Tag: Rule 14-1(1)(f)

Rule 15 Costs Cap Applied to Settlement of a Non-Rule 15 Claim

Further to my previous posts on this topic (which can be found here and here), reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, finding that the Rule 15 costs cap can apply to a personal injury claim litigated outside of the fast track when a settlement below $100,000 is achieved.
In the recent case (Varga v. Shin) the Plaintiff was injured in a 2006 collision.  The plaintiff initially sought significant damages over $422,000 and the case was prosecuted in the usual course.  It was never put into the fast track rule.  Prior to trial the case settled for $65,000 plus costs “to be assessed or agreed“.  The parties could not agree on the costs consequences with the defendant arguing that the Rule 15 cap should apply.  Registrar Sainty agreed and in doing so provided the following reasons:
[27]         I prefer Ms Taylor’s submissions in relation to the application of the costs provisions of R. 15-1. In my view, this action, even though it was not declared to be a “fast track” action, is subject to the costs provisions of R. 15-1(15). I agree with Ms Taylor’s submissions that R. 15-1(1) is exclusive and not inclusive. In my opinion, if a matter settles for less than $100,000, R. 15-1(15) applies to the costs of the action. This is made clear, in my view, by the addition to the Rules of R. 14-1(1)(f). That subrule effectively fast tracks actions that were not fast tracked but should have been (see Axten, supra, and Affleck v. Palmer, 2011 BCSC 1366). The cases cited by Mr. Warnett (listed above) were all, in my view, decided per incuriam: without reference to either R. 15-1(1) or 14-1(1)(f) in relation to the issue of costs.
[28]         This interpretation is in keeping with the object of the Rules: “to secure the just, speedy and inexpensive determination of every proceeding on its merits” 
(R. 1-3(1)) and the proportionality provisions set out in R. 1-3(2).
[29]         Finally, I note that Mr. Warnett also suggested that, if the defendants wished the provisions of R. 15-1(15) to apply to the action, they ought to have applied to place it into fast track and as they did not do so, they should not be allowed to limit the plaintiff’s costs to the costs allowed under R. 15-1(15). This suggestion cuts both ways however. Just as it was open to the defendants to seek an order bringing the matter into fast track, it was also open to Mr. Warnett to seek an order (even at the trial management conference) that R. 15-1 not apply to the action. He did not do so and as the action is by operation of the Rules a fast track action, it attracts costs per R. 15-1(15).
[30]         As I have found that the action falls within the provisions of R. 15-1(15), thus the plaintiff is entitled to some proportion of the $6,500 “cap” available (see Duong v. Howarth, 2005 BCSC 128; and Anderson v. Routbard, 2007 BCCA 193 [Anderson]). In order to avoid a re-attendance before me (or some other registrar) to determine how much of that cap the plaintiff may claim, I am going to employ some “rough and ready justice” (see Anderson, at paragraph 49 and Cathcart v. Olson, 2009 BCSC 618 at paragraph 19) to this matter. I will set the amount at the full $6,500, plus tax. This matter settled some 15 days before trial. Likely a good deal of the trial preparation had occurred up to the settlement. It is therefore appropriate that the plaintiff receive the full amount of the cap: see Gill v. Widjaja, 2011 BCSC 951 (Registrar), aff’d 2011 BCSC 1822.

Court Holds Rule 15 Costs Cap Can Apply to Trials Prosecuted Outside of the Fast Track


Reasons for judgement were released last week by the BC Supreme Court, Chilliwack Registry, addressing whether the Rule 15 Costs ‘cap‘ can apply to non-Rule 15 lawsuits that proceed to trial but result in judgement below $100,000.  In short the Court ruled that the cap should apply in these circumstances.
In last week’s case (Affleck v. Palmer) the Plaintiff sued the Defendants for damages.  The claim was not filed under the fast track provisions of Rule 15.  The case proceeded by way of summary trial under Rule 9-7 and was successful.  The judgement is unclear of the damages awarded but they were apparently over $25,000 under $100,000.  The summary trial lasted one day.
The Plaintiff brought an application for lump sum costs of $8,000 under Rule 15-1(15).  Mr. Justice Brown agreed that this was appropriate even though the lawsuit was not filed under the provisions of Rule 15.  In reaching this conclusion the Court provided the following reasons:

[4] Rule 14-1(1)(f) states that costs payable under the Civil Rules or by court order must be assessed as party and party costs under Appendix B, unless:

(f)         subject to subrule (10) of this rule,

(i)         the only relief granted in the action is one or more of money, real property, a builder’s lien and personal property and the plaintiff recovers a judgment in which the total value of the relief granted is $100,000 or less, exclusive of interest and costs, or

(ii)        the trial of the action was completed within 3 days or less,

in which event, Rule 15-1(15) to (17) applies to the action unless the court orders otherwise.

