IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20141127

Docket: S123567

Registry:
Vancouver

Between:

Golden Rock
Products Inc.

Plaintiff

And

Her
Majesty the Queen in Right of the Province of British Columbia

Defendant

Before:
The Honourable Mr. Justice Savage

Reasons for Judgment on Interest and Costs

Table of Contents

I.  Introduction. 3

II.  Application to Reopen. 3

III.  Interest 4

IV.  Costs. 7

Appendix A. 11

I.        Introduction

[1]            
There are two applications before the court. First, the defendant
applies to reopen the case to argue an authority which was not brought to the
attention of the court and which, it says, is binding on the court. Second, the
plaintiff argues that it should be entitled to costs at higher than Scale B,
commencing one or two years earlier than the date conceded by the defendant.

II.       Application to Reopen

[2]            
With respect to the first matter, there is a discretion in the court to
reopen a case after trial and before the order is entered. The following
propositions apply to that exercise:

(1)      The
discretion has been described as “unfettered” with the “fundamental
consideration” being to avoid “a miscarriage of justice”: Clayton v. British
American Securities Ltd., [1935] 1 D.L.R. 432 at 441, [1934] 3
W.W.R. 257 (B.C.C.A.); Sykes v. Sykes (1995), 6 B.C.L.R. (3d) 296, 13
R.F.L. (4th) 273 at paras. 9-10 (S.C.);

(2)      The
discretion should be exercised “sparingly” in limited circumstances: Cheema
v. Cheema, 2001 BCSC 298 at para. 23; Sykes at para. 10;

(3)      A party
should not be allowed to advance an alternative argument that, for pragmatic
reasons, was not advanced at trial: Sykes at para 12;

(4)      A party
is not foreclosed from reopening the trial simply because an appeal has been
taken: The United Mexican States v. Metalclad Corporation, 2001 BCSC
1529 at para. 12; Constantinescu v. Barriault, [1996] B.C.J. No. 2105, 66
A.C.W.S. (3d) 876 at paras. 10, 13 (S.C.);

(5)      The
exercise of such discretion will generally be based on either new evidence,
overlooked or misconstrued material evidence, or a prior misapplication of the
law: Sykes at para. 10; and

(6)      The
discretion should not be exercised to allow a party to repair a broken down
case on a matter argued and considered: Bell v. Bell, 2001 BCCA 148 at
paras. 23-25.

[3]            
In this case the defendant says that it should be allowed to reopen the
case as (1) there is authority in the Supreme Court of Canada on point that was
not before the Court prior to judgment, and (2) the authority is recent, is not
affected by other judgments, is binding on the court, and was a considered
judgment.

[4]            
In my view the circumstances here are more persuasive than those faced
by Johnston J. in Meghji v. Lee (9 December 2011) Victoria 04-2102 (B.C.S.C.).
In Meghji the court allowed the case to be reopened on the basis that
the decision of this court, not referenced, should have been brought to the
attention of the court and given curial deference: at para. 14.

[5]            
In this case although the issue was argued, it was only perfunctorily
argued, and the authority now said to be binding was not brought before the
court by either party. The authority is on point and references at length the decision
relied on. In these circumstances, I would allow the defendant to reopen the
case to make this argument, although these circumstances are germane to costs
which I discuss below.

III.       Interest

[6]            
The Court Order Interest Act, R.S.B.C. 1996, c. 79 (the “COIA”)
reads in part as follows in ss. 1 and 2:

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 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.

[My emphasis].

[7]            
In this case the plaintiff relied on the decision of the Court of Appeal
in Morriss v. British Columbia, 2007 BCCA 337, to argue entitlement to
compound interest. In Morriss, a majority of the Court held that the COIA
did not apply to the inclusion of interest in compensation for a compulsory
taking not governed by the Expropriation Act, R.S.B.C. 1996, c.125: at
para. 34. Thus it was open to the Court to apply the concept of “equitable
interest” to include compound interest in the computation of full compensation
in the pecuniary judgment of the court: at paras. 31, 41.

