Tag: Rule 14-1(15)

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

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


(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.

Interest on Disbursements: The Uncertainty Continues

The BC Court of Appeal released reasons for judgement today in a case addressing the recoverability of interest on disbursements in personal injury lawsuits.  It was anticipated that the Court would set out a firm answer to this issue.  Unfortunately the question remains unanswered as the BC Court of Appeal held that “this is not the right case to address the issue“.
In today’s case (Milne v. Clarke) the Plaintiff was injured in a motor vehicle collision.  The case settled but following this the parties could not agree whether the interest charges on disbursements for private MRI’s were recoverable.  Ultimately Mr. Justice Burnyeat held that this was a recoverable disbursement finding as follows:
[9] The law in British Columbia is that interest charged by a provider of services where the disbursement has been paid by counsel for a party is recoverable as is the disbursement.  The interest charge flows from the necessity of the litigation.  If the disbursement itself can be assessed as an appropriate disbursement, so also can the interest owing as a result of the failure or inability of a party to pay for the service provided.  In order to obtain the M.R.I., it was necessary to pay not only the $975.00 cost but also the interest on any unpaid balances that were not paid immediately.  The cost plus interest was the cost of obtaining the M.R.I.  The claim for interest should have been allowed.
ICBC appealed this as a test case hoping to get a firm answer from the BC Court of Appeal.  The Appeal was dismissed with the Court finding that there was insufficient material before them to address the issue.  The Court provided the following reasons:





[13] There is, as Mr. Justice Frankel observed, divergent authority on the recoverability of interest on disbursements under Rule 57(4) (now Rule 14-1(15)).  There may be different answers to that question depending upon the circumstances of the charge, the time and purpose for which the charge was incurred, and the circumstances that caused counsel to pay the bill, but this must be a question for another case.  It is clear from the fresh evidence that in this case the recoverability of the interest paid by counsel requires an interpretation of the settlement agreement.  One question is whether the amount in issue is properly characterized as a claim for special damages rather than disbursement, and is thus captured within the agreed sum.  Another question is whether, on a correct interpretation of the settlement agreement, the amount in issue is recoverable as “a necessary and reasonable disbursement”.  The judge, having been presented with the case as an application of Rule 57(4), did not deal with either of these issues.

[14] To look at it another way, it was intended that this appeal would be concerned with the recoverability of interest as a disbursement under Rule 57(4).  On the material before us, the case turns on the characterization of the charge as a disbursement or special damages, and the interpretation of several terms of the settlement agreement, on only one of which the law on Rule 57(4) might be a reference point, and even there is not directly engaged.

[15] In our view this is not the right case to address the issue raised in the leave application.  While that issue is of interest to the profession, its answer must await a case that directly engages the rule, in the context of a proper factual matrix rather than a hypothetical.






Court Finds Plaintiffs Can Face Costs Risks If Defendant Succeeds in Contributory Negligence Claim


Reasons for judgement were released last week by the BC Supreme Court finding that Rule 14-1(15) provides the court with discretion to award costs to a Defendant following a finding of contributory negligence as against a Plaintiff.
In last week’s case (Brooks-Martin v. Martin) the Plaintiff was involved in a motorcycle collision.  At trial she was found 30% at fault with the Defendant bearing 70% of the blame.  The Court awarded the Plaintiff 70% of her costs in accordance with the BC Negligence Act.  Although not specifically asked to address this issue, the Court went further and found that the Rules of Court permit a costs award to be made against a Plaintiff if they are found contributorily negligent.  Mr. Justice Halfyard provided the following reasons:

[41] Section 3 of the Negligence Act directs that the plaintiff shall receive 70% of her costs of this proceeding, from the defendant Martin. But that statute does not entitle the defendant Martin to receive 30% of his costs of the proceeding, from the plaintiff, because he sustained no damage or loss. See Bedwell v. McGill 2008 BCCA 526 at paras. 29-30 and 32.

[42] However, the defendant Martin was successful on the issue of contributory negligence on the part of the plaintiff. In my opinion, the costs entitlement of the plaintiff is defined solely by theNegligence Act. That statute directs that the plaintiff shall recover 70% of her costs of the proceeding from the defendant Martin. It seems to me that the Rules of Court relating to costs should govern the issue of whether the defendant Martin should recover any of his costs from the plaintiff. Rule 14-1(15) reads in part:

(15)      The court may award costs

. . .

(b)        that relate to some particular application, step or matter in or related to the proceeding . . .

[44] I think that the issue of whether the plaintiff was contributorily negligent is a “matter in or related to the proceeding” under the new rule… I conclude that the court has the discretion to award costs of the contributory negligence issue, to the defendant Martin. I am not suggesting that such costs should be awarded, only that the court has jurisdiction to entertain such an application under the Rules of Court.

Lump Sum Costs and the New BC Supreme Court Rules


Reasons for judgement were released today by the BC Supreme Court, Kamloops Registry, finding that the new Civil Rules give the BC Supreme Court the power to award lump sum costs without the need for taxation.  Madam Justice Adair held that this power was not available under the former rules absent party consent.
In today’s case (Madock v. Grauer) the Plaintiffs sued the Defendants for damages.  At trial one of the Defendant’s was ordered to pay $5,000 in damages.  The parties could not agree on the cost consequences that followed and applied to the trial judge to address this issue.   Madam Justice Adair ultimately held that the Plaintiff was entitled to costs and fixed these at $11,000.  In doing so the Court provided the following reasons about the ability of trial judges to award lump sum costs:

[47]         Under Rule 14-1(15), “The court may award costs (a) of a proceeding . . . and in awarding those costs the court may fix the amount of costs, including the amount of disbursements.”  This Rule is to be contrasted with its counterpart in the old Rules, Rule 57(13), which provided, and I am going to emphasize the first few words:

With the consent of the parties, the court may fix a lump sum as the costs of the whole proceeding, either inclusive or exclusive of disbursements and expenses.

A key change in the new Rule is that consent of the parties is no longer necessary, before the court can fix lump sum costs.

The Court went on to use the new concept of ‘proportionality‘ and found that this was an appropriate case to order lump sum costs.  Madam Justice Adair provided the following reasons:

[49]         I have concluded that these siblings and Mr. Grauer would not be well-served by having a forum – namely, taxation of costs – in which they can continue to litigate over the late Mr. McKenzie’s estate.  Moreover, prolonging litigation among these parties is, in my opinion, out of all proportion to the amount involved, the importance of the issues in dispute and the complexity of the proceeding.  Rather, it is now time for finality.  The costs consequent on my judgment following the trial must also be in some rational proportion to the amount ultimately recovered, which was $5,000.  The costs – indeed the double costs – that the plaintiffs suggest in their submissions they should be awarded are out of all proportion to what would be reasonable.

[50]         I have therefore concluded that, in this case, orders should be made for lump sum costs under Rule 14-1(15)

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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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