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Getting Your Costs Paid – Strategic Considerations

09 Feb Getting Your Costs Paid – Strategic Considerations

Dooley Barristers Professional Corporation

Barrie, Ontario

The Advocates’ Society Tricks of the Trade

In Pursuit of Excellence: Practical Tools to Enhance Your Practice

January 24, 2014

Toronto, Ontario

Getting Your Costs Paid – Strategic Considerations

Daniel Dooley and Erin H. Durant, Dooley Barristers


Getting Your Costs Paid – Strategic Considerations 2

A. Rule 1.04(1.1) – Proportionality 3

B. Creative Costs Solutions – Costs Orders before a Motion? 7

C. Excessive Counsel Fees and Disbursements 8

D. The Exorbitant Cost of Medical Reports 11

E. The Minutiae of Rule 49 12

i. General Principle 13

ii. “Seven Days before the Hearing” is not Seven calendar days before the Plaintiff Counsel’s Opening Address 14

iii. Be Specific About Interest 15

iv. Multiple Defence Offers, Rules 49.11, 49.12 and 49.13 16

The basic principles on which costs are awarded in Ontario are straightforward.

The “loser pays” – usually an amount that will partially indemnify the successful party for that party’s legal costs incurred.1

Rule 49 was added in 1985 as an incentive to settlement. The court has a principled discretion to award increased costs to litigants who make reasonable offers to settle more than seven days before a trial and leave the offer open until trial. Indeed, in rare cases the court may depart from the “loser pays” principle.

Finally, Rule 57 sets out other factors the court may consider in exercising its discretion to award costs pursuant to section 131 of the Courts of Justice Act.2

We suggest, however, that the law of costs is becoming less straightforward and, as a result, less predictable for litigants and litigation lawyers. Indeed, costs may well become a minefield for the litigator who, although successful on the merits of the case, has not kept a sufficiently close eye on the expense to the client of winning. The Rule on proportionality and the emerging caselaw on costs, if misunderstood or misapplied, may render many a victory Pyrrhic or, to quote one judge hereinafter cited, “cold comfort.”

Costs are an entitlement and a deterrent. Both benefits are lost when courts over-emphasize the amount in issue and de-emphasize the legal work reasonably necessary to protect the client’s interests. The potentially punitive emphasis on the amount in issue undermines the entitlement and deterrent benefits of the “loser pays” principle. The consequence of over-emphasizing the amount in issue because of misguided notions of “access to justice” will undoubtedly be to encourage frivolous or otherwise unmeritorious litigation claims or defences by litigants undeterred by the cost of losing. Litigation will also become unnecessarily expensive as unscrupulous litigants incur unnecessary preparation time and disbursements in the guise of “building the case” to discourage opposing litigants from pursuing meritorious claims or defences – or reasonable settlement positions – through to adjudication on the merits.

Access to true justice, then, will indeed have been denied.

We suggest that it is consistent with the authorities cited in this paper that the proportionality principle is to be used to restrict costs awards only where the court finds that a case has been “over-resourced” by the successful party’s lawyers.

Rule 1.04(1.1) – Proportionality

In January 2010, the Rules were amended to require the court to “make orders …. that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.”3 As will be seen, this rule applies to costs awards.

Prior to the January 2010 Rules amendment, the Divisional Court enunciated a proportionality principle in the context of Simplified Procedure litigation. The trial judge in Culligan Springs Ltd. v. Dunlop Lift Truck (1994) Inc.4awarded a successful defendant/plaintiff by counterclaim more than $60,000 in costs after trial made more lengthy and complex by the lack of examinations for discovery under the then-procedure. The plaintiff had claimed damages at the then-$50,000 limit of the Simplified Procedure and the defendant counterclaimed for approximately $1,000.

