IN THE SUPREME
COURT OF BRITISH COLUMBIA

Date: 20120402

Docket: 05-4371

Registry:
Victoria

Between:

Murray McKay

Plaintiff

And:

Martin Marx and
Federal Express Canada Ltd.
doing business as Fedex Express

Defendants

Before:
The Honourable Madam Justice Dorgan

Reasons for Judgment

(In
Chambers)

[1]            
This is an application by the defendants to dismiss the present action
with costs on the basis of a successful Worker’s Compensation Act,
R.S.B.C. 1996, c. 492 (the “Act”), s. 10 defence. The dismissal
order went by consent leaving the matter of costs to be decided.

Background

[2]            
The plaintiff claimed damages arising from alleged injuries he sustained
in a motor vehicle accident on January 14, 2005, in which his vehicle was
rear-ended by one owned by the defendants, Federal Express Canada Ltd., and
driven by the defendant Martin Marx.

[3]            
The writ and statement of claim were filed on September 12, 2005. A statement
of defence was filed on December 22, 2005. At issue between the parties was
whether the plaintiff and defendant driver were “workers” pursuant to the Act,
at the time of the motor vehicle accident.

[4]            
On March 1, 2006, the defendants, pursuant to s. 257 of the Act,
requested a determination of the issue of whether the plaintiff was properly
considered a “worker” at the time of the motor vehicle accident.

[5]            
In the interim, and in preparation for a potential trial, the defendants
conducted an examination for discovery of the plaintiff. The plaintiff’s
evidence on examination for discovery was subsequently submitted to the Workers
Compensation Appeal Tribunal (“the WCAT”) in order to assist with the
ongoing s. 257 determination.

[6]            
On October 25, 2007, the WCAT determined that the plaintiff was properly
considered a “worker” at the time of the motor vehicle accident.

[7]            
On December 24, 2007, the plaintiff applied to the WCAT for a
reconsideration of his “worker” status.

[8]            
At that point, the trial of this action was set to commence in January
2008. Both parties agreed to adjourn the trial while the WCAT reconsidered the plaintiff’s
status.

[9]            
Although both parties agreed that the defendant driver was a worker at
the time of the motor vehicle accident, the WCAT required the parties to bring
a supplemental s. 257 determination application to confirm his “worker” status.

[10]        
On January 10, 2008, the defendants brought a supplemental s. 257
determination application. On October 30, 2008, the WCAT determined that the defendant
was a “worker” at the time of the motor vehicle accident.

[11]        
On February 10, 2010, the WCAT confirmed, after reconsideration, that
the plaintiff was a “worker” at the time of the motor vehicle accident.

[12]        
Consequently, this action was rendered statute barred pursuant to s. 10
of the Act.

Issue

[13]        
The parties are unable to agree as to whether costs are payable to the defendants
following a dismissal of the action because it is statute barred.

Position of the Defendants

[14]        
The defendants rely heavily on the case of Dhanoa v. Trenholme, 2009
BCSC 1787, an appeal from a Master’s decision to award only partial costs to
the defendant when the plaintiff’s claim was dismissed by a WCAT determination.
In allowing the appeal, and awarding the defendant full costs, Cole J. held the
following at paras. 10 and 11:

10.       The practical effect of this decision is that when
a s. 10 defence is pled, the result is a stay of proceedings irrespective of
whether the parties seek one, pending a decision from the Workers’ Compensation
Appeal Tribunal ("WCAT"). It seems to me, that this places a
defendant in a disadvantaged position because it may be necessary for the defence
to obtain sufficient information at an early stage, for example with respect to
witnesses, that would be difficult to ascertain if nothing was done until the
WCAT decision was made. In addition, it would also be unfair for the plaintiff
to be permitted to actively participate in the ongoing action without asking
for a stay of proceedings and then, after being unsuccessful and having their
action barred, be permitted to argue that the defendant is not entitled to
costs because there should have been a practical stay of proceedings.

