Tag: Wong v. Lee

No "Principled Basis" To Award ICBC Costs Following Trial in Place of Defendant


As previously discussed, the BC Supreme Court has a “loser pays” system.  In short this means that the losing party generally has to pay the winning sides costs.  Since most personal injury lawsuits are defended by ICBC (or other insurance companies) do they get the benefit of a costs award when they are on the winning side of a lawsuit or do the costs get paid to the insured Defendant?  Reasons for judgement were released last week by the BC Supreme Court, Vancouver Registry, addressing this interesting issue.
In last week’s case (Wong v. Lee) the Plaintiff sued for damages following a motor vehicle collision.  The lawsuit was dismissed with Jury finding that the Defendant was not responsible for the crash.  Ultimately the Plaintiff was ordred to pay the Defendant costs.  ICBC argued the costs award should be in their favour (presumably to make it easier to exercise their collections rights under the Insurance (Vehicle) Act).  Madam Justice Dardi refused to make this order finding that there is no ‘principled basis’  to do so.  The Court provided the following reasons:
[35] The defendants contend that any costs awarded to them ought to be paid directly to ICBC, who is not a party to this proceeding. The defendants acknowledge that there does not appear to be any authority directly on point.


[36] The paramount principle to be derived from the authorities is that any discretionary exceptions to the usual costs rules must be made judicially: Bailey v. Victory (1995) 4 B.C.L.R. (3d) 388, 57 B.C.A.C. 23 (C.A.) at para. 13.

[37] The defendants primarily anchor their submissions on s. 84(1) of the Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231 [formerly s. 26 of the Insurance (Motor Vehicle) Act]. Section 84(1) of the Insurance (Vehicle) Act provides as follows:

84  (1) On making a payment of benefits or insurance money or assuming liability for payment of benefits or insurance money, an insurer

(a) is subrogated to and is deemed to be the assignee of all rights of recovery against any other person liable in respect of the loss, damage, bodily injury or death of a person to whom, on whose behalf or in respect of whom the payment of benefits or insurance money is made or to be made, and

(b) may bring action in the name of the insured or in its own name to enforce the rights referred to in paragraph (a).

[38] On a plain reading of s. 84(1) of the Insurance (Vehicle) Act, the provisions pertain to the statutory subrogation issues between the insured and the insurer, which issues were not before me in this litigation. It is axiomatic that this subsection is not determinative of the dispute between the plaintiff and the defendants in this case. An award of costs to ICBC, who is not a party to this proceeding, would constitute a departure from the usual rule that the defendants who were the successful parties in this litigation be awarded costs. In my view, these statutory provisions do not establish a basis for an order displacing the usual rule…

[44] While the Court of Appeal in Perez v. Galambos, 2008 BCCA 382, recognized the jurisdiction to make a costs award in relation to a non-party, the Court observed that such an award is unusual and exceptional, and should only be made in “special circumstances” (at para. 17). The Court stated that a non-party who is funding litigation can be liable for costs as the real litigant if they have put forward an insolvent party as a “man of straw” to avoid liability for costs or if the non-party has promoted the litigation improperly so as to be liable for the tort of maintenance. The Court in Perez declined to order that the insurer who defended the action pay the costs of the successful plaintiff. Since the facts in this case are clearly distinguishable from those in Perez, that case does not assist the defendants. Moreover, I also note that neither counsel brought it to the Court’s attention that this decision was reversed by the Supreme Court of Canada and the issue of costs was left to the parties to resolve or, in the alternative, remanded back to the Court of Appeal for further consideration. It does not appear that there has been any further consideration by the Court of Appeal.

[45] In their submissions the defendants also cite Qureshi (Guardian ad litem of) v. Nickerson (1991), 77 D.L.R. (4th) 1, 53 B.C.L.R. (2d) 379 (C.A.). However, in my view there is no principle to be derived from Qureshi that supports the defendants’ submission that ICBC should be entitled to an award of costs in this case. In that case, the plaintiff argued that the defendant had not incurred any costs in his successful defence of a medical malpractice claim because those costs had been paid on his behalf by the Canadian Medical Protective Association. The Court of Appeal found that there was no contract of indemnification and no right of subrogation between the defendant and the Canadian Medical Protective Association. The Court concluded that in the absence of a right of subrogation, and having not incurred any liability for fees and disbursements in defending the claim, the defendant was not entitled to a costs award against the plaintiff.

