Defendant Made To Pay More In Costs After Refusing To Participate In Mediation
Litigation can be a costly and stressful method to finding resolution in personal injury cases. In some situations, each party has an arguable case, and may not be clear which party has the upper hand should a case go to trial. In such circumstances, mediation is an excellent way to try to find resolution before a trial, therefore keeping costs low. In a recent case before the Ontario Superior Court of Justice, a defendant learned a costly lesson when the plaintiff was awarded significant damages after the defendant refused requests to participate in mediation.
The issue at the original trial arose after the plaintiff, who was attending a stock car race, had to jump, or step, out of his seat when a race car came off the track. While getting out of the way of the car the plaintiff fell and suffered injuries.
A jury rules in favour of the plaintiff, but the parties can’t agree on costs
At the original trial a jury awarded the plaintiff $217,600 for loss of past income, $149,000 for loss of future income, and $60,000 for general damages. These amounts are exactly what the plaintiff’s lawyer suggested during his closing statement. However, after finding the plaintiff 25% liable for his injuries, the total damages were reduced to $190,750 ($212,000 including interest).
What brought the case before the court once again was the parties’ inability to agree on fees. The plaintiff sought $269,371 while the defendant suggested appropriate amount would be $150,000.
The court’s discretion to award costs is set out in Rule 57.01 of the Rules of Civil Procedure, which states that while costs are usually payable on a partial indemnity scale, there can be situations where the case warrants enhanced (substantial indemnity or full indemnity) scale.
The judge wrote that while the principle of proportionality is a general one and applies to the application of the rules of costs, it does not override other considerations, and should not be “used as a sword to undercompensate a litigant for costs legitimately incurred,” citing a 2015 Ontario Superior Court of Justice decision. The judge went on to refer to a 2004 Ontario Court of Appeal decision that said that the fixing of costs is not a mechanical exercise, but should instead reflect an amount that the court considers to be fair and reasonable, and within the expectations of the parties.
The court then turned to apply the guidelines for establishing costs to the case at hand. The judge noted that once it became apparent that the damages might exceed $100,000, the possibility of pursuing the case under simplified procedure was no longer possible. At this stage the parties moved onto examinations for discovery and other aspects of trial preparation. By the time the trial started, the plaintiff was seeking $400,000.
The plaintiff made one offer to settle, requesting $300,000 plus interests and costs on March 23, 2015. The defendants, meanwhile, made a number of offers, including:
- October 2012 – dismissal without costs;
- May 2014 – $15,000 all inclusive;
- 13 July 2017 – $50,000 all inclusive; and
- 8 August 2017 – $30,000 plus interest and costs.
The court noted that the outcome eventually achieved by the plaintiff was significantly better than the last offer put forward by the defendants.
Determining Costs For Failure To Participate For In Mediation
The court went through a number of aspects of determining costs, including the number of hours, hourly rate of lawyers, and apportionment of liability before turning to the failure by the defendants to participate in mediation. The plaintiff argued that the defendant’s insurer’s refusal to participate in mediation should be a factor in determining costs. The defendant’s lawyers first refused mediation after the plaintiff’s offer to settle for $300,000. The plaintiff suggested mediation again in July 2017, putting forward the names of a number of available mediators. Again, no mediation resulted from the request.
There was no statutory requirement for the defendant, or its insurer, to participate in mediation. However, the court referenced a 2016 decision (David v. Transamerica Life Canada, (2016) 131 O.R. (3d) 314) where the judge wrote,
“In cases where each of the parties has an arguable case, and each faces a risk of loss in the proceeding, mediation can offer a reasonable prospect of settlement. In such cases, a refusal to participate in mediation is a factor that the court can properly consider in determining whether the party has engaged in unreasonable conduct that has caused unnecessary costs to be incurred and that warrants rebuke by means of a costs sanction. This determination requires a case-by-case analysis.”
The judge in the case at hand agreed, stating “It was, in my view, unreasonable for the insurer to decline mediation in this case. That should be reflected in the disposition of costs. Had a mediation occurred in 2015 or even in 2017, substantial costs would have been avoided.” The court awarded the plaintiff costs of $210,000.
Contact the lawyers at Derfel Injury Law if you have been injured in an accident. Our team of qualified, experienced personal injury lawyers can help you assist your claims for damages and can help identify every potential avenue for compensation. Please contact us by phone at 416-847-3580 or online in order to schedule an appointment today.