizalde, 2016 ONSC 6395 at paras. 70-71. Furthermore, I was advised by counsel that the maximum coverage available to the plaintiff was $100,000. Accordingly, neither the existence of this coverage nor the amount of coverage obtained have any bearing whatsoever upon an assessment or fixing of costs.

(d) Use of Jury Focus Groups

[60] Mr. Bonn asserted that the use of jury focus groups was essential to the successful outcome achieved by the plaintiff. He described how questionnaires were sent out to 1,000 residents of Hastings County. An effort was made to ensure that the recipients represented a fair cross-section of the local population, both demographically and geographically. Approximately 157 questionnaires were returned. These were then carefully scrutinised and three six-person focus juries were selected, again with a view to putting together groups that were representative of a cross-section of the local population.

[61] The three focus groups were invited to a local hotel where they received presentations outlining the cases advanced by the plaintiff and the defendant as well as instructions on the applicable law. After being provided with a lunch, the focus groups were then divided up and their deliberations were videotaped. In addition to live monitoring of the focus groups’ discussions, there was then considerable further review and analysis of those deliberations.

[62] According to Mr. Bonn, a critical finding of that process was that any prospective juror who had any knowledge of stock cars or stock car racetracks would find for the defendant. Armed with this knowledge, the plaintiff suggested to the defendant, and the defendant agreed, that the court should be asked to exclude from the jury panel individuals having knowledge of or involvement with stock car racing. Mr. Bonn believes that this was a significant concession which led to the selection of a jury favourable to his client.

[63] Mr. Bonn argues that the use of jury focus groups is a reasonable part of trial preparation. This should be particularly so in a litigation environment where many insurers instruct defence counsel to file jury notices because of the perception that in many cases, defendants obtain more favourable outcomes in personal injury cases tried with juries as opposed to by judges alone. The use of jury focus groups enables plaintiffs to better prepare for trial. In the present case, the use of the focus groups conferred the additional benefit (from a plaintiff’s perspective) of alerting the plaintiff to the dangers of having people knowledgeable about stock car racing on the jury.

[64] The jury focus group work undertaken in this case was undoubtedly beneficial to the plaintiff. But does that necessarily mean that the time spent by the fee earners at Bonn Law participating in that process should be indemnified by the defendant?

[65] With unlimited time and resources, there is always more that could be done to prepare a case. When parties elect to try civil cases with juries, it does not seem to me to be unreasonable to undertake some sort of jury research, regardless of whether the jury notice was filed by the plaintiff or the defendant. At the end of the day, as with so many other aspects of costs, it comes down to a question of proportionality. In the present case, three lawyers monitored the deliberations of the three jury focus panels. After that, Mr. Bonn and other members of his team spent a considerable time viewing, analysing and discussing the video tapes. It was Rolls-Royce preparation for, with the greatest of respect to Mr. Canfield, a family sedan of a case.

Conclusions

[66] The time spent on this case was, as previously stated, significant. There is no doubt that the case was extremely well prepared.

[67] It would be churlish of the court to criticise a party for preparing too thoroughly. But, on the other hand, from a costs perspective, the party paying costs should only be responsible for indemnifying reasonable costs that are proportionate, having regard to the nature of the dispute.

[68] Accordingly, the defendant should not be required to indemnify the plaintiff for all of the time spent on jury research. And, as indicated, the hourly rates used to calculate the claim for fees need to be adjusted.

[69] Weighing these elements and the other factors discussed as best I can, without embarking upon a full scale assessment of the plaintiff’s fees, an appropriate downward adjustment to the plaintiff’s claim for $269,371 (plus H.S.T.) would be in the order of 30%, or $80,000.

[70] However, as I have also indicated, the defendant’s refusal to mediate is a relevant factor. That refusal was unreasonable. It deprived the parties of an opportunity to settle the case without the necessity for a trial.

[71] As a result, instead of adjusting the plaintiff’s claim for costs downward by $80,000, I have made the adjustment a little under $60,000 and have therefore concluded that an appropriate award of costs in this case is $210,000 plus applicable taxes.

Graeme Mew J.

Released: 28 May 2018

Correction: August 7, 2018

Para 57: The word “would” has been changed to “could”.