Vancouver Car Accident Lawyers
Anson vs Keroway Dec 31 1997
Anson v. Karoway
Stella Anson, plaintiff, and
Phillip Karoway, defendant, and
Insurance Corporation of British Columbia, third party
 B.C.J. No. 2913
52 B.C.L.R. (3d) 8
76 A.C.W.S. (3d) 500
Vancouver Registry No. C932079
British Columbia Supreme Court
Vancouver, British Columbia
Heard: December 12, 1997.
Judgment (Ruling No. 1): filed December 31, 1997.
Practice — Costs — Party and party costs — Special orders — For reprehensible or inefficient conduct by party — Increase in scale of costs, recovery equal to or more than settlement offer.
Application by the plaintiff for special costs or increased costs arising out of an action for damages for personal injuries from a motor vehicle accident. The plaintiff contracted to pay her solicitors a contingency fee of one-third of what was recovered after trial, which resulted in a fee of $390,000. Costs on the usual scale amounted to $9,780. After the initial examination for discovery of the plaintiff, plaintiff’s counsel assessed the case for settlement purposes at $114,000. The third party’s offer of $36,000 was rejected. After it became apparent that the plaintiff required intensive psychological treatment, plaintiff’s counsel estimated that the claim could exceed $1 million, and urged settlement by way of mediation. The parties were unable to arrange mediation prior to the scheduled trial date. The third party offered to settle for $100,000. The trial proceeded and the plaintiff was in such an emotionally fragile state she could not complete her testimony on cross examination. Plaintiff’s counsel alleged that the defendant should have produced witnesses to support its theory that events other than the motor vehicle accident caused the plaintiff’s medical and psychological problems. The third party was accused of not considering the possibility of mediation. In addition, it was alleged that the plaintiff was subjected to a particularly aggressive cross examination, which put her emotional health at risk.
HELD: Application for special costs denied; increased costs awarded at 50 per cent of the fees that would have been allowed under an order for special costs. The actions of the defendant and the third party did not demonstrate any improper motive. The plaintiff’s cross examination was not particularly aggressive and in fact was conducted in an attempt to accommodate her condition. There was no basis on which to award special costs. However, costs on the ordinary scale were inadequate, resulting in the award for increased costs.
Statutes, Regulations and Rules Cited:
British Columbia Supreme Court Rules, Rule 57(3).
Y. Gertsoyg, for the plaintiff.
P.J. Armstrong, for the third party.
1 BURNYEAT J.:– The plaintiff applies for an order that the plaintiff’s costs be assessed as Special Costs pursuant to Rule 57(3) of the Rules of Court or, alternatively, for an order that the costs be on an increased tariff scale or be increased costs pursuant to s. 7 of Appendix B of the Rules of Court. The defendant is not represented but the third party on his behalf submits that the costs to the plaintiff should not be other than Party and Party (Scale 3) costs.
2 Counsel for the plaintiff has estimated that Scale 3 costs would amount to approximately $9,780. On a time basis, they estimate that they expended 762 hours so that an account based on their usual billing rates of $250 would be $190,500. The plaintiff contracted with her solicitors to pay a contingency fee of 33.33% of what was recovered after trial. The total amount awarded in the August 8, 1997 judgment was $1,170,569.39 so that this would result in an account of $390,189.76 to the plaintiff.
3 The plaintiff relies upon actions taken by the third party or by counsel on behalf the defendant and third party both before and after trial to justify their request for special costs. The trial concluded on January 31, 1997. Judgment was filed August 8, 1997.
BACKGROUND PRIOR TO TRIAL
4 On January 14, 1993, an offer of settlement was made to the plaintiff: $7,500 for non-pecuniary damages, $500 for special damages and $3,889.31 for past wage loss. That offer was rejected. The trial was originally to commence on May 15, 1995 but the defendant agreed to an adjournment of the trial when that was requested by the plaintiff. The trial then commenced January 29, 1997.
5 The initial examination for discovery of the plaintiff took place on March 31, 1994 and, after that examination, counsel for the plaintiff provided the third party with his assessment of the case for settlement purposes: $114,270. At that time, the plaintiff had returned to work and it was hoped that she could continue to work. On July 15, 1994, the third party offered a total of $36,000 “new money” including $25,000 in non-pecuniary damages and $3,839.31 as past wage loss. That offer was rejected. It later became apparent that the plaintiff could no longer work and that she required intensive psychological treatment.
