Getting Personal

In the recent decision, Hoang v. Vicentini, Justice Darla Wilson of the Superior Court of Justice provided detailed reasons related to the issue of costs in a fiercely contested action. The trial commenced with a jury, following two mistrials, and lasted approximately seven weeks. Justice Wilson awarded costs to the successful plaintiffs, but for a sum significantly reduced from what had been sought.

Significantly, costs were also awarded to the successful defendants, to be paid by the plaintiffs.

FACTS

The plaintiffs sought damages for personal injuries sustained by the infant plaintiff, Christopher Hoang, who was six years old at the time of the motor vehicle accident. After being dropped off at an intersection with other children by his father, defendant Can Hoang, the child’s hat blew off as he was crossing the street. While trying to retrieve the hat, he was struck by a vehicle driven by defendant Adriano Vicentini.

Although defendant Hoang was represented at trial by counsel appointed by his automobile insurer, it was understood that the insurer had taken an off-coverage position. Subsequent to the trial of the personal injury action, a separate action was instituted by Hoang to determine the coverage issue, the ruling for which is pending.

The jury submission by plaintiffs’ counsel sought a future loss of income award ranging from $2.5 million to $3 million, and a future care costs award of $10 million. The jury awarded nothing for the former (and nothing for loss of interdependent relationship) and only $672,000 for the latter.

The total award was as follows: general damages, $150,000; FLA claim of the injured plaintiff’s mother, $35,000; FLA claim of the injured plaintiff’s sister, $10,000; future loss of income, $0; loss of interdependent relationship, $0; and future care costs (including housekeeping and home maintenance), $684,228.22.

The jury found liability on defendant Hoang, with no finding of liability against the other defendants (Vicentini, and Ford Credit Canada Leasing Company, owner of the Vicentini vehicle).

OFFERS TO SETTLE

The plaintiffs had served a number of Offers to Settle, ranging from $2.1 million to just under $5 million, with the last being a Rule 49 offer of $4,950,000, plus costs. Defendant Vicentini had made an offer to settle for $250,000, plus a pro rata share of costs, while defendant Ford Credit Canada had served an offer to dismiss the action against it without costs. Defendant Hoang, for his part, made an offer to settle for $100,000, plus costs, net of Statutory Accident Benefits entitlement.

POSITIONS ON COSTS

The plaintiffs argued that defendant Hoang should pay fees on a partial indemnity scale of just over $967,000, plus taxes, plus slightly more than $429,000 in disbursements, plus an additional amount of a little more than $131,000 plus taxes for fees related to the accident benefits claims.

Defendant Vicentini sought fees of just over $447,000, inclusive of taxes, plus disbursements of a little more than $85,000. While it was conceded the fees should be reduced by 20% to 25% to reflect the partial indemnity scale, defendant Vicentini sought an order that the counsel for the plaintiffs pay costs because of “the aggressive manner in which it handled the case and the conduct of counsel at trial.”

Defendant Ford Credit Canada sought fees of just over $155,000, plus disbursements in excess of $43,000.

Defendant Hoang argued that the plaintiffs should be paid costs on a partial indemnity scale to the date of the defence offers in the fall of 2011 (the trial proceeded in January 2012) but that defendant Hoang should be entitled to partial indemnity costs from that date forward because the jury verdict was “an acceptance of the defence theory of the case and a clear rejection of the case put forward by the plaintiffs.”

This defendant also submitted that resolution of the matter was impossible, and an expensive trial was inevitable as a result of the “aggressive manner in which plaintiffs’ counsel” advanced the case. Defendant Hoang asked for fees of slightly more than $137,000, plus disbursements of just under $32,000.

ANALYSIS

In considering the provisions of Rule 49 regarding Offers to Settle (under Ontario’s Court of Justice Act), Justice Wilson noted that in Ontario, the “normative approach” is that costs follow the event (loser pays) and that costs are awarded on a partial indemnity basis.

