Ever wonder how much a lawsuit really costs, especially when after a trial? A recent Ontario Superior Court case, Pye v. Di Trapani et al., just delivered a serious dose of reality, highlighting how legal bills can stack up after lengthy litigation and a lengthy trial.
By way of refresher, Ontario has a loser-pay civil justice system, meaning that the loser of a lawsuit will be ordered to pay a portion of the opposing party’s legal costs. The size of these costs awards can vary depending on a variety of factors, including the proportionality of the costs being sought and the final outcome of the case (i.e. the jury’s award) and any offers to settle the case made by either party before the trial. Generally speaking, the size of a cost award will be between approximately 55-85% of the actual fees incurred in prosecuting the litigation.
This case stemmed from a motorcycle collision where the plaintiff was injured when a defendant blew through a stop sign. A jury found in the plaintiff’s favour, awarding him a substantial sum totalling just over one million dollars for general damages, future medical care, future home maintenance, and past lost income. On any evaluation of the outcome, this was a very good result.
Here’s where it gets interesting: before the trial, both sides had tried to settle the case. The plaintiff had offered to settle for $799,000, while the defendant’s offer was $500,000. The jury’s final award exceeded both these offers. Usually when a plaintiff gets a jury award more than their offer to settle, they’re in a strong position for costs. The law is, generally, that the costs awarded up to the point of an offer to settle is somewhat lower (called partial indemnity costs) and the costs awarded after an offer to settle (where the jury award beats the offer to settle) is higher (called substantial indemnity costs).
In this case, the plaintiffs claimed $218,925 plus HST up to the date of their offer, and $516,060 plus HST after the date of their offer. The Court agreed that this was reasonable and therefore ordered a total of $794,985 for costs plus HST. On top of that amount, the court also agreed that the disbursements claimed by the plaintiffs were reasonable (disbursements are monies spent by a party on items required to prosecute or defend a case, including anything from photocopies and mail costs to medical records and experts’ costs) and awarded $168,071.45 for disbursements. When interest was added to these amounts, the total costs award was $1,104,557.50. This sum is almost equal to the size of the jury award.
As always, it is important to note that since this was a motor vehicle case, the actual defendant does not have to pay this sum of money themselves. Their car insurance company will pay it for them.
Not surprisingly, that insurance company appealed the decision on costs to the Court of Appeal. They argued, among other things, that it was entirely disproportionate to award costs that essentially equated the jury award for damages. The Court of Appeal dismissed these arguments. It held that the trial judge properly reviewed all relevant factors and did not make any errors in doing so. The final result is therefore that the defendant insurer in this case owes a significant sum to the plaintiff.
The takeaway? This case is a stark reminder of the financial implications of litigation. It underscores the critical importance of offers to settle in determining who pays what in legal costs. And for anyone involved in a serious personal injury claim, it highlights that the fight for fair compensation can indeed come with a hefty, but justifiable, price tag in legal fees.
About the Author
Joseph Dart is a partner at Bergeron Clifford LLP. He graduated from Yale University in New Haven, CT. He graduated from Queen’s University Law School in 2005.
Joseph was called to the bar in 2006, and began his legal career as a crown prosecutor in the Crown Attorney’s Office, first in Scarborough, and later in Belleville, where he worked on various high-profile criminal cases. During his time with the Crown’s Office, Joseph litigated many cases in both the provincial and superior courts of Ontario.
He joined Bergeron Clifford in 2015, and represents plaintiffs in negligence, medical malpractice and auto cases. He has tried and argued cases before the Ontario Superior Court of Justice and Ontario Court of Appeal, along with the License Appeals Tribunal, Social Security Tribunal of Canada and Workplace Safety and Insurance Appeals Tribunal. Know More
