BCSC Civil Rule 14 – Page 5

The High Risk of Personal Injury Trials: The Costs and Disbursements Swing

Written by admin on May 27, 2011. Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14, BCSC Civil Rule 9, Uncategorized. 44 Comments on The High Risk of Personal Injury Trials: The Costs and Disbursements Swing

As previously discussed, personal injury trials can be risky and expensive. The British Columbia Supreme Court has a so-called ‘loser pays’ system which generally makes the losing side pay the winning side’s costs and disbursements (the hard expenses associated with running a trial such as court filing and expert witness fees). Last month the BC Supreme Court, Victoria Registry, released reasons for judgement demonstrating this reality.
In this recent case (Sartori v. Gates) the Plaintiff was injured in 2005 when a truck owned by his friend accidentally struck him. The Plaintiff sued for damages. As the lawsuit progressed ICBC made a formal settlement offer of $230,000 plus costs and disbursements.
The Plaintiff presented his own formal offer of $600,000 plus costs and disbursements. These offers were rejected and the claim proceeded to trial. Ultimately a jury found the Plaintiff 33.3% at fault for the collision but accepted that he was injured and awarded damages.
When all the dust settled, the Plaintiff was awarded $234,000. ICBC argued that since the final result was “within a knife’s edge” of their offer that the Plaintiff should be stripped of his post offer costs and disbursements. This was a significant development because the Plaintiff spent over $120,000 in disbursements while advancing his claim.
Ultimately Mr. Justice Wilson found that this result would not be fair. However, the Court disallowed disbursements associated with one of the Plaintiff’s expert witnesses and further reduced the disbursements the Plaintiff was entitled to by 1/3 to take into account the jury’s finding of fault and section 3 of the Negligence Act. Some quick math reveals this results in about $40,000 of the real costs of advancing the claim not being recovered by the Plaintiff. This large swing highlights the need to consider potential costs consequences when deciding whether to settle an ICBC claim or to proceed to trial.
This recent case is also noteworthy for a few other reasons. ICBC argued that the usual rule of a winner receiving costs should not be followed given how close the settlement offer was to the jury verdict. Mr. Justice Wilson rejected this argument providing the following useful reasons:

[42] The governing principle on the first issue, is R. 14-1(9). The material words of that subrule, on this application, are:

… costs of a proceeding must be awarded to the successful party unless the court otherwise orders.

[43] The onus is on the defendant to persuade me why I should otherwise order….

[55] The plaintiff reminds me that the discretion conferred by the cost rules must be exercised judicially. The parameters of that judicial duty were referred to in Stiles v. B.C. (Workers’ Compensation Board), and iterated consistently thereafter. The court said:

… The discretion must be exercised judicially, i.e. not arbitrarily or capriciously. And, as I have said, it must be exercised consistently with the Rules of Court. But it would be a sorry result if like cases were not decided in like ways with respect to costs. So, by judicial comity, principles have developed which guide the exercise of the discretion of a judge with respect to costs. Those principles should be consistently applied; if a judge declines to apply them, without a reason for doing so, he may be considered to have acted arbitrarily or capriciously and not judicially.

[56] The Rules of Court mentioned in that extract are those cited above. The “principles … developed …” or “purposes”, were referred to in Giles v. Westminster Savings and Credit Union:

The purposes for which costs rules exist must be kept in mind in determining whether appellate intervention is warranted. In addition to indemnifying a successful litigant, those purposes have been described as follows by this Court:

• “[D]eterring frivolous actions or defences”: Houweling Nurseries Ltd. v. Fisons Western Corp. (1988), 37 B.C.L.R. (2d) 2 at 25 (C.A.), leave ref’d, [1988] S.C.C.A. No. 200, [1988] 1 S.C.R. ix;

• “[T]o encourage conduct that reduces the duration and expense of litigation and to discourage conduct that has the opposite effect”: Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 at para. 28 (C.A.);

• “[E]ncouraging litigants to settle whenever possible, thus freeing up judicial resources for other cases”: Bedwell v. McGill, 2008 BCCA 526, 86 B.C.L.R. (4th) 343 at para. 33;

• “[T]o have a winnowing function in the litigation process” by “requir[ing] litigants to make a careful assessment of the strength or lack thereof of their cases at the commencement and throughout the course of the litigation”, and by “discourag[ing] the continuance of doubtful cases or defences”: Catalyst Paper Corporation v. Companhia de Navegaçao Norsul, 2009 BCCA 16, 88 B.C.L.R. (4th) 17 at para. 16.

[57] Giles is also authority for the proposition that the “usual rule” is that costs follow the event…

Here, this plaintiff did succeed. The defendant’s argument is that he did not succeed to the extent of his aspirations. Therefore, goes the argument, the defendant should have the costs of establishing that failure.

[81] In my opinion, that proposition is not a phenomenon contemplated by R. 14?1(14) or Forrest v. Gaidner.

[82] My conclusion on the first issue is that the defendant has not persuaded me that this is a case on which I should otherwise order. The plaintiff is entitled to his costs, subject to the disallowance of one day of trial and disbursements associated with Dr. Hunt’s involvement.

