Court File and Parties

COURT FILE NO.: 05-CV-283449-0000 DATE: 20190923

SUPERIOR COURT OF JUSTICE – ONTARIO

B E T W E E N:

STAMATIS (STEVE) STAMATOPOULOS, NIKOLAOS STAMATOPOULOS, CHRISTOTHEA STAMATOPOULOS, KYRIAKOS STAMATOPOULOS and STEPHANIE CLARKE, Plaintiffs

and

RICHARD J. HARRIS and THE REGIONAL MUNICIPALITY OF DURHAM and HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF ONTARIO represented by THE MINISTER OF TRANSPORTATION FOR THE PROVINCE OF ONTARIO and STATE FARM INSURANCE, Defendants

BEFORE: Copeland J.

DATE: September 23, 2019

COUNSEL: George A. Bougadis, Boris Goryayev and Joga S. Chahal, Lawyers for the Plaintiffs David G. Boghosian and Sachin Persaud, Lawyers for the Defendant Regional Municipality of Durham Brian M. Bangay, Lawyer for the Defendant Richard J. Harris

HEARD: IN WRITING

COSTS ENDORSEMENT

Introduction

[1] On March 6, 2019, I dismissed the claims of the plaintiff Mr. Stamatopoulos against the Regional Municipality of Durham (“Durham Region”): Stamatopoulos v. The Regional Municipality of Durham, 2019 ONSC 603. The action involved allegations of negligence by Durham Region in its maintenance of the road where Mr. Stamatopoulos was a passenger in a vehicle that was involved in a single-vehicle collision. I also dismissed the Family Law Act claims of the remaining plaintiffs, who are family members of Mr. Stamatopoulos.

[2] I also dismissed the cross-claim of the defendant Mr. Harris against Durham Region. The plaintiffs and Mr. Harris had reached a settlement prior to trial, and entered into a Mary Carter agreement. As part of the settlement, Mr. Harris conceded that his manner of driving was negligent, and was a cause of the collision. As a result, Mr. Harris’ participation in the trial related to asserting his cross-claim attempting to establish liability on the part of Durham Region, and if Durham Region was found liable, what proportion of liability should be apportioned to Durham Region. As I noted in my trial decision, the impact of the Mary Carter agreement was that the interests of the plaintiffs and Mr. Harris were largely aligned during the trial.

[3] I received costs submissions in writing. These are my reasons in relation to costs.

Positions of the Parties

(i) Durham Region

[4] Durham Region seeks costs on a partial indemnity scale as follows: $519,529.38 for fees (including HST), and $98,064.12 for disbursements (including HST), for a total of $617,593.50. Durham’s costs outline excludes costs of motions, as costs of motions were previously dealt with.

[5] Durham Region submits that because it was successful at trial, it should receive partial indemnity costs throughout the action. Durham bases the fees portion of its costs outline on rates at 65% of its actual rates.

[6] Durham Region argues that the quantum of partial indemnity costs it seeks is reasonable for the following reasons. Durham submits that the issues in the case were numerous, highly complex, and technical. Durham notes that a total of eight liability experts testified at trial. The damages which had been agreed upon prior to trial (in the event of a finding of liability) were high ($2.3 million). The issues in the case were of great importance to both the plaintiffs and Durham Region. Durham Region argues that the case was important to the Region because it would establish a precedent in relation to maintenance of rural roads.

[7] Durham Region submits that it worked with the plaintiffs as far as possible to shorten the trial by admitting evidence without the need to call witnesses, and agreeing to a joint document brief and agreed statement of facts, as well as reaching an agreement on damages prior to trial.

[8] Durham Region asserts that when this action was struck from the trial list in March 2010 and January 2012, both times it was because the plaintiffs were not ready for trial.

[9] Lead counsel for Durham Region was a 28 year call at the start of the trial. Second counsel for the Region was an 11 year call at the start of the trial. In addition, other counsel were used for various tasks along the 12 year history of this action. Durham Region submits that it used lawyers of various degrees of experience for different tasks to try and keep legal costs down. Durham Region notes that it conducted the trial with two counsel (and two attendances by a first year lawyer to assist with audio visual equipment). The plaintiffs had two counsel and a law clerk present throughout the trial, as well as a third lawyer for approximately half of the trial.

