IN THE SUPREME
COURT OF BRITISH COLUMBIA

Date: 20130508

Docket: 33055

Registry:
Penticton

Between:

Kayla Krenn

Plaintiff

And

Insurance Corporation
of British Columbia
and Silvia Gisela Le Burel

Defendant

Before:
Master Young
(as Registrar)

Reasons for Decision Re Costs

[1]            
These reasons relate to the taxation of a party-and-party bill of costs,
which were awarded at Scale B in a personal injury action. There is some minor
dispute about the tariff items; however, the primary issues before me are
whether or not certain disbursements for expert reports were reasonable and
whether the plaintiff should be entitled to recover interest on a disbursement
loan.

Background Facts

[2]            
The action arose from a motor vehicle accident, which occurred on April
23, 2009, in Penticton, British Columbia. Because the driver of the vehicle
that impacted the plaintiff’s vehicle fled the scene, the action proceeded
under the unidentified driver provisions of the Insurance (Vehicle) Act,
R.S.B.C. 1996, c. 231. Liability and quantum were an issue. The plaintiff was
19 years of age at the time of the motor vehicle accident and was working in
the pizza restaurant owned by her fiancé. She was injured while delivering
pizza. She suffered both physical and psychological injuries, which included neck
and back soft tissue injuries, right knee and right ankle sprains, a neurogenic
bladder condition, agoraphobia, anxiety, a sleep disorder, and chronic pain.
The plaintiff was off work for one year and had returned to work prior to the
trial doing light to medium work.

[3]            
Prior to discussing the issues related to the disbursements, I will
review the decisions I made with respect to the tariff items.

Tariff Items

Disbursements

[4]            
Non-taxable disbursements are agreed to and allowed at $655. Taxable disbursements
before July 1, 2010, are allowed at $851.32, plus GST of $42.57, for a total of
$893.89.

[5]            
The following disbursements are opposed and will be discussed below:

1.     Dr. Apel
– Conduct money ($100), air flight ($351.25), and invoice for IME appointment
($2,800)

2.     Dr. Joy
– Invoice for IME appointment and report ($3,937.50)

3.     Dr. Stuart
– Medical/legal report ($2,000)

4.     Disbursement
loan interest ($1,558.29)

[6]            
The balance of disbursements are agreed to and allowed.

Dr. Apel – Conduct money ($100), air flight
($351.25), and invoice for IME appointment ($2,800)

[7]            
Dr. Apel is a physiatrist who saw the plaintiff in July 2010, one
year and three months after the motor vehicle accident. No report was ordered
from Dr. Apel. Counsel for the plaintiff says that at the time the
disbursement was incurred, the plaintiff was suffering from symptoms and
thought she could go back to work. She was sent for the medical examination to
determine whether it was reasonable for her to go back to work and to determine
what restrictions should be placed on her work and what treatment
recommendations should be made.

[8]            
The objection the defendant has is that it is not clear why Dr. Apel
charged $2,800, given that a report was not prepared. Counsel submits that
ordinarily an examination and report costs approximately $2,000.

[9]            
The invoice from Dr. Apel is not very illuminating. I have no
indication of how much time Dr. Apel spent reviewing records and meeting
with the plaintiff. The invoice indicates no report was being requested. This
makes it impossible for me to assess the reasonableness of the account.

[10]        
I questioned why it was necessary to retain an expert to answer the
question of whether or not the plaintiff was able to return to work, given that
the plaintiff did have a family physician who could have answered this question
or referred the plaintiff to a specialist for consultation. It strikes me that
this report was not being requested for the purpose of acquiring evidence for
trial but for the purpose of obtaining treatment advice.

[11]        
I have not had a satisfactory answer as to why it was necessary to incur
this expense for treatment advice, and therefore I deny this charge and the conduct
money and airfare charge. The plaintiff has the onus of establishing the
necessity of a disbursement and whether the charge itself is reasonable. They
have not met this onus.

Dr. Joy – Invoice for IME appointment and
report ($3,937.50)

[12]        
Dr. Joy is a psychiatrist who assessed the plaintiff on June 23,
2010 and April 30, 2012. He prepared two reports. For the first report, he
charged a fee of $3,937.50. His invoice is attached and provides the following
breakdown:

–      
$1.518.75 for the first assessment of the plaintiff on June 23,
2010

–      
$168.75 for reviewing the medical/legal material

–      
$281.25 for analyzing test scoring, interpretation, diagnostic
formulation and research

–      
$112.50 telephone consultation with Mr. Poon

–      
$1,856.25 for preparing a psychological legal report

*Fees are calculated at $225 per
hour

[13]        
Two years later, Dr. Joy conducted a further assessment and
prepared a further report and charged $3,543.75. The defendant does not take
issue with the cost for the second report.

