COURT FILE NO.: CV-15-531138-00A1
CV-09-387789
DATE: 20190920
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Navarathy Chandrababu and Nallaiah Sinnappu, Plaintiffs
AND:
TD Home and Auto Insurance Company, Defendant
AND:
Sutha Tharmalingam, Third Party
And RE: Nallaiah Sinnappu and Navarathy Chandrababu, Plaintiffs
AND:
Sutha Tharmalingam, Defendant
AND:
Intact Insurance Company, Third Party
BEFORE: D.A. Wilson J.
COUNSEL: David S. Wilson, Counsel for the Plaintiffs
Sabrina Lucibello, Counsel for the Defendant
Daniel Himelfarb, Counsel for the Third Party Intact Insurance Company
HEARD: By Written Submissions
ENDORSEMENT
[1] The Plaintiffs bring two actions for damages for personal injuries allegedly sustained in a motor vehicle accident that occurred October 3, 2007: the tort action which is CV-09-387789; and the action commenced against TD Home and Auto Insurance Company (“TD”), CV-15-53113800A1.There was an issue of insurance coverage with respect to the Defendant driver, Sutha Tharmalingam, and consequently, Intact was added as a Statutory Third Party. Instead of adding TD as a defendant to the tort claim, the Plaintiffs chose to issue a separate action against TD for coverage pursuant to the uninsured provisions of the policy.
[2] The timeline indicates that the Defendant Tharmalingam was examined for discovery in 2011. Thereafter, the insurer had difficulty contacting the insured. The Plaintiffs obtained an order for compliance with undertakings in May 2013. A further motion was necessary and another order was obtained in 2014. The insurer for the tortfeasor offered to make a formal admission of liability in exchange for an agreement by the Plaintiffs to restrict their claims to the policy limits of $1 million. The Plaintiffs were not prepared to do so. In March 2015, counsel for Intact brought a motion and obtained an order removing themselves as counsel of record for the tortfeasor. In August 2015, Intact was added as a Statutory Third Party. A mediation took place in 2015, which failed; these actions were set down for trial. A consent trial date was fixed for October 7, 2019 for 3 weeks with a jury.
[3] I presided over the pretrial of these actions on July 2, 2019. Mr. Wilson, counsel for the Plaintiffs, advised that he did not believe the 3 weeks of trial time that had been set aside was sufficient given the number of experts expected to testify and the fact that interpreters were required for the Plaintiffs. The Defendants did not agree with the adjournment of the trial and consequently, I arranged a chambers appointment on July 16, 2019.
[4] At the appointment, I was advised that the coverage issues between Tharmalingam and the insurer had been resolved so the statutory third party claim could be dismissed as well as the claim against TD. Counsel for TD confirmed that she had instructions to dismiss the action on a without costs basis. Counsel for the Plaintiffs advised that costs were being demanded in both actions.
[5] After reviewing the list of witnesses, I was concerned that the trial could not be completed in the 3 weeks that had been allotted for it and I reluctantly agreed that the trial date of October 2019 must be vacated and a new date selected. I say “reluctantly” because this is an old action, the accident giving rise to the claims occurred a dozen years ago. Furthermore, nothing has changed in the case since Mr. Wilson set the action down for trial and advised the court that the trial could be completed in 3 weeks. In fact, the case is more streamlined, since the issues of insurance coverage have been resolved and it is only the damages claims that will proceed to trial.
[6] In any event, I indicated to counsel that I would deal with the issue of costs of the dismissal of the actions and requested brief written submissions, which have been received.
Positions of the Parties
[7] The Plaintiffs submit that the conduct of Intact in alleging coverage issues was tactical and resulted in the Plaintiffs incurring extra costs, which are now thrown away. Costs on a substantial indemnity basis are requested in the sum of $27,574.05 or alternatively, on a partial indemnity basis in the sum of $19,901.35. Each of these figures includes disbursements of $3,377.43.
[8] Additional costs related to the Third Party action are also claimed. Mr. Wilson requests costs in that action on a substantial indemnity basis of $2,577.82 or alternatively, on a partial indemnity basis in the sum of $1,752.92.
[9] The Defendant submits that it was unable to communicate with the Defendant, therefore the insurer denied coverage, and added itself as a statutory third party, which was reasonable in the circumstances. Recently, the Defendant has been in communication with Intact and coverage has been re-instated. Intact submits that no costs ought to be awarded to the Plaintiffs in the circumstances and in any event, the costs should be dealt with at the end of the case, as is the usual practice.
Analysis
[10] Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides that the Court has discretion to determine to what extent and by whom costs of a step in a proceeding shall be paid, Rule 57.01of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 sets out the general principles for the exercising of the Court’s discretion and states that the court shall determine the “simplest, least expensive and most expeditious process for fixing costs” (Rule 57.01(7).
[11] In dealing with the issue of costs, 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 CanLII 14579 (ON C.A.), (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 in the particular circumstances, rather than an amount fixed by actual costs incurred by the litigant claiming costs.
