COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Cellular Baby Cell Phones Accessories Specialist Ltd.
  v. Fido Solutions Inc.,

2017 BCCA 50

Date: 20170202

Docket:
CA42346

Between:

Cellular Baby Cell
Phone Accessories Specialist Ltd.

Appellant

(Respondent on Cross
Appeal)

(Plaintiff)

And

Fido Solutions
Inc.

Respondent

(Appellant on Cross
Appeal)

(Defendant)

And

Elizabeth Poon

Respondent on Cross
Appeal

(Defendant
by Counterclaim)

Before:

The Honourable Mr. Justice Donald

The Honourable Mr. Justice Goepel

The Honourable Mr. Justice Fitch

On appeal from:  An
order of the Supreme Court of British Columbia, dated
October 17, 2014 (
Cellular Baby Cell Phones Accessories Specialist Ltd. v.
Fido Solutions Inc.
, 2014 BCSC 1959, Victoria Registry Docket 11-4662).

Counsel for the Appellant, Cellular Baby
Cell Phone Accessories Specialist Ltd.,
and Respondent on Cross Appeal,
Elizabeth Poon:

G.N. Harney

Counsel for the Respondent,
Fido Solutions Inc.:

K.D. Loo

Place and Date of Hearing:

Victoria, British
  Columbia

September 21 and 22,
  2016

Place and Date of Judgment:

Vancouver, British
  Columbia

February 2, 2017

Written Reasons by:

The Honourable Mr. Justice Goepel

Concurred in by:

The Honourable Mr. Justice Donald

The Honourable Mr. Justice Fitch

Summary:

Cellular Baby seeks damages
against Fido for wrongful termination of a dealership agreement. The trial
judge found that Fido wrongfully terminated the agreement and assessed damages
at $1,222,000. He, however, awarded only nominal damages of $500 on the basis
that Cellular Baby failed to mitigate its loss when it did not sell to a
prospective purchaser. On appeal, Cellular Baby submits that the trial judge
erred in assessing damages and in finding that Cellular Baby failed to
mitigate. Fido cross-appeals, alleging that the trial judge erred in finding
that it wrongfully terminated the agreement.

Held: appeal allowed and cross-appeal
dismissed. Fido did wrongfully terminate the agreement as Fido failed to
terminate within a reasonable period of time. Fidos breach of contract
resulted in Cellular Babys lost opportunity to sell its business as a going
concern. Cellular Baby is thus entitled to $1,617,000 for loss of opportunity.
Cellular Baby did take proper steps to mitigate its damages by carrying on
business as a sub-agent for another wireless carrier. The duty to mitigate does
not require Cellular Baby to release Fido from potential damage claims. Since
Cellular Baby met its duty to mitigate, no amount should be subtracted from the
damage award. In the result, Cellular Baby is entitled to a total damage award of
$2,184,000.

Reasons for Judgment of the Honourable
Mr. Justice Goepel:

INTRODUCTION

[1]

In this action, the appellant Cellular Baby Cell Phones Accessories
Specialist Ltd. (Cellular Baby) sought damages against the respondent, Fido
Solutions Inc. (Fido) for wrongful termination of a dealership agreement
pursuant to which Cellular Baby sold Fidos products. Fido counterclaimed
against Cellular Baby and its principal and sole shareholder, Elizabeth Poon,
for unpaid inventory.

[2]

The trial judge found that Fido had wrongfully terminated the agreement
and assessed damages of $1,222,000. He went on however to hold that Cellular
Baby had failed to mitigate its loss and in the circumstance was not entitled
to damages otherwise flowing from Fidos breach. In the result, he awarded Cellular
Baby nominal damages of $500.

[3]

On appeal Cellular Baby submits that the trial judge erred both in his
assessment of damages and in finding that Cellular Baby had failed to mitigate.
Fido has cross-appealed. It alleges that the trial judge erred in finding that
it wrongfully terminated the dealership agreement.

[4]

Fidos counterclaim for unpaid inventory was allowed. On the counterclaim
the trial judge granted judgment against Cellular Baby and Ms. Poon in the
amount of $309,345.73. No appeal is taken from that decision.

BACKGROUND

[5]

Ms. Poon, in 2000, when she was still a university student, began
selling cellular phone accessories at the Richmond Night Market. By 2001, she
had incorporated Cellular Baby, opened her first free-standing store location
and begun selling cellular phones and wireless plans under a dealership
agreement with a company called CityFone.

[6]

In 2003, Cellular Baby entered into a dealership agreement with Fido. In
November 2004, Rogers Communications acquired the controlling interest in Fido
and assumed a role in the management of Fido dealerships in British Columbia,
including Cellular Baby. In October 2005, Cellular Baby and Fido entered into a
further dealership agreement.

[7]

On July 1, 2008, Cellular Baby and Fido entered into a third dealership
agreement (the Agreement). The Agreement was for a term of five years. It was
88 pages long. It was prepared by Fidos solicitors. Its terms were not the
subject of discussion or negotiation. All of Fidos dealers throughout Canada
signed similar agreements.

[8]

The Agreement authorized Fido to unilaterally set quarterly performance
criteria for its dealers. The performance criteria established sales quotas in
respect of a number of facets of the dealers operations including voice
activations and data plans. Dealers were advised of their quotas by written
communication from Fido issued 15 days prior to the commencement of the
upcoming fiscal quarter. Pursuant to s. 11.2(c) of the Agreement, if a dealer
failed for three consecutive calendar quarters or for any three quarters in a
calendar year to meet performance criteria, Fido could immediately terminate
the Agreement.

[9]

Cellular Baby operated 12 retail outlets: 10 in British Columbia and 2
in Alberta. Several of its outlets were located in premium locations. Substantially
all of Cellular Babys revenue was generated through the sale of Fido products.

[10]

Cellular Baby was one of Fidos highest producing dealers in British Columbia.
In 2009 it provided roughly 27% of Fidos total sales from its dedicated
dealers. In 2009, Cellular Baby was recognized for its high sales and high
level of customer satisfaction.

[11]

Prior to 2010, Cellular Baby had never failed to achieve its assigned
quota. In 2010 Cellular Baby failed to achieve the quotas assigned to it in Q1,
Q2 and Q4 in British Columbia and all four quarters in Alberta. Following each
of those quarters, Fido sent a perfunctory email to Cellular Baby reminding it
of the quotas and noting Cellular Babys underachievement. Fido did not suggest
any remedial action, but did note that Cellular Baby was contractually required
to use all commercially reasonable efforts to achieve its quota. Fido did not
warn Cellular Baby that its failure to achieve its quarterly quota was jeopardizing
its status as a dealer.

[12]

Fido knew by February 2011 that it had the right to terminate the
Agreement because Cellular Baby had failed to achieve its quota in three of
four quarters in fiscal 2010. Fido took no steps at that time to terminate the
Agreement. Rather it set out to analyse internally the impact on Fido of
terminating a dealer the size of Cellular Baby. In particular it attempted to
determine whether it would be able to replace and recapture the sales that
would be lost if Cellular Baby was terminated.

[13]

Throughout 2011 the parties continued to operate under the terms of the
Agreement. In 2011, Cellular Baby achieved quota for Q1, just failed to meet
its quota for Q2 and was trending to achieve its quota for Q3, which ended on
September 30, 2011.