[14]        
The defendant says that the first assessment and report were not
necessary, as the plaintiff was already being treated by a psychiatrist (Dr. Wasti)
for a pre‑accident history of depression. That psychiatrist was providing
a course of treatment recommendations, including prescribed medication and
counseling for the plaintiff.

[15]        
In November 2009 (which was post-accident), the plaintiff was assessed
by Dr. Wasti at the request of the plaintiff’s family doctor. Dr. Wasti
reported to the family doctor that the plaintiff had been experiencing
depression, anger and panic attacks. She had also experienced posttraumatic
stress and a chronic pain disorder. Dr. Wasti recommended a trial of
medication and began a course of treatment with the plaintiff. The action was
commenced March 19, 2010, and the plaintiff continued to be treated by Dr. Wasti.

[16]        
I find that it was reasonable for the plaintiff to obtain an expert
opinion early in the proceedings for the purpose of establishing the causation
of the plaintiff’s psychological symptoms. The fact that the plaintiff had a
pre-accident history of psychological conditions strengthens the plaintiff’s
argument that this report was necessary. Separating pre-existing symptoms from
post-accident symptoms is complicated, and would have been more complicated if
the plaintiff had waited for two years before asking for this opinion. Dr. Joy
provided a detailed breakdown of his charges, and I find that they are
reasonable. I allow them in full.

[17]        
The defendant does not object to the second report prepared by Dr. Joy
but questions why the cost was almost identical to the cost of the first
report. I have reviewed the invoice provided by Dr. Joy on June 12, 2012.
He conducted an assessment of Ms. Krenn on April 30, 2012. Again, he
reviewed the medical/legal material, which was provided by Mr. Poon, and
reviewed the test scoring and then prepared a report. The assessment costs were
less than they had been two years previously. The cost to review medical/legal
material was higher because, of course, there would have been more reports and
clinical records produced two years later. I am uncertain as to why the test
scoring interpretation cost more than the previous test scoring and
interpretation, but the amount is negligible. The report writing charges
identical at $1,856.25, which I believe is the BCMA recommended charge. I find
the second account of Dr. Joy to be reasonable and I will not reduce it.

Dr. Stuart – Medical/legal report ($2,000)

[18]        
The defendant takes issue with the medical/legal report charge of Dr. Stuart
at $2,000. Dr. Stuart is a physiatrist and he saw the plaintiff on August
30, 2011, after she returned to work. He was asked for an assessment of how she
was handling work and a recommendation for treatment.

[19]        
The first medical/legal report he prepared was dated September 19, 2011.
The second medical/legal report he prepared was dated June 11, 2012. The second
report was prepared in preparation for trial. The plaintiff had undergone a functional
capacity examination. The vocational expert had recommended that she take on
sedentary work only. Dr. Stuart was consulted to see if the plaintiff had
benefited from any of the treatment she received since he had seen her
previously and to evaluate the recommendation made by the vocational expert.

[20]        
The second report includes a critique of the functional capacity report.
At $2,000 for an assessment and report, the plaintiff says that this is a cost
far less expensive than most expert reports.

[21]        
The first objection by the defendant is that the plaintiff had already
been assessed by a physiatrist. They questioned why it was necessary to seek an
opinion from Dr. Stewart.

[22]        
I have not allowed the report charges of Dr. Apel, so there is no
duplication.

[23]        
I find that it is reasonable to seek evidence from a physiatrist a year
after the accident so that a thorough history can be taken and treatment
recommendations can be made. The problem with seeking a report that soon after
the accident is that it will necessarily have to be updated prior to trial. I
do not find that to be unreasonable. It gives a better evidentiary picture of
the condition of the plaintiff and an answer to causation questions around the
time of the accident, and the second report provides an opinion as to the
plaintiff’s progress closer to trial.

[24]        
The defendant says that Dr. Stewart’s invoice for his second
assessment is excessive, given the fact that the second report is essentially a
supplement to his original report. He charged the same amount for both reports,
and he did not find a significant change after the second assessment. He agreed
with the recommendations made by Ms. Barnes in her report.

[25]        
Dr. Stuart does not provide a breakdown of his charges; however, I
find $2,000 for an examination and report to be a very reasonable charge. I
assume that the assessment prior to trial took the same amount of time as the
original assessment did, which is why there is no cost-savings for the updated
report. I find the charges to be reasonable and I will allow them in full.

Disbursement loan interest ($1,558.29)

[26]        
This claim settled before trial. The only issues that were not consented
to are those issues discussed in this decision. A consent dismissal order was
entered into which stayed all further proceedings in this action, except the
assessment and recovery of costs and disbursements. The costs and disbursements
were assessed pursuant to the Supreme Court tariff before me today.

