IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20110726

Docket: M114699

Registry:
New Westminster

Between:

Clifford
Axten & Daimler Chrysler Financial Services Canada Inc.

Appellant/Defendants

And

Perry Edward
Johnson

Respondent/Plaintiff

Before:
The Honourable Madam Justice Ker

On
appeal from decision of Master of Supreme Court of British Columbia, dated
February 14, 2011 (2011 BCSC 178)

Reasons for Judgment

Introduction

[1]            
This appeal arises out of a judgment on a dispute as to costs, handed
down by Master Keighley on February 14, 2011.  Reasons for judgment below are
indexed at Johnson v. Axten, 2011 BCSC 178 [Johnson].

[2]            
The originating action arose out of a motor vehicle accident, which
occurred on November 30, 2006.  The action was commenced August 19, 2008,
pursuant to the “expedited action” provisions of Rule 68 of the Supreme
Court Rules, B.C. Reg 221/90 [Former Supreme Court Rules].  The contested
issues originally included liability and quantum; however, liability was
admitted by the appellants, Clifford Axten and DaimlerChrysler Financial
Services Canada, whom I shall refer to as the defendants, after the exchange of
documents.  Issues of causation and quantum were complicated by the
pre-existing degenerative disc disease of the respondent, Perry Johnson, whom I
shall refer to as the plaintiff.

[3]            
In April 2010, the ICBC claims manager, the adjuster and counsel for the
defendants met to discuss whether the action should remain within the
strictures of Rule 68.  According to the claims manager, they determined the
action should not remain within Rule 68 as the defendants wanted: (i) to discover
the plaintiff; (ii) to rely on more than one expert; and, (iii) did not want to
prepare will say statements.  As well, they were aware that Rule 68 would cease
to exist after July 1, 2010.

[4]            
By Order dated May 7, 2010, the parties consented to the removal of this
action from Rule 68.

[5]            
The trial was scheduled for five days commencing January 31, 2011.

[6]            
During the course of the litigation, fifteen expert reports were
produced and served from nine different expert witnesses.  The plaintiff had
seven experts, including three medical experts, and the defendants had two
medical experts.

[7]            
On October 20, 2010, the parties participated in a mediation of this
matter. The plaintiff’s position at the mediation was that he sought a total
amount of damages of $642,579.  The mediation was unsuccessful.

[8]            
Approximately two months before trial, and one month after the unsuccessful
mediation, the parties were able to settle the claim out of court.  As set out
by Master Keighley, under the terms of the settlement the plaintiff received
the sum of $90,000 in addition to assessable costs and disbursements. The
plaintiff’s Part 7 claim remained open for a further 90 days to permit direct
funding of a chronic pain program: Johnson, para. 3.

[9]            
The issue for determination before Master Keighley was under which Scale
the costs of the parties should be assessed.  Specifically the issue was stated,
as set out in para. 5 of Johnson, “is a plaintiff who settles his or her
claim prior to trial for a sum less than $100,000.00 limited to costs payable
pursuant to Rule 15-1(15)?”

[10]        
The complicating factor in this case was the introduction of the Supreme
Court Civil Rules, B.C. Reg 168/2009 [Supreme Court Civil Rules], which
came into force on July 1, 2010.  As stated, the action was commenced August
19, 2008, pursuant to the provisions of Rule 68 of the Former Supreme Court
Rules. This Rule, covering situations of expedited litigation, operating in
conjunction with Former Rule 66, limited, among other things, the costs a
successful party could recover after trial.  With the consent of all parties, an
order was made on May 7, 2010, that Rule 68 ceased to apply to this action.  The
effect of the transition to the Supreme Court Civil Rules formed the substance
of the argument before the Master.

[11]        
It was uncontested Rules 14-1(1) and 15-1(15) govern the situation the
parties find themselves in.  Rule 14-1(1) provides, in part:

(1)        If costs are payable to a party under these
Supreme Court Civil Rules or by order, those costs must be assessed as party
costs in accordance with Appendix B unless any of the following
circumstances exist:

(a)        the parties consent to
the amount of costs and file a certificate of costs setting out that amount;

(b)        the court orders that

(i)         the costs of the
proceeding be assessed as special costs, or

(ii)        the costs of an
application, a step or any other matter in the proceeding be assessed as
special costs in which event, subject to subrule (10), costs in relation to all
other applications, steps and matters in the proceeding must be determined and
assessed under this rule in accordance with this subrule;

(c)        the court awards lump
sum costs for the proceeding and fixes those costs under subrule (15) in an
amount the court considers appropriate;

