A costs endorsement in the case of Persampieri v. Hobbs was just released by the Honourable Justice Sanderson after a three week jury trial of a car accident case.
This costs endorsement reflects everything that’s wrong with car accident law in Ontario.
You should know that in jury trials, jury decisions are not reported. Only the Judge’s endorsements/rulings from in-trial motions or costs decisions are reported. It’s through those endorsements/decisions which lawyers and insurers alike can pick up on what happened at trial (unless they are in the Court room to observe the trial as it takes place).
This case encapsulates EVERYTHING that’s wrong with the current state of tort claims for car accidents in Ontario. The system is simply grotesque, and tilted so far towards insurers it acts as a deterrent for innocent accident victims to seek the compensation which they deserve.
Here are the highlights (or lowlights) from the case:
- The car accident took place on February 11, 2009 (you read that right. the car accident took place 9 years ago. It can take that long to get your day in Court)
- The jury trial lasted around 3 weeks.
- The Defendant insisted on having a Jury trial. Why? As The Honourable Justice Myers said in Mandel v. Fakhim, 2016 ONSC 6538:While jury trials in civil cases seem to exist in Ontario solely to keep damages awards low in the interest of insurance companies, rather than to facilitate injured parties being judged by their peers, the fact is that the jury system is still the law of the land…
- Shortly after the Statement of Defence was served, counsel for the Defendants advised counsel for the Plaintiff that the Defendants’ insurer, Aviva Canada, “the insurer or Aviva” was not prepared to pay any tort damages and that it would not be making any offer to the Plaintiff in the tort action.
- The Defendant Insurer Aviva maintained this position throughout the course of the litigation. Their only offer to the Plaintiff was a dismissal without costs. This forced the Plaintiff’s hand to either accept ZERO for the case, or proceed to trial.
By March 21, 2017 the Plaintiff had served a Rule 49 Offer to Settle her action for damages of $20,000 plus partial indemnity fees plus disbursements. The Offer further provided that no prejudgment interest would be payable
- Around two weeks before the commencement of the trial, that Offer was withdrawn, in effect, when Counsel for the Plaintiff served a further Rule 49 Offer to accept damages of $10,000, without pre judgment interest. You read that right. To get a deal done, the Plaintiffs agreed to cut their offer to settle in half, from $20K, all the way down to $10K.
- Still, the Defendant insurer refused to bargain with the Plaintiff and maintained their hardline defence. Either accept ZERO, or proceed with the trial.
- The Plaintiff remained determined, much to their credit and advanced the case to trial. A jury trial nonetheless, which are more expensive and time consuming that non-jury trials which are heard before a Judge alone.
- At trial, the Defence brought a motion to dismiss the Plaintiff’s action on account of a missed limitation period (and lost)
- After trial, the Defence brought a threshold motion seeking to dismiss the Plaintiff’s action for failure to meet the threshold for pain and suffering claims (and lost)
- The Jury awarded the Plaintiff $40,000 for general damages, $25,000 for housekeeping and home maintenance, $2,000 for attendant care, and $500 for medical and rehabilitation expenses.
- Naturally, the Jury is NOT told about the statutory deductibles. So, these amounts needed to be reduced. This is exactly why insurers opt for jury trials; because juries aren’t told about the statutory deductions to general damage awards. This is simply not fair, and a system which is completely abused by insurers and works to their favour every time.
- Here is what happened to the Plaintiff’s $40K pain and suffering award. It was reduced by the statutory deductible down to just$2,614.83!!!! From $40K down to just $2,614.83!?!?!? Talk about a windfall for the insurer!
After application of statutory deductibles and deductions for accident benefits, the net Jury award is $20,414.83, calculated as follows:
$2,614.83 for general damages (net of the deductible),
$15,800 for housekeeping and home maintenance damages (net of housekeeping benefits received)
$0 for caregiving,
$0 for out of pocket expenses,
$0 for medical and rehabilitation benefits (net of medical rehabilitation benefits.)
- But it was on costs where the Plaintiff succeeded, and succeeded big time! The Honourable Justice Sanderson found:
Notwithstanding the Defendants’ and Aviva Canada’s uncompromising refusal to engage in good faith settlement talks, the Plaintiff was always willing to discuss resolution. The Plaintiff made two extremely reasonable Rule 49 Offers in an attempt to resolve this action and avoid an unnecessary trial. The jury awarded the Plaintiff a damages amount that exceeded both of her Rule 49 offers. Furthermore, the jury award was more than double the amount of the Plaintiff’s Rule 49 Offer…. While the Defendants were entitled to adopt the litigation strategy they did, and to “play hardball”, they appreciated the obvious risks of so doing. They must now bear the foreseeable costs consequences thereof.
To use the words of the Court of Appeal in Ross v Bacchus 2015 ONCA 347 (CanLII),…at para 51 “When an insurer rejects a plaintiffs offer and proceeds to trial, the insurer risks both a higher damage award at trial and the imposition of substantial indemnity costs after the date of the rejected offer. Both risks came to pass in this case.”
Here, the party invoking the proportionality principle and thereby seeking to minimize the effects of a usual order for costs under Rule 49.01(1) is a sophisticated insurer that made a tactical decision to reject a Plaintiff’s formal Rule 49 Offer to Settle understanding the risk in costs that it was taking by so doing.
 Because it had framed its defence in the manner that it had, it knew that the resolution of the issues at a trial would involve the hearing of lengthy and costly evidence, including extensive medical evidence.
 Sanctioning insurers’ litigation strategies involving: (1) discouraging Plaintiffs from pursuing legitimate but modest claims by refusing to make any meaningful offer to pay damages and forcing those Plaintiffs to trial in circumstances where, because of defences the insurers have asserted, they cannot possibly be successful unless they call expensive medical and other evidence;
(2) then, raising the spectre of very serious adverse cost consequences of such trials;
(3) then, even after Plaintiffs have chosen to take the serious adverse costs risks of such trials, and even after they have been successful at trial and have received costs awards under Rule 49.01(1) on a substantial indemnity scale; (4) attempting to unduly minimize the quantum of otherwise usual amounts of costs including substantial indemnity costs on the basis of proportionality,
would be, in my view, to sanction under compensation of Plaintiffs for costs legitimately incurred to make many lawsuits uneconomic and could generally discourage Plaintiffs with modest claims, even if valid from pursuing them…
The end result? On a$20,414.83 jury award where the insurer played hardball throughout the course of the case, that same insurer was ordered to pay out to the Plaintiff $237,017.50 in costs. Aviva could have accepted the Plaintiffs $10K offer. But they opted not to. Instead, they opted to take a hardline approach towards litigating this matter. And this was the result.
Will this decision get appealed? That wouldn’t surprise anyone….