[27]        
The plaintiff, a 19-year-old woman who was delivering pizza for a living,
was unable to work for over a year because of this motor vehicle accident and
was unable to afford the funding of expensive disbursements to prepare her case
for trial. The lawyer she retained to represent her obtained funding through a
disbursement loan, and at the end of the day, interest charges on the
disbursement loan were $1,558.39. The plaintiff claims that this disbursement
was necessary and properly incurred so that she could proceed with this
litigation. Without this loan she was not in a position to proceed.

[28]        
Defense counsel said that to justify this charge, she would have to show
that she searched local personal injury firms and could not find one who would
fund her disbursements up front. Counsel for the plaintiff relies on Mr. Justice
Burnyeat’s decision in Milne v. Clarke, 2010 BCSC 317, where Mr. Justice
Burnyeat held that the statement set out in the McCreight v. Currie, [2008]
B.C.J. 2494 (S.C.), accurately represents law in British Columbia, which is
that interest charged by a provider of services is recoverable as a
disbursement. The interest charge flows from the necessity of the litigation.
If the disbursement itself can be assessed as an appropriate disbursements, so
also can the interest owing as a result of the failure or inability of a party
to pay for the services provided.

[29]        
District Registrar Cameron followed Milne v. Clarke in Chandi
v. Atwell, 2011 BCSC 1498. In that case, the plaintiff borrowed money
from a private lender to finance disbursements for the conduct of an action.
Registrar Cameron followed the Milne decision but reduced the rate of
interest to that which is permitted under the Court Order Interest Act, R.S.B.C.
1996, c. 79.

[30]        
In Chandi, Registrar Cameron received written submissions from
counsel. After describing the nature of the disbursement loan and the interest
rates charged, he provided a thorough review of the following cases:

71. The following are, as best as we can determine, in
order, the British Columbia cases which touch on the subject issue:

a) Greene v. Troje (6 October 1991), Courtenay
Registry No. 860009 (B.C.S.C.) (unreported)

b) Moore v. Dhillon, [1992] B.C.J. No. 3055 (QL)
(B.C.S.C.)

c) Hudniuk v. Warkentin (29 August 2002), New
Westminster Registry No. S058003 (B.C.S.C.) (unreported)

d) Sovani v. Jin (25 April 2006), Vancouver Registry No. B981465
(B.C.S.C.) (unreported)

e) McCreight v. Currie, [2008] B.C.J. No. 2494

f) Milne v. Clarke, 2010 BCSC 317

g) Basi v. Atwal et. al., (6 December 2010), Vancouver
Registry No. M070135 (B.C.S.C.)

h) Milne v. Clarke BCCA
322, [2011] B.C.J. No. 1345 (QL)

I will not reproduce that discussion here.

[31]        
Registrar Cameron found that he was bound by Milne v. Clarke but
that he was not bound to order full indemnity for the interest charged to the
plaintiff. He said at paras. 74 and 75:

[74]      In the law of costs it is still only in the
relatively rare case that full indemnity is provided to the successful party.
Only disbursements that are necessary and reasonable in amount are recoverable.

[75]      In my view the
Registrar should endeavour, wherever possible, in assessing the amount to allow
for a specific type of disbursement to strive for consistency unless the
application of that principle would work a real hardship or unfairness in a
particular case. To attain that consistency I will make an allowance for
disbursement interest based upon Registrar’s rates with the calculation of the
total amount to be akin to the calculation of interest payable on special
damages pursuant to the relevant provisions of Court Order Interest Act.

[32]        
After the Chandi decision, Registrar Sainty issued her oral
reasons in McKenzie v. Rogalasky, 2012 BCSC 156. Registrar Sainty found
that she was not bound by the decision of Mr. Justice Burnyeat in Milne,
distinguishing that decision because it arose in the context of the settlement
of an action as opposed to being decided following a trial. Further, she found
Justice Burnyeat’s comments in Milne were not binding on her, and she
distinguishes the Chandi decision on the basis that Registrar Cameron
was not given the benefit of submission that she had heard regarding the Court
Order Interest Act. She also distinguished McCreight v. Currie
because the interest was charged directly by the service provider not a third-party
lender and because the decision was per incuriam – none of the cases she
referred to were cited by me as authority for my decision. It is true that no
case law was argued before me when I made my decision in McCreight v. Currie,
and I relied entirely on my assessment of the reasonableness of the charge. I
certainly did not consider limitations under the Court Order Interest Act.

[33]        
This argument relies on the wording of ss. 1 and 2 of the Court
Order Interest Act:

Court order interest

1 (1)
Subject to section 2, a court must add to a pecuniary judgment an amount of
interest calculated on the amount ordered to be paid at a rate the court
considers appropriate in the circumstances from the date on which the cause of
action arose to the date of the order.