Court Finds Plaintiffs Can Face Costs Risks If Defendant Succeeds in Contributory Negligence Claim

Written by admin on May 18, 2011. Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14, Uncategorized. 59 Comments on Court Finds Plaintiffs Can Face Costs Risks If Defendant Succeeds in Contributory Negligence Claim

Reasons for judgement were released last week by the BC Supreme Court finding that Rule 14-1(15) provides the court with discretion to award costs to a Defendant following a finding of contributory negligence as against a Plaintiff.
In last week’s case (Brooks-Martin v. Martin) the Plaintiff was involved in a motorcycle collision. At trial she was found 30% at fault with the Defendant bearing 70% of the blame. The Court awarded the Plaintiff 70% of her costs in accordance with the BC Negligence Act. Although not specifically asked to address this issue, the Court went further and found that the Rules of Court permit a costs award to be made against a Plaintiff if they are found contributorily negligent. Mr. Justice Halfyard provided the following reasons:

[41] Section 3 of the Negligence Act directs that the plaintiff shall receive 70% of her costs of this proceeding, from the defendant Martin. But that statute does not entitle the defendant Martin to receive 30% of his costs of the proceeding, from the plaintiff, because he sustained no damage or loss. See Bedwell v. McGill 2008 BCCA 526 at paras. 29-30 and 32.

[42] However, the defendant Martin was successful on the issue of contributory negligence on the part of the plaintiff. In my opinion, the costs entitlement of the plaintiff is defined solely by theNegligence Act. That statute directs that the plaintiff shall recover 70% of her costs of the proceeding from the defendant Martin. It seems to me that the Rules of Court relating to costs should govern the issue of whether the defendant Martin should recover any of his costs from the plaintiff. Rule 14-1(15) reads in part:

(15) The court may award costs

. . .

(b) that relate to some particular application, step or matter in or related to the proceeding . . .

[44] I think that the issue of whether the plaintiff was contributorily negligent is a “matter in or related to the proceeding” under the new rule… I conclude that the court has the discretion to award costs of the contributory negligence issue, to the defendant Martin. I am not suggesting that such costs should be awarded, only that the court has jurisdiction to entertain such an application under the Rules of Court.

Winners and Losers: More on Costs Consequences and Formal Settlement Offers

Written by admin on May 16, 2011. Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14, BCSC Civil Rule 9, Uncategorized.

How can a Plaintiff who is awarded damages following a personal injury trial end up owing ICBC money? The answer relates to the costs consequences that can be triggered by formal settlement offers. I’ve discussed this topic previously and two sets of reasons for judgement were released this week by the BC Supreme Court further demonstrating this reality.
In the first case (Dempsey v. Oh) the Plaintiff was injured in a bicycle accident when he was struck by the Defendant’s vehicle. In the course of the lawsuit ICBC made a formal settlement offer of $40,000. As trial neared ICBC increased their formal offer to $165,000. The Plaintiff rejected this and proceeded to trial. At trial the Court made some critical findings relating to the Plaintiff’s credibility and awarded damages of just over $20,000.
Following trial ICBC asked for an order pursuant to Rule 9-1(5) that the Plaintiff pay all of the Defendant’s costs following their first formal offer. The Plaintiff objected to such a result arguing that “if he is ordered to pay the defendant’s costs he will end up owing it money“. Mr. Justice Myers rejected this argument and ordered that the Plaintiff pay the Defendant’s post offer costs. In rejecting the Plaintiff’s submission the Court made the following comment “It is not the court’s function to ensure that a plaintiff makes a net recovery from an action when it has ignored a reasonable offer. That would defeat the purpose of the Rule and does not accord with common sense”.
On another note, this case is worth reviewing in full for the Court’s discussion of Rule 14-1(10). The Defendant argued that the Plaintiff should be deprived of his pre-offer costs as there was no sufficient reason to sue in Supreme Court. Mr. Justice Myers rejected this argument finding that when the lawsuit was started the Supreme Court was an appropriate venue. In making this finding the Court provided the following useful reasons:
[11] In part due to the loss of income, this was a more complicated case than Ghelen. This action was commenced approximately six months after the accident. At that point I find it was reasonable for the plaintiff to have commenced the action in this Court because he was reasonably entitled to see the impact of the accident on his prior condition. There is nothing in the rules which imposes a cost penalty on a party who files its suit quickly after its cause of action arises. And, in Reimann v. Aziz, 2007 BCCA 448, the Court of Appeal held that there is no ongoing obligation on a party to assess his action as it progresses in the Supreme Court in order to consider whether it should be moved to Provincial Court.
In the second case released this week (Miller v. Boughton) the Plaintiff was injured in a 2006 collision. She sued for damages and her case went before a jury. The trial lasted 7 days. Prior to trial ICBC made a series of escalating formal settlement offers starting at $22,000 with the final offer made shortly before trial topping out at $62,500.
The Plaintiff rejected these offers and proceeded to trial. The Jury found the Plaintiff 45% at fault for the crash and the Defendant 55% at fault. After taking this split into account the Jury’s award was a modest $3,880. ICBC’s motion for post offer costs and disbursements was granted. After factoring these in the Plaintiff likely ended up owing ICBC a significant amount of money. (UPDATE September 12, 2011 – click here for follow up reasons confirming the Defendant’s costs were assessed at over $42,000)
Cases such as these illustrate the important lesson that formal offers create a “loser pays” system which could result in significant costs swings following trial. When considering ICBC formal settlement offers it is important to keep this in mind when deciding whether to accept the offer or proceed to trial.

