Tag: special costs

"Ill-Conceived" Dismissal Application Leads To Special Costs Award


Reasons for judgement were released yesterday by the BC Supreme Court, Vancouver Registry, punishing a Defendant in a personal injury lawsuit with a special costs order for bringing an “ill-conceived” motion to dismiss the Plaintiff’s lawsuit.
In yesterday’s case (Wood Atkinson v. Murphy) the Plaintiff suffered a bilateral wrist injury in a 2006 collision.  She sued for damages and the Defendant admitted fault for the crash.  In the course of the lawsuit the Defendant requested employment records relating to the Plaintiff.   The Plaintiff made reasonable efforts to obtain these but the Plaintiff’s employer “mistakenly failed to provide counsel with the Plaintiff’s complete employment file“.  The Court found that this failure was due “to repeated errors or internal miscommunication on the part of (the employer)“.
The Defendant obtained two Court Orders addressing the production of the sought records.  The Defendant then brought an application seeking the dismissal of the Plaintiff’s lawsuit for “material non-disclosure”.  In support of the application to dismiss the Defendant’s lawyer “swore an affidavit erroneously describing the orders“.
Associate Chief Justice MacKenzie dismissed the Defendant’s application and went on to award special costs for the “excessive and draconian” application.  In doing so the Court was critical of the Defendant’s erroneous summary of the disclosure court orders.   Madam Justice MacKenzie provided the following reasons:

[29] I have concluded in the circumstances that it is appropriate to award special costs to the plaintiff for the dismissal application.  It is the mechanism by which the Court expresses its disapproval of two aspects of defendants’ counsel’s conduct. The first aspect is his carelessness in erroneously deposing to the contents of the two orders in question and relying on them to make a very serious application to punish the plaintiff.  This error was a self-serving lack of attention to detail.

[30] Court orders are important. They give effect to the Rule of Law. Counsel cannot simply rely on their notes or fail to be accurate, especially after becoming aware of the disagreement or reservation of the other counsel. Although an application to the court is required to obtain a transcript of submissions at a CPC or TMC, the clerk’s notes are readily available. Indeed, plaintiff’s counsel obtained them to clarify the nature of the orders in question and provided them to defendants’ counsel.

[31] Secondly, it is clear that defendants’ counsel knew well before the hearing that the dismissal application was ill-conceived and was on notice that his version of the court orders was in question.  Nonetheless, he persisted with the application.

[32] An order dismissing a plaintiff’s claim for material non-disclosure is a very serious matter; the consequences for the plaintiff and her counsel would have been severe. This type of application requires a solid foundation of misconduct on the part of the plaintiff, especially considering that the defendants had already admitted liability for her injuries.

[33] The fact the defendants may have become aware of the file and the correct nature of the orders after defendants’ counsel had sworn his September 14, 2011 affidavit (for his application to dismiss filed the next day) is of no moment because he became aware of these matters well before the start of the hearing on September 26, 2011.  He pursued the application in any event.

[34] It is no answer to say that outside counsel was required nonetheless in order to address inconsistencies in counsels’ version of Ms. Tsang’s statements as to whether she had provided the complete file. Those hearsay issues are quite minor in the circumstances of all CBSA’s errors or miscommunications. Plaintiff’s counsel was put to a clearly unnecessary expense in the requirement to retain outside counsel to speak to plaintiff’s counsel’s affidavit. The application to dismiss the claim was misconceived and heavy handed.

[35] I have concluded it is appropriate to award the plaintiff special costs for the defendants’ application to dismiss her claim. The Court heard that application on the afternoon of September 26, 2011, the first of the three-day hearing. It is that day for which plaintiff’s counsel was obliged to retain outside counsel to speak to the affidavit that, amongst other things, corrected the errors in the defendants’ counsel’s version of the two orders.

