IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20141219

Docket: M101629

Registry:
Vancouver

Between:

Shawn David Best

Plaintiff

And

April Teresa
Thomas and Joan Mary Thomas

Defendants

And

Insurance
Corporation of British Columbia

Third
Party

Before:
The Honourable Madam Justice Duncan

Oral Reasons for Judgment

In
Chambers

[1]           
THE COURT: On June 10, 2014, I issued written reasons awarding
the plaintiff $2,735,818.16 for injuries received as a result of an accident
caused by the defendant, April Thomas. My reasons are indexed at 2014 BCSC
1033.

[2]           
In brief summary, Ms. Thomas was an unlicensed driver at the wheel
of her grandmother’s van. She rear-ended the plaintiff and knocked him off his
motorcycle. The plaintiff suffered injuries to his neck which required surgery
and ultimately resulted in devastating physical effects due to the onset of
conversion disorder.

[3]           
My reasons provided that the parties could arrange to appear before me
to deal with costs, taxation, management fees, pre‑judgment interest, and
the impact of the updated discount rates under the Law and Equity Act, R.S.B.C.
1996, c. 253 as my judgment did not take this adjustment into account.

[4]           
At the time of trial, the discount rate was set at 3 1/2% for costs of
care awards, but on April 30, 2014, that rate was reduced to 2%, and the
discount rate applicable to loss of earning capacity was set at 1.5%.

[5]           
Before the costs hearing, the parties arrived at a consensus about the
impact of the discount rate on the awards for loss of earning capacity and
future care. The amount for future income loss is now agreed to be $1,193,437. The
amount for future care is now agreed to be $1,433,620. Pre‑judgment
interest is applicable, but that amount need not be part of the order that I
make today.

[6]           
The parties also agreed on an amount for tax gross‑up. The third
party accepted the calculations of Mr. Taunton, the plaintiff’s expert,
who calculated that amount to be $89,032.

[7]           
Finally, the parties agreed that $64,748.53 should be deducted from the
award for special damages to take into account payments made by ICBC prior to
trial.

[8]           
This leaves the issue of costs, management fees, and deductions for
physiotherapy and occupational therapy to be dealt with.

[9]           
I will begin with costs.

[10]       
The plaintiff seeks Scale C costs, double costs because the plaintiff
made an offer six days prior to trial that was not accepted, increased costs,
and costs for the attendance of two counsel at trial.

Scale C issue

[11]       
Appendix B of the Supreme Court Civil Rules, B.C. Reg. 168/2009
deals with party and party costs:

Scale of costs

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.

[12]       
The factors articulated in Mort v. Board of School Trustees No. 63
(Saanich), 2001 BCSC 1473, are generally accepted to govern the analysis of
the difficulty of a proceeding for the purposes of determining the appropriate
scale of costs. I will deal with each factor articulated in Mort and its
application in this case.

(a)      The length of the trial

[13]       
This trial lasted 15 days, including two days of closing submissions. On
occasion, the court sat late or started early to accommodate certain witnesses.
I do not find the length of this trial to be unusual, nor does it persuade me
that it indicates this was a matter of more than ordinary difficulty.

(b)      The complexity of the issues involved

[14]       
Counsel for the plaintiff maintains this was a complex case, because the
plaintiff’s diagnosis and prognosis were both in question. This necessitated
complex evidence from Dr. Trevor Hurwitz, a neuropsychiatrist, who diagnosed
the plaintiff with propriospinal myoclonus, an exceedingly rare condition.
Dr. Hurwitz also found the plaintiff suffered from conversion disorder,
which was consistent with the opinion of the third party’s experts.

[15]       
Plaintiff’s counsel says the question of diagnosis was hard fought, in
part because the third party’s experts, in particular Dr. O’Shaughnessy,
were not prepared for court and had not reviewed all the documents relevant to
the plaintiff.

[16]       
Counsel for the third party points out that the plaintiff’s prognosis
was not hotly disputed and not complex. As I observed during submissions at
this hearing, none of the third party’s experts posited a “Lazarus‑like”
recovery by the plaintiff. They were slightly more optimistic about his
residual capacity to work than any of the plaintiff’s experts, but nobody
predicted anything close to a full recovery for the plaintiff.