(d)        the court awards lump
sum costs in relation to an application, a step or any other matter in the
proceeding and fixes those costs under subrule (15), in which event, subject to
subrule (10), costs in relation to all other applications, steps and matters in
the proceeding must be determined and assessed under this rule in accordance
with this subrule;

(e)        a notice of fast track
action in Form 61 has been filed in relation to the action under Rule 15-1, in
which event Rule 15-1 (15) to (17) applies;

(f)         subject to subrule (10)
of this rule,

(i)         the only relief granted
in the action is one or more of money, real property, a builder’s lien and
personal property and the plaintiff recovers a judgment in which the total
value of the relief granted is $100,000 or less, exclusive of interest and
costs, or

(ii)        the trial of the action was completed within 3
days or less, in which event, Rule 15-1 (15) to (17) applies to the action
unless the court orders otherwise. (Emphasis added)

[12]        
Rule 15-1(15) provides:

(15)      Unless the court otherwise orders or the parties
consent, and subject to Rule 14-1 (10), the amount of costs, exclusive of
disbursements, to which a party to a fast track action is entitled, is as
follows:

(a)        if the time spent on the
hearing of the trial is one day or less, $8,000;

(b)        if the time spent on the
hearing of the trial is 2 days or less but more than one day, $9,500;

(c)        if the time spent on the hearing of the trial is
more than 2 days, $11,000.

[13]        
The defendants argued before Master Keighley that the combined effect of
these provisions is to disentitle a party who settles a claim for less than
$100,000 from claiming costs other than those provided for in Rule 15-1(15).
The plaintiff argued before Master Keighley that the plain meaning of the Rule
requires its interpretation to refer only to judgments, not settlements.

[14]        
Master Keighley, in his carefully reasoned judgment, noted there was no
authority strictly on point, which was not surprising given how recently Rule
15-1 had come into effect at the time of the costs hearing.  Several cases of
assistance were, however, brought to the Master’s attention and considered by
him.

[15]        
In Majewska v. Partyka, 2010 BCCA 236 [Majewska], a
particularly pertinent discussion of when parties ‘opt out’ of Former Rule 66
is found at para. 34:

Moreover, it is important to
recognize that parties to a R. 66 action are not compelled to remain in the
fast track process. If the spectre of "special circumstances" emerges
at any time during the action, whether in the form of complex issues, offers to
settle, increased trial time, or any other situation, the parties may consent
to removing the case from R. 66, or obtain an order to that effect under R.
66(8). Thus, if a concern arises that costs under R. 66(29) will not be
adequate, this can be remedied by taking appropriate action during the
proceeding.

[16]        
And, at para. 36, Madam Justice Neilson, writing for the Court stated:

Here, if the plaintiff was
concerned that R. 66 was no longer appropriate, the proper response was to
apply for removal from the fast track litigation. If she chose not to take that
step, she should have no basis for complaint that her costs are limited by R.
66(29).

[17]        
Master Keighley noted the effect of the judgment to be the following:

[18]  In other words, a party who opted out of
Rule 66 prior to trial was not limited by Rule 66(29). It is noteworthy that
Rule 68, which governed this action prior to the parties "opting out"
contained no limitation on costs. Also noteworthy is that Rule 15-1 as well as
the case with its predecessors, provides for opting out of the provisions for
the Rule and in this case the parties did so.

[19]      [Counsel for the
defendants] says that although Rule 15-1 does not, on its face, contemplate
settlement, neither did Rule 66(29), but that did not prevent the court from
holding that the subrule applied to settlement of cases governed by the Rule.
That submission, with respect, ignores however the very clear statement of the
Court of Appeal in Majewska: that once Rule 66 ceased to apply to an
action, a party would not be limited to costs recoverable under Rule 66(29).

[18]        
As it forms the basis of the appeal before me, I will set out Master
Keighley’s conclusion in full:

[20]      The plaintiff’s costs
will be assessed pursuant to Schedule B of the Supreme Court Civil Rules. While
I agree that Rule 15-1(1) provides that cost limitations apply to cases which
were not "fast tracked" but should have been (regardless of the
intentions of the parties), the rule nonetheless provides that even if
otherwise applicable, it will not apply to cases where the court has ordered
that it will cease to apply. The court did so here, with the consent of the
parties and, as a result, the cost limitation set out in Rule 15-1, does not
apply.

[19]        
There are, broadly speaking, two methods by which costs may be assessed
in this case.

