Court File and Parties
COURT FILE NO.: CV-17-586762 DATE: 20181128 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: The Wawanesa Mutual Insurance Company, Applicant AND: The Dominion of Canada General Insurance Company, Respondent
BEFORE: D.A. Wilson J.
COUNSEL: Derek V. Abreu, Counsel for the Applicant Eric J. Adams, Counsel for the Respondent
HEARD: By Written Submissions
Endorsement
[1] This application came before me on the referral of Justice Firestone, who presided in Civil Practice Court on October 5, 2018. At that time, the Applicant wished to withdraw the Application, and the Respondent wished to make submissions on costs. Justice Firestone directed counsel to attend a chambers appointment before me to deal with the costs issue.
[2] I met with counsel on October 10, 2018 and set times lines for the delivery of written submissions on costs. I specifically endorsed that costs submissions were to be brief. Notwithstanding my direction, I received lengthy materials from Dominion, including portions of the cross examination of the representative of Wawanesa, the Response to the Request to Admit served by Dominion, and copies of emails. From the Applicant, I received similar materials as well as case law. I then received reply costs submissions from Dominion with further submissions and a tabbed brief of no less than 11 cases. That is not what I anticipated when I agreed to deal with the issue of costs at the chambers appointment. However, neither counsel provided me with a copy of the Application giving rise to the costs submissions, for reasons which escape me.
[3] Briefly put, Wawanesa issued an Application in March 2018 presumably for a declaration of coverage and duty to defend for a loss which occurred on October 12, 2011. Claudia Villani issued a claim against a numbered company which allegedly owned a Nissan vehicle which she alleges struck her car. In her claim, Ms. Villani asserts that the Nissan was driven by a driver she was unable to identify. She also sued Wawanesa on the basis of the unidentified coverage afforded to her in her own automobile policy of insurance.
[4] The numbered company filed a statement of defence denying that the Nissan was owned by the numbered company. Wawanesa filed a Statement of Defence denying the accident involved an unidentified driver.
[5] Dominion insured the numbered company pursuant to a garage policy which precludes coverage for accidents involving a car owned by the numbered company. Eventually, it was agreed that the Nissan that was involved in the accident was owned by the numbered company. Wawanesa brought the application arguing that Dominion was estopped from denying coverage because it filed a Statement of Defence.
[6] After service of the Application, there was a cross examination of Wawanesa’s representative, service of a Request to Admit and Response to the Request to Admit and several attendances at Civil Practice Court. On October 5, 2018, Wawanesa advised that it was not proceeding with its Application. As a result, Justice Firestone a chambers appointment before me be arranged to deal with the costs issues.
Position of Dominion
[7] Dominion argues that it is entitled to its costs because the Application was aggressively pursued, then abandoned at the last minute. Counsel submits that all of the work on the application had taken place, fees were incurred and the manner in which Wawanesa pursued this Application increased the fees; without any notice to Dominion, Wawanesa abandoned the Application and as a result, Dominion is entitled to its costs.
[8] Dominion has included the actual time expended at $28,329.10 plus disbursements of $552.52 as well as the time on a partial indemnity basis at $18,697.21. However, in the written submissions, counsel did not indicate whether fees are being claimed on a partial or substantial indemnity scale. Mr. Adams, a 2009 call has docketed time of 107.6 hours.
Position of Wawanesa
[9] The Applicant argues that there should be no order of costs. Counsel submits that the conduct of Dominion in refusing to admit the authenticity of various documents resulted in Wawanesa determining to withdraw the Application and deal with it at a later date, following the trial of the underlying tort action. Wawanesa brought the Application for the early determination of a discrete legal issue based on simple, uncontested facts. Dominion’s unreasonable position made this impossible and will simply result in a delay of the determination and increased costs. In any event, the quantum of fees for the Application which did not proceed is exorbitant.
Analysis
[10] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides as follows:
Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent costs shall be paid.
[11] Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990 Reg. 194 identifies the factors a court may consider when exercising its discretion to award costs:
(1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(i) any other matter relevant to the question of costs.
[12] Certain principles have been established that serve as a guide when the court is exercising its discretion when fixing costs.
The discretion of the court must be exercised in light of the specific facts and circumstances of the case in relation to the factors set out in rule 57.01(1): Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC (2005), 75 O.R. (3d) 638 (C.A.).
