Court File and Parties

COURT FILE NO.: CV-10-00395662-0000 DATE: 20230523 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: HELEN FRANCES, Plaintiff AND: TTC INSURANCE COMPANY, TORONTO TRANSIT COMMISSION, PAUL MANHERZ, PETER ASHBOURNE, JULIE STAFFORD, JOHN DOE, FARUK HATIA and THE TORONTO POLICE SERVICES BOARD, Defendants

BEFORE: VERMETTE J.

COUNSEL: Adam Romain, for the Plaintiff Chad Townsend, for the Defendants TTC Insurance Company, Toronto Transit Commission, Paul Manherz, Peter Ashbourne, Julie Stafford and Faruk Hatia

HEARD: In writing

Endorsement as to Costs

[1] On January 31, 2023, I released an endorsement (2023 ONSC 780) dismissing the Defendants’ [^1] appeal from the Order of Master Wiebe (now Associate Justice Wiebe) dated August 16, 2021 and denying leave to appeal from his costs decision dated November 25, 2021.

[2] The parties were not able to agree on costs and have delivered costs submissions.

Positions of the parties

a. Position of the Plaintiff

[3] The Plaintiff’s position is that she was wholly successful in the appeal and that costs should flow therefrom. She submits that a substantial indemnity costs award of $40,000.00 in her favour would be fair, reasonable and appropriate.

[4] The Plaintiff states that the appeal was important to her given the serious allegations that have been made against her and her inability to complete the examinations for discovery. She notes that the appeal was long and complex and more complicated than the typical appeal of an undertakings and refusals motion. According to the Plaintiff, the sheer number of criticisms of the Associate Judge’s decisions increased the complexity of the appeal and unnecessarily lengthened it. She argues that the Defendants must reasonably have expected that their attempt to relitigate so many issues on appeal would result in increased costs for the Plaintiff.

[5] The Plaintiff submits that the Defendants’ costs outline is not credible. She points out that in-house counsel and staff do not docket their time and that the hours set out in the Defendants’ costs outline are therefore only a guestimate made conservatively due to the high hurdle the Defendants knew was required on appeal. The Plaintiff argues that the Defendants expended significantly more time on this appeal than their costs outline discloses and, therefore, their costs outline should not be used as a benchmark to measure the amount of costs that they expected would flow from this appeal.

[6] The Plaintiff served a written offer to settle on October 5, 2021, and she asks that her offer to settle trigger costs consequences from the date of the offer. The Plaintiff’s offer to settle provides that: (a) the Defendants would abandon all grounds of appeal; (b) if the Defendants accepted the offer on or before 10 a.m. on October 8, 2021, then no costs would be paid for the appeal; and (c) if the offer was accepted after 10 a.m. on October 8, 2021, then the Defendants would pay to the Plaintiff her costs incurred before the date of the offer on a partial indemnity basis and pay her costs after the date of the offer on a substantial indemnity basis.

[7] The Plaintiff argues that, when viewed as a whole, from the Defendants’ improper conduct at discoveries to the Defendants maintaining untenable positions in their expansive grounds of appeal, the Defendants’ approach to this matter was to ensure that the Plaintiff suffer a considerable financial defeat even if she enjoyed success on appeal. She also argues that the appeal was about the Defendants trying to save money by not having to pay the large costs award made below and not having to incur the costs of re-attending a further week of discoveries at their own expense.

[8] While the Plaintiff seeks costs on a substantial basis in the amount of $40,000, her costs outline reflects costs on a partial indemnity basis in the amount of $50,187.82 and costs on a substantial indemnity basis in the amount of $61,759.02.

b. Position of the Defendants

[9] The Defendants’ position is that an appropriate costs award would be between $10,000 and $20,000 on a partial indemnity basis. Their own costs outline is in the amount of $11,074 on a partial indemnity basis. It includes the time of one lawyer: 36 hours at a $250 partial indemnity rate. The description of the work done is as follows: “Draft appeal record, research law, draft factum and reply factum.”

