SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Shagofa Noori and Maliha Noori, Plaintiffs
AND:
Zhenyu Liu, 1734942 Ontario Inc, carrying on business as Advanced Auto Imports, Hertz Rent-A-Car and J. Lockwood Leasing Limited, Defendants
BEFORE: Coats J.
COUNSEL: James Page, Counsel for the Plaintiffs
Joel Cormier, Counsel for the Defendants
COSTS ENDORSEMENT
- Overview
1This action arose out of injuries to Shagofa Noori following a motor vehicle accident that occurred on May 29, 2013. The Defendants admitted liability. The trial of this action was solely on the issue of damages suffered by the Plaintiffs.
2Following the conclusion of the trial, the Jury awarded the Plaintiff, Shagofa Noori, $40,000 in general damages, and $0 for special damages. The Jury awarded the Plaintiff, Maliha Noori $0 in general damages under the Family Law Act, R.S.O. 1990, c. F.3. Maliha Noori did not claim special damages.
3After the trial I heard a threshold motion brought by the Defendants. I released my decision on the threshold motion on May 14, 2020. Pursuant to this decision, Shagofa Noori’s claim for general damages was dismissed (Noori v. Liu, 2020 ONSC 3049, para. 162). While at this stage the totality of the Plaintiffs’ claims have not been dismissed, Shagofa Noori’s claim for general damages has been dismissed, and all other heads of damage have been assessed by the Jury at $0.
4The trial was originally scheduled for ten days. The trial took place over 22 days, over the period of October 21, 2019 to December 13, 2019.
5As the parties have been unable to agree on the quantum of costs owing to the Defendants, I requested written submissions as to costs. I have since received and reviewed the following:
i. Costs Submissions of the Defendants;
ii. Bill of Costs of the Defendants;
iii. Plaintiffs Costs Submissions, including the Affidavit of Laura Bigham, sworn March 5, 2021; and
iv. Reply Costs Submissions of the Defendants
2. Positions of the Parties
a) Defendants:
6The Defendants are requesting an order that the Plaintiffs pay costs to the Defendants in the amount of $275,259.55, which represents the sum of the Defendants’ partial indemnity costs prior to the May 23, 2019 offer (in the sum of $12,899.66), and post-offer substantial indemnity costs (in the sum of $207,704.97), plus disbursements of $54,654.92. The Defendants are seeking that costs be divided between the Plaintiffs on a proportional basis.
b) Plaintiffs:
7The Plaintiffs are requesting that costs be awarded against Shagofa Noori on a partial indemnity basis throughout. The Plaintiffs’ position is that it would be open to the Court to award costs in an amount ranging from $100,000 to $168,000 against Shagofa Noori. The Plaintiffs are seeking that no costs be awarded against Maliha Noori. If costs are awarded against Maliha Noori, it is the Plaintiffs’ position that costs awarded against her should be on a partial indemnity basis, and in the amount of $500 to $1,000.
3. Offers to Settle
Defendants:
8On May 23, 2019, the Defendants made a formal offer pursuant to Rule 49 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to settle the action. The Defendants offered to pay to the Plaintiffs $35,000, plus partial indemnity costs and disbursements.
9On September 10, 2019, the Defendants made a further Rule 49 offer to settle the action. The Defendants offered to pay $77,000, plus partial indemnity costs and disbursements.
Plaintiffs:
10The Plaintiffs state that the Defendants’ May 23, 2019 offer included nothing for Maliha Noori. The Defendants September 10, 2019 offer included $2,500 for Maliha Noori.
11The Plaintiffs made two Rule 49 offers. One was for $123,000 ($8,000 for Maliha Noor) plus costs. The other was for $105,000 ($5,000 for Maliha Noori) plus costs. The offers were not severable as between the main claim and the Family Law Act claim.
12On September 17, 2019, the Plaintiffs’ made a global offer to settle of $197, 263.71 (available until September 20, 2019) and the Defendants later made a global offer to settle for $132, 471.98.
4. The Law:
Provided by the Defendants:
13The Court’s authority to award costs is derived from Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C. 43. Section 131 (1) provides as follows:
131 (1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
14In Ontario, costs follow the event, premised upon a loser pay approach. As set out at para. 5 of Duca Financial Services Credit Union Ltd. v. Bozzo, 2010 ONSC 4601, a successful party has a prima facie entitlement to costs on a partial indemnity scale.
15Rules 49 and 57 of the Rules of Civil Procedure, apply to the determination of costs.
16Rule 49.10 sets out what the costs consequences are in situations where the plaintiff does not accept an offer from the defendant and obtains a judgment as favourable or less favourable than the terms of the offer to settle. In these circumstances, the plaintiff would be entitled to partial indemnity costs to the date the offer was served and the defendant entitled to partial indemnity costs from that date, unless the court orders otherwise (Rule 49.10 (2)).
17Rule 49.10 is silent as to what, if any, a defendant should receive in costs if the defendant makes an offer and the plaintiff’s action is dismissed. The Ontario Court of Appeal addressed this issue in S&A Strasser Ltd. v. Richmond Hill (Town), 1990 6856 (ON CA), [1990] O.J. No. 2321. In this case, the defendant made an offer to settle in the amount of $30,000. The plaintiff’s claim was dismissed. The Court pointed out that, offers to settle aside, a defendant would typically be entitled to partial indemnity costs throughout the action, to the end of trial, in a case where the plaintiff’s action is dismissed. The court then took into account the defendant’s offer to settle and decided that the defendant was entitled to a bonus for having made the offer to settle in the circumstances. The Court awarded the defendant partial indemnity costs from the commencement of the action to the date of the offer, and then substantial indemnity costs thereafter.