6 The plaintiff says that, in May, 1995, the matter was transferred to the “Major Loss Department” of the third party and that all Part 7 benefits to the plaintiff were terminated. There was a subsequent agreement to advance funds in order that the Part 7 benefits could be continued. The plaintiff says that the third party only agreed to advance the $10,000 requested if the following conditions were met:
(a) Dismissal of Ms. Kleeman, Care Manager, Waldee Services “without regard to her professional recommendations for a continuing rehabilitation program as was heard in evidence at trial”;
(b) Replacement with a Ms. Petrov who “has a different approach” (favoured by I.C.B.C);
(c) A reduction in treatment and “passive therapies” with immediate implementation of a work hardening program to “toughen” Mrs. Anson up for an early return to work “in the face of medical opinions that such action was premature and potentially dangerous as a setback to recovery, emphasis was placed upon the fact that she loved her work”; and
(d) The cancellation of a disability parking permit on the basis that: “… this would appear to be counter active to her recovery.”
7 On July 15, 1996, counsel for the plaintiff wrote the third party to outline his “respective” position for settlement. In that letter, counsel for the plaintiff indicated that he thought it “foreseeable” that the claim could total more than $1,000,000 “depending upon the costs of future care.” On July 29, 1996 counsel for the plaintiff again urged settlement: “Settlement in this matter may be facilitated by Mediation rather than full trial and arbitration. Let me know your thoughts”. In addition to the July 29, 1996 letter, counsel for the plaintiff says that there were further telephone requests to counsel for the third party that the matter be mediated but that there was no reply to the possibility of mediation.
8 The third party scheduled a second examination for discovery of the plaintiff which took place on October 1, 1996. After that examination, an independent examination of the plaintiff was requested by the defendant. That examination was scheduled with Dr. K.S. Riar, a psychologist who met with the plaintiff on December 2, 1996. His report dated January 13, 1997 was served on counsel for the plaintiff on January 16, 1997 and an addendum to his opinion dated January 20, 1997 was served on counsel for the plaintiff on January 21, 1997. Counsel for the third party indicates it was only after the second discovery and upon receipt of these reports that they became aware of pre-existing psychological problems and the extent to which the plaintiff had been traumatized by a number of post-accident events.
9 In his opinion of January 13, 1997, Dr. Riar noted:
Other family dynamics are also quite important in her case.
She indicated that after her [mother’s] stroke in 1994, “All hell broke loose”. She said that her brother told her mother that she was stealing from her and that she had kept her captive and her mother believed him. At the time her mother was very disturbed and was threatening to kill people. She threw a cup of hot coffee at Ms. Anson. She indicated that her brother had her mother convinced that she could not stand Ms. Anson. Her brother subsequently took her mother from Ms. Anson’s home and put her in an apartment. It took three months for Ms. Anson to find her with the help of her doctor and Social Services. A few months after this she passed away. While her mother was living with her Ms. Anson had arranged 24-hour home care for her in her home. She indicated that her mother was a perfectionist. She was a nice lady who always had a smile on her face. She described her brother as a welfare case with a severe drinking problem. She believes that he was the cause of her mother’s death and she has no contact with him. She indicated that she is worried about her hatred towards her brother when she buried her mother.
Regarding the other problems in her life, Dr. Riar concluded:
There is a family history of alcoholism and obsessive-compulsive personality traits. Other family dynamics are also quite important in her case. Her parents who were quite close to her and lived with her for the last 23 years died during this period. Her brother also created a family fight after her mother suffered a stroke and developed some cognitive problems. Her mother was taken out of her house and placed in an apartment by her brother. . .
I also feel that the death of her parents and the family feud after her mother’s stroke contributed to a great extent to her emotional difficulties. I feel the poor response to the medication could be due to ongoing stresses that she was facing.
10 In his January 20, 1997 opinion, Dr. Riar was not in a position to say that it was inevitable that the pre-existing problems would have led to her depression and anxiety but he was able to say that:
The issue of whether Ms. Anson could have suffered from depression and anxiety in a debilitating proportion if she was not involved in an automobile accident is extremely difficult to answer. Looking at her pre-accident functioning one can speculate that if she had not been involved in the accident she could have managed the various stressors without major interruption in her life. Having said that, the chances of her recovering following the accident in a short time would have been much greater if she did not have the other stressors. Lastly, I feel that the other factors are mainly responsible for delaying and aggravating her recovery from various physical and emotional sequelae of the accident.
