I admit that this case may only be of interest to those of us acting for insurers and at discounted hourly rates. But in Sigma Capital Management Group Inc. v. KPMG LLP & Benzer Ltd. v. KPMG LLP, 2014 ONSC 6486 (CanLII), Justice Charles Hackland became the latest judge to apply the principle enunciated in Mantella v. Mantella. There, it was held that counsel retained by LawPRO at a discounted hourly rate was entitled to recover partial indemnity costs at his full hourly rate. The rationale was that there was no reason for the unsuccessful party to obtain the benefit of the negotiated rate.
Sigma Capital was also a LawPRO case. Two third party claims by the defendant KPMG were dismissed on the basis that the law firm had owed no duty to it.
On the issue of costs, Justice Hackland said the following:
Special considerations can apply to discounted fee situations such as LawPRO employs as do an increasing number of institutional clients who litigate in our courts. The partial indemnity guideline of 60% of fees actually charged can result in unduly modest costs recovery to parties whose counsel are subject to discounted fee arrangements and an unwarranted benefit to unsuccessful litigants against whom costs awards are made.
He then endorsed the decision of Justice Corbett in Mantella, rejecting KPMG’s argument that the retainer between counsel and the client is irrelevant in fixing costs. He did, however, reduce the fees recoverable by the successful LawPRO defendant, from a claimed $63,524.00 to $50,000.