[10] In addition, Durham Region notes that during a pre-trial conference with Justice Chiappetta in January 2018, plaintiffs’ counsel made certain representations about the amount of legal fees and disbursements that the plaintiffs had incurred to date. Durham Region argues that the quantum of the plaintiffs’ own costs, prior to the 23 days of trial, is reflective of what the plaintiffs could reasonably be expected to pay in the event they were not successful at trial.

[11] Durham Region also notes that it made an offer to settle in September 2011 for a dismissal of the action on a without costs basis. I note that this was not an offer that engages rule 49 consequences, as it was only open for 30 days.

(ii) The Plaintiffs

[12] The plaintiffs submit that the quantum of costs sought by Durham Region is excessive. They submit that a number of unreasonable tactics by Durham Region delayed the litigation and caused significant avoidable costs to all parties. For this reason, the plaintiffs submit that the rate applied to calculate Durham Region’s partial indemnity costs should not be more than 50-55% of its actual fees. In all the circumstances, the plaintiffs submit that any award of Durham’s legal costs as against the plaintiffs should be limited to $100,000.00, inclusive of disbursements and HST.

[13] The plaintiffs note that s. 131 of the Courts of Justice Act provides that costs are in the discretion of the court. The overriding principles in determining the appropriate costs award are fairness and reasonableness, considering all the circumstances.

[14] The plaintiffs submit that Durham Region unreasonably implemented a “scorched earth” defence of the claim.

[15] The plaintiffs dispute Durham Region’s submission that it worked to shorten the trial. According the plaintiffs, Durham Region’s agreement to damages in the amount of $2.3 million was effectively late in the game. The plaintiffs argue that Durham Region unreasonably opposed several of the plaintiffs’ pre-trial motions. The plaintiffs also argue that Durham’s mid-trial motion to lead a report from a new expert, Mr. Daily, and to lead Detective Wyatt’s CSY calculations unnecessarily lengthened the trial.

[16] The plaintiffs dispute Durham Region’ submission that the action was struck from the trial list in March 2010 and January 2012 because the plaintiffs were not ready for trial. In 2010 the matter was struck from the trial list due to the order of Wilkins J. for a joint experts conference. In 2012, the trial did not proceed for several reasons, including that the final joint expert report was not yet completed due to a number of missing records, and motions brought both by the plaintiffs and Durham Region.

[17] The plaintiffs also dispute some hours spent for specific tasks by counsel as excessive, or work that could be done by clerical staff. The plaintiffs argue that some specific disbursements are not sufficiently detailed in Durham Region’s costs outline.

[18] Further, the plaintiff Mr. Stamatopoulos notes his own financial circumstances. He has been unemployed since the collision. He receives LTD/CPP benefits, as well as payments under a structured settlement of his SABS claim and the settlement with the defendant Mr. Harris. His wife works only part-time in order to be free to provide care to the plaintiff as needed on “bad days”. He also has two young children to support. His family members who made the FLA claims are also all now either unemployed or retired. For this reason, any costs award in favour of Durham Region (vis-a-vis the plaintiffs) is likely to be Mr. Stamatopoulos’ sole responsibility, and will result in considerable financial hardship.

[19] The plaintiffs submit that any costs award should be divided equally between the plaintiff and the defendant Mr. Harris.

(iii) The Defendant Mr. Harris

[20] The defendant Mr. Harris accepts that Durham Region is entitled to a costs award on a partial indemnity basis. Mr. Harris submits that he is responsible to Durham Region for costs only for the cross-claim he advanced against Durham Region.

