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We are attaching a copy of the costs decision in Hartwick v. Simser. (You may recall that we discussed this decision in an earlier Update.) The ruling on costs is very favourable for defendants because it addresses several of the same issues that arose in Power J.’s ruling in Russett v. Bujold. The decision of Madam Justice Toscano Roccamo, in Hartwick, takes a much more conservative approach to costs than that in Russett.
To recap, Hartwick was an MVA case involving two chronic pain claimants, mother and daughter. At trial, the court awarded substantial damages to both, although, in the first such case in Ontario, reduced the general non-pecuniary damages by a percentage that was supposed to reflect the pre-existing “crumbling skull” conditions.
The plaintiffs sought substantial indemnity costs throughout, because of the “aggressive litigation strategy” adopted by the defence. The fact that the plaintiffs’ credibility had been challenged was also cited as a basis for substantial indemnity costs (an argument which did find some favour in Russett, although in a somewhat different context).
The court rejected the plaintiffs’ argument. Madam Justice Toscano Roccamo commented that “litigation is never a tea party” and that “defendants are entitled to put plaintiffs to the proof and there is no obligation to settle an action”. She noted that “in cases of chronic pain which so often rest on a myriad of subjective complaints, courts have long since recognized that issues of credibility may become pivotal”.
The court also rejected the request for a costs premium. Since the Russett decision, in which a premium of $25,000 was awarded in a chronic pain case, it has become a standard practice to seek a costs premium. In Russett, the court rationalized the premium principally on three bases:
(a) the fact that the plaintiffs lacked the financial resources to fund lengthy complex litigation;
(b) the fact that the plaintiffs’ counsel financed the litigation; and
(c) the fact that counsel assumed the risk attached to the litigation.
Counsel for the plaintiff in Hartwick relied on these same factors to justify a premium in that case. Toscano Roccamo J. rejected the request. Her reasons are very instructive.
First, she noted that although liability had been placed in issue through most of the litigation, the plaintiffs faced no serious risk of non-recovery.
Secondly, she observed that although counsel for the plaintiff had fully funded the litigation, the plaintiffs were not impecunious. (Of course, neither was the plaintiff in Russett.)
The court made this further comment:
A premium should not be awarded in every instance where counsel has funded protracted litigation in the absence of other extenuating circumstances, such as high risk of non-recovery due to liability or other concerns. To do otherwise, would result in the award of premiums in almost every case where counsel funds successful litigation, and may in some instances result in the subsidy by the losing party of a lucrative contingency fee arrangement. This could not have been contemplated in the exercise of a court’s discretion in awarding costs under s.131 of the Courts of Justice Act . The potential award of costs up to the maximum range of the substantial indemnity scale already addresses to some extent the expenditure of a greater degree of skill and effort of counsel in the achievement of a particularly good result. As was observed in Russett v. Bujold , supra , the upper limit of the Tariff is reserved for the most complicated of cases with the most experienced of counsel.
Her Honour referred to two recent decisions of the Court of Appeal, from which she extracted the principle that “at the end of the day, the assessment of costs must be guided by the overriding principle of reasonableness, that is, the reasonable expectations of both parties”.