18Rule 57.01 (1) lists various other factors that a court will consider in awarding costs, including the amount claimed and the amount recovered in the proceeding, the complexity of the proceeding, and the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceedings.
19In Rule 57.01 (1), a party’s ability to pay is not listed as a factor for the court to consider. In Mundinger v. Ashton, 2020 ONSC 2024, the plaintiff argued that the costs awarded should be limited to costs covered by an adverse costs insurance policy, as the plaintiff did not have any assets that could satisfy a costs order in excess of the policy limit. At para. 16 of Justice Charney’s decision, he specifically states that the existence and the amount of adverse costs insurance is an irrelevant factor in determining costs. He goes on to state at para. 19 that limiting an unsuccessful plaintiff’s costs exposure to the amount of coverage would undermine the purpose of costs, which is promote settlement, and “would permit a plaintiff to ignore reasonable offers to settle and take their chance at trial without risk of adverse costs consequences.”
Provided by the Plaintiffs:
20The Plaintiffs agree that a successful party is presumptively entitled to costs. The Plaintiffs also agree that a nil judgment puts the Plaintiffs in the same position as if the action had been dismissed.
21The Plaintiffs referred to Robichaud v. Constantinidis, 2020 ONSC 310, at paras. 19 and 21, as setting out the principles for costs awards. The Court has broad discretion when determining costs under section 131 (1) of the Courts of Justice Act. Rule 57.01 of the Rules of Civil Procedure provides a non-exhaustive list of factors for the court to consider. The overarching principle is reasonableness. The court must determine an amount that is fair and reasonable.
22In Robichaud, the Court also took into account the jury verdict and implicit expectations of the jury in determining costs. In Robichaud, the Plaintiff had been awarded general damages, which were ultimately eliminated by the statutory deductible and damages for past loss of income. The damages for past loss of income were eliminated by previous income replacement benefits the Plaintiff had received. It had also been determined that the Plaintiff did not meet the statutory threshold for non-pecuniary damages and health care expenses. Justice Schabas took into consideration the jury’s verdict in his determination of costs. Para. 20 of his decision provides as follows:
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.
23The Court is entitled to take into account a Plaintiff’s financial circumstances in determining costs. The Plaintiffs refer to Berg v. Loblaw Properties Limited, 2013 ONSC 4803, at para. 20, wherein the Court determined that the plaintiff’s means are a relevant consideration, not to eliminate costs, but to reduce costs to avoid hardship.
24The Plaintiffs’ position is that since the action was effectively dismissed Rule 49 does not apply. If Rule 49 applied, pursuant to Rule 49.10 (2), the Plaintiffs would be entitled to their costs on a partial indemnity basis to the date of the Defendants’ first offer and the Defendants would be entitled to costs on a partial indemnity basis thereafter, unless the court orders otherwise.
25The Defendants rely on S&A Strasser Ltd, for the proposition that where a Defendant makes an offer and the Plaintiff’s claim is dismissed, the Defendant is entitled to partial indemnity costs to the date of the offer and substantial indemnity costs thereafter. The Plaintiffs’ submit that this is not the current law in Ontario.
26The Plaintiffs’ refer to the case of Davies v. The Corporation of the Municipality of Clarington, 2009 ONCA 722 in this regard. The Court of Appeal has clarified that, apart from the operation of Rule 49, elevated costs should only be awarded where there is a clear finding of reprehensible conduct, and that S&A Strasser Ltd. should be viewed as a case where the trial judge implicitly found that there had been reprehensible conduct. Paras. 34-40 of Davis provide as follows:
34This takes me to Strasser, the case upon which the trial judge relied in awarding an elevated scale of costs following the February 2005 offer to settle and upon which Blue Circle heavily relies in this appeal.
35In Strasser, the plaintiff had originally claimed $1 million. After discovery, the defendant offered to pay $30,000. The plaintiff then reduced the claim to $70,000. The action was ultimately dismissed. In those circumstances, the trial judge awarded the defendant solicitor-and-client costs, throughout.
36In the plaintiff's appeal of the costs award, Carthy J.A., for the court, noted that although the defendant's offer was not a rule 49.10 offer, the language of rules 49.13 and 57.01 gives the trial judge discretion with respect to costs, and rule 49.13 specifically invites the judge exercising discretion to take into account any offer to settle made in writing. Carthy J.A. went on, however, to hold that the offer in Strasser could not, standing on its own, justify an award of solicitor-and-client costs. While the trial judge did not identify any evidence of reprehensible conduct, Carthy J.A., in upholding the award, was careful to note that during the costs submissions the trial judge did say "I think this case, in these circumstances, screams for solicitor-and-client costs": p. 246 O.R.
37This court sought to clarify Strasser in Scapillati v. A. Potvin Construction Ltd. (1999), 1999 1473 (ON CA), 44 O.R. (3d) 737, [1999] O.J. No. 2187 (C.A.), a case in which the defendant had served an offer to settle on the basis that the action be dismissed without costs and the trial judge subsequently dismissed the plaintiff's claim. Purportedly following Strasser, the trial judge awarded party-and-party costs to the date of the offer and solicitor-and-client costs thereafter.
