C.A. Sends Mixed Messages on Substantial Indemnity Costs for Defendants

Posted on April 28, 2010 by Stephen Cavanagh

In the course of the last week, separate panels of the Court of Appeal have addressed the issue of whether a defendant’s offer to settle can produce an award of substantial indemnity costs when the plaintiff’s action has been dismissed. The cases are: St. Elizabeth Home Society v. Hamilton (City) and Schwark v. Cutting.

Unfortunately, the two panels came to opposite conclusions.

St. Elizabeth Home Society v. Hamilton

In St. Elizabeth, the trial judge had awarded costs totalling $4,262,000 to two defendants (the City of Hamilton and the Regional Municipality of Hamilton-Wentworth). One issue in the case was whether ordering two sets of costs was appropriate, given that the two defendants had amalgamated years before the trial was held.

Much of the decision deals with the law of misfeasance in public office and this commentary will not get into that issue. We are looking only at the award of costs, the discussion of which begins at paragraph 71 of the reasons.

At trial, the action had been dismissed. The respondents (the City and the Region) had made an offer to settle for $153,200 plus interest and costs. (The plaintiff had offered to settle for $1.299 million.) The trial judge awarded costs to the respondents on a partial indemnity basis up to the date of the offer and on a substantial indemnity basis thereafter. As noted above, he ordered that costs be payable to each defendant: $2,317,000 to the City and $1,945,000 to the Region.

The Court of Appeal held that the trial judge ought to have treated the two defendants as one after the date of their amalgamation (which took place after the claim was issued but long before the trial). We are not going to focus on that issue here either.

Instead, what we’re interested in is how the Court dealt with the plaintiff’s argument that the award of substantial indemnity costs should be set aside because the trial judge had been wrong to use the defence offer to settle as a basis for such an award.

In both St. Elizabeth and Schward, the defendants sought to support their substantial indemnity costs by relying on the Court of Appeal’s decision in S & A Strasser v. Richmond Hill (Town) (1990), 1 O.R. (3d) 243 (C.A.). In that case (not yet online), the Court found that award of substantial indemnity costs from the date of the defendant’s offer to settle was warranted.

In St. Elizabeth, the panel was Justices Laskin, Rouleau and Epstein. They unequivocally rejected the decision of Justice David Crane, to award substantial indemnity costs from the date of the defence offer to settle, saying that the award was “inconsistent with the Rules and is not supported by the case law”.

The St. Elizabeth panel emphasized that Strasser “should be applied narrowly” as a case where egregious conduct by the plaintiff was the warrant for a higher scale of costs. It said that trial judge in St. Elizabeth had erred in taking the offers to settle (both the plaintiff’s, which the trial judge thought inordinately high, and the defendants’, which he considered very reasonable) into account, because neither offer fell within the provisions of r. 49.10(1).

(Although the Court did not point this out explicitly, it obviously had in mind that R. 49 is not triggered when an action is dismissed, even in the face of a defence offer to pay something or to consent to a dismissal without costs. That is because the costs consequences of R. 49 are engaged only when “the plaintiff obtains judgment”. When an action is dismissed, the plaintiff does not obtain a judgment.)

In the result, the Court ordered partial indemnity costs throughout and reduced the costs of each defendant by a further 25 percent, to reflect the fact that there should not have been two sets of costs.

Schwark v. Cutting

The panel in this case was made up of Justices Gillese, Blair and MacFarland. (The decision is dated January 7, 2010, but only appeared on the Court of Appeal’s website on April 28, 2010. It is possible that the date is a typographical error and should read, “April 27, 2010”.  Thus, it is not clear whether this decision preceded St. Elizabeth or vice versa.)

The defendant ended up being successful in having the action dismissed (on appeal, not at trial) and sought partial indemnity costs to the date of their offer to settle and substantial indemnity costs thereafter.

This panel did expressly advert to the non-applicability of Rule 49 when an action is dismissed. It then went on to say that notwithstanding that fact, Rule 49.13 and s. 131 of the Courts of Justice Act allow the court to take into account any offer to settle in exercising its discretion in awarding costs.