[46] In summary on this issue, I am not persuaded that in the circumstances of this case, there is any principled basis upon which this Court should order that the plaintiff pay costs to the non-party ICBC.


"Special Costs" Clause Takes the Teeth Out of ICBC's Formal Settlement Offer


I’ve written many times about the risks and consequences formal settlement offers can create in the course of a personal injury lawsuit.  Interesting reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, refusing to give ICBC double costs after the dismissal of a lawsuit because of a ‘special costs‘ clause in their formal offer.
In this week’s case (Wong v. Lee) the Plaintiff was injured in a 2003 motor vehicle collision.  She sued her driver but the lawsuit was dismissed with a Jury finding the driver was not negligent.  Typically such a result obligates the Plaintiff to pay the Defendant’s costs due to the BC Supreme Court’s Loser Pays system.
Prior to trial ICBC made a formal settlement offer of $60,000.  In these circumstances the Court has the discretion to award ‘Double Costs‘.  ICBC, on the Defendant’s behalf, asked for the Court to make such an order.  Madam Justice Dardi refused, however, finding that the ‘special costs’ clause which is contained in many of ICBC’s formal settlement offers operates to create uncertainty in the settlement process.  The Court provided the following useful reasons:








[27] The plaintiff’s overarching submission is that the inclusion of para. 6 in Appendix A of the Offer to Settle is fatal to the defendants’ application for double costs. The Offer to Settle was subject to the conditions in Appendix A which provides in para. 6 as follows:

Nothing in this offer detracts from the Defendants’ right to seek special costs against the Plaintiff or his counsel above and beyond the Defendants’ entitlement to costs under this offer. Neither the making nor the acceptance of this offer shall be deemed a waiver or estoppel by the Defendants in respect to any reprehensible or improper conduct on the part of the Plaintiff and / or his counsel in respect of this proceeding. [Emphasis added.]

[28] Based upon these terms, even if the plaintiff had accepted the Offer to Settle, the defendants nonetheless would have been at liberty to pursue the plaintiff for special costs. Thus, there was a potential risk that the acceptance of the offer may not have ended all of the outstanding disputes between the parties.

[29] The Court of Appeal, in discussing Rule 9-1(5) in Evans v. Jensen, 2011 BCCA 279, articulated at para. 35 that “the most obvious and accepted intent of this Rule, namely to promote settlement by providing certainty to the parties as to what to expect if they make, or refuse to accept, an offer to settle”. The Court reasoned as follows:

[41]      This conclusion is consistent with the importance the Legislature has placed on the role of settlement offers in encouraging the determination of disputes in a cost-efficient and expeditious manner. It has placed a premium on certainty of result as a key factor which parties consider in determining whether to make or accept an offer to settle. If the parties know in advance the consequences of their decision to make or accept an offer, whether by way of reward or punishment, they are in a better position to make a reasoned decision. If they think they may be excused from the otherwise punitive effect of a costs rule in relation to an offer to settle, they will be more inclined to take their chances in refusing to accept an offer. If they know they will have to live with the consequences set forth in the Rule, they are more likely to avoid the risk.

[42]      This certainty in terms of the result of either making, accepting or refusing to accept an offer is also more conducive to the overall object of the Rules, which is “to secure the just, speedy and inexpensive determination of every proceeding on its merits”.

[30] It clearly emerges from the authorities that an important objective of offers to settle under the Rules is to bring certainty and finality to litigation. The reservation of the defendants’ right to seek special costs from the plaintiff after the acceptance of the offer is antithetical to this objective. It cannot be said that the Offer to Settle provided a genuine incentive to settle. As was stated inGiles v. Westminster Savings and Credit Union, 2010 BCCA 282 at para. 88, “plaintiffs should not be penalized for declining an offer that did not provide a genuine incentive to settle in the circumstances”.

[31] In short, para. 6 in Appendix A of the Offer to Settle militates against an award of double costs…





[34] In weighing all of the factors, the most significant being the inclusion of para. 6 in Appendix A of the Offer to Settle, I conclude that the plaintiff should not be required to pay double costs.



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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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