Tag: costs

More on Rule 66, Rule 37B, ICBC Claims and Costs

Reasons for judgment were released today by the BC Supreme Court dealing with 2 issues of interest to me, Costs consequences under Rule 66 and Rule 37B.
In today’s case (Schnare v. Roberts) the Plaintiff was injured in a motor vehicle collision.  The Plaintiff sued for damages under Rule 66.  The Plaintiff made a formal offer of settlement and ICBC did not accept it.  The Plaintiff proceeded to trial and the verdict more than doubled the Plaintiff’s settlement offer.  (click here to read my previous post regarding the trial judgment).
Today’s judgment dealt with the costs consequences.  ICBC argued that the Plaintiff should be limited to costs under Rule 66 (which are capped at an amount less than regular Tariff costs under the BC Supreme Court Rules) because the lawsuit was brought initially under Rule 66.  Madam Justice Adair disagreed with ICBC’s submission and noted that since the trial went beyond the Rule 66 2 day limit that constituted ‘special circumstances’ which permitted the court to order costs outside of the Rule 66 costs.  Madam Justice Adair reasoned as follows:

[13]        Sub-rules (29) and (29.1) of Rule 66 provide (italics added):

(29)      Unless the court orders otherwise or the parties consent, and subject to Rule 57 (10), the amount of costs, exclusive of disbursements, to which a party is entitled is as follows:

(a)   if the time spent on the hearing of the trial is one day or less, $5 000;

(b)   if the time spent on the hearing of the trial is more than one day, $6 600.

(29.1)   In exercising its discretion under subrule (29), the court may consider a settlement offer delivered in accordance with Rule 37 or 37A whether or not other special circumstances exist.

Rules 37 and 37A have been repealed and replaced with Rule 37B.

[14]        In my view, Ms. Schnare’s case was not the type of case contemplated by Rule 66.  By October 2008, the parties themselves realized that two days would not be sufficient for trial.  Even a more generous estimate of three days turned out to be insufficient to deal with the evidence on the relevant issues in the case and with submissions (including submissions on the admissibility of documentary evidence).  Although court adjourned somewhat early in the afternoon on January 28, 2009, it sat late on January 29, 2009, to ensure that a witness’ evidence could be completed.  I did not consider counsel were inefficient in their use of time.  I am satisfied that the length of the trial itself constitutes “special circumstances” in this case.  See Kailey v. Kellner, 2008 BCSC 224, 56 C.P.C. (6th) 40, where, in comparable circumstances, Mr. Justice Parrett also found the length the trial constituted “special circumstances” justifying a departure from the fixed costs under Rule 66(29), and awarded costs on Scale B.

[15]        In my opinion, the appropriate order respecting costs (before considering matters under Rule 37B) was and is that the plaintiff should recover her costs on Scale B of Appendix B.

The second issue worth noting were the costs consequences under Rule 37B.  The Plaintiff argued that they should be awarded double costs from the date of their formal settlement offer onward.    Madam Justice agreed and engaged in the below analysis and in doing so made some critical comments about an expert physician (Dr. McPherson) who ‘was very closely tied to ICBC…for over a decade‘ in the defence of personal injury claims:

19]        Should the plaintiff’s January 26, 2009 offer have been accepted, and the costs of the trial avoided?  Analysis of this question is not to be based on hindsight once the final result is known, as noted in Bailey v. Jang, 2008 BCSC 1372, 63 C.P.C. (6th) 291, at para. 24.  Nevertheless, in my view, the defendants should have given that offer much more serious consideration when looking at the risks of going to trial. 

[20]        The defendants’ defence to Ms. Schnare’s claims for substantial damages rested primarily on the shoulders of their expert, Dr. McPherson, the only defence witness.  However, there were serious risks in that strategy.  Dr. McPherson was very closely tied to ICBC, and had been for over a decade.  This was not a secret, and had been the subject of media reports, which were used to cross-examine Dr. McPherson.  As counsel for the defendants must have appreciated, these ties made an issue of Dr. McPherson’s impartiality and credibility, and impaired his value as a expert.  Dr. McPherson’s evidence, unlike that of Dr. Van Rijn and Mr. McLean, did nothing to explain Ms. Schnare’s continuing symptoms and physical difficulties, and provided little assistance to the court.  His rejection of the possibility that there could be movement of Ms. Schnare’s sacroiliac joints led inevitably to his conclusion that her complaints could not be accident-related, and to speculate that Ms. Schnare possibly had a condition that Dr. McPherson conceded was extremely rare.  As I noted in my reasons, Dr. McPherson was unhelpfully dismissive of opinions other than his own.  In my view, the defendants’ reliance on Dr. McPherson’s opinions to defend against Ms. Schnare’s claims was unreasonable in face of the plaintiff’s eve-of-trial offer to settle.  The offer represented a very substantial discount from the amounts Ms. Schnare sought at trial.  A more reasonable assessment of the potential risk that Dr. McPherson’s opinions would be unpersuasive (as I found them) should have led the defendants to accept Ms. Schnare’s last offer, in which case the costs of the trial would have been avoided.  This factor supports the plaintiff.