[21] Mr. Harris submits that Durham region should be awarded fees on a partial indemnity basis of $275,000.00 to $300,000.00, plus HST. He submits that of that amount, $40,000.00 to $50,000.00, plus HST, should rest with Mr. Harris (i.e., in the range of 1/6 of any costs award). Mr. Harris does not set a specific figure on how much Durham Region should be awarded in disbursements. Mr. Harris submits that a number of the disbursements claimed by Durham Region are insufficiently detailed in the Region’s costs outline, and also questions whether HST has been double-charged on some disbursements.

[22] Mr. Harris submits that he participated in this matter fully through the second pre-trial conference, which ultimately resulted in the settlement of the plaintiffs’ claims against him, and the negotiation of the Mary Carter agreement in 2010. Mr. Harris submits that from that time until the fall of 2017, his counsel participated essentially in a watching brief capacity. Thus, Mr. Harris submits that he was not a participant in much of the interlocutory proceedings referenced in Durham Region’s costs submissions. Mr. Harris then participated fully in the proceedings from the fall of 2017 onwards, including the case conferences and settlement conference with Justice Chiappetta, trial preparation, and the trial.

[23] At trial, Mr. Harris called two witnesses – himself and Neil Bigelow. Mr. Harris submits that both witnesses were necessary to the proceedings, and would have been called whether or not Mr. Harris participated in the trial by counsel.

[24] Mr. Harris was represented at trial by one counsel, a 34 year call, with the assistance of a law clerk throughout the trial.

[25] Mr. Harris submits that he worked to shorten the trial, including the (successful) effort to settle damages, agreeing to the admission of evidence without the need to call some witnesses, agreeing to a joint document brief, and consenting to the agreed statement of facts.

[26] Mr. Harris submits that the evidence led on his behalf and cross-examinations by his counsel were done in an efficient and focused manner. He submits that this resulted in minimal expenditure of court time attributable to the involvement of Mr. Harris at trial as a defendant by way of cross-claim.

[27] By way of comparison for reasonable expectations, Mr. Harris has filed his counsel’s costs outline as part of his costs submission. At partial indemnity rates, his own counsel’s costs were a total of $342,260.15, made up of approximately $270,000.00 in fees, and $70,000.00 in disbursements.

[28] Mr. Harris submits that at its heart, the trial was simply a liability trial. He admitted that his driving was negligent and was a cause of the collision. Mr. Harris submits that the case was not one of general public importance, but rather was driven by its facts. Although the damages agreed on in the settlement prior to trial were $2.3 million, the trial proceeded on the basis that Mr. Harris and the plaintiffs were seeking to have Durham Region found 50% liable. Thus, as a practical matter, the claim Durham was facing by the time of trial was $1.15 million.

[29] Mr. Harris acknowledges that lead counsel for Durham Region is an experienced and capable advocate. However, Mr. Harris argues that partial indemnity costs should be in the range of 2/3 of substantial indemnity fees, not 2/3 of actual fees (i.e., 2/3 of 90%, not 2/3 of 100% – which works out to approximately 58% of actual fees, rather than 65% of actual fees). Mr. Harris also submits that second counsel was not necessary for Durham Region for the trial and discoveries, but that one counsel and a law clerk, as used by Mr. Harris, would have been reasonable.

(iv) Durham Region’s reply submission

[30] In a reply submission, Durham Region addressed eight specific disbursements questioned by counsel for the defendant Harris or the plaintiffs in their costs submission. Durham provided invoices to support those disbursements. I will address disbursements below in my analysis.

(v) Additional Submissions

[31] After receiving the initial costs submissions, I requested additional submissions from counsel regarding whether the Mary Carter Agreement contained any provisions that would change the usual rule that any costs order as between the plaintiffs and the defendant Mr. Harris would be several.

[32] The defendant Durham Region took no formal position on the issue.

[33] Counsel for the plaintiffs and the defendant Harris agreed that the terms of the Mary Carter agreement did not change the usual rules in relation to costs awards as between the plaintiffs and the Defendant Mr. Harris. Both took the position that any costs award should be several as between the plaintiffs and Mr. Harris. Mr. Harris reiterated his submission that he should only pay costs for his cross-claim against Durham Region. Mr. Harris also asserted that he was contractually bound by the Mary Carter agreement to advance his cross-claim and participate in the trial, and that his commonality of interest with the plaintiffs at trial was “contractual, not volitional”.

