Court File and Parties
COURT FILE NO.: CV-14-498203 DATE: 2020-01-16 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: YVETTE ROBICHAUD AND SANDRA MCAULAY, Plaintiffs AND: KYRIAKOS CONSTANTINIDIS, SOFIA CONSTANTINIDIS AND COSECO INSURANCE COMPANY, Defendants
BEFORE: Schabas J.
COUNSEL: Joseph G. Caprara and Andra N. Preda, for the Plaintiffs Jonathan Schwartzman and Akari Sano, for the Defendant, Sofia Constantinidis
HEARD: September 16 - October 11, 2019
COSTS ENDORSEMENT
Introduction
[1] This matter was tried before a jury over four weeks commencing September 16, 2019, concluding on October 11, 2019. The action addressed causation and damages arising from a motor vehicle accident which occurred in November 2012. At the conclusion of the trial, which only involved the plaintiff Yvette Robichaud (“Yvette” or “the plaintiff”) and the defendant Sofia Constantinidis (“Sofia” or “the defendant”), the jury returned a verdict awarding the plaintiff $35,000 in general damages and $20,000 for past loss of income. Application of the statutory deductible of $38,818.97 to the general damage award, pursuant to s. 267.5(7) of the Insurance Act, R.S.O. 1990, c. I.8, reduced the general damages to zero. As the plaintiff had received collateral accident benefits consisting of $22,331.26 of Income Replacement Benefits, her damages for past loss of income were also reduced to zero by operation of s. 267.8(1) of the Insurance Act.
[2] In a separate ruling, I held that the plaintiff did not meet the statutory threshold for non-pecuniary damages and health care expenses as her injuries did not fall within the exceptions to the statutory immunity provided for in s. 267.5(3) and (5) of the Insurance Act and the applicable regulations: Robichaud et al. v. Constantinidis et al., 2019 ONSC 5995.
[3] The defendant submits, due to the reduction of the verdict to zero, that she was the successful party and is entitled to costs. Based on the Amended Bill of Costs dated October 25, 2019 (the “Amended Bill”), the defendant seeks costs on a partial indemnity basis up to June 24, 2019, and substantial indemnity thereafter, totalling $401,048.73 ($292,131.41 for fees, and $108,917.32 for disbursements) inclusive of taxes.
[4] The plaintiff, on the other hand, submits that “the cumulative conduct of the defendant” and “the principles of proportionality and reasonableness in promoting access to justice, favour the award of a modest cost award against her, if any.” The plaintiff submits that the amounts sought “are unreasonable and not proportional and therefore contrary to the principles and factors enumerated in Rule 57 of the Rules of Civil Procedure.” The plaintiff’s Bill of Costs is much lower, showing partial indemnity costs of $183,376.73 ($86,002.35 for fees and $97,374.38 attributable to disbursements).
[5] For the Reasons that follow, I award costs to the defendant on a partial indemnity basis in the amount of $131,980.35 inclusive of HST.
Background
[6] The parties have filed extensive submissions and evidence regarding the issue of costs. This has included affidavits from counsel for both parties, and a cross-examination on one of those affidavits. It appears that the vigour with which the issue of costs has been pursued, and opposed, is consistent with the history of the litigation and positions at trial, which was challenging and hard fought due to the vigorous defence put forward by counsel for the defendant and her insurer, Economical Insurance (“Economical”), which stood behind Sofia and funded and managed the defence.
[7] Although liability was admitted at trial, this admission was only made in June 2019. Until then, Sofia, who owned the car that caused the accident, had taken the position that the driver of the car, her son Kyriakos Constantinidis (also a defendant who was noted in default), had been using it without her consent. This led to a range of additional steps in the litigation, including requiring Yvette to add her own insurer, Coseco Insurance Company (“Coseco”), as a defendant, which remained a defendant until the belated admission of liability by Sofia and Economical a few months before trial.
[8] The plaintiff argues that because of the continued assertion of the consent issue she was put to additional expense and delay, including delays in scheduling a mediation, a fruitless mediation process, unnecessary examinations for discovery, a threatened summary judgment motion, and that there was a failure by the defendant to address issues of damages until shortly before the trial. The defendant’s hard line on this issue, it is argued, frustrated or prevented early efforts to settle the case.
[9] There were a number of offers to settle from both parties. Some may be characterized as offers to capitulate, while others had limited times during which they were open for acceptance. Although the plaintiff made offers to settle, they were for amounts much higher than even the unreduced awards of the jury.
[10] The defendant relies on one offer, which it describes as the “Rule 49 of the Rules of Civil Procedure Offer” (the “Offer”), made on June 24, 2019, in support of its claim for substantial indemnity costs, which it submits is supported by the other “reasonable offers to settle” and other facts in the litigation. The Offer was made after liability was admitted and just 3 months before the trial commenced. It offered to pay the plaintiff $25,000 in damages, with costs to the date of the offer paid on a partial indemnity basis plus her reasonable disbursements, both in an amount to be agreed, or assessed by the Court. It was open for acceptance until trial.