[17]       
On the assessment of the complexity of the issues involved in a personal
injury case, Johnston J. in Meghji v. Lee, 2012 BCSC 379 said at para.
57:

[57]      The issues of liability and damages were not more
complex in this case than many other motor vehicle accident cases. The remarks
of Master Bolton in Aikenhead v. Higgs (1992), 65 B.C.L.R. (2d) 340
(S.C.) at paras. 9 and 10, are apposite:

But, in my view, personal injury litigation so predominates
on the civil lists of this jurisdiction that it is reasonable to use it as the
archetype of litigation against which other categories of cases may be
measured; it is not unreasonable to suppose, when the rules on the scales and
units of costs were formulated and are periodically reviewed, that the
draftspeople would have in mind a typical personal injury case when abstract
consideration of various steps in the litigation process are being quantified
in probable duration and valued in dollars and cents.

In the circumstances, I conclude that personal injury
litigation, generally, tends to be of average difficulty and importance for the
purposes of App. B, s. 2, and that the particular case now before me is a
fairly typical personal injury case. It follows that costs should be taxed on
scale 3.

[18]       
While the diagnosis the plaintiff sought to prove in this case was
unusual, if not exceedingly rare, I do not find as a result that the issues
involved were complex and, in any event, the plaintiff failed to prove its case
on the aspect of diagnosis. I will have more to say about the impact of this
later in these reasons.

(c)      The number and complexity of pre‑trial applications

[19]       
Counsel worked cooperatively in bringing this matter to trial, obviating
the need for case management by a judge. There were two pre‑trial
applications: one a document production motion argued shortly before trial, and
the other to examine a witness which was resolved with the witness answering
questions in writing.

[20]       
In my view, the unsuccessful party in this case should not be penalized
for its cooperation by being subject to a higher scale of costs.

(d)      Whether or not the
action was hard fought with little or nothing being conceded along the way

[21]       
This action was hard fought on the issue of diagnosis, but much less so
on prognosis. The issue of prognosis boiled down to the plaintiff’s future care
needs and an assessment of his loss of capacity. The plaintiff’s counsel
maintains the matter should have settled, given that the third party
essentially conceded the plaintiff had little residual capacity to work.

[22]       
However, I note that the parties were far apart in terms of the amount
to be awarded under each head of damage, in particular the cost of future care,
and this necessitated a trial. In particular, with respect to the residual
capacity to work, the third party sought a reduction of approximately 30% of
any award, given a residual capacity, and I ultimately reduced loss of capacity
by a much lower amount.

[23]       
The plaintiff also notes that the third party disputed liability, adding
about a day of evidence to the trial. Counsel for the third party submits that
liability was not seriously contested, and they could not admit liability on
behalf of the undefended defendants. They point out that the plaintiff did not
pursue a summary trial of the issue of liability, even though counsel was aware
it was not admitted. Causation was not in issue and the third party conceded
the injury caused was significant. The only issue vigorously litigated was the
diagnosis.

[24]       
I found the issues in this trial, apart from liability, were vigorously
litigated, but this was far from a “knock‑down, drag‑out fight”
with many interruptions to deal with minor, unmerited objections to the
admissibility of evidence or the course of questioning.

(e)      The number and length of examinations for discovery

[25]       
The examinations for discovery in this case were neither unusually
lengthy nor numerous. The plaintiff was discovered once for about two and one‑half
hours. The defendant driver and vehicle owner were each discovered for a half
day in total. While the plaintiff’s counsel had to travel to conduct the latter
discoveries, this is covered as a separate item in the tariff, and I agree with
the third party that travel does not make a case legally complex in the
circumstances of the matter before me.

(f)       The number and complexity of expert reports

[26]       
Plaintiff’s counsel maintains the report of Dr. Hurwitz on the
plaintiff’s diagnosis was complex. While I agree that it was a dense document
on a very rarely‑diagnosed and controversial condition, it was
comprehensible. The report does not elevate this case to one where costs on
Scale C are merited.

(g)      The extent of the
effort required in the collection and proof of facts

[27]       
The collection of facts in this case was done through the usual means:
examination for discovery, document discovery, and expert reports. The proof of
facts for the most part was thus not particularly difficult.

[28]       
Counsel for the plaintiff points to the exhaustive efforts in gathering
materials to cross-examine a third party’s witnesses in order to challenge
their diagnoses. Cross-examination of Dr. O’Shaughnessy and Dr. Woolfenden,
in particular, was lengthy and detailed and involved many parts of various
medical texts or journals being produced to each. The plaintiff sought to have
the court accept the diagnosis of Dr. Hurwitz. To do so, the evidence of Dr. O’Shaughnessy
and Dr. Woolfenden would have to be rejected. Despite counsel for the
plaintiff’s best efforts, this did not happen. However the efforts expended in
proving Dr. Hurwitz’s opinion should be accepted do not merit an award on
Scale C.

[29]       
After weighing all the foregoing factors from Mort which apply to
the award of costs on Scale C, I conclude that this case is not one in which
Scale C should be awarded. Therefore, costs are to be assessed at Scale B.

