Summary Trials and the Severance of Issues


Reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, dealing with an interesting question: is a Court order for severance of issues required prior to a Court adjudicating an issue (as opposed to the entirety of a claim) in a summary trial?
The reason why this is an issue is due to two competing Rules of Court.  Rule 9-7(2) permits a party to “apply to the court for judgement…either on an issue or generally“.  On the face of it this rule seems to permit a party to apply for only part of a case to be dealt with summarily.  However, Rule 12-5(67) requires a Court Order to sever issues in a lawsuit stating that “the court may order that one or more questions of fact or law arising in an action be tried and determined before the others“:.
In this week’s case (Chun v. Smit) the Plaintiff was injured in a motor vehicle collision.  He brought a motion for the issue of liability to be addressed on a summary trial.  The Defendant opposed arguing that a summary trial was not appropriate.  Mr. Justice McEwan agreed and dismissed the application.  In doing so the Court provided the following useful reasons finding that an order to sever issues under Rule 12-5(67) is a prerequisite to having only part of a case tried by way of summary trial:

[7] The question is really whether Rule 9-7 merely describes a mode of trial, while the claim or cause of action remains otherwise subject to the rules that govern trial, or whether the trial of an “issue” under Rule 9-7, where that issue is the severance of liability from quantum, somehow bypasses Rule 12-5 (67) and falls to be decided on a lower standard.

[8] In the brief passage excerpted from Bramwell (above), three different approaches are apparent. It seems to me, however, that whether the test for severance, or of a trial of an “issue” is rationalized as within or outside Rule 9-7, it must meet the standard set out in Bramwell. Rule 9-7 is, in itself, a departure from the ordinary mode of hearing a trial, and proceedings within it are contingent upon the court accepting that the compromises inherent in that process will not impair the courts’ ability to do justice. That being so, it would be illogical that collateral to the compromises inherent in proceeding by summary trial, other aspect of the process were similarly downgraded. If a trial of an issue is found to be an appropriate way to proceed, it may be tried under Rule 9-7, if Rule 9-7 itself is properly applicable.  Where a party seeks to proceed on only part of a case under Rule 9-7, the first question is whether there should be severance at all, and the second is whether Rule 9-7 is appropriate. The correct approach is set out in Bramwell, which would bind me in any case (see Hansard Spruce Mills Ltd. (Re), [1954] 4 D.L.R. 590 (B.C.S.C.)).

Court Finds Abuse of Process for Liability Denial After Careless Driving Conviction


Useful reasons for judgement were released this week by the BC Supreme Court, New Westminster Registry, finding that it is an ‘abuse of process‘ pursuant to Rule 9-5(1)(d) for a Defendant to deny the issue of liability in a personal injury lawsuit after they have been convicted of careless driving as a result of the same collision.
In this week’s case (Ulmer v. Weidmann) the Plaintiff’s husband was killed when his motorcycle was struck by a vehicle operated by the Defendant.  The Plaintiff sued for damages pursuant to the Family Compensation Act.
Following the collision the Defendant was charged with “driving without due care and attention” under section 144(1)(a) of the BC Motor Vehicle Act.  He contested this charge but ultimately was found guilty following trial in the BC Provincial Court.
The Defendant then denied fault for the crash in the Wrongful Death lawsuit and claimed the Plaintiff was partly responsible.  Mr. Justice Truscott rejected this argument and found the Defendant solely responsible for the fatal collision.  The Court went further and found that while a party convicted under s. 144(1)(a) of the Motor Vehicle Act can argue an opposing motorist is partly to blame for a crash, it is an abuse of process for the convicted party to outright deny the issue of fault.  The Court provided the following useful reasons:

[83]         In my opinion the finding of driving without due care and attention in Provincial Court was akin to a finding of negligence against Mr. Weidmann, because his manner of driving was found to have departed from the standard of a reasonable man and he failed to avoid liability by proving he took all reasonable care in the circumstances.

