Skip to main content

Why Global Settlement Offers Are OK in BC Wrongful Death Lawsuits

Written by admin on . Posted in Settlement Law.

Interesting reasons for judgement were released this week by the BC Supreme Court, Vernon Registry, addressing the propriety of a global settlement in a wrongful death lawsuit involving children as beneficiaries.
In the recent case (Gaida v. McLeod) the Plaintiff Brenda Leah died “as a result of methotrexate toxicity and that the medication was mistakenly given to her daily, rather than weekly“.  The Defendants admitted liability in causing the wrongful death.   In the course of the lawsuit the Defendants and the estate of the Plaintiff reached a global settlement.   A disagreement arose and leading to a Defendant application to declare that a binding settlement took place.
The Plaintiff opposed this arguing that “ the failure to allocate specific amounts of the settlement money to the two minor children renders the proposed settlement too uncertain and vague to be enforceable.”  Mr. Justice Pearlman rejected this argument and provided the following reasons explaining why a global settlement can survive scrutiny:
[60]         In British Columbia, the court must approve the amount to be paid in settlement of an infant’s claim before the settlement of a claim under the FCA may be implemented.  The court may approve payment to an infant in an amount different from that proposed by the parties or recommended by the Public Trustee and Guardian.  The court may increase the amount to be paid in settlement of an infant’s claim beyond that proposed by the parties, and may do so at the expense of an adult claimant…
[67]         Any amounts which the parties propose to allocate to the heads of damages applicable to minor claimants, including loss of care, guidance and companionship, and loss of inheritance, are proposals only, subject to the court’s approval.  Ultimately, the court must determine the amount to be allocated to each minor claimant, which may require the reapportionment of allocations proposed by the parties within the global settlement amount.  While the global amount of settlement will not change, there can be no certainty respecting the parties’ allocation of specific amounts to each of the claimants, because the court has the exclusive jurisdiction to determine the allocation of settlement monies to the minor claimants.
[68]         Under s. 3(6) of the FCA, a defendant may make a single payment into court, in satisfaction of all claims, without specifying how that amount is to be allocated among the claimants.  There is no requirement under the FCA that a defendant making a payment into court must specify the amounts to be paid out to minor claimants.  In cases where the payment into court is accepted by the plaintiff, if the claim involves infant claimants the court must still approve the distribution of settlement monies to the minor claimants.
[69]         I conclude that the allocation of specific amounts to minor claimants, which is always subject to the court’s approval, and may vary from the amount proposed by the parties, is not an essential term for the formation of an enforceable settlement agreement.

BC Court of Appeal Confirms Solicitor's Liens Can Apply Retroactively

Written by admin on . Posted in Settlement Law, Uncategorized. 104 Comments on BC Court of Appeal Confirms Solicitor's Liens Can Apply Retroactively

Reasons for judgement were released this week by the BC Court of Appeal discussing the effects of a Solicitor’s Lien under the Legal Profession Act in the context of a personal injury claim prosecuted on a contingency basis.
In this week’s case (FitzGibbon v. Piters) the Plaintiff was injured in a collision.  She hired a lawyer to advance her claim for damages.  In the course of the claim a breakdown occurred in the relationship and the Plaintiff retained new counsel.  The claim eventually settled and the first firm sought payment from the settlement amount by way of solicitor’s lien.  No notice of this lien was given, apparently, until after settlement and disbursement of funds.  A dispute arose whether a solicitor’s lien could be attached retroactively to the settlement.  The Court of Appeal agreed that it could and that a valid lien existed in these circumstances.  In doing so BC’s high court provided the following reasons:

30] The nature of the charge arising may be described an “inchoate right”, the crystallization of which requires only the pronouncement of the court [see Re Tots and Teens Sault Ste. Marie Ltd., et al (1975), 65 D.L.R. (3d) 53 (Ont. H.C.J.)].  While the charge exists, by statute, upon the recovery of property as a result of the retained lawyer’s efforts, the charge only becomes enforceable upon declaration by the Court under s. 79(3).

[31] This analysis is consistent with the decision of the Supreme Court of British Columbia in Jenik v. Fearn, (1995) 130 D.L.R. (4th) 695 (B.C.S.C.), and in Chouinard.