[20]        
Section 2(4) of appendix B to the Supreme Court Civil Rules sets out:

If, after December 31, 2006, a
settlement is reached under which payment of assessed costs is agreed to or an
order for costs is made, and if no scale is fixed or agreed to in that
settlement or order, the costs must be assessed under Scale B, unless a party,
on application, obtains an order of the court that costs be assessed under
another scale.

[21]        
The other options under this method of assessment are Scale A, for less
complicated matters, and Scale C, for more complicated matters: Supreme Court
Civil Rules Appendix B, 2(2).

[22]        
As an exception to this general rule of application, costs assessed
under ‘fast track’ litigation procedures are subject to limited costs.  This
cap on costs, under the Former Supreme Court Rule 66, was held, at para. 17 in Duong
v. Howarth, 2005 BCSC 128, to be “not designed to deprive a successful
litigant of costs available outside of the rule. Instead, the rule seeks to
displace the need for unnecessary and expensive taxations in the relatively
modest cases that proceed under the rule.”  I see no reason why the same
reasoning ought not to apply to the ‘fast track’ litigation under the Supreme
Court Civil Rules. However, this is not determinative of the issues in this
appeal.

[23]        
In the instant appeal, the defendants seek to have the order of Master
Keighley overturned and the defendants’ exposure to the costs it must pay the
plaintiff be limited to costs pursuant to Rule 14-1(1)(f).  The defendants also
seek that the costs of the appeal and the application before Master Keighley be
granted in their favour.  The plaintiff seeks to uphold the order of Master
Keighley as, among other grounds, his decision was based on an exercise of
discretion.

Standard of Review

[24]        
The defendants argue this appeal involves the interpretation of the
meaning of Supreme Court Civil Rule 14-1(1)(f), and as such raises a question
of law.  The plaintiff argues the issue on appeal involves a review of an exercise
of discretion by the Master.  The standard of review for matters of law is
correctness: Housen v. Nickolaisen, 2002 SCC 33 at paras. 8-9 [Housen].
The standard of review for an exercise of discretion is the determination of
whether the decision was ‘clearly wrong:’ Stoneman v. Desjardins, 2004
BCSC 57.

Issues

[25]        
The first issue to address is whether Rule 15-1 of the Supreme Court
Civil Rules applied to this action.  It is common ground that Rule 15-1 was not
of prima facie application, as neither the parties nor the court brought
the action under that rubric, nor did the operation of Rule 15-1 render it
applicable.  Rather, the contested question is whether Rule 15-1 is brought
into effect by the operation of Rule 14-1(1)(f), with the defendants arguing
the action should have been fast-tracked.

[26]        
The second issue to address is, if the action is found to be subject to
Rule 15-1 limitations, whether or not the Master exercised his discretion in
removing the action from the ‘fast track’ litigation, and if so, was it an
appropriate exercise of discretion.

Discussion

[27]        
Rule 14-1(1)(f) states costs are assessed under Rule 15-1(15) to (17)
where “the only relief granted in the action is one or more of money, real
property, a builder’s lien and personal property and the plaintiff recovers
a judgment in which the total value of the relief granted is $100,000 or less,
exclusive of interest and costs [emphasis added].” Essentially, Rule 14-1(1)(f)
places actions that should have been fast-tracked but were not, under the fact
track costs schema.  As the settlement in this case was for $90,000, there is
no issue as to the monetary aspect of this provision: the quantum awarded is
clearly captured within this legislative scheme.

[28]        
The first point of contention between the defendants and the plaintiff is
whether Rule 14-1(1)(f) contemplates settlements, or only judgments.

[29]        
The parties rightly agree the proper interpretation of the Rule is that
it be read in its entire context, and read in its ordinary grammatical sense,
harmoniously with the scheme and object of the rule itself and the Rules of Court
in general: Majewska, para 15; Nazmdeh v. Spraggs, 2010
BCCA 131, at paras. 37-38.

[30]        
The plaintiff argues that including settlements within this provision
requires the reading in of the words “or settlement” into the sub-rule.  This, counsel
argues, runs afoul of the basic principle of statutory interpretation that a
court should not accept an interpretation which requires the insertion of extra
wording where there is another acceptable interpretation that does not: Markevich
v. Canada, 2003 SCC 9.

[31]        
The defendants argue Rule 15-1 is the successor to Former Supreme Court
Rule 66: the former ‘fast track’ litigation rule.  Thus, argue the defendants,
given the similarity between the Former Rule 66 and the current Rule 15-1, the
jurisprudence relevant to Former Rule 66 is also apposite to Rule 15-1.  While
I note there are also elements of Former Rule 68 present in the wording of Rule
15-1, the aim of these rules is the same: efficiency in the resolution of
litigation, and the optimisation of court resources.