[14]

On September 19, 2011, Fido sent a letter to Cellular Baby terminating
the Agreement effective September 30, 2011 (the Termination Letter). The
Termination Letter stated in part:

Despite numerous warnings from
Fido, the performance of your Fido dealerships has continued to fall below acceptable
standards in all key performance areas. Specifically, Cellular Baby has
persistently failed to meet the Performance Requirements set by Fido for the
last six (6) quarters. The Performance Requirements pursuant to the Agreement
are set out in quarterly quota letters and in section C.3.2 of Schedule A-1
to the agreement. Cellular Babys failure to meet these requirements and cure
all defaults and breaches within the prescribed time under the Agreement,
despite having received numerous notices, gives rise to Fidos right to
immediately terminate the agreement.

[15]

The Termination Letter was factually incorrect in many areas. No
warnings had been issued to Cellular Baby, nor had Cellular Baby fallen below
acceptable standards in all key areas. It had not failed for the last six
quarters to meet its performance requirements. No notice of default had ever been
delivered such that it could have taken any curative steps.

[16]

At trial Fido resiled from the broad allegations contained in the
Termination Letter and relied exclusively on Cellular Babys failure to achieve
its assigned quota for three of the four quarters in fiscal 2010 to justify the
termination.

[17]

In the Termination Letter, Fido indicated it was prepared to offer
residual continuance in accordance with s. 11.3(2) of the Agreement under
certain terms. Those terms included Cellular Baby releasing Fido of any
potential claims, Cellular Baby being bound by the non-competition clause
contained in the Agreement and Cellular Baby signing over to Fido its premium
leases. Cellular Baby was given but four days to accept Fidos offer.

[18]

The residual payments referenced in the Termination Letter were payable
by Fido to a dealer upon expiration of a dealership agreement if the dealer was
in compliance with its obligations under the dealership agreement. The residual
payments represented a portion of the payment made by customers who had entered
into contracts or voice or data plans through the dealer and remained Fido
customers following the dealership expiration.

[19]

On September 23, 2011, Fido wrote to Cellular Baby offering different
terms. Fido was now prepared to take over all of Cellular Babys leases, not
just the premium ones. It also offered to pay the residual payment as a lump
sum. The offer was extended by four days.

[20]

Cellular Baby declined both offers.

[21]

On November 18, 2011, Cellular Baby commenced these proceedings. On
November 30, 2011, it filed an application for an interim injunction to prevent
Fido from terminating the Agreement until final determination of the action.

[22]

The parties agreed to stay the termination pending the hearing of the
injunction application. The injunction application was heard on February 27,
2012. On March 29, 2012, Madam Justice Russell dismissed Cellular Babys
application for injunctive relief. Following the dismissal of the application,
Fido set April 4, 2012 as the new date for termination. This date was later
extended to April 26, 2012 to allow Cellular Baby further time to attempt to
sell its business.

[23]

After Cellular Baby rejected Fidos initial offers, Fido advised Cellular
Baby that it was free to contact approved Fido dealers in an effort to sell its
locations together with the remaining term of the Agreement. Fido reserved the
right to approve any sale and as a condition of a sale, Fido advised Cellular
Baby that it would have to provide Fido a full release from any future claims.

[24]

Cellular Baby contacted other Fido dealers to determine whether they
might be interested in acquiring some or all of its business. The most serious
suitors were Fido dealers, Yappy and Pepper. Beginning in November 2011,
exchanges took place between Mr. Tsang, the principal of Yappy, and Ms. Poon
firstly on the topic of bundled locations, but later focused on Yappy
purchasing all of Cellular Babys business. Mr. Tsang indicated he was prepared
to pay 36 times residuals plus incentives on the leases. Ms. Poon valued this
offer at $2 million. The trial judge found he was unable to conclude that Yappy
had made a firm offer of $2 million. It is clear that Yappy was prepared to pay
at least 36 times residuals.

[25]

When Mr. Tsang sought details from Fido concerning Cellular Babys
finances, he was advised that Fido would not approve Yappy as a purchaser. This
discussion occurred around April 6, 2012. When Fido advised Ms. Poon that it
would not support a sale to Yappy, its representative encouraged her to carry
on negotiations with Pepper.

[26]

Pepper was the other dominant Fido dealer in British Columbia and had
sales similar to those of Cellular Baby. Fido indicated that it would likely
approve a sale to Pepper.

[27]

Peppers original offer was $1.2 million, approximately 30 times
residuals. Ultimately it increased its offer to $1.57 million, 36 times
residuals and then rounded its offer to $1.6 million.

[28]

Ms. Poon advised Pepper that she was not prepared to sell for less than
$2 million. Evidence at the trial indicated that Pepper was prepared to
increase its offer and Ms.

Poon likely
would have accepted something less than $2 million. Unfortunately, an agreement
was never made.

[29]

On April 26, 2012, after Cellular Baby failed to reach an agreement with
Pepper, Fido terminated the Agreement. Cellular Baby stopped sales of all Fido
products. All Fido signage was removed. Cellular Baby commenced selling
products and wireless plans as a sub-agent for another wireless carrier.

THE TRIAL REASONS

[30]

The trial judge identified the issues as follows:

1.         Did the defendant unlawfully terminate the
Agreement?

2.         If so, what damages flow from the wrongful
termination?

3.         Did the plaintiff fail to
mitigate its losses and, if so, what impact does the failure to mitigate have
on the plaintiffs damage claim?

[31]

The trial judge first dealt with whether Fido had unlawfully terminated
the Agreement. He commenced his analysis by reviewing the terms of the
Agreement. Fidos right to terminate the Agreement is set out in s. 11.2. In terminating
the Agreement, Fido relied on s. 11.2(c) which reads:

Notwithstanding any other provision herein, Fido may
immediately terminate this Agreement by written notice to Dealer:

(c)        if Dealer fails to meet the Performance Criteria
for two (2) consecutive six (6) month periods or if Dealer fails for three (3)
consecutive calendar quarters or any three (3) quarters in a calendar year to
meet any Performance Requirement;

[32]

The trial judge found that there was no question that Cellular Baby had failed
to achieve its quotas in three of the four quarters of fiscal 2010 in British
Columbia and Alberta. The trial judge then reviewed in some detail Fidos practices
in setting quotas. In that regard, he reviewed the quotas for each quarter in
2010 and compared Fidos local adjustments for Cellular Baby relative to other
major dealers. For example, in Q4, the quota for Cellular Baby was raised
locally by 355 activations; the remaining dealers quotas were reduced by the
same number. The trial judge found no reasonable basis for this adjustment. The
trial judge held that since Cellular Babys quota was not set reasonably for
Q4, a quarter where quota was not achieved, then it could not be said that Cellular
Baby breached s.

11.2(c).

[33]

The trial judge further found that Fido did not act reasonably towards Cellular
Baby in exercising its discretion to terminate the Agreement. He found that
Fido failed to act in good faith by failing to respond to and deal with certain
legitimate complaints that Cellular Baby had raised. He further found that Fido
acted unreasonably in failing to issue warnings and failing to offer assistance
to Cellular Baby in advance of deciding to exercise its right of termination.

[34]

He further found that Fido breached its obligations under the Agreement by
not terminating the Agreement immediately upon learning of the breach. In
that regard he reasoned as follows:

[150]    Section 11.2 allows Fido to terminate by written
notice to a dealer if any of the obligations set out in 11.2(a)-(k) are not
fulfilled. It is entirely discretionary and within Fidos control whether they
decide to terminate. However, the word terminate is modified by the word
immediately. Immediately is not the same as without notice. According to
the Concise Oxford Dictionary,5
th
ed., it means: occurring at once;
without delay.

