Canada: How Much Is This Lawsuit Going to Cost Me?

First presented at the CCLA Summit for New Lawyers and Articling Students

Local Decisions on Costs

Case Study No. 2 of 2: Carroll (Litigation guardian of) v. McEwen

Facts

This case involved an action for damages arising from a motor vehicle accident. The Jury divided liability in the proportion of 62/38 between the Plaintiffs and the Defendants. The Plaintiff, Barbara Carroll, was awarded $300,000 for pain and suffering and $3.6 million for the cost of future care. The other Plaintiffs, being the children of the deceased, Lorne Carroll, were awarded family law damages in the amount of $43,000.

During the course of the trial, the Defendants were taken by surprise on several occasions. At one point, the Plaintiffs had 'accepted' an offer to settle but then immediately issued a Statement of Claim against the Defendant Aviva Canada Inc., seeking $2,000,000 alleging damages for a breach of good faith. This claim was served on Aviva on the basis that the plaintiffs claimed to be under the belief that the defendant's offer did not settle the mala fides claim.

The Defendants were also led to the belief that the Plaintiff, Barbara Lynn Carroll, would not be called as a witness but this position changed at trial. After the commencement of trial, the plaintiff's advised of their change in position and adjourned the trial to allow for Ms. Carroll's examination. The Court also found that the Plaintiff did not abide by the Case Management Order because they produced expert reports late.

Costs Analysis

After the trial, a hearing took place to determine ancillary matters. The issue of costs was argued, at length, by counsel. The Plaintiffs sought costs of $796,616.09. The Defendants took the position that costs should be reduced substantially or that no costs should be awarded as proceeding to trial did not benefit the Plaintiffs.

The Plaintiffs were awarded $375,000 in costs by Justice McLean. In his costs analysis, Justice McLean noted that although various offers were made, there was no binding Rule 49 Offer to Settle. However, various 'offers' were exchanged. The Defendants made an offer, dated September 11, 2015, to settle the Plaintiffs' claim for $2,150,000 inclusive of all damages, prejudgment interest, and costs. The offer did not request any assignment of the future care and cost. The Defendants argued that, if the Plaintiffs had accepted that offer, they would have been substantially better off. Conversely, the Plaintiffs argued that the Defendant's offer did not exceed the jury's verdict.

The Plaintiffs later claimed that they did, in fact, accept this offer of September 15, 2015. However, they then filed a new claim against the defendant's insurers for breach of duty of good faith. In starting the new claim, the Plaintiffs stated that they did not intend to settle all matters and the offer of September 15 did not settle the mala fide claim against the insurance company. Then, the plaintiffs brought a motion to enforce settlement before Justice Hackland.

In hearing this motion, Justice Hackland noted that this new claim had taken the Defendants by surprise. The Plaintiffs also did not advise the Defendants of the new claim. In issuing the new claim after attempting to enforce the offer, the Court was of the view that the Plaintiffs engaged in "sharp practice" and considered this a trick. The Court also confirmed that all offers had been made on the basis that they settled all outstanding matters between parties. The Plaintiffs subsequently withdrew their motion.

In considering the factors under Rule 57.01(1) of the Rules of Civil Procedure, Justice McLean looked at the conduct of the parties throughout the trial. He noted that the Plaintiffs conduct extended the proceedings. For example, by conducting further discoveries in the middle of trial (which was the result of them changing their mind about calling the plaintiff to testify) and by commencing the motion before Justice Hackland (where it was acknowledged that this motion delayed the matter considerably and caused inconvenience to the jury). He also noted counsel's failure to comply with the schedule issued by the Case Management Judge and the last minute decision to have Ms. Carroll provide evidence, which he stated contributed to the extension of proceedings. He stated that this behavior by Plaintiff's counsel should be sanctioned. Therefore, costs were awarded to the Plaintiffs in the amount of $375,000.

Take-Away

The Court will consider the conduct of the parties and the size of the damage award resulting from trial, in comparison with the offers made. In this case, for example, Justice McLean found the plaintiff's costs were high given that the award obtained at trial was not much more significant than the offer made by the defendants.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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