Court File and Parties
COURT FILE NO.: CV-11-00439706-0000
DATE: 2022-12-12
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MARY TERENCIA ANTONY, Plaintiff
AND:
RATNAKUMAR KUMARASAMY and REDDIAR RAGUNATH BAKTHAVACHALU, Defendants
AND:
THE WAWANESA MUTUAL INSURANCE COMPANY, STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and CERTAS HOME AND AUTO INSURANCE COMPANY, added by orders pursuant to Section 258(14) of the Insurance Act, R.S.O. 1990, c.I.8, as amended, Third Parties
BEFORE: Justice A.P. Ramsay
COUNSEL: David S. Wilson, for the Plaintiff Bruce Chambers, for the Third Party Defendants
HEARD: July 28, 2022
COSTS ENDORSEMENT
A. Nature of the Motion
[1] Following a pre-trial conference, and less than a month before trial, the plaintiff accepted an offer to settle of $85,000.00 plus interest from the statutory third party, with disbursements and costs to be agreed upon or assessed. The parties were unable to resolve the issue of costs.
[2] The plaintiff brings this motion for a determination of the costs of the action and seeks to recover certain legal fees for pursuing her statutory accident benefit claim as well as her claim for Canada Pension Plan (“CPP”) disability benefits.
B. Background
[3] The action arises as a result of a motor vehicle accident on November 20, 2009. The action was commenced on November 16, 2011.
[4] At the time of the accident, the plaintiff was a passenger in a vehicle operated by the defendant Ragunath Bakthavachalu (“Bakthavachalu”) and insured by State Farm Mutual Automobile insurance (“State Farm”). State Farm was purchased by the Desjardins Group and the plaintiff’s accident benefits and tort claim were assigned to Certas Home and Auto Insurance Company. Both insurers are the same entity for the purposes of the proceedings and are referred to collectively as “Certas”.
[5] The Bakthavachalu vehicle was involved in a collision with a vehicle operated by the defendant Ratnakumar Kumarasamy (“Kumarasamy”) and insured by Wawanesa Mutual Insurance Company (“Wawanesa”).
[6] The plaintiff retained David Wilson to pursue her tort claim as well as her claim for accident benefits (“SABs”) under the Statutory Accident Benefits Schedule, O. Reg. 34/10, as amended (“the Schedule”), made under the Insurance Act, R.S.O. 1990, c. I.8. (“the Insurance Act”).
[7] Mr. Wilson also acted for the plaintiff in pursuing her CPP disability benefits.
[8] The plaintiff was 51 years old and employed at the time of the accident. She did not return to work after the accident. She was diagnosed with mechanical cervical pain; left anterior shoulder impingement syndrome; mechanical thoracic, lumbar, and sacral pain; and an exacerbation of underlying bilateral knee osteoarthritis.
[9] Certas was also the plaintiff’s SABs insurer. Certas ultimately accepted that the plaintiff met the designation for catastrophic impairment (“CAT designation”) under the Schedule.
[10] On the evidence before me, neither defendant co-operated with their respective insurers and both Certas and Wawanesa added themselves as statutory third parties to the tort action pursuant to s. 258.14 of the Insurance Act.
[11] By order dated September 10, 2019, of then Associate Justice Sugunasiri, the action was dismissed against Wawanesa without costs and without prejudice to the plaintiff seeking costs against the defendant Bakthavachalu and Certas.
[12] The plaintiff is seeking partial indemnity costs in the tort action in the amount of $84,075.00 plus HST and disbursement in the amount of $58,983.63 for a total of $153,988.38. The plaintiff is also seeking recovery of legal fees in the amount of $259,250.46 for pursuing her accident benefits, as well as $2,547.46 for pursuing CPP benefits, for a total of $415,786.17 in fees and disbursements.
C. Positions of the Parties
a. Position of the Plaintiff
[13] The offer to settle, dated January 4, 2022, was accepted about one month before a scheduled trial date in February 2022. The plaintiff argues that the case was complex and complicated by liability. Wawanesa took the position that the accident was staged. Certas ultimately agreed to admit liability on behalf of its insured, the defendant Bakthavachalu.
[14] Certas (read, the defendant Bakthavachalu) has not provided its own Bill of Costs.
