Tag: Sufficient Reason for suing in the BC Supreme Court

More on ICBC Injury Claims and "Sufficient Reason" to Sue in Supreme Court

If a Plaintiff sues in Supreme Court but is awarded damages of $25,000 or less (the current financial limit of the BC Small Claims Court) the Plaintiff is not entitled to Costs unless they had “sufficient reason” for suing in the BC Supreme Court.
It is becoming reasonably well established that a Plaintiff has sufficient reason to sue in Supreme Court when the Defendant is insured with ICBC.  The reason being that the Defendant will likely be represented by a lawyer paid for by ICBC whether the claim is filed in Small Claims Court or the Supreme Court.  In these circumstances it is reasonable for a plaintiff to hire a lawyer to balance the playing field.  Since the Supreme Court allows costs orders to offset some of the legal fees our Courts have held on a few recent occasions that this creates a ‘suffient reason’ for Plaintiff’s to bring modest claims to trial in the Supreme Court.  Reasons for judgement were released today demonstrating this.
In today’s case (Zale v. Colwell) the Plaintiff was injured in a BC motor vehicle collision.  She sued in the Supreme Court.  At trial she was awarded just over $10,000 for injuries and losses.  Mr. Justice Harvey went on to award the Plaintiff costs despite the fact that the Small Claims Court could have heard the case.  The Court provided the following reasons:

[7]             None of the factors identified in Spencer have application here. The matter was not factually complex; it proceeded by judge alone; liability was admitted, obviating the need for examination for discovery by the plaintiff; the defendant resided within the jurisdiction; and, the matter did not proceed by way of summary trial.

[8]             As was noted in Spencer, the desire of the plaintiff to have counsel, alone, is not a sufficient reason, of itself, to depart from the underlying proposition stated in R. 57(10). In any event, the plaintiff was represented when the action was originally commenced in Provincial Court in 2006.

[9]             Lastly, the plaintiff says costs should be awarded owing to the fact the defendant, in effect ICBC, is an institutional litigant with rigid policies in low velocity collision claims such as this.

[10]         The defendant, while admitting liability, put the plaintiff to the strict proof of any damages whatsoever arising from the accident. That position did not change throughout the trial process. As in Spencer, I am left with the conclusion that but for the trial process, the plaintiff would be left without a remedy…

[13]         In each of the above three decisions, the primary reason for awarding the plaintiff costs, in circumstances not unlike these facing the plaintiff here, was the consideration that given the need to retain counsel to battle an institutional defendant,  a reasonable consideration in determining the forum is the matter of indemnity for the costs of counsel.

[14]         Recognizing that the onus rests on the plaintiff to demonstrate sufficient reason to have raised the matter from Provincial Court to Supreme Court, I am not persuaded that the distinguishing factor noted by the defendant, that counsel was retained (albeit not the same counsel) for the Provincial Court proceeding, is sufficient to deprive the plaintiff of the costs of the proceeding under R. 66.

[15]         I conclude that in the circumstances, it was ultimately reasonable for the plaintiff to make the decision to have the matter heard in Supreme Court.

[16]         Accordingly, the plaintiff will have her costs pursuant to R. 66(29)(b).

I should point out that today’s case relied on BC Supreme Court Rule 57(10).  This rule has now been repealed and replaced with Rule 14-1(10) which reads identically to Rule 57(10) so the precedents developed under Rule 57(10) regarding costs should continue to assist litigants under our new rules.  I should also point out that the BC Court of Appeal is expected to address the issue of sufficient reason for suing in the BC Supreme Court and provide further clarity and certainty to this area of the law.

More on Court Costs and "Sufficient Reason" For Suing in the BC Supreme Court

Further to my previous posts on this topic, if a Plaintiff successfully sues in the BC Supreme Court but receives damages below $25,000 they may be deprived of their court ‘costs’ unless they had ‘sufficient reason’ for choosing the Supreme Court over small claims court.
Two judgements were released this week by the BC Supreme Court discussing this area of law.  In this weeks cases (Spencer v. Popham and Spencer v. Horton) the Plaintiff was involved in 2 separate  BC car crashes.  She started separate lawsuits in the BC Supreme Court but settled her cases before they went to trial.  Both claims settled form amounts below $25,000 (the current financial limit of BC’s small claims court).  The Plaintiff and ICBC could not agree on the issue of costs.
ICBC argued that since both cases were in the small claims courts jurisdiction the Plaintiff did not have sufficient reason for suing in the Supreme Court.  Mr. Justice Punnett disagreed and awarded the Plaintiff costs in both claims.  In doing so he provided the following useful and through summary of this area of the law:

[8] Rule 57(10) of the Rules of Court states:

A plaintiff who recovers a sum within the jurisdiction of the Provincial Court under the Small Claims Act is not entitled to costs, other than disbursements, unless the court finds that there was sufficient reason for bringing the proceeding in the Supreme Court and so orders.

[9] This rule encourages persons to bring actions in Small Claims Court when a claim falls within that court’s monetary jurisdiction. It is an example of “proportionality”; the judicial process should match the amount in dispute. However, the court must also respect a party’s “legitimate choice” of forum: Reimann v. Aziz, 2007 BCCA 448, 286 D.L.R. (4th) 330 at para. 35.

[10] The burden is on claimants to evaluate their claims prior to commencement and to justify their decision if they recover less than the Small Claims Court limit, currently $25,000:Reimann at para. 38. If plaintiffs fail to sufficiently investigate and assess their claims prior to commencement, they risk not recovering costs. In a personal injury action this may require plaintiffs to obtain medical records and medical reports, to gather evidence to support claims for loss of earnings and earning capacity, and to assess the evidence in support of the claims being advanced before commencing the action.