11 Counsel for the third party says that she advised counsel for the plaintiff on December 16, 1996 that she required a settlement package for her review before Christmas of 1996 as she had four trials to run “back-to-back” in January of 1997. Unfortunately, the videos relating to a settlement video and a video-conference between treating doctors was not available until January 6, 1997. On that date, a settlement package was received as was an acknowledgment from counsel for the plaintiff that the trial schedules of counsel precluded mediation prior to the January 27, 1997 commencement of the trial. On January 17, 1997, counsel for the third party served a formal offer to settle for $100,000 along with the demand for attendance of all medical doctors at the trial.
12 In his opinion, Dr. Paul Peel, the psychologist of the plaintiff, provided a warning as to fragile condition of the plaintiff. In particular, he said that the plaintiff was vulnerable and susceptible to “secondary trauma” such as would be produced if it was necessary for her to testify at trial. The trial commenced on January 27, 1997 and the plaintiff gave her testimony on January 30, 1997. It was clear that her emotional state was fragile and, in fact, gentle questions from her own counsel produced several occasions where she could not continue with her testimony. The cross-examination by counsel for the third party was limited to areas of the causation theories advanced by the third party. Cross-examination was interrupted and not completed when it became apparent that the plaintiff was not in a position to continue her testimony.
13 After the trial but before Judgment was rendered, the third party terminated their payment of the rehabilitation and treatment accounts which they had previously paid pursuant to the Part 7 benefits available to the plaintiff. Counsel for the plaintiff says that the plaintiff and her husband were forced to place their house on the market in order to pay accounts for her expensive ongoing therapy.
14 An application was made before me on April 16, 1997 as to the obligation of the third party to continue payments for rehabilitation and treatment. While this application was outside the confines of this action and within the separate action commenced by the plaintiff to enforce payment of Part 7 benefits and although my Judgment in this action had not as yet, been filed, I did indicate to counsel that my Judgment would find that the problems of the plaintiff were due to the motor vehicle accident and not to any intervening events.
15 Counsel for the plaintiff deposes that Ms. Leske of the third party advised him after the April 16, 1997 hearing to the effect that:
ICBC was not going to cover these costs even when judgment was delivered. In response to the remainder of [the] Judge’s informal direction the said ICBC adjuster indicated the matter would be fully appealed without payment.
Counsel for the plaintiff says that, as a result of the continuing refusal of the third party to pay for the accounts for treatment being rendered, the condition of the plaintiff “took a turn for the worse” after April 16, 1997 and that the plaintiff started to have suicidal thoughts. The plaintiff says that these events both before and after trial should be taken into account by the court when deciding whether special costs should be awarded.
CASE AUTHORITIES – SPECIAL COSTS
16 Special costs will be awarded when the conduct of either counsel or client can properly be characterized as “reprehensible.” This term encompasses conduct which could also be described as “scandalous” or “outrageous”. Regarding these words, Lambert J.A. in Garcia v. Crestbrook Forest Industries Ltd. (1994), 9 B.C.L.R. (3d) 242 stated:
It is suggested that those words may be synonyms for a single standard of objectionable conduct.
17 In his submissions, counsel for the plaintiff indicates that this court has previously awarded special costs in the following circumstances:
(a) Where the major issue at trial was causation and the only evidence in support of the defendant’s “theory” came from clearly flawed reports and expert testimony: Heppner v. Schmand,  B.C.J. No. 1149, (28 May 1996), Campbell River S1026 (B.C.S.C.);
(b) Where one of the plaintiffs had embarked on a deliberate course of conduct designed to mislead the court and subvert its process: National Hockey League v. Pepsi-Cola Canada Ltd. (1995), 2 B.C.L.R. (3d) 13 (B.C.C.A.).
(c) Where a defence was filed in order to impose the financial burden of the proceedings themselves on the plaintiff “in circumstances where one party is financially much stronger than the other” and where an “absence of merit” is coupled with an “improper motive”: Garcia v. Crestbrook Forest Industries Ltd. (1994), 9 B.C.L.R. (3d) 242 (B.C.C.A.).