[10] The Defendants submit that the Plaintiff did not comply with Rule 57.01(6) of the Rules of Civil Procedure as she did not serve a costs outline prior to the hearing. I note, however, that the Plaintiff’s costs outline was sent by e-mail to counsel for the Defendants very shortly (less than 30 minutes) after the end of the hearing. I also note that the Defendants’ costs outline was sent to the Plaintiff’s lawyer less than 1.5 hours before the beginning of the hearing.

[11] The Defendants point out that the Plaintiff subsequently served a second costs outline which claims higher costs than the first costs outline. A cursory review of the Plaintiff’s second costs outline reveals that the differences between the two are as follows: (1) the second costs outline includes the time spent on the supplementary written submissions that were filed at the request of the Court after the hearing of the appeal; (2) the lawyer’s fee for appearance was reduced; and (3) HST, which had been omitted in the first costs outline, was added. The time spent on all the steps taken before the hearing did not change.

[12] The Defendants also point out the differences between their own costs outline and the Plaintiff’s costs outline, notably the significant differences in the number of hours spent, the hourly rates and the total amount claimed.

[13] The Defendants emphasize that this was a two-hour appeal of an Associate Judge’s order, and they state that they did not appeal every aspect of the order, contrary to the Plaintiff’s submission. I note that the hearing of the appeal took more than two hours.

[14] The Defendants deny that they adopted an approach intended to inflict financial defeat and financially punish without merit the Plaintiff. They express the view that the Plaintiff’s action is meritless.

[15] The Defendants submit that the Plaintiff should not be compensated for costs to the extent that time was spent on written and oral submissions that were not needed to decide the appeal. The Defendants state that the Plaintiff decided to oppose a reasonable request for an adjournment by the Defendants and forced a case conference as a result. I note, however, that the endorsement of Justice Morgan dated June 1, 2022 does not reflect an opposition to the adjournment, although terms were imposed: the new appeal date was made peremptory on the Defendants and Justice Morgan reserved the costs of the appearance to the judge hearing the appeal. Further, Justice Morgan’s endorsement shows that other issues were addressed at the case conference. Among other things, the parties disagreed as to whether transcripts needed to be filed, and Justice Morgan agreed with the Plaintiff that they did not.

[16] The Defendants argue that there are three fatal flaws to the Rule 49.10 argument made by the Plaintiff: (a) the offer to settle contravened Rule 49.10(2)(b) as it was made on October 5, 2021 and expired three days later on October 8, 2021, whereas the hearing was not even set at that point and the costs decision had not been rendered; (b) the wording of Rule 49.02(2) states that the Rule is subject to the necessary modifications for motions and the necessary modifications are that the Rule only applies to the moving party; and (c) the Plaintiff’s offer was not a compromise offer as it demanded abandonment of all issues.

c. The Plaintiff’s reply submissions

[17] After receipt of the Defendants’ costs submissions, the Plaintiff sent a one-page reply to my assistant and requested leave to deliver such. The purported attachments to the reply submissions were not included. The Plaintiff is granted leave to deliver the reply submissions (without the attachments that were not provided) which were very short and within the appropriate scope of reply. However, I note that the better practice is to request leave to deliver reply submissions before sending the submissions themselves. The points made in the reply submissions have been incorporated in the summary of the parties’ submissions above.

Discussion

a. Preliminary issues

[18] I reject the Defendants’ arguments based on the timing of the service of the Plaintiff’s costs outline and the fact that a second costs outline was served. The first costs outline was served very shortly after the end of the hearing and, in any event, the Plaintiff is seeking a lower amount of costs than what is reflected in her costs outline. As for the second costs outline, it was necessary in order to address the costs of the additional submissions requested by the Court.

[19] With respect to the attendance before Justice Morgan, it is my view that it is appropriate to order the Defendants to pay the costs of this attendance. Although counsel for the Defendants may not have been personally responsible for the fact that a trial in which he was involved was called, the adjournment was required because of the Defendants, not the Plaintiff. Further, the endorsement of Justice Morgan shows that the case conference was necessary in order to deal with a number of issues before the hearing of the appeal.

b. Offer to settle / Scale of costs

[20] An offer to settle need not contain an element of compromise to qualify as an offer that will attract costs consequences under Rule 49.10 of the Rules of Civil Procedure. However, the court has a very narrow discretion to deny the costs consequences of this Rule and may consider the absence of compromise together with other factors when considering whether to depart from the normal rule imposing costs consequences. See OPB Realty Inc. v. Canada International Medical Suppliers Company Limited, 2015 ONSC 6 at para. 7 and Walker Estate v. York Finch General Hospital (1999), 43 O.R. (3d) 461 (C.A.).

