Stillwell v. World Kitchen Inc., et al. (2013)

Calculating Costs at Trial – Reasonableness Outweighs Predictability

This was a product liability case arising from injuries sustained by 56 year-old Larry Stillwell on September 11, 2000, when he was washing his “Visions Dutch Oven” in the kitchen sink, when it burst into four sharp pieces. The nerves, tendon and an artery in Mr. Stillwell’s right hand were severed, resulting in the loss of use of his right hand, rendering him unable to return to work as a lift-truck operator.

In May 2013, after 10 years of litigation and a 22 day jury trial, Mr. Stillwell was awarded over $1.15 million dollars against the defendants, Visions Glass Cookware, World Kitchen Inc. and global giant, Corning Inc. The jury found that the Defendants failed to adequately warn customers to stop using the product if it were banged or dropped. Mr. Stillwell was found to be 25 percent contributorily negligent.

In August 2013, Mr. Stillwell was awarded over $387,000 in costs and over $157,000 in disbursements. In awarding said costs, the Superior Court of Justice made it clear that a judgment on costs is not a mechanical exercise, but rather involves a significant amount of discretion on the trial judge’s part, informed by the overriding principle ofreasonableness.

The Honourable Justice Leach outlined the following principles to be relied on when assessing the reasonableness of a cost award:

1) Substantial indemnity costs are justified only in circumstances where:

I. the plaintiffs achieved a result better than a valid 49.10 offer extended by the plaintiffs, regardless of whether the results achieved at trial greatly exceeded the amount of the defendants’ Rule 49.10 offer; and/or

II. the defendants engaged in behaviour worthy of sanction, which will only occur in the most rare and exceptional cases – where the conduct has been reprehensible, scandalous or outrageous, indicating an abuse of process, which involves something more egregious than a tenacious, but unsuccessful defence.

In the within case, Mr. Stillwell was awarded partial indemnity costs, such that the offers exchanged between the parties fell in between the amount actually awarded at trial. Though the defendants mounted a very strong defence, their conduct was not determined to be reprehensible in nature, hence the award of partial indemnity costs.

2) Hourly counsel rates should be decided on a case by cases basis, taking the following into consideration:

I. the Costs Grid, repealed in 2005, may be used as a guideline, but is not determinative; and

II. not only should the seniority of counsel be considered, but the nature or demands of the particular matter, with attention to the significance of the case in monetary, jurisprudential and procedural terms.

In the within case, Justice Leach set plaintiff’s counsel’s rate at $300 per hour (Mr. Smitiuch was a 1998 call) as opposed to $225 per hour, which was offered by defence counsel, as determined by the Costs Grid. Justice Leach noted that the case was complex, involving substantial duration, and there were difficult issues of liability, damages and evidence. All of the above was heightened by the fact that the action proceeded to trial before a jury (which is a rare occurrence for product liability claims). The stakes were high for both parties and Justice Leach determined that Mr. Smitiuch did an outstanding job, notwithstanding considerable resistance mounted by the defence.

3) A bonus or cost premium is only available in circumstances where counsel achieved an outstanding result, as opposed to a satisfactory result – a finding of significant contributory negligence, will not warrant a cost premium.

In the within case, Justice Leach declined to award a cost premium. Though Mr. Stillwell’s counsel obtained a very good result, the additional claims of negligent design, negligent manufacture and breach of warranty were rejected. Furthermore, Mr. Stillwell was found contributorily negligent and the jury’s award of damages was far below the numbers sought.

4) Imposing any reduction on a plaintiff’s cost award as a result of a finding of contributory negligence is a matter of court discretion, as is the quantum or percentage of any such reduction – it is by no means a given that a plaintiff’s costs will be subject to a percentage deduction equal to the degree of their contributory negligence. Instead, the following analysis should be undertaken:

I. whether the plaintiff’s own contribution to the accident and resulting injuries was minimal or substantially contributed to the need for litigation;

II. whether addressing the plaintiff’s contributory negligence substantially affected the amount of costs incurred, for example, necessitating additional witness testimony that might otherwise not have been required; and

III. whether or not the plaintiff’s contributory negligence materially affected the prospects for settlement as reflected in offers of settlement.

In the within case, Justice Leach declined to reduce the cost award whatsoever, relying on the following factors:

i. the need for litigation was inevitable, such that Mr. Stillwell was only found 25% contributorily negligent;

ii. no additional time or costs were incurred in order to address Mr. Stillwell’s negligence, such that the evidence was inextricably bound together with the issue of negligence in general; and

iii. the parties’ settlement positions were so vastly apart that a trial would have been necessary regardless of whether Mr. Stillwell had conceded the existence of contributory negligence.

5) A trial judge has no discretion to award costs for a prior contested event, such as a motion, for which costs were decided, including where no express provision for costs was made.

The damages decision is currently under appeal, so the costs award may not stand. Nevertheless, the costs decision serves as a comprehensive outline of how costs may be awarded and calculated. Of particular note, the Costs Grid is no longer found to be determinative and contributory negligence will not garner an automatic commensurate reduction in costs.