38On appeal, this court started its analysis of the defendant's appeal of the costs award by observing, once again, that as the plaintiff's claim had failed, rule 49.10 had no application. Then, at p. 750 O.R., turning to Strasser, Austin J.A. had this to say:
[T]he principle upon which solicitor and client costs were awarded in Strasser is a very narrow one. The plaintiff had made a claim for $1 million, the defendant made an offer after discovery of $30,000 and the action was dismissed at trial. In the instant case, no similar offer was made. While the trial judge in the instant case made an award of solicitor and client costs, it does not appear from the record that she felt as strongly about it as the trial judge in Strasser who said "I think this case, in these circumstances, screams for solicitor and client costs."
39Thus interpreting Strasser as a case where egregious conduct was implicitly found, this court allowed the appeal as to costs, set aside the original costs award and substituted an award of costs on a party-and-party basis. For other cases in which comments have been made on the limited application of Strasser, see St. Louis-Lalonde v. Carlton Condominium Corp. No. 12, [2005] O.J. No. 4164, 142 A.C.W.S. (3d) 934 (S.C.J.), at para. 15, affd 2007 ONCA 108, [2007] O.J. No. 578, 155 A.C.W.S. (3d) 479 (C.A.); Dyer v. Mekinda Snyder Partnership Inc. (1998), 1998 14847 (ON SC), 40 O.R. (3d) 180, [1998] O.J. No. 2204 (Gen. Div.).
40In summary, while fixing costs is a discretionary exercise, attracting a high level of deference, it must be on a principled basis. The judicial discretion under rules 49.13 and 57.01 is not so broad as to permit a fundamental change to the law that governs the award of an elevated level of costs. Apart from the operation of rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made. As Austin J.A. established in Scapillati, Strasser should be interpreted to fit within this framework -- as a case where the trial judge implicitly found such egregious behaviour, deserving of sanction.
27The Davies decision has been followed in subsequent decisions. In Shewchuk v. Blackmont Capital Inc, 2015 ONSC 7861, the defendant made three offers to settle, all of which were not accepted by the plaintiff. The trial proceeded and the action was dismissed in its entirety. The defendant sought substantial indemnity costs relying on S&A. Strasser. Justice Akhtar did not award substantial indemnity costs. Paras. 5-8 of Shewchuk provide as follows:
5Most notably, Rule 49 does not cover the situation in which a defendant, who has made an offer to settle, defeats the plaintiffs claim outright.
6Blackmont relies upon S.A. Strasser Ltd. v. Richmond Hill (Town) (1990), 1990 6856 (ON CA), 1 O.R. (3d) 243 (C.A.) where the court indicated that substantial indemnity costs might be awarded in cases where a defendant, entirely successful in an action, had previously made an offer to settle. In such cases a court may award partial indemnity costs until the date of the offer and substantial indemnity costs thereafter. The Strasser analysis was followed in a series of other cases: H.L. Staebler Company Ltd. v. Allan (2008), 2008 64396 (ON SC), 92 O.R. (3d) 788 (S.C.J.); Dunstan v. Flying J Travel Plaza, 2007 819 (ON LRB), [2007] O.J. No. 4089 (S.C.J.); Alie v Bertrand & Frere Construction Co. (2002), 62 O.R. (3d) 645.
7I find, however, that Strasser has been overtaken by recent decisions of the Court of Appeal for Ontario namely, Davies v. Clarington (Municipality), 2009 ONCA 722, where Epstein J.A. clarified the position on substantial indemnity, at para. 40, in the following way:
In summary, while fixing costs is a discretionary exercise, attracting a high level of deference, it must be on a principled basis. The judicial discretion under rules 49.13 and 57.01 is not so broad as to permit a fundamental change to the law that governs the award of an elevated level of costs. Apart from the operation of rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made. As Austin J.A. established in Scapillati, Strasser should be interpreted to fit within this framework - as a case where the trial judge implicitly found such egregious behaviour, deserving of sanction.
8In light of this passage, substantial indemnity would only be available if I found that Shewchuk had committed “egregious behaviour, deserving of sanction.” I find no evidence of any such conduct. As I have already observed, the trial was hard fought with two sets of very able counsel. Both parties co-operated to ensure that the trial proceeded in the most expeditious manner possible. The action, even though unsuccessful, was not frivolous and, the legal issues that arose during the course of the trial required adjudication and were dealt with expeditiously by both sides. I therefore conclude that this is not an appropriate case in which to award substantial indemnity costs.
28Similarly, in Robichaud, supra, the defendant sought substantial indemnity costs. The defendant had made a Rule 49 offer for $25,000, along with other offers to settle. The plaintiff was awarded damages that were reduced to zero due to the deductible and income replacement benefits received. It was determined that the Plaintiff did not meet the statutory threshold. The defendant sought substantial indemnity costs. Justice Schabus declined to order same relying on Davies, supra. Para 21 of Robichaud provides as follows:
21As 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 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.