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Court Interprets New 7-Hour Limit on Examination for Discovery

Posted on April 28, 2010 by Stephen Cavanagh

In J. & P. Leveque Bros. v. Ontario, Madam Justice Templeton considered the new R. 31.05.1, which provides that “[n]o party shall, in conducting oral examinations for discovery, exceed a total of seven hours of examination, regardless of the number of parties or other persons to be examined, except with the consent of the parties or with leave of the court.”

On this motion, the plaintiff sought leave to exceed the seven hour limit. The underlying litigation had to do with the failure of a rehabilitative surface treatment applied to an Ontario highway. The potential damages apparently exceeded two million dollars.

Her Honour had little difficulty in concluding that the plaintiff was entitled to leave to conduct examinations lasting more than seven hours. She based her decision on “effective representation, cost efficiency and expediency as defined in the factors set out in the Rule”. She extended the time limit to 19 hours in total.

Her reasons contain a discussion of the factors set out in subrule 31.05.1(2). She also set out some practical guidelines, including:

  1. the seven hour limit does not include breaks, adjournments, unreasonable interference in questioning by opposing counsel, resulting in undue shortening of the time available to the examining party;
  2. where “the time limit agreed upon in the Discovery Plan has expired and counsel is at a crucial point in his/her examination on an issue central or germane to the case, flexibility ought to be brought to bear and that further time to a maximum of one hour to continue and conclude the examination would not be unreasonable in the circumstances”; and
  3. where such a one-hour leeway is taken advantage of by a party, it should reduce that examiner’s allotted time for the examination of another party.
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Master Dash Discusses Counsel “Helping” Witness Being Examined for Discovery

Posted on April 27, 2010 by Stephen Cavanagh

In Madonis v. Dezotti, Master Ronald Dash discussed a practice problem that frequently occurs at examinations for discovery: counsel attempting to assist the witness by stating what he or she thinks the evidence should be. His reasons provide helpful guidelines for counsel in this situation.

The action arose out of a motor vehicle accident. The plaintiff was being examined for discovery. The Master said that the examination “fell apart” when defence counsel asked about the plaintiff’s work history. His counsel interjected, “It’s on this paper. Do you want to know an exact date?” There followed a lively exchange between the lawyers as to whether the examiner was entitled to insist on her questions being answered by the plaintiff himself, even if more precise or accurate information was available in a document or from the plaintiff’s counsel.

The Master set out a set of principles governing examinations for discovery and these are useful reading in themselves (see paragraph 16 of the reasons).

The Master then dealt with the problem posed in this case. He said that “there is nothing objectionable about a lawyer producing records to assist the examining party in obtaining a more complete and accurate history as long as the examining party does not object”. But here, counsel for the plaintiff persisted in his interruptions after the examining lawyer had made her objections quite clear and this, said the Master, was improper.

Master Dash also went on to say that, in his opinion, the plaintiff’s lawyer ought not to have said, “If you remember tell her, and if you don’t tell her you can’t remember.” He explained by analogizing the situation to cross-examination at trial:

In my view that was most improper. I appreciate Mr. Linett was concerned that his client could not remember exact dates and might give incorrect answers, but in light of Ms. Ramsay’s insistence that neither Mr. Linett nor his document come to the assistance of the plaintiff, Mr. Linett should have refrained from saying anything to his client. Those are the type of instructions a lawyer gives in preparing his client for an examination, but should not be stated once the examination has commenced, particularly in an atmosphere where Ms. Ramsay had continued to caution Mr. Linett about interfering. Clearly at trial, if the plaintiff is being cross-examined by defendants’ lawyer, plaintiff’s counsel cannot rise and tell his client “if you can’t remember tell her you don’t remember.” Similarly on an examination for discovery, plaintiff’s counsel cannot give those instructions and interfere with the defendants’ examination. In this case it appears that the plaintiff picked up on Mr. Linett’s cue since he stated, “I can’t remember exactly, but it’s on record if you need to know.”