[5] There are other exceptions under Rule 14-1(1), but subsection (f) is the significant one in this case. Rule 14-1(10), which pertains to plaintiffs who recover in this Court a sum within the jurisdiction of the Provincial Court, does not apply in this case.

[6] Rule 15-1(15)(a) states a party in a fast track action is entitled to costs of $8,000, exclusive of disbursements, if the time spent on the hearing is one day or less, unless the court orders otherwise or the parties consent.

[7] I agree with the plaintiffs that although they had proceeded by way of summary trial and did not file a notice of fast track action, the wording of Rule15-1(1) governs and the action qualifies as a fast track action under Rule 15-1(1)(a) or 15-1(1)(b).

[8] As the plaintiffs point out, because they claimed various forms of relief under the Business Corporations Act, S.B.C. 2002, c. 57 [Business Corporations Act], it is arguable they were claiming more than monetary relief. Even so, the action still completed under Rule 9-7 in less than one day.

[9] The plaintiffs submit it would be appropriate for me to order $8,000 in costs. This represents the amount payable in a fast track action; and, despite the fact that the plaintiffs proceeded by way of summary trial under Rule 9-7, the plaintiffs submit an order for $8,000 in costs is appropriate in this case. I find the $8,000 set out in Rule 15-1(15)(a) is appropriate in this case.

This case is also a useful precedent because as set out in paragraph 8 the Court suggests that Rule 15 applies regardless of quantum provided the trial takes three days or less.

This case is worth reading in conjunction with the recent case of Johnson v. Axten which held that the Rule 15 costs cap can apply to pre-trial settlements of under $100,000 even if the case was not prosecuted under the fast track rule.

Costs Awards For Settlements Below $100,000


(Note: The case discussed below was upheld on appeal in July, 2011 by Madam Justice Ker)
As previously discussed, Rule 15 is the new BC Fast Track Litigation Rule and it is mandatory for cases for damages seeking less than $100,000 and for cases that “can be completed within 3 days“.
Rule 15-1(15) generally limits costs awards for fast track lawsuits to no more than $11,000.  Reasons for judgement were released today by the BC Supreme Court, New Westminster Registry, addressing whether this limit applies to non-fast track cases that settle for less than $100,000.  In short, Master Keighley held that it can, however, when a case has been removed from the fast track the costs restriction does not apply.
In today’s case (Johnson v. Axten) the Plaintiff started the lawsuit under the former Rule 68.  The parties consented to remove the case from Rule 68 prior to trail and obtained a Court order to that effect.  The case then settled after the new Rule 15 came into force.  The settlement was for $90,000 plus costs and disbursements.  The Defendant argued that the Rule 15 cap on costs should apply.  Master Keighley disagreed finding that while it could apply, it should not in the circumstances of this case.  The Court provided the following useful reasons:

[17]         The Majewska case does, however, contain this helpful observation on the issue of “opting out” of Rule 66, at para. 34:

Moreover, it is important to recognize that parties to a R. 66 action are not compelled to remain in the fast track process. If the spectre of “special circumstances” emerges at any time during the action, whether in the form of complex issues, offers to settle, increased trial time, or any other situation, the parties may consent to removing the case from R. 66, or obtain an order to that effect under R. 66(8). Thus, if a concern arises that costs under R. 66(29) will not be adequate, this can be remedied by taking appropriate action during the proceeding.

and at para. 36:

“Here, if the plaintiff was concerned that R. 66 was no longer appropriate, the proper response was to apply for removal from the fast track litigation. If she chose not to take that step, she should have no basis for complaint that her costs are limited by R. 66(29).”

[18]         In other words, a party who opted out of Rule 66 prior to trial was not limited by Rule 66(29). It is noteworthy that Rule 68, which governed this action prior to the parties “opting out” contained no limitation on costs. Also noteworthy is that Rule 15?1 as well as the case with its predecessors, provides for opting out of the provisions for the Rule and in this case the parties did so.

[19]         Ms. Deane-Cloutier says that although Rule 15-1 does not, on its face, contemplate settlement, neither did Rule 66(29), but that did not prevent the court from holding that the subrule applied to settlement of cases governed by the Rule. That submission, with respect, ignores however the very clear statement of the Court of Appeal in Majewska: that once Rule 66 ceased to apply to an action, a party would not be limited to costs recoverable under Rule 66(29).

[20]         The plaintiff’s costs will be assessed pursuant to Schedule B of the Supreme Court Civil Rules. While I agree that Rule 15-1(1) provides that cost limitations apply to cases which were not “fast tracked” but should have been (regardless of the intentions of the parties), the rule nonetheless provides that even if otherwise applicable, it will not apply to cases where the court has ordered that it will cease to apply. The court did so here, with the consent of the parties and, as a result, the cost limitation set out in Rule 15-1, does not apply.

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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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