29The case of Collin v. Jasek, [2000] O.J. No. 3545 (ONSC) was decided before Davis, supra. The defendant offered to settle for $30,000. The plaintiff’s action was dismissed following trial. The plaintiff had claimed $1,000,000 in general damages and $1,000,000 for special damages. Damages were assessed at $15,000. The defendant claimed substantial indemnity costs. Justice Philip reviewed the Ontario Court of Appeal authorities, including S. & A. Strasser and Mortimer v. Cameron (1994), 1994 10998 (ON CA), 17 O.R. (3d) 1, and did not award substantial indemnity costs. Paras. 22 and 23 provide as follows:
22 In my view the issues in this trial were real and important and required the time and effort of counsel for both sides. In my discretion I cannot find that there has been some "reprehensible conduct either in the circumstances giving rise to the cause of action or in the proceedings, which makes an award of solicitor and client costs desirable as a form of chastisement". The plaintiff was entitled to prosecute her case and was not required to settle it for the $30,000.00 offered in 1997 or at all. This case is not one of those rare and exceptional cases where costs should be awarded on a solicitor and client scale rather than on a party and party scale. As Dubin J.A. Wrote in Foulis v. Robinson "an award of costs on a party and party scale to the successful party strikes a proper balance as to the burden of costs which should be borne by the winner without putting litigation beyond the reach of the loser". I return therefore to the general rule that the unsuccessful party should pay the successful party's costs assessed on a party and party scale.
23 The plaintiff's action was dismissed. The costs of the defendant from the commencement of the trial shall be paid by the plaintiff, Pierrette Collin on a party and party scale.
30In terms of the quantum of partial indemnity costs, the Plaintiffs’ refer to Rule 1.03 (1) of the Rules of Civil Procedure, which defines substantial indemnity costs to be 1.5 times partial indemnity costs.
31The Plaintiffs’ rely on four different cases in support of their position that no costs or minimal costs only should be awarded against Maliha Noori.
32In Winters v. Haldimond (County), 2014 ONSC 5759, the plaintiffs’ claims were dismissed against the county. Each Family Law Act claimant was ordered to pay costs of $5,000. On appeal, at [2015] O.J. No. 633 (Ont. C.A.), the Court of Appeal stated as follows regarding costs of Family Law Act claimants.
22 While in some cases there have been no costs awarded against FLA claimants, there is no general rule that that should be so. The awarding of costs is a matter for the discretion of the trial judge and while we agree that the awards are here seem somewhat high, to interfere we must be satisfied that the trial judge has committed an error in principle or is clearly wrong.
33In Boyuk v. Loblaws Supermarket Limited, 2007 5522 (ONSC), the defendant sought costs against the Family Law Act claimant following a successful defence. Justice Perrell declined to order costs against the plaintiff’s daughter. Paras. 3 and 4 provide as follows:
3I agree that in the circumstances of this case, it is appropriate to make a costs award only against the elder Boyuk. Her daughter's claim was a statutory and derivative one, and the daughter's participation to assert this derivative claim, although unsuccessful, should not expose her to a costs award.
4I agree with the submission of plaintiffs' counsel that if unsuccessful Family Law Act claimants were automatically [page615] exposed to costs, it would discourage family members from making these claims, although the legislation clearly intended that such claims are available to them. Apart from the lack of success, which really depends upon the failure of her mother's claim, there is nothing to justify a costs award against Peggy Ann Boyuk, and I decline to make one.
34Similarly, in Berg supra, the court did not award costs against a Family Law Act claimant. The defendants had made an offer including an amount payable to the Family Law Act claimant. The jury found the defendants not liable. The defendant sought costs against the Family Law Act claimant. The Court declined to award same at paras. 9 to 11:
9Ms. McDonald asserted a claim for damages pursuant to the Family Law Act arising from the care she provided to her mother following her surgeries. Ms. Berg is fortunate, indeed, to have such a caring and devoted daughter (and son-in-law).
10In regard to this claim, it was clearly a modest one. Ms. McDonald was not examined for discovery and little trial time was devoted to her claim. She would have been a witness regardless because she was able to shed light on her mother’s condition and personality pre and post morbidly.
11I agree with and echo my colleague Perell J.’s observations in Boyuk v. Loblaw Supermarkets Ltd. (2007), 2007 5522 (ON SC), 85 O.R. (3d) 614 (S.C.J.). Ms. McDonald’s claim was derivative and entirely dependent on the success of her mother’s claim. To routinely order costs against a derivative claimant would undoubtedly discourage such claims that are statutorily available.
35In Pyatt v. Roessle Estate, 2017 ONSC 3878, the Court also declined to award costs against the Family Law Act claimants in circumstances where the plaintiffs action was dismissed. The defendants had made two Rule 49 offers to settle that were not accepted. The offers included damages for the Family Law Act claimants. The Court declined to order costs against the Family Law Act claimants. Paras. 18 – 20 provide as follows:
18 In the circumstances of the case before me, I find that it is entirely inappropriate to saddle the FLA claimants with any costs for four reasons:
i. the FLA claims were derivative of the principal claim of Katherine Pyatt;
ii. the time spent presenting and defending the FLA claims was miniscule compared to that spent presenting and defending the principal claim;
iii. a significant portion of the testimony of each of the FLA witnesses bore on the issues of damages suffered by Katherine Pyatt, not on their respective losses of care, guidance and companionship; and
iv. to find any of the FLA plaintiffs liable to pay costs would be entirely out of proportion to the value of their claims and the importance of the FLA issues relative to the issues of inevitable accident, liability, damages for pain and suffering, past and future loss of income and future care.
19 I would as well adopt the reasoning of my brother Perrell J., who, in Boyuk v. Loblaws Supermarkets Limited, 2007 5522 (ON SC), declined to award costs against the Family Law Act plaintiff following an unsuccessful personal injury claim:
"...if unsuccessful Family Law Act claimants were automatically exposed to costs, it would discourage family members from making these claims, although the legislation clearly intended that such claims are available to them. Apart from the lack of success, which really depends upon the failure of her mother's claim, there is nothing to justify a costs award against Peggy Ann Boyuk, and I decline to make one."
