KS v Willox, 2016 ABQB 654

Court of Queen ’ s Bench of Alberta Citation: KS v Willox, 2016 ABQB 654 Date: 20161122 Docket: 0403 07714 Registry: Edmonton Between: Tim Wood, Litigation Representative of K.S., an Infant Plaintiff - and - David Willox and Brian Muir Defendants _____________________________________________ Memorandum of Decision of the Honourable Madam Justice M.T. Moreau ____________________________________________________ I. Introduction [ 1 ] The Court issued Reasons for Judgment in this case on August 29, 2016. The parties subsequently returned to speak to costs and to finalize the terms of the Formal Judgment. II. Costs A.

Cut-off Date for J.S.’s Costs 1. Background [ 2 ] A case management Order was granted on February 17, 2010. It stated: ...

5. The Plaintiff, [J.S.], shall inform the Defendants and the Court on or before March 5, 2010, in writing, whether she will be discontinuing her own claim and/or withdrawing from her role as the Next Friend of the Plaintiff [K.S.]. 6. If [J.S.] chooses to discontinue her role as the Next Friend of [K.S.], she shall nonetheless remain as the Next Friend of K.S. until such time as an alternate Next Friend is appointed. [ 3 ] By letter dated March 1, 2010, counsel for K.S. advised that she wished to be removed as Next Friend.

By letter dated July 19, 2010, counsel advised that K.S. did not wish to proceed with the litigation. By letter dated February 2, 2011, counsel advised the case management justice that the Public Trustee had declined their invitation to step in as Next Friend. Extended family members of K.S. were also unwilling to step in. Various options were discussed in the case management context, including the delivery by counsel for the Defendants of a notice to the Public Trustee pursuant to s. 5.1 of the Limitations Act , RSA 2000, c.

L-12 which would require the Public Trustee to make inquiries and determine (among other options) whether it intended to act as Litigation Representative of the minor under s. 5.1(6)(

b) or seek directions from the Court under s. 5.1(6)(c). Ultimately, that option was not pursued. The parties proceeded to a Judicial Dispute Resolution of the liability issue in April 2013, which was unsuccessful. [ 4 ] Ultimately, Mr. Tim Wood, a lawyer, agreed in writing on October 15, 2013 to replace J.S. as K.S’s Litigation Representative, which was confirmed by a June 9, 2014 Order of the case management justice. The Order also provided that: ... 2.

In performing his role as Litigation Representative for [K.S.], Tim Wood and his firm will be absolved from any liability for costs of the litigation being visited on him or his firm, as incurred from the date of this Order; 3. This Order does not absolve [J.S.] from liability for costs incurred as the next friend to [K.S.] to the date of this Order, as such liability is a matter to be determined by the trial judge 4.

This Order does not absolve any remaining Plaintiff at trial from liability for costs as incurred from the date of this Order, as such liability is a matter to be determined by the trial judge. [ 5 ] Counsel for the Plaintiffs filed a Partial Discontinuance of Action, discontinuing J.S.’s personal claims on June 24, 2014. 2. Positions of the Parties [ 6 ] Counsel for the Plaintiff maintains that any liability of J.S. for costs should end in 2010 when she made Defendants’ counsel and the Court aware of her intention to abandon her personal claims and to cease to act as K.S.’s Litigation Representative.

Counsel pointed out that a case management Order of July 15, 2010 prevented J.S. from abandoning her role as Litigation Representative without there being a replacement. Even a discontinuance of K.S.’s claim would have required court approval as under the Minors’ Property Act, S.A. 2004, c.

M-18.1, a settlement of a minor’s claim would include a Discontinuance of Action without liability for costs: LH v Smith , 2008 ABQB 434 at para 6 . [ 7 ] Counsel for the Defendants noted in response that J.S. was not precluded at any point from discontinuing her personal claims and did not do so until shortly after the June 9, 2014 Order. She elected to continue taking steps in the action from the spring of 2010 until June 2014 that caused costs to be incurred, including disbursements relating to the finalization of expert reports on liability in preparation for the JDR.

Nor was there any evidence that J.S. disclosed an intention that K.S.’s claims be discontinued at any time in the case management process between the spring of 2010 and June 2014. Finally, the June 9, 2014 Order clearly did not absolve J.S. from liability for defence costs incurred before that date. 3. Ruling [ 8 ] J.S. continued to instruct counsel to take active steps in these proceedings after making her intentions known that she was no longer willing to act as Litigation Representative, including instructing counsel to conduct a liability JDR.

