



COURT OF APPEAL FOR ONTARIO

CITATION: Bondy-Rafael v. Potrebic, 2019 ONCA 1026

DATE: 20191231

DOCKET: C66487

Lauwers, van Rensburg and Roberts JJ.A.

BETWEEN

Krystal Lynn Bondy-Rafael, Tanner Curtis Eyraud,
a minor by his Litigation Guardian, Leeann Rafael, Spencer Ouellette,
a minor by his Litigation Guardian, LeeAnn Rafael and
LeeAnn Rafael

Plaintiffs (Respondents)

and

Soka Potrebic, Dane Potrebic
,
The
    Estate of Luigi Pipolo, by his Estate Trustee, Enza Mary Pipolo, Enza Mary
    Pipolo, Anthony Lino Pipolo, Anthony Pipolo Incorporated
and the Corporation
    of the City of Windsor

Defendants (
Appellants
/
Respondents
)

Sheldon A. Gilbert, Q.C., for the appellants

Brian A. Foster and Anne C.
    Davenport, for the respondents, The Estate of Luigi Pipolo, by his Estate Trustee,
    Enza Mary Pipolo, Enza Mary Pipolo, Anthony Lino Pipolo, and Anthony Pipolo
    Incorporated

Alan L. Rachlin, for the
    respondents, Krystal Lynn Bondy-Rafael, Tanner Curtis Eyraud, a minor by his
    Litigation Guardian, LeeAnn Rafael, Spencer Ouellette, a minor by his
    Litigation Guardian, LeeAnn Rafael, and LeeAnn Rafael

Heard: August 28, 2019

On appeal from the order of Justice Justice J. Paul R.
    Howard of the Superior Court of Justice, dated August 31, 2018.

Roberts
    J.A.:

A.

Overview

[1]

This appeal turns on the correct analytical approach to be followed in
    the fixing of costs when an action is settled before its adjudication on the
    merits.

[2]

On May 4, 2004, the then infant plaintiffs, Krystal Lynn Bondy-Rafael
    and Tanner Curtis Eyraud, were catastrophically injured when struck by the SUV
    driven by Soka Potrebic while they were waiting for their mother to pick them
    up from the Pipolos plaza. There was no issue that these plaintiffs damages
    exceeded by several millions of dollars the Potrebics and the Pipolos respective
    third party liability policy limits.

[3]

The Potrebics appeal from the order of the motion judge that required
    them to pay all the plaintiffs partial indemnity costs in the amount of
    $927,934.08, without any contribution from the Pipolo respondents (the
    Pipolos), but net of an agreed upon contribution by the City of Windsor. While
    they also take issue with the quantum of the costs award, the main thrust of
    their appeal challenges the motion judges apportionment of liability for
    damages as the basis for apportioning costs following a settlement.

[4]

The background to the settlement is as follows. The plaintiffs reached a
    settlement with the City of Windsor in 2014. After more than ten years of
    litigation, the remaining parties agreed to settle the action in June 2017,
    about three months before the four-month trial of the action was scheduled to
    commence. The plaintiffs settled their claims as against the Potrebics for $1 million
    plus accrued interest
[1]
,
    and as against the Pipolos for $1 million, plus costs to be determined by the
    court and allocated between the Potrebics and the Pipolos. The settlement and
    the fees and disbursements payable to plaintiffs counsel were approved by the
    motion judge, who had also been assigned to hear the trial.

[5]

The motion judge later heard argument on the issue of costs payable to
    the plaintiffs by the Potrebics and the Pipolos. The plaintiffs disbursements
    were conceded, although their apportionment was not. The Potrebics and the
    Pipolos each argued that the other should be primarily responsible for the
    payment of the plaintiffs costs.

[6]

The motion judge assessed the Potrebics and the Pipolos respective
    liability based on his view of the merits of the action and concluded that the
    Potrebics were entirely responsible for the plaintiffs damages. As a result, he
    found the Potrebics solely responsible to pay the plaintiffs partial indemnity
    costs.

[7]

For the reasons that follow, I would allow the appeal and re-allocate
    liability for the plaintiffs costs equally between the Potrebics and the
    Pipolos consistent with their respective settlement contributions. In the
    circumstances of this case, the motion judge erred in his approach to fixing
    the plaintiffs costs following the settlement by apportioning costs based on
    his assessment of what would have been the respective liability of the parties
    for damages at trial.

