Court File and Parties

COURT FILE NO.: CV-12-452889 DATE: 20180820 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: LOURDES PRABAHARAN (BONIFACE), Plaintiff AND: RBC GENERAL INSURANCE COMPANY, Defendant

BEFORE: Madam Justice V.R. Chiappetta

COUNSEL: David S. Wilson, for the Plaintiff Sam Sandhu, for the Defendant

HEARD: In Writing

Endorsement

[1] This action settled at a pre-trial conference before me on May 22, 2018 for $200,000 for damages and interest with costs to be determined by me by way of written submissions. Having received and reviewed the written submissions presented I believe it is a fair and reasonable exercise of my discretion under section 131 of the Courts of Justice Act, R.S.O. 1990 c. C.43 to fix costs of this action at $145,605.75 inclusive.

[2] The plaintiff submits that the total fees for the within action of $77,943.00 is fair and reasonable and meets the test of proportionality, together with HST in the amount of $10,132.59 for a total inclusive amount of $88,075.59.

[3] Following the accident, the plaintiff claimed a number of benefits from the defendant in its capacity as her accident benefit insurer. As a result of an arbitration proceeding the plaintiff received income replacement benefits and an amount with respect to housekeeping. The plaintiff relies on the decision of the Divisional Court in Carr v. Modi, 2016 ONSC 7255 and claims $44,727.18 of the costs incurred by the plaintiff to recover the accident benefits. The total amount the plaintiff claims for fees and HST, inclusive of accident benefit matters is $132,802.77 plus disbursements of $55,153.40. In addition, the plaintiff seeks additional amounts for the preparation of its costs submissions ($1,406.85) and its reply costs submissions ($1,242.72) for a total costs claim of $190,605.74.

[4] In summary, then, this matter resolved for $200,000 for damages and interest and the plaintiff is seeking a total of $190,605.74 in costs. In other words the result of the proceeding was damages awarded in an amount less than $200,000 considering some interest included in the stated amount and a costs award being sought that likely exceeds the damages awarded. In these circumstances it cannot be said that the costs sought by the plaintiff are fair and reasonable (Clarington Municipality v. Blue Circle Canada Inc., 2009 ONCA 722 at para. 52). The amount sought fails to conform with the principle of proportionality. The issue is not with the hours recorded or the rates charged by counsel for the plaintiff. Rather, when measured against the results, the costs requested are simply too high. An award of costs must be proportionate to the amount recovered. (Mullin v. Lagace, 2015 ONSC 4267 at para. 24). When the costs of the arbitration are removed, the costs that remain as the fees for the tort claim is $145,878.56. In recognition of the principle of proportionality, I reduce the costs attributable to the tort claim by $45,000, leaving an award of $100,878.56.

[5] As noted above, the plaintiff pursued an accident benefit carrier and as a result of her efforts at arbitration she received income replacement benefits and an amount for housekeeping expenses. The plaintiff in his request for costs seeks a further amount in recognition of the costs incurred in pursuing the accident benefits claim. This issue was considered by Justice Lederer in Carr v. Modi, 2010 ONSC 1300 at paras. 26-31:

[26] On an initial review, this seemed peculiar. The Arbitrator who conducted the proceeding, guided by the Dispute Resolution Practice Code, has determined the amount she concluded appropriate. How can it be that the court, which had no involvement in the arbitration, could be asked to supersede what she has done and impose a further order for more costs? For motor vehicle accident claims, Ontario has a mixed system: partly no-fault, partly tort. The arbitration was with respect to the plaintiff’s claim for income replacement under the Statutory Accident Benefits Schedule (“SABS”), the no-fault part of the scheme. To the extent that an injured party is successful in an arbitration such as the one that took place here, it inures to the benefit of the tortfeasor because it lowers his or her liability, in this case for any claim for loss of income. An injured party cannot be compensated twice for the same loss. The value of the income replacement benefit is deducted from any award for loss of income in the tort claim. Counsel for the plaintiff submitted that, this being so, it is not out of place to expect the defendant to pay some of the costs of a proceeding that results in a benefit that accrues to any contiguous tort claim. Counsel provided case law which supports this request.

[27] In one case, Madam Justice D. Wilson observed that the payment of accident benefits is “…inextricably linked to the action against the driver because the defendant insurer can claim a deduction for amounts the Plaintiff receives from her own insurer. Thus, the solicitor for the Plaintiff is bound to pursue his client’s entitlement to various benefits or face the argument at trial from the tort insurer that the Plaintiff could have and should have received benefits from the no-fault insurer.”[24] Ananthamoorthy v. Ellison, 2013 ONSC 4510, at para. 21. The judge went on to quote, and agree with, another judge in another case:

…In my view such pursuits are part and parcel of the Plaintiff’s obligations in an action against the tortfeasor by reason of the releases available to the tortfeasor under the Insurance Act and only in any compelling circumstances should the unsuccessful tortfeasor escape responsibity to indemnify the Plaintiff for the costs of such pursuits…”.[25] Ibid, at para. 22, quoting from Moodie v. Greenway, [1970] O.J. No. 6525, at p. 2.

