Costs on a Summary Judgment Motion

Costs on a Summary Judgment Motion

In Mo v. Johnson, the defendant successfully moved for summary judgment dismissing the plaintiff's claim.  Justice Morgan's decision on costs is reported at 2012 ONSC 6307 (CanLii). 

One of the arguments made by the plaintiff was that the defendant was only entitled to costs of the motion, not the entire action.  Justice Morgan disagreed, holding that:

[24]      I agree with Mr. Bizezinski that where summary judgment dismisses the action, it is the costs of the action in its entirety that are at issue. To hold otherwise would allow a party who brings spurious litigation to cause the opposing side to incur substantial costs with no means of compensation. 

The defendant was awarded costs of the entire action on a substantial indemnity basis due to the plaintiff's conduct, which was described as "aggressive and high-handed".  The decision is a nice synopsis of some of the basic principles relating to costs. 

Costs on a Summary Judgment Motion

The Importance of Clarity in Making Rule 49 Offers

The Importance of Clarity in Making Rule 49 Offers

The law with respect to r. 49 offers is increasingly complicated.  It is important for offers to be clear in order to benefit from the provisions of r. 49.  At the same time, even if an offer does not qualify as a r. 49 offer, it can be taken into consideration when a court is deciding costs.

In Elbakhiet v. Palmer, 2014 ONCA 544 (C.A.), the plaintiffs sought damages of almost $2 million dollars.  After a jury trial, they were awarded $144,013.07.  The plaintiffs made one offer of $600,000 plus costs.  The defendants made two offers, the second of which was $145,000 plus pre-judgment interest in accordance with the Courts of Justice Act plus costs.

One of the issues at the Court of Appeal was whether the defendants obtained a judgment as favourable or less favourable than their offer.  The defendants’ position was that the offer was intended to mean PJI of 5% on the entire offer (which would mean the offer exceeded the judgment).  The trial judge held that it was not clear that there was a uniform practice that 5% would be applied to the entire offer, and different rates of interest could apply to different heads of damages.  She held the defendants had not beat their offer and ordered the defendants to pay costs of almost $580,000.

The Court of Appeal held that there is no evidence of a general understanding that 5% would apply to the entire offer.  At the same time, the trial judge failed to give proper consideration to r. 49.13 which permits the court to exercise discretion and take into account any offers made.  Since the offer to settle was virtually the same as the judgment, the trial judge should have taken r. 49.13 into account.  She erred in failing to do so.

The Court of Appeal held that “it was not fair and reasonable to award the [plaintiffs] costs of almost $580,000 for a claim the jury valued at just under $145,000”.  It allowed the appeal and reduced the costs payable to the plaintiffs to $100,000. 

The Importance of Clarity in Making Rule 49 Offers

Plaintiffs Denied Costs of Jury Trial

Plaintiffs Denied Costs of Jury Trial

A London judge recently denied costs to plaintiffs following a jury trial which saw them recover less than 10% of their claim.

In Mayer v. 1474479 Ontario Ltd., 2014 ONSC 2622 (S.C.J.), the defendant admitted liability for a 2008 motor vehicle accident.  The action proceeded to a jury trial on damages.  The Statement of Claim sought damages of $1.1 million, and mid-trial the prayer for relief was amended to $2 million.  The jury awarded the primary plaintiff $137,000 (reduced to $116,000 after the deductible and collateral benefits), her daughter $3,300 (reduced to $0 after the deductible) and her husband $0, for a total recover of $119,300.  The plaintiffs sought costs of $422,000.

Justice Leach went through the factors in r. 57.01.  Some of the factors considered were:

1.  The plaintiffs fell "drastically short" of the amounts claimed;
2.  The time and resources devoted by the plaintiffs were disproportionate to what the case was worth, as determined by the jury; 
3.  There were disbursements for experts who either did not add much to the proceeding or overlapped with other experts;
4.  The case was scheduled for 2 weeks and ran to 4 weeks, for which the plaintiffs were largely responsible; and
5.  Various disbursements were not permissible in any event, such as a "day in the life" video which was not used, the cost of a trial that was adjourned by the plaintiffs, and the cost of a voluntary mediation.

The defendants made several offers; however, they were not r. 49 offers as they failed to separate interest from damages, did not make it clear whether the offer was global for all plaintiffs or severable, and were not clear as to whether the plaintiffs could retain future collateral benefits.  But for the deficiencies in the offers, the defendants would have been entitled to partial indemnity costs in the amount of $181,000.  Even though they were not r. 49 offers, the defendants' offers were taken into account in exercising the Court's discretion.  Justice Leach held that each party should bear their own costs.