[151]    Nothing in the wording of s. 11.2(c) allows
Fido to sit back, assess its position, create strategies to ameliorate the
effects of its decision and then, eight months after the fact, terminate the
dealer, who, at the time of termination, was in compliance with the achievement
of its B.C. quotas.

[152]    Fido was aware by mid-to-late January 2011 of the
breach on which it relies to invoke the termination clause in the Agreement.

[153]    While acknowledging the word immediately in
s. 11.2 ought not to be construed as meaning instantaneously upon learning
of the breach, it cannot mean eight months after the fact.

[154]    Such, in my view, has
nothing to do with the doctrines of either waiver or estoppel but flows from
the wording of the Agreement and the doctrine of
contra proferentem
. If
Fido chose to terminate the Agreement on the basis of s. 11.2(c), it had
an obligation to do so immediately, which I find to mean within a reasonable
period of time. Eight months is not, in my view, a reasonable period of time
in the circumstances. By failing to act immediately, Fido failed to comply with
the provisions of 11.2(c) which would have, from the defendants perspective, allowed
it to lawfully terminate the Agreement.

[35]

Having found that Fido unlawfully terminated the Agreement, he turned to
the question of damages. He agreed that Cellular Baby was entitled to recover the
profits it could reasonably have anticipated earning over the Agreements
remaining 14 months. Cellular Baby sought an award of $276,000. The trial
judge, after noting numerous frailties in the evidentiary foundation of the
loss of profits claim, assessed the loss of profits at $200,000.

[36]

The trial judge next went on to consider Cellular Babys
post-termination business losses. Cellular Baby claimed losses of almost
$950,000 including documented transition expenses of approximately $367,000.
The transition expenses flowed from Cellular Babys efforts to mitigate its
losses by continuing in the cellular business. They included such items as the
costs of changing signage, interior design and fixtures, surrendering four
leases and lease conversion fees, brokerage and professional fees, together
with emergency and extra staff costs. The remainder of the claim represented
operating losses over the 14+ months remaining on the Agreement.

[37]

While acknowledging that some of the transition expenses may have
occurred in any event at the expiration of the Agreement, the trial judge held
that it was Fidos wrongful conduct which caused the immediacy of the problem
that Cellular Baby had to confront. The trial judge found Fidos wrongful
termination was the cause of most of the transition expenses and assessed those
damages at $367,000. He refused to make any award for the operating losses.

[38]

The final damage issue concerned residual payments. The parties agreed
that if Fido wrongfully terminated the Agreement, Cellular Baby was entitled to
ongoing residual payments at the expiration of the Agreement. They disagreed on
the amount.

[39]

Paragraph 11.3(2) of the Agreement provided a formula for the payment of
residuals. If the dealers subscriber base was less than 50,000 at the contracts
conclusion, it provided for post-expiry residuals for one year following the
Agreements expiration. If the subscriber base was between 50,000 and 99,000,
residuals would be paid for 18 months. As at March 31, 2012, Cellular Babys
subscriber base was 33,700.

[40]

The parties dispute centered on what the cumulative subscriber base
might realistically have risen to if the Agreement had run to term. While the
trial judge found the subscriber base would have grown in the 14+ months
remaining until the Agreements expiry, he held that it would not have reached
the 50,000 subscriber base necessary to achieve the higher residual payment. In
this regard he accepted Fidos growth calculations and determined the loss for
the non-payment of residuals was $655,000.

[41]

The trial judge rejected Cellular Babys submission that damages should
be assessed not on the basis of payment of one years residuals but on
anticipated sale proceeds calculated at 36 times residuals. Based on Fidos residual
projection accepted by the trial judge, the sale of the business at the end of
the Agreements term, assuming a sales price of 36 times residuals, would have resulted
in a price of $2,156,000. He rejected this submission for the following
reasons:

[196]    What the submission overlooks is that while the
Agreement makes provision for the sale of the business at the expiration of the
Agreement, such is subject to the provisions of article 12.1 of the Agreement,
which precludes assignment or transfer of assets, including goodwill, without
the written consent of Fido. Article 12.4 provides that Fido may, in its sole
discretion, grant or deny permission based on a number of enumerated criteria.

[197]    What is clear is that Fidos consent is
discretionary. Given the duty to act in good faith, Fidos consent to a
transfer could not be unreasonably withheld. Absent a potential purchaser
ready, able and willing to purchase the plaintiffs business for $2,156,000 as
at June 30, 2013, it is difficult to assess how Fido might respond. Clearly,
Yappy was not such a candidate in 2012. Pepper was. Whether a candidate such as
Pepper would have been available at the Agreements expiration is a matter of
speculation.

[198]    Given the absence of any evidence suggesting a ready
market for the fair market value sale of wireless distributorships such as the
plaintiffs upon the expiry of the term of the dealership agreement, I am
unable to conclude that the sale of the plaintiffs business at the Agreements
end was anything more than a possibility; not a probability.

[199]    Recalling that the
plaintiff was afforded more time than Yappy to affect a sale of its business
and my conclusions, which follow, as to the reasonableness of the plaintiffs
strategies in trying to complete a sale in 2012, I conclude the preferred
manner to assess the plaintiffs loss is on the basis of the residuals payable
at the Agreements end rather discounting the potential sale of the business at
$2,156,000 to reflect the possibility of such a sale. Given the variables and
uncertainty associated with a future sale to a limited number of potential
buyers, the $655,000 for loss of residuals exceeds the discounted value of a
potential sale at the Agreements expiration.

[42]

In summary, the trial judge awarded damages of $1,222,000 calculated as
follows:

1.

Loss of
  Profits April 26, 2012 to June 30, 2013

$200,000

2.

Business
  Losses

$367,000

3.

Residual
  Payments

$655,000

Total:

$1,222,000

[43]

Having assessed Cellular Babys damages, the trial judge then turned to
the question of mitigation. He found that Cellular Baby did not act reasonably
in failing to conclude a sale to Pepper at $1.6 million. As a result, he
concluded that Fido had proven on the balance of probabilities that Cellular
Baby could have mitigated its entire loss and having failed to do so it was
only entitled to nominal damages which he set at $500.

THE APPEAL

[44]

Cellular Baby challenges two aspects of the damage award. It submits the
trial judge should have assessed damages, not on the basis of one years
residuals, but rather on the potential sale of the business at $2,156,000. It
further submits that the trial judge erred in finding that it had failed to
take reasonable steps to mitigate its loss.

[45]

In its cross-appeal, Fido challenges the trial judges findings that it
wrongfully terminated the Agreement. In that regard, it submits the trial judge
erred by:

1.  concluding that the local
adjustment to Cellular Babys Q4 2010 quota was unreasonable as the local
adjustment made no difference to the result as Cellular Baby would have failed
to meet its Q4 2010 quota even if the local adjustment had not occurred;

2.  finding that Fido did not act
reasonably in exercising its discretion to terminate the Agreement when the
decision to terminate was not discretionary in nature (rather, Fido submits that
its right to terminate was contractual and unqualified); and

3.  finding that Fido was required
to terminate the Agreement immediately upon learning of Cellular Babys
breach, despite the permissive language in s.

11.2(c).

[46]

Although the issues were contested at trial, neither side has appealed
the $200,000 award for loss of profits or the $367,000 award for business
losses.

