COURT FILE NO.: 12-56112
DATE: 2019/10/29
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
TATIANA NEMCHIN
Plaintiff
– and –
YVONNE GREEN
Defendant
Joseph Obagi and Adam Aldersley, for the Plaintiff
Thomas Ozere and Kim Dullett, for the Defendant
HEARD: August 28, 2018
ENDORSEMENT
Costs of the action
CORTHORN J.
Introduction
[1] At the conclusion of a multi-week jury trial in this personal injury action, the plaintiff was awarded damages totalling $698,112.58.[^1] She seeks her costs of the action.
[2] The parties agree on a number of matters. First, the defendant does not dispute the plaintiff’s entitlement, in principle, to her costs of the action. The defendant does not dispute the docketed time upon which the costs claimed are based. The partial indemnity rate for junior counsel is agreed upon at $110 per hour, as are the partial indemnity rates for all other timekeepers, excluding senior counsel.
[3] With respect to senior counsel, the parties agree on the partial indemnity rate for work done in the years 2012 through 2016. The rate agreed upon is the inflation-adjusted maximum under what counsel referred to as the “costs grid”: see the chart below. In those years, senior counsel was in the category for lawyers 10 to 20-years at the bar.
[4] The parties disagree as to the partial indemnity rate for work done by senior counsel in 2017 and 2018. The plaintiff proposes a rate of $375 per hour, the defendant a rate of $370 per hour.[^2] In those years, senior counsel was in the category of more than 20 years at the bar.
[5] The disbursements claimed are not in dispute. Disbursements totalling $67,121.01 (including HST, where applicable) are agreed upon.
[6] The matters to be determined in fixing the plaintiff’s costs are:
- The partial indemnity hourly rate for senior counsel, Joseph Obagi in the years 2017 and 2018;
- Whether costs are to be fixed on the basis of the total award of damages or on what the defendant submits is the net effective award of damages. The latter takes into consideration the assignment of Ms. Nemchin’s rights to payment of collateral benefits (see: Nemchin v. Green, 2018 ONSC 2185, 140 O.R. (3d) 668 (“Nemchin (No. 1)”) and Nemchin v. Green, 2019 ONSC 6243 (Nemchin (No. 2)); and
- Whether the plaintiff is entitled to costs on the substantial indemnity scale from February 6, 2017 forward, based on the terms of her offer to settle of that date.
[7] The issue of costs of the action was argued at the same time as other issues raised in the post-trial phase of this matter. Those issues include the rate at which pre-judgment interest accrued and the defendant’s request for an assignment of the plaintiff’s rights with respect to payment of certain collateral benefits. Those issues were determined in Nemchin (No. 1) and Nemchin (No. 2).
[8] When the issue of costs was argued, the verdict was under appeal. The parties agreed that the court’s decision with respect to costs would be deferred pending the outcome of the appeal. The Court of Appeal released its decision, dismissing the appeal, on July 31, 2019 (Nemchin v. Green, 2019 ONCA 634).
[9] A decision with respect to costs of the action is therefore required.
Positions of the Parties
a) The Plaintiff
[10] Mr. Obagi was called to the bar in 1995. He was certified as a specialist in civil litigation in 2006. Mr. Obagi was retained in 2012 to represent the plaintiff. When the trial of this action was conducted in the winter and spring of 2017, Mr. Obagi was in his twenty-second year of practice.
[11] The fees initially claimed on the partial indemnity scale were $391,723. That amount was based on partial indemnity hourly rates for Mr. Obagi that increased from $400.00 in 2012 to $430.00 in 2017 and 2018.
[12] As noted above, the parties ultimately agreed on the partial indemnity rates for Mr. Obagi, other than for the years 2017 and 2018. Based on all rates agreed upon and a rate of $375 per hour for Mr. Obagi in those two years, the fees on the partial indemnity scale claimed by the plaintiff total $353,154.65. That amount is exclusive of HST.
[13] The fees claimed for work done in 2018 relate only to the issue of costs. Costs for work done with respect to post-trial motions are not included.
b) The Defendant
[14] With respect to the work done by Mr. Obagi in 2017 and 2018, the defendant emphasizes that Mr. Obagi had only recently moved into the section of the costs grid applicable to counsel more than 20 years at the bar. The defendant accepts that for those two years, a reasonable partial indemnity rate for Mr. Obagi is more than the inflation-adjusted maximum for counsel 10 to 20 years at the bar ($365.95). The defendant submits that the rate applied should be closer to that amount than to the inflation-adjusted maximum for counsel more than 20 years at the bar ($426.24).