Defendant Punished With Costs Award for Relying on "Advocate" Expert Witness


Dr. Hymie Davis is a psychiatrist who has been frequently retained by ICBC to provide expert opinions as to the extent of Plaintiff’s accident related injuries.  (You can click here to access my previous posts setting out the billings of Dr. Davis and other experts often retained by ICBC).  In a judgement released last week, the BC Supreme Court harshly criticized Dr. Davis and took the unusual step of punishing the Defendant, (who was insured with ICBC), for relying on him at trial.
In last week’s case (Jayetileke v. Blake) the Plaintiff was injured in a BC motor vehicle collision.  She sued for damages.  Prior to trial ICBC made a formal settlement offer of $122,500.  The Plaintiff rejected this offer and went to trial.  She was ultimately awarded about $9,000 less than the settlement offer by the trial judge.
Normally, in these circumstances, ICBC would be entitled to their costs and possibly double costs from the time of their offer onward.  Mr. Justice Dley, however, refused to follow this usual course finding that not only should the Defendant not be awarded costs, but they should pay the Plaintiff costs.  The reason for this departure was a finding that Dr. Davis was “nothing more than an advocate thinly disguised in the cloak of an expert” and he should not have been relied on by the defence at trial.
Mr. Justice Dley provided the following damaging criticism of Dr. Davis as an expert witness and warning to lawyers who  intend to rely on experts who have a history of crossing the line into advocacy:

[35] Dr. Davis had a history before the courts where his evidence was rejected and his objectivity called into question: Grewal v. Brar et al, 2004 BCSC 1157, [2004] B.C.J. No. 1819; Gosal v. Singh, 2009 BCSC 1471, [2009] B.C.J. No. 2131; Kelly v. Sanmugathas, 2009 BCSC 958, [2009] B.C.J. No. 1413; and Smusz v. Wolfe Chevrolet, 2010 BCSC 82, [2010] B.C.J. No. 114.

[36] A witness may have a poor day in court – that does not mean the witness was dishonest or forever unreliable. However, Dr. Davis had displayed an alarming inability to appreciate his role as an expert and the accompanying privilege to provide opinion evidence.

[37] The defence was alive to his propensity to abuse the role of an expert. His reputation would have been known from the cited decisions. Plaintiff’s counsel succinctly set out the concerns about Dr. Davis in a letter dated January 29, 2010, which stated:

1.         Although he may have once been a qualified expert in psychiatry and able to give opinion evidence in court, we suggest he no longer is properly qualified to give opinion evidence. We will suggest that he is no longer aware of his duty to assist the court and in reality he is an advocate for ICBC. Additionally, we will submit that he has been so consistently discredited by the courts of this Province that he is incapable of being qualified as an expert;

2.         His report is replete with advocacy. The report is an attempt [to] neutralize any material/opinions which support the plaintiff’s claim rather than providing an objective medical opinion;

3.         His report contains many opinions and arguments that are beyond his expertise; and

4.         The information apparently gleaned from the plaintiff is inaccurate and incomplete and coloured to advance his position.

[38] In spite of the concerns that the Courts have expressed, the defence nonetheless proffered Dr. Davis as an expert in opposition to the plaintiff’s complaints of depression and anxiety. My assessment of Dr. Davis was as follows (oral reasons May 13, 2010):

[43]      Dr. Hymie Davis, a psychiatrist, examined Ms. Jayetileke on January 12, 2010 at the request of the defence. I find his evidence to be unreliable. I give it no weight for the following reasons.

[44]      Dr. Davis was an advocate. He was argumentative, defensive, non-responsive, and prone to rambling discourses that were not relevant to the questions posed in cross-examination.

[45]      Dr. Davis was asked to leave the courtroom so that counsel could argue about questions to be put to him. Dr. Davis was seen peeking into the courtroom and listening to the discussion. He was again asked to leave. In spite of these instructions given to him, Dr. Davis hovered within hearing distance and, on four occasions, stuck his head into the courtroom to hear what was occurring.