DISCUSSION

A.       Wrongful Termination

[47]

I will first consider the cross-appeal and in particular the submission that
the trial judge erred in holding that Fido wrongfully terminated the Agreement because
it did not do so immediately on learning of the breach.

[48]

This ground of appeal requires consideration of the terms of the
Agreement. The Agreement is a standard form contract. Its interpretation is of
precedential value. There is no meaningful factual matrix that is specific to
the parties to assist in the interpretation process. Interpretation of the
Agreement is subject to a correctness standard of review:
Ledcor
Construction Ltd. v. Northbridge Indemnity Insurance Co
., 2016 SCC 37 at
para. 24.

[49]

The Agreement, unless terminated in accordance with s. 11, was to remain
in effect for five years. Section 11.2 sets out various circumstances pursuant
to which Fido could immediately terminate the Agreement. This case turns on s. 11.2(c)
which gives Fido the right to immediately terminate the Agreement if the dealer
fails for any three quarters in a calendar year to meet performance review
requirements.

[50]

In his reasons, the trial judge noted that the word terminate is
modified by the word immediately. He held that immediately is not the same as
without notice. He held that if Fido wished to terminate the Agreement on the
basis of s. 11.2(c), it had to be do so immediately which he took to mean
within a reasonable period of time. He found eight months was not, in his
view, a reasonable period of time and by failing to act immediately, Fido had
failed to comply with the provisions of s.

11.2(c)
which would have allowed Fido to lawfully terminate the Agreement.

[51]

Fido submits that the trial judge misconstrued the import of the word
immediately in s. 11.2(c) of the Agreement. It submits that the provision gives
Fido the right to terminate without notice or warning but does not require
immediate action.

[52]

The interpretation of a written contractual provision must be grounded
in the text and read in light of the contract as a whole:
Sattva Capital
Corp. v. Creston Moly Corp.
, 2014 SCC 53 at para. 57.

[53]

The Agreement, unless earlier terminated by Fido pursuant to the
provisions of s. 11.2, was for a fixed five-year term. If the Agreement expired
and the parties did not enter into a new agreement, and Fido continued to
accept sales solicited by the dealer, the Agreement was deemed to continue on a
month-to-month basis which either party could terminate upon no less than 30
days written notice (s. 11.1).

[54]

Section 11.2 sets out an extended list of circumstances that gave Fido
the right to immediately terminate the Agreement. Unlike s. 11.1, s. 11.2
does not contain a specific length of notice provision. Considering the
Agreement as a whole, I find that the word immediately in s. 11.2 is a length
of notice provision. It gives Fido the right to terminate without notice or
warning if Cellular Baby commits any of the defaults set out in the section. I
agree with Fidos interpretation of the term immediately.

[55]

While I agree that the trial judge erred in his interpretation of
immediately that error is not fatal to his conclusion that if Fido wanted to
terminate the Agreement on the basis of s. 11.2(c), it had to do so within a
reasonable period of time. That conclusion is consistent with long-established
principles governing the termination of contracts when one party has committed a
breach that allows the other party to elect to terminate the contract.

[56]

In
Gulston v. Aldred
, 2011 BCCA 147, this Court set out the
options open to an innocent party when the other party has breached a term of
an agreement which gives the innocent party the right to terminate the
contract:

[50]      Where there is a breach of a fundamental term, the
innocent party has two options.  As this Court stated in
Morrison-Knudsen
Co. Inc. v. British Columbia Hydro and Power Authority
, (1978) 85 D.L.R.
(3d) 186 at para. 130:

... However, it is not every breach which determines a
contract and puts an end to contractual obligations. There are breaches
compensable in damages only and breaches called fundamental breaches which can
bring the contractual relationship to an end and free the parties from further
performance. When faced with a fundamental breach the innocent party is put to
an election. He may elect to affirm the contract and to hold the other party to
the performance of his obligations and sue for damages as compensation for the
breach. He may, on the other hand, elect to treat the breach as a fundamental
breach and accept it as such. Thus he would terminate the contract and
thereafter be relieved of any further duty to perform and he could sue at once
for damages or
quantum meruit
for performance to that point.
It is
essential that such election, an election between inconsistent rights, be made
promptly and communicated to the guilty party. Once made, the election is
binding and cannot be changed
.

[57]

In
A & G Investment Inc. v. 0915630 B.C. Ltd.
, 2014 BCCA 425,
this Court explained why an election between inconsistent rights must be made
promptly:

[38]      An election between
inconsistent rights must, however, be made promptly and communicated to the
other side. Parties cannot adopt a wait-and-see approach to fundamental
breach, as their election simultaneously determines the position of the
counterparty to the contract. Either the contract is not repudiated and the
rights and obligations under it still exist, or the contract is rescinded
because of an accepted repudiation and then very different rights come into
being in respect of a cause of action. In either case, parties must have prompt
notice of their position.

[58]

Cellular Babys failure to meet its quota obligations in 2010 gave Fido
the right to terminate the Agreement. Fido knew of that right by February 2011.
Fido however took no steps to terminate the contract until it sent the
Termination Letter on September 19, 2011.

[59]

Fido was entitled to a reasonable period of time in which to decide
whether to affirm the Agreement or exercise its right of termination:
Dosanjh
v. Liang
, 2015 BCCA 18 at para. 37. I agree with the trial judge that eight
months in these circumstances was not a reasonable period of time. By September
19, 2011, Fido had lost the right to terminate the Agreement for the 2010
breach. Fidos termination of the Agreement was wrongful.

[60]

In light of this conclusion, it is not necessary to consider the two
other arguments raised on the cross-appeal.

[61]

I would dismiss the cross-appeal.

B.       Residual Payments

[62]

If the Agreement had been allowed to run to the end of its term,
Cellular Baby would have had the right to sell its business to a third party.
The evidence at trial indicated the business was of considerable value. In
April 2012, both Yappy and Pepper offered to pay 36 times the then residuals in
their efforts to purchase the ongoing business. The trial judge, based on his
finding of the likely number of contracts on which residuals would have been
payable as at June 2013, held that a sale of the business at the end of the
Agreements term, assuming 36 times residuals, would result in a price of
$2,156,000 (rounded).

[63]

The trial judge found that he was unable to conclude that the sale of
Cellular Babys business at the Agreements end was anything more than a
possibility; not a probability. In reaching that conclusion, he referenced the
absence of any evidence suggesting a ready market for the fair market value
sale of wireless distributorships upon the expiry of the term of the dealership
agreement. He noted that Fidos consent was required for any sale and absent
evidence of a potential purchaser ready, willing and able to purchase the
business as of June 30, 2013 it was difficult to assess how Fido might respond.
He suggested whether a candidate such as Pepper, who was prepared to purchase the
business in 2012, would have been available in 2013, was a matter of
speculation.

[64]

The trial judges decision regarding the potential sale of the business
raises a question of mixed fact and law. It involves applying a legal standard
to a set of facts. Matters of mixed fact and law lie along a spectrum. Where an
error can be attributed to the application of an incorrect legal standard, a
failure to consider a required element of a legal test, or similar error in
principle, such an error can be characterized as an error of law, subject to a
standard of correctness:
Housen v. Nikolaisen
, 2002 SCC 33 at para. 36.

