IN
THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20100513

Docket:
09-0843

Registry: Victoria

Between:

Melanie Spencer

Plaintiff

And

Rex Popham and Claudia Scherer

Defendants

Subject to Rule 66

Before: The Honourable Mr. Justice Punnett

Reasons for Judgment

In Chambers

[1]            
Melanie Spencer commenced her action in Supreme
Court but then settled her claim for an amount within the Small Claim Court’s
jurisdiction. Nevertheless, is she entitled to costs in this Court? Was there
“sufficient reason” for her to commence the claim in Supreme Court?

Background

[2]            
On June 14, 2007, the plaintiff, Melanie
Spencer, stopped at a red light and was rear-ended by the defendant Claudia
Scherer. Ms. Spencer states in her affidavit that some pain immediately
developed at the base of her neck, between her shoulder blades and in her right
shoulder. She missed seven days of work.

[3]            
She developed pain in her low back and hips. Her
ability to bend over and do housework was impaired. She attended massage
therapy and chiropractic treatment for the remainder of 2007. Her low back pain
continued and, in the spring of 2008, she attended an exercise rehabilitation
program. By the fall of 2008, she had improved although she was still suffering
from stiffness and pain in her lower back in January 2009 when a second
accident occurred.

[4]            
The defendants’ position prior to the plaintiff
filing the writ of summons on February 25, 2009, was that her claim was a low velocity
impact claim. The statement of defence, filed April 29, 2009, denied liability,
alleged that the plaintiff was liable for the accident, pleaded a number of the
usual allegations of negligence, denied that the plaintiff suffered any loss,
pleaded contributory negligence, denied causation, alleged pre-existing
conditions and accidents, and alleged a failure to mitigate. In total, the
statement of defence was 12 pages.

[5]            
It appears that at the time the action was
commenced, the plaintiff had not obtained any medical records or medical
opinions. Previous counsel apparently relied on the plaintiff’s evidence alone
in electing to commence the action in Supreme Court.

[6]            
The action was subsequently amended to a Rule 66
proceeding in May 2009.

[7]            
The parties settled the claim for $13,500.

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. (6^th) 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.

Application

[20]        
The plaintiff concedes that when she filed the
writ of summons, the exact degree of her soft tissue injuries was not known. Plaintiff’s
counsel had neither its own medical-legal report nor the CL19 Medical Report
generally obtained by ICBC. They did not know the amount of special damages or
past wage loss. However, they were aware that the defendants denied the
accident caused any compensable injury since the defendants had categorized the
claim as a low velocity impact claim. Therefore, prior to issuing the writ,
plaintiff’s counsel was aware of the probable form the defence would take.

[21]        
The plaintiff asserts that at the time of
commencement, presumably based on her own evidence, the claim could have exceeded
$25,000. If that was likely, then costs are recoverable.

[22]        
The defendants argue that the plaintiff lacked
the necessary medical evidence to make such an assessment. They also submit
that the settlement offers and settlement amount support their position that
the claim was always within the jurisdiction of the Small Claims Court.
However, offers of settlement made after the commencement of the action do not necessarily
relate to what was known at the commencement of the action.

[23]        
Arguably, at the time the action was started,
the claim could have exceeded $25,000. The plaintiff knew her injuries, from
which it took her 18 months to substantially recover, caused her pain at work,
disturbed her sleep, made her unable to do housework, and decreased her leisure
activities. She had missed seven days of work and required numerous visits to a
chiropractor and massage therapist. There is no evidence that the plaintiff
misled counsel or that her complaints lacked credibility.

[24]        
Further, even if it was clear that the claim
would fall within the Small Claims Court’s jurisdiction, the issues raised by
the defendant increased the complexity of the claim and the plaintiff’s need
for counsel. By denying liability, causation and that the plaintiff suffered
any loss, the plaintiff would have been required to prove these elements at
trial. Also, although unnecessary because the matter settled, discovery of the defendant,
which had been arranged, could have been important to the plaintiff’s case.

[25]        
In taking the position that this was a low
velocity impact claim the defendants created the situation giving rise to this
motion. Their pleadings raised a multitude of issues in their defence. Those
issues raised complex questions of fact and law. It is unlikely that a lay
person could address them competently. Therefore, I find that there was
sufficient reason for the plaintiff to bring the action in Supreme Court regardless
of the quantum at the time of commencement.

[26]        
The plaintiff shall recover her costs pursuant
to Rule 66 and the costs of this motion at scale B.

Punnett
J.