



COURT OF APPEAL FOR ONTARIO

CITATION: Wilson v. Cranley, 2014 ONCA 844

DATE: 20141127

DOCKET: C58281

Laskin, Gillese and Pardu JJ.A.

BETWEEN

Dean Wilson

Plaintiff (Respondent)

and

Stephen Cranley

Defendant (Appellant)

Chris G. Paliare and Andrew Lokan, for the appellant

James L. Vigmond and Brian Cameron, for the respondent

Heard: October 15, 2014

On appeal from the judgment of Justice Barry G.
    MacDougall of the Superior Court of Justice, dated Sept. 6, 2013.

Gillese
    J.A.:

[1]

When determining whether an offer to settle attracts the costs
    consequences of rule 49.10 of the
Rules of Civil Procedure
, R.R.O.
    1990, Reg. 194, should the court add notional pre-judgment interest to the
    jurys general damages award?  This appeal depends on the answer to that
    question.

BACKGROUND

[2]

Dean Wilson (the plaintiff or the respondent) and Stephen Cranley
    (the defendant or the appellant) were involved in a motor vehicle accident
    on October 4, 2008.  The plaintiff claimed damages of more than $800,000, plus
    interest and costs.

[3]

Before trial, the plaintiff put forward two offers to settle.  On April
    19, 2013, he offered to settle for $145,000, inclusive of interest but
    excluding costs.  And on May 3, 2013, he offered to settle for $95,000,
    excluding interest and costs.

[4]

The defendant also made an offer to settle.  His offer of May 2, 2013,
    was for $50,000 in damages, plus interest under the
Courts of Justice Act
,
R.S.O. 1990, c. C.43 (the 
CJA
), costs, disbursements and taxes
    (the Offer).  The Offer of $50,000 plus interest amounted to $61,609.56.

[5]

Prior to trial, the plaintiff asked the defendant to participate in mediation,
    as required by legislation. The defendant did not respond.  He did, however, admit
    liability for the accident after the plaintiff brought a motion to compel the
    defendant to attend for examination under oath.

[6]

Following a six-day trial, the jury awarded the plaintiff $15,000 for general
    damages and $45,000 for loss of future income, for a total award of $60,000. 
    After applying the $30,000 statutory deductible mandated by s. 267.5(7) of the
Insurance
    Act
, R.S.O. 1990, c. I.8, as amended by S.O. 1996, c. 21, s. 29 (the 
Act
),
    the award for general damages was reduced to zero.

[7]

The defendant sought partial indemnity costs from the date of his Offer. 
    He argued that the plaintiff had obtained a judgment only as favourable as, or
    less favourable than, the Offer and therefore the costs consequences of rule
    49.10 should apply.  In making this argument, he compared the Offer of $61,609.56
    (plus costs, disbursements and taxes) to the total jury award of $60,000
    ($15,000 for general damages and $45,000 for loss of future income).

[8]

The trial judge rejected the defendants argument because he found that
    the plaintiff beat the Offer.  In so finding, the trial judge added notional
    pre-judgment interest of $2,299.31 to the $15,000 award for general damages. 
    By notional, the trial judge meant the amount of prejudgment interest that
    would have accrued on the general damages award but for the application of the
    statutory deductible.  The general damages award plus notional pre-judgment
    interest amounted to $17,299.31.  When the trial judge added that sum to the
    award of $45,000 for loss of future income, the total amount was $62,299.31.
    The Offer was for $61,609.56. Thus, the trial judge reasoned, for the purposes
    of rule 49.10, the judgment was more favourable than the Offer by $689.75 and
    the plaintiff was presumptively entitled to costs.

[9]

The trial judge stated that in considering the rule 57.01 factors, he
    took into account, among other things, the fact that the jurys award was only slightly
    more favourable than the Offer and that the defendant did not respond to the
    plaintiffs request for mediation, as required by the
Act
.  He noted
    that a failure to participate in mediation shall be considered by the court in
    awarding costs.

[10]

By
    judgment dated September 6, 2013, the trial judge awarded the plaintiff costs
    of $45,200 plus disbursements of $41,040.86, both of which sums included HST.

ISSUES

[11]

The
    appellant submits that the trial judge erred by:

1.  adding
    notional pre-judgment interest to the general damages award for the purposes of
    rule 49.10; and,

2.  failing
    to properly consider the near miss Offer, even if notional pre-judgment
    interest was properly added to the general damages award.