Mayer should be reviewed by counsel as guidance in making offers, as well as in deciding what resources should be put into a particular file.

Plaintiffs Denied Costs of Jury Trial

Costs to Unrepresented Litigant

Costs to Unrepresented Litigant

Mustang Investigations v. Ironside et al, 2010 ONSC 3444 (Div. Ct).

Thanks to Alex Lacko, articling student, for preparing this case summary.

The plaintiff appealed from a costs order in which the motion judge awarded the self-represented defendant a counsel fee of $20,000 on the basis that he had done work ordinarily done by a lawyer.

The parties made written submissions as to costs. Mustang submitted that Ironside should receive costs limited to disbursements in a net amount of $1,541. Ironside delivered two bills of costs, the larger one for $208,138.40, inclusive of disbursements. The motion judge disallowed $87,500 claimed by Ironside as being not a proper claim for costs. The motion judge then considered the leading authority on costs to be awarded to unrepresented litigants, Fong v. Chan (1999), 46 O.R. (3d) 330, (C.A.). The motion judge correctly set forth the two principles enunciated by Sharpe J.A. and the Court of Appeal in that case in the following language:

First, the self-represented litigant should not recover costs for the time and effort that any litigant would have to devote to the case. Second, costs should only be awarded to those litigants who can demonstrate that they devoted time and effort to do the work ordinarily done by a lawyer retained to conduct the litigation and that, as a result, they incurred an opportunity cost by foregoing remunerative activity.

The motion judge interpreted the second principle as requiring a self-represented litigant to simply show that he or she did work ordinarily done by a lawyer without any reference to incurring an opportunity cost by foregoing remunerative activity.

The issue on appeal was whether the motion judge applied the correct principles for awarding costs to a self-represented litigant.

Jennings J. delivered the judgment of the Divisional Court and found that a number of cases, while purporting to apply Fong, in fact introduced a “spin” on Sharpe J.A.’s proviso to the second principle which he found troubling.

Jennings J. found that the motion judge erred by ignoring the proviso regarding an opportunity cost and further, awarding the self-represented litigant the partial indemnity costs that the plaintiff could reasonably be expected to have paid to a lawyer had one been retained by Ironside.

Justice Jennings stated that the language used by Sharpe J.A. was clear and that in order to receive costs, a lay litigant must demonstrate (1) that he or she devoted time and effort to do the work ordinarily done by a lawyer, and (2) that as a result, the litigant incurred an opportunity cost by foregoing remunerative activity. He further stated that if an opportunity cost is proved, a self-represented litigant should only receive a moderate or reasonable allowance for the loss of time devoted to preparing and presenting the case.

Several trial judges as well as a master, seem to have interpreted Fong as saying that even in the absence of proof of an opportunity cost, one may assume that because the lay person was involved in the litigation preparing material that might otherwise be prepared by a lawyer, he or she should nevertheless be entitled to nominal costs. Jennings J. wrote that:

“With great respect to the master and those judges, I’m unable to find that the language in Fong permits an award to be made without the self-represented litigant demonstrating that, as a result of the lawyer-like work put in on the file, remunerative activity was foregone. Simply stated, no proof of opportunity cost, no nominal costs available.”

Jennings J. further stated that in the case that an injustice will result, he had two responses:

(1) It is difficult to see any injustices in compensating someone for a loss not incurred; and

(2) Regardless, the principle of stare decisis does not permit this court, or judges sitting in motions, or masters, to modify a decision of the Court of Appeal.

The appeal was allowed and the award of $20,000 for counsel fee on a partial indemnity basis was set aside.

Costs to Unrepresented Litigant

Substantial Indemnity Costs for Unsubstantiated Bad Faith Claim

Substantial Indemnity Costs for Unsubstantiated Bad Faith Claim

In Sagan v. Dominion of Canada General Insurance Company, 2014 CanLII 16478 (SC.J.), the defendant insurer successfully moved to dismiss the plaintiff's claim for non-earner benefits and mental distress.  The claim continued "a litany of unsupported allegations of bad faith, misconduct and incompetence against the defendant".  There was no evidence to support the allegations and they were maintained right up until the hearing of the motion.