18 Regarding the conduct of the defendant, counsel for the plaintiff says that the defendant did not produce any witnesses to support the theory that events before or, alternatively, after the motor vehicle accident caused the medical and psychological problems of the plaintiff. In this regard, my judgment concluded:
It was the submission of counsel for I.C.B.C. that it was these intervening events and not the motor vehicle accident which have caused the long term and permanent disability of the plaintiff. I find that the evidence does not support that submission.
In fact, I find that the defendant’s negligence was virtually the sole cause of the problems and of the physical and mental injuries which have been suffered by the plaintiff.
Counsel for the plaintiff says that, the fact that no witnesses were produced to support its theory, “is sufficient to warrant an order for special costs”.
19 Unfortunately, the true nature of the plaintiff’s difficulties only became known after her attempts to return to work had failed. Prior to that time, counsel for the plaintiff assessed the case for settlement purposes at $114,270 and counsel for the defendant offered $36,000 in response to that assessment. There is no obligation on the defendant or the third party to settle litigation. While it is not what was acceptable, the July 15, 1994 counter-offer of the third party was not unreasonable in the circumstances. In fact, it is only after the true nature of the plaintiff’s difficulties became known that counsel for the plaintiff changed his assessment of the case for settlement purposes.
20 It was not objectionable conduct on behalf of the defendant and third party to disagree with the $1,000,000 assessment of damages made by counsel for the plaintiff, to not accept the proposition that all damages flowed from the accident or to make an offer of $100,000 prior to trial. In the absence of improper motive, making a settlement offer for substantially less than what is eventually awarded at trial is not grounds upon which special costs will be awarded. I can find no such improper motive in this case.
21 This accident and the resulting physical injuries might well have affected others in a less severe manner than how it affected this plaintiff. There is nothing inappropriate in the fact that the suspicions of the third party were aroused when they were told that, as a result of this accident, the plaintiff would never be in a position to return to work. It was only after the second examination for discovery on October 1, 1996, the independent examination of the plaintiff by Dr. Riar, and the two reports received in late January that the possibility of crumbling skull and/or intervening acts theories were apparent to the third party. The third party did not act inappropriately when it explored these two theories. The two reports from Dr. Riar came only several weeks before trial and at a time when counsel for the third party was not in a position to take steps other than at trial to fully pursue these theories.
22 Counsel for the plaintiff submits that, if repeated, similar conduct will “greatly discourage litigants from pursuing meritorious claims for emotional injury in this court.” Those who advocate the benefits of the adversary system over a no-fault system should be aware that the possibility of trial and a full canvassing of issues at trial is one of the “costs” of the adversary system. There was clear evidence and a witness was produced at trial to advance the theory of a “crumbling skull” or the theory of an “intervening act.” These matters are all raised in the expert opinions of Dr. Riar. The plaintiff submits that these theories were only raised at the last minute. With counsel for the plaintiff urging the trial to proceed on January 27, 1997 and with the previous advice provided by counsel for the third party that she was in trial most of January so that she would not be in position to consider possible settlement of this action, it is not unreasonable for the third party to test these theories during cross-examination even though these matters had not been raised during the discovery process.
23 The criticism of counsel for the third party that she did not consider the possibility of mediation can also be laid at the door step of counsel for the plaintiff. Counsel for the plaintiff knew that counsel for third party would not be available during January after she advised that any settlement package for her review should be received prior to Christmas of 1996. Unfortunately, the videos relating to settlement and a video conference between consulting doctors was not made available by counsel for the plaintiff to counsel for the third party until January 6, 1997. In the circumstances, it was not unreasonable for the possibility of mediation to be rejected and, in fact, counsel for the plaintiff acknowledged in January that it was too late to have the matter mediated. If counsel for the plaintiff had sought an adjournment of the trial in order that mediation could be undertaken, there is nothing to suggest that counsel for the third party would not have agreed to that. However, it was important for the plaintiff’s well being that the trial proceed.
24 Counsel for the plaintiff also submits that the plaintiff was subjected to a “particularly aggressive cross-examination at extreme risk to her emotional health given the well-known weakness of her condition at trial”. They submit that where an opposing party is “clearly notified in pleadings and subsequent expert reports that the opposing party is emotionally much weaker and vulnerable to cross-examination as a consequence of its client’s fault”, it is reprehensible conduct for counsel to reject or ignore a request for mediation and insist upon its right to trial:
… only to use this opportunity to subject the plaintiff to an emotionally stressful cross-examination for the equivocal purpose of, (a) at best, proving a theory which counsel could produce no witness to support, or, (b) at worst, using the condition the Defendant himself caused, against her to prevent her from testifying to establish her claim.
