Refusal to Mediate, the Use (and Expense) of Jury Focus Groups, ATE Insurance, and Their Impact on Costs - Canfield v. Brockville Ontario Speedway by Nathan Fabiano
Jun 06, 2018
After 45 years at the Ontario bar, Canfield v Brockville Speedway, 2018 ONSC 3288, was George Bonn’s last trial. The decision of Justice Graeme Mew led to interesting implications in regards to contingency fees, insurer’s refusal to mediate, adverse costs insurance policies, and the use of jury focus groups.
The issue at trial was whether a speedway was liable to a spectator who fell while jumping or stepping away to avoid a race car that had come from the track, and was making its way to a pit area. There was no contact made between the plaintiff and that vehicle.
After a seven day trial in Brockville, the jury awarded the plaintiff $60,000 in general damages and $197,000 in past and future income loss – the precise figures sought by the plaintiff in his closing statement. The jury reduced this award by 25% for contributory negligence leading to an award of 190,000 plus interest. The Plaintiff’s trial offer was $300,000 plus interest and costs. The defendant’s highest offer was $30,000 plus interest and costs.
Both parties were unable to agree on costs. The plaintiff’s bill of costs showed 1,219 hours spent on the case. Defence counsel argued that both the time spent on the case and the hourly rate of George Bonn was excessive, describing the hourly rate particularly as “Torontoesque”. Plaintiff’s counsel sought a total of $269,000 for costs plus HST, whereas the defendant thought a reasonable costs award would be $150,000 all inclusive.
a) Contingency Fees
Mr. Bonn claimed $850 an hour on a solicitor client basis and $250 an hour for his co-counsel, a 2011 call. There existed a contingency fee agreement between the plaintiffs and their lawyers at a rate of $700/hour for George Bonn and $250/hour for other lawyers in the firm. The contingency fee agreement was entered into by the plaintiffs and their counsel a number of years ago, and the hourly rates were increased each year by plaintiff’s counsel. The plaintiffs were never told that these rates were being increased. In addition, plaintiff counsel filed an affidavit disclosing that the fee payable to George Bonn and his solicitors will be either A) an amount equal to 33% of total damages recovered by settlement or adjudication; or B) the amount payable by the defendants for costs.
The defendant argued that there should be fairness and consistency in the amount that can be recovered for lawyers’ time across similar pieces of litigation involving similar conduct and counsel. Justice Mew held that the existence of or nature of the contingency agreement had no bearing on the outcome of the costs assessment.
The court held that rates used for fixing costs should have regard to what clients typically pay, which varies with the type of work, geographic location, the type of client, and other factors. The court then stated that appropriate partial indemnity rates would be $400/hour for George Bonn and $250/hour for other lawyers in the firm.
In regards to the time spent on the case, the court held that the number of hours spent on the case was disproportionately high and beyond the reasonable expectations of the defendants, even with regard to the nature and complexity of the case. The court stated that although it would be churlish to criticize a party for preparing too thoroughly, from a costs perspective, the party paying costs should only be responsible for indemnifying reasonable costs that are proportionate, having regard to the nature of the dispute.
b) Refusal to Mediate By Insurers
The plaintiff argued that the refusal of the defendant to participate in mediation should be a factor in determining costs. There was no statutory requirement for both parties to mediate, as the action was not commenced in Toronto, Ottawa, or Essex County.
Justice Mew cited two cases, one going in each direction, on the obligation to mediate where there is no statutory requirement. In Baldwin v. Daubney, (2006) 2006 CanLII 33317 (ON SC), 21 B.L.R. (4th) 232 Justice Spence declined to consider a refusal to mediate as a factor in the exercise of his costs discretion. Ten years later, in David v. Transamerica Life Canada, (2016) 131 O.R. (3d) 314, Justice Price took a different approach. Ultimately, Justice Mew preferred the latter approach. The court held that defendants do not have to settle, but if reasonable opportunities to mediate are spurned, that can be a relevant factor when fixing costs. Defence counsel held that they genuinely believed they had a strong liability case, which is why they refused to participate in mediation.The court held that the findings of the jury indicated that neither plaintiff nor defence counsel had such a strong position on liability that it would have been reasonable to decline an offer to mediate. While the court should be aware that economic pressure is often exerted on defendants to settle cases where there is no legal justification to pay a claim, this was not one of those cases. Therefore, according to the court, it was unreasonable for the defendants to decline mediation and this should be reflected in the disposition of costs.
c) Adverse Costs Insurance
The plaintiff had also purchased an adverse costs insurance policy, which provided coverage for his own disbursements and opposing counsel’s costs and disbursements in lost or abandoned cases. The defendants argued that the purchase of the coverage should be a factor in determining if the plaintiff’s claim for partial indemnity fees was appropriate. The court held that the amount of adverse costs insurance purchased was irrelevant and had no bearing whatsoever upon an assessment or fixing costs, as plaintiffs are not able to recover the cost of obtaining this insurance as an assessable disbursement.
d) Jury Focus Groups
Plaintiff’s counsel used jury focus groups in this case, sending a questionnaire to 1000 residents of the county, reviewing the 156 responses, and composing three 6 person focus juries whom were brought to a local hotel and presented a summary of the case. Three lawyers reviewed the case with the three sample juries, and trial counsel spent considerable time reviewing and analyzing the focus group conclusions. Plaintiff counsel noted that the composition of the jury panel in the real case that was sought as a result of the focus groups would not have been known without the work done with the focus groups. Counsel argued that the use of jury focus groups was a reasonable part of trial preparation, as it enabled counsel to better prepare for trial.
Justice Mew noted that when civil cases are tried with juries it is certainly not unreasonable for either side to conduct some pre-trial jury research. However, it all comes down to proportionality. The court held that although the jury focus group was beneficial to the plaintiff, the considerable effort and time that went into the jury focus group work amounted to “Rolls-Royce preparation for, with the greatest respect to Mr. Canfield, a family sedan of a case”. Therefore, with keeping proportionality in mind, the court held that defendant should not be required to indemnify the plaintiff for all of the time spent on jury research.
Ultimately, the court concluded that it would be “churlish” to criticize a party for preparing a case for trial too thoroughly. However, only proportionate costs ought to be awarded against the unsuccessful party. As such, the jury research should not all be payable by the defendants and the hourly rates need to be adjusted downward. Without undertaking a line by line analysis of the plaintiff’s fees, the court found that a reduction of the demand from $269,371 by 30%, or $80,000, would be in order. However, due to the refusal to mediate by the defendants, only $60,000 was reduced, leaving an award for costs of $210,000 plus taxes.