B.

Issues

[8]

The Potrebics raise two issues:

(i)

The motion judge erred in his apportionment of costs as between the
    Potrebics and the Pipolos.

(ii)

The motion judge erred in the amount of costs awarded to the plaintiffs.

[9]

Before addressing these issues, I set out the background facts.

C.

Background facts

(1)

The accident and the injuries

[10]

For the purposes of this appeal, a brief summary of the relevant
    background and unchallenged facts suffices.

[11]

On May 4, 2004, Ms. Bondy-Rafael, who was then 17 years old, worked
    part-time at the nursery school that her then 2-year-old brother, Mr. Eyraud,
    attended. The nursery school was located two doors south of the Pipolos plaza.
    At the end of the nursery school day, Ms. Bondy-Rafael took her brother to get
    a snack at a convenience store located in the plaza. They sat outside the
    convenience store while they waited for their mother, LeeAnn Rafael, to pick
    them up. Other than a shallow curb, there were no barriers between the plazas
    parking lot and the area where Ms. Bondy-Rafael and Mr. Eyraud were seated.

[12]

Without warning, Dane Potrebics SUV, driven by Ms. Potrebic, left the
    parking lot, drove over the curb, and hit Ms. Bondy-Rafael and her brother.
    They were both catastrophically injured. Neither of them will ever be able to
    live independently or to support themselves financially.

(2)

The action and settlement

[13]

In 2006, the plaintiffs, by their litigation guardian, Ms. Rafael, sued
    the Potrebics, the Pipolos, and the City of Windsor. They pleaded that Ms.
    Bondy-Rafael and Mr. Eyraud were catastrophically injured by the accident.
    Plaintiffs counsel estimated the plaintiffs damages to be
:
    $18.8 million for Mr. Eyraud; $5.6 million for Ms. Bondy-Rafael; $300,000 for Ms.
    Rafaels
Family Law Act
, R.S.O. 1990, c. F.3 (
FLA
) claims;
    and $225,000 for Spencer Ouellettes
FLA
claims.

[14]

The plaintiffs sought damages against the Potrebics on the ground that
    Ms. Potrebic was negligent in her operation of the motor vehicle that struck
    and catastrophically injured Ms. Bondy-Rafael and Mr. Eyraud. Their claim
    against the Pipolos alleged negligence on the basis that they failed to install
    barriers in the parking lot that would have prevented the vehicle from jumping
    the curb and hitting Ms. Bondy-Rafael and Mr. Eyraud. The plaintiffs claimed
    damages against the City of Windsor on the ground that it had jurisdiction over
    the area where the Pipolos plaza was located and was responsible for
    promulgating and enforcing bylaws and standards affecting the plaza, which were
    deficient and failed to protect the plaintiffs.

[15]

In 2007, the Potrebics counsel advised the plaintiffs that their third
    party liability policy limits were capped at $1 million, inclusive of interest,
    plus costs. The Potrebics offered to pay their policy limits to settle the
    action, provided that the plaintiffs agreed to limit their liability to the $1
    million policy limit. In September 2007, the Potrebicss insurer paid $1
    million into an interest-bearing trust account. When the investment matured on September
    12, 2017, its total value was $1,117,544.77 inclusive of interest.

[16]

The plaintiffs did not accept the Potrebics offer at that time because
    of the obligation to limit the Potrebics liability. Over the next ten years, they
    pursued the Pipolos to contribute to the settlement. To that end, they secured
    three experts reports supporting their allegation of negligence against the
    Pipolos. The Pipolos obtained their own experts report that disputed the
    opinions of the plaintiffs experts and expressed the view that the Pipolos
    were not negligent. The Pipolos third party liability policy limits were fixed
    at $2 million, including interest.

[17]

In 2010, the plaintiffs settled their statutory accident benefits claims
    with their own insurer for a total of $3,007,903.97 without litigation.

[18]

On June 20, 2014, the court approved the settlement of the plaintiffs
    claim against the City of Windsor in the amount of $400,000, plus $100,000
    towards the plaintiffs legal fees, inclusive of HST, and $50,000 for
    disbursements, inclusive of HST, based on a Mary Carter Agreement.