11.       … I am of the view
that if the plaintiff does not want the defendant to run up costs in the
meantime, the plaintiff is at liberty to make an application for a stay of the proceedings
until the Workers’ Compensation Board issue is decided.

And further at para. 19:

19.  I am of the view
that because each case is unique, it would be wrong to set a blanket rule that
a party claiming costs cannot recover on any proceedings initiated by them
after a s. 10 Workers’ Compensation Board defence is raised, as it would be too
draconian. There may be legitimate reasons to take steps in a proceeding and if
those steps are unfair, either party can apply for a stay.

And further at para. 21:

21.  In the
alternative to seeking a stay, if the steps taken in a proceeding after a s. 10
defence is raised are unfair, costs can be denied on the basis of the court’s
discretion to depart from the general rule where there has been misconduct on
the part of the successful party. There is no need for a blanket rule, in light
of the court’s discretion.

[15]        
In the result, Cole J. held at para. 25 as follows:

I am satisfied that the defendant
being the successful party is entitled to their costs for all the items
requested, pursuant to R. 57(9), subject to taxation. There is nothing arising
from the defendant’s conduct in this litigation that provides a proper judicial
basis to deny their costs.

[16]        
The defendants also rely on Wilson v. Paskalidis, 2003 BCSC 1170.
Wilson emphasized Cumming J.A.’s ruling in Bailey v. Victory, [1995]
B.C.J. No. 526 (C.A.), which held the following at para. 13:

The general rule, as set out in
Rule 57(9), is that costs follow the event. The successful litigant is entitled
to costs as indemnification for the costs incurred in having been forced into
litigation. The rules contain other provisions which show, and recent cases
have indicated that the power of the court to award costs is not limited to
indemnification. In appropriate cases awards for costs can be made with a view
to discouraging frivolous claims or defences and unnecessary or abusive proceedings,
to encourage prompt and early settlements, and, in appropriate cases, to
penalize improper conduct. But through the Rules and the decided cases runs one
simple overriding principle which must not be lost sight of that is that
discretionary exceptions to the general rule must be made judicially.

[17]        
Finally, the defendants rely on R.L.L. v. R.L. and J.L., 2001
BCCA 386, in which Hall J.A. acknowledged the broad discretion of the trial
judge in making a disposition of costs. However, Hall J.A. also cited the trial
judge’s remarks noting at para. 31 that:

As to the claim concerning those
issues on which she (the plaintiff) was not successful, I note that the Court
has a discretion in determining whether costs will follow the event. This
discretion must be exercised judicially and be based on grounds connected to
the case. It is improper to exercise this discretion out of a sense of
fairness, out of sympathy, or by comparing the relevant economic strength of
the parties. Exceptions to the rule that costs follow the event include
misconduct of the parties. Such misconduct includes dishonest, reprehensible,
discreditable, unmeritorious, unwarranted, callous, or reckless conduct.

[18]        
The defendants argue that these authorities make clear that in matters
similar to the case at bar, unless the successful defendant can be shown to
have demonstrated reprehensible, discreditable, unmeritorious, unwarranted,
callous, or reckless conduct, the successful defendant is entitled to costs.

Position of the Plaintiff

[19]        
The plaintiff places heavy emphasis on the reasons in Fotheringham v.
Fotheringham, 2001 BCSC 1321 (“Fotheringham”), which articulate a
four-step inquiry to determine whether to award costs. That inquiry is set out at
para. 46:

1.         First,
by focusing on the "matters in dispute" at the trial. These may or
may not include "issues" explicitly mentioned in the pleadings.

2.         Second,
by assessing the weight or importance of those "matters" to the
parties.

3.         Third,
by doing a global determination with respect to all the matters in dispute and determining
which party "substantially succeeded," overall and therefore won the
event.

4.         Fourth, where one party
"substantially succeeded," a consideration of whether there are
reasons to "otherwise order" that the winning party be deprived of
his or her costs and each side then bear their own costs.

[20]        
The plaintiff referenced Chaster (Guardian ad Litem of ) v. LeBlanc,
2008 BCSC 47, which makes clear that the four-step test in Fotheringham does
not strictly apply to matrimonial cases.