The plaintiff appealed the ruling as to costs, arguing that Justice Weekes was obliged to consider proportionality in awarding costs notwithstanding the expense the successful litigant actually incurred. The plaintiff relied on Trafalgar Industries of Canada Ltd. v. Pharmax Ltd. for the principle that in Simplified Procedure actions the court must balance the need to award costs to a successful party with the access to justice purpose of the Simplified Procedures.5

The plaintiff in Culligan was successful on appeal. The Divisional Court ruled that the lower costs awarded in Simplified Rules actions have two functions: “First, they allow cases involving smaller amounts to go to trial without disproportionate, crippling cost consequences. Second, they provide an additional incentive to all parties to settle the case. Even if the party is successful at trial, he or she will still likely have to pay a proportion of his or her own lawyer’s fees. All litigants, both winners and losers, are required and motivated to be reasonable in their conduct.”6 The Divisional Court reduced the costs award to $40,000 and the successful litigant was denied recovery of a substantial amount of its actual costs incurred in defending what was found to be an unmeritorious lawsuit.

That may be “access to justice” but is it justice? All litigants should perhaps be motivated to be reasonable in their conduct, but some are not. There are cases in which it would have been “reasonable conduct” for someone not to sue and cause unnecessary and significant expense to someone else.

Culligan remains a leading authority as to costs recoverable in Simplified Rules Actions however it fortunately appears to be limited to that procedure.

For example, in Tucci v. Pugliese,7 Justice Price cautioned that lawyers must “use restraint in deciding how much time to invest in litigation.” His Honour also recognized, however, that costs awards should reflect the value of the legal work necessary to properly represent a client’s interests.

In Tucci, a personal injury plaintiff moved unsuccessfully for summary judgment and then unsuccessfully sought leave to appeal the court’s costs ruling. The defendant insurers requested over $9,000 in costs for successfully opposing the motion for leave to appeal whereas they had asked for only $2,129.45 for the costs of the summary judgment motion.8 Justice Price referred to authority that costs awards must bear some relation to the amount in dispute.9 As noted, however, the Court must also consider the value of the legal work necessary to properly represent a client’s interest.

We suggest that the positions are not at all contradictory if one recognizes, as did Justice Price in Tucci that, apart from the Simplified Procedure since Culligan, the true purpose and benefit of the proportionality rule is to prevent an unsuccessful litigant from being financially penalized for over-preparation and unnecessary expenses by a successful litigant.

The balance to be drawn, as Justice Price cautioned, is that lawyers must “use restraint in deciding how much time to invest in litigation,” failing which “they will put both the Bar and the Courts out of business.”10 His Honour ruled that the costs requested by the defendants were disproportionate to the amount in issue on what His Honour described as an uncomplicated motion. Costs were fixed at $3,500.

Clearly, then, a complicated motion would probably have attracted a higher costs award.

Further, proportionality will not protect an unsuccessful litigant who is seen by the court as responsible for pursuing a long and ultimately unsuccessful trial.

In Cimmaster v. Piccione, Justice Gray gave judgment for just over $9,000 in a sale of goods lawsuit. The plaintiff nevertheless requested more than $60,000 in costs. The defendant argued that the amount was excessive. However, the defendant failed at least in part to attempt to justify its position by disclosing its own legal costs in defending the litigation and unsuccessfully pursuing a counterclaim. Justice Gray held that it was open to him to “infer…..that if this information were disclosed it would not assist [the defendant] in arguing that the amounts claimed are unreasonable.”11 Justice Gray also made the following observation as to proper application of the proportionality principle to an award of costs:

[I]n my view, the principle of proportionality should not normally result in reduced costs where the unsuccessful party has forced a long and expensive trial. It is cold comfort to the successful party, who has been forced to expend many thousands of dollars and many days and hours fighting a claim that is ultimately defeated, only to be told that it should obtain a reduced amount of costs based on some notional concept of proportionality. In my view, as was the case in Pitney Bows, the concept of proportionality appropriately applies where a successful party has over-resourced a case having regard to what is at stake, but it should not result in a reduction of the costs otherwise payable in these circumstances. 12

Counsel preparing to argue the issue of costs should therefore disclose their client’s own legal expense while at the same time emphasizing, or downplaying as the case may be, whether or not the matter was legally or factually complicated such that much or little time was required to truly protect the client’s interests. These factors, as much as the amount in issue, must be before the court to avoid over-emphasis on the amount in issue.13

Creative Costs Solutions – Costs Orders before a Motion?