[11] However, as noted by Justice Savage in Gradek v. DaimlerChrysler Financial Services Canada Inc, 2010 BCSC 356 at para. 19, R. 57(10) contemplates the possibility that factors other than quantum must be considered:

[19]      The proviso in Rule 57(10) is “unless the court finds that there was sufficient reason for bringing the proceeding in Supreme Court and so orders”. The Rule does not define “sufficient reason”. There is nothing in the Rule that limits the extension of the term “sufficient reason” to matters relating to the quantum of the claim.

[12] Factors that can give rise to “sufficient reason” were set out in Kuehne v. Probstl, 2004 BCSC 865 at para. 22, and accepted in Icecorp International Cargo Express Corp. v. Nicolaus, 2007 BCCA 97, 38 C.P.C. (6th) 26 at para. 27. They include:

i. the legal or factual complexity of the case;

ii. the need for discovery of documents and examinations for discovery;

iii. the need for a judgment enforceable outside of British Columbia;

iv. a bona fide preference for a jury trial; and

v. access to the summary trial procedure available in Supreme Court.

Other factors can be the need for the plaintiff to have legal counsel (Faedo v. Dowell, 2007 BCSC 1985 at para. 36; Ostovic v. Foggin, 2009 BCSC 58 at para. 42; Gradek at para. 43), and the defendant’s denial of liability, causation, and injury or loss and allegations of contributory negligence, pre-existing conditions, previous causes and a failure to mitigate (Ostovic at paras. 39-40; Gradek at para. 35).

[13] Therefore, a plaintiff’s evaluation of his or her claim, can also involve an assessment of these factors. Even if the plaintiff assesses the claim to be within the jurisdiction of the Small Claims Court, the plaintiff can rely on these other reasons to commence the action in Supreme Court: Johannson v. National Car Rental (Canada) Inc., 2009 BCSC 1284 at para. 5.

[14] In my opinion, a plaintiff’s simple desire to retain counsel is not in and of itself a sufficient reason for commencing the action in Supreme Court. Other factors, such as those noted above, determine whether retaining counsel is justified.

[15] In Faedo, the plaintiff was in a low impact collision and suffered a soft tissue injury to her neck and back. Justice Vickers found that the case was not that complex and plaintiff’s counsel could not have considered ICBC’s original dispute of liability a serious threat to recovery. However, Justice Vickers concluded that it was reasonable for the plaintiff to have brought her claim in Supreme Court for two reasons: (1) when the action was commenced, the plaintiff believed she was suffering from the accident and her pleadings included a claim for loss of earning capacity and disruption of the ability to earn income; and (2) ICBC put her credibility seriously in issue when it took the position that she had not suffered from any injury or any significant injury. Justice Vickers continued at para. 36:

[36]      … I observed this plaintiff to be very nervous in court. She had no previous experience in court and in my opinion when she was confronted with a case where the defendant represented by counsel was suggesting that she hadn’t been injured at all and this was a low impact accident in which it was suggested she wouldn’t be injured, that the plaintiff reasonably required counsel to represent her and reasonably started an action in the Supreme Court where she could hope to recover some of the cost of retaining that counsel which was necessary for her to properly put her case to get the compensation I have found her entitled to. Furthermore, an offer to settle such as the plaintiff made in this case puts very little pressure upon a defendant to settle where there is no exposure to costs.

[16] In Ostovic, another case arising out of a low impact accident, Justice Savage noted that because the defendant denied liability, causation and special damages, the plaintiff had to prove these issues in court. Because of this, the plaintiff needed to avail himself of pre-trial discovery, which provided important evidence of the speed of impact, the consequences of impact and concern over the plaintiff’s condition. In addition, Justice Savage found at para. 42:

[42]      There is the additional factor that, as in Faedo and Kanani [v. Misiurna, 2008 BCSC 1274], the Plaintiff faced an institutional defendant which, in the ordinary course, has counsel. To obtain any recovery the Plaintiff is forced to go to court, where he is facing counsel and counsel is reasonably required, but in Provincial Court there is no way of recovering the costs of counsel.

[17] In Gradek, before the issuance of the writ, the defendants’ insurers had informed the plaintiffs that their position was the accident did not result in any compensable injury. In their pleadings, the defendants denied liability and injury or loss and alleged contributory negligence, the existence of a pre-existing injury and previous causes, and a failure to mitigate. There was a broad range of findings possible respecting liability. The plaintiff, Henryk Gradek, was a Polish immigrant who spoke halting English. Justice Savage found at para. 42 that “he would have had extraordinary difficulty presenting a case on his own” and would have been “out-matched” by either a lawyer or an ICBC adjustor. The plaintiff needed counsel to obtain a just result and, therefore, had sufficient reason to begin the action in Supreme Court.

[18] Plaintiffs do not have an ongoing duty to reassess their claims as the matter proceeds: Reimann at para. 44. Thus, the court must assess whether a plaintiff had “sufficient reason” to bring the action in Supreme Court when the plaintiff started the action: Ostovic at para. 35. This analysis is necessarily done with the benefit of hindsight since it only occurs after trial or settlement, but the court must be careful not to use that hindsight in deciding what was reasonable: Faedo at para. 28.

[19] It also must be remembered R. 57(10) “does not involve an exercise of discretion.” Rather, “the court must make a finding that there was sufficient reason for bringing the action in the Supreme Court” (emphasis added): Reimann at para. 13.

In my continued effort to cross reference the current Supreme Court rules with the new Rules of Court that come into force on July 1, 2010 I will note that the Current Rule 57(10) will become Rule 14-1(10) and it reads identical to the current rule so the precedents developed under Rule 57(10) regarding costs should continue to assist litigants under our new rules.

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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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