[84]         I agree with plaintiff’s counsel that it was an abuse of process for the defendants to deny full liability in their statement of defence as this constituted an attempt to re-litigate the findings of the Provincial Court that were necessary for Steven Weidmann’s conviction of driving without due care and attention. This was an attempt to undermine the integrity of the adjudicative process which is not to be allowed.

[85]         I do not conclude however that the findings essential to Mr. Weidmann’s conviction in Provincial Court prevented Mr. Weidmann from alleging contributory negligence against Mr. Ulmer in this action…

[91]         While I have decided that there was no negligence on Mr. Ulmer contributing to the collision, based upon the evidence that I have accepted, I cannot say that this was a defence advanced in bad faith for the ulterior purpose of emotionally disturbing the plaintiff and putting pressure on her to settle at a figure favourable to the defendants.

[92]         Although I have concluded that it was an abuse of process by the defendants to deny liability completely, they were not guilty of an abuse of process in maintaining the defence of contributory negligence of Mr. Ulmer at all times.

The Plaintiff was ultimately awarded damages for her accident related losses and these included $10,000 for ‘nervous shock’.  Paragraphs 97-215 of the Reasons for Judgement are worth reviewing for Mr. Justice Truscott’s thorough review of the law of nervous shock claims.

Court Lacks Discretion To Deviate From Costs Agreement In Formal Settlement Offers


Authorities under the formal Rule 37B held that when a formal settlement offer dealing with costs consequences was accepted the BC Supreme Court had no discretion to make a different order with respect to costs.  The first case I’m aware of dealing with this issue under the New Rules was released today.  The Court upheld the principle developed under the former rule.
In today’s case (Sahota v. Sandulo) the Plaintiff was involved in a 2004 motor vehicle collision in Surrey, BC.  He started a lawsuit which was set for trial by Jury.  In the course of the lawsuit the Plaintiff incurred significant disbursements advancing the claim.  Fearful that the Jury trial would not go favorably the Plaintiff delivered a formal offer of settlement of $3,000 “plus court costs and disbursements“.  The Defendant accepted the formal offer.
The parties then could not agree on the costs consequences.  The Defendant brought a motion to address this issue.  Mr. Justice Armstong held that precedents developed under Rule 37B remain good law and that the Court has no discretion with respect to costs awards in these circumstances.   The Court provided the following reasons:

[28] Generally, the Court has discretion in relation to costs; however, where an offer to settle with specific terms as to costs has been accepted, to which Rule 9-1  applies, the Court does not have discretion to vary the terms of that agreement as they relate to costs.

[29] In Buttar v. Di Spirito, 2009 BCSC 72, Gerow J. held:

[11]      Both parties advanced arguments that the court has discretion under Rule 37B to make an order regarding costs. However, it is my opinion that the court has no discretion to make an order regarding costs in this matter. Mr. Buttar accepted the offer put forth by the defendants, including the offer regarding costs, without reservation. It is my view that Rule 37B does not confer discretion on the court to set aside an agreement that has been entered into between the parties regarding costs.

[33]         The rule in Buttar has been consistently applied in this Court and appears determinative of this issue.

[34]         Buttar and cases following it did not address Rule 9-1(4) as it relates to an accepted settlement that addresses costs. Rule 9-1(4) states:

(4)        The court may consider an offer to settle when exercising the court’s discretion in relation to costs.

[35]         Buttar held that the Court does not possess discretion to vary costs where a formal offer to settle, specifically addressing costs, has been accepted. If, in such circumstances, the Court is not in a position to exercise discretion in relation to costs, Rule 9-1(4) is of no application.

[36]         The rule in Buttar is applicable to the defendant’s application in this case. The plaintiff’s offer to settle, accepted by the defendant, created an agreement between the parties. This agreement is not subject to the Court’s discretion as to costs. In my view, the purpose of the rules would be frustrated if a party was free to accept an offer, clear and unambiguous on its face, and then move to invoke the Court’s discretion to add or vary terms to substantially rewrite the agreement reached by the parties.

