Background to the 6% Cap on Disbursements
The Disbursements and Expert Evidence Regulation caps disbursements in personal injury cases at 6% of the plaintiff’s total damages post-trial or settlement. It only applies to vehicle injury proceedings, essentially car accident cases. It requires injury claimants to apply to exclude disbursements from this cap before the disbursement is incurred, alongside applications for additional experts. The regulation attempts to reduce litigation costs in motor vehicle claims and “operates to the immediate and primary benefit of ICBC”(British Columbia (Attorney General) v. Le,2023 BCCA 200 at para 54). While the rule affects cases other than those financed by ICBC, including out of province cases or excess limits cases, the cap operates, practically speaking, for the benefit of ICBC.
What appears to be happening, however, is an increase in pre-trial litigation costs. There have been no less than 10 reported decisions under this regulation since December, 2023. Many more court applications are expected in coming months, which will exhaust many court resources. For injury claimants without lawyers this new NDP law creates further barriers to justice and fair treatment for their ICBC claims. To assist the general public and lawyers we have summarized the key legal issues set out in the cases reported to date. Unfortunately there is inconsistency among the rulings and no reported appeals.
Criteria for Exclusion of Disbursements
In the first reported case, Nagra v. Prasad, 2023 BCSC 2297, The court reviewed the regulatory criteria for excluding disbursements, focusing on the necessity of the disbursements for resolving the case, the risk of exceeding the disbursement cap, and the undue hardship that incurring these costs would impose on the plaintiff. In Jabbal v. Venier, 2024 BCSC 151, the court focused on the requirement that the application be made before incurring disbursements, the prejudicial impact of not excluding disbursements, and the evidence required to support the application.
It is important to also apply for additional experts or expert reports as these applications are required to be brought together.
Financial Hardship and Prejudice
The plaintiff must demonstrate that without exclusion, they would suffer disproportionate prejudice, considering the complexity and cost of the proceeding, the necessity of the disbursements for a fair resolution, and the undue hardship in incurring these costs.
Evidence presented in Nagra highlighted the claimant’s modest annual income, his career aspirations in law enforcement hindered by the accident’s injuries, and the significant portion of his income the expert report’s cost represented. The court found that excluding the requested disbursements was justified based on the potential prejudice to the plaintiff, the importance of the disbursements for proving his case, and the financial hardship he would face otherwise.
In Jabbal the plaintiff argued her early retirement was attributed to the accident. When excluding disbursements the court considered the potential for exceeding the 6% disbursement cap, the importance of expert evidence for resolving complex issues, and the undue hardship on the plaintiff.
In Joshan v. Pathak, 2024 BCSC 195, the court recognized that not excluding the disbursements would lead to prejudice disproportionate to the benefits of not increasing the proceeding’s complexity, as the plaintiff would face undue hardship. The court granted the exclusion for the disbursements related to both experts’ reports, including any subsequent rebuttal reports, trial preparation, trial testimony, and late cancellation fees, if required. Additionally, costs incurred by the plaintiff for this application were excluded.
In Mandair v. Sandhu, 2024 BCSC 246 the plaintiff focused on the necessity of the disbursements for a just resolution of the case and argued that incurring these costs would cause undue hardship, given her financial situation. Despite her claim of financial hardship, based on her disability allowance and modest part-time income as a financial advisor, the court was not convinced. Evidence presented by the defense showed she had previously been a joint tenant in property which sold for over $11 million, challenging her claims of inability to afford expert disbursements without undue hardship.
Given the lack of convincing evidence of undue hardship and the substantial assets previously owned in Mandair, the court dismissed the application for excluded disbursements. The plaintiff’s financial situation did not meet the threshold of undue hardship required for the exclusion of disbursements under the regulation.
The requirement operates to discriminate against litigants that can provide for themselves financially, punishing income earners. It appears to discriminate against working litigants trying to reclaim a source of income.