The Court of Appeal has identified the overriding principle to be that the amount of costs awarded be reasonable in the circumstances. In Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (Ont. C.A.) Epstein J.A. stated at paras. 51-52:
As can be seen, the overriding principle is reasonableness. If the judge fails to consider the reasonableness of the costs award, then the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. In Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291, [2004] O.J. No. 2634 (C.A.), this court emphasized the importance of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding at para. 37, where Armstrong J.A. said “[t]he failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice.
[13] The Courts of Justice Act gives the court a wide discretion concerning the award of costs, the quantum of costs and the parties that must pay a costs order. Rule 57.01 provides the court with guidance about the various factors that may be considered when exercising its discretion.
[14] Generally, in civil proceedings in Ontario, the rule of thumb is that costs follow the event unless there is a persuasive reason that they should not. Cumming J. in DUCA Financial Services Credit Union Ltd. v. Bozzo, 2010 ONSC 4601, at para. 5, described the “normative approach” to an application for costs:
Costs are in the discretion of the Court: s. 131, Courts of Justice Act, R.S.O. 1990, c. C.43 and Rule 57.01 of the Rules of Civil Procedure. In Ontario, the normative approach is first, that costs follow the event, premised upon a two-way, or loser pay, costs approach; second, that costs are awarded on a partial indemnity basis; and third, that costs are payable forthwith, i.e. within 30 days. Discretion can, of course, be exercised in exceptional circumstances to depart from any one or more of these norms. [Emphasis added].
[15] In 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, at para. 10, Perell J. noted at para. 12:
In the exercise of the court’s discretion, the most general rule is that costs at a partial indemnity scale follow the event, which is to say that normally costs are ordered to be paid by the unsuccessful party to the successful party on a partial indemnity scale: Bell Canada v. Olympia & York Developments Ltd. (1994), 17 O.R. (3d) 135 (Ont. C.A.); St. Jean (Litigation Guardian of) v. Cheung, 2009 ONCA 9, [2009] O.J. No. 27 at para. 4 (C.A.).
[16] In Yelda v. Vu, 2013 ONSC 5903, the court stated, at para. 11:
The default rule, however, in resolving costs issues is that the successful party is entitled to its costs. The principle that costs follow the event should only be departed from for very good reasons such as misconduct of the party, miscarriage in procedure, or oppressive or vexatious conduct of proceedings.
[17] I have reviewed the costs submissions submitted by counsel. I have considered the factors enumerated under Rule 57, including the time spent, the results achieved, and the complexity of the matter, as well as the application of the principle of proportionality: Rule 1.04(1).
[18] Furthermore, I have taken into account the principles set forth by the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3rd) 291 (C.A.), specifically that the overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant.
[19] In this matter, Wawanesa brought an Application for a declaration which would be of assistance in the underlying tort action dealing with the obligations of Dominion to defend. Wawanesa chose to commence the Application at the time it did and it cannot now be heard to blame the Respondent for the decision to abandon the Application and bring it at a later date. Work was done by Dominion to respond to the Application which was not proceeded with. In my view, those are costs thrown away, which ought to be paid by Wawanesa.
[20] Frankly, the overly long costs submissions provided by counsel were of marginal assistance to me in fixing the costs because large portions of the submissions were directed at blaming opposing counsel for how the Application was handled or were thinly veiled attempts to justify their respective positions on the Application. My task is to fix the costs of an Application that was abandoned, not to fix costs after the hearing of the Application. To do so did not require volumes of material, copies of transcripts from the cross examination or submission of case law; the issue was addressed at a chambers appointment and did not arise as a costs endorsement following a hearing.
[21] I do not intend to scrutinize the docketed time but rather to fix a sum that strikes me as fair and reasonable in the circumstances, in accordance with the principles articulated in Boucher.
[22] In my view, the time claimed is excessive—more than 100 hours of time for an Application that did not proceed is not reasonable, particularly from a counsel whose practice is based on insurance law. This Application does not contain a novel point nor does it arise from a complex fact situation. I am of the view that fees of $10,000 plus HST plus disbursements of $552.52 is fair and reasonable and is a sum that the unsuccessful Applicant could well have expected when it decided to abandon the Application.
Conclusion
[23] Wawanesa is to pay Dominion its costs of this abandoned Application fixed in the sum of $10,000 plus HST plus the disbursements forthwith.
D. A. Wilson J.