COURT FILE NO.: 16-67152
DATE: 20200828
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CATHERINE McNAMEE AND JOHN McNAMEE
Plaintiffs
– and –
PAM OICKLE
Defendant
Colleen Burn/Éliane Lachaîne, for the Plaintiffs
Tom Ozere/Erin Durant, for the Defendant
HEARD: in writing
costs decision
Beaudoin J.
[1] Catherine and John McNamee were injured in a motor vehicle collision on February 11, 2014. Their claims arising from that accident proceeded to a trial before me with a jury. The jury was first selected on January 6, 2020 and rendered its verdict on February 24, 2020.
[2] The jury found liability on the part of the defendant, Pam Oickle. The total amount awarded by the jury was $61,340 for both plaintiffs. The jury accepted the low end of the range as put to the jury by the defence on every head of damages and completely agreed with the defence on the damages that should be completely denied.
[3] As trial judge, I had previously determined that various heads of damages should not be put to the jury. These included future treatment costs for physiotherapy and the future costs of medication for Catherine McNamee. As for John McNamee, I decided that the jury would not be asked any questions with respect to the future costs of his physiotherapy, future costs of his medication, future treatment costs for massage therapy, and past and future loss of income/loss of competitive advantage/ loss of economic opportunity. I concluded that the plaintiffs had not adduced any evidence that would allow these questions to be put to the jury.[^1]
[4] In accordance with my threshold rulings of February 21, 2020 and April 21, 2020,[^2] the plaintiffs’ awards for general damages and loss of guidance, care and companionship are all reduced to $0.00. These damages were also reduced to $0.00 under statutory deductibles. The plaintiffs concede that the jury awards for past physiotherapy and massage therapy expenses were reduced to $0.00 as a result of the successful threshold motions.
[5] In the end, the plaintiffs received a total amount of $5000 for past loss of housekeeping capacity ($2,500 for each plaintiff). The plaintiffs had sought $1.5 million, combined, in damages. Since the amount claimed was in excess of the defendant’s policy limits, liability could not be admitted, and this had to be tried. The result can only be described as a crushing and complete loss to the plaintiffs.
[6] The plaintiffs seek an order for payment of the judgment plus pre-judgment interest and an order for post-judgment interest against the defendant on their legal costs at the rate of 3% from February 24, 2020 (date of the verdict) to the date of payment.
[7] The defendant does not dispute the claim to pre-judgment and post-judgment interest. The issue that I must now decide is the plaintiffs’ entitlement to any costs given the result obtained at trial and the consequences of the defendant’s Rule 49 offer.
Position of the Parties
[8] The plaintiffs acknowledge that they received a judgment far less favorable than the defendant’s offer. They claim their partial indemnity costs to December 23, 2019 and recognize that the defendant is entitled to her partial indemnity costs from that date.
[9] The plaintiffs claim partial indemnity costs in the total amount of $350,617.30. They cite case law where plaintiffs have recovered costs in excess of the amount of their judgment.
[10] The defendant seeks her partial indemnity costs and disbursements from December 23, 2019, in the amount of $212,633.15 inclusive of HST. The defendant submits that the judgment, interest and any reasonable award of costs made to the plaintiffs, if any, should be entirely set off by the defendant’s claim for costs with the defendant receiving an order for payment of her costs from the plaintiffs for the balance.
The Law
[11] Costs are at the discretion of the court pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c.C.43, and rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 sets out the factors to be considered by the court in the exercise that discretion.
[12] Here, I adopt the suggested approach of Trimble, J. as set out at para. 28 of Doyle v. Zochem Inc., 2017 ONSC 920:
In exercising its discretion on the basis of these legal principles, and in determining what costs are payable, the court should consider the following questions in the following order:
a) Which was the successful party, and in what way?
b) Are there Offers to Settle under rule 49.10 and what impact do they have?
c) What effect do the enumerated factors in rule 57.01(1) have?
d) Are there any Offers to Settle that should be considered under rule 49:13;
e) How does proportionality under rule.1.04(1) affect the analysis?
f) What is fair and reasonable for the paying party to pay?