Analysis

(i) Principles in determining costs

[34] Pursuant to the Courts of Justice Act, s. 131(1), the court has a broad discretion when determining the issue of costs. Rule 57.01(1) of the Rules of Civil Procedure sets out a non-exhaustive list of factors to be considered by the court when determining the issue of costs. These factors include: the principle of indemnity and the results obtained; the reasonable expectations of the paying party; the amount claimed in the proceeding and proportionality; the complexity of the proceeding; the importance of the issues; the experience of the lawyer for the party entitled to costs; any offers to settle; and, the conduct of a party that tended to lengthen the duration of the proceeding.

[35] 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: Boucher v. Public Accountants Counsel for Ontario. I have considered these factors, as well as the principle of proportionality, keeping in mind that the court should seek to balance the indemnity principle with the fundamental objective of access to justice.

(ii) Appropriate costs award in this case

[36] I have considered the factors set out in rule 57.01.

[37] I accept that Durham Region should be awarded costs on a partial indemnity basis. This action was for a significant amount of money, and important to all of the parties. In my view all of the parties could reasonably expect to be required to pay partial indemnity costs in the event they did not prevail at trial. As noted above, this is conceded by counsel for Mr. Harris, and not significantly contested by counsel for the plaintiffs. The real issue is what quantum of costs is fair and proportionate in all of the circumstances.

[38] The amount of the plaintiffs’ claim was significant. The original claim was for over $3 million. Shortly prior to trial, damages were settled in the amount of $2.3 million, with the plaintiffs and Mr. Harris seeking to have 50 % of this amount apportioned to Durham Region if it was found liable.

[39] The issue of liability was important to all of the parties. The trial was lengthy, 23 days.

[40] On the issue of complexity, I find that the trial was mixed. There was some complexity to the evidence. This was due to the expert evidence led by all parties, in primarily two fields of expertise (road safety engineering evidence, and accident reconstruction evidence). However, while the trial raised a number of legal issues, in my view none of the legal issues were particularly complex.

[41] Although the result of the trial was important to all of the parties, I accept Mr. Harris’ submission that the case turned primarily on its facts. I do not accept that the result is of broader application or of concern to others beyond the immediate parties. Thus, although the issues were important to the parties, they were not more broadly important to the public.

[42] I take into consideration the conduct of two parties (or perhaps more accurately, their counsel), which tended to unnecessarily lengthen the proceeding. I have referred to some of these matters in my reasons on the trial proper. This conduct fell into two categories.

[43] The first category of conduct is that counsel for the plaintiffs and for Durham Region led or sought to lead evidence which in my view, counsel ought to have known was of dubious value. This unduly lengthened the trial, both in terms of argument over some of this evidence, and in terms of time taken up hearing some of the evidence. I refer in particular to: (i) the evidence of Mr. Liscio regarding mapping a 2010 survey of the road onto Mr. Bigelow’s 2005 survey, and the portions of Mr. Robinson’s opinion that were based on that evidence (see Reasons for Decision at paras. 434-472); (ii) the opinion evidence of Detective Wyatt regarding his CSY calculation (see Reasons for Decision at paras. 94-117); and (iii) the proposed report of John Daily (see Reasons for Decision at paras. 647-652).

[44] The second category of conduct by counsel for the plaintiffs and Durham Region that in my view unnecessarily lengthened the proceedings had to do with their relationship, which was unnecessarily disputatious and frequently lacking in civility. I understand that trials can be hard fought. I understand that not all counsel will get along well in every case. But counsel need to exercise the professional discipline to keep a poor relationship from affecting their behaviour in the courtroom, and from affecting their judgments about a case. It was clear to me at numerous points throughout the trial that lead counsel for the plaintiffs and lead counsel for Durham Region allowed what had clearly become a difficult personal relationship to affect their conduct in the courtroom. And at times I commented on this on the record during the trial. This is regrettable. I comment on it because it is relevant to costs in terms of the lengthening of trial proceedings.