[46]      Dr. Davis conceded that without his notes, he would not be able to recall the discussion with Ms. Jayetileke. He relied on his notes to prepare his report.

[47] Dr. Davis had noted that Ms. Jayetileke awakened once or twice a week and that this was in some measure related to the accident-related symptoms. He was adamant Ms. Jayetileke had not said that she awakened once or twice a night. He said that his notes would reflect what Ms. Jayetileke had told him.

[48]      His notes referred to Ms. Jayetileke awakening once or twice but did not specify whether that was nightly or weekly. Nonetheless, Dr. Davis tried to point out other references in his notes that meant a weekly occurrence. Those references did not strengthen his evidence. They simply confirmed the unreliability of his testimony.

[49]      Dr. Smith had commented about how important it was for the history-taking to be done in a setting where the patient was comfortable and at ease with the interviewer. Dr. Davis’s demeanour would not lend itself to Ms. Jayetileke being at ease in his presence so that an effective and accurate history could have been taken. Ms. Jayetileke was under the impression that Dr. Davis did not take things seriously. I accept her view of the interview and prefer her evidence to that of Dr. Davis.

[39] For a trial to be fair, the Court must allow each party to put its best case forward. Where a party seeks to advance its position with reckless abandon seeking only the ultimate goal of victory and using questionable evidence along the way, that party risks sanctions in the form of costs penalties. Where the conduct is reprehensible and deserving of reproof and rebuke, the penalty is special costs. “Costs considerations are meant to guide counsel and litigants in the choices and strategies they pursue in litigation”: Karpodinis v. Kantas, 2006 BCCA 400, [2006] B.C.J. No. 2074 at para. 4.

[40] In this case and against the backdrop of previous judicial comment, the defence tendered Dr. Davis. He was nothing more than an advocate thinly disguised in the cloak of an expert. That is conduct deserving of rebuke and from which the Court disassociates itself.

[41] Dr. Davis attempted to inject levity to the proceedings when he was introduced to the Court – his reference to scotch can only be taken as an attempt to be humorous. However, these are serious and solemn proceedings and should be treated as such. His opening comments were unnecessary and unhelpful.

[42] Dr. Davis’ refusal to remove himself from earshot of the Court proceedings despite repeated requests was reprehensible. His conduct simply confirmed a lack of respect for Court proceedings.

[43] Under these circumstances, special costs are to be awarded against the defendant.

[44] The special costs will be the equivalent of the costs of the entire trial. The defendant will be deprived of any costs that it might otherwise have been entitled to as result of the offer to settle.

[45] The plaintiff is awarded costs as if there had been no offer to settle made. The defendant shall receive no costs.

[46] The plaintiff shall receive costs of this application.

Special Costs and "Obviously Flawed Expert Reports"

When ICBC Claims proceed to trial in the BC Supreme Court the parties to the lawsuit frequently rely on the reports of ‘expert’ witnesses.  Usually these are medical doctors but other experts such as engineers, economists, functional capacity witnesses and others are common. If a party relies on a hired expert who authors an ‘obviously flawed report’ that party can be penalized by the judge with an order of ‘special costs’.  The BC Supreme Court summarized this principle of law in a 2003 decision by the name of Coulter v.  Ball as follows:

[75]   The use of obviously flawed expert reports is conduct that has been found by the Courts to warrant an award of special costs, see Heppner v. Schmand, supra.  In McKitrick v. Iskic, [1999] B.C.J. No. 1724, Madam Justice Bennett stated, although declining to order special costs on that basis in the case before her at para. 11:

There is no doubt that when a party bases a claim or defence on obviously flawed reports, or an unsubstantiated basis, special costs may be awarded.