[12] In the instant case, the Plaintiffs issued their claim against the driver of the vehicle that struck their vehicle, Tharmalingham. There is no issue of liability for the accident, on the evidence; the Defendant offered to admit liability in exchange for an agreement by the Plaintiffs to restrict their claims to the policy limits of $1 million but the Plaintiffs would not do so. As a result, a formal admission of liability has not been made.
[13] From the synopsis provided by Plaintiffs’ counsel, following the discovery of the Defendant, counsel for Tharmalingham was unable to contact her. Due to the lack of communication, Intact brought a motion and obtained an order adding itself as a Statutory Third Party. There was an affidavit from counsel deposing that Tharmalingham had breached conditions of the insurance policy.
[14] Counsel for the Plaintiffs submits that the position of Intact in denying coverage was “done solely for the purpose of obtaining a tactical advantage, the intent being to reduce its liability limits to the extent of $200,000.” This is a serious allegation to make, and one without merit in this case and I reject it entirely. If an insured fails to co-operate with counsel in the defence of an action, thereby prejudicing the ability of the insurer to defend the claim, the insurer may deny coverage. That is a judgment call that must be made by the insurer, on the recommendation of counsel. It is an issue between the insurer and its insured.
[15] The prudent thing for Plaintiffs’ counsel to do in such circumstances is to add the Plaintiffs’ insurer as a defendant to respond to the claims. As counsel for Intact correctly points out, the solicitor for a Plaintiff has options when coverage is denied to a tortfeasor. The Plaintiff can amend the claim to add the uninsured carrier as a party defendant or the action can proceed to trial and a judgment obtained and payment requested from the uninsured carrier. Usually, the former course of action is adopted and it is reasonable to proceed in that fashion.
[16] In this case, Mr. Wilson submits that he decided to commence a new action because to amend the existing claim “might have involved a contested motion and further delay.” I do not accept this submission. It was as a result of Intact’s denial of coverage that the Plaintiff’s insurer had to be added to the litigation as a Defendant so it is difficult to comprehend on what basis Intact would have contested the motion to amend the claim. The institution of a new claim naming TD as a Defendant necessitated the securing of an order for trial together and two sets of pleadings, which is not the ideal way to proceed.
[17] In my view, it was unnecessary for the Plaintiffs to issue a separate claim against TD in this case it resulted in increased costs. The Defendant TD, against whom the claim is being dismissed, is not demanding costs; I am not persuaded the Plaintiffs incurred any additional costs as a result of this claim against TD being initiated, apart from issuing the claim, which as I have noted, was unnecessary.
[18] Counsel for the Plaintiffs argues that the Defendant failed to comply with undertakings following the discovery and 2 motions were brought before the Master as a result. Any costs the Plaintiffs would be entitled to from those motions would have been dealt with by the Masters hearing the motions and do not form part of any costs thrown away.
[19] Mr. Wilson submits that the addition of Intact as a statutory third party required “considerable” further legal work, although what that work entailed is not specified. A review of his Bill of Costs does not set out any work counsel did because of the 2015 order adding Intact as a Statutory Third Party and it is difficult to conceive of why such an order would require the Plaintiffs’ counsel to take any steps whatsoever.
[20] It appears after TD was added as a defendant, it conducted its own discoveries of the parties, as it was entitled to do. Mr. Wilson claims 4.65 hours of work to prepare his clients for the discovery and another 14 hours for attending the discovery with them. In my view, this is excessive. Mr. Wilson conducted a discovery of TD by way of written interrogatories for which he claims 2 hours of time.
[21] In my view, as a result of the addition of TD as a party defendant, the solicitor for the Plaintiffs had to produce his clients again for a further discovery and he did a discovery of TD through written interrogatories. There is no basis upon which costs should be fixed on a substantial indemnity basis. Coverage issues arise on a regular basis in insurance claims and they must be addressed during the course of the lawsuit. I fix the costs thrown away for the discovery attendances on a partial indemnity basis in the sum of $3,500, an amount I consider to be fair and reasonable and proportionate given the facts of this matter.
[22] With respect to disbursements, the 4 unpaid disbursement accounts sent to TD should be paid if they related to productions requested. Disbursements thrown away include the cost of the interpreter for the discovery, which amount is unclear; it might be $376.11 plus HST or $663.72. No reason is set out for ordering discovery transcripts and while it may be a proper disbursement to claim at the conclusion of the case, it is not a disbursement thrown away. I do not view the cost of issuing the claim and setting the TD action down for trial as reasonable for the reasons I have previously articulated. I therefore fix the disbursements thrown away as a result of the addition of TD as a party defendant in the sum of $500.00.
Conclusion
[23] TD was added as a party defendant as a result of coverage issues concerning the tortfeasor and its insurer, which was appropriate. These issues have now been resolved such that TD no longer a party to the lawsuit. I fix the quantum of costs thrown away by the Plaintiffs in the sum of $3,500 plus disbursements in the sum of $500.00. These costs are to be paid by the Defendant Intact to the Plaintiffs in the cause.
D.A.Wilson J.
Date: September 20, 2019