Lee v. Lepage, 2010 ABQB 829

Court of Queen ’ s Bench of Alberta Citation: Lee v. Lepage, 2010 ABQB 829 Date: 20101230 Docket: 0901 02340 Registry: Calgary Between: Lawrence Lee Plaintiff(Applicant) - and - Lionel Lepage and Formco Custom Cribbing & Footings Inc. Defendants(Respondents) _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice W.A.

Tilleman _______________________________________________________ Appeal from the Order by Hanebury, Master in Chambers Dated the 30 th day of June, 2010 ( 2010 ABQB 444 , Docket: 0901 02340) Introduction [ 1 ] This is an appeal from a Master’s decision that arises out of a motor vehicle accident occurring on April 20, 2008. In that accident, the 61 year old Plaintiff claimed damages and reached a settlement in September of 2009 for roughly $23,000.00 plus pre- judgment interest, taxable costs and disbursements.

[ 2 ] From that settlement came an appeal of an Order granted by Master Hanebury following a special application heard by her on April 8, 2010. The original application was for

summary judgment to enforce a settlement of Mr. Lee's personal injury claim against the Defendants. [1] However, the dispute between the parties gravitated to whether the Plaintiff/Appellant (Appellant) reasonably and properly incurred certain disbursements in the prosecution of his action, and was thus able to recover those disbursements from the Defendants under the then-Rule 601 of the Alberta Rules of Court . [2] [ 3 ] In her decision, the learned Master reduced the amounts allowed for certain disbursements for expert reports obtained by Mr. Lee in advancement of his claim.

This appeal seeks to set aside that Order and allow the full amount of those disbursements. [3] The Bill of Costs includes among other things, disbursements in respect of the following expert reports and assessments: [4] a. Dr. Schnell, a certified independent medical examiner b. Dr. Esmail, an orthopaedic surgeon c. Dr Apel, a specialist in physical medicine and rehabilitation, and also, in clinical neurophysiology; d. Dr Zabrodski, a physician, certified in occupational medicine; e. Ms. Caron, an occupational therapist; and f. Ms. Brown, an economist. Only three of the reports remain in dispute, namely: a. Dr.

Apel; - costing $2,798.08 b. Dr. Zabrodski; - costing $3,184.54 and c. Ms. Caron of Rehab Works - costing $3,450.00 A fourth report raised by the Defendants/Respondents (Respondents) is that of Economist Ms. Brown for $3,196.00. The total disputed Reports is roughly $12,629. Issue [ 4 ] The issue is whether Master Hanebury erred in reducing the amount of Dr. Apel, Dr. Zabrodski and Ms. Caron. The Law [ 5 ] The appeal raises the standard of review from a Master’s judgment or Order. The Appellant refers to the previous Rules of

Court A.R. 338/83 and in particular Rules 600 - 612; additionally the Appellant refers me to

section 21 of the Court of Queen’s Bench Act (R.S.A. 2000, c. C-31) which states: Subject to an express provision to the contrary in any enactment, the costs of and incidental to any matter authorized to be taken before the Court or a judge are in the discretion of the Court or judge and the Court or judge may make any order relating to costs that is appropriate in the circumstances. [ 6 ] The Respondent refers the court to new Rule 6.14(3)

part 6, subdivision 4 of the new Rules of Court A.R. 124/2010 . [ 7 ] Thought the Appellant asked me to consider both old and new Rules, both Counsel argue that the appeal is now on the record which means that the measure against which I must determine the decision of Master Hanebury is on the standard of overriding and palpable error, as it relates to facts.

The Appellant argues that the standard of review for questions of law alone, is correctness. [ 8 ] In discussing the previous Rules, both parties point me to Rule 601(1) to confirm the discretionary principle of costs and to enumerate several factors that the court may consider when exercising that discretion.

That Rule stated: Notwithstanding anything in Rules 602 to 612, but subject to any Rule expressly requiring costs to be ordered, the costs of all parties to any proceedings (including third parties), the amount of costs and the party by whom or the fund or estate or portion of an estate (if any) out of which they are to be paid are in the discretion of the Court, and when deciding on costs the Court may consider the result in the proceeding and (

a) the amounts claimed and the amounts recovered, (

b) the importance of the issues, (

c) the complexity of the proceedings, (

d) the apportionment of liability, (

e) the conduct of any party that tended to shorten or to unnecessarily lengthen the proceeding, (

f) a party's denial of or refusal to admit anything that should have been admitted, (

g) whether any step or stage in the proceedings was (

i) improper, vexatious, or unnecessary, or (ii) taken through negligence, mistake or excessive caution, (

h) whether a party commenced separate proceedings for claims that should have been made in one proceeding or whether a party unnecessarily separated their defence from anal her party, and

(

i) any other matter relevant to the question of costs [ 9 ] Under the new Rules, Rule 6.14(3) states: 6.14(1) If a master makes a judgment or order, the applicant or respondent to the application may appeal the judgment or order to a judge.

