Court File and Parties

COURT FILE NO.: CV-10-400641 DATE: 2020-04-24 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: BERNICE MCKENZIE, Plaintiff AND: LIDA ZHANG, AND 6927360 CANADA INC. AND 1680908 ONTARIO INC., Defendants

BEFORE: Schabas J.

COUNSEL: Christopher Thiesenhausen, Counsel for the Defendant Lida Zhang William Scott, Counsel for the Plaintiff John Friendly, Counsel for the Ministry of Finance

HEARD: November 26, 2019

COSTS ENDORSEMENT

[1] In Reasons released on December 12, 2019, I stayed enforcement of the Judgment against the defendant Lida Zhang (“Zhang”): McKenzie v. Zhang et al., 2019 ONSC 6998. This had the effect of preventing the Motor Vehicle Accident Claims Fund (the “Fund”) from seeking reimbursement of the Judgment, which it has paid to the plaintiff, from Zhang. However, I also declined to set aside the Judgment, which Zhang had also sought and was opposed by the Fund and by the plaintiff.

[2] Zhang now seeks costs, arguing that he was successful on the motion. The other parties submit there should be no costs awarded in this matter.

[3] Under s.131 (1) of the Courts of Justice Act, RSO 1990, c. C.43, the Court has a broad discretion in determining costs. Costs serve a number of purposes. One is to recognize that successful litigants should be indemnified, though not necessarily completely, for the expense of asserting or defending their rights. Another purpose is that costs seek to discourage frivolous claims and defences. Costs can also be used to sanction bad conduct in litigation. The threat of costs also has the effect of encouraging settlement. Costs are also intended, more broadly, to facilitate access to justice.

[4] If costs should be awarded, the Court seeks to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount determined by the actual costs incurred by the successful litigant: Boucher v. Public Accountants Counsel for Ontario. Rule 57.01(1) lists a number of factors the Court should consider, and the principle of proportionality (R. 1.01(1.1)) must also be kept in mind so that the Court can balance the indemnity principle with the objective of facilitating access to justice. The overriding goal is to fix an amount that is reasonable in the circumstances: Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 at paras. 51-52.

[5] In this case, I agree that there should be no costs against the plaintiff, and she does not seek costs against Zhang.

[6] Zhang was successful against the Fund in staying its ability to enforce the Judgment against him. Accordingly, as the successful party Zhang would ordinarily be entitled to costs and he seeks them on that basis. Further, as Zhang made a written offer to settle in January 2017 which, among other things, would have had him pay $20,000 to the Fund in settlement of the Judgment, and has now obtained a result that is more favourable to him than the offer, he seeks substantial indemnity costs from the date of the offer.

[7] The Fund submits that success was divided, as Zhang did not succeed in having the Judgment set aside. It also cites the statutory function of the Fund, that it provided Zhang with a defence without charge, and that it made other efforts to resolve the case to his benefit as reasons why it should not be required to pay costs.

[8] I do not agree that success was divided. Insofar as the dispute was between Zhang and the Fund, Zhang was successful. Further, the Fund’s other submissions are largely repetitious of issues addressed on the motion. Indeed, in my Reasons I took into account the functions and goals of the Fund. However, I found in the unusual circumstances of this case, in which Zhang was unaware of the litigation and that there was no insurance for the accident due, in part, to the fact that the Fund did not contact him, that Zhang should not have to repay the Judgment. In short, I accepted Zhang’s core submission, which was opposed by the Fund.

[9] The Fund has important and laudable functions, but that does not mean that it should be immune from an award of costs where, in a particular case, an individual takes it to court and succeeds. Rather, I must have regard to the purposes of costs orders, including the principle of indemnity and the objective of promoting access to justice.

[10] Accordingly, I conclude that Zhang is entitled to costs from the Fund.

[11] I turn then to quantum. Here, I agree with the Fund that I should not give effect to the offer to settle, which included the reinstatement of Zhang’s drivers’ licence, which was addressed, and a term which would have constrained the Fund in its ability to pursue other remedies that the Fund could not accept and which was not necessary for the settlement. Accordingly, I am not obliged to give effect to the offer under Rule 49, and decline to give it any weight. Costs, therefore, should be awarded on a partial indemnity basis.

[12] Zhang’s Costs Outline seeks $39,096.65, inclusive of HST and disbursements, on a partial indemnity scale, noting that his actual costs were $58,486.55. The Fund does not take issue with the Costs Outline in its submissions.

[13] In my view, having regard to the importance of the issues to both sides, the amount at stake for Zhang, and the somewhat complex factual, legal and policy matrix of the case, the amount sought is fair and reasonable and an amount that the Fund should reasonably expect to pay. Therefore, I award Zhang $39,096.65 in costs, inclusive of HST and disbursements.

Schabas J. Date: 2020-04-24