[8]            
In her dissent in Morriss, Saunders J.A. distinguished the cases
on which the majority relied, noting that mineral claims were personalty, the
case was an action for a sum of money, and earlier authorities, such as Re Hougen and British Columbia
(Minister of Highways) (1984), 13 D.L.R. (4th) 106
(B.C.S.C.) , Hougen v. British Columbia
(Minister of Highways) (1984), 58 B.C.L.R. 306 (S.C.), and British
Pacific Properties Ltd. v. British Columbia (Minister of Highways and Public
Works), [1980] 2 S.C.R. 283, 112 D.L.R. (3d) 1, involved
compensation for deprivation of land for which arbitration proceedings were
engaged: at paras. 48, 52-54. She concluded that compound interest was not required
to form part of a compensation award made by a court for the taking of
personalty, not governed by the Expropriation Act and would have
dismissed the appeal.

[9]            
Morriss has subsequently been considered by the Supreme Court of
Canada (the “SCC”) in the recent case of British Columbia (Forests) v. Teal
Cedar Products Ltd., 2013 SCC 51. The case arose from an appeal of the
decision of the Court of Appeal in Teal Cedar Products Ltd. v. British
Columbia (Ministry of Forests), 2012 BCCA 70. The Court of Appeal had
declined to reconsider Morriss in Teal as Morriss was a
recent decision of the Court, fully argued, and on point. The Supreme Court of
Canada allowed the appeal.

[10]        
The defendant says that the following propositions arise from the SCC’s
decision in Teal:

(1)      The
provisions of the Court Order Interest Act with respect to interest are
mandatory, i.e., a court must add to a pecuniary judgment an amount of interest:
COIA s. 1(1), Teal at para.9;

(2)      A
pecuniary judgment only bears simple interest: Teal at para. 9;

(3)      Paragraphs
(1) and (2) apply even though compound interest is a more accurate way of
compensating parties for the time value of money: Teal at para. 10; and

(4)      While
courts presume that legislatures intend to provide full compensation for
expropriations, that presumption can be rebutted by statutory provisions that
demonstrate legislative intention to the contrary Teal at para. 37.

[11]        
As noted by the plaintiff, the SCC at para. 40 declined to decide
whether Morriss was decided rightly or wrongly. That said, at para. 20 the
court noted that it was a concern about awarding interest on interest that gave
rise to the dissent in Morriss, which also arose in Teal.

[12]        
 In my view, the mandatory nature of the COIA and the
exclusion of interest as a component of a pecuniary judgment are two critical
elements of Teal as it relates to this proceeding. Interest cannot be
included as part of a pecuniary judgment as it would permit the awarding
of interest on interest despite the s. 2(c) prohibition of awarding interest on
interest; i.e., compound interest as per Morriss plus simple interest as
per s. 1 of the COIA.

[13]        
As the Court in Teal notes, the provisions of the COIA are
mandatory: at para. 9. The exception in s. 2(b) of the COIA does not
apply here as there is no agreement by the parties. The plaintiff’s offer to
forego simple interest does not qualify as an agreement under s. 2(b) of the COIA,
as argued. In the result, in my opinion I am bound by the reasoning of the
Supreme Court of Canada in Teal, and conclude that it was an error to
rely on Morriss. In the result, I conclude that the plaintiff should be
awarded simple interest in accordance with the COIA.

[14]        
There is an issue regarding the date from which interest should be
awarded. In this case the Crown conceded at the outset of trial that there was
unauthorized interference with the mineral claims. Golden Rock argues that the unauthorized
interference commenced in May 2003. The Crown argues that the unauthorized
interference commenced at the commencement of construction in June 2005.

[15]        
I cannot accept the plaintiff’s position that unauthorized interference
commenced before revocation of the mineral reserve. While the areas of the
claim adjoining the Trans-Canada Highway were subject to a mineral reserve, the
Crown actions were protected. I do not see how there could be unauthorized
interference prior to that time.

[16]        
Once the reserve was rescinded, however, in my view the actions of the
Crown constituted unauthorized interference. The unauthorized interference
preceded de facto possession, which was the commencement of
construction. In the result, in my view interest should accrue from March 30,
2004.