[15] Certas’ only offer to settle at the mediation was a request for the plaintiff to pay Certas $19,000 in costs to resolve the lawsuit. The second offer to settle by Certas, which the plaintiff accepted, was made late in the litigation.
[16] The plaintiff argues that a major factor which resulted in her modest recovery for damages was due to the deductions for collateral benefits recovered through significant effort and costs.
[17] As for the claim for additional costs for pursuing her SABs and CPP benefits, the plaintiff argues that she was obliged to pursue these claims, and her successful recovery of benefits resulted in a substantial benefit to Certas. The SABs insurer only agreed that the plaintiff met the catastrophic designation after two years from when she applied.
b. Position of Certas
[18] Certas concedes that it is liable to pay the plaintiff’s costs of the action but disputes the quantum being claimed. During oral submissions, counsel argued that the plaintiff ought not to be awarded costs greater than the conventional amount because of the efforts put in by the plaintiff. Counsel argued that the bill of costs from Certas would be of no assistance to the court but conceded that the plaintiff expended more time in prosecuting the case than Certas did in defending it.
[19] Certas argues the costs and disbursements claimed in the tort action are excessive, unreasonable and disproportionate, particularly as Certas’ exposure to payment of damages as a statutory third party was limited to $200,000. Certas argues that it has a statutory right to recover from its former insured any damages paid. Counsel for Certas submits that there should be no costs to Certas where it has denied coverage under the auto policy and submits that Certas is not to be out of pocket.
[20] Certas disputes any liability to indemnify the plaintiff for costs with respect to recovery of her collateral benefits. It argues that the plaintiff’s receipt of accident benefits provided no net benefit to Certas in respect of the tort damages because Certas also paid the plaintiff’s accident benefits, so that the total amount paid by Certas would be unaffected by any statutory deductions. Certas further argues that, with respect to the $85,000.00 settlement on account of the plaintiff’s claims for damages, $40,000.00 was allocated to general damages and $45,000.00 was allocated to future losses or expenses, which, because of the lack of specificity, do not align with the “silos” of accident benefits to justify being characterized as having reduced the tort claims.
D. Disposition
[21] I make the following disposition:
i. The plaintiff is entitled to $84,075 as partial indemnity fees.
ii. The plaintiff is entitled to recovery disbursements of $58,983.63 on account of the tort claim.
iii. On the evidence, it is not appropriate for the plaintiff to recover legal costs incurred in pursuing her SABs.
iv. The plaintiff is not entitled to recover legal fees for the recovery of her CPP benefits.
E. Analysis
[22] Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, governs the court’s jurisdiction to award costs and 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.
[23] The relevant factors which the court must consider in exercising its discretion to award costs are set out in r. 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Those factors include the principle of indemnity, the amount claimed, the amount recovered in the proceeding, the complexity of the proceeding, and the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding, among other things. Neither side provided a Costs Outline or addressed the factors in their factum as they relate to this case, and, as this is a settlement, suggest that the factors should apply to a settlement by analogy or otherwise, though certain aspects of the factors were dealt with by both parties.
[24] This motion is really an assessment following settlement as opposed to an assessment at the conclusion of a proceeding. While it may well be that a Bill of Costs is not required, I disagree that a Costs Outline from the responding party would be of no assistance to the court.
[25] Turning to the principle of indemnity, counsel for the plaintiff is a senior member of the bar. The rates charged by the plaintiff’s lawyers ranges between $360 to $410 on a partial indemnity scale. Certas does not challenge the hourly rate or the years of call of the plaintiff’s lawyers. The hourly rates appear reasonable having regard to the number of years at the bar.
[26] Examination for discovery of the plaintiff was completed in April 2014. The examination for discovery of a representative of Certas (State Farm) was completed in November 2016, and of Wawanesa in June 2017. The parties participated in a mediation in October 2018.
[27] Certas ultimately agreed to admit liability for the accident after the defendant Bakthavachalu pled guilty to a charge under the Highway Traffic Act, R.S.O. 1990, c. H.8. I make no comment on the timing of Certas’ admission of liability given its position as a statutory third party and the particular limitations on a statutory third party who may ultimately seek reimbursement from its insured, as further discussed below. However, it is for that reason that I do not find it necessarily unreasonable for Certas not to have made any meaningful offer to settle at the mediation.
