COURT FILE NO.: CV-10-416817

DATE: 20210518

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

THOMAS ANDREAS KLATT, THE ESTATE OF DEBRA ANN KLATT, by its Estate Trustees THOMAS KLATT and KEVIN BUNDY and DEREK JAMES KLATT

Plaintiffs

• and -

LA TOC HOLDINGS LIMITED, CICERON MANAGEMENT LIMITED carrying on business as SANDALS REGENCY LA TOC GOLF RESORT & SPA, UNIQUE VACATIONS (CANADA) INC. and UNIQUE VACATIONS INC., HOLIDAY MARKET INC., HOLIDAY MARKET TRAVEL INC., TOURAM LIMITED PARTNERSHIP carrying on business as AIR CANADA VACATIONS, NEW EMPIRE DESIGN/BUILD CONTRACTORS LTD. and DOMENIC TERSIGNI

Defendants

BEFORE: Justice Lorne Sossin

COUNSEL: Joseph Falconeri and Leigh Harrison, Counsel, for the Plaintiffs

Seumas Woods, Counsel, for the Defendants

SOSSIN J.

COSTS ENDORSEMENT

OVERVIEW

[1] This trial concerned whether the plaintiff, Thomas Klatt, was entitled to recover damages following a fall and serious leg injury in January 2009, while on vacation at the Sandals Regency La Toc Golf Resort & Spa, a property operated by the Sandals Defendants in Saint Lucia.

[2] The trial reasons were released on March 29, 2021. In reasons now reported at Thomas Andreas Klatt v. La Toc Holdings Limited, 2021 ONSC 2121, I found Mr. Klatt entitled to general damages of $67,500.00, in addition to pre-judgment interest, cost of future care in the amount of $736,818.53, and special damages in the amount of $26,250.00, in addition to pre-judgment interest. These amounts also reflected a finding that Mr. Klatt was 25% contributorily negligent in the accident.

[3] The reasons set out that if the parties could not agree on costs, submissions could be provided.

[4] Mr. Klatt’s costs’ submissions were received on April 19, 2021, with a fresh as revised costs submission received on April 20, 2021.

[5] The Sandals Defendants’ costs’ submissions were received on May 4, 2021.

[6] Further reply costs’ submissions from Mr. Klatt were received on May 11, 2021.

[7] Mr. Klatt seeks costs in the amount of $577,746.94, representing partial indemnity costs of $244,825.69 to the date of the plaintiff’s Rule 49 Offer dated January 27, 2020, and substantial indemnity costs of $332,921.25 from the date of the Offer to present, plus HST of $75,107.10 on costs, plus disbursements in the amount of $165,067.95. The total amount claimed in costs and disbursements from the Sandal Defendants is $817,921.99.

[8] The Sandals Defendants argue that the costs claimed by Mr. Klatt are excessive, both in the number of timekeepers for which costs are claimed, as well as in the number of hours of work claimed. They submit that the costs award for Mr. Klatt should be $300,000, with an additional $80,000 in disbursements (including HST), which is close to the range of the Sandal Defendants’ own costs of the trial.

[9] The costs of a trial are at the discretion of the court, and the court may determine by whom and to what extent costs shall be paid (s. 131(1), Courts of Justice Act (Ontario)).

[10] In exercising this discretion, in addition to the result and any offer to settle made in writing, the court may consider the factors set out in Rule 57.01(1) of the Rules of Civil Procedure R.R.O. 1990, Reg. 194.

[11] Rule 57.01(1) provides:

57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(0.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 and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer;

(h.1) whether a party unreasonably objected to proceeding by telephone conference or video conference under rule 1.08; and

(i) any other matter relevant to the question of costs. R.R.O. 1990, Reg. 194, r. 57.01 (1); O. Reg. 627/98, s. 6; O. Reg. 42/05, s. 4 (1); O. Reg. 575/07, s. 1; O. Reg. 689/20, s. 37.

[12] The overriding principles in determining costs are fairness and reasonableness (Boucher v. Public Accountants Council for the Province of Ontario, 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.).

[13] The general rule is that costs on a partial indemnity scale should follow the event. A court should only depart from this general rule where warranted, for example, by misconduct of a party, a miscarriage in procedure or oppressive or vexatious conduct (1318706 Ontario Ltd. v. Niagara (Regional Municipality) 2005 CanLII 16071 (ON CA), 75 O.R. (3d) 405 (C.A.).

[14] Mr. Klatt was successful at trial and is entitled to costs. However, the damages awarded at trial were lower than those claimed, and Mr. Klatt was found to be 25% contributorily negligent in the accident.

[15] Mr. Klatt claimed a total of $1,380,883.95, exclusive of pre-judgment interest. At trial, Mr. Klatt was awarded $789,619.16, exclusive of pre-judgment interest, following the deductions made for contributory negligence.

[16] The trial was complex, involving matters of foreign law, numerous expert reports and the passage of over a decade between the date of the accident and the date of the trial.

[17] Further, as most of the experts testified on behalf of Mr. Klatt, his counsel bore more of the brunt of time in preparing for and conducting the trial.

[18] Both Mr. Klatt and the Sandals Defendants made offers to settle this dispute.

[19] On January 27, 2020, seven days prior to commencement of trial on February 3, 2020, the plaintiff delivered an Offer to Settle in compliance with Rule 49 of the Rules of Civil Procedure in the amount of $945,000.00 plus pre-judgment interest, costs, HST, disbursements and HST on disbursements.

[20] The Sandal Defendants delivered an Offer to Settle on January 23, 2020 in the amount of $400,000.00 “all-inclusive”.

[21] The result for Mr. Klatt at trial was somewhere between the last offer made by Mr. Klatt and the last offer made by the Sandals Defendants, though it is closer to the last offer made by Mr. Klatt.

[22] The Court of Appeal has rejected the concept of imposing Rule 49 consequences on “near miss” offers to settle: Elbakhiet v Palmer, 2014 ONCA 544 at paras. 29 to 36, and it is not clear the result in this case was close enough to Mr. Klatt’s last offer to qualify as a “near miss” in any event.

[23] Consequently, substantial indemnity costs are not warranted in this case.

[24] Additionally, in my view, neither party engaged in conduct which unnecessarily lengthened the trial, or which justifies a departure from the general rule on costs.

[25] In light of Mr. Klatt’s significant but not complete success at trial, and bearing in mind the principles set out in the case law and the criteria set out in Rule 57.01, I find costs of $500,000.00, all inclusive, to be proportionate, fair and reasonable.

[26] Therefore, Mr. Klatt is entitled to costs in the amount of $500,000.00, inclusive of disbursements and HST. These costs are payable by the Sandals Defendants within 30 days from the date of this endorsement.

Sossin J.

Released: May 18, 2021