Court File and Parties
Court File No.: CV-12-36765 Date: 2018-07-25 Superior Court of Justice - Ontario
Re: Milena Karafiloski and Stane Karafiloski, Plaintiffs And: Nzela Jeanine Kalenga and Nkema-Liloo Etale, Defendants
Before: The Honourable Justice L. C. Sheard
Counsel: Matthew A. Caldwell, Counsel for the Plaintiffs Jeffrey R. Goit, Counsel for the Defendant, Nzela Jeanine Kalenga Dennis M. O’Leary, Counsel for the Proposed Defendant, Viking Insurance Company of Wisconsin
Heard: In Writing
Costs Endorsement
1The plaintiff, Milena Karafiloski, was injured as a pedestrian in a motor vehicle accident on May 14, 2012. The named defendants are the driver and owner, respectively, of the vehicle that struck Ms. Karafiloski. They do not have insurance. The Motor Vehicle Accident Claims Fund (“MVACF”) has defended the action on behalf of Nzela Jeanine Kalenga.
2The MVACF made it clear to the plaintiffs that it is an insurer of last resort and will not pay unless the plaintiffs prove that there is no policy of insurance available to respond to the plaintiffs’ claim.
3The plaintiffs brought a motion for leave to add Viking Insurance Company of Wisconsin (“Viking”) as a defendant on the basis that the policy of insurance that the plaintiff, Stane Karafiloski, had with Viking could be found to provide insurance to the plaintiffs.
4The MVACF was represented by counsel on the motion, but filed no materials and its submissions were directed at assisting the Court to understand the role and obligations of the MVACF and with the Regulations under the Insurance Act, relevant to the possible liability of Viking.
5Viking opposed the order sought on the basis that there was another insurer whose liability would rank ahead of Viking and on the basis that any claim against Viking was statute barred by virtue of the Limitations Act, 2002.
6The Court concluded that section 21 (1) of the Limitations Act, 2002 barred plaintiffs from adding Viking as a party and dismissed the plaintiffs’ motion. The parties have not been able to agree on costs and the Court has received written submissions.
Positions of the Parties
7As the successful party on the motion, Viking seeks its costs. Viking submits that costs should be awarded on a substantial indemnity basis because the plaintiffs should have known that another insurer, and not Viking, was first in line to provide insurance to the plaintiffs and also that the limitation period had expired and the plaintiffs could not succeed in their motion. Viking communicated its view on those points in the letters dated October 18, 2017 and April 2, 2018.
8Viking also asks for substantial indemnity costs on the basis that MVACF encouraged and actively supported the plaintiffs in bringing the motion and that MVACF was in fact the “real litigant” on the motion. For the same reasons, Viking submits that MVACF should be jointly liable with the plaintiffs to pay Viking’s costs of the motion.
9Viking submits that, “at a minimum”, any costs awarded against the plaintiffs should be paid from any monies that MVACF may be ordered to pay to the plaintiffs in priority to the claim of any other person against such funds, including the plaintiffs.
10Viking’s Bill of Costs reflects fees and HST relating to the motion of $17,611.05 on a partial indemnity scale and $26,426.75 on a substantial indemnity scale. To those amounts would be added disbursements of $1,205.06, which includes $469.50 for photocopies and scanning and $321.17 for deliveries.
Position of the Plaintiffs
11The plaintiffs acknowledge that they were unsuccessful on the motion but submit that the motion was a necessary step in the action and involved some “esoteric legal arguments as to potential insurance coverage” such that the result was not plain nor obvious from the outset. The plaintiffs also submit that Viking’s costs are unreasonably high and offer their own Bill of Costs for comparison. The plaintiffs argue that their lawyer spent just over 31 hours to prepare for the motion whereas counsel for Viking spent over 65 hours including 12 hours of student/clerk time.
12The plaintiffs also take issue with the hourly rates charged by Viking’s counsel and note, for example, that the hourly rate for Viking’s junior counsel, whose year of call was 2016, was $325, $50 per hour higher than the rate charged by plaintiffs’ counsel, who was called in 2009.
13The plaintiffs submit that a more reasonable award of costs would be $11,584.53 on a substantial indemnity basis or $7,784.29 on a partial indemnity basis. In their submissions, the plaintiffs do not comment on the disbursements charged by Viking’s counsel.