Alternate approaches to awarding costs are being developed by a creative judiciary, although it may be cautiously suggested that some approaches seem to emphasize perceived reasonableness at the expense of a just determination on the merits and adherence to established principle.

In a Case Management context, for example, Justice D. M. Brown (of “Green Eggs and Ham” fame) recently notified (warned?) litigants what he would order for costs if a refusals motion was argued. In each case, Justice Brown gave the parties an alternative to bringing a refusals motion. His Honour also notified the litigants that he would award costs of $1,500 per refusal if the motions proceeded – in other words, an “amount per refusal.”14

Justice Brown provided this rationale: “By communicating my approach to costs to the parties in advance of them bringing a refusals motion, I wish to afford them an opportunity to take a sober look at exactly how many refusals are material for a fair determination of the issues at trial and therefore require adjudication by this court.”15 It does not appear as if any litigant has challenged Justice Brown’s authority to make costs orders in advance of his rulings on the merits and after counsel’s respective submissions. As a result, we fear, these somewhat perfunctory costs orders made out of an apparent concern for scarce judicial resources may become more frequent with the potential consequence of deserving litigants being intimidated into foregoing their substantive and procedural rights.16

Excessive Counsel Fees and Disbursements

Litigators should obviously scrutinize opposing counsel’s costs outline for unnecessary time and disbursements – “over-resourcing.”

Having more than one lawyer at a judicial proceeding may be over-resourcing if the successful litigant then seeks recovery of the “second chair” at full rate. The amount is likely to be disallowed if the court is not satisfied that the additional lawyer was necessary to protect the client’s interests. Reference may once again be had to a decision of Justice D.M. Brown. In Graat v. Adibfar,17 His Honour discounted junior counsel’s rate to $50 per hour from $150 (a law clerk’s rate) because junior counsel did not conduct any of the examinations or make any submissions during the trial. Although His Honour accepted that lead counsel needed some assistance in the courtroom, the work could have been done by a law clerk or articling student with knowledge of the file. Justice Brown noted that the mentoring of junior counsel “should not be borne by the opposing party.”18 His Honour also discounted junior counsel’s trial preparation time on the basis that detailed time dockets were not provided to him so that he could determine whether the time was necessary or, rather, a duplication of lead counsel’s work.19

Similar comments were made by Justice Platana in Meady v. Greyhound Canada.20In that case it was argued that junior counsel was required at trial to assist with notetaking. Junior counsel also did limited examinations of witnesses. Justice Platana ruled that the notetaking could have been completed by a law student or a law clerk at a lower billable rate. At the same time, Justice Platana recognized that junior counsel’s efforts were necessary for a portion of the trial. His Honour awarded one-half of the junior lawyer’s fees.21

Other examples of what the court appears to have considered “over-resourcing,” without using the term, were identified by Justice Belobaba in three costs decisions released November 8, 2013: Crisante v. DePuy Orthopaedics,22Dugal v. Manulife Financial,23 and Rosen v. BMO Nesbitt Burns Inc.,24Each ruling followed a class action certification motion but, we suggest, the principles are likely to have general application.

Justice Belobaba reduced the costs awards based on what His Honour found were hourly-rates charged by counsel that were higher than described in the Rules Committee’s Information to the Profession.25 His Honour also disallowed costs for what he found was unnecessary duplication of effort, too many counsel claiming fees at examinations and hearings,26 too many hours billed by too many lawyers27 and for unnecessary preparation (billing on motions for items not significant for that portion of the proceeding).28

Other examples described in the caselaw include:

expert reports that were never served;29

reports from experts who did not testify at trial and whose reports were not filed;30

trial preparation fees for experts or professionals who did not testify at trial;31

agency fees for counsel hired to assist with trial (although their counsel fees are recoverable in the usual course);32

stationery and office supplies (and other items properly considered counsel overhead);33

the Law Society Transaction Levy;34

excessive photocopy fees, and 35

excessive and/or unnecessary fax, telephone and courier charges that are properly part of a lawyer’s overhead.36