[21]        The final damages awarded to Ms. Schnare were more than twice the amount of Ms. Schnare’s offer.  This factor also supports the plaintiff.

[22]        With respect to the relative financial circumstances of the parties, I consider this factor neutral.

[23]        Taking into account the underlying legislative policy behind Rule 37B, that Ms. Schnare’s offer represented a very substantial discount off her damage claims presented at trial and if accepted would have avoided the costs of the trial, and that the amount awarded was significantly more than the amount of Ms. Schnare’s offer, in my view it is appropriate to award the plaintiff double costs for steps taken after January 26, 2009.

How Can $125,000 really equal $0 in an ICBC Claim?

Costs consequences, that’s how.  If ICBC beats their formal offer at trial they can be awarded costs under Rule 37B.  These costs can sometimes exceed the amount of a judgement and reasons for judgement were released today by the BC Supreme Court demonstrating this principle.
Trials can be risky and expensive and to the victor go the spoils.  In today’s case the Plaintiff claimed she suffered a brain injury as a result of 2 collisions.  The Defendants collectively offered to settle the Plaintiff’s claims for $450,000.  The Plaintiff made a settlement offer of $1,500,000.  After a 41 day trial Mr. Justice Gropper of the BC Supreme Court rejected the brain injury claim and awarded damages of $125,349.  The Defendants brought an application to be awarded costs from the date of their respective formal offers and succeeded.  In reading the judgement it appears that these consequences are so significant that the Plaintiff may be left with $0 or perhaps even owe money to the Defendants after all the dust settles.  In addressing this reality the court held that such an outcome in and ofitself is not enough to extinguish the Defendant’s entitlement to costs.  Specifically, Mr. Justice Gropper reasoned as follows:
As stated, the plaintiff received judgment.  The defendants’ costs and disbursements from the time of the offers may exceed the judgment.  This is an appropriate factor to consider in determining the appropriate order for costs.  It is not sufficient, in my view, to deny the defendants their costs arising from the offers to settle.  If the aim of the rule is to encourage reasonable settlements, denying the defendants their costs in the circumstance does not meet that aim.  It may be a reason to deny the defendants double costs, but the defendants have not sought double costs in this matter.  While it is an important factor to consider, it is not sufficient, in and of itself, to extinguish defendants’ entitlement to the costs.
Cases such as this which illustrate the potential costs consequences of an unsuccessful ICBC claim need to be reviewed when considering claim settlement.  Trials come with risk and settlement offers have to be weighed against this risk.  Reasons for judgement don’t always reflect who the real winner is.  In ICBC claims the real winner is often the party that beats their formal settlement offer and this is not always revealed in judgements.  
In addition to illustrating the significant costs consequences which parties can be exposed to in the BC Supreme Court, this case does a good job in discussing Rule 37B.   Mr. Justice Gropper summarized the authorities to date applying Rule 37B as follows:

[18]            The jurisprudence is developing in this court under Rule 37B(5) in regard to the effect of offers to settle on costs.  The following principles have been stated:

1.         “…Rule 37B is permissive in nature and provides the Court with a broad discretion to award double costs”: Radke v. Parry, 2008 BCSC 1397 at ¶37.

2.         “…there are important differences between Rule 37B and the predecessor rules, Rule 37 and Rule 37A.  Notwithstanding the differences … the underlying legislative policy remains the same.  The goal has been and remains to encourage the early settlement of disputes ‘… by rewarding the party who makes an early and reasonable settlement offer, and by penalizing the party who declines to accept such an offer’ (see MacKenzie v. Brooks, 1999 BCCA 623, 130 BCAC 95…)”:Radke ¶38.

3.         “Subrule (5) is permissive.  It empowers the court to make either type of order mentioned in the subrule.  By necessary implication, it contemplates that the court may make an order that denies one of the two forms of relief set out in the subrule”: BCSPCA v. Baker, 2008 BCSC 947at ¶ 15.

4.         “[Subrule (5)] does not specifically state that it is possible for the court to order costs to a defendant where an offer to settle was in an amount greater than the judgment.  Nevertheless, that is implied in the rule.  If the court can deprive a party of costs or order double costs, it must also be able to order costs, the intermediate step between those two extremes”: Arnold v. Cartwright Estate, 2008 BCSC 1575 at ¶15.