[32] The decision of whether to make a declaration upon application is a discretionary one.  The judge must be satisfied that it would be “just and proper” to grant the order (see Wilson, King & Co. v. Lyall (Trustees of) (1987), 12 B.C.L.R. (2d) 353 (C.A.), and Cliffs Over Maple Bay Investments Ltd. (Re), 2011 BCCA 346, 21 B.C.L.R. (5th) 297).

[33] It is not an answer to the inchoate nature of the charge to say that the property it applies to has not been identified.  In Doyle v. Keats, (1990) 46 B.C.L.R. (2d) 54 (S.C.), the Court said:

It is my opinion that the words “any property” used in s. 79 of the Legal Profession Act are as well of the widest possible character, and include a chose in action. Further, I am of the view that the specific property need not be immediately ascertained. It is generally, but not exclusively, the client’s interest in the property which is subject to the charge: Walker v. Saunders, supra. The ascertaining of the extent of that interest may occur subsequent in time to the creation of the charge.

[34] In my respectful opinion, the argument that a charging order under s. 79 cannot have retrospective effect is not supported either by the language of the statute or by the relevant caselaw.

Verbal Agreements Can Create Binding Settlements of Injury Claims in BC

Written by admin on . Posted in Settlement Law, Uncategorized. 105 Comments on Verbal Agreements Can Create Binding Settlements of Injury Claims in BC

While this is certainly not a new legal development (you can click here to access my archived posts addressing this topic) reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, confirming yet again that a verbal agreement can create a binding injury claim settlement and that refusing to sign the appropriate closing documents does not create an escape route for a litigant that regrets their decision.
In this week’s case (Robertson v. Whistler (Resort Municipality)) the Plaintiff was injured when she fell in a shower owned by the Defendant.  She was 8 years old at the time.  She started a lawsuit when she was 20.  In the course of the lawsuit the Defendant made a global settlement offer of $1,400.  The Plaintiff, in a phone conversation with the Defendant’s lawyer stated that she “wished to accept the $1,400 offer“.
The Plaintiff later refused to sign an agreed to Consent Dismissal Order.  The Plaintiff testified that “until she signed the offer and signed the order, there was no settlement“.  Madam Justice Hyslop disagreed and dismissed the lawsuit finding there was a binding settlement.  In addition the Court awarded the Defendant costs from the date of the settlement onward (which could result in the Plaintiff owing the Defendant money).
In confirming that a binding settlement was reached with the verbal agreement the Court provided the following reasons:

[31] Contract law applies to settlement agreements provided no contractual grounds to set aside the contract exist. Example: mutual mistake, lack of capacity, duress or fraud: Robertson v. Walwyn Stodgell Cochrane Murray Ltd., [1988] 4 W.W.R. 283, 24 B.C.L.R. (2d) 385.

[32] Settlement agreements need not be in writing to be enforceable. This was recognized in Sekhon v. Khangura, 2009 BCSC 670.

[33] Even if the oral agreement contemplates that it be reduced to writing, it is still enforceable: Young et al v. Fleischeuer et al, 2006 BCSC 1318. A party may decide not to pursue certain heads of damages as claimed and a settlement may be reached without addressing that particular head of damage: Prasad v. Ho, [1992] B.C.J. No. 643…

[47] The plaintiff changed her mind and repudiated the settlement as a result of the reaction of her father and the involvement of her aunt, Ms. MacDonald.

[48] I conclude that on December 16, 2010, the plaintiff entered into a binding settlement agreement. This action is dismissed with costs awarded to the defendant upon the basis that the sum of $1,400.00 due to the plaintiff will be set-off against the defendant’s assessed costs. Costs will be assessed under Appendix B, Scale B of the Supreme Court Civil Rules.

The Point of No Return: More on ICBC Settlements, Finality And Consent

Written by admin on . Posted in Settlement Law.


