



COURT OF APPEAL FOR ONTARIO

CITATION: Przyk v. Hamilton Retirement Group
    Ltd. (The Court at Rushdale), 2021 ONCA 267

DATE
:
20210428

DOCKET: C68447

Tulloch, Zarnett and Sossin
    JJ.A.

BETWEEN

Anna Przyk

Plaintiff
(Respondent)

and

Hamilton Retirement Group Ltd.,
    carrying on business
under the name and style The Court at Rushdale

Defendant
(Appellant)

Todd J. McCarthy and Dennis Ong, for
    the appellant

Jeffrey Crannie, for the respondent

Heard: January 28, 2021 by video conference

On appeal from the costs ruling of
    Justice Alan C.R. Whitten of the Superior Court of Justice, dated December 24,
    2019, with reasons reported at 2019 ONSC 7498.

Zarnett J.A.:


A.

OVERVIEW

[1]

The respondent, Anna Przyk, slipped and fell on
    a sidewalk located between the entrance and exit of the retirement home where
    she resided. She sued the owner of the retirement home  the appellant (Rushdale)
     for negligence and breach of the
Occupiers Liability Act
, R.S.O.
    1990, c. O.2. The quantum of damages was agreed to and a trial proceeded before
    a judge and jury on liability alone. The jury found no liability on the part of
    Rushdale, and the action was dismissed.

[2]

Rushdale, as the successful party to the action,
    asked for an award of partial indemnity costs against Ms. Przyk. The trial
    judge denied the request for three reasons.

[3]

First, he observed that the action, which
    required expert evidence, illustrated the need that the law of negligence adapt
    to the growing area of elder care.

[4]

Second, he held that since Rushdale was insured
    and had been defended by an insurer  Aviva  which holds a large share of the
    Ontario insurance market, the case was a David and Goliath situation.

[5]

Third, he was critical of the fact that Aviva
    had never offered a settlement to Ms. Przyk, other than a no costs dismissal of
    her claim. The trial judge considered this to be an example of Avivas
    arrogant, hardball approach on display generally when it defends claims  an
    approach that is unfair to litigants of modest means and inconsistent with
    Avivas social responsibility.

[6]

Rushdale obtained leave from a panel of this
    court to appeal the costs ruling.

[7]

In my view, the trial judges costs ruling
    reflects certain errors in principle. The fact that Rushdale was insured and
    defended by Aviva, a large insurer, was not a reason to deny an award of costs.
    Neither the existence of insurance in favour of a successful party at trial,
    nor the fact that the successful party was better resourced than their
    opponent, is a justification for denying costs where the resource advantage has
    not been used to engage in abusive tactics or other misconduct during the
    litigation. The refusal of a party to offer a financial settlement before trial
    is also not a reason to deny that party costs where the refusal is proven
    reasonable by the verdict. Nor ought the trial judge to have sought to correct
    a general attitude of Aviva toward settlement in other cases by his costs award
    in this case.

[8]

Nevertheless, I would not interfere with the
    costs award. The trial judge viewed Ms. Przyks case as addressing an
    underdeveloped area of the law and thus to have raised important and novel
    issues, which is a proper consideration in deciding whether costs should be
    awarded. This finding was not tainted by any errors in the costs decision and
    is entitled to deference from this court. It is sufficient on its own to
    justify the result reached by the trial judge.

B.

ANALYSIS

(1)

The Standard of Review

[9]

An appellate court takes a deferential approach when
    reviewing a discretionary award of costs by a trial court (including a
    discretionary decision to deny costs). A costs award will only be set aside on
    appeal if the trial judge has made an error in principle or if the costs award
    is plainly wrong:
Hamilton v. Open Window Bakery Ltd.
, 2004 SCC 9,
    [2004] 1 S.C.R. 303, at para. 27.

[10]

This deferential approach requires that attention
    be paid not only to the nature of any error affecting a costs decision, but
    also to its extent. It is insufficient  to identify an error in principle in
    the course of the trial judges reasons without considering whether there is an
    independent basis to uphold the order. An appellate court should be reluctant
    to interfere with the exercise of discretion by a trial judge who had a much
    better opportunity to acquaint himself with, and have a feeling for, all of the
    factors that formed the basis for the award of costs:
Bell Canada v.
    Olympia & York Developments Ltd.
, 1994 ONCA 239, 111 D.L.R. (4th) 589
    at para. 41. Even where a trial judge has relied on a factor that is
    unsupported by proper legal principles or considerations to deny costs to a
    successful party, an appellate court should not intervene unless it can find
    nothing in the factual circumstances or argument to support the order:
Bell
    Canada
at para. 42.

