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BC Court of Appeal Discusses When Special Costs Against Lawyers Personally Should be Ordered

Written by admin on . Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14, Uncategorized.

In exceptional circumstances lawyers can be ordered to be personally on the hook for costs when litigation goes awry.  Today the BC Court of Appeal discussed when such orders are warranted and when they are not.
In today’s case (Nuttall v. Krekovich) the Plaintiff was seriously injured in a hit and run accident.  A lawsuit was started suing ICBC as a nominal defendant pursuant to s. 24 of the Insurance (Vehicle) Act.  As the litigation progressed the Plaintiff’s lawyer came to believe that the Defendant may have been the driver and brought an application to add him to the lawsuit.  Shortly after obtaining this order the lawyer realized he was mistaken and discontinued the lawsuit against the Defendant.
The Defendant sought costs against the lawyer personally and the Chambers judge made such an order finding  the lawyers actions were “indefensible and an abuse of process meriting sanction in the form of an order of special costs payable by him personally”.
The lawyer successfully appealed the order with the BC Court of Appeal noting the chambers judge made several errors in ordering special costs against the lawyer.  In discussing the scope of special costs being ordered against a lawyer personally BC’s highest court provided the following reasons:

[25]         It is my view that the chambers judge made several errors that warrant intervention by this Court.

[26]         First, special costs have a punitive or deterrent element and are only appropriate where the conduct in issue is deserving of punishment or rebuke. This well-known principle stems from numerous cases, most recently enunciated in J.P. v. British Columbia (Children and Family Development), 2018 BCCA 325 at para. 28. The chambers judge erred in principle by failing to consider the cautious approach to an award of special costs against a lawyer personally, as well as the kind of reprehensible conduct that would justify such an award, mandated by the Supreme Court of Canada in Young v. Young, [1993] 4 S.C.R. 3 and more recently in Quebec (Director of Criminal and Penal Prosecutions) v. Jodoin, 2017 SCC 26.

[27]         In Young the court directed judges to be “extremely cautious” in awarding costs personally against lawyers given their duties to guard confidentiality of instructions and to bring forward with courage even unpopular causes:

… A lawyer should not be placed in a situation where his or her fear of an adverse order of costs may conflict with these fundamental duties or his or her calling.

[28]         In Jodoin, the court confirmed that the threshold for exercising the power to award costs against lawyers is high, such that there must be a finding of reprehensible conduct by the lawyer. Reprehensible conduct “represents a marked and unacceptable departure from the standard of reasonable conduct expected of a player in the judicial system” (at para. 27). Mr. Justice Gascon, for the majority, described the kind of conduct that would justify such an order at para. 29:

[29]      In my opinion, therefore, an award of costs against a lawyer personally can be justified only on an exceptional basis where the lawyer’s acts have seriously undermined the authority of the courts or seriously interfered with the administration of justice. This high threshold is met where a court has before it an unfounded, frivolous, dilatory or vexatious proceeding that denotes a serious abuse of the judicial system by the lawyer, or dishonest or malicious misconduct on his or her part, that is deliberate…

[29]         Consistent with these decisions, this Court has long held that such orders should be made only in “very special circumstances”, and not on the basis of mistake, error in judgment or even negligence: see Hannigan v. Ikon Office Solutions Inc. (1998), 61 B.C.L.R. (3d) 270 (C.A.); Pierce v. Baynham, 2015 BCCA 188 at para. 41.

[30]         Second, the chambers judge erred in concluding that Mr. Krekovic’s failure to disclose the entire circumstances of his investigation was in itself sufficient to justify an order for special costs. A special costs order is not justified only because counsel fails to disclose evidence that ultimately proves to be material or incorrect: see Pierce at para. 43. The chambers judge made no finding of dishonesty, accepting that Mr. Krekovic’s motivation to bring the application was “in pursuance of his duty to his client”. Given that, his failure to disclose more about his investigation does not constitute reprehensible conduct sufficient to justify an award of special costs. This is particularly so in the context of the evidence in the application that Mr. Krekovic clearly informed the court that his own investigation had not yielded any reliable information and he was relying only on information provided to him from another lawyer, the basis for which had not been disclosed.

[31]         Moreover, I cannot agree that disclosure of further information would necessarily have yielded a different outcome in the application. The chambers judge placed considerable importance on “the discrepancy between the date of birth that he had given for the Mr. Dhillon identified by Mr. Folick, and the date of birth of the Mr. Dhillon whom his investigation had previously identified as a potential defendant”. In fact, there was no discrepancy in the most recent date of birth provided by the investigator, Mr. Loncaric, and the date of birth later provided by Mr. Folick. The only discrepancy was with the earlier information Mr. Loncaric had given, which had not been confirmed. Had the application judge been informed of these or other details – such as the inconclusive information pointing to another Mr. Dhillon – the order may have nonetheless been granted. It is also important, in my view, that Mr. Dhillon did not attend himself to oppose the application. Instead, the application was opposed only by ICBC, who put the issue of the sufficiency of the information squarely before the court.