More on ICBC Claims, Costs and Sufficient Reason to Sue in Supreme Court

Written by admin on May 13, 2011. Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14, Uncategorized.

Earlier this year the BC Court of Appeal released important reasons finding that more than value of a claim can be considered in deciding whether a Plaintiff has sufficient reason to sue in the Supreme Court when considering costs under Rule 14-1(10). Useful reasons for judgement were released last month by the BC Supreme Court, Vancouver Registry, further addressing this issue in the context of an ICBC Injury Claim.
In last month’s case (Taylor v. Kassa) the Plaintiff was injured in BC motor vehicle collision. His injuries were modest and it was “readily apparent from the outset that the quantum of damages would fall within the jurisdiction of the Small Claims Court“. Despite this he sued for damages in the Supreme Court under the fast track rule.
After examinations for discovery a damages settlement was reached for $15,000. The parties agreed to ask the Court to address the issue of whether costs should be payable. Mr. Justice Davies found that given ICBC’s boilerplate response to the lawsuit it was reasonable for the Plaintiff to pursue the claim in Supreme Court with the assistance of counsel therefore entitling the Plaintiff to costs. In reaching this decision the Court provided the following reasons:
[7] ….I make that ruling because I find it to be significant that this matter did not settle until there had been examinations for discovery.
[8] The defendants availed themselves of the discovery procedure and then revised their assessment of the case. Prior to discoveries, there had been a complete denial of liability and causation including allegations of pre-existing injury and failure to mitigate, all of which matters had rendered the case somewhat complex.
[9] As Justice Punnett said in Spencer at para. 23 and 24

[23] Arguably, at the time the action was started, the claim could have exceeded $25,000. The plaintiff knew her injuries, from which it took her 18 months to substantially recover, caused her pain at work, disturbed her sleep, made her unable to do housework, and decreased her leisure activities. She had missed seven days of work and required numerous visits to a chiropractor and massage therapist. There is no evidence that the plaintiff misled counsel or that her complaints lacked credibility.

[24] Further, even if it was clear that the claim would fall within the Small Claims Court’s jurisdiction, the issues raised by the defendant increased the complexity of the claim and the plaintiff’s need for counsel. By denying liability, causation and that the plaintiff suffered any loss, the plaintiff would have been required to prove these elements at trial. Also, although unnecessary because the matter settled, discovery of the defendant, which had been arranged, could have been important to the plaintiff’s case.

[10] I am satisfied that this case falls within that same exeption expressed in para. 24 and supports a finding of sufficient reason to commence the action in this case in this Court.
[11] Discovery was not available in the Provincial Court and led to the settlement of this case.
[12] There will be an order that the plaintiff recover his costs under the provisions of the fast-track litigation project.
The Taylor decision is unpublished but, as always, I’m happy to provide a copy to anyone who contacts me and requests a copy.

More on Costs and Sufficient Reason to Sue in the BC Supreme Court

Written by admin on May 4, 2011. Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14, Uncategorized.

Earlier this year the BC Court of Appeal provided much needed clarity to the factors Courts can consider when deciding whether a Plaintiff has sufficient reasons to sue in the Supreme Court when considering costs consequences following trial. Reasons for judgement were released today by the BC Court of Appeal further addressing this topic finding that while the Court can consider other issues, the value of the claim will be one of the most important factors.
In today’s case (Gehlen v. Rana) the Plaintiff was injured when she was a passenger involved in a rear-end car crash. The Defendant admitted fault for the crash but denied liability to the Plaintiff claiming that the Plaintiff “was not present in the vehicle at the time of the accident“. The Defendant made a formal offer to settle the Plaintiff’s claim for $22,000 plus disbursements. The Plaintiff rejected this offer and went to trial. After trial the Jury awarded the Plaintiff total damages of just over $13,000.
Despite this result the trial judge awarded the Plaintiff costs and found the Plaintiff has sufficient reason to sue in the Supreme Court. The BC Court of Appeal found this was in error and in doing so provided these reasons addressing the issue of “sufficient reason” to sue in the BC Supreme Court in a personal injury claim:

[35] In Gradek, the Court interpreted the meaning of “sufficient reason” in Rule 57(10). The Court acknowledged that the procedures available in the Small Claims Court will, in most cases, “enable the parties to proceed in a cost-efficient manner to a just result” (para. 18).