In Kwiatkowski v. Russo, 2024 BCSC 278 the plaintiff’s income was considered in assessing undue hardship. However, the court emphasized the importance of providing detailed evidence beyond speculative statements regarding the costs of proposed disbursements and their impact on the plaintiff’s financial situation.
In Rocheleau v. Khokhar, 2024 BCSC 228 The court also determined that the plaintiff did not provide adequate evidence to demonstrate undue hardship. While the plaintiff’s income was mentioned, there was limited information on her overall financial circumstances, including contributions from her spouse and other living expenses. The application for exclusion of disbursements was dismissed.
Rocheleau highlighted the court’s role as a gatekeeper to ensure proportionality in litigation costs while also illustrating the challenges plaintiffs face in navigating the regulatory framework for managing litigation expenses in personal injury cases.
In Gill v. Zadeh, 2024 BCSC 284 the court concluded she would face undue hardship without the exclusion of the disbursements sought. The plaintiff had earnings of $102,560 in 2021. However, her monthly income was $5,500 to $5,800 net, and her fixed monthly expenses are approximately $3,800 for grocery, mortgage, utilities, and insurance. On top of that are expenses for her son with respect to his hockey commitments. This decision outlines some considerations taken into account when assessing financial hardship and the necessity of disbursements for a just resolution.
Necessity for Expert Reports and Evidence Required
As argued in Joshan and accepted Gill at para 10, relevant expert reports actually reduce complications at trial, and the time needed to quantify losses. Contrary to increasing complexity expert reports can decrease it, making a more streamlined case for both parties.
In Mandair v. Sandhu, 2024 BCSC 246 the court acknowledged the logical choice of a physiatrist given the complex pre-existing conditions and the nature of the complaints. However, the determination of necessity also considered the potential for these costs to exceed the regulatory disbursement cap. Given the lack of convincing evidence of undue hardship and the substantial assets previously owned by the plaintiff, the court dismissed the application for excluded disbursements.
In Garcia v. Gill, 2024 BCSC 108 the court again acknowledged the importance of expert evidence in personal injury litigation. However, despite the claim of necessity, the court found a lack of evidence regarding the cost of the two expert assessments and anticipated costs of their reports, trial preparation, or trial attendance. The court criticized the absence of such information, likening it to making a significant financial commitment without knowing the purchase price. Based on the insufficient evidence the court dismissed the plaintiff’s application. This analogy seems dissonant given the legal test for recovery of disbursements is reasonable and necessary, not that the “investment” will be profitable.
Similarly in Rocheleau v. Khokhar, 2024 BCSC 228 the court found the plaintiff’s application lacked sufficient evidence on the estimated costs of the proposed disbursements. They primarily relied on hearsay evidence regarding the anticipated costs and did not include specific cost quotes or statements from the proposed experts.
Gill v. Zadeh, 2024 BCSC 284, in contrast, underscored the critical role of expert evidence in personal injury claims but allowed the plaintiff to rely on cost estimates. The evidence was the occupational therapy report would cost roughly $3,000, and the economist report $2,000 to $3,000. The plaintiff’s damages claim was within a fairly wide range, between $100,000 and $1 million. The two reports were ordered excluded from the 6% cap.
Similarly in Nagra the court excluded the reports from the 6% cap. The evidence was that the occupational therapist report would cost between 5,000 to $5,500. There was no estimate on the costs of court appearance. The physiatrist report was projected to be in the range of $5,000 to $5,500, without the anticipated cost of attendance for cross-examination.
There appears to be significant inconsistency in the level of evidence expected by the court for these applications.