[32]         Additionally, Mr. Krekovic’s conduct after the order was granted demonstrates an effort to be prudent. He did not enter the order or serve the amended notice of civil claim without making further inquiries of Mr. Folick’s office about the reliability of the information, and as soon as he learned that the information was in fact incorrect, he advised Mr. Dhillon’s’ counsel that the action would be discontinued against him.

[33]         In my opinion, Mr. Krekovic’s conduct was far from being characterized as reprehensible.

[34]         Finally, the chambers judge referred to Rule 14-1(33) as allowing for an order for special costs. Rule 14-1(33) gives the court discretion to make various orders if it considers that a party’s lawyer “has caused costs to be incurred without reasonable cause, or has caused costs to be wasted through delay, neglect or some other fault”. One of those orders is that the lawyer “be personally liable for all or part of any costs that his or her client has been ordered to pay to another party”.

[35]         This rule, which does not distinguish between party and party costs and special costs, has expanded the scope of conduct which might support a costs order against a lawyer. As explained in Nazmdeh v. Spraggs, 2010 BCCA 131, there is no requirement for “serious misconduct” to justify an order that a lawyer pay party and party costs, but it is still necessary to find reprehensible conduct on the part of the lawyer to justify an order for special costs. Moreover, the lower standard mandated by Rule 14-1(33) must also be exercised with restraint, as the Court reasoned at paras. 103‒104:

[103]    The power to make an order for costs against a lawyer personally is discretionary. As the plain meaning of the Rule and the case law indicate, the power can be exercised on the judge’s own volition, at the instigation of the client, or at the instigation of the opposing party. However, while the discretion is broad, it is, as it has always been, a power to be exercised with restraint. All cases are consistent in holding that the power, whatever its source, is to be used sparingly and only in rare or exceptional cases.

[104]    The restraint required in the exercise of the court’s discretion is not to be confused with the standard of conduct which may support its use. Care and restraint are called for because whether the unsuccessful party or his lawyer caused the costs to be wasted may not always be clear, and lawyer and client privilege is always deserving of a high degree of protection.

[36]         In conclusion, it is my view that Mr. Krekovic’s conduct in making the application to add Mr. Dhillon as a defendant did not approach the kind of reprehensible conduct required to justify an order for special costs against him as counsel.

[37]         I would allow the appeal and set aside the order of the chambers judge that Mr. Krekovic personally pay the special costs of Mr. Dhillon. I would also award costs to the appellant of this appeal and for the application for special costs in the court below.

BC Court of Appeal – Expert "Fact" Witnesses Entitled to Only $20 Fee for Trial Attendance

Written by admin on . Posted in BCSC Civil Rule 14.

Useful reasons for judgement were published today by the BC Court of Appeal confirming that when a professional is summoned to testify at trial about facts they have knowledge of (as opposed to privately retained expert witnesses to give opinion evidence) they are entitled to no more than the $20 fee that must accompany a subpoena.
In today’s case (Luis v. Marchiori) the Plaintiff was injured in two vehicle collisions and sued for damages.  At trial her family doctor testified but not as an expert opinion witness, but rather as a witness of fact.  The Plaintiff paid $2,651 to the doctor for this service and tried to recover this as a disbursement.  In refusing to allow this the BC Court of Appeal noted that when a professional testifies as to facts they are entitled to nothing more than any other fact witness.  The BC Court of Appeal provided the following reasons:

[5]             It is useful to begin by distinguishing between expert fact evidence and expert opinion evidence. Witnesses who become involved in litigation due to their profession—such as a treating doctor or an engineer overseeing a construction project—may be called to testify about their observations. Although the observations may be beyond the knowledge of a layperson, that testimony is not opinion evidence. Examples include a witness describing radiological images, identifying a microbe seen under a microscope, or identifying the pathological process seen on surgery or autopsy. Such evidence is sometimes described as “non-opinion expert evidence”: Robert B. White, The Art of Using Expert Evidence (Toronto: Canada Law Book, 1997), ch. 2 at 16‒21.

[6]             Justice Schultes addressed this distinction in Anderson v. Dwyer, 2009 BCSC 1872 at para. 14 in the context of the Rule requiring notice of opinion evidence:

… However, the witness’s factual narrative of the actions he took and the observations he made, including describing without interpretation, the anatomical features he observed in the x-rays does not amount to offering an opinion and does not offend the Rule. The fact that he brings special training or experience to bear in having taken those actions and made those observations is not determinative. It is whether he draws inferences or offers opinion beyond what the actual evidence itself is capable of revealing.