The offer to settle

[30]       
The plaintiff made two offers to settle prior to trial. Both of them
were in the range of $2,000,000. The second one was made just under a week
before trial.

[31]       
The plaintiff beat the second offer to settle by close to $1,000,000. The
plaintiff maintains that offer should have been accepted, and I should exercise
my discretion and make an order for double costs from the time of delivery of
the settlement offer to the end of trial.

[32]       
The third party maintains the offer to settle was not delivered seven
days before trial, and that made it difficult to facilitate contact with the
unrepresented defendants. The plaintiff had to apply to amend pleadings on the
first day of trial, to include a past interest claim for special damages
related to care of the plaintiff by his family after the accident.

[33]       
The third party also maintains the unrepresented defendants are from a
disadvantaged, if not impoverished, background. The defendant April Thomas
lives in a remote First Nations community off the coast of Vancouver Island. The
third party will ultimately seek to collect the amount of the award and costs
from the defendants, and an award for double costs would have a crippling
effect on them.

[34]       
Recently, in Acciona Infrastructure Canada Inc. v. Allianz Global
Risks US Insurance Company, 2014 BCSC 1907, Skolrood J. reviewed the framework
for analysis of costs relating to an offer to settle:

[14]      Rule 9-1(5) sets out the options available to the
court where an offer to settle has been made and Rule 9-1(6) identifies a
number of factors that the court may consider when determining the appropriate
option:

(5) In a proceeding in which an offer to settle has been
made, the court may do one or more of the following:

(a) deprive a party of any or all of the costs, including
any or all of the disbursements, to which the party would otherwise be entitled
in respect of all or some of the steps taken in the proceeding after the date
of delivery or service of the offer to settle;

(b) award double costs of all or some of the steps taken in
the proceeding after the date of delivery or service of the offer to settle;

(c) award to a party, in respect of all or some of the steps
taken in the proceeding after the date of delivery or service of the offer to
settle, costs to which the party would have been entitled had the offer not
been made;

(d) if the offer was made by a defendant and the judgment
awarded to the plaintiff was no greater than the amount of the offer to settle,
award to the defendant the defendant’s costs in respect of all or some of the
steps taken in the proceeding after the date of delivery or service of the
offer to settle.

(6) In making an order under subrule (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.

[15]      In Hartshorne v. Hartshorne, 2011 BCCA 29,
the Court of Appeal described the purpose of the costs rules generally, and the
double costs rule specifically, in these terms at para. 25:

[25] An award of double costs is a punitive measure against
a litigant for that party’s failure, in all of the circumstances, to have
accepted an offer to settle that should have been accepted. Litigants are to be
reminded that costs rules are in place “to encourage the early settlement of
disputes by rewarding the party who makes a reasonable settlement offer and
penalizing the party who declines to accept such an offer” (A.E. v. D.W.J.,
2009 BCSC 505, 91 B.C.L.R. (4th) 372 at para. 61, citing MacKenzie v.
Brooks, 1999 BCCA 623, Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d)
201 (C.A.), Radke v. Parry, 2008 BCSC 1397). In this regard, Mr. Justice
Frankel’s comments in Giles are apposite:

[74] The purposes for which costs rules exist must be kept
in mind in determining whether appellate intervention is warranted. In addition
to indemnifying a successful litigant, those purposes have been described as
follows by this Court:

·       “[D]eterring
frivolous actions or defences”: Houweling Nurseries Ltd. v. Fisons Western
Corp. (1988), 37 B.C.L.R. (2d) 2 at 25 (C.A.), leave ref’d, [1988] [S.C.C.A.
No. 200];

·       “[T]o
encourage conduct that reduces the duration and expense of litigation and to
discourage conduct that has the opposite effect”: Skidmore v. Blackmore
(1995), 2 B.C.L.R. (3d) 201 at para. 28 (C.A.);

·       “[E]ncouraging
litigants to settle whenever possible, thus freeing up judicial resources for
other cases: Bedwell v. McGill, 2008 BCCA 526, 86 B.C.L.R. (4th) 343 at para. 33;

·       “[T]o
have a winnowing function in the litigation process” by “requir[ing] litigants
to make a careful assessment of the strength or lack thereof of their cases at
the commencement and throughout the course of the litigation”, and by
“discourag[ing] the continuance of doubtful cases or defences”: Catalyst
Paper Corporation v. Companhia de Navegação Norsul, 2009 BCCA 16, 88
B.C.L.R. (4th) 17 at para. 16.

[35]       
I agree with the plaintiff that the jurisprudence does not, strictly
speaking, require seven days’ notice of an offer to settle. The question is
whether the notice was sufficient and I find that it was in this case.