[28] Before addressing the arguments raised by Certas regarding its status as a statutory third party, the limits, and its right to recover amounts from its insureds, I will comment on the hours expended by Mr. Wilson on the tort file. Mr. Wilson’s Bill of Costs totals 212 hours (96.35 hours of time expended on the claim for damages, and 116 hours for correspondence, that is .1 hour per piece of correspondence). The Bill of Costs also includes 61.7 hours expended on the accident benefit claims (addressed more fully below). Correspondences are not docketed, but the plaintiff has 2475 pieces of correspondence with 1160 pieces allocated to the claim for damages and the remaining 1315 expended to pursue the SABs claim. The total time allocated to the SABs claim is 193.2 hours of time.
[29] Focusing solely on the tort claim, in my view the hours expended were reasonable and proportional to prosecute the tort action. The trial in this matter would have been a lengthy one, taking at least three weeks.
[30] Aside from challenging the plaintiff’s costs—primarily on the basis that Certas, as a statutory third party, is liable for only $200,000.00—Certas has not challenged the plaintiff’s position that this matter was complex and, with good reason. It was only in 2021, two years after applying, and after almost ten years of litigation, that the accident benefit carrier accepted that the plaintiff met the CAT designation. Catastrophic impairment is defined by the Schedule, and such a designation affords the plaintiff access to enhanced benefits from the SABs carrier, which reduces a tort defendant’s exposure for tort damage. Had the plaintiff proceeded to trial Certas would have had the benefit of deducting her accident benefits received for income replacement benefits against any award for income loss, attendant care and medical and rehabilitation benefits, against any claim for healthcare expenses or future care costs, and loss of housekeeping and handyman capacity against any benefits received from her AB carrier. Moreover, Certas would be able to ask for an assignment or trust over the ongoing benefits that the plaintiff receives or the future benefits that are available to her that she may be entitled to receive. I therefore reject Certas’ argument about the lack of specificity in the settlement – that is not the barometer. Had the matter proceeded to trial, the jury would be asked to award damages, for each head of damages, based on gross numbers. It is the trial judge who would have to consider the deductibility of any collateral benefits after the fact.
[31] I also do not accept Certas’ position that the plaintiff’s costs are excessive because the same insurer happened to be the tort (liability) insurer and the SABs insurer. Such an argument ignores the fact that different parts of coverage are engaged under the Automobile Insurance Policy (O.A.P. 1). Moreover, accepting Certas’ position would result in plaintiffs who are passengers or pedestrians, who look to the tortfeasor’s policy for coverage for accident benefits, or who are claiming accidents from their own insurer as result of motor vehicle accidents involving uninsured or unidentified motorists, to be faced with the same argument. That is because, in those cases, the same insurer may potentially be called upon to respond to a tort claim and respond to claims for accident benefits. Certas’ argument also ignores the established jurisprudence that, absent the consent of the plaintiff, the tort (side) has no access to the plaintiff’s file for the SABs claim. In the result, the fact that the plaintiff’s SABs insurer is the same as the third-party liability insurer is not a relevant factor in the assessment of costs.
[32] In my view, Certas cannot shield itself against the plaintiff’s costs on the basis that it is a statutory third party and is only liable for $200,000.00.
[33] Pursuant to subsection 258(14) of the Insurance Act, an automobile liability insurer may add itself as a statutory third party to an action in which its insured is being sued, where the insurer alleges that indemnity is forfeited under the contract, whether or not that action is defended by its insured. The action is the plaintiff’s tort action against Certas’ insured, not an action by the plaintiff to have the insurance money payable under the contract applied towards satisfying her judgment (see s. 258(1) of the Insurance Act). The jurisprudence makes it clear that a separate proceeding is contemplated, though, for practical purposes, that may not occur and an insurer, just as in this case, may simply settle with the plaintiff without having a judgment.