Double Costs Ordered for Taking "Extremely Weak" Case to Trial


As recently discussed, when a party is on the losing end of a lawsuit in the BC Supreme Court they usually have to pay the winning sides costs.  If the successful party beat a pre-trial formal settlement offer the Court has the discretion of awarding double costs.  Reasons for judgement were released this week considering an application for double costs where a very modest formal offer was made prior to trial.
In today’s case (Brooks v. Gilchirst) the Plaintiff was involved in two motor vehicle incidents.  She sued for damages and both claims were heard at the same time.  ICBC disputed the allegation that a collision took place in the first incident.  Prior to trial ICBC made a $1 formal settlement offer.  The Plaintiff rejected this offer and went to trial.  Mr. Justice Sigurdson dismissed the claim finding that “no collision” took place.
ICBC applied for double costs.  The Plaintiff opposed arguing that the nominal offer should not trigger increased costs.  Mr. Justice Sidgurson agreed that while this was typically the case, in circumstances where an ‘extremely weak‘ case proceeds to trial double costs could be awarded in the face of a formal settlement offer.   In reaching this result the Court provided the following reasons:

[16]         In terms of the relationship between the terms of settlement offered and the final judgment of the court, the offer was better than the result, but the offer was only for the sum of $1 plus disbursements.  Ordinarily I would think that a nominal offer of one dollar may not attract orders for double costs but I know that in some cases even nominal offers may attract orders of double costs.  See for example MacKinlay v. MacKinlay Estate, 2008 BCSC 1570; Ludwig v. Bos, 2010 BCSC 695.

[17]         This is a case where there had been expenditures on medical and expert reports.  I think that where it becomes clear that liability will be extremely difficult to establish a nominal offer that has the effect of allowing the plaintiff to recover disbursements and avoid liability for the other party’s disbursements may nevertheless be a substantial offer.

[18]         In considering whether the offer ought reasonably to have been accepted, I think it was quite clear that the plaintiff’s original theory that she had been sideswiped as a result of the collision involving the other two adjacent cars was not maintainable once each side had filed their expert reports.  This was not merely a case where the plaintiff had a claim that was difficult to prove at trial; this was a unique case where on the evidence available to her before trial the plaintiff should have realized that she did not have a realistic position on liability…

[23]         In the circumstances, I think that the ICBC defendants should be awarded costs with respect to the main action.  I have estimated the main action consumed 90% of the time at trial.  The defendants were clearly successful and, in my view, it is not an appropriate order for each side to bear its own costs.

[24]         In terms of whether I should award double costs, I think that, in exercising my discretion, the offer reasonably ought to have been accepted in the days prior to trial.  Although the offer was modest, the circumstances at that time were clear that her case was extremely weak, she would have avoided liability for disbursements, and in fact recovered the disbursements she had incurred.

[25]         I award double costs for the period after two days prior to trial.