The plaintiff was ordered to re-attend and answer questions in accordance with directions that were provided by the Master.

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Tort Insurer Can’t Call AB Doctors as Experts

Posted on April 27, 2010 by Stephen Cavanagh

In an important new decision, Mr. Justice J. Patrick Moore has refused to allow the defendant in a personal injury action to adduce expert testimony from three physicians who examined the plaintiff in connection with a claim for statutory accident benefits. The decision hinged on the new wording of Rule 53.03.

The ruling was made in Beasley and Scott v. Barrand. The plaintiff had been injured in a motorcycle accident in 2002 and sued the defendants for damages. At trial, counsel for the defendant sought to tender the expert evidence of three doctors who had examined the plaintiff in the course of his application for accident benefits and who had expressed an opinion that the plaintiff was able to work. Counsel for the plaintiff objected on the basis that those experts’ reports “cannot possibly be read to comply with the provisions of Rule 53.03.”

Prior to the trial, the defendants’ lawyer had tried to comply with Rule 53.03 by having each doctor sign an “acknowledgment of expert’s duty” [Form 53]. (That form and the corresponding provisions in Rule 53.03 only came into effect in January, 2010 as a result of reforms to the Rules of Civil Procedure.)

As Moore J. pointed out, Form 53 requires the expert to name the party by whom he or she was engaged to provide evidence in “the above-noted court proceeding” [emphasis in original] and to set out the instructions provided to him or her in relation to “this proceeding” [emphasis in original].

(It is to be noted that Rule 53.03 refers to “the” proceeding instead of “this” proceeding.)

In this case, the three doctors had been retained by insurers, not by a party in the tort action.

Justice Moore found that none of the three doctors in question had attempted to write their reports in compliance with Rule 53.03:

Drs. Moddel, Weinberg, and Soric did not state in their reports whether they were qualified to opine, on the basis of the information and documentation available to them, that the plaintiff was physically or psychologically capable of returning to all and every aspect of his activities of daily living, including his pre-accident employment. Nor did they describe on what basis Mr. Beasley might (as the adjuster’s instructing letter asked) undertake the essential duties of his occupation [including, for example, physical intervention leading to physical restraints]. In any event, the basis for their optimism that Mr. Beasley would be able to meet the demands of the job is simply not addressed.

Justice Moore mentioned that the relationship between an insurer and an insured is a fiduciary one, while the relationship between a plaintiff and a defendant in a tort action is not. He also noted that the issues in the two types claim can be quite different.

In addition, Justice Moore pointed out that the three doctors in question had seen the plaintiff back in 2003, while a number of other doctors who had been engaged for this litigation had seen him more recently.

His Honour found that the plaintiff would be unfairly prejudiced if the three experts in question were permitted to testify.

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C.A. Says $125,000 is Maximum Award for “Loss of Care, Guidance and Companionship”

Posted on March 22, 2010 by Stephen Cavanagh

In Fiddler v. Chiavetti, the Court of Appeal has held that the current maximum award for the loss of care, guidance and companionship under s. 61 of the Family Law Act, is $125,000. That amount represents the $100,000 award approved by the Court of Appeal in 2001 in To v. Toronto Board of Education and then adjusted for inflation.

At trial, the jury in this case had awarded damages of $200,000 for loss of care, guidance and companionship to the mother of a woman who had been killed in a car accident. The Court of Appeal ruled that that award was “grossly excessive” and reduced it to the maximum of $125,000.

The Court noted that although the trial judge was not obliged to give guidance to the jury as to the “upper limit” of an award for the loss of care, guidance and companionship, it might have been preferable, in this case, that she do so.

The defendants in the case had also challenged various other aspects of the trial, principally the judge’s charge in light of statements made by counsel for the plaintiffs, which statements the defendants characterized as “inflammatory”. However, apart from the damages reduction mentioned above, the Court of Appeal did not accept any of the other defence arguments. Although they agreed that a number of the submissions made at trial by counsel for the plaintiffs had been inappropriate, they were satisfied that the trial judge had adequately dealt with those issues in her charge.