[34] The jurisprudence makes it clear that when added under s. 258(14) of the Insurance Act, an automobile liability insurer can suspend the determination of coverage as between the insurer and its insured, while, at the same time, availing itself of the rights prescribed in s.258(15). Upon being added as a statutory third party, the insurer only has the rights prescribed by s. 258(15) of the Act, which permits the insurer to participate in the action and defend against the plaintiff’s claim, as it may be faced with a demand to pay the judgment: see, Bortuzzo v. Barna, 1986 CanLII 2748 (ON SC), 54 O.R. (2d) 598 (S.C.O.). That is to say, the statutory third party may contest liability and the amount of any claim, deliver pleadings, have production and discovery, and examine and cross-examine witnesses at the trial to the same extent as if it were a defendant in the action: s. 258(15). It can do these things without prejudicing the insurer’s right to ultimately deny coverage to its insured. The relevant provisions set out that the statutory third party is not contesting liability and damages against the insurer, but rather against any party claiming against the insured. The text of sections 258(14) and (15) read as follows:
Insurer may be made third party
(14) Where an insurer denies liability under a contract evidenced by a motor vehicle liability policy, it shall, upon application to the court, be made a third party in any action to which the insured is a party and in which a claim is made against the insured by any party to the action in which it is or might be asserted that indemnity is provided by the contract, whether or not the insured enters an appearance or defence in the action. R.S.O. 1990, c. I.8, s. 258 (14).
Rights of insurer
(15) Upon being made a third party, the insurer may,
(a) contest the liability of the insured to any party claiming against the insured;
(b) contest the amount of any claim made against the insured;
(c) deliver any pleadings in respect of the claim of any party claiming against the insured;
(d) have production and discovery from any party adverse in interest; and
(e) examine and cross-examine witnesses at the trial,
to the same extent as if it were a defendant in the action.
[35] I also do not accept Certas’ argument that its exposure to the plaintiff’s damages is limited to $200,000.00. Section 251(3) of the Insurance Act provides that the minimum liability limit (of an auto policy) is $200,000 exclusive of interest and costs (“the statutory limits”). Section 251(3) in conjunction with s. 258(4) of the Insurance Act impose an absolute liability on the insurer up to the statutory limits for the claims of an accident victim even where there is a cancellation, assignment, breach of the policy, default or contravention of the Criminal Code or other statute by the insured. Section 258(11) permits the insurer to raise any defence mentioned in s. 258(4) that it is entitled to set up against its insured, to a judgment creditor (plaintiff) in excess of the statutory limits set out in s. 251.
[36] The relevant provision of s. 258(11) provides as follows:
Defence where excess limits
(11) Where one or more contracts provide for coverage in excess of the limits mentioned in section 251, except as provided in subsection (12), the insurer may,
(a) with respect to the coverage in excess of those limits; and
(b) as against a claimant,
avail itself of any defence that it is entitled to set up against the insured, despite subsection (4)
[37] Since s. 258(1) speaks to a person having a judgment, that section in tandem with s. 258(11) contemplates a separate proceeding. To avail itself of the defences available under s. 258(4) and limit its exposure in accordance with s. 258(11) to a judgment creditor (plaintiff), a separate proceeding is required where Certas may set up any defences it may have against its insured to the judgment creditor/plaintiff. An established body of cases have made it clear that the determination of coverage is suspended once an automobile liability insurer avails itself of the statutory mechanism to become a third party in the tort action against its insured, who is a defendant in the action.
[38] Certas also asserts that it is not to be out of pocket and is entitled to seek reimbursement against its insured. While that may well be the case, in my view, Certas’ right to seek reimbursement has no bearing on the liability of its insured for costs. A statutory third party may seek reimbursement from its insured pursuant to s. 258(13) of the Act, for any amounts the insurer is obliged to pay a judgment creditor by virtue of the absolute liability provision of the Act. A judgment is a pre-requisite. There is no evidence before me that there is a judgment against the defendant Bakthavachalu, nor that the defendant consented to the settlement. Absent the consent to judgment by the defendant, Certas has no right to seek reimbursement against its insured under s. 258(13): see Lockhard v. Quiroz (2006), 2006 CanLII 81801 (ON CA), 83 O.R. (3d) 797 (C.A.).