These examples seem to the authors of this paper to be straightforward. More controversial, and more troubling we suggest, is Justice Belobaba’s ruling that there should be no costs awarded for legal research. Does his reasoning mean that because lawyers bill at high hourly rates and have no competition – except from each other – that lawyers should never bill for legal research? Justice Belobaba appears to believe that these lawyer beneficiaries of monopoly should either know all the law relevant to the matters for which they are retained, no matter how complex and/or emerging, or they should learn it at other than the unsuccessful litigant’s expense:

“An obvious disbursement excess: charging for ‘legal research.’ In my view, lawyers (who are already billing very high, monopoly-based, hourly rates for their legal knowledge) should not be charging for ‘legal research.’ Customers should not have to pay anyone who charges by the hour, whether lawyers or plumbers, to learn on the job. Legal Research is obviously essential, but it should not be a chargeable disbursement.”37

We respectfully submit that the better view is expressed by Justice Boswell: “I am not aware of any absolute prohibition on the inclusion of research costs in the assessment of the costs of a proceeding. In some circumstances, it is probably quite appropriate that they be heavily discounted. In simple matters at least, a losing party ought not reasonably to be assessed the cost of educating the other side’s counsel. But the case at bar was far from simple. It was complex and difficult…In this instance, each party ought to have reasonably expected that the losing party would be assessed costs and that those costs would include time spent reviewing and summarizing the law.”38

Based on the reasoning of Justice Boswell, an amount may be recovered for legal research if the court is persuaded that research was necessary given the complexity of the case. This is consistent with the principle of recovery for legal work reasonably necessary to protect the client’s interests.

The Exorbitant Cost of Medical Reports

The principles of reasonableness and proportionality apply to disbursements – including those for experts. 39

Excessive or unnecessary disbursements have traditionally been disallowed. Hopefully, more judges will follow Justice Edwards’ lead and reduce or disallow disbursements for expert witnesses on the basis that the expert’s fee was unreasonable.40

In Hamfler v. Mink, a personal injury ruling, Justice Edwards provided guidance in assessing whether expert witness disbursements are reasonable and proportionate. Justice Edwards awarded only $51,000 of the $93,000 in disbursements claimed by the plaintiff primarily for experts’ reports.41 Justice Edwards ruled: “By simply accepting a disbursement which on its face appears to be extravagant and excessive, will simply encourage experts to charge excessive fees.  Litigation in the 21st century is at risk of becoming priced well beyond the reach of almost anyone seeking, or needing access to our courts.  In far too many cases, the total claim for costs and disbursements exceeds the recovery at trial.  Reasonableness and proportionality dictate that the court take a long hard look at the claim for costs anddisbursements in its overall determination as to the reasonableness and fairness of the amount claimed.”

Justice Edwards provided a list of questions a judge may ask when determining if an expert’s fee is excessive (at para. 17):

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?

We suggest that counsel also keep these questions in mind when retaining their own experts. The disbursements incurred by the successful litigant may be more readily recovered if the expert knows from the outset that fees charged and work performed will be measured against reasonableness and may be the subject of adverse judicial comment if excessive.

The Minutiae of Rule 49

The costs consequences of Rule 49.10 are referred to in the case law as “severe”.42 As such, many cases have held that Rule 49 must be strictly adhered to in order for an offer to settle to be relied upon to deprive a successful party of her costs (or to support an award of costs on a substantial indemnity basis from the date of an offer). Several recent cases have commented on the minutiae of Rule 49’s various sub-rules as counsel battle following trial to determine who will get their costs paid. One thing is clear: being awarded substantial indemnity costs is not simply a matter of recovering more or paying less than if your offer had been accepted (“beating your offer”).

General Principle

If a plaintiff makes a Rule 49 offer and obtains a judgment as favourable as or more favourable than the terms of the offer, the plaintiff is entitled to her partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date (Rule 49.10(a)). If a defendant makes a Rule 49 offer and the plaintiff obtains a judgment as favourable or less favourable than the offer, the plaintiff is entitled to her partial indemnity costs to the date of the offer and the defendant is entitled to partial indemnity costs from that date (Rule 49.10(b)). A Rule 49 offer must be made at least seven days before the commencement of the hearing and must not be withdrawn or expire before the commencement of the hearing (Rule 49.10).