The conduct of a JDR was a clear indication that K.S.’s claims were actively being pursued. There was no evidence that J.S. indicated an intention to discontinue K.S.’s claim at any time prior to June 2014. Nor was J.S. prevented at any time from formally discontinuing her own claim until after the JDR. She did discontinue her claim shortly after the June 9, 2014 Order. [ 9 ] I conclude that the appropriate cut-off date for the calculation of the Bill of Costs is June 9, 2014. B. Application of a Multiplier 1.

Positions of the Parties [ 10 ] Counsel for the Defendants circulated a draft Bill of Costs in Column 5 including a multiplier of 5, with fees amounting to $124,000 and disbursements and other charges, including G.S.T., bringing the total costs claimed to $179,289.77. J.S.’s personal claim costs are based on $300,000 claimed, placing her claim in Column 3.

Counsel have agreed that rather than attempt to separate the costs attributable to J.S.’s personal claim until the June 9, 2014 Order from those attributable to K.S.’s claim, the Bill of Costs would be calculated in Column 5 but reduced by 25% to account for the differential between applicable Columns. [ 11 ] Counsel for the Defendants noted that their disbursements from June 9, 2014 to trial were in the range of $122,000 and that taxable fees with a multiplier of 5 would amount to an additional $508,750 for that same period.

The Defendants are prevented by the Order of June 9, 2014 from recovering these fees and disbursements despite their successful defence of the lawsuit.

[ 12 ] Counsel for the Defendants maintained that a multiplier of 5 is appropriate, given that: the amount of the claim in the pleadings and then at trial was several times the threshold Column 5 amount of 1.5 million dollars; the case was complex, involving 5 weeks of trial; and inflation should be factored into the calculation. [ 13 ] Counsel for the Plaintiff submitted in response that no multiplier should be applied in this case.

First, he argued that the evidence only came out at trial to the effect that no ultrasound based cerclage was available in Edmonton at the relevant time, and the Form 25s of some of the experts did not reference this evidence. Secondly, the Court found that Dr. Willox breached his duty of care, which can be considered in reducing a costs award.

Finally, J.S. wished to be removed as Litigation Representative to preserve the resources she and K.S.’s father will need to care for K.S. throughout his lifetime. [ 14 ] Counsel for the Plaintiff pointed out that while the June 9, 2014 Order absolved Tim Wood, as the replacement Litigation Representative, of liability for costs from that point onward and through the trial in which the Plaintiff was ultimately unsuccessful, the Court should bear in mind that it was K.S.’s claim that went to trial, not that of J.S. 2.

Ruling [ 15 ] In LC v Alberta (Metis Settlements Child & Family Services, Region 10) , 2011 ABQB 42 at para 53 , Graesser J. stated that where the Court is of the opinion that a Litigation Representative is necessary for a child and the person appointed is essentially a stranger to the child and is in the nature of a professional advisor rather than being a parent or guardian, there is a strong case for protecting that person from liability for costs.

In making the order, Graesser J. noted at para 55 that it was a “highly unusual step”, as it left the Defendants in the action without any effective cost remedy in the event they were successful in defending the lawsuit.

He explained at para 56 that he made the order having considered the fact that the Defendants were Alberta Government entities and that the minor appeared to have a prima facie case for liability. [ 16 ] In this case, costs are sought against a parent of the minor plaintiff and the Defendants are not public entities. [ 17 ] Rule 10.33 of the Alberta Rules of Court refers to the factors to be considering in making a costs award. Counsel focussed their arguments on Rule 10.33(1): Court considerations in making costs awards 10.33(1) In making a costs award, the Court may consider all or any of the following: (

a) the result of the action and the degree of success of each party; (

b) the amount claimed and the amount recovered; (

c) the importance of the issues; (

d) the complexity of the action; (

e) the apportionment of liability; (

f) the conduct of a party that tended to shorten the action; (

g) any other matter related to the question of reasonable and proper costs that the Court considers appropriate. [ 18 ] Our Court of Appeal recently noted in relation to the application of a multiplier in Stewart Estate v TAQA North Ltd , 2016 ABCA 144 : 25 ... Alberta courts have typically awarded a multiplier of the tariffs in Column 5 in three circumstances: when the complexity of the action warrants it, when the amount in dispute significantly exceeds the $1.5 million threshold for Column 5 or when the conduct of one of the parties warranted a multiplier.