[19]

The trial of the action was estimated to take four months and scheduled
    to commence on September 5, 2017. In June 2017, the remaining parties achieved
    a settlement, subject to court approval. All issues were settled, except for
    the amount of costs to be paid to the plaintiffs and the apportionment of costs
    as between the Potrebics and the Pipolos. The minutes of settlement provided
    that the costs would be determined by a judge of the Superior Court of Justice.

[20]

On November 24, 2017, the motion judge approved the settlement. The
    judgment provided that the defendants shall pay to the plaintiffs their costs
    in an amount and allocated amongst the defendants in accordance with a further
    order to be made by a judge of this Court and that they were collectively
    entitled to a credit against the plaintiffs costs in the amounts paid by the
    City of Windsor - $100,000 for fees and $50,000 for disbursements, including
    HST.

[21]

The motion judge also approved the fees payable by the plaintiffs to
    their counsel pursuant to their contingency fee agreement, under which the
    plaintiffs agreed to pay their counsel 30 percent of any amount awarded in
    settlement or after trial. The motion judge fixed counsel fees for the tort action
    and the statutory accident benefits claims in the amount of $1,222,996.68,
    inclusive of HST.

(3)

Fixing of costs

[22]

The parties later appeared before the motion judge on a motion to have
    the plaintiffs costs fixed. They filed the settlement brief prepared by plaintiffs
    counsel for the approval of the settlement, including the contingency fee
    agreement, a brief of counsels dockets, the voluminous medical reports and
    clinical records in relation to the injuries suffered by Ms. Bondy-Rafael and
    Mr. Eyraud, as well as the four experts reports submitted by the parties
    concerning the configuration of the Pipolos plaza. There was a conflict
    between the plaintiffs and the Pipolos experts.

(a)

The positions of the parties

[23]

The plaintiffs three experts opined that the Pipolos plaza was
    negligently configured in that it lacked any barriers, such as bollards, in
    front of the parking lot that they stated would have prevented the accident.
    The Pipolos sole expert disagreed and was of the view that the plaza was
    configured in accordance with relevant standards. No cross-examinations of any
    of the experts occurred and there was no oral evidence called at the hearing of
    the costs motion.

[24]

The Potrebics position was that the Pipolos should bear most of the
    plaintiffs costs. They submitted that the Pipolos delay in admitting
    liability increased the plaintiffs costs. They pointed to their 2007 offer to pay
    their policy limits and submitted that the Pipolos should pay a significantly
    greater percentage of the costs award. Finally, they stated that the costs of
    particular motions for which costs had been fixed should be excluded from the
    plaintiffs costs, as well as costs of a motion for summary judgment brought by
    the Pipolos, in which the Potrebics did not participate, and which was under
    reserve at the time of the settlement.

[25]

The Pipolos submitted that the motion judge should apportion costs
    between them and the Potrebics based on their respective liability for the
    plaintiffs damages. They argued that the Potrebics were entirely responsible
    for the plaintiffs injuries and that the plaintiffs theory of the Pipolos
    liability was dubious. They relied on their own experts report to exonerate
    them from any negligence in the configuration of their plaza. They submitted
    that, as a result, they should pay no costs.

(b)

The decision under appeal

[26]

The motion judge organized his reasons around three principal issues on
    the fixing of costs: the scale of the plaintiffs costs; the amount of the
    plaintiffs costs; and the apportionment of the responsibility to pay the
    plaintiffs costs as between the Potrebics and the Pipolos.

[27]

With respect to the first two issues, the motion judge rejected the
    plaintiffs request that their costs be fixed on a full indemnity scale and
    ordered that they be awarded on a partial indemnity basis. He then fixed the
    plaintiffs partial indemnity costs for the tort action, net of the City of Windsors
    settlement contribution, in the amount of $800,000 for fees, including HST, and
    $127,934.08 for disbursements (the amount of the disbursements was conceded and
    is not challenged on appeal).

[28]

In establishing the quantum of costs, the motion judge took into
    consideration the factors listed at r. 57.01(1) of the
Rules of Civil
    Procedure
, R.R.O. 1990, Reg. 194. In particular, he considered the amount
    of the plaintiffs recovery in terms of the settlement of the tort action
    combined with the settlement of the statutory accident benefits claim.