[15] The defendant proposes a partial indemnity rate of $370 for Mr. Obagi’s work in 2017 and 2018. That rate is said by the defendant to reflect that the action was commenced and the trial conducted in the East Region (not in Toronto). If applicable, that rate results in fees on the partial indemnity scale totalling approximately $350,000.
[16] The defendant also submits that:
- the costs consequences pursuant to Rule 49 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, do not apply because the damages awarded do not exceed the amount of the offers made by the plaintiff; and
- the costs awarded must reflect the net recovery to the plaintiff taking into consideration the assignment ordered of collateral benefits.
c) The Plaintiff’s Alternative Position
[17] In response to the defendant’s submissions, the plaintiff advances an alternative position. If the court agrees with the defendant that the impact of the conditional assignment is to be considered, then the plaintiff submits that the outcome at trial is more favourable than the terms of her offer to settle. As a result, she would be entitled to her costs on the substantial indemnity scale from the date of her offer to settle (February 6, 2017) forward.
[18] Based on the hourly rates proposed by her, the plaintiff calculates fees on the partial indemnity scale to be $353,155 (rounded figure). If the plaintiff is entitled to fees on the substantial indemnity scale from February 6, 2017 forward, then she would be entitled to approximately $80,000 more in fees—for a total of $433,000. That figure is an estimate only for the purpose of this ruling. A precise calculation of costs based on the plaintiff’s alternative position was not provided during submissions.
Analysis
a) Partial Indemnity Hourly Rates
[19] The parties agree upon the inflation-adjusted maximum figures upon which their respective submissions are based. Below is a chart setting out the years in which work was done, the inflation-adjusted maximum for counsel 10 to 20 years at the bar, the inflation-adjusted maximum for counsel more than 20 years at the bar, and the hourly rates claimed by the plaintiff in her initial submissions.
| Year | Inflation-adjusted maximum rate (10 to 20 yrs.) | Inflation-adjusted maximum rate (20-plus yrs.) | Rate initially claimed by the plaintiff |
|---|---|---|---|
| 2012 | $341.25 | $398.13 | $400.00 |
| 2013 | $345.18 | $402.71 | $410.00 |
| 2014 | $353.32 | $412.21 | $410.00 |
| 2015 | $356.97 | $416.46 | $410.00 |
| 2016 | $362.30 | $422.68 | $425.00 |
| 2017 | $365.95 | $426.94 | $430.00 |
| 2018 | N/A | $437.42 | $430.00 |
[20] Neither party provided the inflation-adjusted maximum rate for counsel 10 to 20 years at the bar for the year 2018.
[21] The defendant relies on the decision of Mew J. in Canfield v. Brockville Ontario Speedway, 2018 ONSC 3288, 24 C.P.C. (8th) 133. Justice Mew fixed costs of a seven-day trial before a jury in a personal injury action. Plaintiff’s counsel was more than 45 years at the bar. Like the present action, Canfield proceeded to trial in the East Region.
[22] Justice Mew concluded that the appropriate partial indemnity rate for plaintiff’s counsel was $400. At para. 23 of the decision, he said, “rates used for the purpose of fixing costs should have regard to what clients typically pay. That will vary with the type of work, geographic location and the type of client, among other factors.”
[23] In suggesting a partial indemnity rate for Mr. Obagi of $370, the defendant emphasizes counsel’s number of years at the bar. In proposing a rate of $375, the plaintiff emphasizes not only Mr. Obagi’s number of years at the bar, but his “extensive” experience. [^3]
[24] For each of the years 2012 through 2017, there is a difference of approximately $60 between the partial indemnity rate for counsel 10 to 20 years at the bar and that for counsel more than 20 years at the bar. What happens when counsel reaches the top category of 20-years plus at the bar? Is that $60 difference in the maximum rate of any consequence?
[25] The answer to the latter question is “yes”. The intention is that, as counsel reach a level of experience further into the 20-plus years category, the partial indemnity rate upon which costs for their services are based increases from the maximum for the 10 to 20-year category to the maximum for the 20-plus years category.
[26] Where senior counsel fall in that $60 range does not depend solely on their respective number of years at the bar. Consideration is to be given to counsel’s level of experience. I agree with the description of Mr. Obagi’s experience in civil litigation as “extensive”. His level of experience is beyond the average level of experience of a civil litigator with his number of years at the bar. I am satisfied that a partial indemnity rate of $375 for Mr. Obagi in the years 2017 and 2018 is fair and reasonable.