However, generally, courts also rely upon the other considerations set out in Rule 10.33 in determining whether a multiplier should be applied. [ 19 ] The Court of Appeal attached a

schedule of Alberta decisions to its reasons in Stewart Estate in which the use of a multiplier was discussed and in some cases applied, however, some of the cases noted involved “bad conduct” of the type referred to in R. 10.33(2), but not raised in this case. [ 20 ] In Briante (Litigation Guardian of) v Vancouver Island Health Authority , 2015 BCSC 807 , a medical malpractice action that was dismissed following trial, the unsuccessful plaintiffs applied for an order that the parties pay their own costs.

The plaintiffs argued that: - they had succeeded on the standard of care issue; - they would incur significant financial hardship if ordered to pay the defendants’ costs; - the litigation involved novel issues and resulted in a precedent-setting ruling; - they had delivered a notice to mediate and an offer to settle to the defendants; and - the defendants’ conduct in the litigation justified a departure from the usual rule as to costs. [ 21 ] At paras 16-17, Bracken J. noted the usual rule that costs are to be awarded to the successful party in a proceeding.

The onus of justifying a departure from the usual rule is a substantial one, particularly in the case of a long and expensive trial where the defendant

was successful in defeating the claim on an evidentiary basis. [ 22 ] Bracken J. referred, at para 29, to Brito (Guardian ad litem of) v Woolley , 2007 BCCA 1 , a medical malpractice claim in which the plaintiffs proved breaches of the standard of care by some defendants, but failed to prove causation in relation to any of the defendants. The Court of Appeal reversed the trial judge’s decision ordering the defendants to pay the plaintiffs’ costs, and instead ordered that the plaintiffs pay costs to the defendants.

The Court held that the plaintiffs’ failure to prove causation meant that their claim had been “entirely unsuccessful” and that in the absence of any other sound basis for departing from the usual rule, the defendants were entitled to their costs. [ 23 ] Bracken J. also referred, at paras 30-31, to the later decision of the British Columbia Court of Appeal in Lee v Jarvie , 2013 BCCA 515 , in which the Court recognized that individual heads of damages in a negligence claim constitute divisible issues in determining relative success at trial. In that case, liability was not in dispute.

Nonetheless, Bracken J. commented at para 32 that the decision in Lee “might well be taken as reflecting the increasing discretion granted to trial judges on costs”. [ 24 ] Bracken J. also referred, at para 34, to Cranwill (Next Friend of) v James , [1995] AJ No 788 (QB) , where the plaintiff in a medical malpractice suit succeeded in establishing a breach of the standard of care but could not prove causation. The Court in that case deprived one of the defendants of costs, having found at para 30 that the breach “was a material factor resulting in the commencement of this litigation”.

Bracken J. agreed with this reasoning, commenting, at para 36, that proof of the breach of the standard of care provides at least some indication that the action had some merit and was not frivolous. He also noted that success on the standard of care issue suggested that an analysis of the defendants’ conduct in defending that issue may well be warranted.

Bracken J. did not find the defendants’ conduct in defending the standard of care issue was a basis for disentitling them to costs, although he found there to be some evidence of misconduct on the part of one of the defendants. [ 25 ] Bracken J. also determined, at paras 59-60, that mere financial hardship to an unsuccessful litigant did not provide an adequate basis for depriving a successful litigant of a costs award.

However, it may be taken into account “in fashioning the appropriate order for costs” and may, in conjunction with other factors in the appropriate case, justify a departure from the usual rule. [ 26 ] Ultimately, Bracken J. ordered an apportionment of costs, as some misconduct on the part of one defendant had lengthened the litigation, some financial hardship would be experienced by an adverse costs award, and the plaintiffs’ conduct was reasonable throughout the proceedings. [ 27 ] Dealing with the Plaintiffs’ arguments in the context of the factors under Rule 10.33, I am not prepared to comment, in the context of a costs application, on the merits of any potential grounds of appeal relating to the contents of the expert reports presented at trial.

My finding after trial that Dr. Willox breached his duty of care arguably has a bearing on whether the Plaintiff reasonably pursued the claim to trial. Having regard to the first factor under Rule 10.33, namely, the result of the action and the degree of success of each party, no amount was recovered as a result of the Plaintiff’s failure to prove causation, nor was liability apportioned. There was no suggestion that the issues had importance beyond the parties to the litigation.

