COURT FILE NO.: CV-17-2414 DATE: 2019 03 08
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Glenn Beauchamp v. Kathleen E. DeMan
BEFORE: FRAGOMENI J.
COUNSEL: Julian Binavince, for the Applicant Inga B. Andriessen, for the Respondent
C O S T S E N D O R S E M E N T
[1] The application was heard on December 21, 2018. On January 23, 2019 this application was dismissed.
[2] The respondent submits that she is entitled to costs in the total amount of $29,211.83 comprised of the following:
- partial indemnity costs in the amount of $6,213.50 up to the date of the respondent’s Offer to Settle served March 14, 2018 and
- substantial indemnity costs from the date of the offer in the amount of $22,998.33.
[3] The applicant acknowledges that the respondent is entitled to partial indemnity costs of the entire proceeding in the amount of $18,065.17. The applicant denies that the offer attracts the consequences of Rule 49 or that there is any reason to award elevated costs. At paragraph 8 of his costs submissions the applicant sets out the following:
At the hearing of the application, the applicant provided his bill of costs to the respondent, claiming partial indemnity costs of $15,599.15 (inclusive of taxes), plus disbursements and an attendance fee for the hearing of the application. Accordingly, the applicant could reasonably be expected to pay costs in the amount of $15,599.15, plus the respondent’s actual disbursements in the amount of $1,716.02, plus $750 for attending at the hearing of the application (3 hrs at the partial indemnity rate of $219.80, plus HST), for a total of $18,065.17.
[4] The applicant submits that a respondent who offers a dismissal is not making a Rule 49 offer because the dismissal is not a recovery and in offering such an offer the applicant is merely “reaffirming his original decision to sue the respondent”.
[5] In support of this position the applicant refers to two decisions: Rooney (Litigation Guardian of) v. Graham, [2001] O.J. No. 1055 (C.A.), at para. 11
State Farm's offer asked Rooney to accept a dismissal of the claim with, costs to be assessed. This was not an offer which could engage Rule 49 because that rule, by its wording, only applies when a plaintiff recovers a judgment. A dismissal of a plaintiff's claim is not a recovery. Therefore, a defendant who offers a dismissal is not making a Rule 49 offer. See S.A. Strasser Ltd. v. Richmond Hill (Town) (1990), 1 O.R. (3d) 243. In refusing this offer, Rooney was doing no more than re-affirming her original decision to sue State Farm. It was certainly reasonable to sue the owner and driver of the vehicle that struck her and, when they didn't defend, to pursue the responsible insurer. There is nothing on the record to show that at the time the offer was made it would have been unreasonable to continue the action.
S. & Strasser Ltd. v. Richmond Hill (Town) (1990), 1 O.R. (3d) 243 (C.A.), at para. 4:
At first glance it seems an anomaly that the plaintiff should be awarded solicitor-and-client costs following the date of an offer, while the defendant only receives party-and-party costs. The answer is found in appreciating that this rule assumes that the plaintiff has recovered a judgment of some value. Without the rule, that plaintiff would normally recover party-and-party costs. The rule gives that plaintiff a bonus for an offer lower than the recovery by elevating costs to the solicitor-and-client level following the offer. The bonus to a defendant who makes an offer higher than the recovery is that the defendant pays no costs following the offer and, in addition, recovers party-and-party costs for that period of time. That rationale does not fit a case where the plaintiff is totally unsuccessful because, without the rule, the defendant is normally entitled to party-and-party costs. The words in the rule "and the plaintiff obtains a judgment as favourable" make it clear that the rule has no application where the plaintiff fails to recover any judgment.
[6] In Boucher v. Public Accountants Council for the Province of Ontario, [2004] O.J. No. 2634, Armstrong J.A. stated the following at paras. 26 and 38:
26 It is important to bear in mind that rule 57.01(3), which established the costs grid, provides:
When the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs.
Subrule (1) lists a broad range of factors that the court may consider in exercising its discretion to award costs under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The express language of rule 57.01(3) makes it clear that the fixing of costs is not simply a mechanical exercise. In particular, the rule makes clear that the fixing of costs does not begin and end with a calculation of hours times rates. The introduction of a costs grid was not meant to produce that result, but rather to signal that this is one factor in the assessment process, together with the other factors in rule 57.01. Overall, as this court has said, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.
38 In deciding what is fair and reasonable, as suggested above, the expectation of the parties concerning the quantum of a costs award is a relevant factor. See City of Toronto v. First Ontario Realty Corporation (2002), 59 O.R. (3d) 568 at 574 (S.C.). I refrain from attempting to articulate a more detailed or formulaic approach. The notions of fairness and reasonableness are embedded in the common law. Judges have been applying these notions for centuries to the factual matrix of particular cases.
[7] Rule 57.01(1)(0.b) of the Rules of Civil Procedure states:
57.01 (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.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;
[8] I am prepared to fix costs in this matter.
