The British Columbia government has added regulations to the Evidence Act that now cap disbursements at 6% of the overall value of a motor vehicle accident claim that is litigated through the Supreme Court.

 

Although the intent of the new regulations is primarily aimed at the cost of expert reports, the scope of what actually constitutes a disbursement is widely encompassing, including such items as courier fees, process server fees, and photocopying charges.

 

Exceptions include fees payable to the Crown, such as court fees and filing fees.

 

The new limit will apply to court cases where a Notice of Trial was not filed and served by August 12, 2020, for a trial date before June 1, 2021.

 

The limit will not apply the limit in the following circumstances.

 

• where a Notice of Trial was filed and served before August 12, 2020, and the trial date is before June 1, 2021
• where a Notice of Trial was filed and served before August 12, 2020, the trial date is on or after June 1, 2021, and the Court is satisfied that the litigant necessarily or properly incurred disbursements before August 12, 2020, that were in excess of the limit

 

As was the case last year when the government introduced measures to restrict the amount of experts and expert reports that a Plaintiff could use, which were deemed unconstitutional, a constitutional challenge will likely ensue. The new regulations on disbursements as they stand now will mean that a Plaintiff may not be able to call all necessary evidence to fully prove their case. This will be particularly detrimental in more serious cases, where multiple experts are often required to testify to a multitude of injuries sustained by a Plaintiff.

 

In Wynia v. Soviskov, the Court considered the issue of whether or not the premium for adverse costs insurance was compensable as a disbursement.

 

Adverse costs insurance, also known as “after the event” insurance, is a form of insurance policy purchased by a Plaintiff to provide financial protection in the event that the Court makes a judgment for costs against the Plaintiff after a trial should the Plaintiff be unsuccessful. It can also apply to a successful Plaintiff who is granted an award at trial that is less than the amount of the Defendant’s formal offer to settle. A benefit of purchasing the policy is that it can help level the playing field in that Plaintiffs, who may be hesitant to proceed to trial out of fear of a crushing costs award, can have access to justice.

 

In the case at bar, counsel for the Plaintiff sought to recover the cost of premiums for an adverse costs insurance policy purchased by the Plaintiff to insure against the Plaintiffs’ own disbursements, as well as the Defendant’s costs and disbursements.

 

There appeared to be no British Columbia case authority directly on point. Counsel for the Defendant relied on the Ontario case of Markovic v. Richards et al. for the proposition that the cost of premiums for an adverse costs insurance was not a compensable disbursement.

 

Rule 14-1(5)(a) of the British Columbia Supreme Court Civil Rules states that a registrar must determine which disbursements have been necessarily or properly incurred in the conduct of the proceeding. In the case at bar, the Court cited the well known British Columbia Court of Appeal case of MacKenzie v. Rogalasky for judicial consideration of the meaning of necessarily or properly incurred in the conduct of the proceeding.

 

In ruling that the premiums for an adverse costs policy are not recoverable as a disbursement, the Court commented :

 

[6] In British Columbia, to be recoverable as a disbursement SCCR 14-1(5) provides that the disbursement must have been necessarily or properly incurred in the conduct of the proceeding. The phrase “necessarily or properly incurred in the conduct of the proceeding” was recently addressed by the Court of Appeal in MacKenzie v. Rogalasky, 2014 BCCA 446. The Court of Appeal states …

 

[79] The rule, in its current form, permits the recovery of “disbursements … incurred in the conduct of the proceeding”. In my view, quite apart from the language “incurred in the conduct of the proceeding” the term “disbursement”, when used in the context of a costs rule that relates to the taxation of costs in particular litigation, does contain limits that narrow its potential broad applicability. It appears to me that the purpose of permitting the recovery of disbursements in the context of a costs regime is to permit the recovery of those expenses that arise inherently and directly from the issues in the case which relate, as the appellants suggest, to the direction, management, or control of litigation and which pay for materials and services used to prove a claim or defence. These expenses arise directly from the nature and conduct of the allegations in a proceeding.