[39] As noted by the Ontario Court of Appeal in Lockhard, at para. 6:
The plain language of s. 258(1) provides for the application of insurance money in or towards satisfaction of a judgment recovered against the insured, in this case, the appellant. Absent an agreement between the insurer and the insured to the contrary as, for example, concerning the application of insurance proceeds (see Co-operative Fire & Casualty Co. v. Ritchie, 1983 CanLII 155 (SCC), [1983] 2 S.C.R. 36, [1983] S.C.J. No. 60), the recovery of such a judgment is a prerequisite to any entitlement under s. 258(1) to access available insurance moneys.
[40] At the assessment, counsel for the plaintiff thoroughly reviewed the time spent on the tort action. Counsel for Certas did not challenge the costs being sought by the plaintiff to pursue Wawanesa, the time incurred by an agent, Mr. Kazman, or the costs being sought as a result of the orders of then Associate Judge Sugunasiri.
[41] Given the nature of the plaintiff's injuries, the timing of when she was accepted as CAT (2021), and the extent of the damages claimed, based on the reports filed, I reject Certas’ argument that a “conventional” amount should be awarded, whether that be 15 per cent of the amount of the claims settled, or slightly increased because of the proximity to trial. The plaintiff sustained serious injuries in the accident. Counsel for the plaintiff thoroughly prepared the case for trial with investigations, assessments and reports being completed by numerous experts in order to prove various heads of damages. In my view, the amount sought by the plaintiff for costs is fair and reasonable, and more than proportional when considering the plaintiff’s gross damages. As such, the plaintiff is entitled to $84,075 as partial indemnity fees and recovery disbursements of $58,983.63 on account of the tort claim.
a. Costs for Recovery of Accident Benefits
[42] Counsel for Certas submits that the plaintiff is obligated to make the application under the Insurance Act, that the statutory third party derives no benefit, and therefore the costs ought not to be recoverable against Certas. I disagree and agree with the plaintiff that the defendant in fact derived a substantial benefit from the fact that the plaintiff was declared to meet the CAT designation and thereafter recovered a substantial amount in SABs. As a result of the plaintiff pursuing her SABs, Certas was able to take advantage of a reduction in exposure to damages. The plaintiff’s economic expert calculated her past loss of income in the amount of $221,581 and her future claim in the amount of $29,371. However, the net amount was only $42,809.00 after deducting $208,143 on account of collateral benefits received. The plaintiff obtained a future care costs report, dated July 16, 2021, which contemplates costs of care, including for a personal support worker, in excess of one million dollars, certain fixed costs of about $68,000.00, and some recommended annual recurring costs of about $57,000.00. As a result of her CAT designation, she has been paid medical benefits in excess of $100,000.00 ($122,513), retroactive housekeeping in the amount of $64,271, attendant care benefits in the amount of $668,727 (as of March 2022) and is being paid monthly attendant care benefits in the amount of $6,000. In addition to the above payment, the SABs carrier agreed to pay $5,522.54 per month for attendant care from March 2021 and housekeeping benefits in the amount of $100.00 per month per week.
[43] In most cases, given the interaction between the tort and SABs claims, a tort defendant will derive some benefit from the plaintiff pursuing their accident benefit claims. However, this is just one factor to be considered.
[44] Certas asserts that there was no adjudication of the SABs, merely a filing of an application with the Financial Services Commission of Ontario (“FSCO”), a pre-hearing conference with FSCO, and a resolution of the issues in dispute. As for the CAT determination, Certas argues that the SABs carrier conceded that the plaintiff met the catastrophic designation without any adjudication on the merit. Counsel argues that the application to the License Appeal Tribunal (“LAT”) was a routine administrative procedural matter, and thereafter counsel only attended a case conference and negotiated a settlement.
[45] Certas submits that the amount claimed by the plaintiff in fees for pursuing the SABs bears no relation to partial indemnity costs and is a private contract between the plaintiff and her counsel. Certas argues it would be unfair to hold it accountable, especially as the plaintiff cannot recover costs at the LAT (except for vexatious, frivolous, or unreasonable conduct or bad faith). Counsel for State Farm argued that there should be no costs allowed for the recovery of SABs, as, although the plaintiff would be permitted to indirectly recover the costs, she is not otherwise able to recover at the LAT except under extraordinary circumstances.
[46] Finally, Certas argues that the statutory third party derived no benefits from the proceedings because it was paying the accident benefits, and it is not a defendant in the action but a statutory third party.