[Emphasis added.]…

[46]         Although I agree that some professions are more regularly called upon to testify in court than others, it is not readily apparent that a particular individual will be called upon more often. Further, these appeals have focused on the potential financial hardship to professionals such as physicians, engineers and lawyers called to testify as fact witnesses, but as Justice Park observed in Lonergan v. The Royal Exchange Assurance, (1831), 131 E.R. 280 at 283, “time to a poor man is of as much importance as to an attorney.” Indeed, the loss of a day’s work at minimum wage may be a greater relative hardship to a lay witness than the loss of a professional person’s earnings. In addition, to focus on monetary losses alone may be too narrow. Although some witnesses make a sacrifice of time and labour and thus of profits and wages, others sacrifice privacy, and experience the “disagreeable consequence of disclosure”: Wigmore on Evidence, vol. 8 at 72.

[47]         In my view, the interpretation Ms. Luis advances is of no small significance, departing as it would from the longstanding tradition that attendance at trial is “an inherent burden of citizenship”. As John Henry Wigmore put it so eloquently:

That the ordinary witness should be paid more than the nominal dollar — i.e., should be fully indemnified for sacrificing his day’s livelihood in order to perform his testimonial duty — is a plausible assertion. The argument against it, that the total cost of reimbursing highly paid citizens would be prohibitive, gives no real answer, for the state is bound to supply the necessities of justice however expensive. The best answer is that the testimonial duty, like other civic duties, is to be performed without pay, the sacrifice being an inherent burden of citizenship. Neither for military service nor for public office can the citizen claim that he shall be paid on a scale which will bear any equable proportion to the loss of his livelihood’s income. Any other principle would be worthy only of a purely mercenary community. If the sacrifice made is a real one, the dignity of the service rendered should ennoble it. The sense of civic duty done must be the consolation.

Wigmore on Evidence, vol. 8 at 136. [Emphasis added.]

[48]         If there are sound policy reasons for departing from that tradition and the present regime, it is in my view for the legislature and not the judiciary to effect that change.

[49]         In summary, I am of the view that the payment of an attendance fee to expert fact witnesses beyond the fee prescribed in Schedule 3 is not a disbursement recoverable from the opposing party. I would therefore dismiss the appeals, with thanks to all counsel for their able and thorough submissions.

Claim That Settled Day Before Trial for Under $25,000 Reasonably Brought in Supreme Court

Written by admin on . Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14, Uncategorized.

Reasons for judgement were released today by the BC Supreme Court, New Westminster Registry, (Gonopolsky v. Hammerson) deciding if a case which settled the day before trail for an amount in the Small Claims Court jurisdiction was reasonably brought in Supreme Court.  The decision was relevant as the Plaintiff’s entitled to Supreme Court Costs rested on the outcome.
In finding there was “sufficient reason” to commence the proceedings in Supreme Court Mr. Justice Brown provided the following reasons:

[36]         Considering the nature of the injuries, and the effects on homemaking and employment, I find there was a substantial possibility the damages could exceed $25,000.

[37]         Further, the plaintiff submits other sufficient reasons to commence action in Supreme Court were the insurer’s denial of coverage because the forces were insufficient to cause injury; and because the plaintiff was allegedly a worker, which if proven and given the defendant was, would see the action statute barred pursuant to s. 10(1) of the WCA.

[38]         Addressing reasons for commencing action in Supreme Court, plaintiff’s counsel states in her affidavit, sworn September 10, 2015, at paras. 8 and 9 as follows:

8.         On November 5, 2012, I received a phone call from [the ICBC adjuster who] confirmed to me at that time that ICBC’s position was that [the plaintiff] was working at the time of the Collision, and that they would require a WCAT determination on that issue.

9.         On December 14, 2012, our office filled the Notice of Civil Claim commencing this action. At the time of filing, I was of the view that examinations for discovery would be necessary because of ICBC’s position regarding worker-worker issue. Based on the medical-legal reports of Dr. Sawhney, I was also of the view that there was a real and substantial chance that [the plaintiff’s] claim was worth in excess of $25,000.

[39]         As for the WCAT issue, the defendant argued it was not complicated and could have been determined in Provincial Court. As for the basics on that matter, I understand the plaintiff was working as a cleaner at the time. The driver was on her way to work. The plaintiff’s position was that she was going to be dropped off downtown and that she was not on the way to work that day. The defendant pointed out the plaintiff was not yet legally eligible to work in Canada and, accordingly, argued the plaintiff could not recover a wage loss in the first place, making WCAT issues moot. That could be argued at trial, had it got there. As it was, the defendant never withdrew the defence before trial and when the action was commenced, the plaintiff could not reasonably be expected to know how that defence would play out.

