Commentary: Here's the second part of the story. What is cool in the case is that LRCanada rejected an offer to settle for 500,000$ Total cost of the trial: probably around 1 million bucks. Gee, I was wondering why those Range Rovers were so expensive!
This was an order as to costs and pre-judgment interest of the plaintiff's successful action for damages for loss of profits in the amount of $855,164.00. The plaintiff had served an offer to settle for $500,000.00 in October, 1995.
HELD: The plaintiff would have party and party costs up to the date of its offer, and costs on a solicitor and client basis thereafter. The plaintiff would not be entitled to costs of preparation for the November, 1995 trial date on which trial did not proceed. Pre-judgment interest was to be calculated on the profits earned in each year. The court declined to exercise its discretion to remove interest for the adjournment period.Statutes, Regulations and Rules Cited:
[para1] LAX J.:-- I released Reasons for Judgment in this matter on April 3, 1996. I found that the plaintiff was entitled to damages for its loss of profits in the amount of $845,101.00 subject to counsel confirming the accuracy of my calculations and advising me of any adjustments to my award based on the directions given by me in those Reasons.
[para2] Counsel have now advised me that the adjustments result in a net increase to the damages of $10,063.00. The final award is therefore $855,164.00.
[para3] Outstanding are issues of costs and pre-judgment interest. Counsel have been unable to agree and have provided me with written submissions which I have now had the opportunity to consider.
[para4] The plaintiff served an Offer to Settle in accordance with Rule 49.10 on October 18, 1995 in the amount of $500,000.00 inclusive of claim, interest and costs which the defendant did not accept. In view of this, the defendant concedes that the plaintiff would be entitled to costs on a party and party basis up to this date and costs on a solicitor and client basis thereafter. I so order.
[para5] Following a pre-trial conference on April 5, 1995, the trial was scheduled for October 30, 1995. The matter was spoken to at the Assignment Court on Monday October 30, 1995 at which time the defendant sought a brief adjournment to deal with the plaintiff's failure to produce documents. Ground J. ordered that the action remain on the trial list but was not to be called for trial before Friday, November 3, 1995. The action was not reached on that Friday or on Monday, November 6, 1995. That week, one of the plaintiff's witnesses was unavailable and the plaintiff sought an adjournment of the trial to which the defendant consented. The next available date for a trial of this length was in March 1996. The trial office was advised of this and the action ultimately was tried before me the week of March 11, 1996.
[para6] The defendant submits that the plaintiff should not be entitled to the costs thrown away in preparing for the trial of this action in October 1995. I expect that what the defendant means is that the plaintiff should not be entitled to two sets of costs for trial preparation. I agree with this. The adjournment in October was at the request of the plaintiff which Mr. Richetti was good enough to indulge. Therefore, pursuant to Rule 57.02 I direct the Assessment Officer to allow trial preparation costs only for the trial preparation in March 1996.
[para7] In my Reasons for Judgment of April 3, 1996, I found that the defendant wrongfully terminated its obligation to enter into a new Dealer Agreement with the plaintiff. This was conveyed to the plaintiff in a letter dated April 16, 1993. The plaintiff submits that this is the date from which interest should be calculated and that it should be calculated on the total award. Alternatively, it should be calculated at the end of each six month period based on the loss of profits determined for each year.
[para8] Counsel for the defendant submits that the earliest date from which interest should be calculated is May 30, 1993 as the plaintiff continued as a Range Rover dealer until this date. However, counsel for the defendant urges me to either present value the loss of profits to May 30, 1993 and grant pre-judgment interest on this amount or to calculate interest on the loss of profits each year from the dates the profits would have been earned which the defendant submits is at year-end. Consequently, the defendant says that there should be no pre-judgment interest for 1996 lost profits as these profits would only be earned at June 30, 1996. Finally, the defendant submits that no pre-judgment interest should be awarded for the period October 30, 1995 to March 11, 1996 in view of the adjournment of the trial.
[para9] It was the plaintiff's position at trial that it was inappropriate to discount or present value the loss of profits as this would be accounted for by pre-judgment interest. I declined to present value the loss of profits. In my view, it would be inequitable to award pre-judgment interest on the total loss of profits from either April or May, 1993. I agree with the defendant's submission that the effect of this would be to award interest on profits which had not been earned. This would improve the plaintiff's position rather than compensate it for money wrongfully withheld.
[para10] The fairest method is to calculate the interest on the profits earned in each year. For 1994, interest is to be calculated on the sum of $112,748.00 from June 30, 1994 to this date. For 1995, interest is to be calculated on the sum of $289,019.00 from June 30, 1995 to this date.
[para11] The lost profits in 1996 were $443,334.00. It would be inequitable to deprive the plaintiff of interest for this entire period as we are now more than nine months into this fiscal year. Interest is therefore to be calculated from June 30, 1995 to this date on the sum of $342,563.50 which is 75% of the 1996 lost profits plus the additional damages of $10,063.00.
[para12] I decline to exercise my discretion to remove interest for the adjournment period.
[para13] Counsel for the defendant submitted that I should award interest at the pre-judgment interest rate set out in the Courts of Justice Act, R.S.O. 1990, c. 43 which in this case is 6.1%. Counsel for the plaintiff took no position on the applicable rate. Accordingly, the interest calculations are to be at the rate of 6.1%.LAX J.