This action arises as a result of a motor vehicle accident that occurred on August 6, 2004 when the then-six year old plaintiff, Christopher Hoang ("Christopher"), was struck by a vehicle driven by the defendant Adriano Vincentini ("Vincentini") and owned by Ford Credit Canada Leasing Company ("Ford Credit"). The accident occurred after Christopher was dropped off at an intersection by his father Can Hoang ("Hoang"). Christopher, along with his mother and infant sister, sued Vincentini, Ford Credit, and Hoang. Christopher's mother acted as the litigation guardian for both minors. The jury found that Hoang was wholly liable for his son's injuries and the action as against Vincentini and Ford Credit was dismissed. The plaintiffs, including the infant plaintiffs personally, were ordered to pay Vincentini and Ford Credit costs in the amounts of $435,214.19 and $173,695.39, respectively. Hoang was ordered to pay the plaintiffs $899,750 in costs. Notably, the total costs awarded at trial in the amount of $1,508,659.58 eclipsed the total damages awarded by the jury to the plaintiffs in the amount of $844,228.22 ($150,000 for general damages; $684,228.22 for future care costs, and $20,000 to the plaintiff's mother pursuant to the Family Law Act).
Although the appeal dealt with many issues including admissibility of evidence, conflict of interest, jury instruction, and cost awards, this bulletin will focus only on the Court's treatment of trial costs. The Court of Appeal upheld the trial judge's decision on all issues on appeal with the exception of varying the award of costs payable by the plaintiffs by excluding payment from the infant plaintiffs personally.
On the issue of costs, the appellants appealed on the following grounds: 1) the Trial Judge should not have ordered costs against the minor plaintiffs; 2) the Trial Judge should not have ordered separate costs for Vincentini and Ford Credit; 3) the Trial Judge erred in declining to make a Sanderson Order by not giving due consideration to the "ability to pay principle"; and 4) Hoang's insurer ought to pay all the trial costs ordered due to the insurer's appointment of conflicted counsel to defend Hoang. The Court of Appeal dismissed all these arguments with the exception of the first. The Court's treatment of these issues is summarized below:
- The cost award against the minor plaintiffs: After noting that Vincentini and Ford Credit filed no objections, the Court followed prior case law in varying the judge's order by excluding the minor plaintiffs in their personal capacity from the cost award and instead ordered payment by the litigation guardian personally and in her capacity as a litigation guardian.
- The separate cost awards to Ford Credit and Vincentini: The Court held that awarding separate cost awards is a matter within the Trial Judge's discretion. Vincentini as the "target defendant" faced a claim well in excess of his policy limits of $1 million. Additionally, Ford Credit's policy had a $10 million (US) deductible which matched the damages claimed by the appellants. In light of the damages claimed and the coverage policy limits of these defendants, the Court found no error in ordering separate costs to these parties.
- The denial of a Sanderson Order: A Sanderson Order is used to require the unsuccessful defendant to pay costs of the successful defendant in circumstances where it would be unfair to require the plaintiffs to pay those costs. The Court held that the Trial Judge considered all the relevant factors in exercising her discretion to deny this type of order, including the "ability to pay" of the plaintiffs. While the Trial Judge recognized that the Hoang family had modest financial means, there was some prospect at the time of trial that Hoang would prevail in a coverage dispute with his insurer which would "render him able to pay the judgment and costs". The Court found no error in the Trial Judge's reasoning.
- Payment of costs by Hoang's insurer: Although Hoang's insurer appointed counsel to defend Hoang, it did so under a reservation of rights. The appellants argued that the insurer's reservations of rights regarding coverage gave rise to a conflict of interest. The appellants submitted that in light of the insurer's appointment of conflicted counsel, it would be in the public interest for the insurer to pay all cost awards. Additionally, the appellants argued that the wording of the policy required the insurer to pay any costs awarded against its insured regardless of the issue of coverage. The Court of Appeal did not accept either submission and held that it was not appropriate for the Court to consider this issue in light of the on-going coverage dispute between Hoang and his insurer.
This decision highlights not only the magnitude of trial cost awards faced by parties but also the difficulty of recovering costs awards against minor plaintiffs personally.
Earlier this week, the Court of Appeal released its cost endorsement with respect to the appeal payable by the litigation guardian personally and in her capacity as a litigation guardian, as follows: $20,000 to Vincentini, $10,000 to Ford Credit, and $10,000 to Hoang's insurer.