[28] Justice Stinson came to a similar conclusion:

It is quite something else, however, for the tortfeasor (or more accurately its insurer) to reap the benefits of the risk and expense undertaken by the plaintiff in commencing legal proceedings and risking adverse cost consequence (not to mention her own legal expenses) pursuing a claim for unpaid IRBs or STDs or LTDs, without the tortfeasor/insurer bearing the costs of accomplishing that result. To follow the defendant's approach would be to place an injured plaintiff who has recourse to IRBs or LTD coverage in a worse position than someone who does not. Such a result would be illogical.[26] Anand v. Belanger, 2010 ONSC 5356; 90 C.C.L.I. (4th) 138, at para. 32.

[29] This is not to say that such costs will always be included in any award that is made. Madam Justice D. Wilson has added a cautionary note:

…Tort defendants are not involved in the SABS process and have no ability to control it. It would be unfair as a general proposition, in my view, to lay the cost of the accident benefits pursuit at the feet of the tort defendants. There may be times when a tort defendant derives a clear benefit from the accident benefits matters by way of a deduction of the amounts from damages, and in those circumstances a judge fixing costs in a tort action may consider it appropriate that the tort defendant pay the costs incurred by the plaintiff in securing the benefits. At other times, however, there may be ‘compelling circumstances,’… where it would be inappropriate to visit the costs of dealing with other insurers on a defendant in a tort claim. There is no hard and fast rule. [27] Hoang v. Vicentini, 2014 ONSC 5893, AT PARA. 66.

[30] In the case I am asked to decide, the value of the income replacement benefit was said to be $95,000. The case settled for $42,500. Surely, it stands to reason that the plaintiff would have looked to the tortfeasor for a larger settlement had there been no statutory accident benefits to fall back on. The $95,000 would be deducted from any income loss claim made as part of the tort claim (s. 267.8(1)) of the Insurance Act). This being so, the tortfeasor is saved from that liability by the successful accident benefits claim.

[31] To my mind, this is a circumstance where it is appropriate for the tortfeasor to pay for some part of the costs of the arbitration.

[6] Justice Lederer’s decision was upheld by the Divisional Court (Carr v. Modi, 2016 ONSC 7255, paras. 13-21). The court held that there can be a correct legal basis for a plaintiff recovering the costs of an accident benefits arbitration from a tort defendant and there was no overriding or palpable error in the motion judge’s determination that the defendants derived a benefit because the settlement was net of accident benefits and the plaintiff would have demanded more from the defendants were it not for the quantum of accident benefits already recovered.

[7] The defendant admits that a plaintiff may receive credit for accident benefit legal costs incurred to obtain accident benefits that are deducted from damages in a tort action but submits that the proper method is not to award accident benefit legal costs as costs in a tort action. Rather, the proper method is to take the collateral benefit that a defendant intends to deduct from tort damages and, prior to the deduction, reduce the collateral benefit by the legal costs incurred to obtain said benefit. I agree that the latter method is a more precise and particularized way of respecting the right of the defendant insurer to claim a deduction for amounts the plaintiff receives from her own insurer and the ability of the successful insured to claim indemnity from the unsuccessful tortfeasor for the costs of pursuing her entitlement for various accident benefits. The latter method however cannot be the only method to pursue and receive the benefit of such costs. All matters do not end with a jury determining the quantum of the plaintiff’s loss, the court determining the quantum of collateral benefits to be deducted, with a specific determination of the quantum of costs which were incurred to receive those benefits. In some cases, like this one, when dealing with costs, it is enough to recognize that the tortfeasor reaped a benefit of the efforts and expense undertaken by the plaintiff and should therefore properly contribute some portion of the costs of the plaintiff’s efforts.

[8] The defendant has taken the position in this litigation that “any income losses that may exist are fully covered by [the plaintiff’s] accident benefit carrier”. If this had not been the case, the plaintiff would have looked to the tortfeasor for a larger settlement. The accident benefits received by the plaintiff ultimately reduced her claim against the defendant. It is appropriate in these circumstances for the plaintiff to recover a portion of her accident benefit legal costs from the defendant. Of the costs incurred of $67,090.75, the plaintiff is claiming $44,727.18. I find this amount to be fair and reasonable given, that by the time of settlement the plaintiff had received approximately $158,000 in income replacement benefits as a result of the arbitration proceeding, in addition to an amount with respect to housekeeping and her right to receive an ongoing income replacement benefit so long as she met the test of entitlement.

[9] Finally, the defendant submits that costs from the service date of its Rule 49 offer onward should not be awarded to the plaintiff on the basis that the matter ought to have resolved once the offer was served. I disagree. The defendant served a Rule 49 offer on the plaintiff’s counsel on July 6, 2017 offering to pay the plaintiff the sum of $200,000 including interest plus partial indemnity costs of the action to the date of the offer to be agreed upon between counsel or fixed by a judge of this court. On May 22, 2018 during a pre-trial conference before me, the parties agreed to settle this matter for $200,000 for damages and interest with costs to be determined by me. I agree with the plaintiff’s submission that there was no limitation or condition placed upon those costs at the time of settlement. Rather, after much back and forth the parties entered into an unrestricted agreement to pay costs as assessed by me. It would be unfair and inappropriate, in my view, for the court to now assess costs based on an earlier offer or reduce the costs otherwise payable as a result of an earlier offer.

[10] For these reasons, costs are fixed at $145,605.74 inclusive.

V.R. Chiappetta J. Date: August 20, 2018