COURT FILE NO.: 12-56112 DATE: 2020/03/03 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

TATIANA NEMCHIN Plaintiff – and – YVONNE GREEN Defendant

Counsel: Joseph Obagi, for the Plaintiff Thomas V. Ozere and Kim Dullett, for the Defendant

HEARD: In Writing

COSTS ENDORSEMENT

(Post-Trial Appearances)

CORTHORN J.

Introduction

[1] The trial of this motor vehicle action was conducted before a judge and jury for several weeks in the winter and spring of 2017. In 2019, the jury’s verdict was upheld on appeal.

[2] Pending the outcome of the appeal, the hearings for a number of post-trial motions (“the Motions”) were deferred. They were ultimately heard in 2018 and 2019. The issues addressed on the Motions include

• the defendant’s request for an assignment of the plaintiff’s rights with respect to LTD benefits from the date of the accident forward (“the Assignment”),
• the pre-judgment interest (“PJI”) rate applicable to the award of non-pecuniary general damages, and
• addressing the tax treatment of the LTD benefits.

[3] Those issues have all been determined. The parties were unable to agree upon costs of the Motions. The defendant seeks costs on the partial indemnity scale and totalling approximately $36,400.

[4] The plaintiff submits that the parties should bear their respective costs of the Motions. The plaintiff relies on (a) developments in the law relevant to some of the issues, (b) the novelty of arguments made, and (c) the statutory requirement for the defendant to request an order for the Assignment. The plaintiff also argues that the court should, with respect to costs incurred for the post-trial phase of work done, consider as a factor that the plaintiff was “denied” her costs of the hearing with respect to trial costs. The plaintiff submits that her costs for that hearing were approximately $25,600 on the partial indemnity scale.

[5] There is, independent of the Motions, one other costs’ ruling required. The order made with respect to PJI and the Assignment (“Order”) includes the following paragraph:

4. THIS COURT ORDERS that Aviva shall pay to the plaintiff the reasonable costs incurred by her to preserve her rights to payments for LTD benefits between April 5, 2017, and the date of payment of [the damages awarded plus pre-judgment interest and costs].

[6] The plaintiff claims costs of $26,260, on the full indemnity scale, for work done to preserve her rights to LTD benefits from April 5, 2017 (the date of the jury’s verdict) to December 2019 (when the costs submissions were delivered). In response, the defendant (a) questions the time spent for certain aspects of the work and (b) submits that much of the work by senior counsel should have been delegated to either junior counsel or a law clerk. The defendant argues that costs should not be payable on the full indemnity scale because there is no evidence before the court that the plaintiff has been billed for the fees, disbursements, and HST claimed.

[7] I deal first with costs of the Motions and then with costs payable pursuant to paragraph 4 of the Order.

Costs of Post-Trial Motions

[8] The defendant seeks her costs of the Motions on the partial indemnity scale. For the Motion with respect to PJI and the Assignment (“Motion 1”), the costs claimed total $23,032.34 and are broken down as follows:

Fees $ 19,866.08 HST on fees $ 2,977.78 Disb. (incl. HST) $ 188.48

[9] On the motion with respect to the tax treatment of LTD and to vary the order for the Assignment (“Motion 2”), the defendant seeks costs totalling $13,239.97. [1]

[10] The plaintiff does not question the amount claimed by the defendant for costs of the Motions. The plaintiff has not provided a costs outline for work on her behalf with respect to the Motions. Rather, she relies on other grounds in support of her submission that the parties should bear their own costs of the Motions.

a) Pre-Judgment Interest Rate (Motion 1)

[11] When Motion 1 was argued, the applicable PJI rate was 1.3 per cent on general non-pecuniary damages, meaning that recent amendments to the Insurance Act, R.S.O. 1990, c. I.8, applied retrospectively: ibid, at para. 9 and El-Khodr v. Lackie, 2017 ONCA 716, 139 O.R. (3d) 659. At the time, the plaintiffs in El-Khodr were seeking leave to appeal to the Supreme Court of Canada. Leave was subsequently denied: [2017] S.C.C.A. No. 461.

[12] The plaintiff asked the court to exercise its discretion pursuant to s. 130(2) of the Courts of Justice Act, R.S.O. 1990, c. C.43, to order PJI at one of two alternative and higher rates. The plaintiff made that request in an effort to obtain approximately $10,000 more – in absolute terms – than the amount of PJI to which she was entitled on the basis of the default rate of 1.3 per cent.

[13] Turning to another of the plaintiff’s submissions, I find that there was nothing novel about the argument made on her behalf with respect to PJI.