[40]         The defendant’s position that the impact’s velocity was too low to cause an injury somewhat further complicated the case, would likely call for examinations for discovery, and at some juncture might entail an engineer’s opinion. It is unlikely the defendant would invest capital in that line of defence for this case, but it is reasonable to say the plaintiff’s burden on causation would be somewhat heavier than in a case where the force of the accident is not really in issue, which weigh in favour of a trial in this court.

[41]         Ultimately, the $22,500 settled figure compensated only non-pecuniary damages.

[42]         As similarly noted in Spencer at para. 24, the defendant’s positions effectively increased the complexity of the claim and the plaintiff’s need for counsel. “By denying liability, causation and that the plaintiff suffered any loss, the plaintiff would have been required to prove these elements at trial.” Further, at para. 25, “In taking the position that this was a low velocity impact claim the defendants created the situation giving rise to this motion. Their pleadings raised a multitude of issues in their defence. Those issues raised complex questions of fact and law. It is unlikely that a layperson could address them competently.” WCAT issues are sometimes simple. But for the plaintiff, it raised questions of mixed fact and law that raised another redoubt the plaintiff had to overcome.

[43]         The gap between the $25,000 threshold for small claims actions and the $22,500 settled on for non-pecuniary damages is not very wide, unlike the large gaps seen in some cases. A host of factors influence a settlement, but the amount settled here is at least within shouting distance of $25,000. Although that somewhat suggests the initial decision to bring action in the Supreme Court was reasonably defensible, standing alone, that is not sufficient reason.

[44]         In summary, the plaintiff has met the burden of proof required, albeit not by a large margin, but I am satisfied on balance that considering the potential damages that could be awarded for the plaintiff’s claim and the complications raised by the minimal damage and worker-worker defence, the plaintiff had sufficient reason to bring the action in the Supreme Court of British Columbia.

[45]         The plaintiff is entitled to costs of the action and of the application at Scale B.

"Reprehensible" Conduct Results in Special Costs Order Against Plaintiff Following Injury Trial

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

Reasons for judgement were released today by the BC Supreme Court, Chilliwack Registry, ordering a Plaintiff to pay ICBC special costs following ‘reprehensible‘ conduct.
In today’s case (Tambosso v. Holmes) the Plaintiff was injured in two collisions and sued for damages.  Prior to trial the Plaintiff received $36,895 in tort advances from ICBC.  After a largely unsuccessful prosecution the trial damages awarded were slightly less than this resulting in a ‘zero judgement’  award.   As a result the Plaintiff was ordered to pay the Defendant costs.
The Court went further, however, and ordered that the costs be increased to special costs as a result of the Plaintiff’s conduct.  In reaching this decision Mr. Justice Jenkins provided the following reasons:

[33]         Commencing at para. 52 of my reasons for judgment in this matter, I embarked upon my findings related to the credibility of the plaintiff. Previously in those reasons I had come to a conclusion that the plaintiff’s evidence regarding the “triggering event” causing her alleged PTSD and other psychological concerns had not happened. To be clear, the event in which the plaintiff claimed she feared for her life and had to jump out of the way of the vehicle driven by the defendant Holmes, as per her evidence that “his eyes are imprinted on my mind” and “I thought he was going to kill me, drive over me…” did not occur. Her evidence in this respect was contradicted by the independent witness who stated she had not exited her vehicle, as well as by the evidence of the plaintiff’s friend and passenger that the plaintiff had exited her vehicle but had taken only a few steps before jumping back into their vehicle before the Holmes vehicle came up the hill and passed the plaintiff’s vehicle. I found it most likely the plaintiff learned of the look in Mr. Holmes eyes from the independent witness, Jeremy Leal, who was in close proximity to Mr. Holmes immediately after the accident.

[34]         The plaintiff repeated her false version of the events of the 2008 accident to several of the expert witnesses who testified at trial which led those experts to come to opinions as to the plaintiff suffering PTSD and other cognitive damage as a result of the interaction with Mr. Holmes. The deception by the plaintiff continued for several years up to and including the trial.

[35]         In addition, my reasons for judgment at trial referred to clear conflicts between the evidence of the plaintiff and the video surveillance recorded by the defence, her evidence that she was not able to drive after the 2008 accident which conflicted with her driving of a rental car within days of the accident for several months, her Facebook postings, and her evidence at trial which was selective, inconsistent, completely uncooperative, non-responsive and simply false. The plaintiff’s evidence on cross-examination resulted in me coming to a conclusion that she had deliberately lied to her disability insurer, to Community Futures where she was paid for attempting a business development plan, to Canada Pension Plan staff and more, all of which resulted in her maintaining an income from the time of the 2008 accident up to trial in 2014. The plaintiff would declare in one instance that she was disabled from the 2008 accident and when convenient to keep funds coming her way would declare she was not disabled by that accident.