The action was complex, involving multiple issues in respect of both liability and quantum, multiple experts, five weeks of trial and the submission of written arguments. The damages award claimed by the Plaintiff at the time of trial was over five times the Column 5 threshold. There was no evidence of conduct that tended to shorten the action, albeit the Plaintiff participated in the JDR process in an attempt to resolve the liability issue. There is no suggestion of improper conduct on the part of any counsel or any of the parties. [ 28 ] I accept that there will be financial hardship in paying the costs award.

However, the evidence at trial was that both parents are working and are receiving some financial support for the care of J.S. through government agencies. [ 29 ] By virtue of the July 9, 2014 Order, J.S. was relieved of her Litigation Representative responsibilities. She shortly thereafter discontinued her personal claim.

Accordingly, the fact that the Defendant is left with the burden for costs incurred after June 9, 2014 should not affect the assessment of J.S.’s liability for costs before the Order, as she no longer had any role to play in the litigation after it was granted. [ 30 ] Having weighed the relevant factors and circumstances to which I have referred, along with inflation, I find that an appropriate award of costs payable to the Defendants by J.S. in her personal capacity and as Litigation Representative from the commencement of these proceedings to and including the June 9, 2014 Order, is costs in

Schedule C, Column 5, with the application of a multiplier of 2. The amount of the Bill of Costs will then be reduced by 25% to account for the fact that some of the costs were incurred in relation to J.S.’s personal claim which would have been assessed in Column 3. I impose no additional conditions or deadlines on the payment of costs, as the costs award will be enforceable as any other judgment of this Court. [ 31 ] Counsel may notify me if there are substantive issues left to address arising from the draft Bill of Costs which cannot be resolved through the usual taxation process. III.

Terms of the Formal Judgment [ 32 ] Counsel requested that I adjourn the portion of the application dealing with the provisional award of damages as it relates to the structured settlement ordered. Counsel for the Defendants also requested at the hearing that I delay making a ruling as to whether the future costs of care award should be particularized and quantified, and whether the cross-dependency model of calculating the dismissed claim for future loss of shared family income should be quantified in the Formal Judgment.

Counsel for the Defendants indicated that he wished to have my ruling on costs before finalizing his clients’ position on the quantification of damages issues. Accordingly, I direct that the parties arrange for a hearing date within the next 45 days if the quantification of these heads of damages and any issues arising from the structured settlement provisions have not been resolved in the meantime. [ 33 ] This leaves two further issues for clarification in my Reasons for Decision of August 29, 2016.

First, counsel for the Defendants requested clarification as to whether the provisional future loss of earning capacity award is to be subject to a 15% or a 20%

contingency reduction. Paragraph 625 is clear that a negative contingency of 15%, not 20% was set on the future loss of earning capacity claim.

If the award resulting from the application of a 15% contingency noted in para 625 was not calculated correctly, the correct number may be inserted in the Formal Judgment and my decision will be amended accordingly. [ 34 ] Secondly, the Defendants argue that a 20% negative contingency (consisting of a 15% contingency related to the risk of significant impairment + a 5% contingency related to the risk of subtle impairments) as set out in para 487 of my Reasons should be uniformly applied to all provisional heads of damages, both non-pecuniary and pecuniary, to reflect the risk of significant and subtle impairments that may have arisen even if K.S. had been born at 28 to 29 weeks’ gestation.

Counsel for the Defendants noted that the experts called by the Plaintiff gave evidence at trial regarding the likelihood of significant injury even if K.S. was born at 28 or 29 weeks. [ 35 ] Counsel for the Plaintiffs noted that the Defendants maintained in their written argument that a 15% reduction on K.S.’s future loss of income claim should be applied to account for the risk of significant impairment in any event and a further 10% reduction to K.S.’s future loss of income claim for the risk of subtle impairments.

The Defendants also argued for a reduction of 50% on all heads of damage s to account for the likelihood of an autism diagnosis in any event. The Defendants did not argue for a reduction of all heads of damages in relation to the non-autism related contingency, in contrast to the position they took in relation to the autism contingency.