As previously discussed (you can click here to read all my archived posts on this topic), a binding ICBC settlement can be reached even before the ‘full and final release’ is signed.  An oral contract can be the point of no return.  Reasons for judgement were released last week by the BC Supreme Court, Vancouver Registry, demonstrating that once a lawyer accepts a settlement offer on behalf of a client it likely becomes too late for the client to change their mind.
In last week’s case (Truong v. Marples) the Plaintiff was injured in a motor vehicle collision.  She hired a lawyer to advance her personal injury claim.  In the course of the lawsuit ICBC’s and the Plaintiff’s lawyer agreed to a $10,000 settlement.
The Plaintiff agreed her lawyer had authority to accept the offer but argued the deal should not be binding as the offer was ambiguous as it should not have disposed of her no-fault benefits claim with ICBC.  The Court disagreed finding that a binding settlement was reached.  In doing so the Court provided the following reasons:

[20] In terms of ambiguity, I find that there was no ambiguity in the settlement.  The settlement was agreed to between Mr. Grewal and Mr. Shane and they both state that there was no ambiguity and agree on what the deal was.  Their evidence, which was not shaken at the hearing, was that they reached a settlement of all issues, including those regarding tort and Part 7 benefits.

[21] Mr. Shane and Mr. Grewal had a history of working on the opposite sides of files.  It is apparent that the two have developed experience with each other.  Mr. Shane’s testimony also indicates that he has a direct working relationship with the Burnaby litigation department of ICBC, and that an “all in” settlement always meant that it included the tort claim and Part 7 benefits.  He displayed a sound understanding of Part 7 benefits and how they interact with a person’s private health insurance.  He stated that if a settlement did not include Part 7 benefits it was his practice to note that.  I accept his evidence on this point.

[22] The Release document sent by ICBC to Mr. Shane supports the settlement asserted by Mr. Grewal and Mr. Shane.  The document states that it is a release of all defendants, and ICBC under Part 7 of the Insurance (Vehicle) Regulation.  Mr. Shane reviewed this document, obviously found it satisfactory, and passed it on to Ms. Truong for her execution.

[23] I also accept Mr. Shane’s evidence that he always makes sure that his clients understand that the figures being proposed to settle include all potential entitlements they have from their claim which include the tort and Part 7 entitlements.  I also accept that he advised Ms. Truong, as per his practice, that prior to confirming any settlement figure with ICBC, that she would need to sign a Release, that this was not optional, or is something that she could refuse to do, and that their claim would be over.

[24] I am not persuaded that the Sharma case is particularly applicable here, given that both counsel involved in the settlement in the instant case agree as to what was settled

[25] Turning then to the question of whether the settlement was unjust and should not be sanctioned.  I have considered the various factors identified in the Pastoor case.  I am not persuaded that the circumstances justify intervention by the court.  Ms. Truong was represented by experienced counsel.  Mr. Shane provided her his opinion based on the information that he had at the time.  He knew that Ms. Truong had private health insurance, he formed a considered opinion that she had little chance of success on liability and the costs of pursuing that aspect, he had a sound understanding of Part 7 benefits, and he discussed that with Ms. Truong.  There was little evidence adduced as to what it would be in the case of Ms. Truong.  Mr. Shane in this hearing stated that it could be thousands of dollars.  Finally, he also received instructions to accept the offer.

[26] I am of the view that interfering with this settlement would do greater harm to encouraging settlement.  It would undermine the role of counsel in relation to a client, in relation to opposing counsel, and in the litigation process.

[27] The issues raised by Ms. Truong are, in my view, related to her relationship with Mr. Shane and not with the defendant.  Her remedy does not lie in having the settlement overturned.

I repeat my previous words of caution about settlement instructions.  If a lawyer enters into a binding settlement without a client’s consent the client’s remedy is against their lawyer as opposed to the Defendant in the ICBC Claim.  In the best interests of everyone involved it is vital that lawyers do not accept an ICBC settlement offer unless they have clear instructions from their clients to do so.  A best practice when giving settlement instructions to a lawyer is to do so in writing to help avoid potential complications.

