IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20101122

Docket: M035207

Registry:
Vancouver

Between:

David
Stapleton

Plaintiff

And

Sofia Charambidis,
Jane Doe, Robert Gish

and
Robert Gish Limited

Defendants

Before:
Master Baker

(as
Registrar)

Reasons for Decision

ISSUE

[1]            
This is the assessment of the costs of the plaintiff in personal injury
litigation.

BACKGROUND

[2]            
Mr. Stapleton was involved in two motor vehicle accidents, the first
November 28, 2001 and the second November 8, 2002.  Liability in the first
accident was a live issue so that there was a trial on that issue before
Kelleher J. who found Mr. Stapleton 80% at fault and Ms. Charambidis 20% at
fault.  He also ordered that “Costs of this trial will follow the event”.

[3]            
The matter ultimately settled for $100,000.00 “and costs”.  From these
simple facts several issues have arisen.  The first issue was the allocation of
units for various tariff items.  Having heard the arguments on this aspect, I
have decided that the units will be awarded as per the attached Schedule.  I
will comment on several items claimed and argued, however.  First, the meaning
of “documents” under tariff items 7 and 8 was argued by counsel.  The
plaintiff’s list of documents totalled some 297 separate instruments, totalling
4305 pages.  The defence list was 665 instruments, totalling approximately 1100
pages.  Note that I use the word “instrument”; hopefully it is neutral enough
for my purpose.  Mr. Gibson argues that “document” cannot be restricted to
refer only to the 297 or 665 separate instruments.  It must have a broader
meaning, he says, to include the actual pages, so that 297 instruments, with
4305 pages, can, for the purpose of Item 8, come within 8(b) (“1000-5000
documents”).  Ms. Jamieson takes a more restricted meaning, and argues that a
document is a document and a page is a page, and that if the legislature meant
“pages” Schedule B would have said so.

[4]            
I am surprised that, given the paper-driven nature of modern litigation,
that there are no cases reported on the subject.  In my view, the term must be
given a flexible and reasonable interpretation.  First, the Rules (both
previous and current) direct that “document”:

has an extended meaning and includes a photograph, film,
recording of sound, any record of a permanent or semi-permanent character and
any information recorded or stored by means of any device;[1]

It would be a mistake, perhaps,
to conflate “extended” with “flexible”, but I infer from this that “document”
is not intended to have a restricted meaning.  Moreover, I see nothing in the
definition of “document” in the Shorter Oxford English Dictionary that
restricts the meaning of “document”, if comprised of more than one page, to
refer only to the compendium or collection of those pages:

…written instrument…official paper…something written,
inscribed, etc. which furnishes evidence or information upon any subject…

It seems to me the only reasonable course is, if necessary,
to examine each instrument and weigh its length, complexity, and potential
relevance.  An instrument comprising 800 or1000 pages, for example, may be a
rote compendium of pro forma information of little importance and worth little
examination.  A 50 page instrument, on the other hand, may have pivotal
elements that require substantially more attention.  At the same time, it would
seem to me that the obvious course is to begin with the assumption that each
enumerated item on a party’s list of document is a “document”, and if the party
presenting the bill of costs wishes to argue otherwise (as does the plaintiff
in this case) then it is incumbent on him or her to explain why that
presumption should be relaxed.  I am satisfied in this case that some
relaxation and broadening of the interpretation is justified.

[5]            
The plaintiff also claimed under Item 26 (written arguments) when, in
fact, no written argument had been requested or ordered by the court. 
Nevertheless, for sheer thoroughness Mr. Gibson did prepare written argument
before Kelleher J.  The item is clear in its description, however, and as the
argument was not mandated by the court, no units are justified.

[6]            
The second issue was the costs order of Mr. Justice Kelleher: how is it
to be interpreted?  The defendant argues that, as the court found only 20%
liability against her, she should pay only 20% of certain costs, in accordance
with s. 3 of the Negligence Act[2]. 
The defence limits this argument to those tariff units attributable only to the
trial i.e. items 24 and 25 and the disbursement for hearing room fees.  Mr.
Gibson submits that the hearing and Kelleher J.’s decision only resolved an issue,
and not the event.  The event is resolved only at the end of the
proceedings when all issues are decided by the court.  This point, he argues,
had not been reached until the parties settled.  That settlement was for
$100,000.00 “and costs”.  The settlement, in effect, resolves the matter and
constitutes “the event”, argues Mr. Gibson, and as such Mr. Stapleton should
not suffer any reduction in his costs that relate to the negligence
apportionment.

