V. Kelner Airways Ltd. v. Standard Aero Ltd.

Ontario Judgments

Ontario Court of Justice (General Division)

O'Brien J.

Heard: April 2-5, 8-10, 15-19 & 22-26, 1991.

Judgment: June 25, 1991.

Doc. 15923/86

[1991] O.J. No. 3453 | 2 C.P.C. (3d) 140 | 27 A.C.W.S. (3d) 957

Between V. Kelner Airways Limited, plaintiff, and Standard Aero Limited, defendant

Case Summary

Practice — Costs — Party and party costs — Offers to settle — Effect of failure to accept — Solicitor and client
costs — Entitlement to solicitor and client costs — Improper, irresponsible or unconscionable conduct — Failure to
make full disclosure.

Determination of costs. The plaintiff, V Kelner Airways, instituted proceedings against the defendant, Standard
Aero, for $260,000. The parties agreed to damages in the amount of $150,870. Prior to trial, Kelner conducted
examinations for discovery that were drawn out and extremely detailed. The discoveries involved the examination of
many points of insignificance, and required substantial undertakings and auxiliary questions. The examinations
lasted approximately six and a half days and required four separate appearances. Standard's examination for
discovery lasted one day and a half. There were two long pre-trial conferences where Kelner was urged to settle on
a 50 per cent basis as there were serious liability issues. Kelner Airways rejected the settlement. Standard made a
formal offer to settle for $125,000. Kelner immediately rejected the offer. Kelner failed to make full disclosure of
expert evidence, and two motions were required to enforce compliance of disclosure proceedings. Partway through
the trial, Kelner adduced additional expert testimony that changed the nature of the evidence. An adjournment was
required in order to permit Standard to obtain evidence to meet the issue raised. The evidence was extremely
complex, expensive to obtain and out of proportion with respect to the amount or to the essential issues involved in
the case. It was also of very little assistance. Kelner's action was dismissed.
HELD: Kelner was ordered to pay Standard's costs on a party- and-party basis until the date the settlement offer.

Thereafter, costs were awarded on a solicitor-and-client basis and included all experts' fees. Kelner's conduct and
approach to the litigation was unreasonable in terms of the production of evidence, the unnecessary complexity of
the issues raised at trial, the conduct of the examinations for discovery and the conduct of the pre-trial conferences.
Further, Kelner Airways took an unreasonable approach to the settlement offer of a doubtful claim.

Susan Toth
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V. Kelner Airways Ltd. v. Standard Aero Ltd.

Statutes, Regulations and Rules Cited:

Ontario Rules of Civil Procedure, Rule 49.10(2).

Counsel

E.M. Lane and G.K. Dunn, for the plaintiff. J.D. Holding, Q.C., and N. Letalik, for the defendant.

O'BRIEN J.

1 I have now received and reviewed submissions on costs made by both parties.

2 I am concerned as to the length of this trial and its conduct by plaintiff's counsel. The defendant succeeded in
trial and the action has been dismissed. The issue was whether a dismissal with costs on a party-and-party basis
payable to the defence is sufficient in this case.

3 I am satisfied it is not. I order the plaintiff pay the defendant its costs in the action on a party-and-party basis to
March 6, 1991, when a settlement offer was made by the defendant. Thereafter, costs are to be paid on a solicitor-
and-client basis. These costs will include all experts' fees and will include all amounts charged by R.J. Waldron &
Company Limited. I have reviewed copies of Waldron's account and am satisfied that the amounts shown in that
account which are over $90,000 should be paid in full. I have not seen accounts from other defendant's experts. If
there are problems in their assessment, counsel may speak to me.

4 I appreciate this order is not one normally made when an action is dismissed and that r. 49.10(2) does not
provide for solicitor-and-client costs payable to a defendant in the usual situation when its offer to settle has not
been accepted by the plaintiff. I make the order for the following reasons:

5 I conclude the examinations for discovery of the defendant conducted by plaintiff's counsel were excessively
protracted and went into meticulous detail which involved investigating many points of insignificance and which
required substantial undertakings and additional questions.

6 Examination of the plaintiff's witnesses on examination for discovery required a day-and-a-half. Examination of
the defendant's took approximately six-and-a-half days, requiring four separate attendances of the defendant's
witnesses in Toronto.

7 Eventually an order was made by Master Donkin requiring the plaintiff to submit future questions in writing.
Following that order no further questions were posed.

Susan Toth
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V. Kelner Airways Ltd. v. Standard Aero Ltd.

8 I have also concluded the lawsuit and the trial were unnecessarily protracted by failure of plaintiff's counsel to
make full disclosure of expert evidence as required by the Rules. Two motions were required to enforce compliance
of disclosure proceedings. In spite of this, partway through trial plaintiff's counsel adduced additional expert
testimony from one of the witnesses. I felt this significantly changed the nature of the evidence. I concluded this
required an adjournment in order to permit the defendant to obtain evidence to meet the issues raised. Most of this
evidence involved evidence from metallurgists which was extremely complex and very expensive to obtain. I
concluded that a good deal of the plaintiff's new evidence was of very limited assistance in enabling me to reach a
decision in this case. I also conclude the defendant had to obtain evidence to meet it.

9 At the opening of trial, damages were agreed at $150,870. The trial took three-and-a-half weeks. I conclude
significant amounts of evidence adduced by plaintiff's counsel were of very little assistance and the trial was
unnecessarily protracted. As an example, examinations for discovery took approximately a full day of court time to
read in. Many of those matters were of limited relevance.

10 I also consider the position of the plaintiff regarding settlement. Damages claimed originally were approximately
$260,000. They were subsequently agreed upon at the amount stated.

11 There were two long pre-trial conferences conducted by Rutherford J. He urged settlement on a 50 per cent
basis, having considered the significant problems on liability. The plaintiff immediately rejected such settlement. The
defendant formally made an offer to settle for $125,000 all inclusive. It was immediately rejected.

12 I am satisfied this is a case in which it was, or should have been, obvious there were serious liability issues.
This should have been obvious from the time pleadings were completed.

13 The conduct of plaintiff's counsel in conducting this trial involved adducing substantial metallurgical evidence.
The defendant obviously had to obtain evidence to meet this evidence. This involved expense which I believe was
grossly out of proportion to the amount involved or to the essential issues involved in this case. This resulted in
great expense and a long and expensive trial. Plaintiff's counsel submits that party-and-party costs are sufficient in
this case. I do not accept that submission.

14 In effect the position taken by plaintiff's counsel means that it would have been much cheaper for the defendant
to have paid the claim in full following the pre-trial rather than to proceed to the trial. This may be the result in many
cases which are successfully defended. However, in this case, I am satisfied the matters I have considered indicate
an unreasonable approach to this litigation in terms of production of evidence, conduct of pre-trial matters (including
examinations for discovery), an unreasonable approach to settlement of a doubtful claim and unnecessary
complexity of issues raised at trial.

15 For these reasons I am satisfied the usual order of party-and-party costs does not deal adequately with costs.

Susan Toth
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V. Kelner Airways Ltd. v. Standard Aero Ltd.

O'BRIEN J.

End of Document

Susan Toth