How Rule 49 and Proportionality can affect a Claimant's Award of Costs

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At the conclusion of a six-week personal injury jury trial, plaintiff Sarah Corbett was awarded $141,500 in damages for injuries arising from a motor vehicle accident.

Case example

In Corbett v Odorico, 2016, the plaintiff, through her counsel, subsequently sought to recover the costs she accrued during the legal process. Mrs. Corbett's costs were calculated at $159,249.90 on a partial indemnity basis. However, she sought her costs on a substantial indemnity basis, which would total $242,521.00, due to the manner in which the defendant's counsel conducted the trial.

There were a number of issues for the judge in this case to consider, with regard to the costs amount, including: the reasonableness of hours and rates claimed by the plaintiff; the offers of settlement made by both parties in relation to Rule 49; the consideration of Rule 57; and the issue of proportionality in relation to the plaintiff's costs.

On the first matter, Justice Hackland found that the hours and rates claimed by the plaintiff's counsel were more than reasonable, especially considering the length and complexity of the trial. Also, the defendant did not challenge the hours and rates claimed by the plaintiff, suggesting that she did not think the amounts were unreasonable, thereby making the amount seem that much fairer to the judge.

The second issue relates to Rule 49, also referred to as an Offer to Settle. The purpose of Rule 49 is to encourage opposing parties to settle. If either party making the Offer receives a similar or better result at trial, the party will secure a better order in relation to costs than they otherwise would have. Neither the plaintiff nor the defendant matched or bettered their respective Rule 49 offers, which meant neither party was entitled to the compulsory cost consequences related to Rule 49.

Rule 57 allows the court to consider other factors, beyond the respective parties' Offers to Settle, in awarding costs. Some of these factors include: one, the complexity of the case; and two, the conduct of each party's counsel during the trial and particularly, how that conduct may or may not have affected the length of the trial.

On the first matter, the judge acknowledged that the trial was a complicated one, owing in part to dealing with a medically complex situation, i.e. soft tissue injury and chronic pain with psycho-social aspects. Specifically, the plaintiff was tasked with proving that these conditions were a direct cause of the accident, which resulted from the defendant's negligence. The judge acknowledged that the plaintiff faced a lot of challenges in establishing her claim, which naturally contributed to the length of the trial.

With regards to the conduct of opposing counsel, Justice Hackland once again acknowledged that the trial was indeed very acrimonious, and communication and cooperation between lawyers was minimal. However, the judge found that both counsels were in part responsible for the nature of the trial and as result, did not consider it a factor in the plaintiff's favor. Therefore, Rule 57 was excluded in the cost analysis.

On the final matter of proportionality, counsel for the defendant argued that an award of trial costs must be proportionate to the amount recovered, as per the recent judgement in Elbakhiet v. PalmerHowever, there were some key factors in the latter case that Justice Hackland had to consider with respect to the current one.

The first factor was that the defendant in Elbakhiet v. Palmer made an Offer to Settle which was considered a near miss. A near miss offer is one that is exactly or almost exactly the amount the plaintiff is later awarded by the jury.

In the case of Elbakhiet v. Palmer, the defendant offered the plaintiff $145,000 in damages and the jury later awarded the latter $144,013. The defendant filed an appeal when the plaintiff claimed and was awarded by the trial judge costs in excess of $500,000.

The Court of Appeal ultimately ruled that the trial judge erred in judgment in not considering the near miss offer to settle by the defendant and that it was also completely unfair and unreasonable to award the plaintiff almost $580,000 in costs for a claim that the jury valued at a little less than $145,000.

Justice Hackland highlighted key differences between the current case and Elbakhiet v. Palmer, and noted why the Court of Appeal's ruling in the latter case did not apply. First, the defendant, Ms. Odorico did not make an Offer to Settle that could in any way be considered a near miss. In fact, her offer, if accepted by the plaintiff, would have given the latter $7 total. In other words, Justice Hackland noted that this left the plaintiff with no other choice but to take her chances in a trial, or else she would have walked away with nothing.

Therefore, the judge concluded that to now limit the plaintiff's amount of costs to some proportion of the recovery, when there had been no real offer to settle, would actually undermine the purpose of Rule 49, which is to encourage settlement by attaching costs consequences for failure to make or accept reasonable offers. In this instance, the defendant did not make a reasonable settlement offer to the plaintiff.

Justice Hackland also remarked that the plaintiff's costs of $151,249 were more than reasonable and fair to the jury verdict amount of $141,500, a circumstance which is grossly different from Elbakheit v. Palmer, where the plaintiff's costs were more than twice the jury award.

Referring to the judgements in Interborough v. Electric Inc. v. 724352 Ontario LtdAacurate v. Tarasco and Gardiner v. MacDonald, where the issue of proportionality was rejected in each, Justice Hackland ruled that the plaintiff's partial indemnity fee of $159,249 was not disproportionate to the jury verdict of $141,500. The plaintiff was then awarded fees in the sum of $159,249, as well as $20,702.48 for HST and $89,347 for disbursements.

Receiving the just compensation you deserve and are owed after you were hurt or injured in an accident can sometimes be a lengthy and difficult process. That is why it is essential that you contact a respected personal injury lawyer as soon as possible to guide you in making the optimal decision given the unique nature of your accident and injuries.

At Rastin Gluckstein Lawyers, our team of personal injury lawyers have years of experience and success in helping individuals like yourself receive the compensation they deserve and need in their recovery.

If you or someone you love was injured due to another individual's negligence, please do not hesitate to call or visit us today. We will be happy to provide a free, no-obligation consultation to review the specifics of your case and discuss your best legal options for successful resolution of your claim.


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