[7]            
I am persuaded that Mr. Gibson’s perspective is the correct one.  I
agree that there is a distinction between ‘issue’ and ‘event’, that the
distinction applies in this case, and that Mr. Justice Kelleher resolved only
one issue of several that would have required decision had the parties not
settled.  Moreover, the defence had the opportunity to limit the costs in
accordance with liability during its negotiation.  It could have structured its
offer accordingly but apparently did not.  As such, the generality of the costs
portion of the settlement means to me that the usual approach to costs will
apply i.e. Mr. Stapleton is entitled to his costs, subject only to assessment
in the usual way.

[8]            
Finally, various of the disbursements are in issue; I will discuss below
the ones in dispute, but by far the most emphatically disputed disbursements
are those for the expert reports and opinions of Stafford & Associates
(“Stafford”), chartered business valuators.  I will leave discussion of that
expense for last.  Any disbursements not discussed or referred to below are
accepted as submitted by the plaintiff.

[9]            
Hearing fees.  Plaintiff’s counsel, in its first bill of costs,
mistakenly claimed for three days’ hearing fees, but at this hearing acknowledged
that the matter only took two days, for a fee of $624.00

[10]        
Photocopying.  Counsel has claimed $5,939.10, calculated at $0.30 per
page.  As Ms. Jamieson points out, the allowable cost is $0.25 per page.  Even
so, the figure translates to 19,796 pages; in other words, almost exactly 15
volumes of Tolstoy’s War And Peace (Penguin/Signet edition).  Mr. Gibson’s firm
uses Copytrak software to record every copy made on a particular file, but he
acknowledged that the system does not distinguish between ordinary office
copies and copies necessary to the litigation.  There were numerous experts
involved in this case, and counsel kept each expert fully informed of
developments, other (especially opposing) experts’ reports, and the like.  But
in doing so, said Mr. Gibson, he scanned many of the documents into digital
form and forwarded them on disks (see para. 12 below).  Allowing, then, for a
reduction in hard copies by the use of digital ones, 19,796 is a number hard to
digest.  I cannot see that it has been justified in this case.  The defence has
submitted $3,500.00 (i.e. 14,000 copies) to be reasonable and I agree. 
Photocopying is therefore allowed at $3,500.00.

[11]        
Courier fees.  The plaintiff incurred $358.86 courier charges, but the
defence argues that they have not been explained or justified.  With counsel in
the same city as the action and experts reasonably proximate, I agree that the
charge, even over several years’ litigation, seems excessive.  On the other
hand I recognize that even in an age of digitization it is occasionally
necessary to deliver hard copies quickly (although Mr. Gibson said that none of
the fees were for expedited service).  I will allow $100.00 courier fees.

[12]        
Scanning.  As mentioned above, Mr. Gibson’s firm now scans many
documents into digital form and distributes them on disks.  For this he claims
a scanning cost of $2,167.75.  I support the use of digital documents entirely,
as it inevitably will encourage efficiencies,  improve communication and
understanding, and eventually reduce costs.  The evidence respecting the charge,
however, was incomplete, possibly due to the fact that the firm was changing
over to scanning technology during this litigation and Mr. Gibson could not
advise when the change took effect.   Given the sum claimed for photocopying,
above, to add another $2,000.00 seems, with respect, excessive.  Given that it
is relatively new and to be encouraged, I will allow $500.00.

[13]        
Legal research.  The plaintiff claims $501.73 for online legal
research.  Ms. Jamieson points out that in the trial before Kelleher J. the
plaintiff submitted only four cases.  Mr. Gibson, however, submits that the
only law before the court at that trial was that relating to contributory
negligence, and that many other aspects of Mr. Stapleton’s case were
researched.  Beyond this, however, is the fact that charges for online research
have been a point of contention for a long time, with cases for both sides of
the argument.  I am of the view, however, that we have reached the stage that
computer-assisted legal research is so commonplace that it has probably
supplanted conventional law library research, and that its cost is one more
line item in a typical law firm’s budget.  In this case the evidence is that
the cost of research is not attributed to a particular file other than to
average the subscription cost for a particular month amongst the files that
needed research in that month.  It seems to me that this invites a waterbed
approach: in a slow month, for example, if only two files needed research their
research costs would be unusually high, compared to a month in which, say, 20
or 30 files were researched.  This cannot be the basis for rational attribution
of a party’s costs to the other party.  I allow no charge for legal research.