More on ICBC Settlements and Consent

Written by admin on . Posted in Settlement Law. 74 Comments on More on ICBC Settlements and Consent


Further to my previous posts on this topic, if a lawyer accepts an ICBC offer without clear client instructions a binding settlement could be created leaving the remedy of a separate claim against the lawyer in negligence.  Reasons for judgement were released last week by the BC Supreme Court, New Westminster Registry, dealing with this area of the law.
In last week’s case (Ng v. Schell) the Plaintiff was injured in a 2007 motor vehicle collision.  She retained a lawyer who allegedly entered into a settlement agreement for $95,000 plus taxable costs and disbursements.  The client apparently did not give instructions to accept such an offer.
The client retained new counsel and attempted to proceed to trial.  ICBC brought a motion to dismiss the lawsuit arguing a binding settlement had been reached.  Ultimately Madam Justice Maisonville declined to determine the issue in a Chambers Application and ordered that the matter proceed to trial so that the former lawyer could be subpoenaed and give evidence as to what occurred.  Prior to disposing of the matter the Court provided the following summary of the relevant legal principles:

[8] Both counsel agree that in a situation where a judgment has been rendered, normal rules of contract and agency are applicable.  However, in an interlocutory matter, such as here, where there is not yet a judgment, then the situation must fall into one of the four exceptions outlined in Hawitt for the court to have discretion to deny the application to order the settlement valid and enforceable and stay the proceeding.  Those four notable exceptions are set out in Hawitt at paragraph 20:

20  The judge may refuse the stay if:

1.   there was a limitation on the instructions of the solicitor known to the opposite party;

2.   there was a misapprehension by the solicitor making the settlement of the instructions of the client or of the facts of a type that would result in injustice or make it unreasonable or unfair to enforce the settlement;

3.   there was fraud or collusion;

4.   there was an issue to be tried as to whether there was such a limitation, misapprehension, fraud or collusion in relation to the settlement.

[9] The first analysis, of course, is whether the previous solicitor was acting on instructions.  One of the leading cases in British Columbia is that of Smoliak v. Smart (Guardian ad litem of), [1995] B.C.J. No. 1559 (S.C.) where, at para. 17, Drake J. held:

17  Solicitors, of course, are agents of their clients in accordance with the terms of their retainers; and when retained to conduct litigation have the authority to compromise and settle an action brought for a client.

[10] It is settled law that a solicitor has authority to enter into settlement agreements as agent for the client in such circumstances and that if there is any restriction on that authority, notice must be given to the other side of such a want of authority.  Otherwise, in the absence of the other side being aware the authority was limited or restricted, the opposing side is entitled to rely upon the authority to settle.  The only exceptions, accordingly, in a situation where there appears to be authority to settle are the above exceptions from Hawitt.

As a practical matter these types of disputes can be avoided if settlement instructions are provided in writing, or, better yet, by clearly communicating in the course of negotiations that binding settlement will be made subject to clients confirming instructions evidenced by a signed full and final release.

More on Canadian Insurance Fraud: Looking Beyond The Claimants

Written by admin on . Posted in Settlement Law, Uncategorized. 62 Comments on More on Canadian Insurance Fraud: Looking Beyond The Claimants


An interesting question was posed earlier this month by Alan Shanoff of the Toronto Sun when he canvassed a recent Ontario case where an insurance adjuster reached an “unconscionable” settlement with a claimant which was eventually set aside by Court order.  After detailing this case he asked “just how prevalent is this sort of practice? Unlike the Canadian insurance industry’s wild claim of $1.3 billion of insurance fraud per year, there are no estimates of how widespread abusive adjuster practices might be.”
Alan hypothesized as follows “Based purely on anecdotal accounts I suspect for every claimant who tries to exaggerate his injuries there’s an adjuster trying to minimize a claimant’s true injuries or deny a rightful claim.”
I can’t say whether this 1:1 ratio is right or wrong, however Alan’s question could be the beginning of an interesting discussion.  If anyone is aware of statistics addressing how often self-represented individuals receive unfair settlements and the global cost of “unconscionable” settlements on the public at large this information should be publicized.  If unfair adjusting practices short change deserving claimants anywhere near the figures the Canadian insurance industry claims fraud costs them then that is a story that needs to be told.
Now I’m no fan of insurance fraud, however, when reading stories of the high cost of insurance fraud it’s worth keeping in mind that, unlike the insurance industry, claimants who get stuck with an unconscionable settlement don’t have hundreds of millions of dollars in profits to offset the cost of a raw deal.   Also, the insurance industry (to their credit) has a good track record of pursuing civil damages to punish and discourage fraudulent conduct.  The same likely cannot be said about individuals who have their insurance claims processed in bad faith.  As always, comments and feedback are welcome.

Can a Verbal Deal Create a Binding ICBC Claim Settlement?