[36] The Court ultimately concluded that “sufficient reason” was not intended by the Legislature to be limited to the quantum as assessed at the outset of the claim. However, the Court stated, at paras. 16 and 20:

[16] The words “sufficient reason” are not defined in the Rules of Court. In their ordinary and grammatical sense, they do not suggest a specific limitation in terms of application, although it is clear that “any reason” will not do. The reason has to be “sufficient”, but there is nothing in the Rule to suggest that it has to be connected solely to the quantum of the claim. On the other hand, the words do not connote the exercise of a discretion, with its attendant deferential standard of review. That point was made by this Court in Reimann v. Aziz, 2007 BCCA 448, 72 B.C.L.R. (4th) 1, at para. 13: …

…

[20] I accept that the narrow interpretation of the words “sufficient reason” advocated by the appellant would provide greater certainty to litigants in knowing the consequences of proceeding in Supreme Court where the matter falls within the Small Claims monetary limit. But I agree with the trial judge that if the Legislature had intended to limit the scope of the words “sufficient reason” to the extent suggested by the appellant, it could readily have done so. While I am satisfied that the words, “sufficient reason” should not be interpreted in an expansive manner, but with restraint, I am also satisfied that they must be read in such a way that a trial judge is not forced to deny a party costs where he is satisfied, as here, that justice can only be achieved as between the parties by an award of costs to the successful party.

[37] As I understand the import of Gradek, it is that likely quantum, while perhaps the most important factor for determination of sufficient reason, is not the only factor that may be taken into account. The Court in Gradek also accepted that there may be other circumstances that justify bringing an action in the Supreme Court despite the fact that the likely quantum will not exceed the Small Claims amount. Thus, in Gradek the Court accepted the trial judge’s finding that Mr. Gradek, due to language difficulties, required the assistance of counsel and it would be unjust to require him to bring his claim in the Small Claims Court where he would be denied costs that would partially offset the expense of retaining counsel (para. 18). However, it is clear from Gradekthat the burden is on the plaintiff to establish eligible circumstances that are persuasive and compelling to justify “sufficient reason”.

[38] In the case at bar, the plaintiff reiterated before us the 12 reasons submitted to the trial judge to establish sufficient reason to commence the action in the Supreme Court. However, eight of those reasons were circumstances that arose after the commencement of the action and were thus irrelevant to the analysis (the defendant’s offer to settle; the defendant’s failure to apply to move the action to the Small Claims Court; the defendant’s denial of liability for the plaintiff’s injury; the insurer’s characterization of the collision as low impact; the exchange of 60 documents; the defendant’s motion for a Rule 66 hearing and eventual removal; a Rule 28 examination of a witness; and the absence of expert evidence tendered by the defendant).

[39] The strongest reason for bringing the action in the Supreme Court related to the plaintiff’s alleged injuries, but that must be closely examined in light of her pre-existing condition. While minor impacts do not necessarily preclude serious injuries, it must have been apparent to the plaintiff that after this minor collision her pre-existing condition was only modestly aggravated and would not attract a significant award of damages.

[40] In my opinion, the plaintiff has not identified a compelling circumstance that meets the sufficient reason test in Rule 57(10) as interpreted by Gradek.

[41] In my view, this was a case where it was plain and obvious at all material times that this was a proper action to be tried in the Small Claims Court.

The "Loser Pays" System: Rule 14-1(9) and Principles of Costs Consequences

Written by admin on May 1, 2011. Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14, Uncategorized. 100 Comments on The "Loser Pays" System: Rule 14-1(9) and Principles of Costs Consequences

Rule 14-1(9) of the BC Supreme Court Rules typically requires a losing party to pay costs to a successful party unless the Court “otherwise orders“. Useful reasons for judgement were released last week by the BC Supreme Court discussing this Rule and the legal principles in play when a Court should deviate from the default “loser pays” result.
In last week’s case (LeClair v. Mibrella Inc.) the Plaintiff sued the Defendant for damages. The lawsuit was ultimately unsuccessful and dismissed at trial largely because the court “did not accept the plaintiff’s evidence”. The Plaintiff asked the Court to deviate from the usual costs result. The Court found that the usual ‘loser pays‘ result should apply although the costs the Defendant was entitled to should be reduced by 50% to take into account some “improper” behaviour of the Defendant in the course of the lawsuit. In discussing the principles behind Rule 14-1(9) Mr. Justice Voith provided the following useful summary:

[10] The following legal principles are relevant:

i) Costs represent an important instrument by which courts can either promote or, conversely, sanction given conduct. Rule 14-1(9) provides one means of achieving this overarching object. The broad role served by cost awards is captured in the following statements:

a) In Houweling Nurseries Ltd. v. Fisons Western Corporation (1988), 49 D.L.R. (4th) 205 at 226, 37 B.C.L.R. (2d) 2 (C.A.) at 25, leave to appeal ref’d, [1988] 1 S.C.R. ix, McLachlin J.A., as she then was for the courts, said:

… Parties, in calculating the risks of proceeding with a particular action or defence, should be able to forecast with some degree of precision what penalty they face should they be unsuccessful.

b) In Karpodinis v. Kantas, 2006 BCCA 400 at para. 4, Hall J.A., for the court, said:

Cost considerations are meant to guide counsel and litigants in the choices and strategies they pursue in litigation. …

c) In Skidmore v. Blackmore (1995), 122 D.L.R. (4th), 2 B.C.L.R. (3d) 201 (C.A.), Cumming J.A., speaking for a five member panel of the court, said:

[28] … the view that costs are awarded solely to indemnify the successful litigant for legal fees and disbursements incurred is now outdated. A review of Rule 37, which deals with offers to settle, reveals that in certain circumstances a party may be entitled to costs, or double costs, or to no costs at all. One of the purposes of the costs provisions in Rule 37 is to encourage conduct that reduces the duration and expense of litigation, and to discourage conduct that has the opposite effect. Thus, although it is true that costs are awarded to indemnify the successful litigant for legal fees and disbursements incurred, it is also true that costs are awarded to encourage or to deter certain types of conduct.