[29]

On the apportionment of the costs between the Potrebics and the Pipolos,
    the motion judge adopted the Pipolos suggested analysis. The motion judge
    followed the approach applied by the trial judge sitting without a jury in
Mortimer
    v. Cameron
(1994), 17 O.R. (3d) 1 (C.A.), leave to appeal refused, [1994]
    S.C.C.A. No. 150, and apportioned the Potrebics and the Pipolos liability for
    costs in accordance with his view of what would have been the apportionment of
    liability for the plaintiffs damages after a trial. In taking this view, the
    motion judge relied on the opinion of plaintiffs counsel submitted for the
    purposes of the settlement approval motion that there was a significantly less
    than 50/50 chance of any recovery against the Pipolos if the matter went to
    trial. He also relied on the expert report provided by the Pipolos to conclude
    that the Pipolos were not negligent in the configuration of their plaza and
    should not bear any responsibility for the plaintiffs costs.

[30]

The motion judge held that the Potrebics were solely responsible for the
    payment of costs to the plaintiffs.

[31]

I now turn to address the issues of apportionment and quantum.

D.

Analysis

(1)

Apportionment of liability and of costs

[32]

I begin by considering the motion judges approach. In assessing the
    respective liability of the Potrebics and the Pipolos for the plaintiffs damages,
    the motion judge noted that the evidence is quite clear that the negligence of
    the Potrebic defendants caused the injuries in question. The liability of the
    Potrebic defendants is not in question.

[33]

With respect to the Pipolos, however, the motion judge concluded that
    there was little, if any, evidence before [him] on this hearing (or the record
    as a whole) to establish liability on the part of the Plaza defendants on the
    basis of [a very novel argument, that is, that the Plaza defendants should have
    installed bollards at the Lauzon Plaza] and that [i]n the absence of evidence
    before the court establishing that the Plaza [Pipolo] defendants were negligent
    in a manner that contributed to the injuries sustained to the plaintiffs, it is
    inappropriate to apportion to them any responsibility for the payment of costs
    of this matter.

[34]

The motion judge accepted the plaintiffs submission, supported by the
    Pipolos, that the jurisprudence overwhelmingly supports the proposition that
    costs should be apportioned amongst defendants in the same proportion as their
    respective liability for damages. He cited the
Mortimer

case,
Wright
    v. Wal-Mart Canada et al.
, 2010 ONSC 2936, and
Gorman v. Falardeau
,
    2004 CanLII 14959 (Ont. S.C.), in support of that proposition.

[35]

The Potrebics submit that the motion judge erred in undertaking an
    assessment of the respective liability of the Potrebics and the Pipolos for the
    plaintiffs damages in order to apportion costs.

[36]

I agree. The motion judge erred in principle by purporting to rely on
    the apportionment of liability as a general principle that must invariably be
    applied in fixing costs following a settlement of the issue of liability for
    damages, both as a matter of principle, and as a matter of procedure.

(a)

The motion judge erred in principle

[37]

The jurisprudence relied upon by the motion judge does not support the
    determination of the apportionment of liability for damages at a costs hearing.
Mortimer
does not stand for the general proposition that the apportionment
    of costs must always replicate the apportionment of liability for damages. In
Mortimer
,
    the question was whether the apportionment of costs between defendants should
    follow the apportionment of liability made
following a trial
. This court
    determined that the apportionment of costs should follow the apportionment of
    liability
in that particular case
but did not state, as a general rule,
    that it should be followed in all cases.

[38]

Wright
and
Gorman
also do not support the motion
    judges position. In both

cases, costs were apportioned between
    defendants
following a trial
on the merits. Moreover, in
Wright
,
    the court held that it would not be just in the circumstances to reduce the
    plaintiffs entitlement to costs by her five percent contribution to liability,
    meaning that costs were not strictly apportioned according to each parties
    respective liability for damages: see para. 30.

[39]

Indeed, the jurisprudence indicates that costs are not always
    apportioned in accordance with the co-defendants respective liability with
    respect to damages. In
Burns v. Hedge

(2001), 146 O.A.C. 333
    (C.A.), this court held that the motion judge who determined the relative and
    different obligations of three insurers funding the settlement of the
    plaintiffs action, on the basis of the statutory minimum under the
Insurance
    Act
and the limits under the respective insurance policies, should have
    apportioned costs equally among them.

[40]

More recently, in
Gendron v. Thompson Fuels
, 2018 ONSC 2079, 18
    C.E.L.R. (4th) 178, at para. 38, the motion judge refused to apportion the
    plaintiffs costs on the same percentage basis as liability, observing that the
    apportionment of costs calls for a more nuanced analysis. This court upheld
    his decision: 2019 ONCA 293, 56 C.C.L.T. (4th) 33, at para. 123, leave to
    appeal refused, [2019] S.C.C.A. No. 228.

