Plaintiff Stripped of Significant Costs and Disbursements for Pursuing "Inflated, Exaggerated or Unrealistic" Claims

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(Update January 16,2013 – the Court of Appeal granted leave to appeal the below costs award.  Once the final decision is released I will further update this post).
(Update December 10, 2013 – today the BC Court of Appeal dismissed the appeal of the below decision)
I have spent much time highlighting costs consequences plaintiff’s face under BC’s loser pays system and perhaps even more time discussing the further costs consequences that can flow from failing to beat a defence formal settlement offer at trial.
A less judicially considered area of the law relates to costs consequences where a plaintiff is awarded damages at trial far below the recovery sought where no defence formal settlement offer was in place.  The starting point in such cases is that a Plaintiff is generally entitled to costs provided the awarded damages exceed $25,000.  The court retains a discretion, however, to move away from this default position in “relatively rare cases”.  Such a result was demonstrated in reasons for judgement released this week by the BC Supreme Court, New Westminster Registry.
In this week’s case (Lee v. Jarvie) the Plaintiff was involved in a rear-end collision in 2004.  Fault for the crash was admitted.  At trial the Plaintiff sought substantial damages in the range of $800,000.  Much of the Plaintiff’s claim was rejected at trial but damages of just over $50,000 were assessed.
The Defendant apparently did not provide a pre-trial formal settlement offer.  As a result the default position of Rule 14-1(9) was triggered with the Plaintiff presumably being entitled to costs.  The Defendant argued that the Defendant was largely the victor at trial, at least insofar as the most substantial alleged damages were concerned, and that the Court should exercise its discretion to apportion costs pursuant to Rule 14-1(15).  Mr. Justice Gaul agreed it was appropriate to do so and stripped the Plaintiff of significant costs and disbursements.  In doing so the Court provided the following reasons:
[12]         The issues of apportioning costs between parties under Rule 57(15) of the former Rules of Court was addressed and considered in  British Columbia v. Worthington (Canada) Inc. et al(1988), 32 C.P.C. (2d) 166, 29 B.C.L.R. (2d) 145 (C.A) and more recently in Sutherland v. Canada (Attorney General), 2008 BCCA 27. From these cases, I have drawn the following guiding principles relating to the apportionment of costs:
1)    Applications to apportion costs should be the exception and not the norm in civil litigation, and they should be limited to “relatively rare cases”.
2)    The power to apportion costs is a discretionary one that “must be exercised judicially, not arbitrarily or capriciously”.
3)    The exercise of discretion must be connected to circumstances of the particular case “which render it manifestly fair and just to apportion costs”.
[13]         In addition to these principles, I am also guided by the test Finch, C.J.B.C. articulated in Sutherland at para. 31:
[31]      The test for the apportionment of costs under Rule 57(15) can be set out as follows:
            (1)        the party seeking apportionment must establish that there are separate and discrete issues upon which the ultimately unsuccessful party succeeded at trial;
            (2)        there must be a basis on which the trial judge can identify the time attributable to the trial of these separate issues;
            (3)        it must be shown that apportionment would effect a just result…
[38]         The apparent divergence of judicial approaches to the question of apportioning costs in personal injury cases appears to hinge on the determination of the degree of success the plaintiff enjoyed at trial and whether the trial was unnecessarily prolonged by the pursuit of inflated or unrealistic claims. Where the court finds the plaintiff was substantially successful at trial and there was no pursuit of exaggerated claims, then apportionment of costs will less likely be granted. However, where the court determines there was divided success, or finds there was a distinguishable portion of the plaintiff’s claim that was unrealistically pursued resulting in a more protracted proceeding, then subject to the guiding principles articulated in Worthington and Sutherland, apportionment of costs is a legitimate consideration…
[82]         In my opinion, the particular circumstances of this case permit the court to consider the plaintiff’s claims for loss of past opportunity to earn income, loss of future earning capacity and cost of future care as separate and discrete issues. Moreover, there is a clear basis upon which to calculate the amount of trial time, including argument, that was devoted to these issues. Finally, apportionment of costs would, given the divided success at trial and the plaintiff’s pursuit of inflated, exaggerated or unrealistic claims, affect a just result between the parties. I therefore find the case at bar falls into that category of “relatively rare cases” where apportionment of costs is appropriate.
[83]         What was to have been, and in my respectful view should have been, a 5?day trial, practically tripled in length, and much of that is attributable to the plaintiff and the nature of the evidence he led at trial. I rejected a significant portion of the plaintiff’s testimony. He was a poor historian of the facts and was at times deliberately evasive in answering questions. As I noted at para. 46 of my Reasons for Judgment, but for the detailed and probing cross-examination of the plaintiff, “…the court would have been left with an inaccurate impression and understanding of Mr. Lee’s situation and condition.” There were also significant deficiencies in the evidence of the plaintiff’s expert witnesses, Mr. Worthington-White, Ms. Quastel, Mr. Benning, Dr. Lee, Dr. Kokan and Dr. Hershler that only came to light during the course of extensive cross-examination.
[84]         The facts in the case at bar, as they relate to costs are, in my view, similar to those found in Bailey, Plackova, Berston, Shearsmith and Heppner, in that an inordinate and unreasonable amount of trial time was consumed by the plaintiff’s pursuit of exaggerated claims that were eventually rejected. The length of the trial was also made more difficult and prolonged as a result of the plaintiff’s credibility issues and his failure to fully and frankly disclose relevant information to his medical experts.

Apportionment of Costs, bc injury law, Lee v. Jarvie, Mr. Justice Gaul, RUle 14, Rule 14-1, Rule 14-1(15), Rule 14-1(9)

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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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