Written by admin on . Posted in Settlement Law. 65 Comments on Can a Verbal Deal Create a Binding ICBC Claim Settlement?


When ICBC Tort and Part7 Claims are settled ICBC usually requires a ‘full and final release‘ to be signed as part of the deal.  There is a common misconception that individuals can simply refuse to sign the release if they get cold feet after negotiating a settlement.
There is, in fact, no legal requirement that an ICBC settlement be reduced to writing and a verbal discussion can create a bidning contract where a claimant gives up their right to sue.  This was discussed in reasons for judgement released today by the BC Supreme Court, Vancouver Regirstry,
In today’s case (Varesi v. Cadelina) the Plaintiff was injured in a 2008 motor vehicle collision.  The Plaintiff and Defendant were both insured with ICBC.   The Plaintiff dealt with ICBC directly and after some initial negotiations the Plaintiff advised as follows “I feel that my original request of $10,000 is still fair. Although my research on the CanLII website leads me to believe I may be entitled to a higher settlement, at this time I am still willing to settle the claim for this amount. I have consulted with a lawyer in regards to filing a writ but again would like to be able to reach a fair conclusion outside of the court system.”
ICBC apparently responded that they accepted this offer and required the Plaintiff to submit receipts documenting her out of pocket expenses.  The Plaintiff had a different recollection stating that ICBC agreed to pay for her out of pocket expenses on top of the $10,000.  ICBC refused to do so arguing that they had a binding settlement.
The Plaintiff brought a lawsuit and in it’s early stages ICBC brought an application to have the lawsuit dismissed based on the alleged settlement.  Ultimately Mr. Justice McEwan dismissed ICBC’s application finding that the issue came down to credibility and it would need to be pursued at trial.  Mr. Justice McEwan provided the following reasons:

[25]         Where an oral contract is asserted and denied the case will generally come down to a contest of credibility. An example in the contest of an automobile insurance claim is Barclay v. Insurance Corp. of British Columbia, 2002 BCPC 15.

[26]         This is not a case of duress or unconscionability or undue influence. Depending on the evidence there may be an element of mistake. As the motion for summary judgment has been defended, the issue is whether there was a “meeting of the minds.”  The material is not at all decisive on that point, specifically as to the inclusion of the Part 7 benefits in the settlement. Mr. Boswell and the plaintiff differ on what was discussed, and such, if it remains an issue in the action when it is tried will have to be resolved on an assessment of credibility. Such an issue cannot be safely undertaken on the affidavit and documentary material before the court.

[27]         The defendants’ application for summary judgment on the alleged settlement contact is, therefore, dismissed, with leave to bring the issue on at trial, on a better evidentiary foundation, if the defendants consider it in their interests to do so.

While this case did not result in a dismissal based on the settlement discussions it demonstrates that a claimant can enter into a binding settlement even without signing a full and final release.  Settlements are based on ‘offers and acceptance’ and it is vital that a claim be valued properly prior to selling your right to sue.  You can access my archived posts discussing other legal issues involved in ICBC Settlements by clicking here.

Binding ICBC Claims Settlements: Lawyers and Client Consent

Written by admin on . Posted in Settlement Law, Uncategorized. 46 Comments on Binding ICBC Claims Settlements: Lawyers and Client Consent


(Update:  The case discussed in the below post went to trial on February 15, 2011 with reasons for judgement released on February 18, 2011 with Mr. Justice Truscott finding that no binding settlements were entered into).
As previously discussed, lawyers act as agents for their clients and can enter into a binding settlement even if their client did not instruct the lawyer to do so.   (This, of course, would be improper and I address this at the bottom of this post).  Reasons for judgement were released this week by the BC Supreme Court, New Westminster Registry, further demonstrating this reality.
In this week’s case (Johnson v. Wells) the Plaintiff was involved in 2 motor vehicle collisions.  She hired a lawyer to deal with one of these claims.  In the lawyers dealings with ICBC he settled the claim that he was retained for apparently with his clients instructions.  However, a disagreement arose as to whether the settlement covered the second claim.   ICBC alleged that the lawyer entered into a settlement agreement for both claims.  The lawyer disagreed.  The BC Supreme Court was asked to decide whether there was a binding settlement.
The Plaintiff gave evidence that she “had not even retained (the lawyer for the second claim)…I had no intention of settling that claim and I did not instruct (my lawyer) to settle that claim“.  Ultimately the Court deemed that there was not enough information to decide whether there was a settlement for the second claim and that ICBC’s adjuster needed to be cross examined.  The reasons for judgment, however, do not focus on whether the client consented, rather, on the communications between the lawyer and ICBC and what was agreed to regardless of the client’s instructions.  In ordering that ICBC’s adjuster be cross-examined Mr. Justice Truscott provided the following reasons:

[40]         I have concluded that the plaintiff’s application to cross-examine Adjuster Johnston on her affidavit should be allowed.

[41]         The cross-examination will be restricted to why Adjuster Johnston attributed $5,000 to the 2006 accident and $2,500 to the 2008 accident, what was said between her and Mr. Albertson about the 2008 accident and its settlement, why she thought Mr. Albertson was retained by the plaintiff or the 2008 accident, what discussion there was between the two of them on the terms of the release, and what discussion there was between the two of them on settlement of any Part 7 benefits claim.

[42]         I see no usefulness in questioning Adjuster Johnston about Mr. Albertson’s authority to settle the 2006 accident because he clearly had that authority from the plaintiff given the plaintiff’s affidavit evidence.

Implicit in this judgment is that a binding settlement could have been entered into, regardless of the client instructions, depending on the discussion between the lawyer and ICBC.
If a lawyer enters into a binding settlement without a client’s consent the client’s remedy is against their lawyer as opposed to the Defendant in the ICBC Claim.  In the best interests of everyone involved it is vital that lawyers do not accept an ICBC settlement offer unless they have clear instructions from their clients to do so.  As previously discussed, a best practice when giving settlement instructions to a lawyer is to do so in writing to help avoid potential complications.

Plaintiff Awarded Double Costs for Beating Pre Trial Formal Settlement Offer; Relevance of ICBC Insurance Considered

Written by admin on . Posted in BC Supreme Court Costs Cases, Settlement Law, Uncategorized.


In my continued efforts to track the judicial development of Rule 37B, reasons for judgement were released today by the BC Supreme Court, Vancouver Registry, awarding a Plaintiff double costs for the trial of her ICBC claim.  The contentious issue of the existence of Insurance as a potentially relevant factor was also considered.
In today’s case (Pham-Fraser v. Smith) the Plaintiff was injured in a BC motor vehicle collision.  Before trial the Defendant (insured with ICBC) offered to settle under Rule 37B for $115,000.  The Plaintiff responded with a formal settlement offer of $149,000.  Neither party accepted the respective offers and proceeded to trial where the Court awarded just over $400,000 in total damages (click here to read my previous post discussing the trial judgement).
The Plaintiff, having comfortably beat her formal offer, asked the Court to award double costs under Rule 37B.  In granting the motion Mr. Justice Greyell held as follows:

[24] The second factor referred to in Rule 37B(6) also operates in the plaintiff’s favour.  There is a wide difference between the offer to settle and the final judgment.  The judgment is almost three times the amount offered.  The plaintiff’s offer was made because she wished to avoid court and having to give her evidence.  Some of her evidence was of a private nature relating to matters she did not wish to talk about in the public forum of a court of law (that is, how the accident affected her work and home life, her marital relationship with her husband after the accident, and the fact she suffered from incontinence).

[25] It is not necessary to consider factors set out in Rule 37B(6)(c) and (d).  I do not accept the plaintiff’s submission I ought to consider that the defendants, being represented by ICBC, are in a “sophisticated” position in terms of providing settlement instructions and that this is a factor to be taken into account and operate in the plaintiff’s favour in exercising my discretion under the rule.   The plaintiff’s argument seems to me to simply be another way of putting a “deep pockets” argument forward: an argument the courts have thus far rejected as being a factor to be considered in determining whether to award costs under Rule 37B.

[26] After considering the factors which I do consider relevant under Rule 37B, I conclude the plaintiff is entitled to an award of double costs.

As previously discussed, the BC Supreme Court is inconsistent on whether a Defendant being insured is a relevant factor under Rule 37B and clarity from the Court of Appeal would be welcome.  While more cases than not have held that insurance is not a relevant consideration it is not yet clear that this is correct.  If the law was settled it would assist lawyers in advising their clients of the potential risks and benefits of trial.

