IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20141016

Docket: 12-1056

Registry:
Victoria

Between:

Kimberly Isbister

Plaintiff

And

Paige Delong

Defendant

Before:
The Honourable Mr. Justice Bowden

Supplementary
Reasons to Isbister v. Delong, 2014 BCSC 1395

Reasons for Judgment

[1]            
These reasons are supplemental to those found in Isbister v. Delong,
2014 BCSC 1395. That decision relates to claims made by the plaintiff for
damages from injuries sustained in a motor vehicle accident. At the conclusion
of the trial the parties were given leave to make written submissions on a
number of issues which were not argued at the trial. These are my decisions on
those issues.

I.                
Interest on Loans

[2]            
The plaintiff seeks to recover the interest she is liable to pay on
loans advanced to her by her lawyers, or a corporation controlled by her
lawyers, as special damages.

[3]            
The evidence regarding the loans is scanty but it appears that at
unknown times the plaintiff borrowed about $170,000. The plaintiff submits that
the interest on the loans is $41,976 but there is no evidence as to how such
interest was calculated. Neither the plaintiff nor her counsel has indicated
whether such interest has been paid nor has it been established whether or not
the payment of interest will be enforced by the lenders.

[4]            
The plaintiff submits that the loans were necessary to enable her to pay
her living expenses because she was unable to work due to her injuries. She
says also that the loans were used to pay some of the costs of her health care.

[5]            
In my view, assuming that the interest is paid, the interest on a loan
to fund general living expenses including treatment costs during the course of
litigation is not recoverable as damages where, as here, it is not reasonably
foreseeable and arises because of the impecuniosity of the plaintiff. See: Campbell
v. Swetland, 2012 BCSC 423, Leisbosch, Dredger v. Edison S.S. (Owners),
[1933] A.C. 449; Choma v. Canadian Vehicle Leasing Ltd., [1982] B.C.J.
No. 1036; and Jones v. Taylor, [1983] S.J. No. 632.

[6]            
In addition, the evidence indicates that the plaintiff did not pay for
all of her treatment and related expenses. Further, this Court found that some
expenses such as those related to dental expenses and urinary treatment were
not related to the accident. It appears that the plaintiff actually paid
treatment and other accident related expenses totalling about $3,000.

[7]            
It also appears that the income of the plaintiff received after the
accident and up to the date of the trial was about $127,000. That amount
exceeds her loss of income and out of pocket expenses such that it appears that
the loans were not required as a result of the accident.

[8]            
The plaintiff also asserts that the interest on the loans is recoverable
as a disbursement and relies on a decision of this Court reported as Chandi
v. Atwell, 2013 BCSC 830.

[9]            
There was no evidence at trial as to the amount of the loans that may
have been borrowed to fund particular disbursements nor was there evidence as
to whether such disbursements were necessary to the litigation or reasonable in
amount.

[10]        
In the circumstances this Court declines to make an order that any part
of the loans or the interest thereon should be treated as a disbursement.

[11]        
The plaintiff is, however, entitled to pre-judgment interest pursuant to
the Court Order Interest Act on her net past income loss and out of
pocket expenses. If necessary this may be dealt with by way of taxation.

II.              
Management Fees

[12]        
The plaintiff seeks a management fee at Level 3 of the levels
suggested by the Law Reform Commission in its report titled Report on
Standardized Assumptions for Calculating Income Tax Gross-up and Management
Fees in Assessing Damages (Vancouver, LRC 33, 1994), in the amount of
$42,500.

[13]        
The defendant’s position is that no management assistance is necessary
and no award should be made. If the Court considers that a management fee is
necessary, then the defendant says it should be nominal in amount.

[14]        
The plaintiff has a grade 12 education and completed a legal
assistant program. She also has experience trading in gold on the internet so
she has some understanding of the basic principles of risk and reward.

[15]        
I accept the defendant’s calculation that the plaintiff will have about
$320,000 to invest. This amount, together with the income that it earns, will
be important to the plaintiff to ensure that she has sufficient funds to meet
her medical needs.

[16]        
I accept that the plaintiff is not skilled in money management matters. The
evidence indicates that she has had little if any money to invest in the past.
She has lived pay cheque to pay cheque and spent much, if not all, of the cash
that she earned as tips.

[17]        
In my view the plaintiff will need some management services in relation
to the funds that she receives along with accounting for her investments on a
reasonably continuous basis. I would be concerned if she were to receive only
one session of investment advice that she may not be capable of following it on
a continuous basis and would gradually spend the amount received.