[65]

With respect, I am of the view that the trial judge did not apply the
correct legal standard to this part of the claim. What Cellular Baby lost as a
result of Fidos wrongful termination was the opportunity to sell its business
as a going concern. This Court in
Pacific Destination Properties Inc. v.
Grandville West Capital Corp.
, 1999 BCCA 115 set out the approach to be
followed in assessing a loss of opportunity claim:

[54]      In assessing damages for loss of opportunity the
court must reach a conclusion as to what would have taken place had there been
no breach.  If it is shown with some degree of certainty that a specific
contract was lost as a result of the defendants breach, some damages should be
awarded.  Even though the plaintiff may not be able to prove with certainty that
it would have obtained specific results but for the breach, it may be able to
establish that the defendants breach deprived it of the opportunity to obtain
such business.  See: Houweling Nurseries Ltd. v. Fisons Western Corporation
(1988), 37 B.C.L.R. (2d) 2 (C.A.).

[55]      In Bradshaw Construction Ltd. v. Bank of Nova
Scotia (1992), 73 B.C.L.R. (2d) 212 (C.A.) this Court considered the principles
applicable to damages, including a claim of a loss of opportunity.  At pages
228-229, the court referred to the following as a correct statement of the
applicable law for loss of opportunity (as set out by the trial judge):

When deciding whether the plaintiff
suffered any damages as a consequence of the actions of the defendant, Bradshaw
must prove the existence of a loss on a balance of probabilities. It has done
so. But when it comes to assessing the actual amount of the loss the standard
of proof is not so strict.

Determining the amount of damages
in these circumstances is largely a matter of assessing the strength and
weaknesses of various possibilities. It is much like measuring the amount of a
past or future loss of income in a personal injury action. The more certain the
possibility of the loss the greater the award; the less certain the possibility
the smaller the award.
When looking at events that may have taken place but
for a certain event, it is impossible to say what would have probably happened
when that event came about, because one does not know the nature of the
circumstances at the relevant time when the event might have occurred. The best
that can be estimated are the possibilities, not the probabilities
.

[Emphasis added.]

[66]

In this case, there is no doubt that if the Agreement had been allowed
to run its course, Cellular Baby would have had the opportunity to sell its
business in June 2013 as a going concern. It lost that opportunity when Fido
wrongfully terminated the Agreement in April 2012. It is now impossible to say with
certainty what would have probably happened in June 2013, because one does not
know the nature of all the circumstances at that time. Any uncertainty as to the
outcome of a possible sale is properly dealt with by applying a deduction on
the basis of contingencies:
Pacific Destination
at para. 52.

[67]

The evidence before the trial judge indicates that the deduction for
contingencies should be modest. Cellular Baby was one of Fidos largest dealers
in British Columbia and its sale produced more than a quarter of Fidos British
Columbia revenues. Its business was profitable. It had leases in several premium
locations. The events of April 2012 clearly demonstrated there were potential
buyers for Cellular Babys business. Because of the compressed timeframe in
which that sale was being negotiated, Fido refused to consider purchasers who
were not otherwise Fido dealers. A sale at the end of the Agreement in June
2013 would not have faced similar limitations. While Fido had to consent to any
sale, given its duty to act in good faith, Fidos consent to a transfer could
not be unreasonably withheld. Fido was most anxious to maintain Cellular Babys
revenues. It was clearly in Fidos interest that Cellular Baby be sold as a
going concern and it can be reasonably inferred that Fido would in these
circumstances have actively encouraged a sale.

[68]

While there was no evidence of any wireless sales in June 2013, the lack
of such evidence is not fatal to the loss of opportunity claim. As set out in
Bradshaw,
quoted above, it is impossible to say what would have probably happened in June
2013, because one does not know the nature of the circumstances at the relevant
time when the event might have occurred. Furthermore, this uncertainty results
from Fidos wrongful breach of the Agreement. The comments of Satanove J. in
REC
Holdings Co v. Peat Marwick Thorne
[1997] B.C.J. No. 1640,
72 A.C.W.S. (3d) 472 (B.C.S.C.) at para. 120 are apposite:

In assessing
quantum, the court is trying to determine a past hypothetical, not historical,
situation. The situation is hypothetical and fraught with difficulties of proof
because the conduct of the defendants have made it so. Therefore, once it has
been proven on a balance of probabilities that it was the defendants conduct
which caused the plaintiffs loss, any doubt should result in favour of the
plaintiffs.

[69]

In this case we do know there was strong interest in purchasing the
business in April 2012 and we also know that in January 2014, Yappy upon expiry
of its dealer agreement was able to sell its business as a going concern. Given
this evidence the strong inference is that absent Fidos wrongful termination
of the Agreement, a sale in June 2013 was likely to have occurred.

[70]

A sale was, of course, not guaranteed. What Cellular Baby lost as a
result of Fidos breach of contract was the opportunity to sell the business. In
April 2012 prospective purchasers were prepared to pay 36 times the then
residuals. If a sale had been made at 36 times residuals in June 2013, Cellular
Baby would have received $2,156,000. As a sale was not guaranteed, that number
has to be reduced to take into account contingencies that may have arisen. I
would reduce the sale price by 25% for contingencies.

[71]

I would substitute an award for $1,617,000 for loss of opportunity in
place of the trial judges award of $655,000 for residual payments.

C.       Mitigation

[72]

In breach of contract cases a wronged plaintiff is
entitled to be put in as good a position as he would have been if there had
been proper performance by the defendant. That rule is subject to the
qualification that the defendant cannot be called upon to pay for avoidable
losses which would result in an increase in the quantum of damages payable to
the plaintiff:
Red Deer College v. Michaels
, [1976] 2 S.C.R. 324
at 330
.

[73]

The duty to mitigate is limited. A claimant need not destroy or
sacrifice rights or property of his own in mitigation:
Elliott Steam Tug Co.
v. Shipping Controller
, [1922] 1 K.B. 127 (C.A.) at 140

141.

[74]

Mitigation is a doctrine based on fairness and common sense. The general
principles of mitigation were summarized in
Southcott Estates Inc. v. Toronto
Catholic District School Board
,
[2012] 2 S.C.R. 51:

23

This Court in
Asamera
Oil Corp. v. Seal Oil & General Corp.
, [1979] 1 S.C.R. 633, cited (at
pp. 660-61) with approval the statement of Viscount Haldane L.C. in
British
Westinghouse Electric and Manufacturing Co. v. Underground Electric Railways
Company of London, Ltd., [1912] A.C. 673
, at p. 689:

The fundamental basis is thus
compensation for pecuniary loss naturally flowing from the breach; but this
first principle is qualified by a second, which imposes on a plaintiff the duty
of taking all reasonable steps to mitigate the loss consequent on the breach,
and debars him from claiming any part of the damage which is due to his neglect
to take such steps.

24

In
British Columbia
v. Canadian Forest Products Ltd.
, 2004 SCC 38, [2004] 2 S.C.R. 74, at para.
176, this Court explained that [l]osses that could reasonably have been
avoided are, in effect, caused by the plaintiffs inaction, rather than the
defendants wrong. As a general rule, a plaintiff will not be able to recover
for those losses which he could have avoided by taking reasonable steps. Where
it is alleged that the plaintiff has failed to mitigate, the burden of proof is
on the defendant, who needs to prove both that the plaintiff has failed to make
reasonable efforts to mitigate and that mitigation was possible (
Red Deer
College v. Michaels
, [1976] 2 S.C.R. 324;
Asamera
;
Evans v.
Teamsters Local Union No. 31
, 2008 SCC 20, [2008] 1 S.C.R. 661, at para.
30).