Offers in cases involving multiple defendants are more complicated. If multiple defendants are alleged to be jointly or jointly and severally liable to the plaintiff and rights of contribution or indemnity may exist between the defendants, the costs consequences of Rule 49.10 do not apply unless the plaintiff’s offer is an offer made to all defendants to settle the claim against all defendants. The costs consequences of Rule 49.10 will not apply to a defendant’s offer unless “the offer is an offer to settle the plaintiff’s claim against all the defendants and to pay the costs of any defendant who does not join in making the offer, or unless the offer is made by all the defendants and is an offer to settle the claim against all the defendants, and, by the terms of the offer, they are made jointly and severally liable to the plaintiff for the whole amount of the offer” (See rule 49.11).

“Seven Days before the Hearing” is not Seven calendar days before the Plaintiff Counsel’s Opening Address

Offers to Settle pursuant to Rule 49 must be made at least seven days before the “commencement of the hearing”. When calculating the seven days, counsel must be aware that as of January 1, 2010 the Rules were amended to excludes the date of service, weekends and holidays whenever a period of time referred to in the Rules is seven days or less, such as Rule 49. See Rule 3.01(1).

In Elbakhiet v. Palmer, plaintiffs’ counsel argued that a defence Offer to Settle purportedly pursuant to Rule 49 and that exceeded the amounts awarded by the jury exclusive of pre-judgment interest was not served seven days before trial.

The defence Offer to Settle served February 9, 2012 offered $145,000 exclusive of prejudgment interest and costs to be agreed on or assessed on a partial indemnity basis to the date of the offer. The jury was selected, opening statements were made, and preliminary rulings occurred on February 21. Evidence was first called on February 22.43 After nine weeks of trial, the jury awarded the plaintiffs $144,013.07, including approximately $25,000 in general damages, $87,000 in future loss of income, $6,000 in future care costs and a total of $25,000 to three Family Law Act plaintiffs. Prejudgment interest brought the total award to $153,999.37.44 The jury award was less than the defence Rule 49 offer. However, the plaintiff argued that the defence offer was not a proper Rule 49 offer since it was not served seven days before the hearing “commenced”.

Defence counsel conceded that pursuant to Rule 3, the defence offer complied with Rule 49 only if the hearing “commenced” on February 22, the day after opening statements were made. Plaintiff’s counsel argued that the hearing “commenced” with the plaintiff’s opening and therefore the defendant’s offer was only served six days before the commencement of trial. The trial judge, Madame Justice Toscano Roccamo, disagreed. Her Honour relied on the Ontario Court of Appeal’s ruling in Catherwood et al . v. Thompson: “When a trial may be said actually to have commenced is often a difficult question but, generally speaking, this stage is reached when all preliminary questions have been determined and the jury, or a judge in a non-jury trial, enter upon the hearing and examination of the facts for the purposes of determining the questions in controversy in the litigation.”45 Therefore, Her Honour ruled, the offer complied with the timing requirements of Rule 49.

Be Specific About Interest

Notwithstanding Her Honour’s ruling as to the computation of time, the defence did not receive the benefit of Rule 49 when the court considered pre-judgment interest.

As noted, the defence Offer to Settle provided for payment of $145,000 inclusive of prejudgment interest and costs. Under Rule 49.10(2), the onus was on the defence to satisfy the court that the plaintiffs obtained judgment as or less favourable than the terms of the defence Offer. Plaintiffs’ counsel successfully argued that because the defence offer was not specific regarding the rate of interest, the offer lacked the clarity required to calculate prejudgment interest under s. 128 of the Courts of Justice Act, which provides for different interest rates for pecuniary and non-pecuniary damages. The defence argued that the defence offer was meant to include interest at 5% per annum, being the Courts of Justice Act rate for non-pecuniary general damages, on the entire $145,000 in accordance with what the defence described as “industry standard”.

