COURT FILE NO.: CV-14-1258-00
DATE: 2020 02 12
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: EDWARD WATT/Plaintiff v. TD INSURANCE AND TD MELOCHE MONNEX/ Defendants
BEFORE: LEMAY J
COUNSEL: R. Kostyniuk, Counsel for the Plaintiff
S. Iordanis, Counsel for the Defendants
HEARD: In Writing
COSTS ENDORSEMENT
[1] I heard a five-day trial in this matter in January of 2019. My reasons were released on November 14th, 2019 (see 2019 ONSC 6454). Costs submissions were originally due in December but, because of various issues, counsel agreed to have the deadline for costs submissions moved to January. I have now received and reviewed the parties’ costs submissions.
Background
[2] On March 25th, 2012, the Plaintiff’s home was destroyed by fire. The underlying action concerns his efforts to recover payments from the Defendants under his policy of insurance. The matter was originally supposed to proceed before me with a jury in Kitchener on January 14th, 2019, and the jury had been selected. However, a couple of days before the trial was to commence, the parties agreed that the Defendants’ jury notice could be struck, and the matter could proceed by way of a judge alone trial.
[3] Significant amounts of monies were paid out by the Defendants prior to the commencement of litigation. Based on the evidence at trial, I found that the Plaintiff was entitled to the net additional amount of $25,468.64.
[4] This net amount was calculated, in part, on the basis of a credit that I provided to the Defendants for the difference between the replacement value and the actual cash value of the Plaintiff’s home.
[5] In the materials filed on these submissions, the parties identified some offers to settle as follows:
a) From the Defendants, dated December 6th, 2018, an offer to settle the action for $50,000.00 plus interest and costs.
b) From the Defendants, dated January 14th, 2019 (the day the trial started), an offer to settle the action in the amount of $100,000.00 inclusive of interest and costs.
c) From the Plaintiff, an offer that, when calculated, appears to provide for payments of approximately $145,000.00 inclusive of interest and costs.
[6] There may have been other offers but, for the purposes of this costs award, these are the most relevant.
Positions of the Parties
[7] The Plaintiff argues that he is entitled to his partial indemnity costs up to the point that the Defendants delivered an offer to settle on the day of trial. It appears from the bill of costs that the amount sought by the Plaintiff is $39,490.94, inclusive of HST and disbursements. In support of this position, counsel argues:
a) That the Defendants were not entitled to rely on the December 6th, 2018 offer to settle because it had been replaced by the January 14th, 2019 offer to settle.
b) The Defendants did not, until trial, raise the issue of the difference between the replacement value and the actual cash value of the home.
c) The costs incurred by the Plaintiff up to January 14, 2019 were necessary because of the positions taken by TD.
[8] The Defendants argue that they are entitled to costs from the date that they delivered their offer to settle on December 6th, 2018. The Defendants also argue that the Plaintiff should only be entitled to “minimal costs” from the commencement of the trial to December 5th, 2018. Finally, the Defendants seek significant disbursements because the trial was held in Kitchener and there was a need for hotel accommodation and other travel related expenses.
Issues
[9] Based on the foregoing summary, there are three issues that need to be resolved:
a) Given the competing arguments involving the Rule 49 offers, what is the significance of the December 6th, 2018 offer to settle from the Defendants?
b) Should the Defendants be entitled to their travel related disbursements?
c) What is the amount of costs that should be paid, and whom should pay it?
[10] I will deal with each issue in turn.
The December 6th, 2018 Offer to Settle
[11] The Plaintiff argues that the December 6th offer was overtaken by an offer made the day of trial. He therefore argues that I should not take this offer into account in assessing the costs.
[12] There are two problems with this argument, each of which is fatal to it. First, if the Plaintiff had accepted the December 6th offer at any time, it would have resulted in him receiving considerably more than he actually received at trial. As a result, it is an offer that he should have accepted, and one that should attract costs consequences.
[13] Second, the offer made on January 14th, 2019 was not a Rule 49 offer. As a result, I am of the view that the December 6, 2018 offer was not rescinded.
[14] In reaching this conclusion, I acknowledge that there is a divide in the case-law as to what to do about a Rule 49 offer when subsequent offers have been made. None of the case law I am going to review was provided to me.
[15] However, in Mortimer v. Cameron ((1994 CanLII 10998 (ON CA), 17 O.R. (3d) 1), the Court of Appeal found that making an offer that was more favourable to the other side than a previous Rule 49 offer did not necessarily imply that the previous offer (and its cost consequences) were withdrawn.
[16] In this case, the offer for $100,000.00 inclusive of everything is modestly higher than the offer of $50,000.00 plus interest and costs. The Plaintiff’s cost claim at that point would have been no more than another $35,000.00 or so, and interest on the $50,000.00 would not have eaten up the rest of the difference between the December 6th, 2018 offer and $100,000.00. As a result, I find that the Defendants increased their offer when they offered the Plaintiff $100,000.00. Therefore, the offers in this case seem to be captured by the principle in Mortimer, supra.
[17] However, in the decision of Diefenbacher v. Young ((1995 CanLII 2481 (ON CA), 22 O.R. (3d) 641), Carthy J.A. came to the opposite conclusion, although he conceded that the answer to the question was elusive.