[36]         The conduct of the plaintiff which must be considered most outrageous and reprehensible for the purposes of a special costs award were the circumstances under which her former friend, Rebecca Aldous, came to be a witness at trial for the defence. Those circumstances are described commencing at para. 188 of my reasons for judgment, which included reference to a voice mail message left by the plaintiff two days before Ms. Aldous was to testify. That message can only be interpreted as an attempt to intimidate Ms. Aldous from testifying. Why the plaintiff would leave a voice mail message of that nature which could and did come back to haunt her is a mystery; however, it is reflective of the behaviour of the plaintiff throughout the trial.

[37]         I have no doubt that the actions of the plaintiff at trial and outside the courtroom have amounted to an ongoing effort to deceive the court which conduct deserves rebuke.

[38]         I agree with the principles in awarding special costs listed by Madam Justice Gropper in Westsea Construction Ltd. A court must show restraint and must be satisfied of special circumstances to justify the award. The conduct rationalizing an award of special costs must also be “reprehensible”. Those principles are present in this case and are supported by the conduct of the plaintiff detailed in the reasons for judgment for the trial and earlier in these reasons.

[39]         The defence is entitled to special costs to be taxed by the registrar, such costs as incurred by the defence from the commencement of each action until the conclusion of the trial.

Difference Between Amounts Claimed and Awarded "Not a Reason for Depriving Costs"

Written by admin on . Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14. 71 Comments on Difference Between Amounts Claimed and Awarded "Not a Reason for Depriving Costs"

Unreported reasons for judgement were recently provided to me confirming that, where a party receives substantially less at trial than they were seeking, that is not a reason in and of itself to deprive the successful party costs.
In the recent case (Fadai v. Cully) the Plaintiff was injured in a collision and sued for damages.  At trial the Plaintiff was awarded damages but these “were substantially lower than he had claimed“.   The trial judge initially awarded the Plaintiff only 75% as a result of this.  The Court was asked to reconsider and after reviewing Loft v. Nat the Court reconsidered and awarded the Plaintiff full costs.  In reaching this decision Mr. Justice Schultes provided the following reasons:
[4] When I look at the decisions that I have been provided…it is clear that a difference between the amounts claimed and those awarded is not, in itself, a reason for depriving a successful party of their costs.
[5]  A proper allication of the law should lead Mr. Fadai receiving his costs of this trial, and not only the portion of them that I tentatively awarded him.
 

The "Heavy Burden" of BC's Loser Pays System

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I have frequently highlighted BC’s loser pays system where a losing litigant is typically ordered to pay costs to the opposing side.   Reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, demonstrating that this result can be harsh and is typically unyielding to factors such as sympathy and financial hardship.
In this week’s case (Laktin v. (Vancouver) City) the Plaintiff was shot three times by police officers rendering him paraplegic.  He sued however his claim was ultimately dismissed following a 5 week jury trial.   Vancouver sought their costs from the Plaintiff who opposed the application arguing financial hardship.  Mr. Justice Pearlman noted the loser pays system does not yield to financial concerns in and of themselves.  In awarding costs the Court noted as follows:
[24]         The plaintiff says that the defendants should be denied their costs on the basis that his life was permanently and catastrophically altered by the event of January 21, 2006 and his future care and financial support are now in jeopardy. Mr. Laktin argues that the costs of a five-week trial will impose an onerous financial burden, which the plaintiff lacks the means to satisfy.  I accept that Mr. Laktin is in difficult financial circumstances, and that an order requiring him to pay costs to the defendant will be a real and heavy burden for him.  While I have a great deal of sympathy for the plaintiff, the case law clearly establishes that the unfortunate personal circumstances and financial hardship of a litigant are not, standing alone, factors warranting a departure from the general rule that costs follow the event: Morris at para. 36; Chen at para. 11;Vesuna v. British Columbia (Transportation), 2011 BCSC 1618 at para. 8.
[25]         In Robinson v. Lakner (1998), 159 D.L.R. (4th) 191, the Court of Appeal, reversing the decision of the trial judge who had limited the costs payable to the successful defendant to $1,500 because the plaintiff was in difficult financial circumstances, held at para. 5, that “financial hardship in itself is not a sound basis for departing from the usual rule with respect to costs”. 
[26]         In Cowherd v. Fraser Valley Health Region et al, 2004 BCSC 698 at para. 5, Madam Justice Ballance cited Brown v. Blacktop Cabs Ltd. (1997), 43 B.C.L.R. (3d) 76 (C.A.); Zelenski Estate v. Fairway(1998), 60 B.C.L.R. (3d) 76 (C.A.); Churchland v. Gore Mutual Insurance Co. (unreported), September 23, 1999, No. S09912, Vancouver (S.C.); and Robinson for the principle that “in general, the unfortunate personal circumstances and characteristics of a litigant are not to be taken into account by the court in exercising its discretion in making an award of costs”.
[27]         In Morris at para. 38, Madam Justice Ker concluded that the court is unable, on any principled basis to take the plaintiff’s financial circumstances into account in determining whether to award costs.
[28]         At para. 39, Her Ladyship cited the following passage from the Reasons for Judgment of Greyell J. in Chen at para. 15:
[39]  To do otherwise would lead to inconsistent and no doubt unreasonable results. As Greyell J. so eloquently noted in Chen at para. 15:
[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.
[29]         I conclude that the plaintiff’s difficult personal circumstances and financial hardship, standing alone, do not provide grounds for the Court to depart from the normal rule that costs should follow the event…
[49]         I conclude that there are no special circumstances in this case that would warrant a departure from the general rule that costs should follow the event.
[50]         Accordingly, the defendant, City of Vancouver, will have costs of this action at Scale B, together with its reasonable disbursements.
 