The High Cost of Losing an ICBC Injury Claim


I’ve written many times about the significant costs a party can be exposed to for being on the losing end of a BC Supreme Court lawsuit.  Reasons for judgement were released today further demonstrating this reality under the New BC Supreme Court Rules.
In today’s case (Chen v. Beltran) the young Plaintiff entered an intersection against a red light on his skateboard.  He was struck by a vehicle operated by the Defendant and sustained injuries.  He sued for damages but his claim was dismissed with the Court finding him entirely at fault for the accident.
Rule 14-1(9) of the BC Supreme Court Rules typically requires a losing party to pay costs to a successful party.  ICBC relied on this section and requested that their costs of over $75,000 be paid by the Plaintiff’s family.   The Plaintiff opposed arguing that no costs should be awarded.  One of the reasons advanced by the Plaintiff was that such an order would “financially cripple the (plaintiff’s) family“.
Mr. Justice Greyell rejected this argument.  The Court, while disallowing some of the most significant disbursements claimed by the Defendant, did go on to order that the Plaintiff pay the Defendant’s costs.  In rejecting the “financially crippling” argument Mr. Justice Greyell reasoned as follows:
[11] The first basis upon which the plaintiff says the defendants should be denied costs is that Allan suffered significant injuries in the Accident and will require ongoing medical and psychological care throughout his life.  His ongoing care will involve significant cost to both his parents.  Allan’s parents have already incurred substantial debt to prosecute the lawsuit, have limited financial resources and will have difficulty providing for Allan’s future care even if they are successful on this application.  The plaintiff says that an order for costs will financially “cripple” the family.  While I have great sympathy for Allan’s parents the case law is clear that the financial circumstances of a litigant, standing alone, are not to be taken into consideration as a factor in the awarding of costs…

[14]         It is clear based on the above authorities that this Court is unable, on any principled basis, to take the plaintiff’s financial circumstances into account in determining whether to award costs.

[15]         To conclude otherwise would undermine the rationale underlying Rule 14-9 and would likely lead to the promotion of litigation rather than to promote the “winnowing” function described by Hall J.A. in Catalyst Paper.  It would lead to a collapse of the general principle discussed in the authorities and result in the unacceptable proposition that costs in each case would be measured not by a party’s success but by the personal financial circumstances of the litigants.

It is worth noting that this result should be contrasted with cases decided under Rule 9-1(5) where the Court does have a discretion to consider a party’s financial circumstances following trial where a formal offer of settlement was made.
Today’s case demonstrates the real world expenses that can be associated with losing an ICBC Claim in the BC Supreme Court.  It is vital to gauge these costs and the risks of trial prior to putting a case before a Judge or Jury.

Over 36,000 Reasons for Learning Motorists to Drive With A Qualified Accompanying Passenger


Reasons for judgement were released today demonstrating some of the real world consequences drivers with a learner’s licence could face if they are found to be in breach of their policy of insurance.
In today’s case (King v. ICBC) the Plaintiff was involved in a 2007 BC motor vehicle collision.  4 vehicles were involved in the crash.  The Plaintiff was insured with ICBC and they paid out over $36,000 with respect to the claims made from the crash.  At the time of the collision the Plaintiff had a Class 5L learners licence and was operating his vehicle “without a qualified accompanying passenger“.   As a result he was found in breach of his insurance.   He was found to be the at fault motorist and ICBC asked that he pay them back the over $36,000.
The Plaintiff sued ICBC arguing that he was not at fault and that he was not in breach of his insurance.  ICBC counterclaimed for $36,613.33.  Prior to trial ICBC made an offer to settle their claim against the Plaintiff for $33,000.  The Plaintiff declined this offer and proceeded to trial.  Ultimately Mr. Justice Pearlman found the plaintiff was the at fault motorist and that he was in breach of his policy of insurance.  He ordered that he pay back ICBC the funds they paid out with respect to the collision claims.
The Court went further and ordered that the Plaintiff pay ICBC double costs for failing to accept their pre trial offer.  In reaching this judgement Mr. Justice Pearlman provided the following reasons:

[30]         The plaintiff’s claim failed as a result of the court finding that neither his testimony, nor that of his witness, Ms. Gromova, was credible.  The court found that the plaintiff had wilfully made a false statement respecting Ms. Gromova’s presence in the vehicle at the time of the accident.

[31]          The over-riding principle is whether, if the Offer to Settle had been accepted, there would have been significant, or any savings in litigation costs to the parties or to the court: LeFler v. Anderson, 2008 BCSC 1563, at para. 18. Here, acceptance of the offer would have spared both parties the significant costs of a four day trial where the amount in dispute was, exclusive of court order interest, less than forty thousand dollars.