The defendants’ final ground of appeal was the failure of the plaintiffs to call actuarial evidence at trial, to prove the loss of income of the mother. They argued that “her failure to provide expert evidence as to the necessary aspect of a future loss of income claim including contingencies such as working life expectancy or her ability to work in the future” meant that there was no foundation for the damages awarded by the jury for loss of income.

The Court of Appeal disagreed. It said that “[t]here is no rule governing when actuarial evidence is required to establish a loss of income claim” and that “Although it is customary that expert evidence is called in this regard, I can find no reason to conclude that it is a legal requirement to do so”.

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Justice Matlow Says Changes to Rule 20 Now Permit Motions for Summary Judgment to Be Brought Before Judges

Posted on March 15, 2010 by Stephen Cavanagh

Last year, Mr. Justice Ted Matlow held, in Bensusan v. Ali, that motions for summary judgment had to be brought before a master. His Honour has now released a new decision in which he has concluded, correctly, in our view, that the substantial amendments that have been made to Rule 20 mean that motions for summary judgment can be mdae to either a judge or a master, at the option of the moving party.

Unlike Bensusan, Abrams v. Air Canada was decided since the changes to Rule 20. As Justice Matlow observed, the amendments give to judges powers that are not enjoyed by masters. In particular, subrule 20.04(2.1) is entirely new and allows judges to weigh evidence, evaluate credibility and draw reasonable inferences from the evidence. (As we’ve said elsewhere, does this mean that masters are not allowed to draw reasonable inferences from the evidence placed before them?)

Given the wording of the new version of Rule 20, Justice Matlow’s conclusion, that motions for summary judgment can be brought before either a judge or a master, seems inescapable.

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Jury Awards Damages of $5,000 on Theft Claim; Costs Fixed at Almost $76,000

Posted on March 10, 2010 by Stephen Cavanagh

The ruling of Madam Justice Alison Harvison Young in Bonaiuto v. Pilot Insurance Company show how the disposition of costs can transform a favourable trial outcome into a Pyrrhic victory. The plaintiff sought damages of $22,424.00 from her insurer as a result of theft and damage to her car and its equipment. The insurer, Pilot Insurance Company, denied the claim, contending that it was fraudulent.

At trial, the jury found for the plaintiff but assessed damages at only $5,000. It rejected the plaintiff’s claim for punitive damages against the insurer.

The trial judge then had to deal with the issue of costs. Counsel for Pilot argued that the plaintiff should receive no costs because the award of damages was so low that the action ought to have been brought in Small Claims Court or under the Simplified Procedure. However, Justice Harvison Young rejected these submissions and awarded costs to the plaintiff on a substantial indemnity basis, in the amount of $75,932.23.

Her Honour was critical of Pilot for having made no offer to settle. She also noted that although Pilot had “vigorously” maintained its allegations of fraud on the part of the plaintiff, its evidence on this issue was “thin”.

While Rule 57.05(1) says that “if a plaintiff recovers an amount within the monetary jurisdiction of the Small Claims Court, the court may order that the plaintiff shall not recover any costs”, Justice Harvison Young stressed that this power is discretionary. (Subrule 76.13 contains similar provisions with respect to costs where the amount recovered in an action under ordinary procedure is less than the monetary limit for simplified procedure cases, which is what happened here.)

In the judge’s view, it was important to assess whether or not it was reasonable for the plaintiff to proceed to trial under the ordinary procedure and on this point, relied on a passage from the Court of Appeal’s decision in Garisto v. Wang, 2008 ONCA 389 (CanLII): “The reasonableness of the appellant’s decision to proceed under the ordinary procedure must be assessed on the basis of the facts as they existed before the jury’s verdict.”

Here, Her Honour held that it was reasonable for the plaintiff to proceed under the ordinary procedure (which, at that time, was for cases involving more than $50,000). As a result, she concluded that this was an appropriate case for an award of costs on a substantial indemnity basis. She fixed those costs at that amount claimed by the plaintiff, $75,932.23.