Which was the successful party, and in what way?
[13] While the plaintiffs achieved some success, the successful party was the defendant who came within $5000 of a complete dismissal of the plaintiffs’ claims. But for that small amount, the plaintiffs would have been exposed to all the defendant’s costs of defending this proceeding.
[14] Although liability was not admitted, the jury was instructed that this issue should not cause them much difficulty. While counsel for the plaintiffs had offered to cap the claims to the policy limits, counsel would only do so if the defendant abandoned a request for an adjournment of the trial. At that time, the defendant had yet to receive several expert reports. The full chronology is set out in my earlier decision.[^3]
[15] Almost all of the plaintiffs’ expert reports were served late, in the last four months preceding the trial date. I conclude that forcing the defendant to seek last minute responding reports and to agree to forgo a possible adjournment in exchange for restricting the claims to policy limits placed the defendant in an untenable position.
[16] Very little trial time was spent on the issue of liability. The defendant would have required the same witnesses to give the same evidence about the minor nature of the collision. The plaintiffs chose to call Constable Jennifer Delia and their counsel went to great lengths reviewing the motor vehicle accident report with her. In the end, Constable Delia’s evidence proved more favorable to the defendant in that she completely undermined the reliability of the plaintiffs’ evidence as to the severity of the collision. Liability was not a complete success for the plaintiffs.
Are there Offers to Settle under rule 49.10 and what impact do they have?
[17] While the defendant made various informal offers to settle this proceeding, the relevant one is her rule 49.10 offer made on December 23rd, 2019.
[18] In that offer, the defendant offered to pay Catherine McNamee $340,000 inclusive of all claims for damages and pre-judgment interest. The defendant also offered to pay Ms. McNamee’s partial indemnity costs, disbursements and applicable taxes as assessed or agreed upon by the parties. The defendant also offered to pay John McNamee $10,000 inclusive of all claims for damages and pre-judgment interest. She also offered to pay his partial indemnity costs, disbursements and applicable taxes, as assessed or agreed upon by the parties.
[19] The offer was severable and open for acceptance by either or both plaintiffs until the commencement of trial. The plaintiffs agree that this offer was compliant with the terms of rule 49.10(2).
[20] The plaintiffs’ first Offer to Settle was on August 3, 2018 in the amount of $996,600 for damages and interest, plus costs. There was a subsequent offer on July 15, 2019 in the amount of $700,000 for damages and interest, plus costs, which offer was withdrawn. There was a final offer on December 4, 2019 in the amount of $900,000 for damages and interest, plus costs.
[21] If I agree with the plaintiffs’ claim for costs of approximately $350,000, the total value of the defendant’s offer is over $700,000. This was a genuine offer.
[22] Despite significant causation issues apparent in each plaintiff's case, the plaintiffs approached this trial as if there was no risk of an adverse outcome.
What is the effect of the enumerated factors in rule 57.01(1)?
(O.a) The principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged in the hours spent by that lawyer.
[23] I take no issue with the hourly rates set out in the respective Bills of Costs. The principle of indemnity is an important one that assures that a successful party will be fairly compensated for pursuing or defending a claim. The principle of indemnity is not rigidly applied; a successful party can be denied costs. Once again, I refer to the Doyle decision at para. 24:
Costs awards have a number of purposes, including to a) indemnify (partly) successful litigants, b) encourage settlement, c) correct behaviour of the parties, and d) discourage frivolous or ill-founded litigation Generally costs should follow the event, be proportional to the issues in the action and the outcome, and be reasonable for the losing part to pay, all circumstances considered. Conduct of the parties is also relevant where it deserves sanction. One party’s playing “hardball” is a relevant factor to consider. (Internal citations omitted)
(O.b) The amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the preceding for which costs are being fixed.
[24] This was a lengthy matter in a long and hard-fought trial. There were 34 days of trial within that time, including motions. Except for their unopposed motion to amend their Statement of Claim, the plaintiffs were the unsuccessful party. Even the questions to be put to the jury were the subject of a motion; where, once again, the defendant prevailed.