[32]         Taking all these factors into consideration, I conclude that an award of double costs should be made in this case, and is consistent with the objective of deterring unreasonable conduct in litigation.  I find that the plaintiff was entitled to a reasonable time to consider the defendant’s Offer to Settle, following its delivery on September 24, 2010.  Taking into account the disclosure of the will say statements of the defendant’s witnesses on September 29, and allowing Mr. King a reasonable time to consider his position, and the defendant’s Offer following the delivery of the will say statements, I find that the defendant is entitled to an award of double costs  commencing October 7, 2010.

RESULT

[33]         The defendant will recover its costs and disbursements of this action from its commencement until October 7, 2010.  Those costs will be at Scale B.

[34]         The defendant is entitled double costs commencing October 7, 2010 and to disbursements incurred after October 7, 2010.  Disbursements will be allowed in the amount incurred, rather than at a double rate.

More on the New Rules, Formal Settlement Offers and Timelines for Acceptance


As I’ve previously written, the new formal settlement offer rule (Rule 9) reads almost identically to the former Rule 37B.   Under the former rules BC Courts were reluctant to have formal settlement offers trigger costs consequences following trial where the offer was open for acceptance for a short period of time.  Reasons for judgment were released today by the BC Supreme Court, Vancouver Registry, reaching a similar result under Rule 9.
In today’s case (Hunter v. Anderson) the Plaintiff sued for injuries as a result of a slip and fall incident.  In the course of the lawsuit the Defendant made a formal settlement offer for $25,000.  This offer was made one week before trial and was left open for acceptance for only 3 days.  The Plaintiff declined the offer and proceeded to trial.  After trial the Defendant was found 25% at fault for the fall and the Plaintiff was awarded just over $9,000 in damages.
The Defendant asked to be awarded their costs from the time of the offer onward.  Mr. Justice Cullen refused to do so finding that the offer was not alive for a reasonable period of time and split the costs the parties were entitled to.   In reaching this verdict the Court provided the following reasons:
[14] In dealing with the first issue under Rule 9-1(6), whether the offer was one that might reasonably have been accepted “the analysis is not one of hindsight, once the final result is known”.  See A.E. v. D.W.J. 2009 BCSC 505; Bailey v. Jang, 2008 BCSC 1372.  In the present case, the operative offer of the defendant was made relatively late in the day and was essentially premised on the defendant having no potential liability, but simply to offset the costs of a potential trial…

[15]         In my view, on balance, in the circumstances, despite the ultimate result, given the short duration of the offer, the fact that it was not based on an assessment of the liability of the defendant, it could not be characterized as one which ought reasonably to have been accepted.  I note that on March 9, 2010, when the offer was made, the defendant had not yet provided her fourth and final list of documents which was provided on March 10th.  As well, there was ongoing disclosure of the plaintiff’s documents.

[16]         In addition I note that in Bailey v. Jang, supra, Hinkson J. (as he then was) considered a seven day period “a reasonable time after which the plaintiff could consider (the defendant’s) offer” for purposes of awarding double costs under the old Rule 37B(6) after the expiry of that period…

Although the defendant tendered her offer on March 9th, six days before trial, it was in the context of ongoing disclosure and was left open, effectively, for only three days.  The plaintiff did not have the benefit of a great deal of time to assess the defendant’s offer.  In the context of Bailey v. Jang, Hinkson J. considered a seven day period “a reasonable period of time after which the plaintiff could consider their offer”.  I conclude a similar period is appropriate to impute in the circumstances of this case where the plaintiff was deprived of the ability to accept the defendant’s offer after only three days effectively commencing March 10th.  In light of that factor and the others I have set forth, I award the plaintiff, as indicated, the costs and disbursements up to and including the first two days of trial, and the defendants their costs and disbursements for the six days comprising the balance of the trial.