[11] The Offer also included an offer to the co-plaintiff Sandra McAuley, who settled with the defendant prior to trial. Submissions were made by the defendant regarding the offer to the co-plaintiff, and her decision to settle prior to trial, arguing that it should inform my assessment of the issues involving Ms. Robichaud. However, I know very little about Ms. McAuley’s situation and am not in a position to compare her circumstances to those of Ms. Robichaud. Accordingly, I have disregarded the facts and argument regarding Ms. McAuley.
Partial or Substantial Indemnity?
[12] I agree that the defendant was the successful party and is presumptively entitled to costs. Section 267.5(9) of the Insurance Act, as amended in 2015, now provides that “a party’s entitlement to costs shall be made with regard” to the effect of the application of the statutory deductible in section 267.5(7)3. And even though this action was commenced prior to the amendment in 2015, it has been held that the revised provision applies: Mandel v. Fahkim, 2016 ONSC 7390 at paras. 1 - 2. Similarly, the reduction of other damages to zero has also resulted in a conclusion that costs should therefore be paid by the plaintiff to the defendant: Arteaga v. Poirier and Pro-Land Landscape Construction, 2016 ONSC 6628 at paras. 36 - 43. The Court of Appeal has also spoken on this issue, holding that a “nil” judgment puts the plaintiff in the same position as if the action had been dismissed: Dermann v. Baker, 2019 ONCA 584 at para. 25.
[13] The defendant is entitled to costs, therefore, and the only remaining issue is quantum, with the defendant submitting a bill based on a substantial indemnity scale from June 2019 and the plaintiff arguing for a “modest” award.
[14] A review of the offers shows that the parties remained far apart, and most of them are unhelpful in my consideration as they were made at points earlier in the litigation before significant costs were incurred. The offers that I do consider informative are those made in the months leading to trial. As noted, the defendant made the “Rule 49 of the Rules of Civil Procedure Offer” in June 2019. It also made an all-inclusive offer on July 25, 2019 for $100,000, but that offer was only open for acceptance for one week. However, when the plaintiff raised the possibility of accepting it on September 12, she was told the offer was no longer on the table.
[15] The plaintiff made an offer to settle on August 20, 2019, for $315,000 plus partial indemnity costs. Prior to that date, both plaintiffs had agreed to limit their damage claim to the policy limit in the Economical insurance policy, which was $1,000,000.
[16] The plaintiff took issue with the Offer made in June 2019, asserting that it “created ambiguity for the plaintiff as she risked essentially not recovering anything in light of the ever increasing disbursements” and that this forced her to proceed to trial. However, this is one of the purposes of offers to settle under Rule 49 of the Rules of Civil Procedure, which is to require a party to take a hard look at their case in light of the added, and often growing, risks of limited, or no, recovery even if successful at trial.
[17] The defendant achieved a better result than the Offer, which favours the defendant’s position that a higher award may be appropriate. However, in light of the result it is somewhat misleading to call it a “Rule 49 of the Rules of Civil Procedure Offer”. Since the plaintiff has not received judgment for anything, the Rule does not apply: Dermann, at para. 24; S&A Strasser Ltd v. Richmond Hill (Town) (1990), 1 O.R. (3d) 243 (C.A.). Nevertheless, I agree that the Offer may support an elevated award, which I have the authority to make, but there is no entitlement to it under Rule 49 of the Rules of Civil Procedure.
[18] On the other hand, the plaintiff’s assertions about the conduct of the case by the defendant, including the very late admission of liability, are, it is argued, inconsistent with the statutory obligation, in s. 258.5 of the Insurance Act, of insurers to make efforts to settle claims “as expeditiously as possible.” The failure to meet that obligation may be considered by the Court in awarding costs.
[19] Of course, pursuant to the Courts of Justice Act, R.S.O. 1990, c. C.43, s.131 (1), the Court has a broad discretion when determining the issue of costs. The overall objective is to determine an amount that is fair and reasonable for the unsuccessful party to pay, and not an amount based on actual costs incurred by the successful party: Boucher v. Public Accountants Counsel for Ontario (2004), 71 O.R. (3d) 291 (C.A.). Rule 57.01 of the Rules of Civil Procedure provides a list of non-exhaustive factors to consider in making decisions on costs.
[20] In this regard, the verdict of the jury is also informative. The jury felt that the plaintiff was entitled to some compensation, and no doubt went home expecting that Yvette would be awarded something and not, as the defendant would have it, facing a crippling bill for costs. Consideration of this finding by the jury is not inconsistent with s. 267.5(9), which simply requires that the court’s decision on “entitlement to costs” shall be made “with regard” to the impact of the deductible. I have complied with that section in finding that the defendant is “entitled” to costs, and indeed shall be awarded costs, but s. 267.5(9) does not tell me I must disregard the jury verdict, or any other relevant factors, in exercising my discretion in fixing the quantum of costs.