Justice Lofchik awarded substantial indemnity costs for the motion itself, and partial indemnity costs for the remainder of the action.  He held that substantial indemnity costs may be appropriate where a party makes empty bad faith allegations.  The purpose is to diminish frivolous and speculative litigation, to cause litigants to focus on the real issues and to foster sober reflection above that of an emotional response.

Although brief, Sagan is a useful decision, especially where plaintiffs commonly throw in allegations of bad faith where an insurer denies a claim.

Substantial Indemnity Costs for Unsubstantiated Bad Faith Claim

Full Costs Awarded to Defendant Where Plaintiff Abandoned Case at Trial

Full Costs Awarded to Defendant Where Plaintiff Abandoned Case at Trial

Plaintiffs who make unsubstantiated allegations of fraud may be liable for substantial costs if they later decide to abandon their claim.

In Sienna v. State Farm, 2015 ONSC 786 (S.C.J.), the plaintiff sued her own insurer for failing to pay non-earners benefits.  The Statement of Claim sought $900,000 for punitive and aggravated damages caused by the defendant's bad faith.  It made allegations of "unlawful claims practices" and a "conspiracy" aimed at the plaintiff and other policyholders.  The matter was set for trial commencing January 26, 2015.  On January 14th, the plaintiff advised she was abandoning her case and would call no evidence.

The issue then became costs.  The defendant sought costs on a substantial indemnity basis, arguing the claim was without merit, it made a reasonable offer to settle, and the allegations against it were akin to fraud.  The plaintiff argued the allegations in her Statement of Claim were not outrageous and are commonly plead in accident benefits cases, that the defendant should have brought a motion to strike the allegations, and that the defendant should have ceased its trial preparation after a similar case ruled favourably for another insurer.

Justice Arrell did not accept the plaintiff's arguments.  He did not agree the allegations are common, when there is no foundation or evidence to support them.  They were akin to fraud.  The defendant should not be put to the expense of striking allegations made in the Statement of Claim; on the contrary, the plaintiff should have withdrawn the offensive portions.  There was no merit to the argument the defendant should have ceased trial preparation as the favourable analogous decision was being appealed, and the plaintiff had not abandoned her claim.

Justice Arrell awarded the defendant the total amount of its bill of costs, plus $2,000 for the costs motion, for a total of $35,92.97.

Full Costs Awarded to Defendant Where Plaintiff Abandoned Case at Trial

Costs - Reasonableness of Disbursements

Costs - Reasonableness of Disbursements

Hamfler v. 1682787 Ontario Inc., [2011] O.J. No. 6190 (S.C.J.)

This is a useful case with respect to recovery of disbursements for expert reports following a trial. Justice Edwards applied a deep discount on several of the plaintiff's doctors’ and accountant’s fees for reports and trial preparation.

The jury awarded the plaintiff $188,000 in damages. He sought $87,600 in fees and $93,500 in disbursements. The main issue was the reasonableness of the disbursements.

Justice Edwards quoted Justice Borins in Moon v. Sher (2004), 246 D.L.R. (4th) 440 (C.A.) in holding that “a disbursement will be recoverable provided that it is both reasonable, not excessive and has been charged to the client." The following factors should be taken into account in determining reasonableness:

1. Did the evidence of the expert make a contribution to the case, and was it relevant to the issues?
2. Was the evidence of marginal value or was it crucial to the ultimate outcome at trial?
3. Was the cost of the expert or experts disproportionate to the economic value of the issue at risk?
4. Was the evidence of the expert duplicated by other experts called by the same party? Was the report of the expert overkill or did it provide the court with the necessary tools to properly conduct its assessment of a material issue?
(paragraph 17).

- Tara Pollitt

Costs - Reasonableness of Disbursements

No Costs Awarded to Either Party

No Costs Awarded to Either Party

A recent decision confirms the decision a court has to make no award of costs to either party.

In Swatridge v. Waters Estate (2014), ONSC 5333 (S.C.J.), the defendant in a motor vehicle action made an offer to settle of $5,000 all inclusive.  The plaintiff's offer was for $85,000 ($55,000 net of the deductible) plus costs and disbursements.

At trial, the jury awarded $10,000 gross for general damages, and $0 for loss of income, housekeeping/home maintenance and medical/rehabilitation expenses.  After the deductible was applied, the new result to the plaintiff was $0.

Justice Ferguson declined to award costs to either side, holding that "The court cannot be blinded by the somewhat artificial characterizations of both the offer to settle and the trial result."  The reality was that an offer to settle amounting to zero dollars was made and rejected, and a trial was held and the result was a judgment for zero dollars. 