Ironically, the court stated in Tran v. Ozee, 2024 BCSC 208 at paragraph 20:
As to that evidentiary record, it is somewhat circular to suggest that a party needs to put volumes of evidence before the
court, which may cost as much to obtain as the Cap itself, to establish that a disbursement over the Cap is warranted. There is
also some inherent risk that in making an application the applicant must, to some extent, tip its hand by possibly highlighting
the flaws in its case to establish their risk that the Cap will not be sufficient, which will have to be balanced by the applicant. I
would also not expect that the legislature intended to interfere with the right of the applicant to withhold its expert evidence until
it is required to disclose it in accordance with the Rules by requiring expert evidence to be tendered on an interim application
such as this.
Psychiatric and Psychological Opinion
In Tran the court found that the psychiatric assessment was necessary to assist with the diagnosis, prognosis, and causation of the plaintiff’s psychological injuries. This was deemed proportional to the complexity of the matter, satisfying the criteria for necessity.
The court in Kundan v. Hoogstra, 2024 BCSC 57 denied the application to exclude the psychiatric assessment disbursement, finding that the plaintiff’s evidence did not demonstrate that psychological injuries need investigation or were causally linked to the alleged physical injuries. There was nothing in the reports or records to indicate psychological injuries that needed to be investigated.
In Gill the plaintiff intended to obtain a report from a psychiatrist. However, there was no evidence of the cost of the assessment, the report, trial preparation or trial attendance. The plaintiff’s lawyer advised that they had asked the psychiatrist whether the costs of assessment and report will exceed $7,000 but the lawyer had not provided the answers to those inquiries. The lack of this evidence led to a dismissal of the application.
Occupational Therapy Opinions
In Nagra the plaintiff successfully argued that the complexity of the trial would be reduced with the report of the occupational therapist as it would limit the depth to which the court will have to go in order to assess the cost of any loss of future earning capacity, or future cost of care.
In Tran plaintiff failed to establish that it was necessary, or proportional, for a FCE or cost of future care evaluation to be done by an occupational therapist. The court stated at para 39, “where the plaintiff is working, a FCE is not necessary having regard to the proposed evidentiary record and considerations of proportionality.” This application was however adjourned and not dismissed, as it may be that the necessity becomes more obvious once a physiatrist report is received.
In Gill the plaintiff was seeking to have three reports deemed excluded reports for the purpose of that regulation. A physiatrist report, functional capacity evaluation, a cost of future care report, and an economist report. In the court’s view, the functional capacity evaluation and cost of future care report could actually reduce complications at trial, and the time needed to quantify the alleged losses. The reports were excluded from the 6% cap.
Rocheleau an occupational therapist’s costs were not excluded from the cap. The occupational therapist assessed the plaintiff with respect to her functional capacity and cost of future care but had not yet prepared a report. The plaintiff provided very little evidence of the anticipated cost. The only evidence provided by the plaintiff was that of a paralegal who states, without providing the basis for her knowledge, that the cost of the occupational therapist’s assessment and report “is expected to be approximately $7,000″.
Mediation Costs
The court in Kwiatkowski v. Russo, 2024 BCSC 278 recognized the necessity of mediation as part of dispute resolution and ordered the exclusion of mediation costs from the cap, affirming the importance of encouraging alternate dispute resolution methods. However, the evidence presented did not convincingly demonstrate that the medical assessment disbursements were essential for addressing the complexity or importance of the issues in dispute.
Consideration of Offers to Settle and Value of the Case
Section 5(9)(b)(i) of the Regulation requires evidence that there is a reasonable risk that the total amount of disbursements the party will incur to resolve the injury will exceed the disbursement limit as submitted by the plaintiff.
As stated in Kwiatkowski at para 25, “Here, the evidence is from plaintiff’s counsel, and is general in that it is based on more than one potential outcome as to a damage award ranging anywhere from $65,000 to $400,000. While it is unfortunate that a potential outcome cannot be narrowed down, I do not fault plaintiff’s counsel for that and nor is more evidence required in respect of the risk factor. In fact, I would go so far as to say it could be unjust to require a plaintiff to come to court and throw open its own file, disclose its strategy and set out an analysis as to all the negatives and weaknesses of its case, in order to satisfy the court that there is a risk that the Cap will be exceeded.”