Issue #1: Did the trial judge err by adding notional
    pre-judgment interest to the general damages award for the purposes of rule
    49.10?

[12]

The
    appellant begins his argument on this ground of appeal by pointing out that neither
    the
CJA
nor the
Rules
provide for interest to be applied to
    anything other than the judgment as issued and entered.  He then points to s.
    267.5(9) of the
Act
and says there is nothing in it that creates an
    entitlement to notional pre-judgment interest.  Section 267.5(9) reads as
    follows:

In an action for loss or damage from bodily injury or death
    arising directly or indirectly from the use or operation of an automobile, the
    determination of a partys entitlement to costs shall be made without regard to
    the effect of paragraph 3 of subsection (7)
on the amount of damages, if
    any, awarded for non-pecuniary loss.
[Emphasis added.]

[13]

Thus,
    the appellant submits, as there is no statutory authority for adding interest
    to any amount other than the judgment, the trial judge erred by adding notional
    pre-judgment interest to the general damages award for the purpose of
    determining whether the Offer attracted rule 49.10 consequences.

[14]

The
    appellant also maintains that adding notional pre-judgment interest is an unwarranted
    extension of the reasoning of this court in
Rider v. Dydyk
, 2007 ONCA
    687, 286 D.L.R. (4th) 517, leave to appeal to S.C.C. refused, [2007] S.C.C.A.
    No. 594, and inconsistent with the reasoning in
Pilon v. Janveaux
, [2006]
    O.J. No. 887 (C.A.).

[15]

I
    would not accept this submission.  I agree with the trial judge that when determining
    whether the plaintiff obtained a judgment more or less favourable than the
    Offer, in calculating the judgment, the court shall consider the amounts that
    the jury awarded, without regard to the statutory deductible, together with
    notional pre-judgment interest added to the award for non-pecuniary loss.

[16]

There
    can be no doubt that when determining a partys entitlement to costs, the trial
    judge was correct to ignore the statutory deductible.  In actions involving
    motor vehicle accidents, pursuant to s. 267.5(7), the award for non-pecuniary
    loss will be reduced by the statutory deductible, which is now $30,000.  However,
    pursuant to s. 267.5(9) of the
Act
, the statutory deductible is not to
    be taken into account when determining whether the plaintiff obtained a judgment
    as favourable as, or less favourable than, a rule 49 offer:
Rider
, at
    para. 23.

[17]

Further,
    when comparing the judgment in such a case with the rule 49 offer, the court is
    to consider not the judgment awarded by the jury but the amount finally awarded
    by the trial judge plus pre-judgment interest:
Pilon
, at para. 16;
Lawson
    v. Vierson
, 2012 ONCA 25, 346 D.L.R. (4th) 518, at para. 22.

[18]

But,
    the appellant argues, the amount finally awarded by the trial judge would be
    reduced by the amount of the statutory deductible, so the trial judge erred in
    adding notional pre-judgment interest to the full amount of the jurys general
    damages award.

[19]

I
    disagree.

[20]

As
    the trial judge noted, s. 128 of the
CJA
provides that a person who is
    entitled to an order for the payment of money is entitled to an award of
    pre-judgment interest on the amount ordered, from the date the cause of action
    arose to the date of the order.  Pre-judgment interest is ordinarily awarded,
    absent special circumstances, to reflect the value of the money wrongfully
    withheld from the plaintiff:
Andrew Kowalczewski Insurance Brokers Ltd. v.
    Hunt
,
[2001] O.J. No. 4429 (C.A.), at para. 13.

[21]

As
    pre-judgment interest would, in the ordinary course, be added to the general
    damages award (
Pilon
)
and the general damages award should be
    considered absent the statutory deductible (
Rider
)
, it follows
    that pre-judgment interest should be notionally added to the general damages
    award from the date of the notice of claim, for the purpose of determining
    whether the judgment was more favourable than the Offer.  Thus, contrary to the
    appellants submission, adding notional pre-judgment interest is not an
    unwarranted extension of
Rider

and
Pilon
.  Rather, it
    is the logical conclusion that flows from the reasoning in the two cases.

[22]

Accordingly,
    in my view, this ground of appeal must fail.

Issue #2: Did the trial
    judge err by failing to properly consider the near miss Offer?