[Emphasis added.]

d) Recently, in Catalyst Paper Corporation v. Companhia de Navegação Norsul, 2009 BCCA 16, Hall J.A., in the context of addressing Rule 57(9), said:

[15] In the recent case of Bedwell v. McGill, 2008 BCCA 526, a case dealing with a particular aspect of costs not relevant to this appeal, Newbury J.A., for the court, at para. 33, noted the purpose of former R. 37(24) as being “aimed at encouraging litigants to settle wherever possible, thus freeing up judicial resources for other cases.”

[16] It seems to me that the trend of recent authorities is to the effect that the costs rules should be utilized to have a winnowing function in the litigation process. The costs rules require litigants to make careful assessments of the strength or lack thereof of their cases at commencement and throughout the course of litigation. The rules should discourage the continuance of doubtful cases or defences. This of course imposes burdens on counsel to carefully consider the strengths and weaknesses of particular fact situations. Such considerations should, among other things, encourage reasonable settlements.

ii) The onus is on the person who seeks to displace the usual rule that costs follow the event: Grassi v. WIC Radio Ltd., 2001 BCCA 376 at para. 24.

iii) Though Rule 14-1(9) conveys a discretion to the court, that discretion is to be exercised in a “principled way”: Rossmo v. Vancouver Police Board, 2003 BCCA 677 at para. 59; or on “sound principle”: Brown v. Lowe, 2002 BCCA 7 at para. 147.

iv) The exercise of discretion must be connected to the conduct (or misconduct) of a party in the litigation: Lawrence v. Lawrence, 2001 BCCA 386 at paras. 31-32; Smith v. City of New Westminster, 2004 BCSC 1304 at para. 9.

v) The conduct in question can arise either at trial or at some earlier stage in the proceeding. For example, conduct that has been held to justify a denial of costs includes giving false evidence on discovery: Brown at para. 149-150. It also includes a failure to make timely and thorough production of relevant documents; Forsyth v. Pender Harbour Golf Club Society, 2006 BCSC 1108 at para. 72.

vi) Costs are not to be used to sanction a party whose evidence was exaggerated or who gave evidence in error: Brown at para. 149. Where the appropriate dividing line lies was explained in each of Roberts v. Wilson (1997), 10 C.P.C. (4th) 188 (B.C.S.C.) at para. 25; Cardwell v. Perthen, 2007 BCSC 366 at para. 13; Noyes v. Stoffregen, [1995] B.C.J. No. 73 at paras. 79-80.

vii) Where a court concludes that a party has intentionally or deliberately sought to mislead the court that party will normally be deprived of its costs: Medeiros v. Vuong, 2001 BCSC 326 at para. 12.

[11] I would add the following additional comments. First, Rule 14-1(9) is not intended to provide an unsuccessful party with an opportunity to parse through the litigation conduct of the opposing party searching for behaviour that might be criticized. I do not say that the discretion which is conferred in Rule 14-1(9) is limited to exceptional cases. The Rule is not, however, intended to address imperfect or less than optimal conduct. It is generally not intended to address questionable judgment. Instead it provides the court with an objective means of communicating its censure in relation to conduct that manifestly warrants rebuke.

[12] Second, the Rules of Court and the rules of evidence apply equally to both parties who are represented by counsel and to those who are self-represented. Self-represented litigants are not insulated from these requirements or the obligations they create. Nevertheless, depending on the nature of the concern expressed, some greater flexibility or tolerance may be accorded a self-represented litigant. For some issues, the need for honesty being the clearest example, no different standard can or does apply to a lay litigant. The requirement that parties be forthright is readily understood by all and is inflexible.

[13] In other cases, some increased measure of lenience will be appropriate and necessary. For example, a well-intentioned lay litigant’s imperfect understanding of relevance may cause that litigant to fail to produce certain documents, or to ask unnecessary questions of a witness or to object to what are proper questions. So long as that litigant acts properly once alerted to the deficiencies in his or her conduct, little is achieved in seeking to sanction the earlier conduct. There is no intentional conduct or abuse of the court’s process that warrants sanction.