BCCA – Obtaining Judgement Below Amount Sought Is Not a Proper Reason to Deprive Costs

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Reasons for judgement were released last week by the BC Court of Appeal confirming that a party who is awarded damages below the amount sought, even if significantly so, is not a reason in and of itself for depriving the party of costs.
In last week’s case (Loft v. Nat) the Plaintiff was injured in a motor vehicle collision and sued for damages.  At trial the Plaintiff sought substantial damages of over $1.8 million.  The Plaintiff’s claims were largely rejected with damages just over $60,000 being awarded.  The trial judge found that the Defendants had been largely successful and ordered that the Plaintiff pay the Defendants costs.  The Court of Appeal found this was plainly an error.  In reaching this conclusion the Court provided the following reasons:
[46]        Pursuant to Rule 14-1(9), costs in a proceeding must be awarded to the successful party unless the court otherwise orders. At its most basic level the successful party is the plaintiff who establishes liability under a cause of action and obtains a remedy, or a defendant who obtains a dismissal of the plaintiff’s case: Service Corporation International (Canada) Ltd. (Graham Funeral Ltd.) v. Nunes-Pottinger Funeral Services & Crematorium Ltd., 2012 BCSC 1588, 42 C.P.C. (7th) 416.
[47]        In this proceeding Mr. Loft was awarded damages for injuries he had suffered in the motor vehicle accident. The respondents had denied liability until shortly before trial. Although the damage award was far less than sought, Mr. Loft was the successful party. The fact that he obtained a judgment in an amount less than the amount sought is not, by itself, a proper reason for depriving him of costs: 3464920 Canada Inc. v. Strother, 2010 BCCA 328, 320 D.L.R. (4th) 637.
[48]        The trial judge’s stated reason for awarding costs to the respondents was that the respondents had been largely successful in all areas of the claim. With respect, that decision is wrong in principle and cannot stand. I note that on the hearing of the appeal the respondents did not suggest otherwise.
[49]        The fact that a party has been successful at trial does not however necessarily mean that the trial judge must award costs in its favour. The rule empowers the court to otherwise order. The court may make a contrary order for many reasons. One example is misconduct in the course of the litigation: Brown v. Lowe, 2002 BCCA 7, 97 B.C.L.R. (3d) 246. Another is a failure to accept an offer to settle under Rule 9-1. A third arises when the court rules against the successful party on one or more issues that took a discrete amount of time at trial. In such a case the judge may award costs in respect to those issues to the other party under Rule 14-1(15): Lee v. Jarvie, 2013 BCCA 515. Such an order is not a regular part of litigation and should be confined to relatively rare cases: Sutherland v. Canada (Attorney General), 2008 BCCA 27, 77 B.C.L.R. (4th) 142; Lewis v. Lehigh Northwest Cement Limited, 2009 BCCA 424, 97 B.C.L.R. (4th) 256. Whether a judge will order otherwise in any particular case will be dependent upon the circumstances of that individual action.
[50]        Costs are very much a matter of the trial judge’s discretion. In the circumstances of this case, the basis upon which that discretion was exercised was in error. That said, the trial judge remains in the best position to determine the proper costs order and to what extent, if any, the offer to settle that was made in this case should impact on costs. On the hearing of the appeal both parties suggested that if the costs appeal was allowed, costs should be referred back to the trial judge.
[51]        I would allow the costs appeal and refer the matter of costs back to the trial judge for a further determination.
 