[25] The defendant acknowledges that a plaintiff’s time in pursuing an action will typically be higher than the time spent by defence counsel as recognized in St. Marthe v. O’Connor, 2019 ONSC 4279 at para. 27. The defendant notes that her counsel docketed 530.10 hours up to December 23, 2019 whereas plaintiffs’ counsel docketed 1,271.30 hours; 60% more docketed time. Although I am not bound by the decision in St. Marthe, Justice Hurley found a ratio of 25% more in hours and 40% more in disbursements to be within a range that would be anticipated by the defendant in that case.
[26] With respect to their own claims of $150,415.66, the defendant notes that the plaintiffs have not produced their own dockets from December 23 onward. For that matter, the plaintiffs do not take issue with the partial indemnity rates claimed by the defendant’s counsel and acknowledge that they spent more time than the defendant. They take issue with the defendant’s disbursements, particularly with respect to their expert, Dr. Ross.
(a) The amount claimed and the amount recovered in the proceeding.
[27] The plaintiffs sought $1.5 million in damages, they recovered $5,000.
(b) The apportionment of liability.
[28] As discussed above, the result was mixed.
(c) The complexity of the proceeding
[29] The action was sufficiently complex and involved two injured plaintiffs. John McNamee had a well-documented medical history of injuries that were very similar to those following the collision. Catherine McNamee had pre-collision history of alcohol dependency and depression. Significant medical and psychological evidence was heard to address those issues.
(d) The importance of the issues
[30] This was a significant claim for compensation that was important to all parties.
(e) The contact of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding.
[31] The plaintiffs left the determination of significant issues to the outset of trial. This is when they first sought leave to call more than three expert witnesses and sought relief for the late service of almost all their expert reports. They brought an ill-conceived and ultimately unsuccessful motion to exclude the evidence of the defendant’s expert, Dr. Ross, because of bias. This motion was brought after they left the defendant scrambling to find a responding expert report on the eve of trial. The plaintiffs also brought an unsuccessful motion that I direct the jurors to draw an adverse inference for the defendant's failure to call Dr. Peter Judge as a witness. Motions were ultimately necessary to determine what questions would be put to the jurors. The plaintiffs’ motions delayed the start of trial and extended its duration.
[32] While the plaintiffs take some issue with the time spent on the unedited surveillance evidence, I conclude that this evidence was reasonable and necessary. I specifically referred to it in my threshold decision for John McNamee. An agreement was reached so that the defendant did not have to call the different investigators to “prove” the surveillance evidence.
(f) Were there any steps in the proceeding that were improper, vexatious or unnecessary or taken through negligence, mistake or excessive caution.
[33] Without question, the most significant development in the course of the trial was the late production of Dr. Charania’s notes and records from 1998 to 2011. Dr. Charania was Catherine McNamee's family physician who had treated her for over 20 years. Of any witness, her evidence offered the most complete picture of Catherine McNamee’s pre-accident psychological problems, her alcohol abuse and her pain complaints arising from a 2006 collision. The production of those reports was central in determining the issue of causation of Catherine’s complaints. Those notes and records fully supported the defence expert’s opinion.
[34] While the plaintiffs fault the defendant for not seeking these records until trial, it remains unclear why plaintiffs’ counsel did not seek and disclose these clearly relevant records any earlier and why this important documentation was not provided to their own experts prior to trial. This failure resulted in a stream of late updated reports and last-minute preparation of experts for both parties. Much of the plaintiffs’ pre-trial preparation time was wasted.
(g) A party’s denial of our refusal to admit anything that should have been admitted.
[35] The defendant could not admit liability because the claims exceeded policy limits.
(h) Whether it is appropriate toward any costs or more than one set of costs …
[36] This factor is not applicable.