(b)

The motion judge erred procedurally

[41]

The motion judge erred in fixing costs following the settlement of the
    action by carrying out an apportionment of the liability between the Potrebics
    and the Pipolos for the plaintiffs damages, without a proper record and a
    trial on the merits.

[42]

Permitting the adjudication of the parties respective liability for
    damages following settlement would run contrary to the purpose of settlements
    and trial fairness. By their settlement, parties agree to resolve the issue of
    the parties respective potential liability for the plaintiffs damages without
    a trial. It would therefore be inappropriate for the court to embark on a full
    examination and adjudication of the merits of the parties substantive claims
    and defences for the sole purpose of determining the question of costs:
Waterloo
    North Condominium Corporation No. 161 v. Redmond
, 2017 ONSC 1304, at para.
    34.

[43]

Still apposite after more than a century is the following passage from
McLellan
    v. Powassan Lumber Co.
(1914), 26 O.W.R. 323 (Ont. H.C.), at p. 324:

Costs are in truth incident to a determination of the rights of
    the parties and ought not to be made themselves the subject matter of the
    litigation. When the merits for any reason cannot be determined, there ought
    not to be a pretended investigation of the merits for the purpose of awarding
    costs.

[44]

There are several practical reasons for this prohibition. A full paper
    proceeding based upon the affidavit evidence filed by the parties for the
    purposes of settlement will rarely allow a court to make a proper adjudication
    of the merits of an action. The requirement of oral evidence and
    cross-examination to resolve any controversies would transform a costs motion
    into the trial process that the parties expressly sought to avoid by their
    settlement. This inevitable result would undermine the principles of
    expediency, certainty and finality that promote settlement and the smooth
    operation of the administration of justice that encourages and depends on
    settlement.

[45]

Returning to the present case, the parties agreed to resolve the issue
    of liability for the plaintiffs damages by their settlement. The issue of the
    parties respective liability for the plaintiffs damages was therefore not
    before the motion judge on the costs motion. Moreover, the untested evidentiary
    record before the motion judge was inadequate, deficient and controversial for
    the purpose of determining liability for damages. At trial, the opinion of
    plaintiffs counsel as to the merits of the plaintiffs action would have been
    inadmissible evidence and the competing experts opinions would necessarily
    have been subject to cross‑examination and submissions by counsel.

[46]

Accordingly, I would set aside the motion judges apportionment of costs
    and his order that the Potrebics are solely liable for the plaintiffs costs.

[47]

In the circumstances of this case, the appropriate and fair
    apportionment of costs is that the Potrebics and the Pipolos contribute equally
    to and be held jointly and severally liable for the plaintiffs costs. This is
    consistent with the fact that the Potrebics and the Pipolos contributed equally
    to the settlement. It was not unreasonable for the plaintiffs to pursue their
    claim against the Pipolos, which ultimately resulted in their contribution toward
    the settlement, but required extensive steps in the litigation. I would reject
    the Potrebics argument that the Pipolos should be responsible for a
    significantly greater percentage of the costs because of the extensive
    litigation costs incurred after their 2007 settlement proposal. Although the
    Potrebics offered their policy limits at an early stage, their proposal was
    contingent on the plaintiffs agreeing to limit their recovery to the $1
    million policy limit. They did not pay the funds into court. Just as it was
    reasonable to continue the litigation against the Potrebics, it was also
    reasonable for the plaintiffs to pursue other avenues of recovery which, as the
    motion judge found, ultimately benefitted the Potrebics. I see nothing in the
    conduct of either side that would warrant diverging from the proportionate
    arrangement regarding damages that the parties accepted in the settlement.

[48]

Consequently, the Potrebics should contribute 50 percent and the Pipolos
    50 percent of the plaintiffs costs.

(2)

Amount of the plaintiffs costs

[49]

The Potrebics submit that the motion judge erred in awarding the
    plaintiffs $800,000 in fees on a partial indemnity basis. The Pipolos support
    and adopt the Potrebics submissions. They raise five arguments based on: proportionality,
    the amount recovered, the reasonable expectations of the parties, the inclusion
    of the costs of the interlocutory motion, and the costs of the summary judgment
    motion brought by the Pipolos. I address each in turn.