(2)

Depriving a Successful Party of Costs

[11]

A successful party to civil litigation in
    Ontario is entitled to a reasonable expectation that it will receive an order
    for payment of its costs unless there are special circumstances
[1]
:
Bell Canada
, at para.
    23
; Lundy's Regency Arms Corp. v. Potato Factory Bar & Grill Corp
,
    2020 ONSC 238 (Div. Ct.) at para. 11.

[12]

Although sometimes referred to as the loser
    pays costs rule, this approach is not, properly understood, a rule at all.
    Costs are in the discretion of the court, which may determine by and to whom
    costs are payable and in what amount:
Courts of Justice Act
, R.S.O.
    1990, c. C.43, s. 131(1). A court in the exercise of that discretion may
    consider, among other things, the result of the proceeding:
Rules of Civil
    Procedure
, R.R.O. 1990, Reg. 194, r. 57.01(1). But the result is not the
    exclusive consideration, and thus a successful party does not have an
    entitlement to costs, but merely a reasonable expectation that they will be
    awarded, absent special circumstances.

[13]

A judge may deprive a successful party of costs,
    or even order the successful party to pay costs, as long as the exercise of
    discretion to do so is not tainted by errors of law or principle, or does not
    result in a decision that is plainly wrong because it is based on irrelevant
    factors and overlooks relevant ones: rr. 57.01(4), 57.01(2);
Bell Canada,
at paras. 20, 41-42;
Birtzu v. McCron
,
    2019 ONCA 777, 438 D.L.R. (4th) 141 at paras. 10-17, 20-21.

[14]

The trial judge cited what he termed the normative
    or default approach that costs should follow the event. He recognized that his
    discretion to make a different order had to be exercised fairly and reasonably.
    He quoted the factors set out in r. 57.01, which may be considered in the
    exercise of discretion over costs, although he did not identify, as applicable,
    any specific factor listed in that rule other than the importance of the issues.
[2]
He then went on to identify
    three reasons why Rushdale, although successful in the action, should not
    receive an award of costs. For analytical purposes, I address them in a
    different order than the trial judge.

(a)

A David and Goliath Situation

[15]

The trial judge said that:

Modest complainants are always at the mercy of
    the economics of litigation. This is not a lucrative area for a personal
    litigator. It is not unexpected that a plaintiff such as Anna Przyk could end
    up against an insurer such as Aviva, an insurer of retirement homes with a head
    office in Kentucky. This could be characterized as a David and Goliath"
    situation. Access to justice could be threatened by the resources of the
    opposing side.

[16]

The trial judge cited no authority for the
    proposition that the existence of insurance could be relied on in the way that
    he did.
[3]
In my view, the trial judge erred in principle in his reliance on the fact that
    Rushdale was insured by Aviva, and the implications he derived from that fact.

[17]

There is no doubt that a party who is being
    defended by an insurer has resources to conduct the defence. But what is
    relevant to the question of costs is not the existence of defence-facilitating
    resources, but how the resources were used in the litigation. I draw this
    conclusion for three reasons.

[18]

First, although the factors listed in r. 57.01 are
    non-exhaustive, they all relate to the nature of the issues in the litigation,
    the result, and to the way a party behaved in the litigation. None point to the
    identity or resources of the party. Nor do the provisions of r. 49.10, which
    set out cost consequences for failure to accept an offer to settle, support the
    view that the resources of the party making or refusing the offer is relevant.

[19]

Second, it would be wrong to punish a successful
    party, or their insurer, by using the existence of insurance as a reason to
    deny an award of costs on the theory that insurance, by resourcing the defence,
could
threaten access to justice, without considering whether there
was
improper litigation conduct by the successful party that in fact did interfere
    with access to justice for the unsuccessful claimant.

[20]

Third, it is wrong to leap to the conclusion
    that a plaintiff with a modest claim against an insured defendant is
    necessarily in a David and Goliath situation without examining the
    circumstances. Proceedings should not be stereotyped:
Kerr v. Danier
    Leather Inc.
, 2007 SCC 44, [2007] 2 S.C.R. 331 at para. 69. An apparently
    tilted playing field might be levelled in a number of ways, such as through contingency
    fee arrangements, third party litigation funding, or adverse costs insurance.