Justice Toscano Roccamo ruled that if the combined effect of a defendant’s Offer to Settle and section 128 of the Courts of Justice Act might result in payment of pre-judgment interest at different rates, a resulting amount for interest that falls short of the jury’s verdict at trial does not satisfy the defence burden under Rule 49.10(3). Her Honour found that it was not possible to determine whether the defence offer actually “beat” the amount awarded of $153,999.37 inclusive of pre-judgment interest.46

Justice Toscano Roccamo wrote: “In evaluating a Rule 49 offer, I must be satisfied that the terms of the offer are fixed, certain and capable of clear calculation in order to attract potentially severe costs consequences under Rule 49. Uncertainty or lack of clarity in any aspect of an offer may prevent a party from showing that the judgment was “as favourable as the terms of the offer to settle, or more or less favourable” as the case may be, under Rule 49.10(3).”47 Justice Toscano Roccamo accordingly ruled that the plaintiff should not be deprived of their partial indemnity costs throughout the proceedings. Her Honour ordered the defendant to pay the plaintiffs’ costs in the amount of $578,742.28 – the full amount claimed by the plaintiffs.48

We have not found a case that has considered the ruling in Elbakhiet. We suggest that in any event, Offers to Settle in personal injury litigation be broken down as precisely as possible as to the amounts payable, including the amount payable for, or the basis of the calculation of, pre-judgment interest.

Multiple Defence Offers, Rules 49.11, 49.12 and 49.13

In Lawson v. Viersen,49 the plaintiffs commenced two separate actions arising out of two motor vehicle accidents. Neither Statement of Claim referred to the other motor vehicle accident. Both claimed damages for the same injuries and the same loss of income. The two actions were tried together as a single, consolidated action. The defendants in the action arising out of the first accident, the Viersens, offered to “settle or contribute for $100,000 plus costs to be agreed upon or assessed.” The defendant in the second and apparently more serious accident, Hart, offered to settle for $300,000, net of advance payments and deductibles, plus costs to be agreed upon or assessed. The plaintiffs offered to settle the consolidated action with both defendants for $1.25 million.50

Evidence was adduced during the six-week jury trial that both accidents contributed to the plaintiff’s injuries and resultant income loss. However, the jury found that the plaintiff’s injuries were separate and divisible. The jury accordingly awarded damage for each accident: $20,000 in general damages ($5,000 net the deductible) plus prejudgment interest for the first accident and $100,000 in general damages ($85,000 net the deductible), $321,000 in past income loss, $192,000 in future income loss, and $12,000 to the Family Law Act plaintiffs for the second accident.51 The net awards were $7,926.71 for the first accident and $344,260.37 for the second. The total damages of $352,187.08 were almost $50,000 less than the combined defence offers.52

The plaintiff requested costs. The Viersens argued that they were entitled to their costs from the date of their offer pursuant to rule 49.10 and that their offer to settle for $100,000 far exceeded the judgment obtained by the Viersens in the first accident. The Viersens argued that their offer was a standalone offer and that it did not have to encompass the claim being made against the other defendant in the second accident as contemplated by Rule 49.11.53 The trial judge disagreed and found that the offers to settle made by the defendants were not a joint offer to settle which would have complied with Rule 49.11. The trial judge refused to apply Rule 49.10 cost consequences to the Viersens or to the defendant Hart because it had been alleged that the plaintiff’s injuries were jointly caused and there had been no proper offer made pursuant to Rule 49.11. The trial judge relied on the opening wording of Rule 49.11: “Where there are two or more defendants, the plaintiff may offer to settle with any defendant and any defendant may offer to settle with the plaintiff, but where the defendants are 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 unless….” The plaintiffs were awarded approximately $480,000 in costs even though the judgment was less than the total of the defence offers.

Viersens’ counsel then argued that Viersens’ portion of the Lawsons’ costs should be paid by the defendant Hart because of Viersens’ Offer to Contribute. The trial judge found that “in the face of a $1 million ‘joint’ claim it would not [have been] logical to accept the Viersens’ offer to contribute” and, although the award against the Viersens was substantially lower than their offer, making an award of costs based on “hindsight in the result” was not appropriate.54

The Viersens also argued that they should have to pay only their proportionate share of the plaintiffs’ costs based on the amount awarded against them by the jury. The trial judge rejected the argument, but exercised her discretion to order that 35% of the costs should be paid by the Viersens and 65% by Mr. Hart.55