(i)

Proportionality

[50]

First, the Potrebics argue that the amount awarded was grossly
    disproportionate based on the amounts assessed between the plaintiffs and their
    counsel and the recovery in the tort action alone. The motion judge determined
    that the plaintiffs gross contingency fee payable to their counsel was
    $1,222,996.68, inclusive of HST. This amount included costs in relation to the
    tort action and the statutory accident benefits claim. With respect to the tort
    recovery, he assessed a 30 percent contingency fee of $853,447.68, inclusive of
    HST, based on the total amount of the settlement, including the amounts paid by
    the City of Windsor. He concluded that the plaintiffs were entitled to partial
    indemnity costs which he fixed at $800,000, inclusive of HST ($900,000 less the
    $100,000 contribution made by the City of Windsor) and net disbursements of
    $127,934.08 ($177,934.08 less the $50,000 contribution by the City of Windsor).

[51]

The Potrebics submit that, as a result, the motion judge fixed the
    partial indemnity fees of the plaintiffs at an amount that effectively exceeded
    the full indemnity fees awarded to their counsel for the tort recovery.
    Moreover, when the net costs related solely to the tort action in the amount of
    $927,934.08 are compared to the net recovery of $2,117,544.77 from the tort
    action (excluding the City of Windsors settlement contribution), the former
    represents approximately 44 percent of the latter. They argue that this is
    grossly disproportionate.

[52]

I am not persuaded by these submissions.

[53]

These submissions fail to recognize that the overarching consideration
    in fixing party and party costs is to arrive at an amount that is fair and
    reasonable for the losing party to pay in the particular proceeding, rather
    than an amount fixed by the actual costs incurred by the successful litigant:
Boucher
    v. Public Accountants Council for the Province of Ontario
(2004), 71 O.R.
    (3d) 291 (C.A.), at para. 26.

[54]

The amount of fees that clients pay to their solicitors, while relevant,
    is not determinative of the reasonableness of the partial indemnity costs that
    a losing party is required to pay.

[55]

The factors to be considered when assessing solicitor fees, including
    the reasonableness of a contingency fee, are not completely identical to those
    listed at r. 57.01(1) of the
Rules of Civil Procedure
. Most notably,
    while the risk assumed by the solicitor, including the risk of non payment, and
    the ability of the client to pay are relevant in assessing solicitor fees or
    the reasonableness of a contingency fee, these factors are not listed at r. 57.01(1):
    see
Cohen v. Kealy
(1985), 10 O.A.C. 344 (C.A.), at para. 11;
Raphael
    Partners v. Lam
(2002), 61 O.R. (3d) 417 (C.A.), at para. 50.

[56]

Moreover, ss. 20 and 20.1 of the
Solicitors Act
, R.S.O. 1990,
    c. S.15, state
that a contingency fee agreement should
    not impact a costs award
. Specifically, s. 20(1) provides that a
    contingency fee agreement does not affect the amount, or any right or remedy
    for the recovery, of any costs recoverable from the client by any other person.
    Section 20.1(1) specifies that [i]n calculating the amount of costs for the
    purposes of making an award of costs, a court shall not reduce the amount of
    costs only because the clients solicitor is being compensated in accordance
    with a contingency fee agreement.

[57]

Further, partial indemnity fees are not defined in terms of an exact
    percentage of full indemnity fees under the
Rules of Civil Procedure
.
    While representing a portion of full indemnity costs, that portion has never
    been defined with mathematical precision but generally amounts to a figure in
    the range of more than 50 percent but less than 100 percent. This is as it
    should be given the myriad factors that the court must consider in the exercise
    of its discretion in fixing costs.

[58]

Here, the motion judge properly took into account all of the factors
    under rule 57.01(1) and other relevant considerations to arrive at the
    $800,000 figure, including grappling with the value of the plaintiffs claim,
    to which I return below. His decision is entitled to a high degree of deference
    on appeal. I see no error in principle in the motion judges decision as to the
    quantum of costs and this decision is not plainly wrong:
Hamilton v. Open
    Window Bakery Ltd.
,
2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27.