In Coulter, the BC Supreme Court summarized the principles behind orders of special costs as follows:

The principle which guides the decision to award solicitor-and-client costs in a contested matter where there is no fund in issue and where the parties have not agreed on solicitor-and-client costs in advance, is that solicitor-and-client costs should not be awarded unless there is some form of reprehensible conduct, either in the circumstances giving rise to the cause of action, or in the proceedings, which makes such costs desirable as a form of chastisement. The words “scandalous” and “outrageous” have also been used. (citations omitted)

[10]   In Leung v. Leung,[1993] B.C.J. No. 2909 (S.C.), Chief Justice Esson, as he then was, clarified the meaning of reprehensible in this context as conduct that the Court finds worthy of rebuke.  At paragraph 5 he stated:

There is nothing in the conduct of Mr. Leung in relation to this matter which I would call “scandalous” or “outrageous”.  But “reprehensible” is a word of wide meaning.  It can include conduct which is scandalous, outrageous or constitutes misbehaviour; but it also includes milder forms of misconduct.  It means simply “deserving of reproof or rebuke”.

[11]   That broader meaning of reprehensible was endorsed in Garcia v. Crestbrook Forest Industries Ltd., [1994] B.C.J. No. 2486 (C.A.).  It was again confirmed in Heppner v. Schmand, [1998] B.C.J. No. 2843(C.A.) by Hinds J.A., speaking for the court, at paragraph 17:

In my view, there was evidence before Mr. Justice Shaw upon which he could found his conclusion that the conduct complained of was reprehensible and was deserving of rebuke.  While the conduct complained of may not have been scandalous or outrageous it was, nevertheless, reprehensible in the sense that it constituted a milder form of misconduct deserving of reproof or rebuke.  It was conduct from which the court sought to dissociate itself.

[12]   Because special costs are awarded to penalize conduct from which the Court seeks to dissociate itself, the award will extend beyond indemnity.  The governing factors are punishment and deterrence, see Fullerton v. Matsqui (District), [1992] B.C.J. No. 2986 (C.A.).

[13]   The general rule is that where special costs are awarded, they will be for the entire proceeding, see Sammartino v. Hiebert, [1997] BCJ 2036 (S.C.).  However, there is discretion to award special costs for only a particular period of time related to the impugned conduct.  The factors which will be relevant in relation to this exercise of discretion included whether the impugned conduct was an isolated occurrence and its significance in terms of the conduct of the litigation, see Muncaster v. Nunnenmacher (1996), 76 B.C.A.C. 211 at paragraph 17 per Finch J.A., speaking for the court:

When one looks at the overall course of this litigation and at the reasons of the learned trial judge in their entirety, two things seem apparent with respect to the false document.  The first is that the learned trial judge viewed its creation as a matter which called for a sanction in costs.  The second is that the document did not play a major part in the disposition of the law suit.  It seems to me that in awarding special costs for the short period he did the learned trial judge was attempting to balance those somewhat conflicting factors.  The order limiting special costs to a brief period of the law suit is an unusual one.  Indeed, counsel were unable to find any case where a similar order had been made.  However, the learned trial judge had the unique advantage of having heard all of the evidence and having seen all of the witnesses, and the advantage of being able to assess the relative importance of the false document in the full context of this long, complex and obviously difficult lawsuit.

On Friday the BC Supreme Court released reasons for judgement dealing with this area of the law.  In Friday’s case (Henri v. Seo) the Plaintiff took her ICBC Claim to trial.  ICBC relied on an orthopaedic surgeon who is often retained in ICBC claims.  The Plaintiff argued that she should be awarded special costs because “the defendant and her insurer (ICBC) improperly relied on the report and the testimony of Dr. J. Schweigel – an orthopaedic surgeon whose evidence has been either rejected or not relied upon in a number of previous cases.  The plaintiff says that by way of an award of special costs this Court ought to express its disapproval of ICBC’s repeated use of what she characterizes as Dr. Schweigel’s “clearly flawed reports”.