[21] In the present case, I exercise my discretion to deny any costs consequences that would be applicable under Rule 49.10. The Plaintiff’s offer to settle only contained a minimal element of compromise, i.e., no costs if the offer was accepted within three days. However, the offer was made shortly after the appeal was brought, at a time when the Plaintiff would not have incurred any significant costs. Further, while the offer remained open until the commencement of the appeal, there was no benefit in accepting the offer after 10 a.m. on October 8, 2021. I also note that the offer was made before the real scope of the appeal was known as it was made before the Associate Judge released his decision on costs.

[22] Aside from Rule 49.10, the Plaintiff has not argued any other ground to support an award of costs on a substantial indemnity basis. As a result, the applicable scale of costs is partial indemnity.

c. Quantum

[23] While the Plaintiff’s costs outline reflects higher amounts, her written submissions state that she seeks costs on a substantial indemnity basis in the amount of $40,000.00. As stated above, I have determined that the appropriate scale of costs is partial indemnity.

[24] Costs awarded on a substantial indemnity scale are to be determined on the basis of applying a factor of 1.5 to the amount of the partial indemnity costs: see definition of “substantial indemnity costs” in Rule 1.03(1) of the Rules of Civil Procedure and Akagi v. Synergy Group (2000) Inc., 2015 ONCA 771 at paras. 52-57. In light of the foregoing, the partial indemnity figure that corresponds to $40,000 on a substantial indemnity basis is $26,667. If one takes into account the partial indemnity rate of the Plaintiff’s counsel set out in the Plaintiff’s costs outline as well as HST, costs in the amount of $26,667 represent approximately 65 lawyer-hours.

[25] While the partial indemnity rate of the Plaintiff’s lawyer is higher than the rate used by the Defendants’ lawyer, I find that it is reasonable and that such a rate should have been within the reasonable expectations of the Defendants.

[26] I also find that the number of hours underlying the costs sought by the Plaintiff (i.e., approximately 65 hours) is reasonable in light of the size of the record, the number of issues raised by the Defendants on the appeal, the materials filed and the manner in which this litigation has been conducted. I agree with the Plaintiff that the time reflected in the Defendants’ costs outline is not credible. [^2] The Defendants’ costs outline contains only 36 hours. However, counsel for the Defendants has indicated that he does not have dockets. I note that the Defendants prepared: (a) a Notice of Appeal and an Amended Notice of Appeal listing numerous grounds of appeal; (b) a voluminous Appeal Record (approximately 5,500 pages); (c) a 29-page Factum with 62 footnotes; and (d) an 8-page Reply Factum in response to the 26-page Factum of the Plaintiff which has 98 footnotes. In addition, counsel had to prepare for the hearing of the appeal which took almost three hours. I also note that the Defendants’ costs outline does not include time spent with respect to the attendance before Justice Morgan and the additional written submissions that were filed after the hearing of the appeal.

[27] Accordingly, I find that the appropriate award of costs on a partial indemnity basis is in the amount of $26,500.

Conclusion

[28] Taking the foregoing into account, as well as the factors set out in Rule 57.01(1) of the Rules of Civil Procedure and the reasonable expectations of the parties, I find that the fair and reasonable award of costs in favour of the Plaintiff is on a partial indemnity basis in the all-inclusive amount of $26,500.00. In my view, this is an amount that the Defendants should reasonably have expected to pay in the event that they were unsuccessful on the appeal.

[29] The costs are to be paid by the Defendants (excluding the Toronto Police Services Board) to the Plaintiff within 30 days.

Vermette J. Date: May 23, 2023

[^1]: The defendant Toronto Police Services Board did not participate in the appeal [^2]: I note that a similar finding was made by the Associate Judge with respect to the costs outline that was before him.