This however presents a severe prejudice to plaintiff’s as the current Regulation essentially requires disclosure of their case and without prejudice offers in order to fulfill its requirements.
Despite Rule 9-1(2) of the Supreme Court Rules, that offers to settle are not to be disclosed to the court until the conclusion of the case, Jabbal, Joshan, Gill, and Garcia, all make reference to out of court offers in making a determination. It maybe that an application under the Regulation addresses costs, thereby allowing the court to avoid the prohibition set out in Rule 9-1(2). This has yet to be decided and would likely only apply to offers made by the applicant(see Kringhaug v. Men, 2022BCSC 185).
In Jabbal, ICBC’s offer was less than $100,000 to resolve the entire matter. Their position was that this is simply a settlement proposal, not an actual assessment of the value of the case. If the defendant was correct in its assessment, “there is no question that the anticipated disbursements would exceed the disbursement limit.” The court found with a 6-percent cap, the amount would not cover the anticipated disbursements and was satisfied that there was the reasonable risk that the disbursements would exceed the disbursement limit.
In Joshan, the court was advised the defendants had advanced an offer that, if accepted, would result in the disbursements not being covered by the 6 percent cap. The court therefore considered the fact that there has been a settlement offer which, if accepted, would essentially exclude the cost of the two reports. The reports were excluded from the 6% cap.
In Gill, the court was advised there had been an offer made of less than $100,000 made by ICBC. The disbursements were excluded from the 6% cap.
In Garcia, the only evidence relied on by the plaintiff is contained in the hearsay evidence from a legal assistant who says that defendant’s counsel made an informal settlement offer on January 9, 2024. Without disclosing the specifics of that without prejudice offer, plaintiff’s counsel submitted that if the six percent cap is applied to that offer, the cost of a single medical assessment would exceed the cap. As the defendant pointed out, a settlement offer made for the purpose of avoiding a trial, and particularly at this stage of the litigation being prior to the deadline for the exchange of expert reports, is likely lower than the damages that may be awarded to the plaintiff following a trial. In addition, the court stated, ” the plaintiff would not need to incur the disbursements at issue if she accepted the offer”. The court went on to state, “Given the lack of evidence before me on this point, I cannot find that there is a reasonable risk that the total amount of disbursements the plaintiff intends to incur will exceed the disbursement limit.”
These cases clearly appear the treat offers to settle differently, leaving plaintiff to guess at what the court may do next. This is in large part due to the requirements of the regulation.
Implications of the 6% Cap
It seems inevitable that the legality of this regulation will be challenged. The Regulation clearly infringes on the right to a fair hearing and frustrates access to justice. However, until the legality of the Regulation is decided it remains the law.
As far as the 6% cap on disbursements our Premier David Eby acknowledged in the Legislature that he was unaware of any jurisdiction that used a percentage of the damage award as a disbursement limit. At the time, he said he was considering a 5% limit, in light of its consistency “with the reimbursement that is currently estimated to be made by ICBC in about 70 percent of cases.” In response to questions, he noted that Doctors of B.C. had provided non‑binding guidelines to its members suggesting a price of $1,832 for a medico‑legal opinion of average complexity. According to the ICBC’s data, he said, about half of the expert reports currently reimbursed by it cost $3,000 or less. This evidence is contrary to a report prepared by the Canadian Bar Association which states that at present, $5,000 for a medical report is “considered average, if not cheap” ( see (British Columbia (Attorney General) v. Le,2023 BCCA 200 at para 50). Most personal injury lawyers know that expert assessments and reports cost much more than $5,000 depending on the amount of time and level of expertise required.
Vehicle injury claimants have been singled out by the NDP in order amass more money for ICBC. The government created auto insurance monopoly, ICBC, stands to gain millions while injury victims are again battling for their basic rights.
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