It is generally accepted that if your client is impecunious, he or she will likely be judgment proof. The recent decision in Leochko v. Rostek, 2013 ONSC 7899 (CanLII) might give some plaintiff’s counsel cause for concern.
In 2005, Ms. Leochko was involved in a motor vehicle accident. She was not able to successfully return to work after the accident and she started receiving income replacement benefits (“IRBs”). In 2007, the insurer stopped the IRBs but they were reinstated in October 2009. The benefits continued to be paid but were reduced as a result of Ms. Leochko receiving Canada Pension Plan benefits. As part of the reinstatement, Ms. Leochko also received arrears of IRBs of $43,967.95. Between 2007 and October 2009, Ms. Leochko fell behind on her bills and had to declare bankruptcy. She lost her house and had to move in with her parents. In 2007 and 2008, she applied and received funds from the Ontario Student Assistance Program for her education. In November 2009, she started receiving payments under the Ontario Disability Support Plan (“ODSP”). Further, Ms. Leochko had to repay $10,000 to ODSP and $17,000 to her bankruptcy out of the $43,967.95 in arrears that she had received.
At trial, the defence brought a threshold motion, which Ms. Leochko beat. However, the jury awarded her only $10,000 in general damages and $14,521.21 for past income loss. What is not discussed in the trial decision is the fact that Ms. Leochko did not beat the defendant’s offer. The decision was not appealed and costs in the sum of $100,000 were agreed upon between the parties. Since she continued to receive IRBs, they were garnished for payment of the cost award.
This is a cautionary tale for plaintiff’s counsel to keep in mind when assessing their client’s ability to withstand a cost award. The fact that a client has no assets should not be the sole consideration; if he or she is receiving some form of income, even if it is a monthly benefit, they could still be susceptible to a garnishment in consideration and payment of a cost award.
To review the trial decision, please click here.