25

On
the other hand, a plaintiff who does take reasonable steps to mitigate loss may
recover, as damages, the costs and expenses incurred in taking those reasonable
steps, provided that the costs and expenses are reasonable and were truly
incurred in mitigation of damages (see P. Bates, Mitigation of Damages: A Matter
of Commercial Common Sense (1991), 13 Advocates Q. 273). The valuation of
damages is therefore a balancing process: as the Federal Court of Appeal stated
in
Redpath Industries Ltd. v. Cisco (The)
, [1994] 2 F.C. 279, at p.
302,: The Court must make sure that the victim is compensated for his loss;
but it must at the same time make sure that the wrongdoer is not abused.
Mitigation is a doctrine based on fairness and common sense, which seeks to do
justice between the parties in the particular circumstances of the case.

[75]

Whether Cellular Baby could have mitigated its damages is
also a question of mixed fact and law:
Southcott Estates
at para
.
47
. It involves applying a legal standard to a set of
facts.
Where an error can be attributed to the application of an
incorrect legal standard, a failure to consider a required element of a legal
test, or similar error in principle, such an error can be characterized as an
error of law, subject to a standard of correctness.

[76]

In this case Fido wrongfully terminated the Agreement
in April 2012. As a result of the termination Cellular Baby lost the profits it
would have earned through to June 2013 and the ability to sell its business as
a going concern in June 2013. Because of the projected increase in its subscriber
base, the business would have been worth considerably more in June 2013 than it
was in April 2012.

[77]

Cellular Baby had an obligation to take reasonable steps to attempt to
mitigate its damages. In April 2012 there appeared to be two possible ways in
which it could mitigate its loss. One was to carry on business as a sub-agent
for another wireless carrier. The other was to sell its business to Pepper as a
going concern for $1,600,000. A sale to Pepper was however contingent on Cellular
Baby providing Fido a general release of all claims.

[78]

Cellular Baby chose to forgo the sale and continue in business. The fact
that the new venture did not prove successful is not determinative of whether
Cellular Baby reasonably mitigated its loss. Expenses incurred in a reasonable
attempt to mitigate are recoverable even if the attempt to mitigate was
unsuccessful:
PreMD Inc. v. Ogilvy Renault LLP
, 2013 ONCA 412 at para.
63. The trial judges award of $367,000 for transition expenses is consistent
with this principle.

[79]

The trial judge found that Cellular Baby should have availed itself of
the opportunity to sell its business and reduce its potential loss. In making
that finding the trial judge appears to have overlooked that the sale to Pepper
required Cellular Baby to provide Fido a general release of all claims. With
respect, in doing so he committed an error in principle. The release would have
forced Cellular Baby to forgo its claim for loss of profits which was
eventually valued at $200,000. It also would have lost its claim arising for
the increased selling price that likely would have been available in June 2013.

[80]

The duty to mitigate does not require a party to release claims it may
have against a wrongdoer. If Cellular Baby had sold its business to Pepper it
would have lost its right to pursue Fido for its other losses. It would not be
in as good a position as if Fido had properly performed.

[81]

While Cellular Baby had an obligation to take reasonable steps to
attempt to mitigate its damages, the duty to mitigate does not require it to
release Fido from potential damage claims. To do so would not be fair, just or
reasonable.

[82]

The trial judge made an error of law in finding that Cellular Baby
failed to mitigate when it did not agree to sell to Pepper. The requirement of
the general release is fatal to the trial judges mitigation finding. In the
circumstances the trial judges mitigation finding cannot stand. If the sale to
Pepper had not been conditional on the release of Fido, different
considerations might apply.

[83]

I find in the circumstances Cellular Baby did take reasonable steps to
mitigate its damages and no amount should be subtracted from the damage award.

[84]

In the result therefore I would set aside the award for nominal damages and
substitute an award of $2,184,000 being the award for loss of profits
($200,000), business loss ($367,000) and loss of opportunity ($1,617,000).

COSTS

[85]

Cellular Baby is entitled to the costs of the appeal and cross-appeal.
In regards to the costs of the trial, the trial judge said this:

[274]    Pursuit of the counterclaim by the defendant as
against both the plaintiff and the defendant by counterclaim occupied
negligible court time.

[275]    The principal issues
were the allegation of breach and the claim for damages as a result. In keeping
with
Davidson
, it is my preliminary view that the plaintiff should have
costs in the action at scale B to reflect its success in proving the breach.
However, as the matter of costs was not argued, I grant the parties leave to
set the matter down before me if either believes some other result is more
appropriate.

[86]

Subsequent to receipt of the reasons for judgment, the parties agreed
that each side should bear their own costs of trial. Unless there are matters
of which we do not know, it would appear that Cellular Baby is entitled to the
costs of the trial.

[87]

If the parties are unable to agree as to the costs of trial or the
calculation of pre-judgment interest arising from the damage awards, they are
at liberty to make arrangements to file further written submissions. They
should do so within the next 30 days pursuant to a schedule to be arranged with
the Registrar.

The
Honourable Mr. Justice Goepel

I AGREE:

The Honourable Mr. Justice
Donald

I AGREE:

The Honourable Mr. Justice
Fitch


COURT OF APPEAL FOR BRITISH
COLUMBIA

Citation:

Nelson v. British Columbia
(Provincial Health Services Authority),

2017 BCCA 46

Date: 20170202

Docket: CA43266

Between:

Nicole Natalie Nelson

Respondent

Appellant on Cross
Appeal

(Plaintiff)

And

Provincial Health
Services Authority dba
British Columbia Womens Hospital and Health Centre

Appellant

Respondent on Cross
Appeal

(Defendant)

Before:

The Honourable Mr. Justice Willcock

The Honourable Mr. Justice Goepel

The Honourable Mr. Justice Fitch

On appeal from:  An
order of the Supreme Court of British Columbia, dated
October 26, 2015 (
Nelson v. British Columbia (Provincial Health Services
Authority)
,
2015 BCSC 1941, Victoria Registry 111408).

Counsel for the Appellant:

C.L. Woods, Q.C. and
  D.S. Hwang

Counsel for the Respondent:

W. Pickett and A.
  Sheane

Place and Date of Hearing:

Vancouver, British
  Columbia

October 17 & 18,
  2016

Place and Date of Judgment:

Vancouver, British
  Columbia

February 2, 2017

Written Reasons by:

The Honourable Mr. Justice Willcock

Concurred in by:

The Honourable Mr. Justice Goepel

The Honourable Mr. Justice Fitch

Summary:

Appeal in a medical
malpractice action from the trial judges finding the defendant Hospital is
liable for approximately $1.17 million in damages to the respondent. The
judge found a nurse allowed the respondents leg to drop from a birthing bar
during labour, causing a labral tear in her left hip. Held: appeal
allowed. The judgment is set aside and a new trial ordered. The judge
misunderstood the evidence of Dr. Gilbart, the plaintiffs expert in
orthopaedic surgery. Dr. Gilbart opined that the leg drop caused the
injury, but the respondent presented him with a factual scenario surrounding
the leg drop which differed from the one she recounted at trial and was accepted
by the trial judge. Since the judge mistakenly adopted Dr. Gilbarts
opinion on the basis it assumed the same version of events told at trial, the
judgment is fatally flawed. If the judge had acknowledged the discrepancy
between the version of events he accepted and the one told to Dr. Gilbart,
and nevertheless inferred causation was made out, this Court may have been
compelled to defer to that inference. However, that was not the case. Since
this Court is not well suited to drawing inferences from all of the evidence in
a case such as this, a new trial is required.

