Written By: Michael Warfe and Krystal Leonov, Student-at-Law
Proportionality in the context of civil litigation reflects the notion that the time and expense devoted to a proceeding ought to be proportionate to what is at stake. It is a guiding principle that courts take into consideration when awarding costs to a successful litigant in conjunction with other factors such as the complexity of the issues in dispute and the financial strength of the parties involved. However, the principle of proportionality could serve to penalize plaintiffs with modest but legitimate personal injury claims, unless proper protection is afforded to them.
For example, if a court were to lower the costs awarded to a successful plaintiff because the damages were modest, what incentive would plaintiffs (or lawyers) have to pursue small, but worthy cases through to trial? These cases would not be pursued if the costs payable to the successful party were not commensurate with the work put into the case, thus creating a barrier to access to justice. After all, civil jury trials are often lengthy and expensive.
So how do we tackle this issue? For starters, there needs to be some protection afforded to plaintiffs where defendants refuse to acknowledge real, albeit modest claims. This issue was at the forefront of Persampieri v. Hobbs, where an 84 year-old plaintiff was awarded a total of $237,017.50 for costs following a jury trial where the net jury award was only $20,414.83.
Persampieri v. Hobbs
Justice Sanderson in Persampieri was asked to fix the costs payable to the successful plaintiff following a jury trial of her claim for damages arising from a rear-end collision. Throughout the case, defence counsel’s position was that their client (the insurer for the defendants) had an internal system of assessing motor vehicle accident claims and its assessment concluded that it would not be willing to offer even $1.00 to settle the claim. Further, once this internal decision was made, nothing could be done to alter it. The parties proceeded to trial.
After a three week trial where extensive lay, medical and future cost of care evidence was called, the jury returned a verdict awarding the plaintiff $40,000.00 for general damages, $25,000.00 for housekeeping and home maintenance, $2,000.00 for attendant care, and $500.00 for medical and rehabilitation expenses. After the application of the statutory deductible and deductions for accident benefits, the net jury award was $20,414.83.
Defense counsel conceded that the plaintiff beat her May 15, 2017 Offer to Settle for $10,000.00 for all general and special damages combined, net of the applicable statutory deductible plus partial indemnity costs. Justice Sanderson concluded that following the usual rule for costs under rule 49, the plaintiff would be entitled to her costs on a partial indemnity scale to May 15, 2017 and on a substantial indemnity scale thereafter. Justice Sanderson went on to consider however whether an application of the proportionality principle ought to lower the costs payable to the plaintiff given the relatively modest jury award. The plaintiff was claiming $268,070.29 for all fees and disbursements, inclusive of H.S.T.
Justice Sanderson observed that a strict application of the proportionality principle would be grossly unfair to the plaintiff and a reward to the uncompromising insurer. She noted that in most cases the proportionality principle was invoked to foster access to justice, but here the party invoking the principle and seeking to minimize the effects of a usual order for costs under rule 49 was a sophisticated insurer that made a tactical decision to reject the plaintiff’s formal Offer to Settle. It knew that the resolution of the issues at trial would involve the hearing of lengthy and costly evidence.
Justice Sanderson emphasized that this type of behavior by the insurer would
- discourage plaintiffs from pursuing legitimate but modest claims; and
- incentivize insurers to resist settling such cases to discourage plaintiffs from proceeding, which would seriously jeopardize overall access to justice.
The plaintiff’s costs were fixed at $237,017.50.
Justice Sanderson rightly noted that insurers can pursue whichever defense strategy they deem fit. However, these strategies will not be sanctioned by courts by lowering costs awards to successful plaintiffs with modest claims when to do so would compromise access to justice. Proportionality is but one factor that the court will consider when fixing costs under rule 57.
The defendants in Persampieri are seeking leave to appeal the decision of Sanderson J.
 2019 ONSC 368.