Defendant Punished With Costs Award for Relying on "Advocate" Expert Witness


Dr. Hymie Davis is a psychiatrist who has been frequently retained by ICBC to provide expert opinions as to the extent of Plaintiff’s accident related injuries.  (You can click here to access my previous posts setting out the billings of Dr. Davis and other experts often retained by ICBC).  In a judgement released last week, the BC Supreme Court harshly criticized Dr. Davis and took the unusual step of punishing the Defendant, (who was insured with ICBC), for relying on him at trial.
In last week’s case (Jayetileke v. Blake) the Plaintiff was injured in a BC motor vehicle collision.  She sued for damages.  Prior to trial ICBC made a formal settlement offer of $122,500.  The Plaintiff rejected this offer and went to trial.  She was ultimately awarded about $9,000 less than the settlement offer by the trial judge.
Normally, in these circumstances, ICBC would be entitled to their costs and possibly double costs from the time of their offer onward.  Mr. Justice Dley, however, refused to follow this usual course finding that not only should the Defendant not be awarded costs, but they should pay the Plaintiff costs.  The reason for this departure was a finding that Dr. Davis was “nothing more than an advocate thinly disguised in the cloak of an expert” and he should not have been relied on by the defence at trial.
Mr. Justice Dley provided the following damaging criticism of Dr. Davis as an expert witness and warning to lawyers who  intend to rely on experts who have a history of crossing the line into advocacy:

[35] Dr. Davis had a history before the courts where his evidence was rejected and his objectivity called into question: Grewal v. Brar et al, 2004 BCSC 1157, [2004] B.C.J. No. 1819; Gosal v. Singh, 2009 BCSC 1471, [2009] B.C.J. No. 2131; Kelly v. Sanmugathas, 2009 BCSC 958, [2009] B.C.J. No. 1413; and Smusz v. Wolfe Chevrolet, 2010 BCSC 82, [2010] B.C.J. No. 114.

[36] A witness may have a poor day in court – that does not mean the witness was dishonest or forever unreliable. However, Dr. Davis had displayed an alarming inability to appreciate his role as an expert and the accompanying privilege to provide opinion evidence.

[37] The defence was alive to his propensity to abuse the role of an expert. His reputation would have been known from the cited decisions. Plaintiff’s counsel succinctly set out the concerns about Dr. Davis in a letter dated January 29, 2010, which stated:

1.         Although he may have once been a qualified expert in psychiatry and able to give opinion evidence in court, we suggest he no longer is properly qualified to give opinion evidence. We will suggest that he is no longer aware of his duty to assist the court and in reality he is an advocate for ICBC. Additionally, we will submit that he has been so consistently discredited by the courts of this Province that he is incapable of being qualified as an expert;

2.         His report is replete with advocacy. The report is an attempt [to] neutralize any material/opinions which support the plaintiff’s claim rather than providing an objective medical opinion;

3.         His report contains many opinions and arguments that are beyond his expertise; and

4.         The information apparently gleaned from the plaintiff is inaccurate and incomplete and coloured to advance his position.

[38] In spite of the concerns that the Courts have expressed, the defence nonetheless proffered Dr. Davis as an expert in opposition to the plaintiff’s complaints of depression and anxiety. My assessment of Dr. Davis was as follows (oral reasons May 13, 2010):

[43]      Dr. Hymie Davis, a psychiatrist, examined Ms. Jayetileke on January 12, 2010 at the request of the defence. I find his evidence to be unreliable. I give it no weight for the following reasons.

[44]      Dr. Davis was an advocate. He was argumentative, defensive, non-responsive, and prone to rambling discourses that were not relevant to the questions posed in cross-examination.

[45]      Dr. Davis was asked to leave the courtroom so that counsel could argue about questions to be put to him. Dr. Davis was seen peeking into the courtroom and listening to the discussion. He was again asked to leave. In spite of these instructions given to him, Dr. Davis hovered within hearing distance and, on four occasions, stuck his head into the courtroom to hear what was occurring.