(2) A notice of appeal in Form 28 must be filed and served within 10 days and returnable within a reasonable time, not exceeding 2 months, after the judgment or order is entered and served.

(3) An appeal from a master's judgment or order is an appeal on the record of proceedings before the master and, if the judge permits, may also be based on new evidence that is significant enough that it could have affected the master's decision.

(4) The record of proceedings is (

a) the application before the master, (

b) affidavits and other evidence filed by the parties respecting the application before the master. (

c) any transcript of proceedings before the master, unless the Court dispenses with this requirement; and (

d) the master's judgment or order and any written reasons given for the decision.

(5) The appellant must file and serve on the respondent to the appeal, one month or more before the return date scheduled for hearing the appeal. (

a) the transcript of proceedings described in subrule (4)(

c) or, if the transcript is not available at the time of filing, confirmation that the transcript has been ordered. unless the Court dispenses with the requirement for a transcript under subrule (4)(c), (

b) any new evidence sought to be relied on, subject to the limitation described in subrule (3), and (

c) any further written argument.

(6) The respondent to the appeal must file and, within 10 days after service of the record of proceedings serve on the appellant (

a) any further written argument the respondent wishes to make, and (

b) any new evidence sought to be relied on. subject to the limitation described in subrule (3).

(7) A party may rely on its original written argument, if any, that was before the master or any further argument filed under subrule (5)

(

e) or (6)(a), or both the original argument and the further argument. Appellant’s Arguments [10] The Appellants disagree with several conclusions of Master Hanebury, including the following three major errors: - The Master gave no weight to the Minor Injury Regulation A.R. 123/2004 and whether experts can help decide if the Plaintiff’sclaim falls outside the cap; - Master Hanebury created a new factor, that is one of “overlap” of expert reports, and that category was not found in the previouscase law of Monashee Petroleum Ltd. v. Pan Cana Resources, [1988] A.J.

No. 205 and former Rule 601; and - Most important, the Master found the reports reasonable and allowed them and thus the full cost should be allowed, or in thealternative, if the Master reduced the reports, then the reduction should have been done on a principled basis including particularly somelogic to which she approached the invoiced amounts. On this point, the Appellants could not find any logic or principled basis. [11] On the last point, the biggest problem was their general concern with the method of Master Hanebury’s bill reduction.

Theyclaim that it was arbitrary and picked as a result of reaching approximately half of the overall total bill. Regarding expert fees and theirreasonableness, I am referred to the decision of Viridian Inc. v. Dresser Canada, Inc. 1998 ABCA 275 , [1998] A.J. No. 947where Justice Côté said this: 4. It is trite law that the question is not what was necessary, still less how much hindsight suggests was really necessary. The question iswhether what was done, and the money that was spent at the time, were reasonable, given the state of knowledge then existing.

Respondents’ Argument (Summary) [12] As a starting point, the Respondents not only argue the deferential standard of a record review under new Rule 6.14, but alsothey point out Master Hanebury’s decision should be further respected because it dealt with costs. Their cases on costs includeWestersund v. Westersund, 1993 ABCA 219, where the Court of Appeal set forth a standard of review that costs awards is not to be interfered with unless there is “clear, palpable and overriding error”.[5] [13] I am also pointed to MacCabe v.

Westlock Roman Catholic Separate School District No. 110, 1999 ABQB 666, whereinJohnstone, J. listed the factors that should be considered in determining whether or not a disbursement is reasonable. Those factors arefound at para. 76: (

a) the length of the trial; (

b) its complexity; (

c) the nature and number of the issues involved in the trial; (

d) the degree of contest as to evidentiary matters;

(

e) the degree of contest as to credibility of witnesses, including professional expert witnesses; (

f) the nature and number of the defences mounted; (

g) the requirement for and use of experts; (

h) the use of models, tests and scientific evidence; (

i) the nature and amount of damages at issue; (

j) the relationship of the expenses claimed as costs to the amounts at issue in damages; and (

k) any agreement of counsel to share specific expense items... [ 14 ] The Respondent also refers me to Markdale Ltd. v. Ducharme, 1998 ABQB 1077 and Oxford Properties Group Inc. v. 786372 Alberta Ltd. , 2005 ABQB 305 . I am referred to both cases for the point, again, that a cost award is discretionary and that it should not be lightly overturned. See e.g. Markdale at para. 26. [ 15 ] The Respondent principally argues that Master Hanebury correctly reduced the cost award for a global approach to collecting the reports by the Plaintiff. The best

summary of that point for the Respondents is found at para. 64 of the Master’s decision which states: However, the nature of his claim and, most importantly, the approach to collecting medical and other reports do not support the payment of all of the charges claimed. Reports should have been shared amongst the experts and a more disciplined and thoughtful approach taken to their collection.