In my continued efforts to get us all prepared for the New BC Supreme Court Civil Rules I will again point out that Rule 37B will be replaced with Rule 9 under the New Rules. The new rule uses language that is almost identical to Rule 37B which should help cases such as this one retain their value as precedents.

More on Court Costs and "Sufficient Reason" For Suing in the BC Supreme Court

Written by admin on . Posted in BC Supreme Court Costs Cases, Settlement Law, Uncategorized. 50 Comments on More on Court Costs and "Sufficient Reason" For Suing in the BC Supreme Court

Further to my previous posts on this topic, if a Plaintiff successfully sues in the BC Supreme Court but receives damages below $25,000 they may be deprived of their court ‘costs’ unless they had ‘sufficient reason’ for choosing the Supreme Court over small claims court.
Two judgements were released this week by the BC Supreme Court discussing this area of law.  In this weeks cases (Spencer v. Popham and Spencer v. Horton) the Plaintiff was involved in 2 separate  BC car crashes.  She started separate lawsuits in the BC Supreme Court but settled her cases before they went to trial.  Both claims settled form amounts below $25,000 (the current financial limit of BC’s small claims court).  The Plaintiff and ICBC could not agree on the issue of costs.
ICBC argued that since both cases were in the small claims courts jurisdiction the Plaintiff did not have sufficient reason for suing in the Supreme Court.  Mr. Justice Punnett disagreed and awarded the Plaintiff costs in both claims.  In doing so he provided the following useful and through summary of this area of the law:

[8] Rule 57(10) of the Rules of Court states:

A plaintiff who recovers a sum within the jurisdiction of the Provincial Court under the Small Claims Act is not entitled to costs, other than disbursements, unless the court finds that there was sufficient reason for bringing the proceeding in the Supreme Court and so orders.

[9] This rule encourages persons to bring actions in Small Claims Court when a claim falls within that court’s monetary jurisdiction. It is an example of “proportionality”; the judicial process should match the amount in dispute. However, the court must also respect a party’s “legitimate choice” of forum: Reimann v. Aziz, 2007 BCCA 448, 286 D.L.R. (4th) 330 at para. 35.

[10] The burden is on claimants to evaluate their claims prior to commencement and to justify their decision if they recover less than the Small Claims Court limit, currently $25,000:Reimann at para. 38. If plaintiffs fail to sufficiently investigate and assess their claims prior to commencement, they risk not recovering costs. In a personal injury action this may require plaintiffs to obtain medical records and medical reports, to gather evidence to support claims for loss of earnings and earning capacity, and to assess the evidence in support of the claims being advanced before commencing the action.

[11] However, as noted by Justice Savage in Gradek v. DaimlerChrysler Financial Services Canada Inc, 2010 BCSC 356 at para. 19, R. 57(10) contemplates the possibility that factors other than quantum must be considered:

[19]      The proviso in Rule 57(10) is “unless the court finds that there was sufficient reason for bringing the proceeding in Supreme Court and so orders”. The Rule does not define “sufficient reason”. There is nothing in the Rule that limits the extension of the term “sufficient reason” to matters relating to the quantum of the claim.

[12] Factors that can give rise to “sufficient reason” were set out in Kuehne v. Probstl, 2004 BCSC 865 at para. 22, and accepted in Icecorp International Cargo Express Corp. v. Nicolaus, 2007 BCCA 97, 38 C.P.C. (6th) 26 at para. 27. They include:

i. the legal or factual complexity of the case;

ii. the need for discovery of documents and examinations for discovery;

iii. the need for a judgment enforceable outside of British Columbia;

iv. a bona fide preference for a jury trial; and

v. access to the summary trial procedure available in Supreme Court.

Other factors can be the need for the plaintiff to have legal counsel (Faedo v. Dowell, 2007 BCSC 1985 at para. 36; Ostovic v. Foggin, 2009 BCSC 58 at para. 42; Gradek at para. 43), and the defendant’s denial of liability, causation, and injury or loss and allegations of contributory negligence, pre-existing conditions, previous causes and a failure to mitigate (Ostovic at paras. 39-40; Gradek at para. 35).