 (2) Despite
subsection (1), if the order consists in whole or part of special damages, the
interest on those damages must be calculated from the end of each 6 month
period in which the special damages were incurred to the date of the order on
the total of the special damages incurred

(a) in the 6
month period immediately following the date on which the cause of action arose,
and

(b) in any
subsequent 6 month period.

 (3) For the
purpose of calculating interest under subsection (2), and despite subsection
(2), if the date of the order occurs

(a) before a
date 6 months after the date on which the cause of action arose, or

(b) after the
end of a 6 month period but before the end of the subsequent 6 month period,

 interest
must be calculated from the date on which the special damages were incurred to
the date of the order.

 (4) If part
of an order represents income loss arising from personal injury or death and
one or more payments have been made before the date of the order to replace,
provide indemnification for, compensate for or protect against some or all of
the income loss or for any other purpose related to the income loss, the amount
of the income loss on which interest may be calculated under this section must
be reduced by the amount of each such payment as of the date of the receipt of
the payment.

Interest not awarded in certain cases

2 The
court must not award interest under section 1

(a) on that
part of an order that represents pecuniary loss arising after the date of the
order,

(b) if there is
an agreement about interest between the parties,

(c) on interest
or on costs,

(d) if the
creditor waives in writing the right to an award of interest, or

(e) on that part of an order that represents
nonpecuniary damages arising from personal injury or death.

[34]        
In McKenzie, Registrar Sainty summarizes the defendant’s written
argument. I provide a brief excerpt here:

[13]      This means, Mr. Parsons says, that absent a
legislative foundation or an agreement between the parties regarding interest
— and there is none here — no interest ought to be awarded including interest
on costs.

[14]      Using principles of statutory interpretation, Mr. Parsons
says, in specifically referring to the Court Order Interest Act [Act]
(and these are from paras. 17 and 18 of his written submissions) that:

17.       Under subsection (1)(1)
of the Act, a court must add to a pecuniary judgment an amount of
interest at a rate the court considers appropriate from the date the cause of
action arose to the date of the order. As costs generally form part of a
pecuniary judgment, absent qualification subsection 1(1) would arguably require
a court to add prejudgment interest to a costs awards. The mandatory
jurisdiction conferred on a court under subsection 1(1) is, however, expressly
subject to s. 2 of the Act, which provides that the court must not
award prejudgment interest on, among other things, “costs”. Accordingly, the
legislature in British Columbia has modified the common law to give the courts
power to award interest on costs starting after judgment. No such
legislation has, however, been enacted in British Columbia to confer
jurisdiction on the courts to award interest on costs from a date before
judgment [Act ss. 1(1), 2(c), and 7(2)].

18.       The word "costs"
is not defined in the Act. At common law “costs” has long been defined as
comprising both litigation fees and disbursements. The Court of Appeal has
repeatedly confirmed the traditional meaning of “costs”, that meaning is reflected
in and governed by Rule 14-1, the provisions of which also indicate that
“costs” are comprised of fees and disbursements.

(emphasis in
original)

[35]        
At paragraphs 33 and 34, Registrar Sainty distinguished Milne and
Chandi and disallowed interest on the disbursements following the
submission made by the defendant on the impact of the Court Order Interest
Act.

[36]        
There is a compelling policy argument that interest should be allowed on
disbursement loans, in order to provide access to justice to those members of
our society who cannot fund lawsuits upfront and do not qualify for legal aid
funding. There is a large sector of our society that falls into the category of
the impoverished middle-class. As Mr. Poon submits, many law firms do not
wish to pay upfront for disbursements.

[37]        
The facts of this case are similar to those facts before Registrar
Cameron in the Chandi decision. In both cases, a settlement was reached
reserving the right to assess costs pursuant to the Supreme Court tariff.
Registrar Cameron found he was bound by the law in Milne, and so he
allowed the interest on the disbursement loan. Registrar Cameron had the
benefit of the loan agreement and the knowledge of what interest rate was being
charged. He found that interest rate was not reasonable, and he allowed
interest at the Court Order Interest Act rate.

[38]        
I have not reviewed the disbursement loan agreement, nor do I know what
interest rate was being charged. I do agree with Registrar Cameron that even if
we are bound by the decision in Milne, as registrars we do retain the
discretion to assess the reasonableness of a charge. Even if I find that
disbursement loan interest should be allowed in order to provide access to
justice to those who cannot afford to fund litigation, that does not mean that I
would agree to an unreasonable rate.

[39]        
I understand that both the McKenzie case and the Chandi
case have been appealed, and the appeals were argued on April 18 and 19, 2013. Rather
than put the parties to the added expense of appealing this decision, I have
decided to reserve on the point of the disbursement interest and to permit
further submissions and to prepare supplemental reasons once we have the
benefit of an appeal decision.

“B.M.
Young”

Master
Barbara M. Young