[45] Counsel for the plaintiffs and for Durham Region in their costs submissions each also argue that the other party is responsible for time taken up over the years with various matters as this action proceeded to trial. On the record before me, I am not prepared to find the plaintiffs or Durham Region more responsible for this. The responsibility is shared.

[46] Having made clear my views about the conduct of counsel for the plaintiffs and Durham Region that tended to lengthen the proceedings, I do not accept the plaintiffs’ submission that Durham Region implemented a “scorched earth” defence. Both the plaintiffs and Durham Region vigorously contested liability, as they were entitled to. As I have set out above, there were a few areas where the conduct of counsel for both the plaintiffs and Durham Region had the unfortunate effect of unduly lengthening the trial. But the record does not support the assertion that Durham implemented a “scorched earth” defence.

[47] Nor do I accept Durham Region’s assertion that the reasons that the trial did not proceed in March 2010 and January 2012 were solely due to the plaintiff not being ready for trial. Both times there were delays related to the joint experts conference and reports. I find that it is not appropriate to assign blame in terms of assessment of costs to any party for the two times the trial did not proceed.

[48] I want to be clear that in making these comments about the conduct of counsel, I only attribute them to lead counsel for both the plaintiffs and Durham Region. There was nothing I observed during the trial that would lead me to attribute these actions to junior counsel.

[49] Further, I want to be clear that I do not attribute any of this type of behaviour to counsel for Mr. Harris. Based on his conduct that I observed during the trial, Mr. Bangay presented his case, and challenged Durham Region’s case, in a streamlined and efficient manner. While fully representing his client’s interests, in my view, he carried out his role in a way that was of great assistance to the court, and effectively fulfilled his role as an officer of the court.

[50] I have also considered the plaintiffs’ submissions with respect to their financial situations, including Mr. Stamatopoulos’ ongoing disabilities and inability to work, and that a significant costs order is likely to cause some financial hardship. I accept that this factor is entitled to some weight in assessing the appropriate costs award, both as a matter of what it is fair and reasonable to for the plaintiffs to pay in all of the circumstances of this case, and in terms of the objective of access to justice.

[51] That said, the financial circumstances of the plaintiffs must be balanced along with the indemnity principle, and the reasonable expectations of parties to a lawsuit of this magnitude of what they would expect to pay in costs in the event they were not successful in the litigation. The lawsuit brought by the plaintiffs was for a large amount of money, and was of some complexity.

[52] The plaintiffs have not filed their own costs outline as part of their costs submission. But based on the number of experts they called at trial, the number of counsel they had present at trial, and the amount of time that would have been required by plaintiffs’ counsel to prepare for the 23 day trial, I am satisfied that the plaintiffs’ own legal costs would have been significant. In coming to this conclusion, I do not rely on Durham Region’s submission about the representation about the plaintiffs’ costs apparently made by plaintiffs’ counsel during one of the pre-trials with Justice Chiappetta. In my view, that discussion is covered by settlement privilege.

[53] In these circumstances, the plaintiffs must have been aware from early on that in the event they were not successful at trial, they would likely be facing a significant costs award. This conclusion goes for Mr. Harris as well. As noted above, Mr. Harris’ counsel’s partial indemnity costs are in the range of $342,000.00 (including disbursements and HST).

[54] I do not intend to piece by piece cut specific hours for work done, or specific disbursements to come to a fair and proportionate costs award. However, overall, I find the costs outline of Durham Region somewhat high. I find the positions of the plaintiffs and Mr. Harris somewhat low. Thus, I exercise my discretion to impose a costs award that is proportionate in all of the circumstances, considering the factors set out in rule 57, and the broad discretion under s. 131(1) of the Courts of Justice Act.

[55] With respect to the fees portion of costs, I find that in all the circumstances, an award for fees of $275,000.00 inclusive of HST is appropriate.