(i) any other matter relevant to the issue costs
[37] The plaintiffs had access to accident benefits from their automobile insurer for which they received a modest lump sum settlement in February 2019. They argue that the defendant derived a clear benefit from the accident benefits by way of the deduction from the amount awarded ($7,000). The plaintiffs submit that it is appropriate for the defendant to pay the costs incurred. The Court of Appeal recently canvassed this issue in Cadieux v. Cloutier, 2019 ONCA 241, 432 D.L.R. (4th) 759:
13 The only reason advanced by the respondent for the award of such costs is that the appellant has received a substantial benefit from the SABs settlement because it reduces the net amount he is required to pay the respondent – an observation that will apply in any case. The respondent has not addressed most of the factors identified in this court’s reasons, particularly whether the SABs settlement was the result of particular risk, effort or expense or whether, to use the vernacular, it was a “slam dunk”.
[38] The defendant’s success on the threshold motions resulted in the plaintiffs’ claims for health care expenses being extinguished. Deductions from the accident benefit settlement were not necessary to achieve that result. While the plaintiffs provided additional information in their reply submissions, there is no evidence that the settlement of the accident benefits claims was the result of a “particular risk”. The amount of the benefit, if any, was insignificant. I agree that the defendant should not be responsible for the payment of any of the costs of pursuing those benefits.
[39] Another issue arises with respect to the time and disbursements for expert witnesses who were not permitted to give evidence. The plaintiffs were unsuccessful on their motion requesting leave to call more than three experts at trial in Catherine McNamee’s case as I concluded that most of the proposed expert opinions were simply duplicative. The defendant was successful in excluding that evidence and should not be required to pay the associated costs of obtaining it.
[40] The plaintiffs take issue arises with the defendant’s claim for Dr. Ross’ account for his reports, and travel and trial services. These comprise a large part of the $69,554.66 in disbursements claimed. In reviewing these fees, I refer to the factors summarized by Justice Edwards in Hamfler v. Mink, 2011 86201 (ON SC) at para. 17:
17 In determining the reasonableness of whether an expert’s fee is excessive, various factors should be taken into account before reducing the disbursements claimed. In that regard, the following types of questions may focus the courts attention:
Did the evidence of the expert make a contribution to the case, and was it relevant to the issues?
Was the evidence of marginal value or was it crucial to the ultimate outcome at trial?
Was the cost of the expert or experts disproportionate to the economic value of the issue at risk?
Was the evidence of the expert duplicated by other experts called by the same party? Was the report of the expert overkill or did it provide the court with the necessary tools to properly conduct its assessment of a material issue?
[41] Dr. Ross’ evidence was crucial to the outcome of the trial. Counsel for the defence had to make great efforts to find a witness who was able to testify given the very late service of the plaintiffs’ expert reports. Counsel was in a poor position to negotiate fees. Dr. Ross was the sole defence witness to respond to Catherine McNamee’s claims. In contrast, the plaintiffs paid a total of $50,843.75 for their own expert, Dr. Suddaby who had no travel expense. The plaintiffs had proposed to call three psychiatrists. They also retained the services of a psychologist, Dr. Tammie Ricci who testified at trial. The total cost of her services is unknown. But for their unsuccessful motion, the plaintiffs proposed to call additional psychologists. Given the total number of experts the plaintiffs proposed to call, the defendant’s claim regarding Dr. Ross’ fees is not unreasonable.
Are there any Offers to Settle that should be considered under rule 49.13?
[42] The plaintiffs made several Offers to Settle but these were all less favorable than the judgment. The Defendant made an all-inclusive Offer to Settle of $350,000 at the April 2019 pre-trial conference.
How does proportionality under rule 1.04(1.1) affect the analysis?
[43] Rule 1.04 (1.1) provides:
(1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.
[44] The plaintiffs argue that the costs being claimed are proportional. They cite the Doyle decision where the court said this at paras. 26 and 27:
26 Costs, generally, should be proportional to the issues in the action and amount awarded. It does not follow, however, that a reasonable amount for costs cannot exceed the award of damage in appropriate circumstances. Proportionality should not override other considerations and determining proportionality should not be a purely retrospective inquiry based on the award. It should not be used to undercompensate a litigant for costs legitimately incurred. In Aacurate,[^4] supra, McCarthy, J. said:
I am mindful that the principle of proportionality calls upon the court to consider the amount claimed for costs in relation to the amount recovered in the judgment, as well as the reasonable expectation of the parties. In my view, however, proportionality cannot and should not be routinely invoked to save litigants from the actual costs of proceedings in circumstances where those litigants have put forth a wholly unmeritorious defence to a legitimate claim or have caused the proceeding to become unduly prolonged or complicated. The principle should be applied thoughtfully and in a balanced fashion along with the other factors set out in rule 57.01.