[21] As the overriding principle is reasonableness, I conclude that it would not be reasonable to award costs on a substantial indemnity basis to the defendant for any portion of the case. Rule 49 of the Rules of Civil Procedure has no application, and having regard to the particular concerns in this case, and cases of this kind, in which plaintiffs, often with little or no resources, face considerable access to justice barriers in litigating complicated cases against well-funded insurers, the caution that substantial indemnity costs should be rare and granted only in compelling circumstances where there has been reprehensible conduct should be heeded: Davies v. Clarington, 2009 ONCA 722 at para. 40. Here, there is no such conduct by the plaintiff that would support an elevated award; to the contrary, there are factors which weigh specifically against such a finding.
[22] On the other hand, I also see no basis to make a “modest” award which would significantly depart from what the defendant would be entitled to on a partial indemnity basis. The plaintiff may well have some complaints with how the defendant conducted her defence, but there is nothing which, in my view, requires sanction such that there should be a significant reduction in costs, especially in light of the result and the offers that were made by the defendant.
Quantum
[23] Turning to an examination of the amounts, I am not required to, nor should I, engage in a purely mathematical exercise; nevertheless, some math is necessary to adjust the defendant’s claim for costs to a partial indemnity result. In making the adjustments described below, I have exercised my discretion in an effort to reach a result that is fair and reasonable having regard to the expectations of the parties and to ensure that the award is not contrary to the fundamental objective of access to justice: See: Boucher, at para. 37; Davies v. Clarington (Municipality), at paras. 51-52. I have also had regard to the factors set out in Rule 57.01 of the Rules of Civil Procedure.
[24] The defendant’s Amended Bill is helpfully divided into a number of categories, summarized on page 11 of the Amended Bill. Items 1 – 8 address initial investigation, pleadings, discovery process, examinations, mediation, defence medical, trial preparation and two pre-trial conferences, up to September 12, 2019, when Ms. McAuley settled her claim. The defendant properly takes those costs and divides them in half attributing 50% to each plaintiff. Most of the amounts claimed (items 1, 2, 4, 5 and 6), are reasonable and appropriate, totalling $4,068, including HST, after the 50% split. However, I do make adjustments to the remaining items, as discussed below.
[25] The amount claimed for examinations for discovery (item 3) is reduced from $7376.25 to $5000 as some of this time was due to the unnecessary involvement of Coseco and its insistence that Kyriakos Constantinidis be examined.
[26] With respect to the trial preparation and attendance at the second pre-trial (items 7 and 8), I have made adjustments to accord with partial indemnity rates for time following the Offer of June 24, 2019, as well as a modest reduction to reflect duplication and administrative tasks spent by the defendant’s law clerk. Applying partial indemnity rates of $260/hour for Mr Schwartzman, $150/hour for Ms. Sano (both of which are used in the Amended Bill), and $80/hour for Ms. Weber (which I have reduced from the defendant’s proposed $130 to accord with the Tariff), and applying a modest reduction, I award $23,956 for pre-trial preparation (item 7) and for item 8 (the second pre-trial conference) I award $2260. The total for items 1 – 8, therefore, is $35,284 which, applying the 50% split, results in an amount of $17,642.
[27] Turning to the claims for work following September 12, for trial preparation (item 9) I have taken the same approach as with item 7, applying partial indemnity rates and a modest reduction, resulting in an amount of $9,040.
[28] For the trial itself (item 10), I have had regard to the Tariff which contemplates a counsel fee on a partial indemnity scale of up to $9,500 per week. I have calculated Mr Schwartzman’s fees using that rate, as he is a senior counsel who led the trial, including examining all but one of the 15 witnesses called at trial. Costs for co-counsel, Ms. Sano, shall be set at $5,000 per week. I do not award anything for the defendant’s law clerk attending trial. The plaintiff had two counsel and no clerk, and while I am sure Ms. Weber was an important asset to the defendant’s team, the plaintiff should not have to pay costs for the choice by the defendant to have both a junior counsel and a law clerk. It should also be noted that Ms. Weber’s time has not gone uncompensated, as there were times when Ms. Sano was absent from the trial and Ms. Weber was present. As the trial lasted four weeks, I award costs for attendance at trial of $14,500 per week for four weeks, totalling $58,000 which, adding 13% for HST, amounts to $65,540.
[29] The defendant also seeks costs for preparation work over the weekends during this four week trial as part of the trial costs. In my view that is not unreasonable, and I award $2500 for each of the three weekends, plus HST, for a total of $8,475.