20 I have concluded that any costs award in favour of the Defendant should be against the Plaintiff Katherine Pyatt only.
5. Submissions/Argument Provided by the Parties
a) The Defendants
36The Plaintiffs brought an action claiming more than $300,000. Following the determination of the case on its merits, the Plaintiffs were not awarded any money. Considering Ontario’s “loser pays” approach, the Defendants are prima facie entitled to a costs award; however, the decision to award costs, and the quantum of costs, is within the absolute discretion of the court.
Applicability Rule 49.10
37The Defendants offered to settle the claims of the Plaintiffs for the amount of $35,000 plus costs and disbursements on May 23, 2019. They offered to settle again on September 10, 2019 for the amount of $77,000 plus costs and disbursements. At trial, the Plaintiffs were not awarded any special or FLA damages. Following the threshold decision, Shagofa Noori’s claim for general damages was dismissed. Effectively, the Plaintiffs did not recover anything in this action.
38According to Rule 49.10 (2), the Plaintiffs would ordinarily be entitled to their partial indemnity costs from the beginning of the action to the date of offer, and the Defendants would ordinarily be entitled to their partial indemnity costs from the date of the offer to the conclusion of the action. However, in the present case, the Plaintiffs did not recover any damages out of this action.
39As stated in S&A Strasser, when the Plaintiffs’ actions are dismissed, the Defendants are ordinarily entitled to their costs on a partial indemnity basis throughout the action. In S&A Strasser, the court took into consideration the offer to settle of the Defendants, and found that, considering the Plaintiffs were not awarded anything and the Defendants made a reasonable offer to settle, the Defendants were entitled to their partial indemnity costs up to the date of the offer, and entitled to substantial indemnity costs from the date of the offer to the conclusion of the action.
40Given the fact that the Plaintiffs recovered nothing in this action, and that the Defendants provided a formal Rule 49 offer on May 23, 2019 and September 10, 2019, the Defendants ought to be awarded their costs on a partial indemnity basis to the date of the first offer, and substantial indemnity costs from the date of the offer onwards.
Applicability of Rule 57 factors:
41The Defendants submit that the case involved complex issues of damages. The trial of this matter required the participation of numerous witnesses from both parties, including 9 expert witness and 13 lay witnesses, including the parties. The trial also required argument on numerous evidentiary issues. In summary, the trial was relatively complex in nature. The Defendants had to incur high costs in order to properly defend the action on its merits.
42Furthermore, the conduct of the Plaintiffs in this matter unnecessarily lengthened the trial. The Plaintiffs failed to properly schedule their witnesses, forcing court to recess early on numerous occasions. This resulted in considerable wasted time for the court and the parties, and additional expense for the parties.
43The Defendants, on the other hand, called their witnesses without any gaps in the evidence during the presentation of the defence case, other than an adjournment to accommodate defence witness Dr. Boucher (the defence points out that this adjournment was entirely as a result of the failure of the Plaintiffs to finish their case in the estimated time, thus disrupting the trial schedule and requiring Dr. Boucher to attend at a later date). The added length in trial time, as a result of the conduct of the Plaintiffs, resulted in increased litigation costs for the Defendants. The Defendants submits that these factors should be taken into account when awarding costs.
44Considering the fact that the Plaintiffs did not recover anything, that the Defendants beat their offer to settle, and applying the Rule 57 factors, the Defendants are entitled to their costs up to May 23, 2019 on a partial indemnity basis, and from May 23, 2019 to date on a substantial indemnity basis.
b) The Plaintiffs
Allegation of Trial Delay/Reprehensible Conduct
45The Plaintiffs rely on Davies, supra and state that there can be no finding that the Plaintiffs engaged in reprehensible conduct and therefore the Defendants are entitled to costs on a partial indemnity basis throughout. Rule 49 does not apply when the Plaintiffs’ claims were dismissed.
46In terms of the accusation by the Defendants that the Plaintiffs or their counsel were responsible for 12 days of delay or any significant delay in the trial, the Plaintiffs state that is incredulous and without merit. In any event, there was nothing reprehensible about the conduct of the Plaintiffs or their counsel in the way the trial was conducted such as to warrant substantial indemnity costs. Further, an award of partial indemnity costs would compensate the Defendants for the 22-day long trial.
47The trial was initially estimated to be 10 days. This initial estimate was incorrect. That does not mean, however, that the trial was conducted in an egregious fashion. It is not uncommon for there to be delays in a trial. In this matter, there were scheduling conflicts, voir dires, objections, and motions. The Court gave counsel time to do research and to come to terms when needed to address issues that arose. There were also typical delays involved in having a jury. All counsel worked collegially, efficiently and effectively to move the trial along.
The Defendants’ Bill of Costs – Fees and Disbursements
48The Defendants seek $919.97 for a Rule 30.10 motion that was never brought. It is the Plaintiffs’ position that the Plaintiffs should not be held responsible for a third party’s recalcitrance, for work that was undertaken to no fault of their own or for a motion that was never brought.
49Additionally, the Defendants seek $8,710.61 for a Rule 48 motion. The Defendants lost that motion. Costs were awarded to the Plaintiff in the amount of $3,000. The decision was not appealed. The order should not be revisited now.