[14]        
Video disks and compact disks.  The plaintiff claims $60.00 for the use
of 12 disks.  Ms. Jamieson submits that only three disks were listed in the
plaintiff’s list of documents.  The disks were used, argued Mr. Gibson, as
described above i.e. to record and forward evidence for experts.  Given that
the court should support and encourage any greater efficiencies possible, I
accept this as a reasonable disbursement.

[15]        
Encore Investigator.  Mr. Stapleton initially claimed this $820.00
expense, but at the hearing Mr. Gibson conceded that it was not an appropriate
claim and waived the expense.

[16]        
MediTech Visual Aids.  This is a claim for $150.00, an invoice submitted
by a company specializing, apparently, in imaging technology for litigation. 
In this case, I believe they were organizing or producing materials for
mediation, but the matter settled without their further involvement.  Still,
their invoice referred to “travel” and “attendance”, when, as Mr. Gibson
agreed, no such travel or attendance occurred.  I regard this as, in all
likelihood, a template form of account, and accept that their preliminary preparations
and, quite possibly, scheduling time for active participation in mediation or a
trial, justified the fee.

[17]        
Talbot Mediation.  The plaintiff initially claimed $275.00 for an
account for a cancelled mediation session, but withdrew the claim at this
hearing.  No fee, therefore, is allowed in for Talbot Mediation.

[18]        
Stafford and Associates.  Far and away the greatest point of dispute in
this assessment was the accounts of Stafford and Associates.  The principal of
the firm, Mr. Campbell Stafford, gave evidence at the assessment.   He clearly
is a highly trained individual.  He is a law school graduate, called to the bar
in 1996.  He then qualified firstly as a chartered accountant and then as a
chartered business valuator.  He was first retained as an accountant and later
as a valuator.  The total Stafford fee claimed, including tax and
disbursements, is $39,479.04.  Ms. Jamieson opposes the charge for several
reasons.  First, she has done the math, as they say, and has added the invoices
exhibited: they total $36,458.92.  The $3,020.12 difference has not been
explained.

[19]        
But more generally she challenges the necessity and appropriateness of
the work done and time spent by Mr. Stafford and his firm.  By contrast, she had
retained Ms. Rosanne Terhart, a chartered accountant and chartered financial
evaluator, first to review Mr. Stafford’s reports for rebuttal at trial, and
then to critique the charges claimed for the investigation and report.  Ms.
Terhart has qualified as an expert in the Supreme Court of British Columbia on
quantification of damages.  Her opinion is that calculation of income loss in
this case would incur a fee of between $6,000.00 and $10,000.00.  She did not
give oral evidence.

[20]        
Mr. Stafford’s involvement came in two main phases.  At his initial
engagement in February 2007 he estimated his fee would be between $10,000.00
and $15,000.00.  His hourly rates at that point were those of an accountant. 
Very early on he realized there were difficulties in performing the analysis,
and by mid-May of 2008 he realized he could not stay within his fee quotes.  He
returned the file, approximately $4,000.00 remaining in his retainer, and
declined to do further work.

[21]        
Not surprisingly Mr. Stafford and Mr. Gibson discussed this problem. 
Mr. Stafford estimated that his “additional fees” would be in the order of
$16,000.00 to $22,000.00: Mr. Gibson wanted the work completed for $12,500.00. 
No agreement was reached at that time so Stafford and Associates ceased work on
the file.  Interestingly, Mr. Stafford’s evidence was that, even with these
budgeting concerns, he had not charged for either his or his associates’ time
on the matter from February 26, 2007 until May 19, 2008 and, in fact, at an
early stage (February 2007) had discounted one fee, $2,490.50 by half, to
$1,245.15 “in an effort to keep our overall fees to a reasonable level…”[3]. 
At this first stage of Stafford’s work Mr. Stafford’s hourly rate was $215.00
and his associates’ time ranged from $65.00 to $105.00 per hour.

[22]        
One of the main reasons for this retainer/budget problem was Stafford’s
expectation that it would be reviewing timely and reliable accounting
information, but that did not turn out to be the case (para. 25 below).

[23]        
Stafford quickly became re-involved and was retained again in June 2008,
but the terms had changed.  While the scope of work had not broadened (indeed,
it may have narrowed, as the retainer did not refer to critiquing opposition
reports or preparation and attendance for trial) the estimate certainly had. 
Stafford increased its fee estimate to $15,000.00 to $20,000.00.  This increase
was in part due to Mr. Stafford having qualified as a chartered business
valuator and, in my view, due to his greater familiarity with Mr. Stapleton’s
business and the likely problems in analyzing it.