[23]

The
    appellant conceded that in the recent decision of
Elbakhiet v. Palmer
,
    2014 ONCA 544, 121 O.R. (3d) 616, leave to appeal to S.C.C. requested, this court
    makes it clear that there is no near miss policy for the purposes of rule
    49.10.  However, the appellant points out, the court also emphasized in
Elbakhiet
that rule 49.13 requires that any written offer to settle must be taken into
    account when the court exercises its discretion with respect to costs.  The
    appellant says that just as in
Elbakhiet
, the trial judge in this case
    did not mention rule 49.13.  Furthermore, the appellant contends, the trial
    judge did not take into consideration the rule 57.01(1) factors, such as the amount
    that the plaintiff had claimed and the amount that he was awarded.  Therefore, the
    appellant submits, the costs order below cannot stand and this court should
    either reduce the costs order by 50% or order that no costs are payable after
    the date of the Offer.

[24]

I
    would not accept this submission.

[25]

As
    the appellant rightly concedes,
Elbakhiet
affirms that there is no
    near miss policy in respect of rule 49.10.  At para. 31 of
Elbakhiet
,
    Rosenberg J.A., writing for this court, states:

I agree with the respondents that there is no near miss
    policy.  A party that comes close to meeting the judgment is not thereby
    entitled to an award of costs as if they did provide a successful offer.

[26]

However, at para. 32 of
Elbakhiet
,
Rosenberg
    J.A. stresses that even where an offer does not attract rule 49.10
    consequences, pursuant to rule 49.13 the court should consider such offers when
    exercising its discretion with respect to costs.

[27]

And, at para. 33, 
    Rosenberg J.A. explains the approach the court is to take pursuant to rule
    49.13:

As this court pointed out
    in
Lawson v. Viersen
, 2012 ONCA
    25, at para. 46, rule 49.13 is not concerned with technical compliance with the
    requirements of rule 49.10.  Rather, it calls on the judge to take a more
    holistic approach.  The appellants complied with the spirit of Rule 49 even if
    they failed for technical reasons to provide an offer that exceeded the judgment. 
    As held in
Lawson
, at para. 49,
    this was the type of offer that ought to have been given considerable weight
    in arriving at a costs award.

[28]

Although the trial judge in the present case did
not
    expressly refer to rule 49.13, in my view, his endorsement complies with the
    approach mandated by
Elbakhiet
.

[29]

At
    para. 21 of his endorsement, the trial judge states, the award of the jury was
    only slightly more favourable than the [Offer].  This is an express reference
    to the Offer and the fact that the result at trial barely exceeded it.  Indeed,
    earlier in his reasons, the trial judge acknowledges that the difference
    between the Offer and judgment was a mere $689.75 and arose only because
    notional pre-judgment interest had been applied to the general damages award. 
    In short, the trial judge was fully aware that the Offer was a near miss and
    he took that into consideration.

[30]

At
    the same time, however, it is important to recognize that the trial judge took the
    requisite holistic approach.  He considered the full circumstances surrounding
    the Offer, including the offers to settle that the plaintiff had made and,
    significantly, the appellants failure to participate in the statutorily
    mandated mediation, given the respondents request for the same.  Under ss. 258.6(1)
    and (2) of the
Act
, the insurer has an obligation to mediate, at the
    request of the insured, and a failure to do so shall be considered by the
    court in awarding costs.  Those sections read as follows:

258.6(1) A person making a claim for loss or damage from bodily
    injury or death arising directly or indirectly from the use or operation of an
    automobile and an insurer that is defending an action in respect of the claim
    on behalf of an insured or that receives a notice under clause 258.3(1) (b) in
    respect of the claim shall, on the request of either of them, participate in a
    mediation of the claim in accordance with the procedures prescribed by the
    regulations.

(2) In an action in respect of the claim, a persons failure to
    comply with this section shall be considered by the court in awarding costs.

[31]

Further,
    unlike in
Elbakhiet
, the trial judge in this case made no error in
    principle in his approach to rule 57.01.

[32]

Accordingly,
    I would reject this ground of appeal.

DISPOSITION

[33]

For
    these reasons, I would dismiss the appeal with costs to the plaintiff
    (respondent) fixed at $9,500, all inclusive.

Released: November 27, 2014 (E.E.G.)

E.E. Gillese
    J.A.

I agree. John Laskin J.A.

I agree. G. Pardu J.A.


