St. Marthe v. O’Connor, 2019 ONSC 4279 (CanLII), <http://canlii.ca/t/j1gzs
[1] Following an 11 day trial, I granted judgment in favour of the plaintiff (2019 ONSC 1585 (CanLII)). This endorsement deals with three issues arising from that judgment: the statutory deductible for the non-pecuniary damages; the prejudgment interest rate; and the costs of the action.
[14] According to the plaintiff, the defendant attended at a mediation and judicial pretrial but declined to make any settlement proposals at them. He refused to participate in a mid-trial judicial settlement conference. The defendant did not explain in his written submissions why he was unwilling to make any settlement proposal other than the offer of August 20, 2018. In the absence of an explanation, I can only conclude that the defendant decided, at an early stage of this litigation, that he would not pay any amount, however modest, to settle the case.
[15] This position is baffling in view of the admission of liability and the defence expert opinion. As I set out in my reasons, the defendant’s expert, Dr. Bednar, concluded that the plaintiff suffered from a chronic pain condition which was supported by objective findings and it was reasonable for him to retrain for a more sedentary occupation. The limitation period defence did not require a lengthy trial and, in any event, was an issue that could have been factored into a settlement that reflected a reasonable compromise on both sides.
[16] The defendant’s approach to this litigation is an important consideration on costs because of the emphasis made in his submissions about proportionality. There is no doubt that this is a principle that I must take into account but I agree with the comments of Sanderson, J. inPersampieri v. Hobbs, 2018 ONSC 368, (CanLII) at paras. 93 – 103:
In my view, it is important to recognize that the legislature [or its delegate], by imposing stiffer costs consequences on Defendants where Plaintiffs have beat their own Offers to Settle than it has imposed on Plaintiffs where Defendants have beat their own Offers to Settle has signaled an intention to give greater costs protections to Plaintiffs than to Defendants.
A strict application of the proportionality principle in awarding costs to a Plaintiff who has obtained an order under Rule 49.01(1) for costs on a substantial indemnity basis, would be to deprive that plaintiff of that greater protection.
Like Firestone J, in Valentine, and the other Courts to which I have earlier alluded in this endorsement, I am of the view that to unduly shave Plaintiff’s costs, especially substantial indemnity costs ordered under Rule 49.01(1), based solely or primarily on an undue emphasis on the application of the proportionality factor (reasonableness of costs ordered relative to the amount awarded) would be unfair, especially in all of the circumstances here.
The proportionality principle is generally invoked to foster access to justice.
However, a strict application of the proportionality principle here could work against the achievement of that goal and could have the opposite effect.
Here, the party invoking the proportionality principle and thereby seeking to minimize the effects of a usual order for costs under Rule 49.01(1) is a sophisticated insurer that made a tactical decision to reject a Plaintiff’s formal Rule 49 Offer to Settle understanding the risk in costs that it was taking by so doing.
Because it had framed its defence in the manner that it had, it knew that the resolution of the issues at a trial would involve the hearing of lengthy and costly evidence, including extensive medical evidence.
Sanctioning insurers’ litigation strategies involving:
(1) discouraging Plaintiffs from pursuing legitimate but modest claims by refusing to make any meaningful offer to pay damages and forcing those Plaintiffs to trial in circumstances where, because of defences the insurers have asserted, they cannot possibly be successful unless they call expensive medical and other evidence;
(2) then, raising the spectre of very serious adverse cost consequences of such trials;
(3) then, even after Plaintiffs have chosen to take the serious adverse costs risks of such trials, and even after they have been successful at trial and have received costs awards under Rule 49.01(1) on a substantial indemnity scale;
(4) attempting to unduly minimize the quantum of otherwise usual amounts of costs including substantial indemnity costs on the basis of proportionality, would be, in my view, to sanction under compensation of Plaintiffs for costs legitimately incurred to make many lawsuits uneconomic and could generally discourage Plaintiffs with modest claims, even if valid from pursuing them.
If pursuing such an approach or strategy were to have the effect of generally discouraging Plaintiffs from bringing and pursuing modest sized claims, [even in cases such as here where liability has been admitted] the benefits to insurers could be significant and wide ranging.
If insurers were incentivized to pursue such a strategy and to generally resist settlement of such cases, in order to generally discourage such Plaintiffs from pursuing such actions, that could seriously jeopardize overall access to justice.
Insurers can, of course, pursue whatever strategy options they deem fit, but especially where such strategies may have wide ranging and adverse implications involving widespread denial of access to justice, the use of such strategies should not be encouraged by the giving of cost breaks on foreseeable costs consequences.
18] The defendant had three lawyers at trial, all of whom are employees of Aviva Canada Inc. Lead counsel was Vanessa Tanner who was called in 2002. She was assisted for the most part by Vanessa De Sousa, a 2017 call. The third lawyer, Jeremy Shaw, was present during the trial but did not gown until final submissions. He was called in 2007. A law clerk also worked on the case. According to the defendant’s cost outline, their fees and disbursements inclusive of HST were $152,883.41 on a partial indemnity basis and $214,810.80 on a substantial indemnity basis. The disbursements were $30,185.75. The collective number of hours was 743.3.
Conclusion
[31] The plaintiff is asking for an amount in costs that is more than double the damages that were awarded. As other judges have done when faced with this issue, I cite the decision of Lane, J. in 163972 Canada Inc. v. Isacco, [1997] O. J. 838:
That the costs significantly exceed the amounts at stake in the litigation is regrettable, but it is a common experience and is well known to counsel as one of the risks involved in pursuing or defending a case such as this to a bitter end rather than finding a compromised solution. To reduce the plaintiff’s otherwise reasonable costs on this basis would simply encourage the kind of intransigence displayed by the defendants in this case.
[32] In Persampieri, Sanderson, J. interpreted the Court of Appeal’s decision in Cobb to impose a notional upper limit for partial and substantial indemnity costs; the former should not exceed 9.035 times the net award and the latter should be fixed at 13.5525. Her decision does not apply in this case because the plaintiff is not seeking an award of costs that is anywhere near that notional upper limit. However, it is important for the confirmation, if such was needed, that a sophisticated litigant like the insurer in this case could reasonably expect to pay costs substantially in excess of the damages awarded, particularly when it takes an inflexible approach to settlement.
[33] This does not mean that proportionality is ignored but reasonableness remains the primary consideration: Boucher v. Public Accountants Council for the Province of Ontario, 2004 CanLII 14579 and Davies v. Clarington (Municipality), 2009 ONCA 722 (CanLII). Applying this principle and taking into account the factors set out in rule 57.01, I fix the fees at $300,000 plus HST of $39,000 and the disbursements at $39,864.56 plus HST, payable by the defendant to the plaintiff within 30 days of the date of this order. I will leave it to the parties to agree on the amount of the applicable taxes on the disbursements. If they cannot do so I will decide the issue by written submissions.
