Impecuniosity no Protection from Cost Award

The theory held by many personal injury lawyers that impecunious and therefore “judgment proof” plaintiffs are immune to adverse cost exposure was further tested in the costs endorsement in Lakew v. Munro, 2014 ONSC 7316 (CanLII) (“Lakew”). We have previously discussed this topic in our May 2014 blog on Leochko v. Rostek, 2013 ONSC 7899 (CanLII).

In Lakew, this motor vehicle accident-related action was tried before a jury in June 2014. The jury found that the accident did not cause her any injuries. The defendant had argued a threshold motion during the jury deliberations, but this was withdrawn upon the jury’s verdict. The Court invited both parties to submit written cost submissions.

The defendant sought costs on a substantial indemnity basis in the amount of $140,024.61. In the alternative, the defendant sought costs on a partial indemnity basis in the amount of $110,371.72. The plaintiff sought her own costs of $144,385.25 plus applicable taxes on the basis that she had no choice but to pursue trial because of the hardball tactics of the defendant’s insurer.

As part of the arguments for no costs to be awarded against the plaintiff, her counsel argued that she was an impecunious mother of four small children. She required subsidized housing and subsidized childcare. Further, she worked part-time earning just above the minimum wage. While the Court acknowledged the plaintiff’s dire financial circumstances, the Court did not accept her argument that she was an unsuspecting member of the public who would not have known of the potential negative cost consequences of a two week trial if she lost given that she was represented by experienced counsel. The Court fixed costs in the amount of $75,215.36 inclusive of fees, disbursements, and HST. The plaintiff was given six months from the date of the order to pay these costs.

This decision reaffirms the fact that a claim of impecuniosity does not bar costs awards and challenges a common view that adverse cost exposure (and the threats related thereto) does not apply to plaintiffs lacking the immediate financial means to satisfy them. Plaintiff’s counsel should always consider the potential for cost consequences even if the client does not have any assets.

To review the cost endorsement decision in Lakew, please Lakew v. Munro 2014onsc7316 re trial” target=”_blank”>click here.


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