[24]        
Mr. Stapleton’s business was not a complex one.  He and a partner, Mr.
Yang, operated a business delivering coffee and related supplies to
professional offices.  Their customer list does not seem to have been very
extensive and leaned, if anything, toward law firms.  One of the Stafford
reports exhibits Appendix F, a list of customers, numbering only 10.  Even if
this is not an exclusive list, it indicates a small company.  Taking the broad
view, I have to say that I cannot see why an analysis of such a relatively
small and uncomplicated business, and Mr. Stapleton’s income from it, should
consume so much energy.

[25]        
There are several possible answers to this question.  First, Mr.
Stapleton, by Mr. Stafford’s own account, turned out to be an uncooperative
client.  Not much specific evidence was given on this point, but it is very
clear that he did not assist his counsel or expert much in preparing his own
claim.  His personality, it seemed, made him “not an easy person to deal with”,
as Mr. Stafford put it, but moreover, the operation of the business was clearly
divided: Mr. Stapleton was the hands-on person who actually delivered the
coffee to customers.  He had very little familiarity with (or, I infer,
understanding of) the company’s accounting.  Mr. Yang was in charge of that and
he was clearly incompetent.  In fact, the accounts were in such disarray and
confusion that Mr. Stafford worried about possible defalcation.  There was no
consistent or uniform accounting system and Mr. Stafford and his firm had to
practically reconstruct the accounts to attempt any meaningful reconciliation
and understanding.

[26]        
Mr. Stafford in his evidence played down the time and resources absorbed
by this aspect.  He said, for example, that it did not always mean increased
time spent, but rather delays in the work as he waited for better information,
but I conclude that it was a significant concern and preoccupation during at
least the early or preliminary valuation process.  Neither Mr. Stapleton nor
Mr. Yang was any real help.  Mr. Stafford had to rely on his own resources and
the help of Mr. Stapleton’s friend, Ms. Cooper who, while not an accountant or
formal bookkeeper, had enough bookkeeping skills and familiarity with the
business, it seems, to assist.

[27]        
There is another reason that the possibility of misappropriation or
fraud consumed Mr. Stafford’s time: he gave evidence that it was part of his
professional and ethical responsibility as a chartered accountant and business
valuator to follow up on any suspected fraud or defalcation and, if necessary,
to report it appropriately.  He discharged this duty, he said, and satisfied
himself that while the problems and irregularities were significant and
consequential, they originated from incompetence and neglect on Mr. Yang’s part
rather than dishonesty.

[28]        
None of this time, effort, or cost, in my view, can or should be visited
upon the defendants.  Mr. Stafford expected reliable and timely accounting
information from the plaintiff and his business when he was first engaged.  Any
deviation from that, in the usual course, is Mr. Stapleton’s problem and any
cost or expense in remedying that must be borne by him.

[29]        
In the result, Mr. Stafford estimated Mr. Stapleton’s past losses at
$30,000.00 to $50,000.00 and his future losses at $311,000.00 to $677,000.00
depending, of course, on which contingencies the court would accept or reject. Mr.
Stafford demonstrated impressive thoroughness and assiduity in coming to these
conclusions.  I cannot fault his professionalism or efforts in that regard,
except to say that in my view he did more than was necessary.  A singular
example would be his personal involvement in the assessment and confirmation of
Mr. Stapleton’s customer relationships.  Mr. Stafford himself called a list of
the customers and either spoke directly with representatives about Mr.
Stapleton’s service (current and future) or exchanged messages.  He then
confirmed every telephone call and its contents and conclusions by letters to
each of the customers involved.  He did so, he said, to “…assess the
reasonableness of assumptions…” he was given by counsel.  Mr. Stafford,
again, played down the time and work taken in this (about 4.2 hours recorded)
but I conclude at least two things from this.  First, I think this unusual step
was taken, in part, because of the profound unreliability of the raw
information first given to Mr. Stafford (viz. para. 25 above).  I suspect that
Stafford and Associates felt compelled to establish even the most basic of
facts and circumstances in order to prepare and defend its opinion.  Second, I
suspect that this permeated the entire process of valuation and that it may
well have occurred in other areas of analysis.  Mr. Stafford spent a great deal
of time on Mr. Stapleton’s behalf: I attribute some of that to his personal
professional commitment to a high standard, but some, in my view, was also
necessary due to the chaotic accounting situation that he initially confronted.