[14] The defendant was successful on the issue of the applicable PJI rate. The defendant is entitled to her costs for that portion of Motion 1.

[15] It is not possible to know what portion of the costs claimed by the defendant on Motion 1 relate to the PJI as opposed to the Assignment. The PJI portion of the defendant’s costs on that motion may be as small as 25 per cent ($5,750) or as large as 40 per cent ($9,200). I fix the defendant’s costs for the PJI portion of Motion 1 at $8,000 inclusive of fees, disbursements, and HST.

b) The Assignment (Motions 1 and 2)

[16] The plaintiff submits that the relevant law was in flux. I agree. Decisions from the Court of Appeal were pending in Carroll v. McEwen, 2018 ONCA 902, 143 O.R. (3d) 641 and Cadieux (Litigation Guardian of) v. Cloutier, 2018 ONCA 903, 143 O.R. (3d) 545.

[17] After adjourning Motion 1 once, and because they required finality, the parties in the present matter decided to proceed with argument on the issue of the Assignment before those decisions were released: see Nemchin v. Green, 2018 ONSC 2185, 140 O.R. (3d) 668, at para. 10 (“Post-Trial Ruling”).

[18] Following the release of the decision of the Court of Appeal in Carroll, the parties in the present matter required relief in the form of a variation of the order for the Assignment.

[19] The plaintiff asks the court to consider that the defendant was required by statute to bring a motion for an assignment of collateral benefits. I find that to be an overstatement of the effect of the relevant statutory provision (s. 267.8 of the Insurance Act).

[20] A plaintiff in motor vehicle accident litigation knows that damages awarded are subject to reduction for collateral, health care, and other benefits paid up to the date of trial: s. 267.8 (1), (4), and (6). A plaintiff also knows that damages awarded for future income loss, loss of earning capacity, and health care expenses

• are subject to a mandatory trust for the defendant (s. 267.8(9)), and
• may be subject to an assignment in favour of the defendant (s. 267.8(12)).

[21] There is nothing in s. 267.8 that “requires” a defendant to bring a motion for an order for an assignment. It may be that, in practice, it is typically the defendant who, preferring an assignment to a trust, requests an assignment of the plaintiff’s rights with respect to collateral benefits. Even then, a contested motion will not always be required. The defendant may request, and the parties might agree, on the terms of an assignment.

[22] There may be circumstances in which it is the plaintiff who prefers an assignment to the trust. Such occasions may be rare, but I see nothing to preclude a plaintiff from bringing a motion for an assignment.

[23] In summary, under s. 267.8(9) and (12), (a) a defendant may request an assignment, and (b) if the parties are unable to agree upon the terms of the assignment, then the defendant may choose to bring a motion for an order for an assignment.

[24] I note that the plaintiff did not oppose the defendant’s request for an assignment. The parties were unable to agree upon a number of terms of the Assignment, including those related to the following matters:

• The effective date of the Assignment (April 5, 2017 or the date on which the judgment was paid);
• The manner in which the plaintiff would account for LTD benefits paid prior to April 5, 2017;
• Whether the Assignment is of gross or net LTD benefits paid;
• How to address the deduction, from the LTD benefits, of tax at source; and
• The duration of the Assignment.

[25] The plaintiff submits that there was little, if any, case law to guide the parties or the court when resolving those issues. I disagree.

[26] At para. 54 of its decision in Carroll, the Court of Appeal emphasized the importance of certainty and predictability in the post-trial phase of an action. To that end, the Court followed the existing rule of general application: the effective date of an assignment of collateral benefits is the date of the verdict or decision at trial. There was no uncertainty with respect to that aspect of the law when the issue of the Assignment was before the court in this matter.

[27] There was also case law available to assist the parties in understanding the significance of and to address the “mechanical exercise” of the deduction of tax at source by the plaintiff’s LTD carrier: Nemchin v. Green, 2019 ONSC 6243, at paras. 25-30.

[28] In the end, the terms of the Order dealing with the tax treatment of the LTD benefits differ from the specific terms proposed by counsel for the parties during submissions. The relevant terms of the Order are intended to provide certainty and predictability in this matter and in others.

[29] I find that both parties are responsible for the lack of agreement reached with respect to the terms of the Assignment – with one party perhaps more responsible than the other, and with their respective roles in that regard varying from one term of the Order to the next. There shall be no costs payable with respect to either the portion of Motion 1 dealing with the Assignment or Motion 2.

c) Other Matters

[30] The plaintiff’s final submission is that the court should, in the context of assessing costs of the Motions, consider that she was “denied” her costs of the costs hearing. I agree with the defendant’s response to that submission: the remedy for any issue the plaintiff had with the award made with respect to trial costs (including the costs hearing) was to seek leave to appeal that award.