The suggestion that cross-examination should be restricted when a warning such as was received from Dr. Peel is present virtually eliminates the ability of counsel for any defendant to fully expose any weaknesses in cases being presented on behalf of the plaintiffs where emotional breakdown or vulnerability is claimed. The court is in a position to control cross-examination in such circumstances and to restrict cross-examination if necessary.
25 In this case, nothing would lead me to conclude that counsel for the third party “subjected Mrs. Anson to a particularly aggressive cross-examination.” In fact, the cross-examination of the plaintiff was extremely gentle and showed much understanding of her condition. When it appeared that the plaintiff was no longer in a position to continue, the cross-examination was concluded before a number of questions could be put to the plaintiff as counsel for the third party did not insist upon the usual right afforded her client to full cross-examination. Unfortunately, the secondary trauma of which Dr. Peel warned would include matters raised both on direct examination and cross-examination. The sensitivity of both the direct examination and the cross-examination was an example of the work of conscientious and responsible counsel.
26 Counsel for the plaintiff also submits that the threat of difficult litigation and the cost of such litigation should not be used to interfere with access of meritorious cases brought by those “less privileged”. In this regard, they rely on the following passage of Lambert J.A. in the Garcia decision, supra:
If the proceedings are taken, not in the reasonable expectation of a satisfactory outcome, but in order to impose the burden of the proceedings themselves on the opposing party in circumstances where one party is financially much stronger than the other, then the absence of merit, coupled with the improper motive, is in my opinion a combination which may well amount to reprehensible conduct sufficient to require an award of special costs.
This is not a case where special costs should be awarded because there was no merit to the defence. I can find neither an absence of merit nor an improper motive. Accordingly, I hold that special costs are not warranted for any of the activities of the defendant or third party or any activities of the counsel for the third party up to and including the trial.
27 The actions taken by the third party after the trial but before judgment can not be taken into account in deciding whether special costs can be awarded. Even if it could be said that such actions are indicative of the attitude of a party up to and including the trial, it would be inappropriate to base any conclusions on whether special costs should be awarded on the basis of what was done after the trial. This is especially the case where the improper activities alleged relate to separate proceedings brought by the plaintiff against the third party to enforce the Part 7 benefits available to this plaintiff and not to matters which arise specifically out of this action. Accordingly, I hold that special costs are not warranted for any activities of the third party after trial.
REQUEST FOR INCREASED COSTS
28 Section 7(1) of Appendix “B” to the Rules of Court provides that if the court determines that, “for any reason there would be an unjust result” if costs were assessed under Scales 1 through 5, then the court may order that costs be assessed as “increased costs”. It is clear that the discretion under this section is very wide and that a discrepancy between an award of ordinary costs and what special costs would have amounted to if ordered may alone be a sufficient basis upon which to make an award of increased costs: National Hockey League v. Pepsi Cola Canada Ltd., supra.
29 Based on the complexity of the matter, costs on a Scale 4 basis would ordinarily be awarded on this matter. However, I am satisfied that an order of costs on only a Scale 4 basis would produce an unjust result. Those costs would amount to about a $13,000 recovery for the plaintiff. This amount falls unacceptably short of a fee based on time spent (approximately $190,000) or the fee for which the plaintiff bargained (approximately $375,000). It was originally intended that Party and Party costs would be equal to roughly 50% of the fees which a client might expect to be charged by his or her counsel. That intent is clearly illusory in present day litigation. It is clearly not the case here that costs assessed under Scale 4 would allow the plaintiff to recover 50% of the fees which she will have to pay to her counsel.
30 On the basis of the very wide discrepancy between ordinary costs and that which would have been available if special costs had been awarded and on the basis of the importance of the issues as between the parties, I am satisfied that there should be increased costs. To order otherwise would produce an unjust result. In the circumstances, there will be an order that increased costs will be allowed at 50% of the fees that would have been allowed if an order for special costs had been made under Rule 57(3). Those increased costs are to be paid forthwith after assessment together with all proper expenses and disbursements.