[21]

Ms. Pryzk was not denied access to justice. She
    took her case to trial, and although the arrangements through which this
    occurred were not explored, there is no doubt that Ms. Przyk was represented by
    experienced counsel at trial. The trial judge noted that (t)he case for the
    plaintiff was well-presented. Both sides called experts. Nothing in the trial
    judges reasons supports the view that Ms. Przyks case was prejudiced by a
    mis-match of resources.

[22]

Moreover, the trial judge overlooked the fact
    that Ms. Przyk had obtained adverse costs insurance, and that Rushdales
    request was for costs only to the extent covered by the insurance available to
    Ms. Pryzk under that policy. Rushdale did not seek any amount from Ms. Przyk
    personally.

[23]

The trial judge made no finding of conduct in
    the litigation that would justify depriving Rushdale of costs. He did not, for
    example, cite any conduct that unnecessarily lengthened the proceedings, any
    improper, vexatious or unnecessary steps taken on its behalf, or any refusal to
    admit something that it should have. On the contrary, he noted that (b)oth
    sides treated this particular case seriously, and that the parties had agreed
    before trial to the quantum of damages, allowing the trial to be confined to
    the issue of liability. In other words, neither any resource advantage due to
    the fact that Rushdale was insured by Aviva, nor Avivas conduct of the defence,
    resulted in anything other than responsibly conducted litigation.

[24]

Accordingly, the trial judge erred in principle
    in relying on the fact of insurance as a reason to deny costs to Rushdale as
    the successful party.

(b)

Avivas Settlement Posture

[25]

Although the trial judge did not advert to any
    litigation misconduct, he was critical of Avivas settlement conduct. He
    referred to the fact that counsel for Ms. Przyk was throughout the course of
    the litigation open to resolve the matter, but that the adjusters and counsel
    for [Rushdale], members of the in-house legal department of Aviva, resolutely
    put forth a negative proposal of no damages nor costs. He referred to the
    position advanced by Ms. Przyk that the refusal of the defence to offer
    anything other than a no costs walk away constituted playing hardball, that
    this is a well-known tactic by Aviva, and that Aviva advertises for employees
    who will work with counsel to ensure a consistent message with judges,
    mediators, and counsel surrounding our litigation files.

[26]

The trial judge then stated:

From reading the employment advertising for
    Aviva concerning the sending a message to judges, mediators, and counsel, one
    detects a certain arrogance. Size of the insurance market is not inconsequential.
    Insurers are answerable to their shareholders. Playing hardball with the modest
    litigant may indeed be profitable, but that does not mean that the modest
    litigant should have a field day or that the insurer be vulnerable to frivolous
    claims.

Being a large market shareholder is not
    without social responsibility, size should not be wielded to oppress deserving
    litigants as that would encroach upon the broader social interest of access to
    justice.

Aviva with its approach is at risk of allegations
    of playing hardball. In some circumstances that approach may result in no
    costs. In a way, that is a cost of doing business in such a fashion.

[27]

Although the trial judge referred to an insurer
    using its size to oppress deserving litigants, he did not refer to any
    conduct of Aviva
in this case
which could be so characterized, other
    than its failure to offer a financial settlement to Ms. Pryzk. In
Bell

Canada
, this court held that it is an error in principle to rely on
    the failure of a successful defendant to have offered a payment to an
    unsuccessful plaintiff as a ground to deny costs. Carthy J.A. stated:

I do not back away from my comment in
Armak Chemicals Ltd. v. Canadian National Railway Co.
:

At the same time, every litigant should be
    encouraged to be single-minded in attention to the need to make and consider
    reasonable offers which may dispose of the litiga
tion
.

The question is, what is reasonable when the
    claim is dismissed? The defendant's position has been vindicated, and to
    deprive that party of the normal fruits of success is to say to all defendants
    that an offer to settle must be made simply because the lawsuit was launched.
    To put it another way, the trial judge cannot dispute the reasonableness of his
    own decision and, thus, cannot be critical of a party who anticipated it.

