Court File and Parties

Peterborough Court File No.: CV-18-0025-00 Date: 2024-05-06 Ontario Superior Court of Justice

Between: Ronald Stewart, Plaintiff And: Rae-Leigh Blaschuk and Tammy Marion Gushue, Defendants

Counsel: William C. Wolfe, for the Plaintiff R. Steven Baldwin, for the Defendants

Heard: In Writing

Costs Decision

Sutherland J.:

Overview

[1] On December 7, 2023, a jury awarded the Plaintiff $175,000 for general damages and gross past loss of income of $125,569. On March 8, 2024, I released an Endorsement following my Decision on the threshold motion. In that Endorsement, if the parties were unable to resolve costs, I set out a timetable for delivery of written submissions.

[2] I have received written submissions from the Plaintiff and the Defendants.

[3] Below is my Decision on Costs.

Legal Principles

[4] Pursuant to the Rules of Civil Procedure [1], namely Rule 57.01(2), a presumption exists that costs should be awarded to the successful party. Rule 57.01 sets out factors the Court may take into consideration when the Court exercises its discretion to award costs.

[5] Rule 57.01(4) indicates that nothing in Rules 57.02 to 57.07 affects the Court’s ability to award costs under section 131 of the Courts of Justice Act [2]. The subrule sets out five ways the Court can award costs.

[6] The Court of Appeal in the Decision of Serra v. Serra [3] confirmed that the modern costs rules are designed to encourage and foster three fundamental purposes, namely, to partially indemnify successful litigants for the costs of litigation, to encourage settlement and to discourage and sanction inappropriate behaviour by litigants bearing in mind that the award should reflect what the Court views as a fair and reasonable amount that should be paid by the unsuccessful party.

[7] Further, the Court of Appeal also indicated in the Decision of Boucher et al. v. Public Accountants Council for the Province of Ontario [4] and Delellis v. Delellis [5], that when assessing costs, it is not simply a mechanical exercise. It is not simply a calculation of hours spent and hourly rates, but the Court is to take a proportional methodology. The overall objective is to fix an amount of costs that is fair and reasonable for the unsuccessful party to pay in the circumstances of the case.

[8] Rule 49 of the Rules of Civil Procedure deals with offers to settle. Rule 49.03 sets out the time for making an offer to settle. Rule 49.10 sets out the consequences for failure to accept an offer to settle by either the plaintiff or the defendant. Rule 49.13 provides the Court with discretion to consider any offer to settle made in writing, the date of the offer was made and the terms of the offer.

Position of the Parties

[9] The Plaintiff requests costs on an actual indemnity basis in the amount of $337,198.65 for fees and $63,392.30 for disbursements for a total of $400,590.95. [6] The Plaintiff submits that he was completely successful. The Plaintiff further submits that he provided a Rule 49 Offer to Settle that was twice what he was awarded by the jury. The Offer to Settle was in the amount of $100,000 plus costs, with partial indemnity for costs up to September 15, 2023, and substantial indemnity for costs thereafter. The amounts awarded by the jury totalled $234,256.43 taking into consideration prejudgement interest of 1.3% from the date of notice of the action (November 17, 2016) and the amount for collateral benefits received of $49,375.12 and 30% deduction of the past loss income amount. This leaves a total of $40,623.18. The Plaintiff points out that the Defendants provided an Offer to Settle dated November 7, 2019, in the amount of $10,000 plus partial indemnity of costs to the Plaintiff up to the date of the Offer to Settle and substantial indemnity of costs to the Defendants thereafter. This Offer to Settle was not changed during the proceeding. The Plaintiff also directed the Court to the following cases: Persmpieri v. Hobbs [7], Corbett v. Odorica [8], Barry v. Anatharajah [9] and Accurate General Contracting v. Tarasco [10] in support of his argument that the Defendant “played hardball” and as such the Court should provide costs to the Plaintiff at the highest level without consideration of the principle of proportionality.

[10] The Defendants do not disagree that the Plaintiff was the successful party but argues that the Plaintiff is not entitled to actual indemnity for costs. The Defendants calculate the Plaintiff’s award in the sum of $234,308.21. The Defendants contend that given the complexity of the trial and the time spent, the Plaintiff should be awarded costs in the amount of $145,000 plus HST in fees and $50,000 in disbursements. On disbursements the Defendants contend that the amounts charged by Dr. Tavazzani are excessive. Being paid for his reports and attendance at trial in the sum of $21,800 for two days is excessive. Plus, no evidence was called on the home assessment and the amount of $3,800 should be deducted.

Analysis

[11] There is no question that the Plaintiff was the successful party.

[12] There is also no question that the Plaintiff received a more favourable result than the amounts for which he was willing to accept as set out in his Offer to Settle. Thus, the consequences of Rule 49.10 apply.

[13] The question for the Court to determine is what a fair and reasonable amount for the Defendant is to pay the Plaintiff for costs.