Viersens were granted leave to appeal costs. The Ontario Court of Appeal ruled that the trial judge was correct in finding that because the defendants in the consolidated action had not made a joint Rule 49.11 offer, therefore, Rule 49.10 cost consequences did not apply. The Court of Appeal noted that the Negligence Act makes concurrent tortfeasors (persons whose conduct causes a single loss to another person) jointly and severally liable. The legislation allows concurrent tortfeasors to claim contribution and indemnity from another tortfeasor if the tortfeasor from whom contribution is sought is, or could be if sued, liable to the plaintiff. The plaintiff’s position at trial had been that the injuries were sustained as a result of both accidents and were indivisible such that they could not be attributed to one or the other tortfeasor. The Court of Appeal accepted the plaintiffs’ argument on appeal that “the fact that the jury found against Ms. Lawson on the issue of joint and several liability was… of no moment because, to comply with rule 49.11, she need only advance a claim that may result in rights of contribution or indemnity.”56

However, the Court of Appeal ruled, the trial judge erred in failing to consider Rule 49.13: “Despite Rules 49.03, 49.10, and 49.11, the Court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.”

In my view, the trial judge erred in failing to consider or in giving inadequate weight to the fact that the combined offers exceeded the Lawsons’ recovery at trial, the fact that the Viersens’ offer substantially exceeded the damages awarded against them and the fact that, given the outcome of the trial, Ms. Lawson could have accepted the Viersens’ offer without compromising her right to recover against Mr. Hart. These were significant factors that weighed heavily in favour of limiting the award of costs against the Viersens to the costs incurred before the date of their offer and militated in favour of allowing the Viersens to recover some of their costs. As a result, the award of costs against the Viersens cannot stand.57

The Viersens were accordingly liable for 35% of the plaintiffs’ costs to the date Viersens’ Offer to Settle was served.58 The plaintiffs were ordered to pay Viersens’ costs on a partial indemnity basis from the date of their offer but that, in turn, those costs should be paid by the defendant Hart.59  The Court held that Viersens’ offer to settle for $100,000 was also an offer to contribute pursuant to rule 49.12(1) and the trial judge had erred by refusing to consider the reasonableness of the Viersens’ offer to contribute as against the judgment.60 The Court of Appeal ruled that the offer to contribute weighed heavily in favour of Viersens in the context of Rule 49.12(2)(a).

Lawson v. Viersens is critical to properly drafting Offers to Settle in multi-defendant litigation. It also allows the court to exercise a discretion under Rule 49.13 where Rule 49.10 does not apply. In other words, judges may see that justice has been done when the circumstances so warrant.

The Ontario Court of Appeal did not consider Elbakhiet. However, the latter case may have been differently decided as to costs if the Lawson analysis had been available. As the Ontario Court of Appeal noted in Lawson:

[Rule 49.13] allows a judge to consider offers even though the offers do not comply with rules 49.10 or 49.11.  Rule 49.13 is not concerned with technical compliance with the requirements of rules 49.10 or 49.11. It calls on the judge to take a more holistic approach.61

(emphasis added)

Similarly, we suggest, a holistic approach to proportionality will prevent the principle from being given disproportionate significance in the awarding of costs.

1 1465778 Ontario Inc. v. 1122077 Ontario Ltd. (2006), 275 DLR (4th) 321 (Ont CA) at para. 26.

2 Ontario Annual Practice (2013-2014), Rules of Civil Procedure, RSO 1990, Reg 194, r 57, “Synopsis” at p. 1233.

3Ibid, at r 1.04(1.1).

4 (2006), 211 OAC 65 (SCJ).

5 (2003) OR (3d) 288 (SCJ). ; see also McLean v. 721244 Ontario Ltd., [2000] OJ No 3507 (SCJ).

6 Culligan Springs, supra note 4 at para. 23.

7 2010 ONSC 2144.

8 Ibid, at paras. 9 and 10.

9 Patene Building v. Niagara Home, 2010 CanLII 468 (S.C.) at para. 1.

10 Buchanan v. Goetel Communications Corp., [2002] OJ No. 3063 at paras 10 and 11.

11 Relying upon Andersen v. St. Jude Medical Inc., (2006), 264 D.L.R. (4th) 557 (OntDivCt.); Risorto v. State Farm Mutual Automobile Insurance Co. 2003 CanLII 43566 (ONSC), (2003), 64 O.R. (3d) 135 (SCJ); and Dean v. Mister Transmission (International) Ltd., [2009] OJ No. 992 (SCJ.), at para. 13.