Madam Justice Boyd rejected this argument and summarized and applied the law as follows:

[10] I entirely reject this submission.  Even if an award of special costs may be made in the case of an action under Rule 66 (which I do not necessarily accept), it remains that simply by virtue of being insured by ICBC the defendant does not thereby assume the corporate persona of the Insurance Corporation and therefore be subject to criticism concerning its prevailing policies or practices, whether as an insurer or as a litigant.  How ICBC goes about defending motor vehicle actions, including which experts it retains and relies upon, is not a matter to be addressed in costs in an action between the plaintiff and the defendant here.

[11] As to the merits of the argument, it remains that while the use of obviously flawed expert reports may be conduct which warrants an award of special costs (Coulter v. Ball, 2003 BCSC 1186; Heppner v. Schamnd [1998] B.C.J. No. 2843 (C.A.), this is not the case here.  The defence has referred to a number of different actions in which Dr. Schweigel’s opinion has either been accepted or preferred to that of other physicians.

Special Costs Awarded for 'Reprehensible' Behaviour by Law Firm

In reasons for judgement released today (Chudy v. Merchant Law Group) the BC Court of Appeal upheld a trial judge’s award for special costs.
The Plaintiff was involved in a serious motor vehicle collision in 1995.  The Plaintiff hired a lawyer and ultimately a $860,000 settlement was reached.
A fee dispute arose after this settlement and litigation ensued.   At trial the Plaintiff’s were granted judgement in the sum of $300,404.17 against the law firm.  This award included a punitive damages award of $50,000 finding that the law firm acted in a ‘malicious, oppressive and high-handed‘ manner to their client.
The lawfirm appealed for various grounds.  In a split decision handed down several months ago, the BC Court of Appeal dismissed the major grounds of appeal but did reduce the over-all judgement by $27,413.58.
Today’s appeal provided supplemental reasons dealing with the narrow issue of whether the trial judge was correct in awarding special costs against the law firm.  In upholding the award, the Court of Appeal said the following with respect to the law of ‘special costs’ and to the behaviour of the Defendant Law Firm:

[6]                The trial judge discussed the claim for special costs at some length at paras. 216 to 261 of his reasons for judgment which are indexed as 2007 BCSC 279.  It is not disputed that he correctly stated the applicable law: 

[255]    In Garcia v. Cresbrook Industries Ltd. (1994), 9 B.C.L.R. (3d) 242 (C.A.) [Garcia], the Court of Appeal considered the type of conduct required for an award of special costs under the Rules of Court, B.C. Reg. 221/90.  After reviewing decided cases and the relationship of “special costs” to the concept of “solicitor-and-client costs”, Lambert J.A. (for the Court) stated at ¶ 17:

Having regard to the terminology adopted by Madam Justice McLachlin in Young v. Young, to the terminology adopted by Mr. Justice Cumming in Fullerton v. Matsqui, and to the application of the standard of “reprehensible conduct” by Chief Justice Esson in Leung v. Leung in awarding special costs in circumstances where he had explicitly found that the conduct in question was neither scandalous nor outrageous, but could only be categorized as one of the “milder forms of misconduct” which could simply be said to be “deserving of reproof or rebuke”, it is my opinion that the single standard for the awarding of special costs is that the conduct in question properly be categorized as “reprehensible”.  As Chief Justice Esson said in Leung v. Leung, the word reprehensible is a word of wide meaning.  It encompasses scandalous or outrageous conduct but it also encompasses milder forms of misconduct deserving of reproof or rebuke.  Accordingly, the standard represented by the word reprehensible, taken in that sense, must represent a general and all encompassing expression of the applicable standard for the award of special costs.

[7]                Davies J. stated his conclusion on the costs issue thus: 

[257]    I am satisfied that the conduct of the Merchant Law Group in this case was reprehensible within the meaning attributed in Garcia.  The conduct and actions of the Merchant Law Group would be deserving of rebuke in an ordinary commercial transaction.  In the context of litigation involving its own clients and the integrity which the Court and the public are entitled to expect from those who are privileged to be members of the legal profession, it was both outrageous and scandalous.

