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Tag: Gehlen v. Rana

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

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

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

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

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

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

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

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

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

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

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

BC Court of Appeal to Consider Discretionary Costs Awards and Formal Settlement Offers

After dozens of trial judgements which have applied Rule 37B (the current rule dealing with formal settlement offers which will be replaced with the almost identical Rule 9 on July 1, 2010), the BC Court of Appeal has agreed to hear what I believe will be their first case dealing with the application of this rule.
Reasons for judgement were published today on the BC Court’s Website where the BC High Court agreed to hear such an appeal.  In today’s case (Gehlen v. Rana) the Plaintiff was injured in a BC motor vehicle collision.  The Plaintiff sued.  Prior to trial ICBC made a formal settlement offer of $22,000.  The Plaintiff rejected this and proceeded to trial.  At trial a jury awarded just over $13,000 in damages.
In these circumstances the trial judge had the discretion to order that the Plaintiff pay the Defendant’s trial costs.    Mr. Justice Leask refused to do so and instead ordered that the Defendant pay the Plaintiff’s costs.   (You can click here to read my article discussing the trial decision).
The Defendant (through ICBC) asked for permission for the BC Court of Appeal to hear the case and they agreed to do so.  In deciding that this case merits an appeal the BC High Court reasoned as follows:

[3]             I am satisfied that the defendant has met the test for leave to appeal on both grounds, as that test is set out in Power Consolidated (China) Pulp Inc. v. British Columbia Resources Investment Corp. (1988), 19 C.P.C. 3d 396 (B.C.C.A.) (Chambers). With respect to the merits of the appeal, I appreciate that an order for costs is a discretionary order to which an appellate court will give considerable deference. I am nevertheless satisfied that the first ground of appeal may be characterized as a question of law, and the second as an error in principle. In fact, counsel advises that leave has been granted in another appeal on the question of whether it is appropriate to adjust costs on the basis that one party chose a jury trial.

[4]             The issue is of significance to the parties as the order under appeal entitles the plaintiff to costs in the range of $47,000, while if the defendant is successful he will recover costs in the range of $8,000.

[5]             It is more difficult to see significance to the practice in this appeal, but I do not find that militates against granting leave. The defendant does say that this court has not had the opportunity to hear many cases that provide guidance on R. 37B and its interaction with R. 57(10).

[6]             Finally, being an order for costs at the end of the action there is no need to consider possible delay due to the appeal.

As I recently wrote, ICBC has asked the Court of Appeal to also consider the issue of ‘costs’ awards when Plaintiff’s receive a judgement below $25,000 at a BC Supreme Court trial and these appeals may be heard together.

Clarity from the BC High Court will be welcome on numerous issues regarding the effects of formal settlement offers and costs awards after trial and I will be sure to report the highlights of the decisions when they are pronounced.