Two things strike us as noteworthy about this decision. First, in evaluating whether or not to apply the costs sanctions provided for in Rules 57 and 76, where the amount recovered falls below a certain level, it seems odd to consider “the facts as they existed before the jury’s verdict”. Taken to its logical conclusion, that approach should make the outcome of the trial irrelevant to this issue.

Secondly, the case of Garisto v. Wang, upon which Justice Harvison Young relied, was a personal injury action in which the plaintiff had marshalled “impressive expert medical evidence”. The Court of Appeal was satisfied that there had been a realistic chance of the damages exceeding the simplified procedure limit at the time.

In cases involving claims for general damages, there is an inherent uncertainty as to what the damages will be. Here though, the claim was a liquidated one for $22,424.00, well below the $50,000 cut-off. The damages for the claim under the policy could not have been higher than the amount claimed. Presumably, it was the claim for punitive damages that had allowed the action to be brought in ordinary procedure. Assuming that to be the case, we would have thought that in determining whether to apply the costs provisions of subrule 76.13 , the court would have had to evaluate the reasonableness of the claim for punitive damages, since the balance of the claim clearly would not have warranted an action under ordinary procedure. However, Justice Harvison Young’s reasons are silent on this point. She said only that “In my view, it was reasonable in these circumstances for the Plaintiff to proceed under the ordinary procedure”, without explaining what led her to that conclusion.

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Judge Says Motion to Compel Answers to Undertakings Requires Leave After Case Set Down for Trial

Posted on February 11, 2010 by Stephen Cavanagh

Mr. Justice Paul Perell has released a decision that discusses the effect to be given to Rule 48.04 of the Rules of Civil Procedure and its prohibition against initiating or continuing any motion or form of discovery without leave of the court, once a case has been set down for trial.

In Van Ginkel v. East Asia,  the plaintiff moved to compel the defendant to answer “undertakings, refused questions and follow-up questions from the examination for discovery of the defendant’s representative”. Counsel for the plaintiff had already set the case down for trial under Rule 48.02. After the motion was served (and after the case had been set down), the defendant provided answers to its undertakings. Counsel for the plaintiff was dissatisfied with the answers and wished to examine the defendant’s representative further on them. (It is not entirely clear how much of the original motion to compel the defendant to answers undertakings, refused questions and follow-up questions was still in play by the time the motion was heard. Justice Perell’s reasons say that the undertakings had been answered by then. It appears that what was really in issue was some follow-up questions on the answers to undertakings. So, even though Justice Perell’s reasons purport to deal with the law regarding whether or not leave is required to move to compel compliance with undertakings after a case has been set down for trial, it is not clear to us that this was such a case.)

Justice Perell concluded that leave to bring the motion was required and that the test for granting leave had not been met. Accordingly, he dismissed the motion.

Counsel for the plaintiff took the position that he did not require leave to bring the motion, because of the exception in R. 48.04(2), to the general prohibition, contained in R. 48.04(1), against motions or discovery being initiated or continued after setting an action down for trial. The exception reads:

(2) Subrule (1) does not,

(a) relieve a party from complying with undertakings given by the party on an examination for discovery;

(b) relieve a party from any obligation imposed by,

(0.i) rule 29.1.03 (requirement for discovery plan) …

(iii) rule 31.07 (failure to answer on discovery), …

His Honour summarized the caselaw as follows:

Having reviewed that case law about these several rules, I extract the following principles:

  • Because of rule 48.04 (1), if a party sets an action for trial, he or she may not without leave bring a motion for: a further or better affidavit of documents; to challenge a claim for privilege; to compel answers to any questions refused at the examination for discovery; or for further discovery: White v. Winfair Management Ltd., [2005] O.J. No. 1542 (Master); Fraser v. Georgetown Terminal Warehouse, [2004] O.J. No. 2131 (Master); Gawronski v. All State Insurance Co., [1998] O.J. No. 4640 (Master); Machado v. Pratt & Whitney Canada Inc.1993 CanLII 5492 (ON S.C.), (1993), 16 O.R. (3d) 250 [1993] O.J. No. 2741 (Gen. Div.).
  • The authorities are not uniform as to whether a party can move without leave to compel further discovery or the production of documents if the unanswered question is an unanswered undertaking. The predominant line of authorities, however, requires that after the action is set down for trial, leave be obtained to compel answers to undertakings: Benedetto v. Giannoulias, [2009] O.J. No. 3218 (S.C.J.); Fraser v. Georgetown Terminal Warehouses Ltd., [2005] O.J. No. 573 (S.C.J.). There, however, is authority that indicates that leave is not required where a party is not honouring his or her undertakings:Region Plaza Inc. v. Hamilton-Wentworth (Regional Municipality), [1996] O.J. No. 4809 (Gen. Div.).
  • A party who has set an action down for trial is not precluded from taking interlocutory steps or from making motions to respond to a motion or interlocutory step taken by the opposing party: 1086471 Ont. Ltd. v. 2077060 Ont. Inc., [2008] O.J. No. 5175 (Master); Trotter v. Cattan (1997), 15 O.R. (2d) 800 (Master). Thus, for example, a party who sets an action down for trial but who is confronted with his or her opponent’s motion for a summary judgment may cross-examine the moving party’s deponents and compel answers to refused questions; see: 1086471 Ont. Ltd. v. 2077060 Ont. Inc., [2008] O.J. No. 5175 (Master).
  • If before setting an action down for trial, a party obtains an order compelling his or her adverse party to answer undertakings or any unanswered or refused questions from the examination for discovery, the party may set the action down for trial and he or she will not require leave to bring a motion to compel compliance with the court’s existing order requiring answers: CBL Investments Inc. v. Menkes Corp 1994 CanLII 7225 (ON S.C.), (1994) 17 O.R. (3d) 147 (Gen. Div.); Chiefs of Ontario v. Ontario, [2007] O.J. No. 2569 (Master); 1086471 Ont. Ltd. v. 2077060 Ont. Inc., [2008] O.J. No. 5175 (Master). In these circumstances, the motion is, in effect, a motion to enforce a court order and not a motion to initiate or continue discovery within the meaning of rule 48.04 (1).
  • Once a party has set an action down for trial, it is a matter of discretion in the particular circumstances of the case whether the court will grant leave to initiate or continue a motion or form of discovery. However, the setting down for trial is not a mere technicality and the test for granting leave to permit further discovery or other interlocutory proceedings, is that there must be a substantial or unexpected change in circumstances such that a refusal to grant leave would be manifestly unjust or the interlocutory step must be necessary in the interests of justice. Hill v. Ortho Pharmaceutical (Canada) Ltd., [1992] O.J. No. 1740 (Gen. Div.) at para. 3; Machado v. Pratt & Whitney Canada Inc.1993 CanLII 5492 (ON S.C.), (1993), 16 O.R. (3d) 250 [1993] O.J. No. 2741 (Gen. Div.); White v. Winfair Management Ltd., [2005] O.J. No. 1542 (Master) at paras. 15-16; Benedetto v. Giannoulias, [2009] O.J. No. 3218 (S.C.J.).

From these cases, Justice Perell distilled the following principle:

In my opinion, the line of authorities that holds if an action is set down for trial leave must be obtained to compel answers to undertakings is preferable. I say this because for situations where the moving party does not receive answers to the undertakings, the Rules of Civil Procedure continues the obligation to honour the undertakings and provides sanctions for the failure to do so, and for situations where the moving party receives answers but wishes to ask follow up questions; the test for granting leave provides an appropriate means to measure whether justice requires that the questions be answered.

Applying the principle to this case, he said that when the plaintiff “set the action down for trial, he indicated [by implication, presumably] that he did not require the ‘raw accounting files, cheques, invoices, and other documents which are compiled in the financial statements’ and the subsequently arriving answer to the Defendant’s undertaking does not justify revisiting that decision.”