[21]        
The plaintiff also relies on Chen v. Ma, [1999] B.C.J. No. 613, where
Master Tokarek awarded costs to the defendant who was successful in having the
action statute barred. In dismissing the appeal from the Master’s order,
Edwards J. held he could find no basis upon which to depart from the rule that
costs follow the event. At para. 10, he went on to emphasize the principle in Bailey
v. Victory that “in exercising its discretion [to award costs] the court
must act judicially in making any exception to the general rule that costs
follow the event.”

[22]        
In addition, the plaintiff argues that Dhanoa and Wilson do
not address the concept of substantial success as articulated in Fotheringham.
On that basis, the plaintiff seeks to distinguish these authorities from the
case at bar.

[23]        
Finally, the plaintiff also relies on the cases of Wong v. Lee, 2011
BCSC 1087, and Clapp v. Macro Industries Inc., 2007 BCSC 840, neither of
which are applicable for the reasons below.

[24]        
The plaintiff argues that the authorities make clear that exceptions can
be made to the general rule that costs follow the event so long as the trial
judge is acting “judicially” and considers grounds connected to the case. The plaintiff
further argues that the defendants’ conduct can be characterized as “callous”
and “reckless” and therefore a departure from the general rule is warranted.

Analysis

[25]        
The plaintiff argues the authorities cited by the defendants “do not
discuss substantial success and are therefore not determinative.” Essentially,
the plaintiff urges this court to find that the plaintiff was, in fact, the
substantially successful party. It follows, the plaintiff argues, that in
applying Fotheringham, the plaintiff, not the defendants, is entitled to
costs.

[26]        
However, Dhanoa clearly holds that if a defendant raises a s. 10
defence, and in the result the action is statute barred and therefore
dismissed, the defendant is considered the successful party.

[27]        
The determination of “success” is a finding of fact. The authorities
cited by the defendants inform that finding in the context of this action. The Fotheringham
test informs how a court will apply that finding in an inquiry as to which
party is entitled to costs. Dhanoa and Fotheringham are not
inconsistent.

[28]        
Furthermore, the plaintiff’s argument is that as there was no trial, technically
there is no “event” as referred to in Fotheringham. That argument is not
supported by the authority of Dhanoa by which I am bound.

[29]        
The further authorities cited by the plaintiff are not, in my view, on
point. Wong considered whether the language in ICBC’s standard form offer
to settle could support an award for double costs against a plaintiff who
failed to prove that the defendant was negligent in a personal injury case. Clapp
stands for the principle that the WCAT has the jurisdiction to make
determinations with respect to those matters that are within the Board’s
jurisdiction under s. 96(2) of the Act and relevant to the court action.
Those issues are not before this court.

[30]        
Finally, it is settled law that in order to depart from the general rule
that costs follow the event, the court, while acting judicially, must find the
defendants (in this case) engaged in disreputable conduct.

[31]        
The evidence of conduct falls short of that necessary to make such a
finding. While it appears that the plaintiff was bounced between the WCAT and ICBC,
I cannot conclude such circumstances imbue the defendants with a callous,
reckless or dishonest approach in and to the litigation. Each party took
reasonable steps to move the litigation along, given that a stay of proceedings
was neither sought nor ordered.

[32]        
The circumstances in which the plaintiff found himself are unfortunate
and they garner some sympathy. However, the authorities explicitly prohibit
this court from denying costs by exercising discretion out of a sense of
fairness or sympathy or a comparison of the relative economic strength of the
parties.

[33]        
In summary, the defendants successfully pled a s. 10 Workers
Compensation Act defence and are thus the substantially successful party ‑‑
the winner of the event. The evidence as presented falls short of demonstrating
such reprehensible conduct on the part of the defendants that would allow the
court, in the exercise of its discretion, to depart from the general rule. Accordingly,
the defendants are entitled to costs.

                 “J.L.
Dorgan, J.”                     

The
Honourable Madam Justice Dorgan