Every week, Bell Temple LLP selects and reports on interesting and relevant decisions from the Ontario Superior Court of Justice, Ontario Court of Appeal, and Supreme Court of Canada.
Angus Chalmers writes this week’s case reports.
Moskowitz v. Toronto Transit Commission, 2023 ONSC 5535
In this decision, Associate Justice Robinson denied the Plaintiff’s request for costs thrown away as a term of an amendment to the statement of defence. The action was for a wrongful dismissal. The Defendant moved for leave to amend its statement of defence. The Plaintiff did not oppose the amendment but insisted on being paid costs thrown away. He also asked that the court impose a litigation timetable to complete examinations for discovery and assign the proceeding to case management. The costs thrown away arose from two cancelled discoveries. The Defendant’s examination of the Plaintiff, which was canceled by defence counsel less than one business day beforehand, and the Plaintiff’s examination of the Defendant, which was cancelled by Plaintiff counsel by reason of the Defendant providing a draft amended defence mere days before the examination. The Plaintiff also sought costs thrown away from having to amend his reply pleading and potentially having to serve a supplementary affidavit of documents.
At issue was whether the Plaintiff should be granted costs thrown away as a term of granting leave to amend. Granting leave for the Defendant to amend its statement of defence was undisputed. The only genuine dispute was whether the thrown away costs should be ordered as a term “as is just”.
Costs thrown away are intended to indemnify a party for reasonably necessary steps that were rendered useless by the conduct of the other party. However, some costs, such as those for preparation work, will inevitably be of use at a later date. The onus is on the party asserting costs thrown away to establish that the steps taken were necessary, to identify which costs were thrown away, and to show that those steps have been rendered useless.
As per Associate Justice Robinson, there are three components to making out a claim for costs thrown away: (i) the step for which costs thrown away are claimed was reasonably necessary; (ii) fees and/or disbursements for the step were wasted or rendered useless; and (iii) conduct of the other party occasioned the wasted or useless costs. Notably, however, costs remain at the discretion of the court, regardless of whether all the elements have been met.
Associate Justice Robinson stated that the preparation for discoveries and amending the reply are both necessary steps, though he was not convinced that the evidence showed that a supplementary affidavit of documents would be necessary.
On the second component, Associate Justice Robinson found that the Plaintiff had not met his onus of establishing that his claimed costs were wasted or rendered useless. His bill of costs set out the time spent by the lawyers on various tasks. However, neither the bill of costs nor the supporting affidavit detailed how the time was incurred or why it was “thrown away”. For example, there was no evidence to show that the time spent on preparation was wasted time with no future value. Associate Justice Robinson noted that it appeared to be a total cost claim for all preparation time, without accounting for time that would be usable again. Further, the distinction between the blocks for meetings with the Plaintiff and preparing for attendance at the examinations was unclear, and there was no evidence of what three hours recorded for correspondence entailed. As such, Associate Justice Robinson was unable to determine what time was properly viewed as thrown away.
On the third component, Associate Justice Robinson found the Defendants decision to cancel discoveries to be reasonable. The Defendant requested supplementary productions related to the Plaintiff’s post-dismissal income. These were relevant in a case where the Plaintiff alleged that a mental breakdown had impacted his ability to work. While the Defendants knew from looking at his LinkedIn profile that the Plaintiff had presented himself as working, they had no knowledge of his income until it received the productions. On the other hand, the Defendant’s proposed amendments to their statement of defence were related to allegations mitigation. Such questions related to his other employment should not have been a surprise. Further, the Plaintiff’s claim that the Defendant was withdrawing an admission that his medical leave was bona fide was not supported by the pleadings.
Despite being advised orally of Associate Justice Robinson’s decision, the Plaintiff still sought his costs for the motion on a substantial indemnity basis. Associate Justice Robinson recognized that while there was precedent to support a compensatory award for an unsuccessful opposition to a motion to amend, this was not a case where it was appropriate. As per Associate Justice Robinson, the motion “was a gross waste of judicial resources occasioned entirely by Mr. Moskowitz’s staunch and unflinching position that he was entitled to costs thrown away, which I have rejected”.
The Defendant had proposed to leave the issue of costs thrown away to the end of the proceeding. Despite this, the Plaintiff insisted that the Defendant agree he was entitled to the costs thrown away and opposed the motion solely on this basis. Associate Justice Robinson issued a strong rebuke of the Plaintiff’s position, stating that “[p]ositions like the one taken by Mr. Moskowitz are precisely the kind of positions that result in unnecessary use of judicial resources that only serves to exacerbate the civil motion backlog in Toronto Region” and that “ ’[d]isproportionate’ is the politest word I can think of to describe how the plaintiff opted to proceed.” The court awarded the Defendant partial indemnity costs, noting that he might have awarded substantial indemnity costs had they been requested.
Mansoor v. Dookie, 2023 ONSC 5533
In this decision, Associate Justice Jolley denied the Plaintiffs leave to amend their claim on the basis that the proposed amendment was not tenable in law. The Plaintiff sought leave to amend her statement of claim to add a claim for punitive and aggravated damages for intentional infliction of mental distress. The proposed claim was based on the manner of the surveillance undertaken of the Plaintiff by investigators retained by Defence counsel and the lack of response from Defence counsel when the issue was raised with her. She proposed to allege that the surveillance was aggressive, overt, and unfounded and that Defence counsel did not respond to her counsel about the nature of the surveillance when it was brought to her attention. She sought leave to plead that the Defendants, through their counsel and insurer, engaged in harassment and intimidation.