[18]        
Having said that, it is also my view that if the plaintiff follows the
advice of a professional investment manager she should receive a higher rate of
return than she would otherwise earn. Accordingly, I would reduce the amount of
the management fee from that suggested by Level 3 of the LRC Report to
$25,500. This represents a 40% reduction in the management fee proposed by the
plaintiff.

III.            
Costs

[19]        
On February 14, 2014, the defendant sent an informal offer by email to
the plaintiff to settle all of the plaintiff’s claims for $1,300,000. That
offer was rejected. On February 19, 2014, the defendant made a formal
offer to settle only the plaintiff’s tort claims for $1,021,203.51. That offer
met the requirements of Rule 9-1(1)(c)(iii) of the Rules of Court
and was open until the first day of trial. The plaintiff did not accept that
offer.

[20]        
The final award of damages will be less than the formal offer made by
the defendant.

[21]        
The defendant asks this Court to consider the formal offer in exercising
its discretion in relation to costs and to award costs to the plaintiff up to
February 19, 2014, and to the defendant thereafter pursuant to Rule 9-1(5)(c)
and (d).

[22]        
The plaintiff seeks her own costs throughout pursuant to Rule 14-1.

[23]        
Under Rule 9-1(6) in making an order for costs under Rule 9-1(5)
the court may consider the following:

a)    whether the
offer to settle was one that ought reasonably to have been accepted, either on
the date that the offer to settle was delivered or served or on any later date;

b)    the relationship
between the terms of settlement offered and the final judgment of the court;

c)     the
relative financial circumstances of the parties;

d)    any other factor
the court considers appropriate.

[24]        
I will first consider whether the formal offer was one that ought
reasonably to have been accepted by the plaintiff. In doing so, I will not
apply hindsight in light of the actual award of damages.

[25]        
The plaintiff says that because some of the defendant’s expert reports
were served on her outside the time requirements of the Rules, her solicitor
was not in a position to assess the strengths and weaknesses of her case and
could not have easily evaluated the offer on a timely basis: Hartshorne v. Hartshorne,
2011 BCCA 29.

[26]        
In my view, with the exception of Dr. Rapoport’s report, the
plaintiff received the expert reports from the defendant in sufficient time to
allow her counsel to consider them and the impact they might have on her case.

[27]        
As to the relationship between the formal offer and the final judgment,
the result of the trial is that the offer exceeds the judgment by about 22%.

[28]        
There was insufficient evidence before the Court upon which a
consideration of the relative financial circumstances of the parties could be
based. I do not consider that the insurer of the defendant used its financial
resources in a way that created an unfair advantage or that led to unnecessary
costs: Hunter v. Anderson, 2010 BCSC 1591.

[29]        
I have also considered the plaintiff’s damage claim for her urological
problems in relation to the settlement offer. The cost of future care that
could have been awarded to the plaintiff, had the Court concluded that her
urological problems were causally related to the accident, would be in the
vicinity of $343,000. Had that been the result, the total award of damages
would have exceeded the amount of the defendant’s formal offer. The late
delivery of the instructions to the defendant’s expert Dr. Rapoport and
the late delivery of his expert report left the plaintiff’s expert in this
area, Dr. Bacsu, unable to respond to Dr. Rapoport’s opinion prior to
taking the witness stand.

[30]        
In my view, while the plaintiff’s chance of succeeding on her claim
regarding her urological issues was not assured, her claim did not fail in that
regard because of anything the plaintiff did or did not do. The question of
causation in relation to her urological problems was very complex. Her expert
supported her position but there were contrary medical opinions.

[31]        
In the end result I consider that the defendant’s formal offer to the
plaintiff was not one that ought reasonably to have been accepted.

[32]        
The plaintiff is awarded costs at Scale B.

IV.           
Tax on Past Income Loss

[33]        
The parties have agreed that a marginal tax rate of 20% should be
applied for the purpose of determining the net income loss. Accordingly, the
net income loss of the plaintiff is determined to be $107,259.20.

V.             
Tax Gross-Up Award

[34]        
The tax gross-up award on the amount awarded for future care costs has
been agreed by the parties to be $8,400 and it is so ordered.

VI.           
Special Damages

[35]        
As directed by the Court and based on the analysis in the original
reasons, the parties have agreed that special damages shall be set at the amount
of $35,249.17, and it is so ordered.

“Bowden
J.”