No Costs Awarded to Either Party

Costs in Cases Where There are Multiple Defendants

Costs in Cases Where There are Multiple Defendants

Lawson v. Vierson, 2012 ONCA 25 (C.A.)

How will a court apportion costs where both the plaintiff and a co-defendant fail to accept offers to settle/contribute?

Lawson was in two motor vehicle accidents seven months apart. The actions were consolidated and proceeded to trial. The first defendant, Hart, offered to settle for $300,000. The second defendants, the Viersons, offered to settle or contribute by making a $100,000 payment to Lawson. Lawson’s offer was $1,250,000.

The jury found the injuries suffered were separate and distinct, and made separate damages assessments for each accident. The net amount awarded against the Viersons was $7,926.71 and $344,260.37 against Hart. The trial judge awarded Lawson costs of $482,000 apportioned 35% against the Viersons and 65% against Hart. The Viersons appealed.

At issue was the interplay of the costs consequences of r. 49.10 and r. 49.11. Rule 49.11 provides that where there are multiple defendants “alleged to be jointly or jointly and severally liable to the plaintiff in respect of a claim and rights of contribution or indemnity may exist between the defendants, the costs consequences prescribed by rule 49.10 do not apply to an offer to settle”.

The Court of Appeal held:

[49] In the circumstances of this case, it is significant that the combined Viersens and Hart offers exceeded the Lawsons’ recovery. The reason that the combined total exceeded the Lawsons’ recovery was because of the Viersens offer. When the Viersens offer is viewed in context rather than in isolation, it is therefore apparent that the offer was a genuine and generous offer to settle and, particularly when taken together with the Hart offer, complied with the spirit of rule 49.10. In these circumstances, the Viersens offer is the type of offer that, as contemplated by rule 49.13, ought to be given considerable weight in arriving at a costs award.

[50] Further, the trial judge appears to have discounted the fact the Viersens offer far exceeded the amount of the award made against them. Although the allegation of joint and several liability meant that pursuant to rule 49.11 the presumption of costs consequences in rule 49.10 did not apply, it would not, as the trial judge found, have been “impossible” or “negligent” for Ms. Lawson to have accepted the Viersens offer. The claim of joint and several liability that made the Viersens offer non-compliant with rule 49.11 was not made out at trial. In light of the jury’s award, the Viersens offer can, therefore, only be seen as having been very reasonable. Contrary to the view expressed by the trial judge, it would have been no more impossible or negligent for Ms. Lawson to have accepted the Viersens offer, than for any plaintiff to accept an offer to settle for an amount substantially less than the amount claimed. Given the outcome at trial, an accurate assessment of Ms. Lawson’s claim was that there was no joint and several liability. As a result, accepting the Viersens offer would not have prejudiced the claim against Mr. Hart and, therefore, would have been the correct decision.

Justice Rouleau awarded costs against the Viersons up to the date their offer was served equal to 35% of Lawson’s costs incurred to the date of the offer. The Viersons were entitled to their partial indemnity costs from the date of their offer payable by Hart since their offer was also an offer to contribute.

Although this case may have somewhat unusual circumstances, I suggest that those defending cases where there are multiple defendants should take it into consideration when making offers.

- Tara Pollitt

Costs in Cases Where There are Multiple Defendants

Summary Judgment - Costs

Summary Judgment - Costs

We continue our discussion of the Court of Appeal's decision in Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764.

The former r. 20 provided that a party that was unsuccessful on a summary judgment motion was liable to pay substantial indemnity costs. The 2010 amendments eliminated the presumption of substantial indemnity costs.

The Court of Appeal commented on the costs rule as follows:

[67] As a result of the amendments to rule 20.06, the onus is now on the party seeking substantial indemnity costs to convince the court that the other side acted unreasonably or in bad faith for the purpose of delay in bringing or responding to a motion for summary judgment. This amendment removes a disincentive to litigants from using Rule 20 by eliminating the presumption that they will face substantial indemnity costs for bringing an unsuccessful motion for summary judgment. However, as the jurisprudence becomes more settled on when it is appropriate to move for summary judgment, the reasonableness of the decision to move for summary judgment or to resist such a motion will be more closely scrutinized by the court in imposing cost orders under rule 20.06.

It seems that this paragraph suggests that courts will revert back to substantial indemnity costs as a body of case law develops. This will be an important consideration when deciding whether to bring a summary judgment motion or not.

- Tara Pollitt

Summary Judgment - Costs