Finally, counsel for the Plaintiff noted that the Court set the award of general damages at $361,100 in para 775 without any contingency reduction. [ 36 ] Counsel for the Plaintiff maintained that since the Court rejected the autism contingency and set a 15% contingency applicable only to the future loss of earning capacity, the Defendants should not be permitted to return after trial to re-open this issue. This is particularly so as the Plaintiff has filed a Notice of Appeal that includes reference to the application of a 15% contingency to the Plaintiff’s future loss of earning capacity claim.

The Plaintiff would be in an awkward position, being bound by a determination under appeal on the application of a contingency to one head of damages, and arguing that the contingency should not legally apply to other heads of damages. If, however, the Court intends to address the application of a negative contingency to other heads of damages, counsel for the Plaintiff requested an opportunity to make written submissions on this point. [ 37 ] In the causation

section of the Reasons for Judgment, I stated: 484 The Defendants therefore submit that there was a measurable risk that K.S. would have had a 15% chance of developing a significant impairment because of his premature birth in any event. They seek the application of a 15% negative contingency on the future loss of income award .

The Defendants also submit that less significant or subtle impairments expected for a significantly premature child may be adequately addressed with a further negative contingency of 10%. [emphasis added] [ 38 ] After reviewing the expert evidence on the risk of a child born at 28 to 30 week old child having a significant handicap, I stated, in the context of the Defendants’ claim for the application of a negative contingency on the future loss of income award: 487 I am in agreement with the Defendants' position that at the point of determining an appropriate damages award, a negative contingency of 15% is appropriate to reflect the chance that K.S. would have developed a significant impairment in any event because of his premature birth at 28 to 29 weeks.

I would set a further contingency of 5% in relation to subtle impairments that might have arisen from his preterm birth for a total negative contingency factor of 20%. [ 39 ] In the

section of the Reasons dealing with the provisional damages relating to future loss of earning capacity, I stated: 625 Having considered the evidence of Dr. Dansereau and Dr. MacNab on this issue, I find that a contingency should be associated with significant health issues that might impact employability associated with premature birth at 28-30 weeks and set a negative contingency of 15% on the future loss of earning capacity claim, reducing it to $1,765,636. I make no further adjustment for subtle impairment as these were unspecified and speculative in terms of their impact on future employability.

Counsel did not address in their written briefs the impact of this negative contingency on the various heads of damage and may address this if unable to agree on its application. [emphasis added] [ 40 ] Rule 9.13 provides: 9.13 At any time before a judgment or order is entered, the Court may (

a) vary the judgment or order, or (

b) on application, and if the Court is satisfied there is good reason to do so, hear more evidence and change or modify its judgment or order or reasons for it. [ 41 ] Therefore, this Court has jurisdiction under Rule 9.13 to vary a judgment or order before it is entered. In discussing the negative contingency applied to the future loss of earning capacity claim, the Court expressly reserved, at para 625, the ability of the parties to argue the impact of this negative contingency on the various heads of damage failing an agreement between them as to the ramifications of the negative contingency finding.

It is true that the Defendants’ written submissions did not specifically request that the negative contingency apply more broadly to other heads of damage. However, it was arguably implicit that a finding that a negative contingency applies to one head of damages might logically have a similar impact upon other heads of damages. That was the reason for

my comment in para 625. Counsel have failed to reach an agreement in this regard. Therefore, the Court may address the issue with the assistance of argument from both counsel. [ 42 ] The outstanding issue is simply whether a negative contingency factor should be applied to any of the other heads of damages. There is no good reason to re-open to hear more evidence relating to this issue.

Nor does this provide an opportunity for the Plaintiffs to argue that the Reasons for Judgment are in error in applying a 15% contingency factor to the future loss of earning capacity head of damages, this being a matter for their appeal. [ 43 ] Counsel agreed at the conclusion of the evidence in the trial to file their written arguments on the same date. If they wish to make submissions on the timing of their arguments, they shall be required to do so, in writing, no later than 7 days of the date of issuance of this ruling.

If they are content with the timing of written arguments adopted at trial, then I direct that their written submissions be filed on this issue no later than 21 days from the issuance of this ruling. Heard on November 14 th , 2016. Dated at the City of Edmonton, Alberta thi s 22 nd day of November, 2016. M.T. Moreau J.C.Q.B.A. Appearances: Joseph V. Miller, Q.C. Shelagh L. McGregor Michael W. McVey for the Plaintiff Tim Wood, litigation representative of K.S., an infant William Hembroff for the Defendants David Willox and Brian Muir