Relying on the principles set forth by the Court of Appeal for Ontario in the 2004 ruling, Boucher v. Public Accountants Council for the Province of Ontario, Justice Wilson noted the “overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant.” In her view, the “overarching principle… is that of reasonableness.”

Costs of defendants Vicentini, Ford Credit

As Vicentini was the “target” defendant, facing a claim well in excess of policy limits, Justice Wilson noted the trial result could only be considered “excellent.”

Taking into account the factors enumerated under Rule 57 (Costs of Proceedings), as well as the complexity of the liability issues, and considering that counsel was “economical” in his use of the court’s time, fees were fixed at $350,000 (virtually what had been requested by counsel). Describing the role of counsel for Ford Credit Canada as “batting clean-up,” Justice Wilson awarded fees of $130,000 (slightly less than requested by counsel).

Cost of the plaintiffs

Justice Wilson noted that, given that the quantum awarded by the jury was significantly less than what had been sought by the plaintiffs, it was clear the jury preferred the damages evidence put forward by the defendants.

However, the result achieved by the plaintiff exceeded the offer to settle of defendant Hoang by a significant amount of money.

Taking into account Rule 57 factors and all offers to settle, Justice Wilson concluded that the plaintiffs’ formal offer to settle was “an unrealistic expectation based on the evidence and does not represent a reasonable compromise. The costs being sought now by the Plaintiffs are not proportional to the outcome of the trial. … I agree that the unrealistic expectations of the Plaintiffs drove this matter on to a lengthy, very expensive trial.”

Justice Wilson stated the number of hours claimed (lead counsel for the plaintiffs was assisted by two other lawyers) was excessive given the facts of the case. While she acknowledged it was reasonable for plaintiffs’ counsel to spend more hours than the defendants, she found it “astonishing” that the plaintiffs would need to spend approximately four times the number of hours that defence counsel did.

In her view, the amounts being sought were beyond “what an unsuccessful Defendant could reasonably have expected to pay if it was unsuccessful at trial.” Applying the principle of proportionality, she fixed the plaintiffs’ costs at $575,000.

The plaintiffs had claimed more than $429,000 in disbursements. Noting that many items claimed were excessive, she reduced the award to $250,000.

Justice Wilson also rejected the plaintiffs’ claim for payment of slightly more than $131,000 for fees related to pursuit of accident benefits.

In her view, the issue of whether or not a tort defendant ought to pay some amount of costs incurred by plaintiffs’ counsel for
an accident benefits claim was fact-driven and depended on the particular circumstances of the case. She concluded it was “neither appropriate nor fair” to include a claim in excess of 600 hours of time relating to the accident benefits claim.

Costs of defendant Hoang

Justice Wilson saw no reason why the plaintiffs should not recover costs against defendant Hoang, who was unsuccessful at trial. This was not a case where the offer to settle made by the defendant was so close to the recovery at trial that some exception to the cost consequences of the aforementioned rules should be made.

Payment of costs to the successful defendants

Justice Wilson noted the general rule in multi-defendant litigation is that the plaintiff is entitled to costs from the unsuccessful defendant, and the successful defendant is entitled to costs from the plaintiff.

In determining whether a Sanderson Order (unsuccessful defendant pays the costs of the successful defendant directly) or a Bullock Order (unsuccessful defendant reimburses the plaintiff for costs paid to the successful defendant) should be made, Justice Wilson relied on the 2008 ruling, Moore v. Wienecke, by the Court of Appeal for Ontario. The decision outlined four factors:

•Did the unsuccessful defendant try to shift responsibility to the successful defendant?

•Did the unsuccessful defendant cause the successful defendant to be added as a party?

•Are the causes of action independent of each other?

•Who has the ability to pay costs?

Taking into account these factors and the overarching concern of “fairness,” Justice Wilson concluded that there was no reason to depart from the usual order of costs.

COMMENTARY

The case makes clear that counsel must carefully consider costs issues before taking a matter to trial.

While the principal factors outlined by Justice Wilson – fairness, reasonableness and proportionality – are clearly appropriate, making a determination prior to trial as to how these factors will come into play is an exceedingly difficult task.