Sanderson and Bullock Orders: Rule 14-1(18)

Written by admin on April 26, 2011. Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14, Uncategorized. 105 Comments on Sanderson and Bullock Orders: Rule 14-1(18)

(Please note that the BC Court of Appeal granted leave to Appeal the below discussed decision.)
When a Plaintiff sues 2 parties and succeeds only against one the Court had a discretion under former Rule 57(18) to order that the unsuccessful defendant pay the successful defendants costs. Depending on the way a court goes about doing this will label the result a “Sanderson Order” or a “Bullock Order“. This rule has been reproduced in the New Rules of Court at Rule 14-1(18) and the first judgement I’m aware of considering this discretion under the New Rules was released last week by the BC Supreme Court, Nanaimo Registry.
In last week’s case (Brooks-Martin v. Martin) the Plaintiff was injured in a 2005 collision in Saanich, BC. The Plaintiff was travelling in the “C” position behind a motorcycle operated by her husband who was travelling in the “A” position. Her husband unexpectedly cut in front of her. In trying to avoid a collision with her husband she lost control, fell down onto the road and was injured.

(Accident Reconstruction Software courtesy of SmartDraw)
At trial Mr. Justice Halfyard found the Defendant 70% at fault and the Plaintiff 30% at fault. The Plaintiff also sued another Defendant although they were found faultless. The Plaintiff asked for a Sanderson order to minimize her costs consequences following trial although this application was dismissed. Prior to doing so Mr. Justice Halfyard provided the following test required to get a Sanderson or Bullock order:

[6] The court’s power to make the order sought by the plaintiff is set out in Rule 14-1(18), which states:

(18) If the costs of one defendant against a plaintiff ought to be paid by another defendant, the court may order payment to be made by one defendant to the other directly, or may order the plaintiff to pay the costs of the successful defendant and allow the plaintiff to include those costs as a disbursement in the costs payable to the plaintiff by the unsuccessful defendant.

[7] In order to justify the exercise of discretion in his or her favour, a plaintiff must establish two elements, namely:

a) that it was reasonable for the plaintiff to have sued the successful defendant together with the unsuccessful defendant; and

b) that there was some conduct on the part of the unsuccessful defendant (such as asserting that the successful defendant was the culprit in the case or committing some act or acts which caused the plaintiff to bring the successful defendant into the litigation) which makes it just to require the unsuccessful defendant to pay the costs of the successful defendant.

See Grassi v. WIC Radio Ltd. 2001 BCCA 376 at paras 32-34; Davidson v. Tahtsa Timber Ltd. 2010 BCCA 528 at paras 53-54.

[8] The first element is a threshold requirement for the exercise of the court’s discretion. This question is looked at mainly from the perspective of the plaintiff. But if the plaintiff has alleged independent causes of action against the two defendants and if these two causes of action are not connected, the plaintiff will not be able to meet the threshold test. See Robertson v. North Island College Technical and Vocational Institute (1980), 26 B.C.L.R. 225 (C.A.) at paras 23-24; Davidson v. Tahtsa Timber Ltd. at para. 52.

Formal Settlement Offers, Costs, and the Flexibility of the New Rules of Court

Written by admin on April 8, 2011. Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14, BCSC Civil Rule 9, Uncategorized. 46 Comments on Formal Settlement Offers, Costs, and the Flexibility of the New Rules of Court

Interesting reasons for judgement were released this week by the BC Supreme Court, New Westminster Registry, discussing the ‘flexibility‘ that the New Rules of Court give Judges in making costs awards following trials where formal settlement offers were made.
In today’s case (Cairns v. Gill) the Plaintiff brought an ‘exaggerated’ personal injury claim to trial following a 2005 motor vehicle collision. ICBC made an early formal settlement offer in 2006. ICBC’s offer was modest at just over $1,200 plus costs. The Plaintiff rejected the offer and proceeded to trial. The trial did not go well and the Jury largely rejected the Plaintiff’s claim awarding just over $850 in total damages.
Having beaten their formal offer ICBC applied for an order that the Plaintiff pay their post offer Bill of Costs which was expected to exceed $16,000. Despited the ‘exaggerated’ nature of the claim Madam Justice Arnold-Bailey found that such a result was unjust. The Court stripped the Plaintiff of her post offer costs and disbursements however did not award ICBC their costs. In reaching this result the Court provided the following reasons demonstrating the flexible (but perhaps somewhat unpredictable) nature of the current Civil Rules:
[57] The defendants seek costs and disbursements following the date of the offer to settle, despite the plaintiff obtaining judgment. This is available pursuant to Rule 9-1(5)(d)…

[59] To make such an order would have a very negative effect on the plaintiff, and have the broader effect of further discouraging those with legitimate claims from bringing their actions in this Court when the defendant, funded by an insurer, has deeper pockets with which to bear the risk of a plaintiff achieving only a minor or, indeed, a pyrrhic victory.

[60] It is clear from the rules and the jurisprudence that costs consequences are to guide counsel in litigation decisions. The object of the Rules is, “to secure the just, speedy and inexpensive determination of every proceeding on its merits.” This object is to be conducted, as far as is practicable, with regard to proportionality. While this object is frustrated to some extent by a claim worth $851 proceeding to its conclusion at a Supreme Court jury trial where it was more appropriate for determination in Provincial Court, the object and proportionality principle do not appear to accord with the potential cost of litigation in this case. The bill of costs of the defendants is expected to exceed $16,000.