[32]        
The wording of Former Supreme Court Rule 66(29) provided as follows:

(29)      Unless the court orders otherwise or the parties
consent, and subject to Rule 57 (10), the amount of costs, exclusive of
disbursements, to which a party is entitled is as follows:

(a)        if the time spent on the
hearing of the trial is one day or less, $5,000;

(b)        if the time spent on the hearing of the trial is
more than one day, $6,600.

[33]        
The new Supreme Court Civil Rule 15-1(15) provides:

(15)      Unless the court otherwise orders or the parties
consent, and subject to Rule 14-1 (10), the amount of costs, exclusive of
disbursements, to which a party to a fast track action is entitled is as
follows:

(a)        if the time spent on the
hearing of the trial is one day or less, $8,000;

(b)        if the time spent on the
hearing of the trial is 2 days or less but more than one day, $9,500;

(c)        if the time spent on the hearing of the trial is
more than 2 days, $11,000.

[34]        
It is clear, from the similarity of the wording of these Rules, the
provisions were to have similar effect.  It is notable neither of these rules
contemplate settlement on a plain reading of the legislation. However, the
courts have interpreted Former Rule 66 as including settlement.  In Bowen v.
Martinec, 2008 BCSC 104, a case very similar to the issues raised in the
instant appeal, Pitfield J. stated:

[21]      In my opinion, the
principles that can be derived from Duong and Anderson should be
applied in the determination of costs in circumstances where an offer has been
accepted before the commencement of trial. It is evident from Rule 66 that a
cap has been imposed upon the recovery of costs in an action to which the Rule
applies. It is also clear that the court can give effect to Rule 37 offers to
settle. I am unable to identify any reason why the Rule 66 regime should apply
in respect of the determination of costs following a trial where offers to
settle have been made and rejected, but those situations where an offer is made
and accepted before trial should justify taxation under Appendix B.

[35]        
I see no reason to depart from this jurisprudence, given the similarity
of wording and purpose between the Former Rule 66 and the current Rule 15-1. As
such, the correct interpretation of Rule 15-1 is that it encompasses settlements.

[36]        
At para. 20 of Johnson, Master Keighley found the court, by the
consent order of May 7, 2010, removing the action from Former Rule 68, had effectively
ordered the predecessor to Rule 15-1 had ceased to apply in the circumstances
of the case at bar, and impliedly found it applied to settlements as well as
judgments.  As the standard of review for questions of law is correctness, as
indicated in Housen, Master Keighley committed no legal error and indeed
was correct in determining Rule 15-1 applied to settlements as well as
judgments.

[37]        
Were this the end of the analysis, the settlement in this case would be
subject to Rule 15-1 by virtue of the exceptions found within Rule 14-1(1)(f).  However,
the effect of the transition of this action from the Former Supreme Court Rules
to the Supreme Court Civil Rules must be addressed, as it is a crucial
component of the factual matrix of this appeal.

[38]        
On July 1, 2010, Former Supreme Court Rule 66(29) ceased to determine
the costs associated with ‘fast track’ litigation and Supreme Court Civil Rule
15-1(15) became determinative of costs in these matters.  The legislative
scheme in which these rules operated also shifted slightly.  There is no
dispute that there was no restriction on costs for the parties after the order
of May 7, 2010, and before July 1, 2010.  Had a settlement been reached within
these approximately two months, it is clear the plaintiff’s costs would not have
been limited by Rule 66(29).

[39]        
By operation of Supreme Court Civil Rule 24-1(1), this action is a
transitional proceeding.  The defendants argue nothing in Rule 24-1 transforms
an action started under Former Rule 66 or Former Rule 68 into a Rule 15-1 ‘fast
track’ action.  As a consequence, they argue, this action was not one to which
Rule 15-1 applied, and was subsequently removed. The defendants argue Master
Keighley erred when he determined the action had been removed from the Rule
15-1 limitations by the May 7, 2010, consent order, and, accordingly, Rule 15-1(15)
is applicable by operation of Rule 14-1(1)(f).

[40]        
However, the transition from the Former Supreme Court Rules to the
Supreme Court Civil Rules does not, nor was it intended to, render moot all
steps taken in an action prior to July 1, 2010, preferring rather to make
specific amendments to ongoing litigation, as found within Rule 14-1.  This is
seen clearly in Supreme Court Civil Rule 24-1(14):

If a step in a proceeding is taken
before July 1, 2010, the Former Supreme Court Rules apply to any right or
obligation arising out of or relating to that step if and to the extent that
that right or obligation is to have effect before September 1, 2010.