The courts must also be careful not to become too
    paternalistic with litigants or to unnecessarily discourage recourse to the
    trial as a forum for the resolution of disputes. Concern is properly directed
    to unreasonable conduct in the course of litigation which leads to unnecessary
    or prolonged trials. However, the judicial system is here to serve the public
    and no barriers to access should be imposed by warnings as to cost consequences
    arising from the court's assessment of how litigants should conduct their
    business.

There are many reasons not to offer settlement,
    and they should remain the private preserve of the litigants. In a libel suit,
    for example, vindication may be a legitimate consideration for either party,
    standing above recovery or payment of moneyA defendant may not be in a
    position to pay a settlement and, even if wealthy, may have a better business
    use for the money pending trial. None of these litigants should fall from grace
    in the eyes of the trial judge if they succeed on the merits: at paras. 13-16.

[28]

The trial judges reasoning is contrary to that
    in
Bell Canada
. Avivas decision not to offer Ms. Przyk a payment was
    confirmed as reasonable by the result of the trial. The analysis does not
    change by characterizing Avivas settlement posture in this case as a hardball
    approach. As the court in
Bell Canada
pointed out, a litigant, or its
    insurer, even if wealthy, is not obliged to pay a settlement just because it
    has been sued; it is entitled to have the claim determined by the court.
    Although the absence of a reasonable settlement posture may influence the
    disposition of costs, when the result of the trial is known what is reasonable
    is necessarily judged by that result. This is consistent with the philosophy
    underlying r. 49.10, which expressly requires comparing an unaccepted offer to
    the result at trial in order to determine whether the cost consequences
    stipulated by that rule apply.

[29]

Ms. Przyk cites various cases where an insurers
    failure to make a satisfactory settlement offer was the subject of comment by a
    trial court or a pre-trial judge.
[4]
But those were cases where the plaintiff was successful at trial, and thus entitled
    to a reasonable expectation of costs, or where a step in the proceeding was a
    waste of time due to unreasonable defence conduct. They were not cases where a
    successful defendant was punished by denying it costs simply because its
    pre-trial settlement position did not go beyond what was reasonable as judged
    against the result achieved at trial.

[30]

Counsel for Ms. Przyk also points to a motor
    vehicle case where Aviva, as the insurer, failed to offer a settlement of more
    than zero dollars. No costs were awarded even though the plaintiffs award at
    trial was effectively zero dollars:
Peterson v. Phillips
, 2008 CanLII
    19504 (Ont. S.C.) at para. 26.

[31]

Peterson
is
    readily distinguishable. In that case, liability was admitted, and the jury
    found that the plaintiff had suffered damages. However, it assessed the damages
    at an amount that netted out to zero after subtracting the deductible under the
    relevant provisions of the
Insurance Act
and its regulations. Since
    under the
Insurance Act
, the plaintiffs entitlement to costs was to
    be determined before giving effect to the deductible provisions, the plaintiff
    argued that it was entitled to costs. However, the court declined to give the
    plaintiff any costs, as the plaintiff had refused an offer of zero dollars  ultimately
    the judgment in the action. The defendant was neither criticized for making
    that offer, nor deprived of costs for having done so. Rather, the defendant
    benefitted in avoiding a costs award against it by virtue of having made the
    offer: paras. 24-26.

[32]

The trial judge also erred in accepting the
    submission of Ms. Pryzk that Aviva generally plays hardball, a reference to its
    behaviour in other cases.
[5]
In my view, the trial judge was not in a position to assess whether the
    circumstances in other cases were the same as those applicable here, or even whether
    settlement positions taken in other cases were reasonable. Moreover, even if
    Aviva had not been reasonable in other cases, it is not clear why the remedy
    would be to deny its insured costs in this case where it was found to have
    acted reasonably.

(c)

A Novel Issue

[33]

As the decision in
Bell

Canada
mandates, even where grounds relied upon by a trial judge to deny a successful
    party costs are tainted by error, the award may still stand if an independent
    ground exists to justify it.

[34]

One of Ms. Przyks submissions to the trial
    judge was that no costs should be awarded because the case raised an important
    and novel issue. She argues that even though the trial judge did not use the
    term novel, he accepted this submission. I agree that the trial judge accepted
    this approach as a basis for his decision. He noted not only that the case
    involved expert evidence but that it arose in an important and developing
    societal and legal context. He said:

As mentioned above, demographically, eldercare
    is a burgeoning area in our society. Coincidental with such growth is a need
    for the law of negligence to apply in new situations involving our elderly.

