Rezai et al v. Kumar et al, 2024 ONSC 4497 (CanLII)

Full Decision

Background:

The plaintiff, Ms. Sheikhbaghermohajer, was injured in a rear-end collision on October 6, 2014. At the conclusion of trial and accounting for the appropriate deductions and pre-judgment interest, the plaintiff was awarded a total of $469,774.85.

The plaintiff sought her legal fees on a partial indemnity basis which was $401,560.23 plus HST. She sought her disbursements which were $139,334.26 plus HST.

The defendant argued that the plaintiff’s costs should be within the range of $100,000 to $150,000 inclusive of disbursements.

Held:

The defendants were ordered to pay the plaintiff $274,000 in costs for the action on a partial indemnity basis. They were also ordered to pay the plaintiff $30,000 as a contribution to the plaintiff’s costs of the LAT proceedings and $100,000 for disbursements.

Issues:

1. Should the defendants be ordered to pay the plaintiff’s costs of advancing her claim for accident benefits?
2. Should the defendant be ordered to pay interest on the plaintiff’s litigation loan?
3. Are the defendants entitled to partial indemnity costs from March 7, 2024?
4. What constitutes a fair and reasonable quantum of costs?

Conclusion:

Issue 1: Costs of Advancing Claim for Accident Benefits

The plaintiff claimed partial indemnity costs of $31,124.87 plus HST for pursuing her SABS settlement.

The plaintiff’s SABS insurer denied her claim for housekeeping and attendant care benefits, prompting her to start a LAT dispute. The dispute was settled on the eve of the hearing. The funds were put in a structure. She settled her SABS claim for $1,075,000.

The defendants benefited from this settlement by receiving a $525,000 deduction from the jury award.

The Court of Appeal in Cadieux v. Cloutier, 2018 ONCA 903 held that legal fees incurred in the LAT setting may in some cases be recoverable upon the resolution of the tort claim. The court should consider the following factors when deciding whether to award such costs and the amount of the award:

1. The fees and disbursements actually billed to the plaintiff in pursuit of the SABS;
2. Relevant factors in rule 57.01, including whether the litigation of the SABS claim involved particular risk or effort;
3. The proportionality of the legal costs and expenses incurred by the plaintiff to the benefit of the SABS reduction to the defendant;
4. Whether the SABS were resolved by way of settlement or arbitration;
5. Any costs paid as a result of the settlement or arbitration;
6. Whether all or any portion of the costs were incurred as a result of unusual or labour-intensive steps that should not be reasonably be visited upon the tort defendant;
7. Whether or not plaintiff’s counsel was acting on a contingency fee basis, and if so, the terms of the agreement; and
8. The overall fairness of the allocation of the costs of pursuing SABS as between the plaintiff and the SABS insurer and as between the plaintiff and the tort insurer.

After applying the facts of the case to the above principles, the Court concluded that plaintiff’s counsel was entitled to recover the costs incurred in securing the benefits. The Court awarded $30,000 in costs for advancing the accident benefits claim.

Issue #2: Interest on the Plaintiff’s Litigation Loan

Davies v. The Corporation of the Municipality of Clarington et al, 2019 ONSC 2292 sets out the steps a plaintiff must take to successfully recover interest on a litigation loan as a disbursement. The plaintiff must:

1. Disclose the loan details;
2. Consider other funding methods;
3. Demonstrate a need for the loan; and
4. Disclose the loan documents in the Schedule “B” of their Affidavit of Documents.

In this case, the plaintiff failed to provide evidence to substantiate the use she made of the litigation loan or that she exhausted other funding alternatives. She did not provide evidence of why she was unable to borrow from a traditional lender.

The claim for the litigation loan interest was denied.

Issue #3: Partial Indemnity Costs

The Court of Appeal Decision in Elbakhiet v. Palmer, 2014 ONCA 544 confirmed that the Rule 49.10 cost consequences apply only when the plaintiff’s judgement is as favourable as or less favourable than the defendant’s offer. There is no “near-miss” policy. The power to order otherwise has been narrowly construed to promote settlement and predictability.

The plaintiff recovered significantly less than her offer, though more than the defendant’s offer. The Court granted partial indemnity costs and calculated the quantum according to the following general principles as set out in s. 131 of the Courts of Justice Act and Rule 57.01 of the Rules of Civil Procedure:

1. The principle of indemnity, the experience of the lawyer for the party entitled to the costs, the rates charged, and the hours spent by that lawyer;
2. The amount claimed and the amount recovered in the proceeding;
3. The apportionment of liability and admission of liability;
4. The complexity of the proceeding;
5. The importance of the issues;
6. Conduct of the parties that affected the duration of the proceeding;
7. Offers to settle not meeting the requirements of Rule 49; and
8. The amount that an unsuccessful party could reasonably expect to pay.

The judge awarded $275,000 for fees and $100,000 for disbursements to the plaintiff based on the following:

1. The action was ongoing for 9.5 years;
2. The parties participated in two mediations and a pre-trial;
3. There were multiple timekeeper on the file;
4. The plaintiff incurred legal fees to obtain a SABS settlement that was highly advantageous to the defendant;
5. The trial lasted under four weeks;
6. The plaintiff was represented by competent and diligent counsel, whose submissions greatly assisted the Court; and
7. The plaintiff obtained an award that exceeded the defendants’ offer by $102,224.85.