[31] In addition, I note the following. The decision with respect to costs of the action is eight pages long. The fees awarded of $353,000 represent slightly more than half of the damages awarded. The full amount of fees claimed for the trial were, in the end, awarded. The plaintiff was awarded 94 per cent of the total of $375,000 in fees claimed for the trial and the costs hearing.

d) Summary

[32] For the reasons set out above, I find that the defendant is entitled to her costs of Motion 1 related to the applicable PJI rate. I fix those costs at $8,000 on the partial indemnity scale. The parties shall otherwise bear their own costs of the Motions.

Costs of Preserving the Plaintiffs’ LTD Rights

[33] The issues under this heading are scale and quantum, not entitlement. The costs for which the plaintiff seeks reimbursement under paragraph 4 of the Order total $26,260.85, broken down as follows:

Fees $ 23,037.50 HST on fees $ 2,994.88 Disbursements $ 228.47

[34] The exercise of fixing costs payable under paragraph 4 of the Order is closer to the assessment of a solicitor-client account than it is to fixing costs following an event in a civil proceeding. The plaintiff delivered a costs outline. It does not include, as an appendix, a printed version of the dockets upon which the time summarized in the costs outline is based.

[35] Following receipt of this endorsement, the parties have another opportunity to resolve the amount of costs payable by the defendant to the plaintiff under paragraph 4 of the Order. If they are unable to resolve that issue, then further materials shall be delivered as follows:

a) The plaintiff shall, within ten business days of the date of this endorsement, deliver a copy of the printout for the dockets upon which the time summarized in the costs outline is based; b) The defendant shall, within 17 business days of the date of this endorsement, deliver its written submissions with respect to the quantum claimed for fees; and c) The plaintiff shall, within 25 business days of the date of this endorsement, deliver her reply submissions, if any, with respect to the quantum claimed for fees.

[36] When attempting to resolve the issue of costs payable under paragraph 4 of the Order, the parties may wish to consider the following points. First, I agree with the defendant that there is no evidence that the plaintiff has actually incurred the fees upon which the costs outline is based. In the circumstances, I am of the view that such evidence is unnecessary. I take judicial notice of the fact that, from time to time when delivering an account, lawyers write down their fees. They do so for any number of reasons, including because costs recovered do not always cover all of the solicitor-client fees for work done.

[37] I am confident that, for the LTD work, plaintiff’s counsel will ultimately deliver an account to their client in an amount between the costs payable under paragraph 4 of the Order and the full amount of the fees for the time docketed. In any event, the defendant remains responsible for costs under paragraph 4 of the Order.

[38] I anticipate that the payment of costs under paragraph 4 of the Order will be a one-time event. The process need not become more burdensome for all concerned than it already is.

[39] Second, I point out that, when costs of the trial were assessed, the parties agreed on the partial indemnity hourly rates for all timekeepers. That agreement was subject to one exception –senior counsel’s rate for the years 2017 and 2018. All of the LTD work identified in the costs outline was done by senior counsel. I leave the suggested lack of delegation aside for the moment.

[40] In the costs outline, senior counsel’s hourly rate is identified as $525 in 2018 and $550 in 2019. If the partial indemnity rate of $375 used in fixing costs of the trial is converted to a full indemnity rate, it becomes $625 ($375/0.6). On that basis, the full indemnity hourly rates for senior counsel’s time in 2018 and 2019 appear reasonable.

[41] It is not possible to determine the extent to which either the number of hours claimed is excessive or the work could (or should) have been delegated. Those are reasonable issues to raise; they cannot, however, be determined in a vacuum.

Summary

[42] The plaintiff shall pay the defendant her costs of Motion 1, on the partial indemnity scale, as they relate to the PJI rate, in the amount of $8,000 for fees, disbursements, and HST. Those costs shall be set off against the costs payable by the defendant to the plaintiff pursuant to paragraph 4 of the Order – as agreed between the parties or subsequently fixed by the court. Those costs shall be agreed upon or fixed on the full indemnity scale.

[43] The parties shall otherwise bear their own costs of the Motions.

Madam Justice Sylvia Corthorn Released: March 3, 2020

[1] The figure of $13,239.97 includes fees, disbursements, and HST related to appearances on three occasions.