BC Supreme Court Continues to Have Broad Discretion of Costs Awards Following Trial

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Reasons for judgement were released today by the BC Court of Appeal addressing the discretion of judges in making costs awards following trial under the new Rules of Court.
In today’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.
Following trial the Court awarded each party 50% of their costs to be set off against one another and denied many of the Plaintiff’s disbursements.  The Plaintiff appealed arguing the Court did not have the authority to make such a costs order under the new rules of Court.  The BC Court of Appeal disagreed and found that a trial judge’s discretion with respect to costs is “at least as broad” as it was under the former rules.  In reaching this decision the Court provided the following reasons:
[37]        Interpreting Rule 14-1(15) as only allowing costs to be awarded in respect of specific procedures would run afoul of the principle that Newbury J.A. identified in the opening of her reasons for judgment inGreater Vancouver Regional District v. British Columbia (Attorney General), 2011 BCCA 345:
[1]        One of the well-known rules that guide Canadian judges in the interpretation of statutes is that wherever possible, the court should strive to give meaning and effect to every word used in an enactment. As stated in Maxwell on the Interpretation of Statutes (12th ed., 1969), “It is a principle of statutory interpretation that every word of a statute must be given meaning: ‘A construction which would leave without effect any part of the language of a statute will normally be rejected.” (See also Communities Economic Development Fund v. Canadian Pickles Corp. [1991] 3 S.C.R. 388 at 408; R. v. Kelly [1992] 2 S.C.R. 170 at 188; Hosseini v. Oreck Chernoff 1999 BCCA 386, 65 B.C.L.R. (3d) 182, at para. 27.).
[38]        The words “application” and “step” cover all procedural fragments of a proceeding. If “matter” were intended to be confined to a procedural event in litigation, it would cover no ground not already covered by “application” and “step”. I am therefore not persuaded that a “matter” must be a discrete procedure.
[39]        In my view, the canons of construction referred to by the plaintiff do not cast doubt on the conclusion that Rule 14-1(15) allows a judge to award costs in respect of a discrete issue in litigation.
[40]        I am satisfied that the discretion to award costs with respect to an issue in a proceeding is at least as broad under Rule 14-1(15) as it was under former Rule 57(15). Under that rule, the discretion was governed by the principles discussed by Finch C.J.B.C. in Sutherland v. Canada (Attorney General), 2008 BCCA 27 at paras. 30 and 31:
[30]      British Columbia v. Worthington (Canada) Inc. is the leading case with respect to the application of Rule 57(15). It affirms that under Rule 57(15) the Court has full power to determine by whom the costs related to a particular issue are to be paid. As Esson J.A. states in Worthington, the discretion of trial judges under Rule 57(15) is very broad, and must be exercised judicially, not arbitrarily or capriciously. There must be circumstances connected with the case which render it manifestly fair and just to apportion costs.
[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.
[41]        The trial judge explicitly addressed each of the three factors in Sutherland, and I am substantially in agreement with his analysis.
[42]        The issues upon which he awarded costs to the defendants were distinct issues in the litigation. While I acknowledge the appellant’s argument that there was some minor overlap between evidence going to general damages and evidence going to loss of income, this did not prevent the issues from being “separate and discrete” issues in the litigation. They were appropriately compartmentalized by the judge.
[43]        The judge identified the time attributable to the separate issues at trial at paragraphs 68-71 of his costs reasons. There is no basis for interfering with his findings in those paragraphs.
[44]        Finally, on the issue of whether the costs award is a “just result”, the trial judge comprehensively dealt with problems with the evidence in his trial judgment. He further dealt with the factors that led to the length of the trial in his costs judgment. The trial judge identified the factors that led him to find his costs award to be a just result. The reasons are cogent, and I would not interfere with his decision.

Plaintiff Denied Costs for Having No Sufficient Reason to Sue in the Supreme Court

Written by admin on . Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14, Uncategorized.