Associate Justice Jolley noted that while the Plaintiff was correct that she was to be generous in her reading of a proposed amendment. However, she also noted that leave to amend is not to be granted where the amendment is not tenable in law. The Plaintiff provided no case law to support the proposition that a party can be vicariously liable in punitive damages for the actions of their lawyer. On the contrary, Associate Justice Jolley noted that in Hill v Church of Scientology of Toronto, [1995] 2 SCR 1130, the Supreme Court found that the Church of Scientology and its lawyer were jointly liable for general damages, but that only the Church was liable for punitive and aggravated damages. As per the Court in Hill, “there cannot be joint and several responsibility for either aggravated or punitive damages since they arise from the misconduct of the particular defendant against whom they are awarded”.
Associate Justice Jolley found that this was enough to dispose of the motion. However, in the alternative, Associate Justice Jolley found that in order for the Defendants to be liable to the Plaintiff for the actions of their lawyers, the Plaintiff would be required to establish that those opposing lawyers owed her some legal duty. Citing MacDonald v MCAP Service Corp. 2013 ONSC 4473, Associate Justice Jolley stated that a lawyer acting for one party does not owe a duty of care to the opposite party. Rather, that is a duty owed to the court. There is no cause of action arising from complaints relating to an opposing solicitor’s unethical conduct or negligence.
Associate Justice Jolley also found that even if there was a tenable cause of action, granting the amendment would prejudice the defendants. The trial was scheduled for June 3, 2024. If the amendments were permitted, Defence counsel would need to need to remove themselves from the record. Defence counsel and the investigators would likely need to testify. Further, in order to defend their client, Defence counsel would be required to disclose instructions that would otherwise be privileged. Plaintiff counsel will also likely be required to get off the record, testify to their conduct and correspondence, and disclose privileged instructions. For these reasons alone, the motion would be dismissed.
Security National Insurance Co. v. Stepien, 2023 ONSC 5521
In this case, Justice Nishikawa denied the Applicant insurance company’s application for judicial review of a decision of the Director’s Delegate (the “Delegate”) of the Financial Services Commission of Ontario (“FSCO”). In the decision, the Delegate held that the Applicant was not entitled to deduct a lump sum amount received by the Respondent for long-term disability benefits from an amount owing for past income replacement benefits.
The Respondent was injured in a motor vehicle accident in November 2009. She applied for LTD benefits and was initially denied. She sued Manulife, her LTD carrier in February 2011. The Applicant paid the respondent IRBs until December 2011 when it terminated the benefits. The Respondent applied for arbitration. In March 2015, Manulife settled the Respondent’s lawsuit and paid her $206,710.57 in arrears of LTD benefits, $7,507.40 in interest, and reinstatement of LTD benefits in the amount of $3,548.75. On October 9, 2015, the eve of the arbitration, the applicant agreed that the respondent was entitled to IRBs. Arrears were calculated as $130,595.30, including $39,998 in interest.
However, the Applicant took the position that pursuant to s. 7(1) of the Statutory Accident Benefits Schedule, it was entitled to deduct the lump sum paid by Manulife from this amount. The arbitrator agreed with the Applicant and ruled that the entirety of the lump sum could be deducted. This was appealed to the Delegate who allowed the appeal. Based on the plain wording of s. 7(1), the Respondent was not in receipt of the LTD payments at the time that the IRBs were due. The Delegate distinguished this case from others in which LTD payments were deducted from future IRB payments and found that s. 7(1) of the SABS does not apply to permit the deduction of an LTD payment retroactively to reduce past IRB payments. The Applicant applied for judicial review of the Delegate’s decision on the basis that it was unreasonable.
In reviewing the decision, Justice Nishikawa cited Vanderkop v. The Personal Insurance Company of Canada, where the court found that settlement monies received by the insured for LTD benefits were a lump sum payment arrived after a lawsuit was commenced and negotiated as a compromise. As a result, they could not be characterized as “net weekly payments for loss of income that are not being received by the person as a result of the accident” within the meaning of the SABS. Where a provider has denied a claim, an individual cannot be said to be entitled to payment of the LTD benefits and they are not “available” to them. To treat LTD benefits as being available would effectively oblige an insured to litigate with their collateral benefits insurer, at their own risk and expense, for the benefit and at the discretion of, their accident benefits insurer. Similarly, Justice Nishikawa cites Cromwell v. Liberty Mutual Insurance, in which the accident benefits insurer was not entitled to deduct a $160,000 lump sum payment made by the LTD insurer because no part of the lump sum was paid in respect of future LTD benefits. In both cases, the courts confirmed that once refused, LTD benefits were not “available” to the insured.
Justice Nishikawa held that the Delegate’s decision that the contemporaneous approach found in Cromwell and Vanderkop applied to the circumstances of this case was reasonable. The rationale from Vanderkop applied to the case at hand. Had the Applicant been paying IRBs during the relevant time period, and had Manulife been paying LTD benefits, it is clear that s. 7(1) would apply to allow the Applicant to deduct LTD benefits from IRBs. This was not, however, what happened. The Respondent received neither LTD benefits nor IRBs for a period of almost five years. As a result, she had no income-related benefits at a time when she was physically unable to work. Instead, she had to engage in litigation with both Manulife and the Applicant. It was only after Manulife agreed to pay the Respondent LTD benefits that Security National also agreed that she was entitled to IRBs.