[47] I agree with Certas that the costs associated with the first attendance at FSCO should not be recoverable. For one, at the time, the Schedule permitted expenses to be recovered and, indeed, the plaintiff recovered part of her legal fees and disbursements from the SABs insurer. For another, in Cadieux v. Cloutier, 2018 ONCA 903, at para. 130, the Ontario Court of Appeal cited with approval, D.A. Wilson J.’s statement in Hoang v. Vicentini, 2014 ONSC 5893, that “the tort defendant should not be required to pay the costs of the plaintiff’s pursuit of SABs as a general principle or as a matter of course.”
[48] In Cadieux, at para. 132, the Court of Appeal set out several factors to be considered by a trial judge in determining whether to award costs to a plaintiff for the recovery of SABs:
i. the fees and disbursements actually billed to the plaintiff in pursuit of the SABs;
ii. relevant factors in rule 57.01, including whether the litigation of the SABs claim involved particular risk or effort;
iii. the proportionality of the legal costs and expenses incurred by the plaintiff to the benefit of the SABs reduction to the defendant;
iv. whether the SABs were resolved by way of settlement or by arbitration;
v. any costs paid as a result of the settlement or arbitration;
vi. whether all or any portion of the costs were incurred as a result of unusual or labor-intensive steps that should not reasonably be visited upon the tort defendant;
vii. whether or not plaintiff's counsel was acting on a contingent fee basis and, if so, the terms of the arrangement; and
viii. the overall fairness of the allocation of the costs of pursuing SABs as between the plaintiff and the SABs insurer and as between the plaintiff and the tort insurer.
[49] The plaintiff proceeded to two arbitrations. The fees associated are $25,401 for the first arbitration and $593,250 for the second. In the first, the plaintiff disputed a refusal to pay attendant care benefits and some treatment plans, which was the subject of an arbitration. She recovered costs of $18,000 from the SABs carrier and settled that claim for $75,346. In my view, it is not appropriate to fix Certas with the balance of the fees of $19,125.46. First, the plaintiff has not addressed the factors above set out in Cadieux, save for the argument that the tort defendant has received a substantial benefit. While that is a factor, it is not the only factor, nor does it predominate over all the other factors.
[50] The plaintiff’s second arbitration related to the claim for CAT designation as well as a claim for attendant care benefits and housekeeping. The plaintiff was enormously successful in the second arbitration. The SABs carrier paid $2,123,574.72 to satisfy arrears, with a little over one million dollars of that amount allocated to interest on overdue payments. The following was achieved by the plaintiff as a result of filing the second application for arbitration:
i. She was ultimately accepted as CAT
ii. The insurer paid arrears of attendant care benefits in the amount of $564,435.99
iii. She was entitled to housekeeping benefits in the amount of $139,267.30
iv. She was entitled to interest on overdue housekeeping benefits in the amount of $49,571.43
v. She was entitled to interest on overdue attendant care benefits in the amount of $1,363,800.00
vi. She was entitled to the cost of occupational therapy in-home assessment in the amount of $6,500
[51] While the plaintiff identified the test in Cadieux, the plaintiff did not, in its submissions or its factum, address most of the factors identified by the Court of Appeal. This is an issue for the plaintiff, because these factors need to be addressed for the court to determine whether to award the costs of seeking the SABs. In supplementary reasons released by the Ontario Court of Appeal, Cadieux v. Cloutier, 2019 ONCA 241, the Court refused to award costs on this basis, noting, at paras. 11 and 12:
[11] At para. 130 of this court’s reasons, we noted that “the tort defendant should not be required to pay the costs of the plaintiff’s pursuit of SABs as a general principle or as a matter of course.” We set out, at para 132, a number of factors that a trial judge might consider in determining whether to award such costs and, if so, the amount to be included. We invited the parties to make submissions as to how these factors applied on the facts of this case.
[12] Neither party made a serious effort to address this issue in their written submissions.
