Costs Decision in “Crushing and Complete” Trial Loss for Plaintiffs

In McNamee v. Oickle, 2020 ONSC 5078, the plaintiffs received $5,000 following a jury trial arising from a motor vehicle accident. Prior to trial, the defendant had offered a total of $350,000 plus costs. The plaintiffs had offered $900,000 plus costs. Justice Beaudoin described the result “as a crushing and complete loss to the plaintiffs”.

Rule 49.10(2) of the Rules of Civil Procedure states that, when a defendant beats its formal offer to settle, the plaintiff is entitled to partial indemnity costs to the date of the offer and the defendant is entitled to partial indemnity costs from the date of the offer, unless the court orders otherwise.

The plaintiffs sought costs of approximately $350,000 up to the date of the defendant’s offer. The defendant sought costs of approximately $212,000 from the date of the offer.

Justice Beaudoin noted that costs are discretionary. The ultimate objective is fairness to the parties.

In examining whether the costs sought by the plaintiffs were reasonable, Justice Beaudoin noted that the amount recovered is one element of the proportionality analysis.

The Court of Appeal’s decision in Elbakhiet v. Palmer, 2014 ONCA 544 was cited, where the Court of Appeal stated: “The amounts claimed and the amounts recovered were completely different. Rule 57.01 required those facts to be taken into consideration, not discounted because the trial judge believed the case was worth potentially more”.

Justice Beaudoin indicated: “I conclude that this defendant is entitled to a level of indemnity for beating its offer by a very wide margin. I am aware that this was a devastating loss to the plaintiffs.  They nevertheless pursued an aggressive litigation strategy that failed miserably”.

The plaintiffs’ costs were fixed at $100,000 all-inclusive and the defendant’s costs were fixed at $200,000 all-inclusive. Therefore, the defendant received a net costs award of $100,000.