[56] With respect to disbursements, I find that $90,000.00, inclusive of HST is appropriate. I am reducing slightly the disbursements sought by Durham Region. In general, I find that the disbursements claimed by Durham Region are properly assessable, and are sufficiently itemized. A significant portion of the disbursements relate to expert evidence. This was a case where expert evidence was relied on significantly by all parties. Further, in its reply submission, Durham Region responded with detail and appropriate invoices for a number of specific disbursements that had been questioned by the plaintiffs and Mr. Harris.

[57] However, I reduce the award for disbursements for two reasons. First, I exclude the disbursement of $2,011.90 for Mr. Daily’s report which was excluded from evidence. In its reply submission, Durham Region conceded that this disbursement should be excluded.

[58] Second, in his submission, Mr. Harris notes that Durham Region’s cost outline lists all of its disbursements and then adds 13% HST onto all of them. Mr. Harris questions this approach, as many disbursements likely would already have HST included in the invoice. Durham Region did not address this issue in its reply submission. In the absence of a response from Durham Region on this point, or specific invoices showing whether or not HST was already charged on some of the disbursements, I reduce the disbursements to account for this.

[59] In all of the circumstances of this case, I find that a reasonable and proportionate award of costs of the action is that Durham Region is entitled to fees in the amount of $275,000.00, inclusive of HST, plus disbursements in the amount of $90,000.00, inclusive of HST, for a total costs award of $365,000.00.

(iii) Division of the costs award as between the plaintiffs and Mr. Harris

[60] I turn then to how this award should be divided between the plaintiffs and Mr. Harris. Durham Region made no submissions as to apportionment of the costs. The plaintiffs submit that any costs award should be divided equally, and that in any event, they should not be liable for more than $100,000.00 in costs. Mr. Harris submission, when put in terms of a fraction, is that he should only be liable for approximately 1/6 of any costs award.

[61] In my view the costs should be apportioned with the plaintiffs paying 65% of the award, and Mr. Harris paying 35% of the award. I come to this division for the following reasons. The plaintiffs’ submission that they should not pay more than $100,000.00 in costs is unreasonable given the magnitude of the litigation, and given what the plaintiffs could reasonably have expected to pay in costs if they were not successful. This division also recognizes the plaintiffs’ larger role in the litigation compared to Mr. Harris. It also recognizes the conduct of counsel for the plaintiffs (and for the defendant Durham Region), which tended to lengthen the trial, but which counsel for Mr. Harris played no part in.

[62] However, I find that it is not appropriate to make Mr. Harris’ portion of the costs award as low as the 1/6 he submits he should bear. Although his role in the litigation was less than the plaintiffs in terms of the conduct of the trial and trial preparation, he played a significant enough role that 1/6 of the costs award is not adequate. As I have noted above, by the time of the trial, as a result of the Mary Carter agreement, Mr. Harris’ interests in the trial were largely aligned with the plaintiffs. His counsel actively sought to have Durham Region found liable. I do not suggest there was anything inappropriate about doing so. But I am not prepared to draw as large a distinction between his role and the plaintiffs’ roles as counsel for Mr. Harris submits. Nor do I accept that the fact that Mr. Harris was bound to participate in the trial and assert his cross-claim by the terms of the Mary Carter agreement is a reason to consider making his share of the costs award less. Mr. Harris’ assertion that his participation in the trial was “contractual, not volitional” ignores the fact that he chose to settle with the plaintiffs and enter into the Mary Carter agreement as part of that settlement. He has to live with the consequences of that choice.

[63] Further, in light of the quantum of Mr. Harris’ own counsel’s costs outline on a partial indemnity basis, the order I make is certainly within the realm of what Mr. Harris could reasonably have expected to pay in costs as a losing party.

[64] Applying this apportionment, the plaintiffs shall pay costs to Durham Region in the amount of $237,250.00, inclusive of disbursements and HST. The defendant Mr. Harris shall pay costs to the Durham Region in the amount of $127,750.00, inclusive of disbursements and HST.

Copeland J.

Date: September 23, 2019