[61] I note that the Court of Appeal in Giles recognized when dealing with the issue of double costs that “all litigation comes with a degree of risk,” and that, “when faced with settlement offers, plaintiffs must carefully consider their positions.” However, the court also indicated that plaintiffs, “should not to be cowed into accepting an unreasonable offer out of fear of being penalized with double costs if they are unable to ‘beat’ that offer.” These considerations also appear relevant in these circumstances.

[62] In this case, pursuing a valid, although exaggerated, personal injury claim to trial, where the offer to settle did not provide a genuine incentive to settle in the circumstances, may, in the face of a defence funded by ICBC, cost the plaintiff almost twenty times what was awarded at trial. It seems consistent with the object of the Rules generally, and of Rules 9-1 and 14-1(10), to have regard to the need to emphasize litigation decisions that direct cases to the appropriate forum without disproportionately penalizing a party that had some success, however limited.

[63] To this end, as considered in relation to the first issue, Rule 14-1(10) permits the Court to limit a plaintiff to the recovery of disbursements when the amount of the judgment is within the jurisdiction of the Provincial Court, which I declined to do in this case. Then, as considered in relation to the second issue, Rule 9-1(5)(a) permits the Court to deprive the plaintiff of any or all of their disbursements after the date of the offer, which I found to be appropriate. Then, taking the matter even further, Rule 9-1(5)(d) permits the Court to consider requiring the plaintiff to pay the defendants’ costs in respect of some or all of the steps taken after the date of the offer to settle.

[64] This progression demonstrates the flexibility within the overall framework of the rules to craft an order for costs that is appropriate to the circumstances of each case.

[65] In the present case, the plaintiff, although the “successful” party at trial, agreed to forego her costs after the date of service of the offer to settle and is, by virtue of my decision on the second issue, without disbursements from the date of service of the offer to settle, which occurred very early in the proceedings. To require her to pay all or some of the defendants’ costs after the date of service of the offer to settle, which at the time was an unreasonably low offer, would be excessive and unjust. It would not be in keeping with the nature of the offer, the relative financial circumstances of the parties, the principle of proportionality, and the need to avoid decisions that inappropriately discourage plaintiffs from pursuing valid claims.

This case is worth reviewing in full for the Court’s length analysis of many authorities to date addressing costs discretion under the new Rules of Court and further addressing important issues such as sufficient reason to sue in Supreme Court, and the relevance of suing an insured defendant.

Costs and Sufficient Reason to Sue in the Supreme Court: Clarity from the BCCA

Written by admin on March 22, 2011. Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14, Uncategorized.

Welcome reasons for judgement were released today by the BC Court of Appeal addressing when a Plaintiff has ‘sufficient reason‘ for suing in the BC Supreme Court. In short the top BC Court ruled that trial judges can look beyond the value of a claim when addressing this topic. This issue is important because generally a Plaintiff who succeeds in a Supreme Court lawsuit but is awarded below $25,000 (the current monetary jurisdiction of the BC Provincial Court) will be deprived of costs unless they have ‘sufficient reason‘ for suing in the Supreme Court.
In today’s case (Gradek v. DaimlerChryster Financial) the Plaintiff was injured in a 2006 collision. His lawsuit was successful and he was awarded damages of just over $9,000. The trial judge also awarded costs of $6,600. In doing so the trial judge made the following useful findings when individuals sue an insured defendant:

[42] The plaintiff is who he is. As such, he would have had extraordinary difficulty presenting a case on his own. While the defendant, represented by the insurer, suggested that in Provincial Court it might, at times, be represented by an adjuster, in my view, whether the defendant was represented by an adjuster or a lawyer the plaintiff would have been outmatched.

[43] In my opinion the plaintiff required counsel to obtain a just result. Costs are not awarded in Provincial Court. [Emphasis added.]

ICBC Appealed this order arguing that a court can only look at the likely value of a claim when deciding whether there is sufficient reason to sue in the BC Supreme Court. The Court of Appeal disagreed and dismissed the appeal. In doing so the Court provided the following useful reasons addressing the scope of ‘sufficient reasons‘ under Rule 14-1(10) of the Civil Rules:

[13] At the outset, I observe that the application of Rule 57(10) does not involve an exercise of discretion. For a plaintiff who recovers a sum within the jurisdiction of the Small Claims Court to recover more than disbursements, the court must make a finding that there was sufficient reason for bringing the action in the Supreme Court.

[17] In support of its position, the appellant relies on the nature and purpose of the legislative scheme which, he submits, reflect an intention on the part of the Legislature to confine the meaning of the words “sufficient reason” to reasons relating only to quantum as assessed at the outset of the claim. In that respect, it is common ground that the primary purpose of denying costs in the Supreme Court to those with monetary claims of $25,000 or less is to encourage claimants to bring their claims in Small Claims Court, with its simplified procedures and greater accessibility to judicial dispute resolution. Litigating in the Supreme Court when the amount of money involved is relatively small can be prohibitive for both the “winner” and the “loser”.

