



COURT OF APPEAL FOR ONTARIO

CITATION: Cadieux v. Cloutier, 2019 ONCA 241

DATE: 20190327

DOCKET: C63160

Strathy C.J.O., Hoy A.C.J.O., Feldman, Brown and
    Paciocco JJ.A.

BETWEEN

Chad Cadieux, by his Litigation Guardian Michael
    Cadieux,
Michael Cadieux and Lance Cadieux

Plaintiffs
(Respondents/Appellants by way of cross-appeal)

and

Susan Cloutier, Pilot Insurance Company,
Eric
    Saywell
and the Wawanesa Mutual Insurance Company

Defendants

(Appellant/Respondent by way of cross-appeal)

David A. Zuber and Joshua J.A. Henderson, for the
    appellant/respondent by way of cross-appeal Eric Saywell

Allan Rouben and Éliane Lachaîne, for the respondents/appellants
    by way of cross-appeal

Kristian Bonn, for the intervener Ontario Trial Lawyers
    Association

Heard: May 1-2, 2018

On appeal from the judgments of Justice Charles T.
    Hackland of the Superior Court of Justice, sitting with a jury, dated December
    12, 2016 and December 23, 2016, with reasons reported at 2016 ONSC 7604, 63
    C.C.L.I. (5th) 79.

SUPPLEMENTARY REASONS

[1]

In
    reasons released December 4, 2018, this court allowed the appellants (defendants)
    appeal in part and the respondents (plaintiffs) appeal in part and requested
    further written submissions on certain issues. We have now received those
    submissions and these are our reasons concerning those issues.

[2]

The
    additional issues are as follows:

(a)

Whether,
    having regard to all the circumstances, it is appropriate for the appellant to
    pay some part of the legal costs incurred by the respondent in recovering
    Statutory Accident Benefits (SABs) as costs of this proceeding and, if so, how
    much [para. 135 and para. 150.3];

(b)

Whether, having regard to all the circumstances, it is appropriate that
    the court exercise discretion under s. 130 of the
Courts of Justice Act
(CJA) to award prejudgment interest at a rate other than the default rate
    prescribed by s. 128 of the CJA [para. 145, para. 150.6];

(c)

The costs in the court below, having regard to the judgment of this
    court [para. 146]; and

(d)

The costs of the appeal.

[3]

In
    his written submissions on these issues, the appellant also submits that: the
    management fee and out-of-pocket expenses awarded by the trial judge should
    be characterized as an award for health care.

[4]

The
    resolution of the outstanding issues, particularly as regards costs in the
    court below and in this court, must have regard to context.

[5]

The respondent,
    a minor, was involved in an altercation with the appellant, also a minor, who
    pushed him onto a roadway into the path of an oncoming truck. The respondent
    suffered a fractured skull, brain injuries and orthopaedic injuries. He became
    incapable of managing his own affairs and will require lifetime financial and
    medical support.

[6]

The respondent
    settled with the insurer of the truck driver and with his own SABs insurer. He
    pursued the appellant to trial for his several liability.

[7]

The
    case was vigorously contested by the appellants insurer. The trial lasted
    seven (7) weeks. At the end of the day, the jury granted judgment in favour of
    the respondent in the amount of approximately $2.3 million. However, it found
    each of the appellant, the truck driver and the respondent one-third
    responsible for the respondents injuries. As a result of the contributory negligence
    finding against the respondent, and the settlement with the truck driver, the respondent
    was only entitled to recover one-third of his damages.

[8]

Following
    the trial, the trial judge was required to make certain deductions from and
    adjustments to the damages. This resulted in further deductions from the jury
    award, largely for: (a) statutory deductions under the
Family Law Act
;
    and (b) the impact of the SABs settlement. After the deductions and the addition
    of a management fee, the result was a damage award for the plaintiff of
    $500,827.

[9]

The
    appeal to this court was from the trial judges post-trial disposition of these
    issues.

[10]

We now turn to the
    issues identified above.

(a)

Respondents costs in recovering SABs

[11]

At para. 130 of this
    courts reasons, we noted that the tort defendant should not be required to
    pay the costs of the plaintiffs pursuit of SABs as a general principle or as a
    matter of course. We set out, at para 132, a number of factors that a trial
    judge might consider in determining whether to award such costs and, if so, the
    amount to be included. We invited the parties to make submissions as to how
    these factors applied on the facts of this case.

[12]

Neither party made a
    serious effort to address this issue in their written submissions. The
    appellant took the position that no payment should be made for costs because
    the SABs settlement was all-inclusive. The respondent has proposed the purely
    arbitrary amount of $95,325.79. This is based on the court-approved gross fees
    charged by the respondents solicitor for the SABs settlement and the
    settlement with the truck driver ($296,549.36) multiplied by the proportion
    that the SABs settlement ($900,000) bore to the total settlement ($1.4
    million), namely 64.3%, divided by two to account for the appellants
    proportionate share of liability.

[13]

The only reason
    advanced by the respondent for the award of such costs is that the appellant
    has received a substantial benefit from the SABs settlement because it reduces
    the net amount he is required to pay the respondent  an observation that will
    apply in any case. The respondent has not addressed most of the factors identified
    in this courts reasons, particularly whether the SABs settlement was the
    result of particular risk, effort or expense or whether, to use the vernacular,
    it was a slam dunk.

[14]

It was within the
    knowledge and ability of the respondent to address the issues identified by the
    court. He has failed to do so and we are not persuaded that the circumstances
    of this case call for an award of costs under this head.