 

[7] In my view, applying the reasons of the BCCA in MacKenzie v. Rogalasky, supra, the cost of insurance coverage is not a proper or necessary disbursement incurred in the conduct of the proceeding. No doubt it provides a measure of financial comfort to the plaintiff, however, it does not arise from the exigencies of the proceeding and relate directly to the direction, management, or control of the litigation used to prove a claim against the defendants. Accordingly, the cost of the insurance coverage is disallowed.

Magnetic Resonance Imaging (MRI) is a medical imaging technique used to take detailed images of various parts of a person’s body, and provides more detailed imaging than a simple x-ray would. An MRI is a very important diagnostic tool for people who have an ICBC injury claim, as it first and foremost can detect the specific injury you have, thus enabling you to get the proper treatment necessary to assist you in your recovery. An MRI can also provide objective proof of an injury, which ICBC will take more seriously than a claimant’s subjective reporting of symptoms.

 

Objective proof of an injury can include, for example, a disc problem, ligament damage, nerve root impingement, or a rotator cuff tear. Claimants with objective signs of injury typically achieve greater settlement values than those with subjective injuries, where sometimes credibility can play a role. In the case of more serious injuries, precise knowledge of the exact extent of the injury is vital, as it can have ramifications with respect to specific heads of damages like diminished earning capacity, loss of future housekeeping capacity, and the cost of future care.

 

Access to an MRI through the public health care system can be a problem, however, as wait times can be anywhere from six months to a year. Another problem is that ICBC will rarely pay for an MRI at a private clinic, unless it is of an extremely urgent nature, as they take the position that you can simply wait to get the MRI for free through the public system. ICBC will “consider” reimbursing a claimant for the cost of an MRI at the conclusion of the claim, however there is no guarantee that they in fact will.

 

Quite often, claimants are not able to afford the cost of an MRI, and some may settle their cases prematurely without knowing the full extent of their injuries. Other claimants may avail themselves of getting an MRI on a private basis, where access is almost immediate, and where there is no charge for an MRI until settlement time. However, normally you must have counsel representing you in your ICBC injury claim, so that a financial services agreement can be entered into between your lawyer and the private clinic. The clinic will expect to be paid back the amount of the MRI at settlement time, plus any applicable interest.

 

If you have been injured in a motor vehicle accident, and you are in need of an MRI, you are wise to consult with a lawyer so that your legal interests can be best protected.

In Ward v. Pasternak, the Plaintiff was injured in a motor vehicle accident, and subsequently brought an ICBC claim for damages for pain and suffering, as well as other types of damages. The Plaintiff claimed that she suffered from neck pain, back pain, shoulder pain, chest pain, leg pain, and jaw pain. The case settled approximately two years after the accident, however counsel for the Plaintiff and ICBC’S lawyer could not agree on the amount of disbursements that should be paid. The main items that were contested were the cost of two expert reports of the Plaintiff’s. ICBC’S lawyer did not dispute the amount of the reports, or that they were unnecessarily or improperly incurred, but did take issue with the fact that counsel for the Plaintiff in essence “buried” the reports by not disclosing their existence until it came time to determine what was owed for disbursements at settlement time. As such, ICBC’S lawyer took the position that the costs of the reports were unrecoverable. Counsel for the Plaintiff argued that he was properly maintaining privilege. The Court, after considering the authorities on the issue, placed great emphasis on the Plaintiff’s right to privilege, and ruled that the Plaintiff could indeed recover the costs of the expert reports as disbursements.

 

[35] … Although the trend may be towards greater pre-trial disclosure, no case authorities were offered in support of this proposition which would have the effect of over-riding litigation privilege in the context of this case.

 

[36] If counsel were compelled to disclose their work product to the opposite side, it is possible that vigorous pre-trial preparation might be systemically discouraged, or left to the last possible moment, thereby compromising the fact finding process. Litigation privilege allows the lawyer to make inquiries and gather evidence and information required to provide the best advice to the client, in confidence. This ultimately allows the client to make an informed decision to pursue, discontinue, or otherwise resolve the dispute.