Both sides treated this particular case
    seriously. Engineers and a biomechanical engineer were witnesses. This was not
    a case solely dependent on upon [
sic
] the evidence of the parties.

[35]

Rule 57.01 contemplates the court considering
    the nature, importance, and complexity of issues in exercising its costs
    discretion. Novel issues arise where there is uncertainty in the law or where
    the facts make the guidance provided by prior cases inadequate:
Fischer v.
    IG Investment Management Ltd.
, 2014 ONSC 6260, at paras. 9, 35. A novel
    issue that involves the public interest can support a no costs order as an
    exception to the general approach that a successful party will receive their
    costs:
Childs v. Desormeaux
(2004), 239 D.L.R. (4th) 61 (Ont. C.A.) at
    para. 100.

[36]

Rushdale argues that the trial judge erred by
    identifying the issues in this case as novel. The question is not, however, whether
    I would have arrived at the same conclusion, but whether the trial judge relied
    on an erroneous principle, or applied it to reach a decision that was plainly
    wrong. I am unable to say that either occurred.

[37]

The trial judge was well-positioned to determine
    whether the case raised an important and novel issue. His decision to accept
    that it did, and to rely on that factor to make a no costs award, is entitled
    to deference. It is not tainted by any error in principle. Nor does it result
    in a costs award that is plainly wrong.

C.

CONCLUSION

[38]

Notwithstanding certain errors in principle, the
    trial judges costs award has an independent basis to support it that is free
    of error.

[39]

I would therefore dismiss the appeal.

[40]

Rushdale succeeded on certain issues that it
    argued had precedential importance. Ms. Pryzk succeeded in upholding the trial
    judges no costs award. I would accordingly not award any costs of the appeal.

Released: April 28, 2021 M.T.

B.
    Zarnett J.A.

I
    agree. M. Tulloch J.A.

I
    agree. Sossin J.A.





[1]

Subject to certain statutory exceptions which are
    inapplicable here.



[2]

Rule 57.01 provides as follows:

(1) In exercising its
    discretion under section 131 of the
Courts
    of Justice Ac
t
to award costs, the court may consider, in
    addition to the result in the proceeding and any offer to settle or to
    contribute made in writing,

(0.a)  the principle of
    indemnity, including, where applicable, the experience of the lawyer for the
    party entitled to the costs as well as the rates charged and the hours spent by
    that lawyer;

(0.b)  the amount of costs that
    an unsuccessful party could reasonably expect to pay in relation to the step in
    the proceeding for which costs are being fixed;

(a)  the amount claimed and the
    amount recovered in the proceeding;

(b)  the apportionment of
    liability;

(c)  the complexity of the
    proceeding;

(d)  the importance of the
    issues;

(e)  the conduct of any party
    that tended to shorten or to lengthen unnecessarily the duration of the
    proceeding;

(f)  whether any step in the
    proceeding was,

(i)  improper, vexatious or
    unnecessary, or

(ii)  taken through negligence,
    mistake or excessive caution;

(g)  a partys denial of or
    refusal to admit anything that should have been admitted;

(h)  whether it is appropriate
    to award any costs or more than one set of costs where a party,

(i)  commenced separate
    proceedings for claims that should have been made in one proceeding, or

(ii)  in defending a proceeding
    separated unnecessarily from another party in the same interest or defended by
    a different lawyer;

(h.1)  whether a party
    unreasonably objected to proceeding by telephone conference or video conference
    under rule 1.08; and

(i)  any other matter relevant
    to the question of costs.



[3]

The
Insurance Act
, R.S.O 1990, c.
    I.8, imposes obligations on insurers defending actions to attempt to settle
    expeditiously, to make advance payments where liability has been admitted, and
    to participate in mediation, and authorizes a court to take into account any
    failure to comply in an award of costs: ss. 258.5, 258.6. These provisions are
    inapplicable here.



[4]
See for example
Persampieri

v. Hobbs
, 2018 ONSC 368 at paras.
    100-8;
Valentine v. Rodriguez-Elizade
,
    2016 ONSC 6395, at para. 64;
Rososhansky
    v. Williams
, 2018 ONSC 1964 at paras. 5, 14, and 22



[5]
I need not deal with Rushdales argument that it was procedurally
    unfair for the trial judge to have done so as Rushdale had not been given an
    opportunity to address the point.