[30]        
Mr. Stafford has been very thorough and precise, as well, in reporting
all of the time his firm expended.  I am not as concerned as Ms. Jamieson about
the lack of specificity in reporting associates’ time (and not breaking down or
attributing which associate spent what time at which rate on the range from
$65.00 to $100.00 for the first retainer and $125.00 to $185.00 for the
second).  She raises numerous concerns, however, that are justified.  The
Stafford accounts reflect, for example, 23.3 hours of telephone calls and
meetings and 21.6 hours arising from correspondence.  A further 69.2 hours were
consumed in “considering issues” and “draft report preparation”.

[31]        
I am concerned about these specific amounts, but about several other aspects
of the matter as well.  First, there is the chaotic financial information that
confronted Mr. Stafford.  Second, there is the unhelpful attitude of Mr.
Stapleton himself.  Third, there is the fact-finding (i.e. discussions with
customers) to prove assumptions.  This, with respect, is the task of counsel
and the court.  Generally an expert is given clear and specific assumptions to
work with (or, occasionally, postulates or assumptions to test as, with, for example,
physical components).  It is the job of counsel to set and prove those
assumptions and the job of the court to conclude whether or not that proof is
acceptable.  There is no question in my mind that in this case Mr. Stafford
undertook some of these tasks himself, and the court has in the past disallowed
expenses incurred in the interviewing of witnesses[4]. 
Again, some of these concerns may help explain the (in my view) excessive time
spent (para. 28, above).

[32]        
But fourthly and significantly, there are the new Rules of Court and
their emphasis on proportionality.  Much of the thrust of the quest for
proportionality is, of course, directed to steps and processes in the
litigation itself as in, for example, the discovery of documents, limitations
on examinations for discovery and, indeed, the necessity at an early stage for
an overall litigation plan.  But surely this proportionality must, in
appropriate circumstances, extend to disbursements expended by the parties.

[33]        
Disbursements are allowed, or not, in accordance with Rule 57(4), now
Rule 14-1(5) and, of course, the reasoning in Van Daele v. Van Daele[5]:
a “reasonable amount” will be allowed for those expenses “necessarily or
properly incurred”.

[34]        
The essential question is usually: was an expense or disbursement
necessary at the time it was incurred.  This, of course, recognizes the
essentially investigatory nature of many expenses.  Counsel on both sides of a
dispute, as litigation develops, are engaged in constant investigation and
re-investigation, revisiting earlier perspectives and conclusions in light of
developing facts and information.  They cannot be faulted for incurring
expenses that, in the final analysis, do not advance their case.  They are
obliged to discover both the good news and the bad news, as it were.

[35]        
It is difficult to predict the future, but learning what lies in the
future is the point of much of the discovery process.  While it is not possible
to predict with certainty what lies ahead, one can often take a very good and
educated guess, so to speak.  And it is training and experience that assist
counsel and their experts in those educated guesses.  By “guess” I mean
estimating the general range of possible outcomes and governing efforts and
disbursements accordingly.  I think, with respect, that that is what lay behind
Mr. Stafford’s comment to counsel (para. 21, above) to the effect that he
wished to keep the expense to a reasonable level.

[36]        
Mr. Stapleton’s business was not complex.  It involved a very simple
business model (he secured coffee supplies and delivered them to retail
customers), only one partner, and a very limited number of customers.  I cannot
understand why the analysis of his possible past and future loss in that
undertaking consumed so much time and such a high degree of expertise as that offered
by Mr. Stafford.  Retaining Mr. Stafford as a chartered accountant, initially,
at an hourly rate of $215.00, and an estimated cost of $10,000.00 to $15,000.00
made sense at the time.  But continuing with his services as a fully trained
business evaluator, with an hourly rate increased to $350.00 (and associates’
rates increased from $65.00-105.00 to $125.00-185.00) does not.  The new rules,
with their emphasis on proportionality, have placed new emphasis on Van
Daele’s caution against expenses that are “… extravagant…or a result of
excessive caution or excessive zeal…”[6],

[37]        
Bearing these factors in mind (bad records, an uncooperative client,
possible excessive effort by Mr. Stafford, opinions of other experts (Ms.
Terhart, para.19, above) and the need for proportionality the Stafford accounts
for which the defendant will be responsible are reduced to $20,000.00.

Summary

[38]        
In sum, then

 a)       There will be no reduction in costs due
to Kelleher J.’s apportionment of liability;

 b)       Tariff units will be allowed, all at
Scale B, as per the attached Schedule

 c)       Disbursements are allowed as above.

Given that there have been
significant reductions in the costs and disbursements allowed, each party will
bear their own costs.

 “Master
Baker”

Schedule