[18] The Court of Appeal discussed this divide in the case-law in Thomas (Committee of) v. Bell Helmets Inc. (1999 CanLII 9312 (ON CA), [1999] O.J. No. 4293. In the Thomas decision, the Court of Appeal was faced with an expressly withdrawn offer. As a result, the Court of Appeal treated the offer ass having been withdrawn. However, in the case before me, I do not have an expressly withdrawn Rule 49 offer and am bound to consider the divide in the case law.
[19] In that regard, I am aided by both the Thomas, supra decision and the decision in Sandhu v. Sikh Lehar International Organization (2017 ONSC 7165). In Sandhu, and some of the cases cited therein, Diefenbacher was distinguished on the basis that the subsequent offer was not a Rule 49 offer. In this case, the same distinguishing factor exists. In order to trigger the cost consequences under Rule 49, the offer must be made at least seven (7) days in advance of the trial. The subsequent offer in this case does not comply with this principle and it does not expressly withdraw the previous offer. I am of the view that, since the January 14, 2019 offer is not a Rule 49 offer, Diefenbacher does not apply.
[20] As a result, the December 6, 2018 Rule 49 offer is still valid. Indeed, it would be a strange result if a party seeking to compromise increased its offer to settle and thereby lost some of the benefits (cost consequences to the other side) of its willingness to compromise further.
[21] Finally, even if the offers are not Rule 49 offers, they are still a factor that should be taken into account in assessing both the reasonableness of the parties’ positions and who should receive costs. This discussion is clearly set out in Thomas, supra at paragraphs 75 and following, and I adopt the reasoning there. In this case, the offers to settle are clearly a factor that favours the Defendants.
The Disbursements
[22] The Defendants claim disbursements for hotel and other travel expenses because the trial was held in Kitchener instead of Brampton. Unfortunately, the lack of available court space in Brampton is a continuing issue that results in actions being moved to other courthouses on a regular basis.
[23] The costs associated with having to move cases to other courthouses is something that is beyond the control of either party. In addition, the travel expenses of one party are not something that the other party has any control over. For example, one side may decide to drive back and forth while the other side may decide to stay in a hotel. Those decisions should be the responsibility of the party that makes them, and the other side should not be required to indemnify the party that decides to stay in a hotel.
[24] In any event, as Mr. Kostyniuk correctly points out, receipts for these expenses were not attached to the Defendants’ submissions, so I have no basis to assess the accuracy of the amounts claimed. Therefore, I decline to order any of the travel related disbursements.
Who Should Pay and in What Amount?
[25] Having found that the Defendants’ December 6th, 2018 offer to settle is a valid Rule 49 offer, it becomes clear that the Plaintiff is entitled to his costs up to the date the offer was served, and the Defendants are entitled to their costs thereafter.
[26] In my view, this position applies to both fees and disbursements. As a result, the Defendants should not be entitled to all of their permissible disbursements, but only a proportion of them.
[27] Counsel for the Defendants argues that the Plaintiff would only have expended minimal amounts prior to December of 2018. There is no basis in fact for this position. Indeed, by the time December, 2018 arrived, the parties were within a month of the start of the civil blitz, had attended at a pre-trial conference and had conducted discoveries. A significant amount of legal fees would have been expended by this point.
[28] The problem I have is in determining what amount of fees was expended. When the factors under Rule 57.01 are considered, the amounts set out by the parties in their bills of cost are reasonable as a total. They also fit with the complexity of the issues and the importance of the action to both sides. On that point, I reject Mr. Kostyniuk’s concerns about the amount claimed by counsel as the time spent at trial.
[29] However, I do not have any detailed docket entries from either side that would allow me to make a precise calculation of how much work was done before and after December 6th, 2018. I am left to make reasonable estimates based on both sides’ dockets, the very voluminous documentary record that was filed at trial and my own estimation of what work was done at trial.
[30] Based on the information before me, I am of the view that approximately 35 percent of the total work would have been done by December 6th, 2018, with the remaining 65 percent of the total work completed between that date and the conclusion of the trial.
[31] On that basis, I am of the view that the Plaintiff’s costs would have been approximately $15,000.00 inclusive of HST and disbursements as of December 6th, 2018. He would be entitled to that amount.
[32] However, the Defendants are entitled to their costs from that date forward. Based on the Defendants’ bill, and taking into account my comments regarding disbursements, I estimate those costs to be approximately $30,000.00 inclusive of HST and disbursements.
[33] I acknowledge the Plaintiff’s argument that the issue of the actual cash value was not raised until shortly before trial. This argument even if true, does not change the analysis. Regardless of the Defendant’s position, the Plaintiff still had an offer to settle that he could have accepted that would have given him more than he received at trial.
Conclusion
[34] In the result, the Plaintiff shall pay costs to the Defendants in the sum of $15,000.00 inclusive of HST and disbursements.
LEMAY J
DATE: February 12, 2020
COURT FILE NO.: CV-14-1258-00
DATE: 2020 02 12
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: EDWARD WATT/Plaintiff v. TD INSURANCE AND TD MELOCHE MONNEX/ Defendants
COUNSEL: R. Kostyniuk, Counsel for the Plaintiff
S. Iordanis, Counsel for the Defendants
COSTS ENDORSEMENT
LEMAY J
DATE: February 12, 2020