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In Pye v Di Trapani, the Ontario Court of Appeal reaffirmed the broad discretion afforded to trial judges in awarding costs. The Court upheld a nearly $1 million costs award following an 18-day jury trial in which the plaintiff was awarded just over $1 million in damages. The trial judge’s reasons highlighted the exceptional quality of the plaintiff’s trial counsel, whose advocacy was described as a “rare jewel… that is a wonderful treat to behold.”
Partner Chris Morrison and myself were counsel on this appeal for the successful party.
The case arose from damages sustained by the plaintiff in a motor vehicle accident in 2016. After a lengthy jury trial, the jury awarded the plaintiff over $1 million in damages – approximately double the defendant’s final offer to settle before trial. At the subsequent costs hearing, the trial judge awarded the plaintiff $995,854.50 in costs (inclusive of disbursements and HST) and $84,944 in pre-judgment interest calculated at a 3% annual rate.
The defendants appealed on the following grounds:
Costs (Rule 57.01)
Under Rule 57.01 of the Rules of Civil Procedure, courts must determine a costs award that is fair and reasonable in the circumstances, guided by a non-exhaustive list of factors including the result of the proceeding, complexity of the case, counsel’s experience and rates, conduct of the parties, and offers to settle. As the Court of Appeal reiterated, quoting Davies v. Clarington (Municipality), the analysis is not a mechanical one: “the judge awarding costs should reflect on what the court views as a reasonable amount… rather than any exact measure of the actual costs.”
Rule 49 Offers to Settle
Rule 49 encourages early resolution by imposing cost consequences on parties who fail to accept reasonable offers. Where a plaintiff obtains a judgment more favourable than their offer, they are entitled to partial indemnity costs to the date of the offer and substantial indemnity costs thereafter.
Pre-Judgment Interest
Pre-judgment interest is governed by section 130 of the Courts of Justice Act, which allows a trial judge to depart from the default interest rate where circumstances justify it.
The Trial Judge’s Reasons
Costs
A central theme of the trial judge’s reasons was the exceptional calibre and efficiency of the plaintiff’s trial counsel. While the defence focused on the hourly rates charged, the trial judge found that the team worked “efficiently as a highly skilled team,” and that their performance at trial justified the rates claimed. He noted that the plaintiff’s counsel conducted the trial without delay or downtime, with each team member playing a vital role.
Notably, the judge emphasized that in assessing hourly rates, effectiveness was more relevant than years of experience. The result achieved and the manner in which the case was conducted led the court to conclude that the amount of costs sought were reasonable in the circumstances.
The plaintiff’s lead counsel, Michael Smituich, received remarkable praise from the bench. The judge described him as a “true artist in the field of advocacy”, noting that his conduct at trial “qualifies as one of those very rare jewels of advocacy that is a wonderful treat to behold”. His presentation was described as “brilliant, and especially so, as Mr. Pye presented as a miserable old man”. Based on Mr. Smitiuch’s excellent advocacy, the trial judge held that in a serious case such as this, most litigants would gladly pay $925 an hour for such “outstanding superior representation”.
In contrast, the $350 hourly rate of defendant’s counsel was described as woefully inadequate in the circumstances.
Of the total costs award, over $165,000 related to disbursements, which were largely unchallenged by the defendants.
Rule 49
The jury award exceeded the plaintiff’s pre-trial offer to settle, triggering entitlement to substantial indemnity costs from the date of that offer. This consequently accounted for more than half o the total costs award, totalling $516,060.00.
Pre-Judgment Interest
The trial judge exercised his to award pre-judgment interest 3% rather than the statutory rate of 0.8% prescribed by the CJA. He considered the inflationary environment and fluctuating market rates over the seven-year period from the accident to trial and concluded that the rate of 3% is fair and reasonable.
The Court of Appeal dismissed the appeal in full, finding no error in principle and no reason to interfere with the trial judge’s exercise of discretion.
Failure to Question the Plaintiff’s Costs
On the first issue, the Court affirmed that a trial judge is not required to conduct a line-by-line review of costs. The focus is on the overall reasonableness of the amount in light of the case’s complexity, the outcome, and conduct of counsel, among other factors. The Court held that the costs reasons demonstrate that the trial judge appropriately focused on the overall reasonableness and adequately explained why he considered the amount sought to be reasonable.
Failure to Apply Principles of Reasonableness and Proportionality
On the proportionality of the costs award, the Court noted that the trial judge properly accounted for the fact that the jury’s damages award exceeded the plaintiff’s rule 49 offer. This triggered substantial indemnity costs and justified a significant award. The trial judge was aware of proportionality concerns and adequately addressed them.
Pre-Judgment Interest
On pre-judgment interest, the Court reiterated that the trial judge’s discretion under section 130 of the Courts of Justice Act is broad and entitled to deference. It was open to the judge to consider inflation and market conditions, in setting a higher rate of 3% – there was no error in his exercise of discretion.
Ultimately, the trial judge was entitled to consider the quality of plaintiff counsel’s advocacy pursuant to Rule 57.01, including the use of colourful commentary to convey Mr. Smitiuch’s exceptional advocacy.
This case reinforces the following key principles:
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