[9] In accordance with the legal principles set out in S. & Strasser Ltd., the application in this case was dismissed in its entirely which means that the applicant “does not obtain” a judgment, and as such the circumstance are not caught by the language of Rule 49.
[10] The respondent relies on the decision in Mills v. Minto Developments Inc., 2015 CarswellOnt 15808 for the proposition that I should exercise my discretion and award costs as set out by the respondent in her written costs submissions. In Mills, the Court set out the following at para. 18:
In the case of Dunstan v. Flying J Travel Plaza (2007), 54 C.P.C. (6th) 123 (Ont. S.C.J.), RJ Smith J. at paragraph 9 points out that Rule 49.10(1) of the Rules of Civil Procedure deal with a plaintiff’s offer to settle in a contrast to the defendant’s offer to settle. The judgment says as follows:
[9] Rule 49.10(1) of the Rules of Civil Procedure deals with a plaintiff’s offer to settle and in contrast to the defendant’s offer to settle, the plaintiff is entitled to receive costs on a substantial indemnity basis from the date the offer is made, if a result is achieved after trial which is as or more favourable than the terms of the offer. The relevant section of Rule 49.10(1) is as follows:
…and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.
[10] In the case of S & A Strasser Ltd. v. Town of Richmond Hill et al. (1990), 1 O.R. (3d) 243 (C.A.) Justice Carthy dealt with what appears to be an anomaly of awarding a plaintiff substantial indemnity costs if he or she obtained a result as favourable or more favourable than its offer, whereas a defendant is only entitled to partial indemnity costs, if a plaintiff obtains a judgment as favourable or less favourable than the defendant’s offer to settle. Justice Carthy explains what at first glance appears to be an anomaly when he stated as follows:
The answer is found in appreciating that this rule assumes that the plaintiff has recovered a judgment of some value. Without the rule, that plaintiff would normally recover party-and-party costs. The rule gives the plaintiff a bonus for an offer lower than the recovery by elevating costs to the solicitor-and-client level following the offer. The bonus to a defendant who makes an offer higher than the recovery is that the defendant pays no costs following the offer and, in addition, recovers party-and-party costs for that period of time.
[11] Justice Carthy further stated that:
That rationale does not fit a case where the plaintiff is totally unsuccessful because, without the rule, the defendant is normally entitled to party-and-party costs. The words in the rule “and the plaintiff obtains a judgment as favourable” make it clear that the rule has no application where the plaintiff fails to recover any judgment.
[12] I agree with the reasoning of Justice Carthy in the S & A Strasser Ltd. decision, that the provisions of Rule 49.10(2) apply when a defendant exceeds its offer to settle and where the plaintiff has recovered a judgment of some value. In this case, Dunstan did not recover a judgment of any value.
[13] The general wording of Rule 57.01(1) states as follows:
…the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing …
Again, I agree with the reasoning of Carthy J. in the Strasser decision that the court in exercising in discretion pursuant to Rule 57.01(1) may find it appropriate to award costs on a substantial indemnity basis from the date of the defendant’s offer to settle, if the defendant made an offer to settle and the plaintiff did not recover a judgment of any value after trial. I therefore order that costs be awarded to the defendant on a partial indemnity basis as claimed from September 15, 2005 until its offer to settle on February 26, 2007 and on a substantial indemnity scale from February 26, 2007 until April 27, 2007.
[11] In the circumstances of this case I am not prepared to consider the offer made by the respondent in exercising my discretion pursuant to Rule 57.01(1). In Iannarella v. Corbett, 2015 ONCA 110 Lauwers JA stated the following at paras. 138 and 139:
[138] The trial judge stated that he was exercising his discretion under this court’s decision in S.& A. Strasser Ltd. v. Richmond Hill (Town) (1990), 1 O.R. (3d) 243 (C.A.). In that case the court cited rule 49.13, which provides that notwithstanding rule 49.10, in assessing costs a court “may take into account any offer to settle made in writing.”
[139] The development of this court’s approach to awards of substantial indemnity costs has evolved since Strasser, as this court noted in Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66. Outside of rule 49.10, to make such an award as a matter of judicial discretion the court must find that the party has been guilty of egregious misconduct in the proceeding. See St. Elizabeth Home Society v. Hamilton (City), 2010 ONCA 280, at para. 92 and McBride Metal Fabricating Corp. v. H. & W. Sales Co. (2002), 59 O.R. (3d) 97 (C.A), at para. 39. I can see no basis in this case on which the trial judge could have found such misconduct on the appellants’ part.
[12] I am not satisfied that the respondent has established that the conduct of the applicant rises to a level that warrants substantial indemnity costs.
[13] Costs will be based on a partial indemnity basis. In all of the circumstances a fair and reasonable amount is $20,000.00 all-inclusive.
[14] Order to issue that the applicant pay to the respondent her costs fixed in the all-inclusive sum of $20,000.00.