IV.      Costs

[17]        
An issue arises as to the scale of costs. The plaintiff seeks special
costs or, alternatively, costs at Scale C. In the further alternative the plaintiff
seeks costs pursuant to ss. 2(2) and (3) of Appendix B of the Supreme Court
Civil Rules (the “Rules”).

[18]        
The plaintiff says that solicitor client costs are payable here, not
because of reprehensible, scandalous or outrageous conduct, but because of the
“full compensation” it should receive for a compulsory taking. That principle,
it says, was approved by the SCC in Teal. In Teal although the
plaintiff was awarded solicitor-client costs, the award was based on the
statutory scheme related to arbitrations, which specifically allows for full
indemnity costs (“actual reasonable legal fees”): Commercial Arbitration
Act, R.S.B.C. 1996, c.55, s. 11(2)(a).

[19]        
In British Columbia indemnification for legal costs is no longer part of
the law of compulsory takings. Even where land is expropriated, s. 45(7)(b) of
the Expropriation Act, R.S.B.C. 1996 c. 125, coupled with s. 16 of the Compensation
Action Procedure Rule, B.C. Reg. 100/2005, provide for party and party
costs. See Appendix “A”.

[20]        
In Adroit Resources Inc. V. HMTQ (British Columbia), 2010 BCCA
334, the Court of Appeal affirmed the decision of Cullen J., as he then was,
where he assessed costs on a party and party basis in accordance with Appendix
B of the Rules. What was at issue there was the compulsory taking of a
mineral tenure where the Expropriation Act did not apply. On the other
hand, the cases cited by the plaintiff are decisions where compensation is
awarded pursuant to, or in reference to, expropriation legislation which
provides for an award of actual reasonable legal fees, or appeals from
arbitration decisions where costs are dealt with under a specified statutory
regime. In my opinion the costs payable should be under Appendix B of the Rules.

[21]        
Section 2 of Appendix B of the Rules is as follows:

2  (1) If a court has made
an order for costs, it may fix the scale, from Scale A to Scale C in subsection
(2), under which the costs will be assessed, and may order that one or more
steps in the proceeding be assessed under a different scale from that fixed for
other steps.

(2) In fixing
the scale of costs, the court must have regard to the following principles:

(a) Scale A
is for matters of little or less than ordinary difficulty;

(b) Scale B
is for matters of ordinary difficulty;

(c) Scale C
is for matters of more than ordinary difficulty.

(3) In fixing
the appropriate scale under which costs will be assessed, the court may take
into account the following:

(a) whether a
difficult issue of law, fact or construction is involved;

(b) whether
an issue is of importance to a class or body of persons, or is of general
interest;

(c) whether
the result of the proceeding effectively determines the rights and obligations
as between the parties beyond the relief that was actually granted or denied.

(4) 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 the costs
be assessed under another scale.

(5) If, after
it fixes the scale of costs applicable to a proceeding under subsection (1) or
(4), the court finds that, as a result of unusual circumstances, an award of
costs on that scale would be grossly inadequate or unjust, the court may order
that the value for each unit allowed for that proceeding, or for any step in
that proceeding, be 1.5 times the value that would otherwise apply to a unit in
that scale under section 3 (1).

(6) For the
purposes of subsection (5) of this section, an award of costs is not grossly
inadequate or unjust merely because there is a difference between the actual
legal expenses of a party and the costs to which that party would be entitled
under the scale of costs fixed under subsection (1) or (4).

(7) If costs
may be assessed without order or agreement, the scale of costs must be fixed by
the registrar on the assessment.

(8) If an offer to settle is made under
Rule 9-1, any costs payable on acceptance of that offer must be assessed under
Scale B.

[22]        
The plaintiff relies on s. 2(2)(c) arguing that it is entitled to costs
at Scale C for matters of more than ordinary difficulty. The plaintiff also
argues that the value of the steps in the proceeding should be 1.5 times the
value otherwise determined pursuant to s. 2(5).