Reasons
for Judgment of the Honourable Mr. Justice Willcock:

Introduction

[1]

This is an appeal from a judgment finding Nurse Felicia Tucker and the
appellant, B.C. Womens Hospital (the Hospital), liable to the respondent in
negligence, for reasons indexed at 2015 BCSC 1941. The respondent cross appeals
the assessment of damages.

[2]

The trial judge found Nurse Tucker, a nurse employed by the defendant
Hospital, to have breached a duty of care owed to the respondent on May 1,
2009, when, having placed the respondents left foot on a birthing bar while
she was under the influence of an epidural anaesthetic and unable to control
her legs, Nurse Tucker allowed the respondents leg to drop. That was
found to have torn the labrum of the respondents left hip and damaged the surrounding
extra-articular soft tissues. The trial judge found that injury to have caused
pre‑existing early degenerative changes to Ms. Nelsons acetabulum,
associated with a congenital condition, to become symptomatic.

Judgment at Trial

Breach of Duty of Care

[3]

The appellant vigorously contested the respondents version of the
events surrounding the May 1, 2009 delivery. There was no dispute that
during the respondents prolonged labour, a birthing bar was attached to her
bed. The purpose of the bar was to permit the respondent to adopt a water-ski
position, pulling on a towel wrapped around the birthing bar, so as to enable
her to push more strongly through contractions. There was a dispute with
respect to how the bar was used. At trial, the respondent testified that she
was encouraged to place her feet on top of the birthing bar, to rest, between
contractions and that on one occasion when she was doing so, her left leg was
permitted to fall laterally off the bar.

[4]

The appellant led evidence to the effect that patients legs are never
left to rest atop the birthing bar, that did not occur on this occasion and the
plaintiffs evidence that it happened was not worthy of credit because she had
given earlier statements inconsistent with that version of events.

[5]

The trial judge concluded:

[90]

Having considered all
of the evidence, not just that referred to in these reasons, I accept Ms. Nelsons
evidence that Ms. Tucker and Dr. Beaudoin placed her feet on top of
the birthing bar between contractions, with Ms. Tucker supporting her left
leg and Dr. Beaudoin supporting her right, that Ms. Tucker let go of
her left leg momentarily, and that it dropped as far as bed level.

Causation

[6]

Causation was also vigorously contested. The respondent has a congenital
malformation of the left hip, femoral acetabular impingement (FAI). The edge
of the socket of her left hip, the acetabulum, protrudes and overhangs the head
of the femur so that it impinges on the femoral head when the hip joint moves
in certain ways. She now suffers from symptoms associated with degenerative
deterioration of the left hip joint. In her case, the FAI is characterized as pincer-type
FAI because the impingement is on the front of the joint. That is common; one
expert testified that between 10% and 40% of the population have radiological
findings of pincer-type FAI. The appellant attempted to establish that patients
with FAI are predisposed to labral tears in labour and predisposed to
degeneration of the hip joint generally, particularly when they are as
physically active as the respondent was. They argued that the degeneration of
the respondents left hip is unrelated to her leg being dropped in labour, and that
degeneration would have caused the symptoms complained of in any event. They
argued most strongly that the medical history and the plaintiffs own reports
to her treating doctors were inconsistent with her evidence at trial and irreconcilable
with her having suffered a torn labrum in May 2009.

[7]

Having considered the evidence, that a degenerative tear will cause intermittent
symptoms of pain and clicking for months to years, and accepting the
respondents testimony that she had no symptoms consistent with a torn labrum
before childbirth but symptoms thereafter, the judge concluded that Ms. Nelsons
labrum was torn during her labour and delivery at B.C. Womens Hospital. He then
reviewed the evidence of two expert witnesses, orthopaedic surgeons Drs. Gilbart
and McGraw, with respect to whether the labral tear might have been a result of
normal birthing practices and he weighed competing views on whether the
incident described by the respondent could have caused the tear.

[8]

He noted that there was little evidence of tears occurring in the usual
course of labour. In suggesting that might occur, Dr. McGraw had relied on
two articles, one of which discussed three cases of labral tear following
childbirth. In two of those cases the patients had suffered hip and groin pain
during pregnancy. The other study considered ten cases, four of which followed
a specific forceful event in labour. The judge concluded, at para. 35: This
is a sufficiently weak scientific foundation that I view the possibility that a
labrum can tear during normal delivery as theoretically possible, but unlikely
in this case.

[9]

That conclusion was also founded upon the opinion of Dr. Gilbart:

[36]

Dr. Gilbart states
that labral tears are not commonly suffered during childbirth, and he has not
seen it happen in his practice, during which he has seen 1,800 labral tears
associated with other pathology. Dr. Sun, Ms. Nelsons family doctor
until 2013, had not seen a labral tear from vaginal delivery since she started
her practice in 1989.

[10]

Addressing the extent of the pre‑existing changes to the hip joint
attributable to the FAI, he described Dr. Gilbart as the only person who
actually saw the interior of Ms. Nelsons left hip and accepted his
evidence that there was no evident wear and tear damage to the respondents labrum
that might have initiated osteoarthritic changes.

[11]

When later assessing damages the judge noted:

[142]

I do not find that Ms. Nelsons
hip would inevitably have become symptomatic, although the possibility exists
that her FAI and early degenerative change might have caused symptoms, in which
case it is impossible to predict when symptoms might have begun, or how they
would have progressed if they did manifest themselves.

[12]

The judge then addressed the argument, founded upon Dr. McGraws
evidence, that simply dropping the leg could not cause a
de novo
tear
of the acetabular labrum because such an event would not result in the forces
of axial-loading, rotation and possible hyperextension that might cause such a
tear. He rejected that evidence for a number of reasons: Dr. McGraw had
conducted his own investigation and the judge was unable to determine how the
event was re‑enacted, making it very difficult to determine what facts or
assumptions Dr. McGraw relied on; he found Dr. McGraw to have
considered the leg to have dropped from a position different from that
described by the respondent at trial; and by expressing an opinion on appropriate
nursing practices, Dr. McGraw had introduced a taint of advocacy into
his evidence.

[13]

On the issue of causation, the judge preferred the evidence of Dr. Gilbart,
summarized as follows:

[105]    In Dr. Gilbarts opinion, set out in his report
dated November 7, 2013, The injuries which she sustained during this
mechanism of her leg being dropped were soft tissue in nature and, It is
probable that the mechanism of this drop injury caused her left hip labral
tear.

[106]    But that does not end the inquiry because, during
his arthroscopic examination of Ms. Nelsons left hip, Dr. Gilbart
observed, in addition to the torn labrum, cartilage softening indicative of
some early degenerative change, or mild focal osteoarthritis, on Ms. Nelsons
acetabulum or hip socket. He also found moderate inflammation throughout her
hip. In his opinion, the sources of Ms. Nelsons pain are as follows:

It is possible that once the labrum
has been torn, despite it being repaired the hip still is persistently painful.
It is probable that some of Ms. Nelsons pain is also emanating from the
small area of articular cartilage damage on the acetabulum that was noted at
the time of the hip arthroscopy surgery. It is also probable that some of her
pain is coming from some ongoing inflammation, or synovitis within the hip. She
probably also has some pain in the extra-articular soft tissues surrounding the
left hip[.]

[107]    Of the four sources of
pain listed by Dr. Gilbart, I find on his evidence that at least the torn
labrum and what he describes as the extra-articular soft tissue injuries
surrounding the left hip were directly caused by the leg drop.