50Costs are being claimed for the motion to produce the litigation insurance policy. The Plaintiffs agree that the Defendants are entitled to some costs. However, they are claiming over 80 hours of time and costs amounting to $17,790.38. The Plaintiffs submit that is excessive. Counsel submits that 24 hours of time (3 days) is more than fair. The total costs should be no more than $5,320.94 (inclusive of HST).
51However, the Plaintiffs submit that the costs related to the motion for production and the litigation insurance policy should be further reduced. Subject to priority issues, the policy provides potential adverse costs coverage that is to the benefit of the Defendants. There were confidentiality terms in the policy. Producing the policy may have voided the contract and deprived the Defendants of the potential benefit of the coverage. Additionally, resisting production was reasonable. The only caselaw provided stated that production was not required. These factors should be considered. It would be open to the court to award $3,500 in costs for this motion (a further reduction from $5,320.94 referenced in para. 50 above).
52The Plaintiffs take issue with the Defendants’ claiming $8,143.63 for this costs hearing (over 39 hours of work). The Plaintiffs submit that this amount is excessive. Two days (16 hours) of work is more appropriate. In any event, nothing should be awarded for this work. Submissions would have been required regardless of the outcome of the trial (“win” or “lose”).
53As set out above in para 30 above, the Plaintiffs’ submit that the Rules of Civil Procedure define substantial indemnity costs to be 1.5 times partial indemnity costs. The Defendants used a substantial indemnity rate of 90 per cent. Therefore, partial indemnity costs should be calculated at 60 percent and not 65 percent as the Defendants calculated.
54The Plaintiffs’ took the Defendants’ Bill of Costs and calculated partial indemnity costs at 60 percent of the actual rate throughout, adjusting the Defendants’ fees claimed as set out in paras. 48 to 52 above. The Plaintiffs’ calculate the partial indemnity fees at $129,073.28, inclusive of HST.
55In terms of disbursements, the Defendants have claimed $7,671.70 for transcripts. The Plaintiffs submit that this cost is excessive. The Plaintiffs note that Mr. Chalmers was in court taking notes. The Plaintiffs point out that they did not order transcripts for themselves, but relied upon notes taken by Ms. Bigham. Transcripts were not shared. As a result, the Plaintiffs should not be saddled with this significant cost.
56Out-of-town travel was claimed at $5,744.72. The Plaintiffs believe these are hotel costs being covered at 100 per cent (beyond even substantial indemnity costs). The Plaintiffs’ lawyers practice out of Burlington. Mr. Page lives in Hamilton. He did not stay in a hotel. Respectfully, the Plaintiffs submit that this disbursement is not reasonable.
57Meals have been claimed at $2,938.50. This is unreasonable. Defence counsel would have had to eat regardless of the trial and presumably would have purchased lunches or groceries even if not for the trial. The Plaintiffs do not have meal costs as disbursements.
58Overall, it is the Plaintiffs’ position that it would be open to the court to award $38,300 for disbursements. The Plaintiffs have taken the total disbursements claimed and deducted the three disbursements noted above.
Substantial vs. Partial Indemnity Costs
59The Plaintiffs submit that only partial indemnity costs should be awarded against Shagofa Noori.
60With reference to the caselaw noted above, this is not one of those rare and compelling cases where substantial indemnity costs are warranted. She was entitled to litigate her case. She was not required to settle. The jury likely anticipated she would receive some compensation as evidenced by their verdict and not be hit with a massive costs bill. She did not engage in reprehensible conduct or anything close to that kind of behaviour. Further, as set out above, neither the Plaintiffs nor their counsel were responsible for any significant delays.
Shagofa Noori’s Financial Means
61Without considering Shagofa Noori’s financial means, it would be open to this court to award $168,000 in costs against Shagofa Noori (fees and disbursements claimed by the Defendants as adjusted by the Plaintiffs’ submissions.) However, a plaintiff’s financial circumstances may be considered to reduce a costs award to avoid hardship. There is no question that such a costs award would be crippling to Shagofa Noori. She had a very limited work history prior to her car accident and suffered from anxiety and panic attacks. She has never earned a significant income. At the time of trial, she was a single mother receiving Ontario Works for financial support. In Berg supra, the court reduced the Defendants’ costs by over 60 per cent. Given Shagofa Noori’s circumstances, it would be open to this court to award total costs (fees, disbursements and applicable taxes) in an amount ranging from $100,000 to $168,000.
Costs Claimed Against Maliha Noori
62The Plaintiffs submit that no costs should be awarded against Maliha Noori. Maliha Noori had a modest claim. The time devoted to her claim in the overall action was miniscule. She would have been a witness regardless. A significant portion of her testimony, if not all of it, was relevant to her daughter’s damage claims for pain and suffering, loss of enjoyment of life, past and future income loss, housekeeping needs, and treatment needs.
63Alternatively, if costs are to be awarded against Maliha Noori, there should be a nexus between those costs and the work devoted to her claim.
64Maliha Noori did not engage in reprehensible behaviour worthy of a penalty. There is no entitlement to substantial indemnity costs. Maliha Noori was examined for discovery for at most one hour, which happened the same day as her daughter’s examination. It would have taken at most one hour to prepare for her discovery. Maliha Noori was going to be a witness regardless at trial. There was at most half an hour of trial time dedicated to her claim that would not have been addressed anyway if she was a lay witness. It would have taken counsel at most one hour to prepare for her cross-examination on matters that would not have required preparation anyway if she was a lay witness. Mr. Cormier’s time at the partial indemnity rate is $225/h. At most the costs would be $500 to $1000, representing 2 to 3.5 hours of work.