As we have mentioned above, it is our impression from the reasons, that what was actually in issue by the time the motion was heard, was whether or not the plaintiff was entitled to pose follow-up questions to the defendant in relation to the answers given to its undertakings, not whether he was entitled to enforce the original undertakings themselves (although that had been part of the original motion).

But if, on the facts, his comments were obiter, Justice Perell was clearly of the view that even if the defendant had not answered its undertakings, leave to bring a motion to compel compliance with the undertakings would have been required by R. 48.04, once the plaintiff had set the action down for trial (see paragraph 18 of the reasons). We have some difficulty with this proposition.

First of all, what Justice Perell describes as “the predominant line of authorities” supporting his conclusion does not appear to us to stand for that proposition at all. The two cases referred to by His Honour are Benedetto v. Giannoulias, [2009] O.J. No. 3218 (S.C.J.) and Fraser v. Georgetown Terminal Warehouses Ltd., [2005] O.J. No. 573 (S.C.J.). Continue reading →

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Judge Declines to Decide Discoverability Issue on Summary Judgment Motion, Despite Expanded Powers

Posted on February 4, 2010 by Stephen Cavanagh

Zurba v. Lakeridge Health Corporation is the first decision we have seen of a summary judgment motion decided under the amendments to Rule 20. Unfortunately, it suggests that “the new boss” bears a strong resemblance to “the old boss”. If this case is any indication, judges are not going to rush to use their expanded powers.

The amendments to Rule 20, which became effective last month, confer upon judges powers that they (arguably) did not have before: to weigh evidence, evaluate credibility and draw reasonable inferences from the evidence. A judge hearing a summary judgment motion may require that oral evidence be given. (Only judges have been given these expanded powers, which makes us wonder whether it is impermissible for masters to draw reasonable inferences from the evidence.)

This was a medical malpractice case. One of the defendants, a physician, moved for summary judgment to dismiss the action, on the basis that it was prescribed, either by the one-year limitation period in the Regulated Health Professions At, 1991 or the two-year limitation period in the Limitations Act, 2002. Central to the motion was when the plaintiff’s claim was “discoverable”. Mr. Justice Peter Lauwers dismissed the defence motion and concluded that there was a genuine issue requiring a trial (viz., the date on which the claim was discoverable). He declined an invitation from counsel for the plaintiff, to decide the issue “definitively” himself, saying:

That is not my role as a motions court judge in this case. It seems to me that the question of whether this is a case in which a medical opinion is required for sufficient knowledge to be communicated to the plaintiff is a factual issue to be determined by the trier of fact who is able to assess first-hand the credibility of Mr. Zurba [the plaintiff] on the issue of when he first developed a view, or when he first ought to have developed a view, that someone erred.

The factual question as to the appropriate date of discoverability is one which ought to be tried and, per Aguonie, supra, on the facts before me, the outcome is not so certain that I am willing to rule definitively among the alternatives of October 17, 2003, June, 2004, or June, 2006, despite the amendments to Rule 20. I find that this is not a case in which it is in the interest of justice for me to exercise the powers under Rule 20.04(2.1). It would be more consistent with the interest of justice for such powers to be exercised at a trial when credibility can be properly assessed. That assessment of the evidence requires live witnesses in a trial context.

In the course of his reasons, Justice Lauwers discussed, at some length, the circumstances in which the limitation period for an action against a physician is postponed until the plaintiff has obtained a report from an expert.

Here, the plaintiff had fallen off a ladder and badly broken his ankle. The defendant physician was the first doctor involved in the plaintiff’s treatment. He elected not to operate and instead, cleaned and dressed the wound and applied a cast. He saw the plaintiff again a few days later, then had no further involvement with his case.