[258]    I order that the plaintiffs recover special costs from the Merchant Law Group from the commencement of this litigation and throughout, including all costs related to the third party proceedings brought against Mr. Shaw.  Those proceedings were, in my view, not only devoid of evidentiary substance but also unnecessarily added to the length of these proceedings.

[259]    Any costs that were paid to the plaintiffs pursuant to previous orders of the Court shall, of course, be deductible from the award of special costs.

[8]                Before stating the above conclusion, the judge described the conduct of the appellant law firm.  In the court’s view, the bad conduct began with a pre-litigation letter from Mr. Merchant to the Law Society of British Columbia dated 2 December 2003 in which he falsely claimed for the appellant a solicitor’s lien on the Chudy file.  He also prepared a fictitious fee account to the Chudys.  This “foreshadowed the way in which the Merchant Law Group was prepared to defend against the plaintiffs’ claims” (para. 251).  In our opinion, this did not amount to a colouration of the judge’s assessment of litigation conduct.  It was properly seen as an attempt by the appellant to put a chill on the appellant’s unsophisticated former clients.  This conduct was not a factor in the assessment of punitive damages.  Rather, the award of punitive damages was based on an earlier breach of fiduciary duty.  In these circumstances, an improper attempt by a legal professional to discourage a claim against that professional, although done before commencement of the action, is properly taken into account when considering litigation conduct.  The trial judge’s conclusion at para. 225 that Mr. Merchant’s evidence about the draft account and an accompanying letter to the respondents “was a disingenuous attempt to cover up the fact that he did not want the plaintiffs to have the file and that he was prepared to go to unethical lengths to avoid delivering it to them” is unassailable.  It was bad enough that Mr. Merchant improperly claimed the lien.  But he exacerbated that conduct by offering an explanation at trial that was contrived.  That was litigation conduct properly considered on the claim for special costs. 

[9]                The appellant has not demonstrated error on the part of the trial judge in his conclusion that the conduct of the appellant during this litigation, both pre-trial and during the trial, was reprehensible as that term is used in Garcia.  The evidence abundantly supports the conclusion.  The appellant brought pre-trial motions that were without merit; it brought a specious application, based in part on false evidence, challenging the jurisdiction of the court to try the matter; it avoided a peremptory trial date by adding Mr. Shaw as a third party but did not require him to file a defence, did not examine him for discovery, did not cross examine him at trial with respect to its allegations against him, and in a lengthy written submission at the end of the trial, did not refer to its claim over against Mr. Shaw (the trial judge tersely dismissed the third party claim); it brought a motion (returnable on the date scheduled for the hearing of a R. 18A application for a summary trial brought by the respondents) for removal of the respondents’ counsel on ridiculous grounds, a tactic which the trial judge at para. 236 stated, with the benefit of his unique perspective of the appellant’s entire conduct, “was not only without merit but was calculated to prevent the Rule 18A application from proceeding as ordered”; on the hearing of the respondents’ R. 18A motion, Mr. Merchant produced a large number of documents, not previously disclosed and not sworn to, in support of his position that the action could not be determined on a summary basis; and, finally but of most significance, Mr. Merchant offered evidence at trial that the trial judge determined was false and misleading.

[10]            As to the final point, the respondents refer to Brown v. Lowe, 2002 BCCA 7, in which Southin J.A. said (at para. 149):  “To give false evidence relating to the matters in question at any stage of the proceedings is a grave matter.  By “false”, I do not mean “erroneous”; I mean knowingly untrue.”  The falsity of Mr. Merchant’s evidence is commented on by the trial judge at several points in his judgment and is referenced by the majority judgment in this court.  There is no need to particularize it here.

[11]            The evidence as a whole clearly supports the conclusion of the trial judge that the legal basis for the awarding of special costs was established in this case. 

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ERIK
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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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