[36]       
The amendment to the pleadings on the first day of trial made a minimal
difference to the claim. The third party was well aware, six days before trial,
of the case it had to meet. The offer was a reasonable one and ought to have
been accepted.

[37]       
While this finding means the plaintiff is entitled to double costs from
the date of the offer to the end of trial, I agree with the third party that
the plaintiff is not entitled to any costs for the days of trial devoted to
advancing evidence of the diagnosis of spinal injury on which he was ultimately
unsuccessful, for argument related to that, and for the time spent applying to
amend the pleadings.

[38]       
I calculate the time required for those items to be five days, and that
should be deducted from the time the plaintiff is entitled to double costs.

Increased costs

[39]       
Appendix B of the Supreme Court Civil Rules provides for
increased costs under s. 2(5) where there are "unusual
circumstances" that render costs on the normal scale "grossly
inadequate or unjust". The factors that comprise unusual circumstances
are:

(a)      the serious nature of the
allegations;

(b)      the complexity or
difficulty of the issues in the litigation;

(c)      the
importance of the litigation to the parties or to the development of the law;
and

(d)      misconduct
by the unsuccessful party to the litigation, per Danicek v. Li, 2011
BCSC 444, at para. 48.

[40]       
Applying those four factors to the case before me, I note that while the
consequences of the accident were serious to the plaintiff, the allegations
themselves were not of a serious nature. This was a simple rear‑end
accident, albeit with tragic results for the plaintiff. As I said earlier in my
discussion on Scale C costs, the plaintiff’s diagnosis was an unusual issue in
this case, but it did not render this litigation unusually complex or difficult
as a result.

[41]       
The litigation is important to the plaintiff, but nothing about it is
generally important to the development of the law.

[42]       
Finally, while the plaintiff maintains Dr. O’Shaughnessy was not in
possession of all the documents he needed to give fully‑informed
evidence, I do not find the third party misconducted itself by tendering his
evidence, nor do I find anything else remotely approaching misconduct by the
third party. I decline to exercise my discretion in favour of increased costs
in this case.

Costs for two counsel

[43]       
Counsel for the plaintiff maintains there should be costs for two
counsel in this case. He relies on a line of authority in this province which
has its most recent expression in Wallman v. Doe, 2014 BCSC 968; and Water’s
Edge Resort Ltd. v. Canada (Attorney General), 2014 BCSC 1962.

[44]       
Counsel for the plaintiff, for many of the same reasons he advanced for
Scale C costs and increased costs, argues this was a complex trial which necessitated
two senior counsel and the order as to costs should reflect this.

[45]       
Mr. Armstrong for the third party submits that the jurisdiction to
award costs for two counsel at trial does not appear anywhere in the Rules
in British Columbia. He characterizes costs for two counsel as a relatively
recent development in this province, and points to the decision in Chen v.
Beltran, 2011 BCSC 41, as the genesis of such awards.

[46]       
The trial judge in Chen, in turn, relied on a line of authority
from Ontario, and Mr. Armstrong submitted the approach to costs in Ontario
is substantially different from that in British Columbia. In Ontario, the
concept of indemnity for costs prevails, whereas in this province the approach
is partial indemnity.

[47]       
Second, Mr. Armstrong points out the Ontario approach involves
assessing a global fee, rather than relying on an assessment of unit items
under a tariff, as occurs in this province. Mr. Armstrong characterizes
the B.C. system as a more regimented and restricted process, which does not
provide explicitly or implicitly for costs respecting two counsel at trial.

[48]       
Finally, Mr. Armstrong notes that Chen did not reference Midland
Mortgage Corp. v. Jawl, [1997] B.C.J. No. 1724, where the court held
that the tariff for ordinary costs is unaffected by the addition of a second
counsel. He invites me to follow Midland and depart from the more recent
decisions of other judges of this court on the issue of costs for two counsel.

[49]       
While Mr. Armstrong’s argument about the authority in this province
for costs for two counsel is an interesting one, I find I do not need to decide
whether to depart from the line of authority advanced by plaintiff’s counsel,
as I am not persuaded that costs for two counsel would be merited in the
circumstances of this case in any event.

[50]       
As I noted earlier, neither Scale C nor increased units, in my view, is
merited by the circumstances of this case.

Management fees

[51]       
The plaintiff seeks $253,596 for fees to professionally manage the award
in this case. He does not seek to invest the money in equity markets, which
would necessitate higher management fees because of market uncertainties and
the skill involved in planning an equity portfolio. Rather, the submission for
management fees was based on the need to secure advice to structure the
investments in safe vehicles, such as bonds.