(b)

The rate of prejudgment interest

[15]

The appellant submits
    that the default rate of 3.3% per annum should apply. The respondent does not
    dispute this. In the circumstances, there is no basis to award anything other
    than the default rate.

(c)

The costs of trial

[16]

Prior to trial, the respondent
    offered to settle for the sum of $900,000, plus costs, disbursements and HST. The
    appellant made a Rule 49 offer to settle for $500,000, plus partial indemnity
    costs.

[17]

The respondent
    advanced a claim for partial indemnity costs of the entire proceeding in an
    amount of nearly $600,000. The trial judge considered this amount reasonable
    for a complex seven-week jury trial. The appellant argued that his near miss
    offer should be taken into account in the award of the costs of trial and
    claimed partial indemnity costs from the date of his offer of approximately
    $420,000. The trial judge considered this amount reasonable as well.

[18]

The trial judge
    considered r. 49.10(2) with respect to the costs consequences of a plaintiff
    not accepting a defendants offer to settle, which is more favourable than the
    judgment: unless the court otherwise orders, the plaintiff is entitled to
    partial indemnity costs to the date the offer was served and the defendant is
    entitled to partial indemnity costs from that date. He also considered the
    near miss line of cases dealing with settlement offers that were close to,
    but less than, the judgment. In particular, he mentioned this courts decision
Elbakhiet
    v. Palmer
, 2014 ONCA 544, referring to r. 49.13, which provides that 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.

[19]

With these principles
    in mind, the trial judge awarded the respondent costs of $100,000 plus HST and
    disbursements of $98,798, a very significant reduction of the costs claimed and
    clearly giving significant effect to the appellants near miss offer.

[20]

The outcome of the
    appeal is that when statutory deductions and deductions for SABs are taken into
    account, the respondents net recovery is somewhere between $340,000 and
    $378,000, depending on which partys calculations are accepted. The result is
    that the appellants offer was not a near miss. It was more favourable than
    the respondents recovery. The costs consequences of r. 49.10(2) apply, unless
    the court otherwise orders.

[21]

In determining costs,
    we must also have regard to the general principles set out in r. 57.01,
    including the amount claimed and recovered, the importance of the issues and the
    overriding principle of proportionality. We also have regard to the principles
    expressed by the trial judge, at para. 64 of his reasons:

It must be remembered that costs are discretionary with the
    Court and in addition to the goal of promoting settlement (Rule 49), there are
    the goals of fairness to the parties, promoting access to justice and, in the
    context of personal injury cases, ensuring that an injured plaintiff is not
    undercompensated (nor over-compensated).

[22]

We begin with
    proportionality. The parties engaged in a lengthy legal dispute, and a
    seven-week jury trial, and
each
incurred, at least
    on paper, costs of about half a million dollars to claim, and defend, a net judgment
    of around $400,000. On the face of it, the costs claimed by both parties are
    disproportionate to the result.

[23]

Second, access to
    justice, fairness and fair compensation. The respondent suffered serious,
    permanent and disabling injuries. While the jury found that he bore some of the
    responsibility, and while he received no-fault SABs and a settlement from one
    of the parties, his total net compensation did not, in our view, result in
    overcompensation. The outcome of the proceeding was clearly not what he and his
    lawyer expected when he offered to settle for $900,000, plus costs,
    disbursements and taxes.

[24]

Third, the real issue.
    This appeal, which resulted in the reduction of the net judgment, was not about
    the jury award or the conduct of the trial. The appellant did not challenge the
    award. He challenged the method of deducting SABs from the jurys award. As we
    pointed out in our reasons, this was a complicated and uncertain area of the
    law. For the appellants insurer, as we were reminded at the hearing, the issue
    was an important one. Indeed, it was important to the insurance industry and
    for lawyers representing plaintiffs and defendants and, of course, for their
    clients. So while the swing in the judgment as a result of the appeal meant a
    great deal to the respondent in terms of dollars and cents, the outcome was
    significant for the appellant in more than its immediate financial
    consequences. The appeal established principles and practices that have important
    effects beyond this particular case.

[25]

Having regard to these
    factors, we would follow the approach originally taken by the trial judge in
    his post-trial ruling (before additional adjustments were made), namely,
    notionally setting off the costs incurred by the plaintiff [respondent] prior
    to the date of the defendants [appellants] offer to settle and the costs
    incurred by the defendant from the date of his offer to settle forward,
    including preparation for trial and trial costs. The result is that neither
    party is entitled to costs.

(d)

The costs of appeal

[26]

Having regard to the
    fact that the appellant was substantially the successful party on the appeal,
    and to the other factors identified in these reasons, the appellant is entitled
    to costs of the appeal fixed at $25,000, inclusive of disbursements and all
    applicable taxes.

(e)

Deductibility of management fee and out-of-pocket expenses

[27]

These issues were
    apparently not raised with the trial judge and they were not directly addressed
    by the parties on the appeal.

[28]

In the interests of
    efficiency, we will address the management fee. In our view, the management fee
    was as awarded by the trial judge properly applied to the plaintiffs
net
recovery and does not itself give rise to a further
    deduction.

[29]

The respondents
    submissions do not refer to the out-of-pocket expenses. We hope the matter has
    been resolved. If it has not been, we expect the parties to make reasonable and
    good faith efforts to do so. The amounts are not large and no issue of
    principle is involved.

G.R. Strathy C.J.O.

Alexandra Hoy A.C.J.O.

K. Feldman J.A.

David Brown J.A.

David M. Paciocco J.A.


