Justice Denis Power has just released his final costs award in Russett v. Bujold and we have attached a copy. You may recall this case from an Update that we circulated several weeks ago. It involved a chronic pain claim and was settled after about a week and a half of trial, for $435,000, exclusive of costs.
Justice Power’s first set of reasons detailed his approach to the award of costs. As we have described in our earlier Update, the factors that he took into account included (quoting from the judgment) “the Defendants’ unreasonable position on liability; the challenge to the Plaintiffs’ credibility; the Defendants’ position on causality with respect to Ms. Russett’s chronic pain; and the fact that the Defendants knew that Ms. Russett did not have sufficient funds to maintain expensive litigation”.
His Honour found that the plaintiff was nevertheless not entitled to costs on a substantial indemnity basis and he awarded only partial indemnity costs. But he did award a premium of $25,000. He also permitted the plaintiff to recover disbursements of about $143,000. Justice Power was not able, in his original decision, to calculate the exact amount of the fees recoverable. He sent the parties back to perform the “arithmetic”, based on the general principles that he had laid down.
In today’s decision, final figures for the costs have been determined. The total costs award, including costs of the assessment process itself, was $431,265.67. Thus, the costs awarded were within $5,000 of the amount of the settlement for damages and interest ($435,000). Justice Power addressed the question of whether it was reasonable for the costs to exceed (or in this case, to approximate) the award of damages and interest. He referred to the case of Dybongco-Rimando Estate v. Lee,  O.J. No. 534, where Justice Quinn had said, “I see no reason why the court should be concerned with whether costs exceed the damages awarded. Everyone knows that, in some cases, the costs involved in going to trial will surpass the value of the claim or the amount otherwise in dispute. That is a foreseeable risk of litigation and it should not accrue to the benefit of the losing party.”
Justice Power did not entirely agree with this proposition. In his view, while it was true that costs might, in some cases exceed the award, the courts should be concerned with the issue. In this regard, he referred to the well-known cases of Zesta Engineering (Court of Appeal) and Gratton-Masuy (Divisional Court panel of which Power J. himself was a member), both of which had held that “the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant”.
Nevertheless, His Honour felt that in this particular case, a costs award of $431,265 was reasonable.
What caused the costs in Russett to reach such large proportions (apart from the disbursements of $143,000) was not the hourly rate, which was a not-unreasonable $225.00 for the principal plaintiffs’ counsel. Rather, it was the expenditure of a very large number of hours by various members of the firm acting for the plaintiff which caused the legal fees to swell.
Justice Power’s decision is a worrisome one for defendants. As we pointed out in our earlier Update, what makes the costs award in Russett of particular concern is (1) that the claim appears to have been a rather garden-variety injury, not a catastrophic one; and (2) that several of the factors for which His Honour faulted the defence (challenge to plaintiff’s credibility, costliness of trial) are common to many, if not most, BI claims.
If $431,625 is really what defendants should expect to have to pay for costs in a chronic pain case, this is information that they should have and be able to weigh at the outset of the case.
Likewise, if challenging the plaintiff’s credibility has become a basis for censure (particularly in a type of case notoriously based almost solely on subjective complaints), this too should be known in advance.
The award of a premium (albeit a relatively modest one) raises questions about the principles underlying such awards. As we reported in another recent Update, Justice Lang (now of the Court of Appeal) addressed this issue in her recent decision in Grass v. Women’s College Hospital . Among the concerns voiced by Lang J.: who is to receive the premium? How is it to be calculated? Should defendants be entitled to premiums too, when they win? What effect do contingency fee arrangements have on the award of premiums?
Finally, the Russett decision suggests that courts will be reluctant to second-guess the judgment of plaintiffs’ counsel as to how many hours should be spent on a file. We see this as a big problem for defendants, who will usually have no way of knowing how much time is accumulating in the office of the plaintiffs’ solicitors until the end of the case, by which time it is too late for the information to be factored into decisions about settlement strategies. We feel that without any objective controls on the time being spent by a party’s lawyer, the Zesta Engineering goal of a “fair and reasonable amount” to be paid by the unsuccessful party, will not be attained.
It is our understanding that the defendant Bujold is going to seek leave to appeal Justice Power’s costs decision. While leave to appeal an award of costs is usually difficult to obtain, this decision, because of its potentially far-reaching consequences, might be one that the Court of Appeal will elect to hear. We will keep you posted.