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Proposed Court Reforms Benefit Rich Insurers at the Expense of Average Litigants in Ontario

In a perfect world, the Courtroom presents a level playing field. There are rules which are meant to be followed. There is a neutral unbiased judge who acts as trier of fact; decides right from wrong; just from unjust.

When the rules of the Courtroom are tweaked, those tweaks have unintended (or sometimes secretly deeply calculated) consequences.

With this edition of the Toronto Injury Lawyer Blog, I would like to present to the general public what some tweaks in our Courtrooms can do to the Average Joe/Jane at trial.

The Ontario Civil Rules Committee is considering increasing the limit for Simplified Procedure Actions from $100,000 to $200,000. OK.

More concerning is that they are also considering placing caps on cost awards in such cases at $50,000 and disbursement awards at $25,000.

What effect would this have on your average litigant (who isn’t made of money?)

The rule of litigation is that the party with the deepest pockets wins. They can grind out their opponents through the legal process to the point their opposition has nothing left to spend.

Take the example of commercial litigation where a company of limited means sues a Fortune 500 company for an amount of $200,000.

The small company has to spend thousands of dollars to advance their claim at the expense of the operating capital of their business. That expenditure on legal fees represents a significant portion of their resources. They are cautious about how much money to spend because they simply don’t have the resources to burn.

The large Fortune 500 company has seemingly unlimited cash to burn on such a case. In addition to hiring an army of high priced lawyers, they can also afford an army of experts to frame the case their way. There is nothing stopping the Fortune 500 company from spending $2,000,000 on a case worth $200,000 (check the zeros). If their litigation strategy is to burn out their opponent, then so be it.

Should the small company win at trial, they may be entitled to have the large Fortune 500 company pay for a portion of their legal fees. Should the above noted Civil Rules Reforms get adopted,  those fees would be capped at $50,000 and disbursements at just $25,000. These caps makes it difficult, if not impossible for a smaller plaintiff of limited means to advance their case in Court.

Change focus now to modern personal injury litigation. Personal injury cases are built, in part on experts. Those experts don’t work for free, and those reports and expert testimony doesn’t come cheap. Just ask the Globe and Mail (see License To Bill: How doctors profit from injury assessments that benefit insurers; and see Insurance assessment firms altered; ghostwrote accident victim reports).

It’s not unheard of for insurers to take hard lined, principled approaches towards personal injury litigation. Where there is an aggressive threshold along with a secret credit exceeding $40,000 in the form of a statutory deductible which can’t be mentioned to a jury at trial, then why not roll the dice. It’s not gambling for the insurer when the deck is loaded in their favour. The legal bills of insurance companies are not scrutinized other than perhaps by the insurer themselves. They have the resources to spend millions of dollars on cases with just tens of thousands of dollars just to prove a point. How much time, energy and money an insurance company spends on any given case doesn’t matter because their resources are seemingly unlimited.0001r_Goldfinger-200x300

When the insurance company gets burned, like Aviva did in Persampieri v. Hobbs, 2018 ONSC 368 (Canlii) where the the insurer refused to offer the Plaintiff any money thereby forcing a trial which the Plaintiff won just $20,000 but was awarded $237,000 in costs because that’s how much trials costs nowadays; it’s scary that the Rules Committee is considering imposing costs limits.  There is no incentive for the insurer to settle smaller cases because the downside for not settling the case is so minimal (just $50,000!)

The exact same thing happened in the case of Poonwasee v. Plaza, 2018 ON SC 4968 (Canlii) where the insurer refused the Plaintiff’s offer to settle of $50,000 and made no counter offers on the case thereby forcing a trial. The Plaintiff was successful at trial and recovered an award of$43,014.93. But because the Defendant insurer took a principled approach to the case, the Plaintiff recovered $120,000 in costs.

Both cost awards in Persampieri and Poonwasee acted as penalties against the insurer because they failed to either  negotiated in good faith or make real efforts to resolve the matter (like most parties are encouraged to do in Ontario which is why there is mandatory mediation, Pre-Trial etc.). If an insurer is going to take an all or nothing approach to litigation, there needs to be a cost for winning (which is paying zero) and a cost to losing (which is paying a significant cost award). To remove that incentive to settle the case by presenting minimal cost risk is acting as a disincentive to insurers to settle cases and carte blanche to try every case without any real consequences.

If the Rules Committee is considering these changes, they should also consider what impact it will have on the already over burdened justice system. Lack of Judges, reporters and court room space is a common theme which will only be made worse by these changes. If every insurer has a safety net that they will only have to pay $50,000 in costs should their lawyers fail at trial to prove a point to deter further litigants from advancing their claim; then $50,000 is a small price to pay when considering the larger picture.

Nobody said that being a Plaintiff was easy. And this is further proof should these changes be adopted.

It’s getting close to the Holiday Season. Our lawyers have noticed a spike in impaired driving incidents. We thought those days were long gone but apparently they aren’t. Don’t drink and drive. Take a taxi or better yet, use a ride sharing service like Uber or Lyft to get you around town. It’s only an App away and you can also get a few dollars off your first ride with one of these services. There are really no more excuses (like there ever were) for drinking and driving. It’s a terrible decision which has life long consequences. Think before you drink. Arrive Alive.


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