 

[37] Litigation privilege is a fundamental principle of civil litigation. The erosion of litigation privilege as it relates to document production and identification would require explicit legislative language to this effect in the Supreme Court Civil Rules. Indeed, this principle was recently stated in Galvon v. Hopkins, 2011 BCSC 1835 (CanLII), where the cases cited by plaintiff’s counsel were relied upon at paras. 19 and 20. In Galvon, supra, at para. 12, the court characterized litigation privilege as being “alive and well”.

 

[38] Litigation privilege is not absolute. It is subject to legislative and judicial limitations. The Supreme Court Civil Rules provide for a level of disclosure. Beyond the four corners of the Supreme Court Civil Rules, there is no requirement for a litigant to wear his trial strategy on his sleeve, or let opposing counsel peer into the solicitor’s brief.

Commencing personal injury litigation, and taking it a long ways throughout the litigation process, can be an expensive endeavour. It is not uncommon in many ICBC claims for disbursements to reach into the tens of thousands of dollars, after factoring in expert reports, and follow up expert reports. Given such large amounts, interest at some point becomes a factor for the client, particularly if their ICBC claims drag on for many years. Although some lawyers do not charge their clients for the amount of interest accumulated on the disbursements incurred on their behalf, most lawyers do, sometimes in excess of 15% percent. If the lawyer cannot recover the interest, the client is still responsible for it. This can definitely impact any ICBC settlement amounts or ICBC payouts, if you as the client has to pay thousands of dollars in interest.

 

There has been some conflicting case law with respect to the issue of interest on disbursements in ICBC claims. Generally, with respect to litigation loans obtained from lenders who charge exorbitant interest rates, interest on disbursements in ICBC claims does not seem to be recoverable. Interest charged on disbursements incurred by Plaintiff’s counsel on behalf of the Plaintiff in ICBC claims, however, for the most part has been recoverable in the past.

 

However, the British Columbia Court of Appeal decision in Mackenzie v. Rogalasky seems to have finally brought some certainty and clarity to the issue. The appeals of two separate cases were consolidated in the Mackenzie case. The Plaintiffs had been injured in motor vehicle collisions, and had subsequently brought ICBC claims for damages for pain and suffering, as well as other types of damages. The issue for the Court of Appeal to decide was whether interest payments incurred by a successful litigant in order to finance disbursements are recoverable as disbursements. The Court held that such interest payments are not recoverable as disbursements.

 

[80] It will be apparent that the conclusion I have reached does not depend on limiting the applicability of the word “disbursements” by reference to the phrase “incurred in the conduct of the proceeding”. I consider that the meaning of the words “disbursement” or “expense” has always excluded out-of-pocket interest expenses. The addition of the phrase “incurred in the conduct of the proceeding” in the rule in 1990 did not narrow or change the meaning of the word “disbursement” or otherwise limit its application. Rather, the phrase reinforces and confirms what has always been the case. To be recoverable a disbursement must arise directly from the exigencies of the proceeding and relate directly to the management and proof of allegations, facts and issues in litigation, not from other sources. In my view, that is what is captured by the phrase “the conduct of the proceeding”.

 

[81] In my opinion, this interpretation of the rule flows naturally from the purposes of a costs regime and the guidance provided on that subject by the Supreme Court of Canada, most particularly in Walker. Several points emerge which assist in interpreting the rule. The first is that a costs regime serves multiple functions, only one of which is indemnification. Even in respect of that function, the costs regime provides only partial, and not full, indemnity to a successful party. Accordingly, one is not compelled to conclude that interest expenses must be recoverable because the purpose of the rule is to make a successful party whole. To the contrary, partial indemnification underlies both the recovery of costs on a tariff and disbursements (because the reasonable amount awarded may not fully indemnify the cost of necessary or proper disbursements).

Commencing personal injury litigation, and taking it a long ways throughout the litigation process, can be an expensive endeavour. It is not uncommon in many ICBC claims for disbursements to reach into the tens of thousands of dollars, after factoring in expert reports, and follow up expert reports. Given such large amounts, interest at some point becomes a factor for the client, particularly if their ICBC claims drag on for many years. Although some lawyers do not charge their clients for the amount of interest accumulated on the disbursements incurred on their behalf, most lawyers do, sometimes in excess of 15% percent. If the lawyer cannot recover the interest, the client is still responsible for it. This can definitely impact any ICBC settlement amounts or ICBC payouts, if you as the client has to pay thousands of dollars in interest.