27 An undue focus on proportionality ignores principles of indemnity and access to justice. The trial judge must make an award that is fair and appropriate, overall. (Internal citations omitted)
[45] The amount involved is the third and last element of the proportionality analysis. It follows a consideration of the importance and complexity of the issues. The amount involved is not an overriding factor. Other considerations apply; particularly when there has been an Offer to Settle.
[46] This is observed in Elbakhiet v. Palmer, 2014 ONCA 544, 121 O.R. (3d) 616, where the Court of Appeal overturned the trial judge’s cost award and said this at paras. 35 and 38:
35 The respondents sought damages of approximately $1.9 million, most of it in relation to loss of future earnings and cost of future care totalling approximately $1.6 million. The jury awards for those items were approximately $94,000. The amounts claimed and the amounts recovered were completely different. Rule 57.01 required those facts to be taken into consideration, not discounted because the trial judge believed the case was worth potentially more. It was not fair and reasonable to award the respondents costs of almost $580,000 for a claim the jury valued at just under $145,000.
38 I would allow the appeal and reduce the costs to be paid by the appellants to $100,000. In my view, this amount takes into consideration all the factors to be considered under Rules 49 and 57, including the complexity of the matter and the manner in which the litigation was conducted, and in particular that the Offer to Settle was virtually the same as the Judgment. This amount is more consistent with the objectives of fairness and reasonableness and especially gives some attention to the need for some proportionality.
[47] In A.B. v. Waite, 2018 ONSC 3155, Justice MacLeod presided over a four-week jury trial involving one plaintiff. As in this case, the net jury verdict was very small ($5,760). Justice McLeod had to decide whether it was reasonable for the defendants to pay the plaintiff’s costs. The defendants’ Rule 49 offer was $250,000 plus costs. Justice McLeod concluded at paras. 23-24:
23 The ultimate objective is fairness to the parties. The defendants are entitled to a level of indemnity for beating their offers. The objective is not to penalize the plaintiff unduly or to terrorize future plaintiffs. Ultimately, however, it is the price of admission to our litigation system that proceeding to trial carries with it the risk of costs.
24 I have fixed the net costs at $70,000.00 on a partial indemnity scale inclusive of fees, disbursements and HST. This amount shall be paid by the plaintiff to the defendants and may be set off against the amount of the judgment previously granted.
Conclusion
[48] I conclude that this defendant is entitled to a level of indemnity for beating its offer by a very wide margin. I am aware that this was a devastating loss to the plaintiffs. They nevertheless pursued an aggressive litigation strategy that failed miserably. I fix the plaintiffs’ costs in the all-inclusive amount of $100,000 and the defendant’s costs at $200,000 inclusive of disbursements and HST.
[49] There will be an order that the plaintiffs pay the net costs of $100,000 to the defendant less the amount of their judgment.
Mr. Justice Robert N. Beaudoin
Released: August 28, 2020
COURT FILE NO.: 16-67152
DATE: 20200828
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CATHERINE McNAMEE AND JOHN McNAMEE
Plaintiffs
– and –
PAM OICKLE
Defendant
costs decision
Beaudoin J.
Released: August 28, 2020
[^1]: McNamee v. Oickle, 2020 ONSC 1077
[^2]: McNamee v. Oickle, 2020 ONSC 1380, McNamee v. Oickle, 2020 ONSC 2371
[^3]: McNamee v. Oickle, 2020 ONSC 432 at para. 10
[^4]: Aacurate General Contracting Ltd. v. Tarasco, 2015 ONSC 5980, 2015 CarswellOnt 14640 at paras. 13 to 17