[14] In ascertaining the fair and reasonable amount, I have reviewed the cases provided by the Plaintiff. I am in agreement that in the circumstances where the Plaintiff has been provided with little alternative but to give up completely or proceed to trial, the principle of proportionality has less influence. The “hard ball” position of the Defendant provided the Plaintiff with little alternative: accept the minimal offer put forth by the Defendants or go to trial. I agree with the sentiments of Justice McCarthy as provided by the Plaintiff, at paragraph 16 of Accurate General Contracting v. Tarasco:

[16] An over-emphasis on proportionality may serve to under-compensate a litigant for costs legitimately incurred. Assuming, as is often the case, that a successful Plaintiff’s lawyer is working on an actual fees basis (as opposed to a contingency agreement), this will inevitably result in the Plaintiff having to fund her successful litigation out of the proceeds of judgment that a court found she was entitled to. This is patently unfair to litigants who have been wronged and who choose to invest their hard-earned resources into pursuing a legitimate claim. One does not say to one’s lawyer, “I have only a modest claim. I am instructing you to do a mediocre job in advancing it.” Few litigation lawyers would be attracted to a litigation landscape where they could not recommend giving a matter the time and effort it requires to be properly advanced because the principle of proportionality predestines a costs award that promises to turn a successful result in court into a net financial loss for their client. A pattern of such outcomes would result in an unintended but nonetheless real denial of access to justice; it will send a message to litigants that it is not worth one’s while to pursue legitimate claims in court because one cannot possibly make it cost effective to do so. This is a denial of justice in the most fundamental sense. It tends to encourage those resisting legitimate but modest claims to take unreasonable positions, the logic being that any exposure to costs will be limited because of the size of the claim, regardless of the time and expense necessary to extract a judgment. At the same time, legitimate claimants will be left without cost effective remedies….

[15] In addition, I am cognizant of the Ontario Court of Appeals statements on the purpose of costs, that is, to partially indemnify successful litigants for the costs of litigation, to encourage settlement and to discourage and sanction inappropriate behaviour by litigants.

[16] I agree with the Plaintiff that the Defendants took a very hard line in this proceeding. In doing so, the Defendants, in my view, take a risk. If their hard like position is not the final determination and the Plaintiff is substantially more successful than their Offer to Settle, one can interpret that the Defendants had no real intention to attempt to settle the action. If such a conclusion is made, there are consequences on the assessment of costs on what is a fair and reasonable amount in the circumstances for the unsuccessful party to pay in costs.

[17] In this case, I do conclude given the terms of the Offer to Settle of the Defendants that there was no real intention to settle this proceeding but was a take it or leave it scenario. As such, the Court must take a view in assessing costs that the lack of real settlement intention of the unsuccessful party will result in a higher amount in costs. To fail to do so, in my view, will not encourage settlement but the continuation of hard ball approaches.

[18] Taking these principles into consideration, I agree with the Plaintiff that in the circumstances of this case, the principle of proportionality has a minimal bearing on the assessment of costs incurred by the Plaintiff to seek a remedy for the injuries suffered.

[19] Having said this, I do emphasis, as the Court of Appeal has stated, the assessment for costs is not made in a mechanical calculation set in a vacuum and that the context and the conduct of each proceeding is critical to that assessment.

[20] I will turn to the case at hand.

[21] In reviewing that amount claimed, I do not agree with the Plaintiff that he should receive actual indemnity in costs. But the consequences of an Offer to Settle that was more advantageous than the award of the jury does apply.

[22] In assessing the amount, I agree that the Plaintiff is entitled to costs on a partial indemnity basis up to September 15, 2023, and on a substantial indemnity basis thereafter. Also, taking into consideration the Offer to Settle of the Defendants, I conclude that the principle of proportionality has minimal consequence on the amount assessed.

[23] The Plaintiff’s Bill of Costs is not overly helpful in assessing costs. The Bill of Costs does not calculate the amount up to September 15, 2023, for partial indemnity for costs and the amount for substantial indemnity for costs thereafter.

[24] Given that the fixing of costs is not a mechanical exercise, I have reviewed the Bill of Costs from a holistic point of view in determining a fair and reasonable amount for the Defendants to pay taking into consideration the hard-line approach and lack of real settlement intention of the Defendants.

[25] I assess the amount in fees to be paid by the Defendants to the Plaintiff in the sum $200,000 plus HST for a total of $226,000.

[26] The Plaintiff is seeking disbursements in the amount of $56,423.64 plus HST. The disbursements appear to be reasonable. There are costs for faxes, postage and photocopies. The purpose of the postage and photocopier has not been provided. I am of the view that postage and photocopies not directly related to the trial is part of overhead costs that should be taken into consideration in the hourly rate of counsel. Further I agree with the Defendants that $3,800 should be reduced but do not agree that the charges of Dr. Tavazzani should be reduced for two days attendance in Peterborough. I therefore reduce those disbursements requested by those costs $4,387.60 (3800+44.45+466.90+5.53+70.72). I have not reduced from the amount charged for printing expense reimbursements paid, it seems, to a third party.

[27] This leaves the amount for costs being $226,000 plus disbursements of $58,800.73 ($52,036.04 plus HST) for a total of $284,800.73.

Disposition

[28] I order the Defendants to pay costs to the Plaintiff in the sum of $284,800.73, payable in thirty days from the date of this Decision on Costs.

Justice P.W. Sutherland

Released: May 6, 2024

[1] R.R.O. 1990, Reg. 194. [2] R.S.O 1990, c. C.43. [3] 2009 ONCA 395, [2009] O.J. 1905 (C.A.). [4], [2004] O. J. No. 2634 (C.A.). [5], [2005] O.J. No. 4345. [6] From my review, the Plaintiff has not claimed HST on fees. I take this as an oversight on the Plaintiff and not a waiver of asking for HST on fees claimed. [7] 2018 ONSC 688 at para. 88-89. [8] 2016 ONSC 2961. [9] 2024 ONSC 1267. [10] 2015 ONSC 5980 at para. 16.