 

There has been some conflicting case law with respect to the issue of interest on disbursements in ICBC claims. Generally, with respect to litigation loans obtained from lenders who charge exorbitant interest rates, interest on disbursements in ICBC claims does not seem to be recoverable. Interest charged on disbursements incurred by Plaintiff’s counsel on behalf of the Plaintiff in ICBC claims, however, for the most part does seem to be recoverable. Clarity on these issues from the British Columbia Court of Appeal will be welcomed by both Plaintiff counsel and defence counsel.

 

In Franzman v. Munro, the Plaintiff was injured a car accident, and brought an ICBC claim for pain and suffering, as well as other forms of damages. There was disagreement between Plaintiff‘s counsel and ICBC’S lawyer as to the reasonableness of certain disbursements. There was also over $5000 in interest on such disbursements. The Court allowed some of the disbursements, and also allowed the interest on such disbursements, following the earlier decision in Chandi.

 

[27] I find that it was necessary for the plaintiff to incur significant disbursements in order to properly pursue her claim. I find as well that the arrangement she made with her lawyer was both necessary and proper.

 

[28] We are constantly hearing how difficult it is for ordinary people to afford access to our courts. The fee agreement entered into between the plaintiff and her lawyer facilitated her having access to the courts. The interest rate charged by the law firm, that being essentially the interest it was paying on its operating line of credit (a way in which many law firms finance their operations) is reasonable.

[29] Defendant’s counsel advised that Chandi is under appeal. Plaintiff’s counsel pointed out that the plaintiff has no ability to control whether that appeal will ever proceed, and the plaintiff should not be restricted from executing on its judgment, including costs, while awaiting the unknown result of an appeal.

 

[31] Chandi is binding on me. No restriction is placed on the award of interest as part of my assessment of costs. The interest claimed is both necessary and proper, and is claimed in a reasonable amount. It is allowed in full as claimed.

In Kumanan v. Achim, the Plaintiff was injured in a motor vehicle accident, and subsequently brought an ICBC claim for damages arising therein. At one point during the litigation, the Plaintiff obtained a private MRI, as opposed to waiting for one through the public medical system. An issue arose as to whether or not the disbursement should be paid by ICBC, who argued that the non-urgent nature of the MRI meant it should not have to be paid. ICBC’S lawyer conceded that it was a necessary and proper examination, but that it was not reasonable to incur this cost due to the non-urgent nature, and that there was no evidence offered to justify bypassing the publicly funded health care system. The Court agreed, and disallowed the disbursement. In referring to the Repnicki case, the Court stated :

[10] This matter bears some significant similarities. In this case, there was no trial date pending when the MRI examination was requested by the two physicians. Rather, a notice of trial was not filed until August 2012 reserving a trial date for March 2013. As matters transpired, this case settled in February of 2013.

[11] I was not provided with any evidence as to what the wait time may have been to have the MRI examination done in the public health care system. It is also noteworthy that while the recommendation for the MRI examination was made in mid July 2011 it was not acted upon until after some other x-rays were done in October 2011 and only after that, on November 2^nd, 2011, was the MRI examination done.

[12] I am left to wonder whether that if a place had been reserved in the public health care system in July 2011, the Plaintiff might not have had the MRI examination done if not by November of 2011, not too much longer thereafter.

[13] Accordingly, I am not satisfied that it was reasonable to incur this expense when it was incurred and it is disallowed.

 

In White v. Reich, the Plaintiff was injured in a motor vehicle collision, and brought an ICBC claim for several heads of damages, including pain and suffering. At some point in the litigation process, Plaintiff‘s counsel obtained a medical report to substantiate the Plaintiff‘s injuries. However, the report did not turn out to be that favorable to the Plaintiff after all, and consequently Plaintiff‘s counsel claimed privilege over the report. The matter settled prior to trial, however ICBC’S lawyer later argued that the expense was an unreasonable disbursement under the circumstances. The Court rejected this notion, however, ruling that it was reasonable to have explored the issue in the first place.