14The plaintiffs also ask that any costs award payable by the primary plaintiff, Milena Karafiloski, be made payable upon the resolution of the action. In support of those submissions, the plaintiffs assert that Ms. Karafiloski is 73 years old; unemployed; separated from her husband, the co-plaintiff in this action; and lives with her son. Accordingly, any costs award would be difficult for her to pay prior to the settlement or judgment in this action.
Position of MVACF
15MVACF does not seek its costs of this motion but filed materials in response to Viking’s request that it be liable for Viking’s costs. MVACF disputes the position advanced by Viking that it encouraged or supported the plaintiffs’ motion to add Viking as a party defendant; that it took no position on the motion; and that, contrary to the arguments put forth by Viking, whether Viking was a party to the action has no impact on the liability of the MVACF.
16MVACF disputes that it was the “real litigant” on the motion and submits that the “straw man” cases to which Viking referred the Court have no application to the facts here [1].
Analysis
17With respect to Viking’s request for an order that MVACF be liable to pay its costs, I accept the argument put forth by MVACF that the outcome of this motion did not have any bearing upon its liability: MVACF’s liability does not depend on whether another insurer is made a party to this action but, rather, on whether there is another insurer from whom the plaintiffs are entitled to seek payment.
18I further accept that MVACF did not put the plaintiffs up to bringing this motion, rather, MVACF communicated to the plaintiffs that MVACF would not pay the plaintiffs’ damages if another insurer was liable. It was up to the plaintiffs to decide if a motion was required to add Viking as a party in order to ensure that there was an insurer from whom the plaintiffs could seek recovery.
19I therefore conclude that MVACF should not be held liable to pay Viking’s costs on this motion.
20While the fixing of costs is governed by section 131 of the Courts of Justice Act, R.S.O. 1990, c. C. 43 and r. 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the Court’s discretion in determining costs is subject to the overriding principle of reasonableness. (Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.)).
21Rules 57.01 (0.a) and (0.b) also require the Court to consider the principle of indemnity, and the amount of costs that the defendants could reasonably expect to pay for the action, including the motion for summary judgment.
22In fixing costs, the following appear to have application here:
(a) the amount claimed: the amount claimed by the plaintiffs in the action is $650,000 in damages, plus interest and costs;
(b) the complexity of the proceeding: the insurance issues in the motion were somewhat complex from the perspective of the plaintiffs. However, Viking is an insurance company and can be assumed to understand the statutory framework within which it carries on business. Also, this motion was determined not on the basis of liability of Viking but on the basis that the claim against Viking was statute-barred. Neither the evidence nor the law in this motion was particularly complex;
(c) the importance of the issues: if it is determined that Viking was the proper insurer from whom the plaintiffs should have sought coverage, then the involvement of Viking is of critical importance to the plaintiffs. The liability of Viking would also be of importance to it, given the amount involved;
(d) the time spent: the time recorded by Viking’s counsel appears excessive in the circumstances, particularly when compared to the time spent by the plaintiff who had the burden on the motion;
(e) hourly rates charged: the hourly rates charged by counsel on this motion were on the high end: particularly the rates charged by junior counsel, whose year of call was 2016, when compared to the hourly rate of the plaintiffs’ counsel; and
(f) any offers to settle: while Viking wrote to the plaintiffs and asserted that they ought not to proceed with a motion to add Viking as a party, that correspondence cannot be characterized as an offer to settle. However, those letters do identify the grounds to be argued by Viking on the motion, including the expiration of the limitation period, which grounds were successful. Therefore, some consideration must be given to that correspondence.
23The Court has sympathy to the situation faced by Ms. Karafiloski: she was injured as a pedestrian by an uninsured motorist. However, she retained counsel very early on and steps could have been taken in a timely way to investigate and identify potential insurers who might respond to her claim. This motion was unsuccessful because it was brought more than five years after the accident occurred, well beyond the limitation period. Those facts do not justify an order limiting or postponing Viking’s ability to collect any costs awarded. Furthermore, it is unclear when, whether or what amount the plaintiffs will recover in this action, and there is no justification for imposing that uncertainty on Viking.
Disposition:
24In considering the foregoing, I conclude that it is fair and reasonable to fix Viking’s costs of this motion at $12,000, inclusive of disbursements and HST.
L. C. Sheard J.
Released: July 25, 2018