[13] Therefore, a plaintiff’s evaluation of his or her claim, can also involve an assessment of these factors. Even if the plaintiff assesses the claim to be within the jurisdiction of the Small Claims Court, the plaintiff can rely on these other reasons to commence the action in Supreme Court: Johannson v. National Car Rental (Canada) Inc., 2009 BCSC 1284 at para. 5.

[14] In my opinion, a plaintiff’s simple desire to retain counsel is not in and of itself a sufficient reason for commencing the action in Supreme Court. Other factors, such as those noted above, determine whether retaining counsel is justified.

[15] In Faedo, the plaintiff was in a low impact collision and suffered a soft tissue injury to her neck and back. Justice Vickers found that the case was not that complex and plaintiff’s counsel could not have considered ICBC’s original dispute of liability a serious threat to recovery. However, Justice Vickers concluded that it was reasonable for the plaintiff to have brought her claim in Supreme Court for two reasons: (1) when the action was commenced, the plaintiff believed she was suffering from the accident and her pleadings included a claim for loss of earning capacity and disruption of the ability to earn income; and (2) ICBC put her credibility seriously in issue when it took the position that she had not suffered from any injury or any significant injury. Justice Vickers continued at para. 36:

[36]      … I observed this plaintiff to be very nervous in court. She had no previous experience in court and in my opinion when she was confronted with a case where the defendant represented by counsel was suggesting that she hadn’t been injured at all and this was a low impact accident in which it was suggested she wouldn’t be injured, that the plaintiff reasonably required counsel to represent her and reasonably started an action in the Supreme Court where she could hope to recover some of the cost of retaining that counsel which was necessary for her to properly put her case to get the compensation I have found her entitled to. Furthermore, an offer to settle such as the plaintiff made in this case puts very little pressure upon a defendant to settle where there is no exposure to costs.

[16] In Ostovic, another case arising out of a low impact accident, Justice Savage noted that because the defendant denied liability, causation and special damages, the plaintiff had to prove these issues in court. Because of this, the plaintiff needed to avail himself of pre-trial discovery, which provided important evidence of the speed of impact, the consequences of impact and concern over the plaintiff’s condition. In addition, Justice Savage found at para. 42:

[42]      There is the additional factor that, as in Faedo and Kanani [v. Misiurna, 2008 BCSC 1274], the Plaintiff faced an institutional defendant which, in the ordinary course, has counsel. To obtain any recovery the Plaintiff is forced to go to court, where he is facing counsel and counsel is reasonably required, but in Provincial Court there is no way of recovering the costs of counsel.

[17] In Gradek, before the issuance of the writ, the defendants’ insurers had informed the plaintiffs that their position was the accident did not result in any compensable injury. In their pleadings, the defendants denied liability and injury or loss and alleged contributory negligence, the existence of a pre-existing injury and previous causes, and a failure to mitigate. There was a broad range of findings possible respecting liability. The plaintiff, Henryk Gradek, was a Polish immigrant who spoke halting English. Justice Savage found at para. 42 that “he would have had extraordinary difficulty presenting a case on his own” and would have been “out-matched” by either a lawyer or an ICBC adjustor. The plaintiff needed counsel to obtain a just result and, therefore, had sufficient reason to begin the action in Supreme Court.

[18] Plaintiffs do not have an ongoing duty to reassess their claims as the matter proceeds: Reimann at para. 44. Thus, the court must assess whether a plaintiff had “sufficient reason” to bring the action in Supreme Court when the plaintiff started the action: Ostovic at para. 35. This analysis is necessarily done with the benefit of hindsight since it only occurs after trial or settlement, but the court must be careful not to use that hindsight in deciding what was reasonable: Faedo at para. 28.

[19] It also must be remembered R. 57(10) “does not involve an exercise of discretion.” Rather, “the court must make a finding that there was sufficient reason for bringing the action in the Supreme Court” (emphasis added): Reimann at para. 13.

In my continued effort to cross reference the current Supreme Court rules with the new Rules of Court that come into force on July 1, 2010 I will note that the Current Rule 57(10) will become Rule 14-1(10) and it reads identical to the current rule so the precedents developed under Rule 57(10) regarding costs should continue to assist litigants under our new rules.