[46]      Dr. Davis conceded that without his notes, he would not be able to recall the discussion with Ms. Jayetileke. He relied on his notes to prepare his report.

[47] Dr. Davis had noted that Ms. Jayetileke awakened once or twice a week and that this was in some measure related to the accident-related symptoms. He was adamant Ms. Jayetileke had not said that she awakened once or twice a night. He said that his notes would reflect what Ms. Jayetileke had told him.

[48]      His notes referred to Ms. Jayetileke awakening once or twice but did not specify whether that was nightly or weekly. Nonetheless, Dr. Davis tried to point out other references in his notes that meant a weekly occurrence. Those references did not strengthen his evidence. They simply confirmed the unreliability of his testimony.

[49]      Dr. Smith had commented about how important it was for the history-taking to be done in a setting where the patient was comfortable and at ease with the interviewer. Dr. Davis’s demeanour would not lend itself to Ms. Jayetileke being at ease in his presence so that an effective and accurate history could have been taken. Ms. Jayetileke was under the impression that Dr. Davis did not take things seriously. I accept her view of the interview and prefer her evidence to that of Dr. Davis.

[39] For a trial to be fair, the Court must allow each party to put its best case forward. Where a party seeks to advance its position with reckless abandon seeking only the ultimate goal of victory and using questionable evidence along the way, that party risks sanctions in the form of costs penalties. Where the conduct is reprehensible and deserving of reproof and rebuke, the penalty is special costs. “Costs considerations are meant to guide counsel and litigants in the choices and strategies they pursue in litigation”: Karpodinis v. Kantas, 2006 BCCA 400, [2006] B.C.J. No. 2074 at para. 4.

[40] In this case and against the backdrop of previous judicial comment, the defence tendered Dr. Davis. He was nothing more than an advocate thinly disguised in the cloak of an expert. That is conduct deserving of rebuke and from which the Court disassociates itself.

[41] Dr. Davis attempted to inject levity to the proceedings when he was introduced to the Court – his reference to scotch can only be taken as an attempt to be humorous. However, these are serious and solemn proceedings and should be treated as such. His opening comments were unnecessary and unhelpful.

[42] Dr. Davis’ refusal to remove himself from earshot of the Court proceedings despite repeated requests was reprehensible. His conduct simply confirmed a lack of respect for Court proceedings.

[43] Under these circumstances, special costs are to be awarded against the defendant.

[44] The special costs will be the equivalent of the costs of the entire trial. The defendant will be deprived of any costs that it might otherwise have been entitled to as result of the offer to settle.

[45] The plaintiff is awarded costs as if there had been no offer to settle made. The defendant shall receive no costs.

[46] The plaintiff shall receive costs of this application.

New Rules of Court Update: Discontinued Lawsuits and Third Party Costs


Reasons for judgement were released today by the BC Supreme Court, Chilliwack Registry, interpreting and applying Rule 9-8(5) for what I believe is the first time.  (It’s worth pointing out, however, that this rule reads almost identically to the former Rule 36(5)).  This rule deals with the entitlement of a Third Party to costs when a Plaintiff discontinues a lawsuit.
In today’s case (Patterson v. Williams) the Plaintiff sued two Defendants for personal injuries sustained when a dog knocked her over.  The Defendants denied fault and issued Third Party Proceedings against another dog walker seeking contribution and indemnity.
Ultimately the Plaintiff settled the claim, signed a release in favour of the Defendants and discontinued the lawsuit.  The Third Party then brought a motion asking that the Defendants pay the Third Party’s costs.  The Third Party relied on Rule 9-8(5) which reads as follows:
(5)  If a plaintiff discontinues the whole or any part of an action in which a person has been joined as a third party, the third party, if the discontinuance disposes of the claim against the third party, is entitled to costs and may apply to the court for a direction as to who should pay them.
Mr. Justice Sigurdson dismissed the motion finding that a discontinued lawsuit does not automatically dispose of Defendant claims against a Third Party.  The Court provided the following reasons:

[11]         The third party says that the notice of discontinuance disposes of the third party claim, as it was for contribution and indemnity only and did not include an independent claim. This was so, in the third party’s submission, because the specific wording of the third party notice made the third party claim conditional both on the plaintiff not being contributorily negligent and on the defendant being found liable. According to the third party, these conditions cannot now be satisfied because of the discontinuance.  Mr. Nossal also argues that there is no ongoing claim against the third party because the terms of the Release are on so-called “B.C. Ferry Agreement terms” (British Columbia Ferry Corp. et. al. v. T&N plc. et .al. (1993), 86 B.C.L.R. (2d) 353 (S.C.); (1995), 16 B.C.L.R. (3d) 115 (C.A.)) that prevent recovery from a third party.

[12]         I think that this application for costs must fail.  While the Release may limit the liability of the defendants and prevent successful third party proceedings against them, the notice of discontinuance itself does not prevent the defendants from continuing third party proceedings against Ms. Parker.

[13]         I do not think it can be said that the filing of the notice of discontinuance by the plaintiff disposes of the claim against the third party by the defendants.

[14]         The claim for contribution is a substantive right that continues to exist notwithstanding a settlement: see A.R. (Al) Smith Ltd. v. Turner, [1984] B.C.J. No. 3107, [1985] 2 W.W.R. 424 (B.C. Co. Ct.), and Canada v. Foundation Co. of Canada, [1980] 1 S.C.R. 695.

[15]         Moreover, I do not think that the precise terms of the third party notice can be determinative of this application, as the defendants are at liberty to apply to amend the terms of the third party notice.

[16]         Even if the terms of the Release do prevent the defendant from continuing third party proceedings against the third party, which I question, that is a matter of the interpretation of the Release, not something that flows from the filing by the plaintiff of the notice of discontinuance itself.

[17]         Accordingly, the application by the third party for costs is dismissed, with costs.

New Formal Settlement Offer Rule Treated the Same as the Old


A further decision dealing with the consequences of formal settlement offers under the New BC Supreme Court Civil Rules was released today by the BC Supreme Court, New Westminster Registry.
In today’s case (Gregory v. ICBC) the Plaintiff was injured in a BC motor vehicle collision.  Prior to trial ICBC made a formal settlement offer of $164,000.  The Plaintiff rejected this offer and at trial was awarded just over $131,000.
ICBC brought an application seeking costs or double costs from the date of the offer onward.  Madam Justice Kloegman agreed that the Plaintiff ought to have accepted the formal settlement offer and accordingly deprived her of her costs and disbursements for the trial and awarded ICBC their costs and disbursements for steps taken shortly after delivery of the formal settlement offer.
In reaching this result the Court noted that Rule 9 (the New Formal Settlement offer rule) should be treated similarly to the old Rule 37B.  Specifically Madam Justice Kloegman noted that “The parties agree that it is likely that the new Supreme Court Rules apply to this application and, in any event, very little turns on whether or not the old or new Rules apply.
While ICBC was awarded post offer costs, they were not awarded double costs.  In reaching this decision the Court noted that ICBC’s financial ability to defend a lawsuit was “much greater than the (plaintiff’s) ability to prosecute” and that this factor must be taken into account in exercising judicial discretion under Rule 9.   In considering this factor Madam Justice Kloegman stated as follows “I will not order double costs to the defendant, which would be about $50,000, because the impact on the financial circumstances of the plaintiff and on the amount of her award at trial would be grievous.

Contact

If you would like further information or require assistance, please get in touch.

ERIK
MAGRAKEN

Personal Injury Lawyer

When not writing the BC Injury Law Blog, Erik is the managing partner at MacIsaac & Company, based in Victoria, B.C. He is also involved with combative sports regulatory issues and authors the Combat Sports Law Blog.

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