[23]        
With respect to 2(2)(c), I agree with the plaintiff that the matter is
one of more than ordinary difficulty. The issue at trial involved the valuation
of a mineral claim that was impacted by highway construction. Because highway
construction dramatically changed access, the parties were required to address
with expert engineering evidence the available historical access and the impact
of the construction, and relate that to the appropriate method of valuation and
the application of that method.

[24]        
In my view the access matter, the appropriate method of valuation and
the application of that method involved difficult issues of fact. The matter
was hard fought. It involved an unprecedented set of circumstances: the removal
of a mineral reserve, of which the Provincial Ministry was unaware, which
released the claims from the protection of the reserve. The case has ongoing
importance as the mineral claims continue and the proceeding affects these parties,
or their successors in title, into the future. It will also be significant in
dealing with like claims.

[25]        
The matter is of obvious importance to the holders of mineral claims
adjacent to highways and illustrates the difficulties the development of those
claims might face.  It is also noteworthy that the plaintiff had to prepare for
trial to deal with both the issue of liability and the question of valuation.
Preparation on the liability issue was time spent on an important issue which
was not argued. The plaintiff and its officers spent several years pursuing a
matter that was ultimately frustrated.

[26]        
In the result, I would allow costs in this matter at Scale C. As I have
allowed costs under Scale C, I would not increase costs further by the
application of section 2(5) in these circumstances.

[27]        
The final matter concerns the costs of this application. While there is
mixed success, the defendants could have raised the relevant authority
regarding the question of interest at the hearing of the trial. In the
circumstances I would grant the plaintiff its costs of this application.

“The
Honourable Mr. Justice Savage”

Appendix A

Expropriation Act, R.S.B.C.
1996, c. 125, s. 45

45  (1) If there is an inquiry, the
inquiry officer may order the expropriating authority to pay a participant the
reasonable costs, to be set by the inquiry officer, incurred by the participant
for the purpose of participating in the inquiry.

(2)
An appeal lies to the court from an order under subsection (1).

(3) Subject to
subsections (4) to (6), a person whose interest or estate in land is expropriated
is entitled to be paid costs necessarily incurred by the person for the purpose
of asserting his or her claim for compensation or damages.

(4) If the
compensation awarded to an owner, other than for business losses, is greater
than 115% of the amount paid by the expropriating authority under section 20
(1) and (12) or otherwise, the authority must pay the owner his or her costs.

(5) If the
compensation awarded to an owner is 115% or less of the amount paid by the
expropriating authority under section 20 (1) and (12) or otherwise, the court
may award the owner all or part of his or her costs.

(6) On a claim
under section 41 (3), the court may award, in its discretion, costs to the
claimant or the expropriation authority.

(7) The costs
payable under subsection (3), (4), (5) or (6) are

(a) the actual
reasonable legal, appraisal and other costs, or

(b) if the
Lieutenant Governor in Council prescribes a tariff of costs, the amounts
prescribed in the tariff and not the costs referred to in paragraph (a).

(8) If an
expropriating authority and a person referred to in subsection (3) agree on the
amount of compensation or damages, but do not agree on the amount of costs to
be paid, the costs must be determined by a registrar of the court.

(9) If the court determines
the amount of compensation or damages to which a person is entitled, the amount
of costs must be determined by a registrar of the court.

(10) In a
determination of costs under subsection (8) or (9), the following
considerations must be taken into account:

(a) the number and
complexity of the issues;

(b) the degree of
success, taking into account

(i) the
determination of the issues, and

(ii) the difference between the amount
awarded and the advance payment under section 20 (1) and (12) or otherwise;

(c) the manner in
which the case was prepared and conducted.

(11) and (12) [Repealed 2004-61-17.]

[Emphasis added]

Compensation
Action Procedure Rule, B.C. Reg.
100/2005, s. 16

Costs for actions
brought under this rule

16 Subject to subrules (17) and (18), if legal costs are
payable to a party to a compensation action, those legal costs must be
assessed as party and party costs under Appendix B of the Supreme Court Rules,
and Rule 57 of those rules, other than Rule 57 (1), (3), (5) and (10), applies.

[Emphasis added]