The plaintiff went on to develop infection in his ankle, for which he underwent treatment from other doctors. Ultimately, he did undergo multiple surgeries which “concluded unsatisfactorily” three years later. The plaintiff commenced action in December, 2006, about three and a half years after the accident. At the time, he did not have an expert’s opinion, that the care provided by the physician whom he had seen immediately after the accident, fell below the applicable standard of care. However, he obtained such a report in May, 2007, prior to this motion being heard. He evidently had received some oral medical advice prior to commencing the lawsuit, although there were no particulars about that.

The key issue that Justice Lauwers had to address was the defence submission, that the plaintiff had “discovered” his claim by October 17, 2003 at the earliest (the date on which he was seen for “worsening symptoms”) or June, 2004 at the latest. That was when the plaintiff was given a choice between amputation of his leg or further treatment. According to the defence, no medical opinion was required in order for the claim to be discovered.

Justice Lauwers reviewed the jurisprudence and concluded that, in the medical malpractice context, an important part of discoverability is determining that someone had “erred”. In some cases (His Honour used the example of a doctor operating on the left knee instead of the right), this will be immediately obvious. But in others, it will not. Here, Justice Lauwers would say only that:

This case may fall into the latter category, depending on the evidence, and that is a matter for the trier of fact. Perhaps Mr. Zurba actually formed the view earlier that someone had erred despite his affidavits, or perhaps he should have formed that view and proceeded earlier with due diligence to obtain a medical opinion, but that is also a matter of evidence for the trier of fact, given that the “reasonable person” test is used in considering the discoverability rule.

Accordingly, he dismissed the motion of the defendant physician.

We wonder whether he did the parties any favour by ruling as he did. Medical malpractice litigation is very  expensive, yet the parties now have no choice but to incur that expense if they wish to have a ruling on the discoverability issue, probably some years hence. It strikes us that the approach taken by Justice Lauwers, in deferring to trial a decision on discoverability, was not really any different from how a judge would have decided this motion before the amendments to the Rules came into effect. It remains to be seen whether other judges will make greater use of their new powers.

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Lump Sum Offer to Multiple Plaintiffs Held Not to Qualify Under Rule 49

Posted on January 29, 2010 by Stephen Cavanagh

Madam Justice Jane Ferguson has released a decision that will be of interest to civil litigation practitioners. Her reasons in Hayden v. Stevenson deal with a defendant’s offer to settle in a motor vehicle case, but the principles that she discusses have application to other types of cases.

The facts are somewhat complicated but need not be summarized here, for purposes of our discussion of Justice Ferguson’s approach to costs.

One of the defendants in the case made a lump sum offer of $260,000 to settle the claims of two groups of plaintiffs (one group of plaintiffs also included defendants in the other plaintiffs’ action). The offer also contained a provision whereby, after 30 days, it would be reduced by the amount of that defendant’s partial indemnity costs.

Following the trial, the defendant argued that it had beaten its offer. The two groups of plaintiffs contended that the lump sum offer and the diminishing amount of it made the offer too uncertain to qualify as a Rule 49 offer to settle, that would give rise to costs consequences.

Justice Ferguson accepted the first argument and rejected the second. She held that because the offer had been made to both sets of plaintiffs, “it was not possible to ascertain the offer being made to each party”. She referred to jurisprudence that had established that “especially in cases where there are multiple claimants, to be effective Rule 49 offers must be crystal clear”. Therefore, the offer did not qualify as one made under Rule 49. (It is not clear whether Her Honour’s decision would have been the same if the offer had been made to a single group, made of up several individuals.)

Justice Ferguson went on to consider the “diminishing offer” argument. She concluded that there are two streams of authority. One espouses the view that an escalating or diminishing offer made it difficult or impossible for an opposing party to evaluate the amount of the offer at a given point and so, are not valid offers under Rule 49.

The second line of cases says that escalating or diminishing offers are not, ipso facto ineligible from consideration under R. 49. Justice Ferguson chose to follow this body of authority. In other words, had she not already found that making a lump sum offer to multiple plaintiffs disqualified the offer from consideration under R. 49, the fact that the offer diminished over time would not have prevented it from being a R. 49 offer.

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