Time and money were wasted and the defendant should not be required to pay for that waste [ 16 ] In supporting the Master’s reduction, the Respondent argues that the timing of the expert reports shows no coordination and instead, it was a shotgun approach to putting together the experts’ reports. At para. 77 of MacCabe , Johnstone, J. went on to state this principle: ... The overriding consideration therefore is the reasonableness of the disbursements in light of the circumstances which existed at the time it was incurred.

The onus is on the Plaintiff to prove on the balance of probabilities that the amounts claimed as disbursements are reasonable in the circumstances. In other words, what is reasonable depends on what is reasonable at the time and not ex post facto . In referring me to Viridian supra , the Respondents repeat the point as Justice Côté put it, is “...whether what was done, and the money that was spent at the time, were reasonable, given the state of knowledge then existing,” see para. 4 of Viridian . [ 17 ] The Appellants argued that Master Hanebury improperly erred when she stressed cost “overlap”.

The Respondents argued just the opposite point, that is, that the overlap principle is alive and well and it should be employed in the reduction of expert costs. In the case of NPS Farms Ltd. v. E.I. du Pont Canada Co. , 2008 ABQB 69 , cited by both parties, our court said this: The amount of the fee claimed is however of concern. I realize that he may have been addressing more than one issue but there is overlap with the subject matter of Mr. Berrien's opinion. The amount of his fee is significantly higher than the fees charged by Mr. Berrien and the Plaintiffs' expert.

I find it to be unreasonable in the circumstances and reduce it by 40% to $34,588.71.

[18] Again, the Appellants raised the Minor Injury Regulation, and their concern with the Master’s statement (at para. 20) claimingthat she did not take that into account. The Respondents, thought, defend her statement because on the evidence before her, both Dr.’sApel and Esmail were qualified to broach the differential type of injury that would fall within the regulation.

Having not spoke to it isconsistent with the Master’s conclusion that the experts themselves were not asked to speak to that point. [19] The timing of the expert reports was stressed because of the quantity of reports and that they were ordered so closely together. Dr. Schnell’s report was ordered March 3rd, Dr. Esmail March 23rd, Dr. Apel March 26th, Dr. Zabrowski April 27th, and the Rehab on May 27th. Taken together, the Respondents not only raise the overlap and number of reports but also some of these reports involve: (a)similar types of doctors, and (

b) some of those doctors appeared to be retained without regard to follow up from prior experts. Forexample, none of Dr. Esmail’s or Dr. Apel’s recommendations were followed before Dr. Zabrowski was retained. The argument, then, isthe Plaintiff should have taken some time to assess the injuries before retaining all of the other experts so quickly.

Analysis [20] At the outset of the appeal hearing, and because of their different approach in written submissions, I asked Counsel to addressthe new Rule 6.14 and whether or not that approach is de novo or a record review. [21] If under 6.14 the appeal exercise is de novo, which I believe it is not, that perspective can relate both to the nature of the hearing (i.e., a new and in-depth hearing) and, de novo can also reflect the standard of review.[6] [22] That the hearing is on the record, as opposed to de novo, is supported by the recent analyses of both Justices Manderscheidand Macklin, respectively, in Royal Bank of Canada v.

Place, 2010, ABQB 733 and Janvier v. 834474 Alberta Ltd., 2010 ABQB 800. [23] In Royal Bank, Manderscheid J. said this at paras. 27-28: 27. The Rules of Court, Alta. Reg. 184/2010 (New Rules) create a significant change from the Rules of Court, Alta. Reg. 390/68 (OldRules) in this regard. As of November 1, 2010, any appeal of a Master’s decision is now “on the record of proceedings before themaster”: New Rules, Rule 6.14(3). 28. An appeal on the record suggests that the standard of review should then be that of general appellate review as set out by theSupreme Court of Canada in Housen v.

Nikolaisen, 2002 SCC 33 , [2002] 2 S.C.R. 235, and summarized by our Court ofAppeal in Harper v. Canada (Attorney General), 2002 ABCA 301 (rev’d 2004 SCC 33 , [2004] 1 S.C.R. 827 on other grounds)(at para. 35): The standard of appellate review have been extensively set out by the Supreme Court of Canada in Housen v. Nikolaisen, 2002 SCC 33. The standard of review for questions of law is one of correctness. For findings of fact, it is palpable and overriding error. For inferencesof fact, the standard is also palpable and overriding error.