One of the more difficult fact patterns to predict the outcome of is when will a Plaintiff be granted costs when they sue in the BC Supreme Court but are awarded damages below $25,000 (the monetary jurisdiction of the Provincial Court in BC).  You can click here to read archived decisions addressing this.  Adding to these, reasons for judgement were released this week considering such a scenario.
In this week’s case (Akbari v. ICBC) the Plaintiff was injured in a collision caused by an unidentified motorist.  He successfully sued ICBC and was awarded damages of just over $13,000.  Following this the Plaintiff sought costs of $17,000.  Madam Justice Baker denied this finding the Plaintiff had no sufficient reason to sue in Supreme Court. In reaching this conclusion the Court provided the following reasons:
[16]         I am not persuaded that there was sufficient reason to bring this action in Supreme Court.  As the plaintiff submits, the issue of liability was the primary issue at trial.  The Provincial Court is an entirely appropriate forum for determining that issue, the outcome of which largely depended on an assessment of the credibility of the witnesses.
[17]         Ms. Berry of ICBC had no personal knowledge of the circumstances of the accident.  I can surmise that questions put to her on discovery may have related to contact by ICBC representatives with one of the plaintiff’s witnesses, Mr. Nahun Chinchilla, whose testimony I rejected at trial as incredible and unreliable.  Mr. Chinchilla voluntarily contacted both the plaintiff and plaintiff’s counsel and so far as I am aware, volunteered to be interviewed by plaintiff’s counsel prior to trial, so it was not necessary to utilize the Supreme Court Rules to compel his cooperation.
[18]         I am not persuaded that any documents and witness statements provided by the defendant to the plaintiff during the course of pre-trial preparation would not have been supplied by the defendant whether the action had been brought in Supreme Court or in Provincial Court.
[19]         I am not persuaded that there was any reasonable prospect that the plaintiff’s total damages would exceed $25,000.  The special damages and past loss of income were known.  The only head of damages involving uncertainty was non-pecuniary damages. The only medical evidence presented at trial was a report from Mr. Akbari’s family doctor, dated June 2, 2011.  In my view, it should have been obvious to the plaintiff and his counsel, after considering that report, that an award in the range of $25,000 was highly unlikely.
[20]         The report and the opinions expressed in it were sufficiently non-controversial that Dr. Rai was not required to attend for cross-examination.  In Dr. Rai’s opinion, Mr. Akbari suffered soft tissue injuries – described by Dr. Rai as “tendonious strain” affecting Mr. Akbari’s left calf, knee and thigh – from which he had recovered in 8 to 10 weeks.  Mr. Akbari was off work for two weeks, but it was during the Christmas holidays and he had planned to take some vacation during that period in any event.  The injuries caused little disruption to Mr. Akbari, only temporarily interfering with his participation in pick-up soccer games, and his weight-lifting routine at the gym.
[21]         In the plaintiff’s written submissions regarding costs, it was suggested that the concluding paragraph of my trial Reasons, in which I stated that I was not aware of any reason why the plaintiff should not have his costs on Scale B, was a determination of the issue.  That is not correct.  Unless a defendant invokes Rule 14-1, a plaintiff is normally entitled to costs.  Once the Rule is invoked, then the court must consider whether there was sufficient reason to bring the proceeding in the Supreme Court.
The plaintiff shall have disbursements only. 

When Does An Award of $20,000 = A Significant Debt

Written by admin on . Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 9. 61 Comments on When Does An Award of $20,000 = A Significant Debt

No, this is not a trick question.  When can a judge awarding you $20,000 leave you in ‘significant’ debt?  The answer is when you fail to beat a formal offer at trial and have ‘loser pays’ costs assessed you.  I’ve discussed this reality previously and it was demonstrated yet again in reasons for judgement released last week by the BC Supreme Court, Vancouver Registry.
In last week’s case (Gonzales v. Voskakis) the Plaintiff was injured in a 2008 collison.  Prior to trial ICBC provided a formal settlement offer of $69,000.  The Plaintiff rejected this and proceeded to have a 12 day trial where she sought in excess of $385,000.  The claim was largely unsuccessful with the trial judge awarding just over $20,000 in damages.  ICBC asked that the Plaintiff be stripped of post offer costs and that the Defendant be awarded post offer costs and disbrsements.  The Plaintiff argued that such a result would “negate her entire judgement and leave her significantly in debt“.   Madam Justice Fitzpatrick noted that the underlying “behaviour modification objective” of the Rules of Court override any sympathy to the Plaintiff and levied substantial costs consequences.
The decision is also worth reviewing for the discussion of whether a post offer costs award to a Defendant can include disbursements.  The Plaintiff argued the Rules don’t contemplate this but the Court disagreed. In finding disbursements were also encompassed in the Rule Madam Justice Fitzpatrick provided the following reasons:
[65]         Rule 9-1(5) is headed “Cost options”. It is clearly intended to guide the court in deciding what costs award is just. Nevertheless, I do not see that subcategory (d) was intended to limit the discretion of the court to award a defendant’s disbursements in all cases when rewarding a defendant for making a reasonable offer. In many cases, disbursements are significant. In fact, the driving force behind an offer to settle may be the desire to avoid having to pay those disbursements. To limit the discretion of the court in awarding disbursements would defeat the clear intention of the Rule.
[66]         Although Brown J. came to another conclusion in Moore relating to double disbursements under Rule 9-1(5)(b), it appears that Kendall and Skidmore were not in front of her at that time. Therefore, in applying the principles set out in Re Hansard Spruce Mills Ltd., [1954] 4 D.L.R. 590, I do not consider that I am bound by her reasoning.
[67]         I acknowledge that the wording of Rule 9-1(5), in its reference to “disbursements” in subcategory (a) without an accompanying reference to “disbursements” in subcategory (d), is awkward and confounding. In my view, however, the fundamental purpose of the Rule — which, as stated by the Court of Appeal in Kendall and Skidmore, is to compensate for all “costs”, including disbursements — has not changed. One can only hope for some clarity on this issue by possible amendments to Rule 9-1(5).
[68]         In the meantime, I conclude that I have the discretion under Rule 9-1(5)(d) to award the defendant his costs, including disbursements.
[69]         I award such costs, which will include disbursements, in favour of Mr. Voskakis for the period from January 25, 2012 until February 29, 2012.