(ii)

Amount recovered

[59]

The second submission builds on the first. It is submitted that the
    motion judge erred in concluding that his assessment of partial indemnity costs
    in the tort action should be based not only on the recovery made in the tort
    action, but also on the sum of $3,007,903.97 recovered by the plaintiffs from
    their own insurer in relation to their respective statutory accident benefits
    claims. They reiterate that the motion judge should have restricted his
    analysis to the net amount recovered in the tort action and that the costs awarded
    were therefore grossly disproportionate to the settlement achieved.

[60]

In my view, this submission depends on too narrow a reading of the
    motion judges reasons. The motion judge was clearly responding to the
    Potrebics submission at the costs motion that the amount recovered as opposed
    to the amount claimed is the governing factor in fixing the plaintiffs
    costs. He grappled with the large discrepancy between the undisputed value of
    the plaintiffs claims and the restricted policy limits available for
    settlement. The motion judge properly determined that the amount recovered by
    the plaintiffs was only one of many factors that he was required to consider
    and that a more nuanced approach was necessary in order to properly apply the
    principle of proportionality in the circumstances of this case to arrive at an
    amount that is fair and reasonable for the unsuccessful party to pay in the
    particular proceeding.

[61]

In determining a fair and reasonable amount of costs, the motion judge
    considered the total amount recovered to be $5,525,448.74, being $2,517,544.77
    recovered on the tort claim (including the City of Windsors contribution) and
    $3,007,903.97 recovered on the statutory accident benefits claims. He found
    that the plaintiffs success on their statutory accident benefits claims
    represented a direct benefit to the defendants. He concluded that even full
    indemnity costs of $1,222,996.68 represented 22.13 percent of that which was
    recovered and that this was not disproportionate.

[62]

The motion judges reliance on
Moodie v. Greenaway Estate
,
    [1997] O.J. No. 6525 (Gen. Div.), at para. 4, affd 122 O.A.C. 90 (C.A.), seems
    misplaced. He adverted to it for the proposition that by reason of the releases
    available to a tortfeasor under the
Insurance Act
, R.S.O. 1990, c.
    I.8, only in compelling circumstances should the unsuccessful tortfeasor escape
    responsibility to indemnify a plaintiff for the costs of pursuing statutory
    accident benefits claims. Unlike the defendant in
Moodie
, the Potrebics
    and the Pipolos are not entitled under s. 256(3) of the
Insurance Act
[2]
to have the amount
    of the plaintiffs statutory accident benefits settlement taken into account to
    reduce the settlement amounts payable in the tort action.

[63]

While the motion judges reference to
Moodie
is not exactly
    clear, his determination that the Potrebics and the Pipolos received a benefit
    from the statutory accident benefits claims settlement is reasonable in that it
    facilitated the plaintiffs agreement to the settlement in the tort action
    within the Potrebics and the Pipolos policy limits.

[64]

The fixing of costs is not a bookkeeping exercise. The fact that the net
    costs award represents about 44 percent of the net recovery of $2,117,544.77
    recovered on the tort claim is not the determining factor in the consideration
    of the principle of proportionality. While the consideration of proportionality
    is necessary to the soundness of any costs award and to ensure the health of
    the justice system, the overarching consideration is that the order for costs
    must be fair and reasonable. Making that assessment is more of an art than an
    exact science. See
Marcus v. Cochrane
, 2014 ONCA 207, 317 O.A.C. 251,
    at paras. 15-16. In consequence, an overemphasis on proportionality to the
    detriment of the other equally relevant factors ignores the principles of
    indemnity and access to justice, especially in proceedings where the
    legitimate claims of clearly wronged plaintiffs are being pursued:
Gardiner
    v. MacDonald,
2016 ONSC 2770, at para. 65, affd 2016 ONCA 968, 63
    C.C.L.I. (5th) 212.

[65]

As already noted, the motion judge quite properly did not limit his
    analysis to the one factor urged by the Potrebics. The motion judges
    determination that the fixed fees were reasonable was open to him. I see no basis
    to intervene.

(iii)

Reasonable expectations of the parties

[66]

Third, it is submitted that the motion judge failed to consider, as
    reflecting the reasonable expectations of the parties, the example of $250,000
    in costs on a $2 million settlement set out in the plaintiffs contingency fee
    agreement.

[67]

This submission is without merit.

[68]

I refer again to the provisions of ss. 20 and 20.1 of the
Solicitors
    Act
that a contingency fee agreement should not impact a costs award. As
    the motion judge noted, reasonably in my view, the example of a possible cost
    recovery used by the plaintiffs solicitors in the contingency fee agreement
    does not serve to establish the amount of costs that a court would determine is
    fair and reasonable in all the circumstances. That determination is subject to
    the many different factors considered by the motion judge.