[19] The applicable legal principles were canvassed and summarized recently by Master MacNaughton in Turner v. Whittaker, 2013 BCSC 712 at para. 5. In particular it is noted that the test is not one of hindsight and that a proper disbursement may be one which is ultimately not necessary but which was reasonably incurred for the purposes of the proceeding.

[20] In this regard, counsel for the defendant acknowledged that if the report had determined that the most recent heart problems had been caused by or contributed to by the accident and that that was the cause of the plaintiff’s being unable to return to work, there would be no question that the report was not only reasonable and proper but in fact necessary to the proper conduct of the litigation.

[21] In all of the circumstances, I am of the view that the course of investigation with Dr. Isserow, which culminated in and included his report, was reasonable and proper at the time that it was undertaken and accordingly the disbursements which relate to Dr. Isserow are allowed as presented.

In Repnicki v. 616696 B.C. Ltd., the Plaintiff was injured in a motor vehicle collision, and consequently brought an ICBC claim for damages for pain and suffering, and various other forms of damages. At one point during the litigation process, the Plaintiff obtained a private MRI, which can come at some cost, as opposed to obtaining an MRI through the normal, public health care system. ICBC’S lawyer argued that such a disbursement was not necessary. The Court agreed, ruling that there was no sense of urgency that would require the Plaintiff to obtain a private MRI at the point in which it was obtained.

 

[4] Before that examination could take place, the Plaintiff and her counsel asked Dr. Duchowska to help accelerate the obtaining of the MRI and, in July of 2010, Dr. Duchowska signed a requisition for an MRI with a private healthcare provider, CMI. That examination was done on July 17, 2010. At that time, there was not yet a trial date in the action. I am advised by counsel that a trial date was obtained in August of 2011 for February 4, 2013.

[5] While the medical evidence that I was referred to satisfies me that obtaining an MRI examination in this case was a reasonable step to take in the Plaintiff‘s interest and to assist with a determination of whether or not there was a causal link to her neck, upper back, and lower back injuries and the motor vehicle accident, I am not satisfied that it was reasonable to incur the additional expense to have the MRI examination done in the private healthcare system. I may have been persuaded it was reasonable to do so if, in fact, there was evidence that there was going to be an ongoing and significant delay in having the MRI examination done in the public healthcare system, but that evidence was not before me.

 

In Mackenzie v. Rogalasky, the Plaintiff was injured in a motor vehicle collision, and brought an ICBC claim for injuries. He took out a loan for $25,000.00 in order to fund the litigation. After all was said and done, he ended up owing approximately $11,000.00 in interest for his ICBC claim. The Court, in distinguishing earlier decisions that had allowed a claim for interest on disbursements, disallowed the Plaintiff’s claim for interest in his ICBC claim.

 

[34]         That, of course, does not end the matter because the fundamental question still remains to be answered: Is this a disbursement that is recoverable by the plaintiff? I think that it is not on the basis of the arguments made by Mr. Parsons, most particularly those related to the impact of the Court Order Interest Act on claims of this nature.

 

[35]         Firstly, a successful party’s right to claim disbursements does not actually arise until the action itself has been determined and so, until the judgment has been rendered, no entitlement arises to recover any costs or any disbursement. Accordingly there can be no right to claim any disbursement until the determination of the action.

 

[36]         The decision in Milne was made without the benefit of the extensive argument that was before me, particularly the argument based on the application of the provisions of the Court Order Interest Act. That Act makes it clear that the legislature did not intend that interest be recoverable on disbursements.

 

[37]         Nor can it be said that the object of costs (as compared to damages for a tortious act) is to return a party to his pre-litigation status and thus interest ought not to be recoverable. Costs are not intended to provide full indemnity to a successful party and the successful party is only entitled to recover necessary or proper disbursements at a reasonable amount. In my view it cannot be said that interest on disbursements is a necessary and proper adjunct of litigation. It is simply one of those unfortunate matters that arose in the circumstances of this particular plaintiff and I find it is not reasonable that the plaintiff recover it.