12 2010 CanLII 846 at para. 19.

13 2013 ONSC 4383 (where the respondent’s claimed hours were clearly excessive); St. Lewis v. Rancourt, 2013 ONSC 4180 at para. 7 (where the number of issues were considered); 1401337 Ontario Ltd. v. MacIvor, 2012 ONSC 6868 (where costs were reduced before the issues were not complicated);

14 See 1416088 Ontario Limited v. Deloitte & Touche Inc., 2013 ONSC 7303 and Mehta v. Sidhu, 2013 ONSC 7583.

15 Ibid, Mehta, at para. 1. See also Ibid, 1416088, at para. 3.

16 See e.g., Yamri Taddese, “Lawyers Fristrated as Motion Delays Hit 7 Months”, Law Times (September 16, 2013) online:

17 2013 ONSC 3264

18 Ibid at para. 13.

19 Ibid. at para. 12.

20 2013 ONSC 5568.

21 Ibid. at para. 54.

22 2013 ONSC 6351.

23 2013 ONSC 6354.

24 2013 ONSC 6356.

25 Crisante, supra note 22 at para. 15.

26 Ibid at footnote 7.

27 Ibid, at para. 12.

28 Ibid, at para 13.

29 Grammatico v. Chambers, 2012 ONSC 5640 at para. 66.

30 Ibid, at para. 66.

31 Ibid, at para. 66.

32 Ibid, at paras. 66(31) and 57.

33 Ibid, at para. 71; Moon v. Sher (2004), 246 DLR (4th) 440 (C.A.) at para. 40.

34Ibid, at para. 71.

35Ibid, at para. 71.

36Tucci v. Pugliese, 2009 CanLII 63137 (Ont SCJ) at paras. 46-47.

37Chrisante, supra note 22 at footnote 7.

38Wellington Plumbing & Heating Ltd v Villa Nicolini Inc, 2012 ONSC 6616, 225 ACWS (3d) 627 at para. 36.

39 See Dugal v. Manulife, supra note 23 at para. 12; see also Bombardier Inc v. AS Estonian Ait, 2013 ONSC 4209.

40 Levshtein v. National Car Rental, 2013 ONSC 4262 at para. 22 (where the cost of a medical report was deemed excessive and reduced); Dugal v. Manulife, Ibid, at para. 12.

41 2011 ONSC 3331 at para. 34.

42 Elbakhiet v. Palmer, 2012 ONSC 3666 at para. 31.

43 Ibid, at paras. 12-15.

44Elbakhiet v. Palmer, 2012 ONSC 3666 at para. 1. Whether this is a proper offer in accordance with Rule 49.10 is discussed below.

45 Citing Kirkpatrick v. Crawford (1987), 22 CPC (2d) 86; Jonas v. Barma (1987), 22 CPC (2d) 274; Villeneuve v. Scott, (1998), 32 OR (3d) 414 (Gen Div); Capela v. Rush (2002), 59 OR (3d) 299 (SC) and Scarcello v. Whalley (1992), 10 CPC (3d) 19 (Gen Div).

46 Elbakhiet v. Palmer, 2012 ONSC 3666 at para. 27.

47 Ibid. at para. 31 citing Rooney (Litigation Guardian of) v. Graham (2001),53 O.R. 685 (C.A.).

48 Ibid. at para. 45.

49 2012 ONCA 25.

50 Ibid. at para. 7.

51 Ibid. at paras. 10 and 11.

52 Ibid. at para. 12.

53 Ibid. at para. 13.

54 Ibid. at para. 17.

55 Ibid. at para. 16.

56 Ibid. at para. 27.

57 Ibid. at para. 52.

58 Less a reduction of 10%, as was awarded by the trial judge, for duplication of work.

59 Ibid. at para. 53.

60 Ibid. at para. 57.

61 Ibid, at para. 46.