65Costs submissions would be made regardless of Maliha Noori’s claim and regardless of the outcome of the trial. Those costs should not be born by Maliha Noori.
66If costs were made payable in an amount proportional to the value of her claim relative to Shagofa Noori’s claim, she would be held responsible for costs that were not directly relevant to her claim and/or for costs that would have been incurred anyway, regardless of her claim. That would be unjust and unfair in the circumstances of this case. The Plaintiffs in their submissions provided two alternate methods of calculating Maliha Noori’s proportion of the total claim.
c) The Defendants in Reply:
67The Plaintiffs claim the Defendants’ costs for the motion to produce the litigation insurance policy were excessive. The Defendants state that they had been asking for production of a redacted copy of the insurance policy for over a year. The Plaintiffs’ vigorously opposed the Defendants on this issue and on this motion, until finally conceding at the 11th hour. Counsel for the non-party insurer participated in the motion. In prosecuting this motion, the Defendants had to litigate against both counsel, increasing costs. This motion raised complex issues of insurance law. These costs are reasonable.
68The Plaintiffs’ agreed just prior to the hearing of the motion to produce the litigation insurance policy, and in addition agreed that for the purposes of costs of the motion, it would be treated as if the Defendants won. The Plaintiffs should therefore be estopped from arguing the reasonableness of their position on the motion as a factor.
69The Plaintiffs’ suggestion that the insurance policy motion was for the benefit of the Defendants is inaccurate and misleading. The policy provides coverage for own (the Plaintiffs’) disbursements, a benefit that accrues to Martin & Hillyer Associates, in addition to adverse costs coverage. The policy does not provide any priority directions. To date, Martin & Hillyer Associates have consumed at least $82,890.49 of the $100,000 policy limits to cover their disbursements (despite the policy terms requiring a judgment prior to making a claim), leaving less than $18,000 to cover any adverse costs award against the Plaintiffs. The Defendants submit that Plaintiffs’ counsel refused to produce the policy for over a year to protect their own disbursements incurred, as they were concerned production would void the policy. Martin & Hillyer benefited most from this situation, so it is misleading for the Plaintiffs to argue that the policy provides coverage that benefits the Defendants without providing this context.
70The Plaintiffs state that costs submissions would be required regardless of trial outcome. The parties would have avoided this cost if the Plaintiffs had accepted either of the Defendants’ pre-trial offers.
71The Plaintiffs’ state the cost of the trial transcript was too high. This was the cost of the transcript, and the Defendants used these during their closing.
72The Plaintiffs’ state that the Defendants are seeking costs jointly and severally against the Plaintiffs. The Defendants are not seeking costs on a joint and severable basis. The Defendants are seeking costs on a proportional basis.
6. Analysis
Partial or Substantial Indemnity
73I concur with Justice Akhtar in Shewchuk, that Strasser has been overtaken by the decision of the Court of Appeal in Davies. As set out in Davies, if the Plaintiffs’ claims have failed, Rule 49.10 has no application. As set out in para. 40 of Davies, “… elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the costs award is being made.” (See also Robichaud and Collin.)
74I make no findings that the Plaintiffs or their counsel engaged in any reprehensible conduct. The Plaintiff Shagofa Noori was a pedestrian struck by a vehicle while she was 7 months pregnant. She was entitled to put her claims forward. The jury did find that she suffered general damages, which did not survive the threshold motion.
75There was absolutely nothing reprehensible in the manner that the jury trial was conducted. Counsel worked cooperatively. Plaintiffs’ counsel conducted his part of the trial in an appropriate and reasonable manner. He did not unduly delay the trial. The fact that the trial was not completed in the number of days estimated resulted from a number of factors – none of which can come close to being described as caused by reprehensible conduct by the Plaintiffs’ counsel. As the Defendants’ counsel points out, the case was complex. There were 9 expert witnesses and 13 lay witnesses, including the parties. There were numerous evidentiary issues. Given all of this, it is not unexpected that the trial took longer than originally estimated. The fact that on occasion the Plaintiffs’ counsel did not have the next witness ready is not egregious conduct. This happens from time to time. It is difficult to estimate the lengths of examination and cross-examination with precision.
76The Defendants are entitled to costs on a partial indemnity basis throughout.
Review of the Defendants’ Bill of Costs and the Issues Raised by the Plaintiffs
77I find that the Defendants’ use of 65 per cent of actual costs to determine partial indemnity costs is reasonable. In Air Canada Pilots Association v. Air Canada, 2007 20093, aff’d 2008 ONCA 531, the court determined that 65% of the fees charged to clients was an appropriate amount to award for costs, where the trial was highly complex, technical, and involved complicated evidence and lengthy expert testimony. In 790668 Ontario Inc. v. D’Andrea Management Inc., 2015 ONCA 557, the Court of Appeal fixed partial indemnity costs at a rate that was 1/3 less than the actual amount charged by the party’s counsel. This would put partial indemnity costs at about 65%-67% of actual costs (at para. 27). The Court of Appeal reiterated that the “ordinary rule of thumb” is that partial indemnity costs should be about 1/3 less than substantial indemnity costs (at para. 23). I reject the Plaintiffs’ position that the rate to be used should be 60 per cent. The rate of 65 per cent for partial indemnity costs is in accordance with these two Ontario Court of Appeal decisions.