[18] I am in general agreement with the appellant’s submission in its factum (at para. 33) that the object of the small claims procedures set out in the Small Claims Act, R.S.B.C. 1996, c. 430 and Rules, B.C. Reg. 261/93 is “to provide parties, and lay litigants, in particular with an easily understandable, flexible, and less costly alternative to the Supreme Court”. I am also prepared to accept that, in most cases, the pre-trial procedures, including pre-trial disclosure of documents and expert reports, mediation services, settlement conferences and recovery of such reasonable expenses as interpreter fees, provided in the Provincial Court, will enable the parties to proceed in a cost-efficient manner to a just result. But, that will not always be the case. In this instance, for example, the trial judge was satisfied that Mr. Gradek’s circumstances required the assistance of counsel to obtain a just resolution of his claim. It is implicit in his reasons that he considered that it would be unjust to find that Mr. Gradek require counsel to properly present his claim, on the one hand, and to deny him costs which would partially offset the expense of retaining counsel, on the other. It was on this basis, in part, that he found there was “sufficient reason” within the meaning of Rule 57(10) to bring the action in the Supreme Court with its attendant relief for the successful party in costs.

[19] Without endorsing all of the factors relied on by the trial judge as constituting “sufficient reason” in this case, I am satisfied that there may be circumstances which may constitute sufficient reason for bringing an action in the Supreme Court, thereby triggering its costs provisions, despite the fact that it is apparent from the outset that the award will fall within the monetary jurisdiction of the Provincial Court. It is open to a defendant who believes that the claim should not have been brought in the Supreme Court to apply under s. 15 of the Supreme Court Act, R.S.B.C. 1996, c. 443, to have the matter transferred to the Provincial Court. Alternatively, if the matter proceeds in the Supreme Court, it is open to the defendant to ask that a successful plaintiff be denied costs on the basis that there was not sufficient reason to bring the action in the Supreme Court in the first instance.

Costs Awards For Settlements Below $100,000

Written by admin on February 16, 2011. Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14, BCSC Civil Rule 15, Uncategorized. 58 Comments on Costs Awards For Settlements Below $100,000

(Note: The case discussed below was upheld on appeal in July, 2011 by Madam Justice Ker)
As previously discussed, Rule 15 is the new BC Fast Track Litigation Rule and it is mandatory for cases for damages seeking less than $100,000 and for cases that “can be completed within 3 days“.
Rule 15-1(15) generally limits costs awards for fast track lawsuits to no more than $11,000. Reasons for judgement were released today by the BC Supreme Court, New Westminster Registry, addressing whether this limit applies to non-fast track cases that settle for less than $100,000. In short, Master Keighley held that it can, however, when a case has been removed from the fast track the costs restriction does not apply.
In today’s case (Johnson v. Axten) the Plaintiff started the lawsuit under the former Rule 68. The parties consented to remove the case from Rule 68 prior to trail and obtained a Court order to that effect. The case then settled after the new Rule 15 came into force. The settlement was for $90,000 plus costs and disbursements. The Defendant argued that the Rule 15 cap on costs should apply. Master Keighley disagreed finding that while it could apply, it should not in the circumstances of this case. The Court provided the following useful reasons:

[17] The Majewska case does, however, contain this helpful observation on the issue of “opting out” of Rule 66, at para. 34:

Moreover, it is important to recognize that parties to a R. 66 action are not compelled to remain in the fast track process. If the spectre of “special circumstances” emerges at any time during the action, whether in the form of complex issues, offers to settle, increased trial time, or any other situation, the parties may consent to removing the case from R. 66, or obtain an order to that effect under R. 66(8). Thus, if a concern arises that costs under R. 66(29) will not be adequate, this can be remedied by taking appropriate action during the proceeding.

and at para. 36:

“Here, if the plaintiff was concerned that R. 66 was no longer appropriate, the proper response was to apply for removal from the fast track litigation. If she chose not to take that step, she should have no basis for complaint that her costs are limited by R. 66(29).”

[18] In other words, a party who opted out of Rule 66 prior to trial was not limited by Rule 66(29). It is noteworthy that Rule 68, which governed this action prior to the parties “opting out” contained no limitation on costs. Also noteworthy is that Rule 15?1 as well as the case with its predecessors, provides for opting out of the provisions for the Rule and in this case the parties did so.

[19] Ms. Deane-Cloutier says that although Rule 15-1 does not, on its face, contemplate settlement, neither did Rule 66(29), but that did not prevent the court from holding that the subrule applied to settlement of cases governed by the Rule. That submission, with respect, ignores however the very clear statement of the Court of Appeal in Majewska: that once Rule 66 ceased to apply to an action, a party would not be limited to costs recoverable under Rule 66(29).

[20] The plaintiff’s costs will be assessed pursuant to Schedule B of the Supreme Court Civil Rules. While I agree that Rule 15-1(1) provides that cost limitations apply to cases which were not “fast tracked” but should have been (regardless of the intentions of the parties), the rule nonetheless provides that even if otherwise applicable, it will not apply to cases where the court has ordered that it will cease to apply. The court did so here, with the consent of the parties and, as a result, the cost limitation set out in Rule 15-1, does not apply.