(iv)

Inclusion of the costs of the interlocutory motions

[69]

Fourth, the Pipolos and the Potrebics argue that the motion judge erred
    in including in the costs award amounts for interlocutory motions for which
    costs had been fixed by other court orders at a net sum payable to the
    plaintiffs.

[70]

I would not accept this submission. In my view, this court is
    effectively being asked to undertake a line by line review of the motion
    judges fixing of costs, which is not our task. As I have already observed, and
    the Potrebics acknowledged at para. 53 of their factum, the fixing of costs
    does not begin or end with the calculation of hours and rates:

see
Boucher
,
    at para. 26.

[71]

The motion judge was aware of these arguments and the previous costs
    awards. There is no indication in his reasons that he failed to consider them,
    along with the other submissions presented by the parties. His reasons do not
    indicate that he awarded the plaintiffs costs covered by previous court
    orders.

[72]

Again, the motion judges task was not a bookkeeping exercise, but,
    rather, as he instructed himself, to fix costs in an amount that would be fair
    and reasonable, having regard to the factors set out in r. 57.01(1) and in all
    the relevant circumstances of this case. I see no error in his fixing of costs
    that would warrant appellate intervention.

(v)

Costs of the summary judgment motion brought by the Pipolos

[73]

Finally, the Potrebics submit that the motion judge erred by including
    in the plaintiffs costs award their costs related to the Pipolos motion for
    summary judgment.

[74]

I would not accept this submission because there is no evidentiary basis
    for it.

[75]

In February 2017, the Pipolos brought a motion for summary judgment
    before the motion judge for an order that would have restricted their potential
    liability in the action to the proceeds of their $2 million insurance policy.

[76]

Unlike the previous costs orders for other interlocutory motions, there
    was no prior disposition of the costs of the Pipolos motion for summary judgment
    which was under reserve at the time of the settlement. The Potrebics submit
    that they should not be responsible for the costs associated with the summary
    judgment motion.

[77]

Since he heard the motion for summary judgment, the motion judge was
    well aware that the motion was under reserve at the time of the settlement.
    There is no indication in the motion judges reasons that he awarded the costs
    of that motion to the plaintiffs.

[78]

As a result, there is no basis to make any reduction to the plaintiffs
    costs.

E.

Disposition

[79]

For these reasons, I would allow the appeal in part and substitute for
    the costs order of the motion judge the following order:

(i)

THIS COURT ORDERS that the plaintiffs costs on a partial indemnity
    basis are fixed in the amount of $800,000 on account of fees (inclusive of
    HST), together with $127,934.08 for disbursements, for a total of $927,934.08,
    payable within 30 days of the date hereof.

(ii)

THIS COURT ORDERS that the plaintiffs costs in the amount of
    $927,934.08 be paid equally by the Potrebics and the Pipolos in the following
    percentages: the Potrebics shall pay 50 percent and the Pipolos shall pay 50
    percent. The Potrebics and the Pipolos are jointly and severally liable for the
    total amount of the plaintiffs costs.

(iii)

THIS ORDER BEARS INTEREST at the rate of 3 percent per year commencing
    30 days from August 31, 2018
.

[80]

I would otherwise dismiss the appeal.

[81]

In my view, the plaintiffs and the Potrebics enjoyed substantial success
    and should be entitled to their partial indemnity costs of the appeal,
    including the costs of the motion for leave to appeal, in the amount of $20,000
    for the plaintiffs and $30,000 for the Potrebics, inclusive of disbursements
    and applicable taxes. I would order that the Pipolos pay the appeal costs of
    the plaintiffs and the Potrebics.

Released: December 31, 2019 (L.R.)

L.B.
    Roberts J.A.

I
    agree. P. Lauwers J.A.

I
    agree. K. van Rensburg J.A.





[1]
The judgment provides for payment by the Potrebics in the amount of $64,172.74
    and periodic payments of $1,053,372.03 as set out in Schedule A to the
    judgment, for a total of $1,117,544.77.



[2]
256 (3) Where the person commences an action, the court shall adjudicate
    upon the matter first without reference to the payment but in giving judgment
    the payment shall be taken into account and the person shall only be entitled
    to judgment for the net amount, if any.