[41]        
Indeed, Supreme Court Civil Rule 24-1(2) expressly states “[a]
transitional proceeding is deemed to be a proceeding started under these
Supreme Court Civil Rules.”  Therefore, by operation of these transitional
Rules, steps taken in this action prior to July 1, 2010, are deemed to apply to
the current Rules.

[42]        
The defendants argue that, while this is true, Rule 15-1 does not
contain the same leeway as found under Former Supreme Court Rule 68(7) insofar
as an action is now only removed from the ‘fast track’ provisions of Rule 15-1 by
an order of the court, and not, as was previously permitted, an application of
any party.  However, the wording of Former Supreme Court Rule 68(7) is important,
and I note it is similar to that found under Former Rule 66(8) as well. Former Rule
68(7) states:

(7)        This rule ceases to
apply to an action if the court, on its own motion or on the application of any
party, so orders.

[43]        
Therefore, where Master Keighley states at para. 2 of Johnson “[w]ith
the consent of all parties, Rule 68 ceased to apply to this action on May 7,
2010,” what is properly meant by this is that, on joint application of the
parties, the court ordered the ‘fast track’ Rules ceased to apply to the
action.

[44]        
The defendants’ assertion the court did not previously order that Rule
15-1 ceased to apply cannot be sustained, when viewed in the light of a proper
understanding of the transitional Rules found under Rule 24-1.  To remove an
action from ‘fast track’ litigation, the current Supreme Court Civil Rules
require an order of the court, as did the Former Supreme Court Rules.  There
was simply more specificity given under the Former Supreme Court Rules as to
how this order could be made.  Once the consent order was made on May 7, 2010,
the action ceased to be within the fast track provisions, the parties having
opted out of the regime for a variety of reasons, including the defendants’
desire to conduct a discovery of the plaintiff and to have more than one expert
witness.

[45]        
The second issue to be addressed in this appeal is whether Master
Keighley  exercised his discretion.  The plaintiff/respondent to the instant
appeal urges that, in the alternative to a finding that settlement of an action
for less than $100,000 is not included by Rule 15-1 by virtue of Rule
14-1(1)(f), which I pause to note I rejected previously, I should nevertheless
find the Master exercised his discretion in removing the action from the Rule
15-1 ‘fast track’ provisions.

[46]        
The Master’s conclusion, set out in full at para. 18 above, read in the
context of his findings and with its plain meaning in mind, demonstrates
clearly the Master did not exercise his discretion to remove this action from
the cost limitations under Rule 15-1(15).  I find that Master Keighley did not
exercise his discretion and remove this action from ‘fast track’ provisions in
the Rules.  Master Keighley, basing his analysis on the correct interpretation
of the legislation, recognised he did not need to exercise his discretion to
remove this action from the Rule 15-1 ‘fast track’ provisions.  Rather, the
action was not subject to the fast track provisions as the court had previously
ordered on May 7, 2010, that the predecessor to Rule 15-1 did not apply to the
action.

[47]        
The combined operation of the Former Supreme Court Rules, the transitional
provisions of the Supreme Court Civil Rules, and the Supreme Court Civil Rules
to this action cannot have been intended to place the action back within the
strictures of the fast track and expedited litigation provisions that it had
been previously released from by order of the court, on the consent of the
parties, on May 7, 2010.

Conclusion

[48]        
Under the standard of review for questions of law, correctness, I find
Master Keighley was correct in his interpretation of the legislation, and his
reasoned analysis of the instant action contains no demonstrated error of law: Housen.

[49]        
In the circumstances of this case, where the parties deliberately
removed the action from the ‘fast track’ provisions prior to the coming into force
and effect of the Supreme Court Civil Rules, it would be contrary to a logical
and reasoned analysis to require the parties, having taken decisive action to
remove the litigation from the ‘fast track’ provisions to undertake this step
again.  Indeed, this is the situation contemplated by the transitional Rules
under Supreme Court Civil Rule 24-1.

[50]        
By order of the court, deemed to be an order under the Supreme Court
Civil Rules by virtue of Rule 24-1(2), this action, upon joint application of
the parties, was removed from the strictures of Rule 68 proceedings on May 7,
2010.  The action having previously been removed from the provisions, there was
no need for the Master to exercise any discretion to remove the matter from the
Rule 15-1 provisions.  The Master recognized this and did not exercise his
discretion in removing the action from the constraints of Rule 15-1.

[51]        
Accordingly, the appeal is dismissed.

[52]        
The plaintiff is entitled to his costs of the appeal and his costs in
the matter before Master Keighley at Scale B.

“Ker J.”