[27] In summary, the partial indemnity costs of the plaintiff are fixed on the basis of the following rates for Mr. Obagi:
2012 $ 341.25 2013 $ 345.18 2014 $ 353.32 2015 $ 356.97 2016 $ 362.30 2017 $ 375.00 2018 $ 375.00
[28] I turn next to the issue of the assignment of collateral benefits and the impact, if any, of that assignment on the plaintiff’s entitlement to costs of the action.
b) Offers to Settle and Impact of Assignment
[29] The plaintiff accepts that if the parties’ respective offers to settle are considered on the basis of the total of the damages awarded, without consideration for the assignment of collateral benefits, then (a) the result at trial was not more favourable than the terms of her offer to settle, and (b) she is entitled to costs on the partial indemnity scale only.
[30] The defendant’s offer to settle, made in October 2015, was for damages and pre-judgment interest totalling $160,000. The offer called for the defendant to pay the plaintiff’s partial indemnity costs over and above that amount. There is no reference in the offer to the plaintiff’s claim for damages for loss of future income or to the plaintiff’s potential entitlement to long-term disability (“LTD”) benefits.
[31] The defendant compares that $160,000 figure to the damages, other than those for future loss of income, and pre-judgment interest which the plaintiff was awarded at trial. The non-pecuniary general damages, damages for the cost of treatment prior to trial, pre-judgment interest on the damages awarded under those two heads, and the damages for the cost of future treatment, total $159,228.92.
[32] With respect to the $540,000 in damages for loss of future income, the defendant submits that there was no compelling reason for the plaintiff to assume that an assignment of collateral benefits would not be ordered following the conclusion of the trial. The defendant submits that her offer to settle took into account the likelihood of such an order being made.
[33] The defendant submits that, in all of the circumstances (a) the net effect of the assignment of collateral benefits on the damages award should be taken into consideration, and (b) the costs awarded should reflect a net recovery of approximately $160,000 in damages and pre-judgment interest. I disagree.
[34] There is no certainty as to the plaintiff’s continuing entitlement to LTD benefits. It would be unfair to the plaintiff to fix her costs of the action on the basis of an assumption that she will remain entitled to payment of LTD benefits until the assignment is exhausted. The costs of the action are therefore fixed taking into consideration damages awarded under all headings.
[35] On the basis of that finding, the plaintiff’s alternative position need not be addressed. The plaintiff is entitled to her costs of the action on the partial indemnity scale.
Other Matters
[36] When making submissions with respect to costs, the parties did not address any of the discretionary factors listed in r. 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Although not asked specifically to consider any of those factors, I note the following.
[37] The damages claimed totaled $900,000 plus special damages for cost of future healthcare services, housekeeping, handyman, etc. The damages recovered were $690,000 (net of the reduction for contributory negligence of 10 per cent). The amount recovered is reasonably in keeping with the amount claimed (r. 57.01(1)(a)).
[38] The defendant accepts as reasonable the work done by counsel and all other timekeepers, including with respect to the submissions as to costs. The defendant did not deliver a bill of costs in an effort to demonstrate that the time docketed by counsel for the plaintiff (and other timekeepers in that office) was unreasonable. I draw an inference and find that the costs claimed fall within the range of costs that the defendant, as the unsuccessful party, reasonably expected to pay (r. 57.01(1)(0.b)).
[39] Ultimately, the fees fixed on the partial indemnity scale of approximately $353,000 represent slightly more than half of the damages awarded. Given the issues addressed at trial, including the various interim rulings required, I find that partial indemnity fees in that amount are in keeping with the principle of proportionality (r. 1.04(1.1)).
[40] In summary, the costs to which the plaintiff is entitled on the partial indemnity scale are fixed in accordance with the rates agreed upon between the parties for the years 2012 through 2016 and as determined in this ruling for Mr. Obagi for the years 2017 and 2018.
Disposition
[41] The plaintiff’s costs of the action, including costs submissions, are awarded on the partial indemnity scale and fixed in the amount of $466,185.76, calculated as follows:
Fees $ 353,154.65 HST on fees $ 45,910.10 Disbursements $ 67,121.01 Total $ 466,185.76
Madam Justice Sylvia Corthorn
Released: October 29, 2019
COURT FILE NO.: 12-56112
DATE: 2019/10/29
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
TATIANA NEMCHIN
Plaintiff
– and –
YVONNE GREEN
Defendant
ENDORSEMENT
Costs of the Action
Madam Justice Sylvia Corthorn
Released: October 29, 2019
[^1]: This figure does not include pre-judgment interest. [^2]: The parties acknowledge that the difference between the total for the plaintiff’s partial indemnity costs based on the $375 rate and those based on the $370 rate is $2,969.50. [^3]: Plaintiff’s submissions on costs and taxation of LTD benefits, para. 13.