[30] Finally, with respect to preparation of the Bill of Costs (item 11), I find the time claimed reasonable and award, on a partial indemnity scale, $1559.40.
[31] Aside from disbursements, therefore, the total amount I award for fees is $102,256.40. This is the sum of the amounts set out above: $17,642 + $9,040 + $65,540 + $8,475 + $1,559.40 = $102,256.40. I note that this is still above the plaintiff’s bill for fees of $86,002.35.
[32] Turning to disbursements, I am unable to see how the total for disbursements of $108,917.32 arises from the items on the Amended Bill. My calculation of the total claimed in the Amended Disbursements list on pages 9 and 10 is $71,146.32, which is also closer to the totals in the first Bill of Costs and the Costs Outline. I observe, by way of comparison, that the plaintiff’s claim for disbursements is approximately $97,000. However, the plaintiff would be expected to have higher disbursements. She called 14 witnesses at trial, including four experts who prepared reports and supplemental reports, and 7 treating physicians. This contrasts with the defendant who called just one witness at the trial, an expert orthopedic surgeon.
[33] I accept many of the disbursements as reasonable; however, some items require discussion and adjustment.
[34] First, the defendant has submitted a large amount for in-house photocopying, and is charging 25 cents per page. I agree with the plaintiff that this is excessive and reduce the amount of $8,381.77 claimed by 25% to $6,286.33. I also reduce the outsourced copying fee of $7,331.44 by 25% to $5,498.58.
[35] Second, the defendant seeks over $33,000 in fees for her expert Dr. Paitich - $10,050 for his report and $23,052 for his attendance for two days at trial. The plaintiff submits this is much too high, and points to the Tariff which provides for an expert fee not exceeding $350 per day. In my view, the amount claimed for Dr. Paitich, who reviewed the plaintiff’s medical file, examined her on one occasion and dictated a report, followed by two days in court, is excessive. I reduce this amount to $10,000, which is still larger than that paid by the plaintiff to Dr. Brown, a chronic pain specialist, according to the plaintiff’s Bill of Costs.
[36] Third, the defendant seeks fees for surveillance it conducted on the plaintiff totalling $11,381.53. No surveillance evidence was led at trial, and I disallow any claim in that category.
[37] Fourth, the defendant seeks reimbursement for obtaining a transcript of the plaintiff’s cross-examination in the amount of $1,817.04, which I also disallow as I am not aware of its use and find that it was not required. I also note that the defendant, with my permission, made an audio recording of the trial.
[38] Fifth, the defendant’s claim for trial preparation fees of $678 for another expert who was not called to testify is disallowed.
[39] Sixth, and finally, I disallow the claim for a room rental during the trial in the amount of $565.
[40] Accordingly, applying these adjustments, the total award for disbursements, including HST, is $29,723.95.
[41] In conclusion then, I award costs of the action to the defendant on a partial indemnity scale. The costs consist of $102,256.40 for fees and $29,723.95 for disbursements, totalling $131,980.35 inclusive of HST.
Production of Insurance Policy
[42] The defendant has sought production of an adverse costs insurance policy from the plaintiff’s law firm. However, as the defendant’s counsel notes, “the existence of adverse costs insurance is an irrelevant factor in the fixing of costs”. This is indeed the case, as held in Canfield v. Brockville Ontario Speedway, 2018 ONSC 3288 at para. 59, where Mew J. stated:
In my view, the amount of adverse costs insurance purchased is irrelevant. Plaintiffs are not able to recover the cost of obtaining adverse costs insurance as an assessable disbursement: Valentine v. Rodriguez-Elizalde, 2016 ONSC 6395 at paras. 70-71. Furthermore, I was advised by counsel that the maximum coverage available to the plaintiff was $100,000. Accordingly, neither the existence of this coverage nor the amount of coverage obtained have any bearing whatsoever upon an assessment or fixing of costs.
[43] The defendant nevertheless seeks disclosure as a “simple production issue”, presumably relying on Rule 30.02 of the Rules of Civil Procedure which provides:
(3) A party shall disclose and, if requested, produce for inspection any insurance policy under which an insurer may be liable,
(a) to satisfy all or part of a judgment in the action; or
(b) to indemnify or reimburse a party for money paid in satisfaction of all or part of the judgment,
but no information concerning the insurance policy is admissible in evidence unless it is relevant to an issue in the action.
[44] Counsel for the plaintiff objects on the grounds that the policyholder is the law firm, not “a party”, and argues that production would breach solicitor-client privilege. Mr. Capara has provided to the defendant’s counsel a redacted copy of the policy declaration page confirming that the policyholder is Caprara Barristers.
[45] I agree with counsel for the plaintiff. As was the case in Jamieson v. Kapashesit et al., 2017 ONSC 5784, where the policyholder is the law firm and not the “party”, Rule 30.02 of the Rules of Civil Procedure does not apply, and I decline to order production.