On questions of mixed fact and law, the standard is overriding and palpableerror, unless it is clear that the trial judge made some extricable error in principle with respect to the characterization or application, inwhich case, the error may be an error of law subject to a correctness standard. [24] In a record review, our role then is to dismiss unless there is overriding and palpable error as it relates to the facts determinedbelow, meaning, the Master made a clear and obvious mistake. Conclusion

[ 25 ] I cannot see that the Master made a clear and obvious mistake. While I might have approached the structure of that decision differently I do not think she made a mistake or an overriding and palpable error. Even conceding the Appellant’s position that she made a decision in reducing the costs award in the way that she did, without referring specifically to each cost allocation per the invoice presented, may make it an error, if so, I do not think it is overriding and palpable.

In fact I don’t think it is an error at all because my decision on the overall costs amount would have been similar to her decision. [ 26 ] As I said above, the appeal of a Master’s decision is not meant to be a “new hearing” unless there is significant new evidence caught by the test in Rule 6.14(3) . Both Counsel admitted to me that there was no new evidence, significant or otherwise.

Failing to accord deference to the Master’s decision, not only because it is a costs decision which is within her discretion, but also because of the wording of new Rule 6.14, would mean that any appeal is a rehearing of the Master’s decision when a dissatisfied party in the first instance lost their case. [ 27 ] I recognize that the Appellant stated that this was a record review but led them to claim the Master made an overriding and palpable error when she discounted the importance of the Minor Injury Regulation and that her errors, e.g. if based on arbitrariness such as the lack of rigorous mathematics when applied to the reduction of costs, should be reversed on the basis of correctness as those are errors in law.

I cannot agree. [ 28 ] Respectfully, this appeal is premised on a deferential record review. Digging to the bottom of every invoice and arguing with the advantage of hindsight is doing a complete rehearing of the information in front of the Master. She used an approach, overall, that the Plaintiff’s technique to collecting the medical and other reports did not support all of the expert charges claimed. She decided that the reports should have been shared between the experts and a more disciplined and thoughtful procedure taken to their collection.

What concerned her was the time and money that she felt was wasted and did not feel the Defendant should be required to pay for that surplus. She also referred to Justice Gill’s decision in NPS Farms to claim that overlap was a proper premise from which to reduce the expert’s fees.

She was right – overlap between expert opinions is a proper basis upon which to review their scale for costs. [ 29 ] Again, I may have constructed my reasons differently but I do not think I would have reached a different cost decision had I exercised my own discretion. [ 30 ] Based on the deferential record review characterized by new Rule 6.14, the Master’s reasons for judgment are not in error, let alone overriding and palpably in error. [ 31 ] The appeal is dismissed. Heard on the 14 th day of December, 2010. Dated at the City of Calgary, Alberta this 30 th day of December, 2010. W.A. Tilleman J.C.Q.B.A.

Appearances:

Christopher P. Rappel of Hoffman Dorchik LLP for the Plaintiff Andrea K. Hay of Gowling Lafleur Henderson LLP for the Defendants [1] Record of Proceedings, Tab 1. [2] Alberta Rules of Court , Tab 2. [3] Record of Proceedings, Tab 8. [4] Expert Reports and Assessments Tab 10, page 3. [5] Westersund , para. 11 . [6] I will discuss the second theory of de novo first, i.e., that it characterized the 'standard of review'.

If the standard of review of a Master's decision is a deferential record review, my job as a judge is simply to consider the record and see if it is sufficiently developed with both its evidence and its reasons, and if so, to dismiss the appeal. The fact that the standard of review is deferential makes sense because the decision being appealed is not e.g., an administrative decision. It is an appeal of a judgment of a Master of this Court following a very formal proceeding from which a judgment was rendered.

All of that suggests the review is deferential when combined with the clear language of Rules 6.14 (3) -(7). Leaving standard of review theory for a moment and turning to de novo meaning the nature of the hearing on appeal, the "new" hearing contemplated by Rule 6.14 is still new only to the extent new issues arise from new evidence that is "significant enough that it could have affected the master's decision." Examples include and are limited by the well-known due diligence test, and could also include cases where the Master made a procedural decision limiting key evidence that could have gone in.

The scope of a Justice appeal under Rule 6.14 can be approached, then, in two different ways. Both, however, lead to a deferential record review. If our appeal authority is categorized as de novo , it is restricted not only by the new evidence test but also by the higher standard of review that is reflected by the language of Rule 6.14 as set out above--and that is a cautious record review.

Second, if it is truly de novo by its process, i.e., a new or second hearing, it is still limited with the same restriction and this is only where there is evidence that is "significant enough that it could have affected the Master's decision”.