[52] The plaintiff relies on Carr v. Modi, 2016 ONSC 1300, Carr v. Modi, 2016 ONSC 7255, Ananthamoorthy v. Ellison, 2013 ONSC 4510 and Moodie v. Greenaway, 1997 O.J. No. 6525, aff’d on appeal, 1999 CanLII 18662 (ON CA), 122 O.A.C. 90 (C.A.), for the proposition that additional costs are appropriate when the tort defendant derives a benefit from the plaintiff’s receipt of accident benefits. In this case, I agree with the plaintiff that the statutory third party derived a substantial benefit from the plaintiff pursuing her SABs claims. If the plaintiff had proceeded to trial, gross damages would be awarded (see Cadieux). However, the Court of Appeal made it clear in Cadieux, that the question of whether the tort defendant derives a benefit is just one of the factors to be considered.
[53] The plaintiff also relies on the decisions by D.A. Wilson J., Hoang v. Vicentini, 2014 ONSC 5893 and Ryan v. Rayner, 2015 ONSC 3310, for the proposition that there are no hard and fast rules, and where the court was unaware of the merits of the pursuit of benefits where counsel had taken considerable labour-intensive steps, the fees associated with pursuing accident benefits could not be claimed. In my view, these cases pre-date Cadieux, which sets out the factors to be considered by the court in determining whether it is appropriate for a tort defendant to pay additional costs to the plaintiff for recovery of her accident benefits.
[54] Counsel for the plaintiff has provided accounts to his client, and dockets, which are not as detailed. The plaintiff is seeking reimbursement for 40% of the account rendered to her of $593,250.00 from Certas or $237,300.00, or $259,250.46 with HST.
[55] The plaintiff successfully resolved her claim for retroactive SABs for housekeeping, attendant care, and some medical expenses and was put back on claim. The matter resolved short of arbitration, though it is clear that a significant amount of time was expended in pursuing the SABs claims. However, there is no explanation from counsel as to why the application for a CAT designation was made only in 2018, seven years after she would have been eligible to receive CAT benefits if she met the designation or why a tort defendant should be exposed to legal fees for that period of time when there is no actual dispute of the SABS claims. It took two years, after the CAT application for the SABs insurer to accept her as CAT. The arbitration was not heard on its merits. Contrary to the directions in Cadieux, the plaintiff has not addressed the relevant factors in rule 57.01, including 1) whether the litigation of the SABs claim involved particular risk or effort, 2) the proportionality of the legal costs and expenses incurred by the plaintiff to the benefit of the SABs reduction to the defendant, 3) whether all or any portion of the costs were incurred as a result of unusual or labor-intensive steps, and 4) the overall fairness of the allocation of the costs of pursuing SABs as between the plaintiff and the SABs insurer and as between the plaintiff and the tort insurer.
[56] While the plaintiff would not have recovered costs for the second arbitration from the SABs insurer, she recovered over one million dollars in interest on overdue payments, which, in my view, should be considered in the circumstances given the significant delay in attaining a CAT designation.
[57] As stated by the Court of Appeal, there is no general rule requiring that the plaintiff will always be awarded those costs. It is a fact specific determination. The Court has said out the guidelines to assist a judge faced with demand for additional costs. I am not satisfied, on the evidence, that this is a case that warrants departing from that dictum.
Costs for Recovery of CPP Benefits
[58] The plaintiff argues that there should be no difference in principle between the recovery of SABs and CPP benefits, which also may inure to the benefit of a tort defendant. I disagree. Section 258.3(1) of the Insurance Act provides that an action for loss or damage from bodily injury or death may not be commenced unless the plaintiff has applied for statutory accident benefits. There is no equivalent positive requirement imposed on a plaintiff to pursue CPP benefits, or any other collateral benefits for that matter. Moreover, in cases where a plaintiff is receiving income replacement benefits under the Schedule, receipt of other collateral benefits such as CPP or disability benefits assists the statutory accident benefit carrier, who can claim the credit first. In this case, the accident benefit carrier was prevented from clawing back more than twelve months due to a limitation period, and Certas was the beneficiary of the excess, but there should be bright lines demarking whether the benefits are claimable or not. In my view, even if the plaintiff was not receiving income replacement benefits it is not appropriate to award legal fees for recovering CPP benefits as those costs are not truly incidental to the proceeding, and a defendant (statutory third party) has no control over the dispute as between the plaintiff and the other parties.
A.P. Ramsay J.
Date: December 12, 2022