5.         “One of the goals of Rule 37B … is to promote settlements by providing that there will be consequences in the amount of costs payable when a party fails to accept an offer that ought reasonably to have been accepted.  That goal would be frustrated if Rule 37B(5) did not permit the court the option of awarding costs of all or some of the steps taken in a proceeding after the date of delivery of an offer to settle”: Arnold at ¶16.

He then went on to decide that the Defendants ought to be awarded their costs in the present case and came to the following conclusion:

[35]            In all of the circumstances, applying the factors addressed by the Rules and the parties, I find that it is reasonable that the defendants recover their taxable costs and disbursements in this action.

[36]            I therefore order that the defendants Paul be awarded their taxable costs and disbursements from June 8, 2005 onwards.  The plaintiff is entitled to her taxable costs and disbursements in the Paul action up to June 8, 2005 only.

[37]            The defendants Brandy are awarded their taxable costs and disbursements from October 26, 2006 onwards and the plaintiff is entitled to recover her taxable costs and disbursements in the Brandy action up until October 26, 2006.

What interested me most in these reasons was the judge’s refusal to look at the fact that the Defendant was insured with ICBC when weighing the relative financial circumstances of the parties under Rule 37B(6).  The courts are currently split on whether this is a relevant factor and once the BC Courts come up with a consistent analysis of this topic it will be easier for ICBC claims lawyers to better predict the costs consequences for their clients following trial.  Hopefully the BC Court of Appeal has an opportunity to shed some light on this subject in the near future.

Court "Costs" and Your ICBC Injury Claim

Reasons for judgment were released by the BC Supreme Court yesterday awarding a Plaintiff in a BC personal injury claim “costs” despite the fact that the Plaintiff’s award was within the small claims court jurisdiction.
This case gave me a good opportunity to write a little bit about the “costs’ consequences of bringing ICBC claims to trial and I intend to make this the first of several blog entries on this topic.
If you make an ICBC claim in BC Supreme Court and win (winning meaning you obtain a judgment in your favour greater than an ICBC formal settlement offer) you are generally entitled to ‘costs’ in addition to your award of damages.
For example, if a plaintiff with soft tissue injuries brings an ICBC claim to trial and is awarded $30,000 and ICBC’s formal settlement offer was $10,000, the Plaintiff would be entitled to “Costs” in addition to the $30,000 (barring any unusual developments at trial).
The purpose of awarding the winner Costs is to compensate them for having to go through the formal court process to get what is fair. This recognzes the fact that there are legal fees involved in bringing most ICBC claims to trial and one of the purposes of Costs is to off-set these to an extent.
Costs cover 2 different items, the first being disbursements (meaning the actual out of pocket costs of preparing a lawsuit for trial such as court filing fees and doctor’s fees in preparing medical reports) and the second being Tarriff costs – meaning compensation for many of the acutal steps in bringing a lawsuit in BC Supreme Court.
The Costs consequences after a BC Supreme Court Trial could easily be in the tens of thousands of dollars and this is often the case in many ICBC claims.
Costs are discussed in Rule 57 of the BC Supreme Court Rules and this rule is worth reviewing for anyone bringing an ICBC claim to trial in the BC Supreme Court. The winner does not always get their costs, however. One of the situations when a winner may not get their costs is when they are awarded an amount of money that was in the small claims court jurisdiction ($25,000 or less).
Rule 57(10) states that “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.”
As a result of this sub-rule, people who bring an ICBC claim to trial in BC Supreme Court and are awarded less than $25,000, may be disentitled to their Tariff Costs unless they can show ‘sufficient reason for bringing the proceeding in the Supreme Court.”
In this weeks judgement the court agreed that despite the fact that the Plaintiff was awarded $12,290 in damages (an award well within the small claims court jurisdiction), the Plaintiff did have sufficient reason to bring the proceedings in Supreme Court.
In reaching this decision the court referred to a leading BC Court of Appeal Case where it was held that “a Plaintiff does not have an on-going obligation to assess the quantum (value) of a claim and that the point in time for a consideration of whether a plaintiff had a sufficient reason for bringing a proceeding in the Supreme Court is the time of the initiation of the action.
The lawyer for the Plaintiff argued that when the lawsuit was started they were not in a position to finalize their valuation of this claim becase they did nothave a final medical report commenting on the plaintiff’s injuries. Also that since the Defendant took an LVI (low velocity impact) position it was important to sue in Supreme Court to have an examination for discovery of the Defendant (a procedure not available in small claims court).
For those and other reasons the court agreed and awarded the Plaintiff her Tariff Costs.
Do you have questions about an ICBC Claim, or BC Court Costs that you wish to discuss with an ICBC claims lawyer? If so click here to arrange your free consultation with Victoria ICBC Claims Lawyer Erik Magraken.

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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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