March 16, 2018, Kitchener, Ontario
Posted by: Robert Deutschmann, Personal Injury Lawyer
Persampieri v. Hobbs, 2018 ONSC 368 (CanLII)
Date of Decision: January 22, 2018
Heard Before: Justice Sanderson
Introduction and Background
This endorsement relates to costs of an action for injuries received by the 84 year old Plaintiff while a passenger in a motor vehicle that was hit from behind by the Defendant vehicle on February 11, 2009.
For costs, the Plaintiff claims total fees and disbursements, inclusive of HST of $268,070.29, including fees and disbursements on a partial indemnity scale to May 15, 2017, the date of the Plaintiff’s successful Rule 49 offer, and fees and disbursements on a substantial indemnity scale thereafter.
History of the Litigation
In her Statement of Claim, the Plaintiff initially claimed $1,000,000. Shortly after the Statement of Defence was served, counsel for the Defendants advised counsel for the Plaintiff that the Defendants’ insurer, Aviva Canada, “the insurer or Aviva” was not prepared to pay any tort damages and that it would not be making any offer to the Plaintiff in the tort action.
The Defendants continued in their intractable position indicating at every meeting that they would not ‘be willing to offer even $1.00” and advising the plaintiff that, “only two options were available… to accept $0.00 for a dismissal of the action on a without costs basis or to proceed to trial…”
In his costs submissions, Counsel for the Plaintiff advised this Court that the Defendant Aviva never wavered from that position at any time prior to the rendering of the jury’s verdict. The Defendants also made it clear that unless the Plaintiff agreed to a dismissal of her action, she would face vigorous opposition from the Defendants at a trial and that, among other arguments, they would be submitting that the Plaintiff’s injuries would not meet the statutory threshold test under s. 267.5(5) of the Insurance Act.
On September 17, 2013 the Defendants served their first Offer to Settle- in exchange for a dismissal of the Plaintiff’s action and any cross claim, they would not to pursue costs against the Plaintiff.
At the mandatory mediation held on January 13, 2015, the Defendants, including Hobbs and Dover Industries agreed to admit liability. In return, the Plaintiff agreed to limit her claim against them to their remaining policy limits after disbursement of amounts the Defendants had already agreed to pay to the Plaintiff’s son, another passenger in the same vehicle on February 11, 2009, to settle his companion action. The Defendants served a Rule 49 Offer to Settle on November 25, 2016 - to consent to an order dismissing the action without costs. That Offer remained open until the commencement of trial.
By March 21, 2017 the Plaintiff had served a Rule 49 Offer to Settle her action for damages of $20,000 plus partial indemnity fees plus disbursements. The Offer further provided that no prejudgment interest would be payable. On May 15, 2017 about two weeks before the commencement of the trial, that Offer was withdrawn, in effect, when Counsel for the Plaintiff served a further Rule 49 Offer to accept damages of $10,000, without pre judgment interest, “for all general and special damages combined net of the applicable statutory deductible plus partial indemnity costs.” Counsel for the Plaintiff submitted that, given the position taken by the Defendants on the Plaintiff’s credibility, the threshold and other matters, including on preexisting disabilities, the Defendants understood when they rejected the Plaintiff’s May 15, 2017 Rule 49 Offer, that if the Plaintiff elected to proceed to a trial, it would be lengthy and expensive.
Following the Jury decision, the Defendants raised the question of proportionality of the settlement.
Justice Sanderson reviewed several key decisions and noted that Daley J expressed the view that while costs must be reasonable, the mere fact that costs exceeded damages would not render a costs award inappropriate. He noted that counsel for the Defendant knew that a costs award of the magnitude he was being asked to make was a risk of defending the claim in the manner that it did. He agreed with Lane J in 163972 Canada Inc v Isacco,  OJ No 838 that to reduce the plaintiff’s otherwise reasonable costs because of proportionality concerns would encourage the kind of intransigence displayed by the defendants in that case.
An over emphasis on proportionality could serve to under compensate a plaintiff for costs legitimately incurred. Noting previous decisions Justice Sanderson commented that a pattern of such outcomes would result in an unintended but nonetheless real denial of access to justice; it would send a message to plaintiffs that it is not worthwhile to pursue legitimate claims in court because one cannot possibly make it cost effective to do so. This would be a denial of justice in the most fundamental sense. It would tend to encourage those resisting legitimate but modest claims to take unreasonable positions.
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.
Justice Sanderson further noted that 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. It 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.
Sactioning insurers' litigation strategies involving:
- 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;
- then, raising the spectre of very serious adverse cost consequences of such trials;
- 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;
- 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 such strategies should not be encouraged by the giving of cost breaks on foreseeable costs consequences .
The insurer here rejected a Plaintiff’s offer that would have made it possible for it to pay minimal damages. I have already alluded to the submission of Counsel for the Plaintiff that the insurer here made the decision early in this litigation not to pay any tort damages and that once made, that decision was unalterable [apparently regardless of any information received and/or of any advice given to the insurer by defence counsel later in the litigation, including advice given after further production, mediation and discovery.] Adoption of such an unalterable decision-making process would render meaningless and make a mockery of the pretrial resolution process, aimed as it is, at encouraging and effecting settlement to avoid unnecessary trials.
To sanction such a process would be to undermine those policy objectives. Total unwillingness to reassess/discuss settlement based on full information and advice should not be sanctioned or encouraged in any way, [including by sheltering insurers from the foreseeable costs consequences of such a decision, should it fail to yield a result favourable to an insurer in a particular case].
Fixing the Plaintiff’s Partial Indemnity Fees to the Date of the Offer May 15, 2017
In all the circumstances here, I order the Defendants to pay costs of $237,017.50 to the Plaintiff.