Branco v. Allianz Insurance Co. of Canada, 2004 CanLII 45036 (ON S.C.)

DATE:  20041115 

 SUPERIOR COURT OF JUSTICE - ONTARIO

 RE:                 Maria Branco, Mario Oliveira, Raquel Oliveira and Joshua Oliveira v . Allianz Insurance Company of Canada and Alexander Epshtein

BEFORE:      Mr. Justice H.J.W. Siegel

COUNSEL:   Kevin Doan, for the Plaintiffs

                                    Mark Elkin, for the Defendant Epshtein

E N D O R S E M E N T  O N   C O S T S

[1]          In this action, the plaintiffs claimed damages arising out of a motor vehicle accident. After a jury trial lasting eight days, the jury awarded $16,500 for general damages, $15,000 for past income loss and a modest amount in respect of claims under the Family Law Act, R.S.O. 1990, c. F.3, as amended. The jury also found the plaintiff, Maria Branco, to be 50% liable on the basis of contributory negligence and rejected the plaintiff’s claim for future income loss in its entirety. Accordingly, the plaintiffs received the net amount of $750 in respect of the general damage award and claims under the Family Law Act, after application of the statutory deductibles.  The plaintiffs received no amount for past income loss because income replacement benefits received prior to trial exceeded the amount of the award for such loss. The plaintiff was, however, successful on the “threshold” motion brought by the defendant under section 267.5(5) of the Insurance Act, R.S.O. 1990, c. I-8, as amended.

[2]          The plaintiffs seek costs on a substantial indemnity basis.  The defendant’s insurer did not deliver an offer to settle prior to trial.  The plaintiffs say this constitutes non-compliance with section 258.5(1) of the Insurance Act which reads:

                        258.5 (1) An insurer that is defending an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile on behalf of an insured or that receives a notice under clause 258.3(1) (b) from an insured shall attempt to settle the claim as expeditiously as possible.

[3]          I do not accept  the plaintiffs’ position.  I am not aware of any obligation on the part of an insurer to deliver an offer to settle prior to trial.  In this action, although unsuccessful, it was reasonable for the defendant to proceed on the basis that it had some possibility of being successful on the “threshold motion” and that, in any event, the jury award might be negligible.  It was also reasonable not to serve an offer to settle in the face of the plaintiffs’ offers which were, their counsel advises, initially $150,000 inclusive of interest plus costs, next $100,000 inclusive of interest plus costs and, then, $200,000 inclusive of interest plus costs.

[4]          Finally, I reject the plaintiffs’ submission that the insurer had a duty to make an offer based on a “reasonably likely verdict and not this particularly low and problematic verdict”.  The insurer had every right to make its own assessment of the likely jury award and conduct itself accordingly.

[5]          The defendant argues that the plaintiffs should be denied costs under the provisions of Rules 76.13(2) and (3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[6]          In addressing this issue, I agree with the plaintiffs that the Court is required to disregard the statutory deductibles by virtue of section 267.5(9) of the Insurance Act which provides:

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 party's 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.

[7]          Accordingly, the Court is to proceed on the basis of an award of costs of $9,250 in favour of Maria Branco, $500 in favour of her husband, Mario Oliveira, and $250 in favour of each of her children, Joshua and Raquel Oliveira. This does not, however, dispose of the issue as the amount of the award still falls below the threshold set out in Rule 76 that was in effect at the date the action was commenced.

[8]          While the test in items 1 and 2 of Rule 76.13(2) has been met, I think this is an appropriate instance in which to exercise the Court’s discretion.  The plaintiffs’ counsel did have medical and related materials that indicated that Maria Branco had suffered a permanent injury that prevented her from resuming her employment.  The plaintiff also had a valid claim for past income loss subject to quantification and at least a possibility of a claim for future income loss.  The fact that the defendant opted for a jury trial also introduced a further element of unpredictability into any assessment of the likely outcome at trial.  In these circumstances, I do not think it was unreasonable to proceed by way of an ordinary action rather than simplified rules.

[9]          For the same reason, the Court declines to exercise its discretion under Rule 57.05(1) to refuse to order costs in favour of the plaintiffs because the award of $9,250 falls within the monetary jurisdiction of the Small Claims Court.

[10]      Accordingly, I believe the plaintiffs are entitled to costs on a partial indemnity basis.

[11]      The plaintiffs seek costs totalling $56,650. For most of the time involved, the rate charged in respect of the plaintiffs’ counsel exceeds the partial indemnity rate for a lawyer with less than ten years experience. Adjusting the bill to reflect the initial rate charged by the plaintiffs’ counsel of $170, which I believe is a reasonable rate, the bill of costs reflects a total of $42,210. The defendant says that the plaintiffs’ submission does not constitute a proper bill of costs as there are no particulars or dockets by which this Court might assess costs.

[12]      The plaintiffs’ bill of costs fails to provide the information specifically requested at trial. Nevertheless, I believe the Court should fix costs using the plaintiffs bill of costs, as adjusted, as a basis for the award because the quantum of costs sought on that basis is not unreasonable for an eight day trial.

[13]      In awarding costs, however, I have had regard to the mixed success of the plaintiffs. While the plaintiff Maria Branco was successful on the threshold motion, she was totally unsuccessful on the claim for future income loss, to which a considerable amount of time was devoted at trial. In addition, she was not successful on her claim for past income loss (after deduction of income replacement benefits) and, given the size of the general damage award sought at trial, was at best partially successful on the general damage claim as the net amount payable to her was $750.

[14]      In these circumstances, I believe the plaintiffs should be entitled to only a portion of the costs of the action, representing the proportion of costs attributable to the successful portions of Maria Branco’s claim. In the absence of dockets or a more specific breakdown of the activities of plaintiffs’ counsel which would permit a more precise allocation, I have proceeded on the basis of my general assessment of the amount of time devoted to the various components of the plaintiffs’ claim at trial, which represents a significant majority of the time reflected in the bill of costs. On this basis, I think a proportion of 50% would be appropriate. Accordingly, the plaintiffs are awarded costs of $21,100 plus GST. This amount is also inclusive of disbursements, as the plaintiffs have not sought a separate amount for disbursements in their bill of costs.

[15]      The plaintiff Maria Branco also seeks an order varying the award of prejudgment interest to provide that interest shall run from the date of the plaintiff’s letter to the defendant dated April 16, 1999 notifying the defendant of her claim.  The Court awarded prejudgment interest from April 6, 2000, being the date of the statement of claim of the plaintiffs.

[16]      As the Court has issued its judgment in this matter, I do not believe I have the authority to vary the award in respect of prejudgment interest.  In any event, in the absence of any case law provided by the plaintiff supporting the plaintiff’s position, I would not vary the award in the manner sought.

[17]      Accordingly, the plaintiff’s motion to vary the prejudgment interest on the award in this action is denied.

___________________________

H.J.W. Siegel J.

DATE:            November 12, 2004