[52]       
The third party opposes an award for management fees, arguing that with
the change in the discount rate, the average individual investing his or her
money in Government of Canada bonds will, over the long run, avoid the erosion
of inflation. Counsel also argues there is no evidence the plaintiff is not
capable of managing his affairs. He is a high school graduate, was gainfully
employed prior to the accident, and has handled his financial affairs, despite
the injuries he suffered in the accident.

[53]       
The plaintiff called evidence from Adam Pion, a portfolio manager with CIBC
Wood Gundy, and from Gerry Taunton, the plaintiff’s economic expert at trial.

[54]       
Mr. Taunton’s calculation of $253,596 to manage a conservative or
interest‑only fund, based on the award the plaintiff has received and at
the management rates charged by companies such as CIBC Wood Gundy, was not
disputed. The question is whether such a fee should be awarded.

[55]       
Mr. Pion described his role as getting to know his client in order
to effectively manage the portfolio. Even with the conservative fund invested
exclusively in bonds, in his view, a portfolio needs to be laddered by a
professional. The investments need to be structured with different maturity
dates to ensure a safe income stream. Mr. Pion does not see government
bonds as a zero‑risk investment. He regards it as prudent for even a
conservative portfolio to be professionally managed.

[56]       
The third party tendered Doug Hildebrand, an economist. Mr. Hildebrand
said  economic projections indicate that by 2019, government bond rates will be
better than 2%. In Mr. Hildebrand’s view, an individual working with a
banker who will charge transaction fees, or an investment planner who would be
paid for a few hours of advice, could set up a proper bond investment structure
that would ensure against erosion from inflation and generate an income stream.

[57]       
Mr. Gordon for the plaintiff takes the position that it would be a
remarkable proposition to award the amount the plaintiff received without also
awarding management fees to guard against the erosion of his funds. He made
some reference to the plaintiff’s past use of medical marihuana and past abuse
of alcohol as valid reasons to award a management fee. However, the plaintiff
is a mature adult and I find no reason he cannot make rational decisions about
his financial future.

[58]       
Mr. Stewart for the third party concedes that currently bond rates
are below 2%, but given the discount rate has recently been set at 2% and the
economic projections that government bond rates will rise beginning in 2019,
the plaintiff can, in the long run, invest his money safely without the need to
pay portfolio management fees.

[59]       
While I am satisfied on the basis of Mr. Hildebrand’s evidence that
in the long run the plaintiff can invest his money safely through free advice
by his financial institution, I find there must be a modest award for financial
advice to bridge the gap between now and when the projections indicate the bond
rates will go up. Otherwise, the plaintiff will be exposed to approximately
five years of uncertainty in terms of the bond market or other conservative
investments.

[60]       
Accordingly, I award the plaintiff $25,000 in management fees.

Deductions

[61]       
The third party seeks the deduction of $85,251.47 from the cost of the
future care award to take into account the fact that this amount remains to be
paid out of the $150,000 Part 7 fund, and the plaintiff can claim repayment
from that fund until it is exhausted.

[62]       
The plaintiff argues his award should not be reduced, either in whole or
in part, to take into account these payments. Counsel points out that ICBC can
refuse to make the payments if they do not meet their internal criteria and
leave the plaintiff in a position where he has to sue in tort to recover some
of his claim.

[63]       
Having considered the evidence of Marco Febbraio, a rehabilitation
benefits administrator with ICBC who has been involved in the plaintiff’s case
up to the release of judgment, I am satisfied the deductions sought by the
third party are appropriate. Mr. Febbraio testified if there was a request
to pay out benefits for physiotherapy or occupational therapy, he would review
the file, the reports, and consider other factors, along with my reasons for
judgment, in coming to a conclusion on coverage.

Summary

[64]       
In summary, I make the following orders concerning costs, taxation, deductions,
and management fees:

·               
future income loss, as agreed by the parties, $1,193,437;

·               
future care, $1,433.620;

·               
tax gross‑up, $89,032;

·               
deduction from special damages, $64,748.53;

·               
costs to be assessed on Scale B;

·               
double costs from the date of the offer to the end of trial, less
costs for five days related to the plaintiff’s application to amend the
pleadings and evidence and submissions associated with advancing the
unsuccessful arguments concerning the plaintiff’s diagnosis;

·               
$25,000 for management fees;

·               
a deduction of $85,251.47 from the cost of future care in light
of the plaintiff’s entitlement to Part 7 benefits.

[65]       
As to costs of the application, the parties have had divided success and
each shall bear their own costs.

“Duncan J.”

___________________________________________

The
Honourable Madam Justice Duncan