78The starting point for the analysis of the Defendants’ partial indemnity costs is therefore as follows:
- Fees for the period from February 23, 2017 to May 23, 2019 – taken directly from page 4 of the Bill of Costs
$12,899.66 (Inclusive of HST)
- Fees for the period from May 24, 2019 to February 11, 2021— 65 per cent of $230,783.30 - $230,783.30 is the actual fees taken from page 4 of the Bill of Costs
$150,009.15 (Inclusive of HST)
- Disbursements listed on page 4 of the Bills of Costs
$54,654.92
Total
$217,563.75
79I have considered the Plaintiff’s objections to the Bill of Costs and the Defendants’ responses and determine as follows:
I have deducted $919.97 for the Rule 30.10 motion the Defendants’ counsel drafted material for but never brought.
I have reduced the sum of $5,567.25 (the partial indemnity amount) for the Rule 48.04 motion. Costs of that motion were already determined and should not be revisited.
The Defendants have claimed on a partial indemnity basis the sum of $11,370.45 for the motion for the production of the insurance policy, which motion was ultimately resolved on consent and was not argued. The Defendants are entitled to costs of the motion as it was ultimately resolved in their favour. The amount claimed should be reduced as the motion was not argued. The sum of $7,500 is reasonable and proportional for the preparation of the motion material and therefore I reduce the amount claimed by $3,870.45.
I decline to make any adjustment to the amount claimed for the preparation of the costs submissions. The submissions were complex and addressed significant legal issues.
I am removing as a disbursement the sum of $7,671.70 for transcripts from the trial. The transcripts were ordered for the Defendants’ counsel’s convenience. This was not a required disbursement.
I deduct the sum of $5,744.72 for travel and $2,938.50 for meals from the claimed disbursements. I do not have any details of what these disbursements were for and therefore cannot determine the reasonableness and appropriateness of same.
80With these adjustments the total amount of $217,563.75 is reduced to $190,851.16 ($217,563.75, minus $919.97, minus $5,567.25, minus $3,870.45, minus $7,671.20, minus $5,744.72, minus $2,938.50).
Rule 57.01(1) Factors and Plaintiff, Shagofa Noori’s Financial Circumstances
81In considering the Rule 57.01(1) factors, I have determined as follows:
i. The rates charged and the hours spend, other than the adjustments made above are reasonable;
ii. The matter was complex – the jury trial itself; the threshold motion and the costs submissions were all complex; and
iii. The issues were of importance to the Defendants.
82The Plaintiff relies on para. 20 of Berg in support of its position that Shagofa Noori’s financial circumstances can be taken into account in the determination of costs. Para. 20 provides as follows:
20There is authority for the proposition that the plaintiff’s means are a relevant consideration in the exercise of the court’s discretion, not to eliminate costs but to reduce them to avoid hardship: Baldwin v. Daubney (2006), 2006 33317 (ON SC), 21 B.L.R. (4th) 232 (Ont. S.C.J.); Ochoa v. Canadian Mountain Holidays Inc. (1997), 10 C.P.C. (4th) 102 (B.C.S.C.); and Capostinsky (Guardian ad litem of) v. Aurora Cycle Supply Ltd. (1994), 1994 8696 (BC CA), 31 C.P.C. (3d) 144 (B.C.C.A.).
83The Defendants rely on paras. 16 and 19 of Mundinger in response to this argument.
84I have determined that as in Berg, I am entitled to consider Shagofa Noori’s means as a relevant factor, not to eliminate costs, but to reduce costs to avoid hardship. Mundinger does not provide otherwise. Mundinger states that the existence and the amount of adverse costs insurance is an irrelevant factor in determining costs. The Plaintiff is not asking that I consider the existence and the amount of the adverse costs insurance as a factor.
85The evidence at trial was that Shagofa Noori has never earned a significant income. At the time of the trial, she was a single mother receiving Ontario Works for financial support .She had a limited work history both pre and post the accident. The costs award will create a hardship for her.
86I am prepared to reduce the total costs as set out in para. 80 above in the amount of $190,851.16 by 20 per cent, to $152,680.93 to reflect Shagofa Noori’s financial circumstances. In my view, a twenty per cent reduction strikes a balance between not permitting a plaintiff to ignore reasonable offers to settle and take their chance at trial without risk of adverse costs consequences and a realistic assessment of the hardship a significant costs award will have on Shagofa Noori.
Maliha Noori
87I have considered the cases referred to by the Plaintiffs in support of their position that no costs, or minimal costs only, should be awarded against Maliha Noori – the cases of Winters, Boyuk, Berg, and Pyatt. In Boyuk, Berg and Pyatt, no costs were awarded against the Family Law Act claimants.
88I decline to order costs against Maliha Noori. Her claim was a statutory and derivative claim. Her claim was a modest one. She would have been a witness at the trial in any event regarding Shagofa Noori’s condition pre and post accident. The time spent presenting and defending her claim was modest when compared to that spent presenting and defending Shagofa Noori’s claims. Her claim was dependent upon the success of Shagofa Noori’s claim. It would not be proportional to award any costs against her.
7. Conclusion
89In conclusion, the Plaintiff Shagofa Noori shall pay to the Defendants costs fixed in the total sum of $152,680.93, inclusive of fees, disbursements and applicable taxes and the Plaintiff, Maliha Noori shall pay no costs to the Defendants.
Coats J.
Date: May 14, 2021