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Articles and Publications

October 2016

How Much Is This Lawsuit Going to Cost Me?

Local Decisions on Costs

Case Study No. 1 of 2: Corbett v. Odorico

Megan Murphy
Megan Murphy,
Associate Lawyer

 

by Megan Murphy
First presented at the CCLA Summit for New Lawyers and Articling Students

Facts

The litigation stemmed from a motor vehicle accident that occurred on December 5, 2009. The plaintiff, Sara Corbett, was a homemaker with two young sons. Her motor vehicle was hit by an oncoming vehicle while she was stopped and preparing to turn into a driveway. The vehicle's air bags did not deploy. Ms. Corbett declined to go to the hospital when the ambulance arrived.

As a result of the accident, Ms. Corbett developed whiplash type symptoms, which evolved into chronic pain syndrome. During trial, Ms. Corbett's evidence was that her chronic pain led to the breakup of her marriage. The jury awarded the plaintiff and her family a total of $141,500 before deductions for statutory deductibles and collateral benefits.

Costs Background

The Plaintiffs sought their costs for the six-week jury trial. They argued that since they were substantially successful in the action, they were entitled to costs. They claimed for fees in the amounts of $159,249.90 plus HST and disbursements of $89,347.65 on a partial indemnity basis. However, the Plaintiffs took the position that, due to the manner in which counsel for the Defendant conducted the trial, Justice Hackland hadto increase the fees to their substantial indemnity amount of $242,521.50.

Court's Analysis

First, Justice Hackland noted that the hours spent, the hourly rate claimed by Plaintiffs' counsel and the claim for disbursements were all reasonable. Second, Justice Hackland noted that neither party matched or bettered their respective Rule 49 of The Rules of Civil Procedure offers to settle. He therefore stated that the compulsory cost consequences in Rule 49.10 could not be relied on.

It was noted that the offers made between the parties were as follows:

  • Offer of September 30, 2015: The Defendants offered to settle the Plaintiffs' claim for payment of the amount of $6 dollars plus costs of $1 dollar.

  • Offer of October 29, 2015: The Plaintiffs sought to settle their claim for damages in the total sum of $370,000 plus pre-judgment interest, partial indemnity costs and disbursements.

  • Offer of November 11, 2015: The Plaintiffs offered to settle their claim for $250,000 plus costs and disbursements (identifying their disbursements to that point of time as $48,931.17).

In considering Rule 57 in his costs analysis, Justice Hackland noted that although this was a complex case and the main Plaintiff faced various challenges in establishing her claim for damages, she received reasonable but not overwhelming success. On the one hand, he considered that the Plaintiff did succeed in achieving significant recovery from the jury in excess of what was being offered by the Defendant. On the other hand, he noted that the jury declined to award any amount for future income loss or for the plaintiff's claim for loss of an interdependent relationship.

In determining costs Justice Hackland addressed the principle of proportionality.

In considering the counsel's conduct and how it affected the trial under Rule 57, Justice Hackland noted that considerable time was wasted arguing about pre-trial issues of alleged lack of production and disclosure. He attributed some of this conduct to the fact that examinations for discovery only ended 3 months prior to trial, which did not allow for much time to resolve disputed issues or exchange updated expert reports. He concluded that both sides shared responsibility for the issues encountered and he, therefore, excluded this category of issues in his costs analysis.

In determining costs Justice Hackland addressed the principle of proportionality. He questioned whether partial indemnity fees of $159,249 were disproportionate to a jury verdict of $141,500 for a six-week trial. In rendering his decision, he referred to a recent Ontario Court of Appeal case Elbakhiet v. Palmer, which was relied on by the Defendant where it was stated that an award of trial costs must be proportional to the amount recovered. Justice Hackland declined to follow this principle of proportionality in this case and instead referred to the Ontario Court of Appeal decision Aacurate v. Tarasco, where the Court cautioned against giving too much weight to the principle of proportionality when determining costs. As such, Justice Hackland stated that imposing a rule "arbitrarily limiting the amount of costs to some proportion of the recovery when there has been no offer or settlement" would undermine Rule 49, which he stated is intended to encourage settlement, and discourage failure to accept reasonable offers.

In rendering his decision, Justice Hackland considered a) the Defendant's position on settlement and b) the relevant factors under Rules 49.13 and 57 (this was including the offers made, the results of the trial and considerations of proportionality). In considering the offers made, it was noted that the jury's award of $141,500 was only half of the amount of the Plaintiffs' last offer, but far surpassed the Defendant's $7 offer. He awarded the Plaintiffs their costs of the action on a partial indemnity basis. In total the Plaintiffs were awarded their fees in the sum of $159,249, HST in the sum of $20,702.48 and disbursements in the sum of $89,347.

Take-Away
This case is significant because it is an example of when the court will not follow the principle of proportionality in awarding costs. Specifically, in this case, Justice Hackland declined to follow Elbakhiert. In Elbakhiert, the defendant made a Rule 49 offer, which was almost as favorable as the jury verdict and therefore, the Court found that this "near miss" settlement offer should have been considered by the trial judge in fixing the amount of costs. In distinguishing the facts of that case to the present case, Justice Hackland found that there was no "near miss" offer made (especially given that the offer the defendants made would have left the plaintiff with a mere $7) and he did not think it was appropriate to reduce costs based on the size of the award granted by the jury.


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