Quantum of Damages

[14]

The trial judge accepted evidence that as a result of the May 2009
injury the respondent had suffered mild degenerative changes to her hip that
were not progressing quickly (because her hip had not significantly
deteriorated since 2009) and synovitis (inflammation of the joint related to that
osteoarthritis), and injury to the soft tissues surrounding the hip.

[15]

The assessment of damages hinged, to a large extent, upon the prospect
of successful treatment of the degenerative hip. The judge understood that Dr. Gilbart
and Dr. McGraw both considered hip replacement surgery to be a viable treatment
option, although their opinions differed on when and if such an operation ought
to be performed. Dr. Gilbart favoured conservative treatment until
symptoms mandate surgery. The trial judge preferred the opinion of Dr. McGraw
in relation to treatment and accepted his view that given the respondents
clinical course, she would likely request a hip replacement by the age of 50 years
(five years from the date of trial). He also accepted Dr. McGraws opinion
that a successful hip arthroplasty carries a 94%
chance of patient satisfaction  [and] following a
successful arthroplasty, there would be no restrictions in her daily activities.
He noted:

[134]    Ms. Nelson
testified that she had not discussed hip replacement with anyone, but if she
were told by a qualified specialist that she was a suitable candidate, and that
hip replacement would make her as good as new, she would have the surgery.

[16]

He assessed damages on the basis that the respondent was motivated and willing
to accept surgery and the probability that much of Ms. Nelsons disabling
pain can be dealt with surgically. Bearing in mind that the hip replacement
would have to be repeated at least once, more likely twice, he awarded
$100,000 in non‑pecuniary damages for pain and suffering and loss of the
amenities of life.

[17]

He found the respondents injuries to have prevented her
from returning to work at her old
employer, or achieving any significant income from other employment. In the
period of
six years and four
months from her injury to trial the respondent had earned little income from
employment, but had been paid disability benefits and received Employment
Insurance maternity benefits.
He accepted that the respondent would have
returned to work had she not been injured and that her income, had she done so,
would have been in the range of $150,000 per year. After accounting for the
effect of her maternity leave, the judge awarded the respondent $775,000 (equivalent
to five years and two months income) for income and opportunity loss from the
incident to trial.

[18]

In relation to the claim
for loss of future income or income-earning capacity, he held:

[159]    Consideration of future
earnings capacity loss is inevitably coloured by my conclusion that much of Ms. Nelsons
function can be restored to her through hip replacement surgery. While she
cannot be faulted for not having the surgery before now, as her own medical
advisors have not recommended it, it would be unjust in my view to order the
defendants to continue to pay substantial damages for a loss that is avoidable
through relatively low-risk medical treatment with a very good chance of
success.

[19]

Considering the medical evidence, he held (at para. 160):

Ms. Nelsons positive
response to the prospect of hip replacement surgery fortifies my conclusion
that the surgical option will be pursued sooner rather than later, and I
conclude Ms. Nelson will have the surgery and be through her recovery in
two years, making discounting less important for the near future.

[20]

For future loss of earning capacity, he awarded $275,000, just less than
two years income.

Grounds of Appeal and Cross Appeal

[21]

The appellant advances eight grounds of appeal. Three relate to the
manner in which the trial judge addressed the evidence of negligence, in
particular the respondents assertion that Nurse Tucker rested her left leg on
the birthing bar. Two grounds are procedural; they relate to the trial judges
admission into evidence of similar fact evidence and evidence in reply. Three grounds
relate to the trial judges consideration of the evidence of causation of
damages.

Evidence of Negligence

[22]

The appellant says the trial judge ought to have given weight to the
evidence of a witness, Angela King, that she had never seen a birthing bar used
in the manner suggested by the respondent in 21 years of nursing practice.
The appellant says the trial judge erred in finding an inconsistency between the
evidence of Nurse Tucker on examination for discovery and at trial. Last, the
appellant says the judge erroneously considered the honest admission of Dr. Beaudoin,
the respondents husband, that he did not observe Nurse Tucker drop the
respondents leg, to make the balance of his testimony more credible.

Procedural Grounds

[23]

The appellant says the trial judge erred in permitting the respondent to
lead what the appellant considers to be similar fact evidence: that patients
had been encouraged by the obstetrical nursing staff to rest their legs on a
birthing bar in other cases. Further, the appellant says the judge erred in
allowing expert evidence in reply, the evidence of Nurse Christina Stahl, with
respect to the use of birthing bars at Vernon Jubilee Hospital, without notice.

Evidence of Causation

[24]

Most significantly, the appellant says the judge erred in finding the
plaintiff to have established causation of damages when there was no evidence
that allowing her leg to drop from the position she described at trial could
have caused a labral tear. The Hospital argues that the trial judge erred in
finding that Dr. Gilbart must have assumed the birthing bar to have been
involved in the mechanism of injury when his opinion was clearly based on a
different scenario. Further, the appellant challenges the finding that a labral
tear occurred during labour on the grounds that the judge erred in failing to
address the nursing evidence of a lack of complaint of injury after the
respondents epidural wore off.

The Cross Appeal

[25]

The respondent cross appeals from the assessment of damages on the
grounds that the judge erred in addressing the evidence with respect to the
efficacy and timing of hip replacement surgery, by imposing an affirmative duty
on the respondent to undergo such surgery within two years, and by failing to
account for the contingency of a less-than-optimal result.

Applicable Law

[26]

The appellant challenges the basis upon which findings of
fact were made: the finding that
birthing bars have been used at the Hospital
in the manner suggested by the respondent; the finding that the evidence of
Nurse Tucker on examination for discovery was inconsistent with her evidence at
trial; the finding that Dr. Beaudoin was a credible witness; and, most
strenuously, the finding that allowing the respondents leg to drop from the
position she described at trial caused the labral tear. The last of these
findings was an inference drawn primarily from the opinion evidence of expert
witnesses. In order to succeed on such an appeal, the appellant must establish
that
the judge made a
manifest error, ignored conclusive or relevant evidence, misunderstood the
evidence, or drew erroneous conclusions from it.

[27]

In
Toneguzzo-Norvell (Guardian ad litem of) v.
Burnaby Hospital
, [1994] 1 S.C.R. 114,
McLachlin J
. (
as she then was
)
for the
Supreme Court of Canada said at 121‑122:

It is by now well established
that a Court of Appeal must not interfere with a trial judges conclusions on
matters of fact unless there is palpable or overriding error. In principle, a
Court of Appeal will only intervene if the judge has made a manifest error, has
ignored conclusive or relevant evidence, has misunderstood the evidence, or has
drawn erroneous conclusions from it: ... A Court of Appeal is clearly not
entitled to interfere merely because it takes a different view of the evidence.
The finding of facts and the drawing of evidentiary conclusions from facts is
the province of the trial judge, not the Court of Appeal.

I agree that the principle of non-intervention
of a Court of Appeal in a trial judges findings of facts does not apply with
the same force to inferences drawn from conflicting testimony of expert
witnesses where the credibility of these witnesses is not in issue. This does
not however change the fact that the weight to be assigned to the various
pieces of evidence is under our trial system essentially the province of the
trier of fact, in this case the trial judge.

[28]

In
Housen v. Nikolaisen
, 2002 SCC 33,
Iacobucci
and Major JJ., for the majority, said (at para. 1):

A proposition that
should be unnecessary to state is that a court of appeal should not interfere
with a trial judges reasons unless there is a palpable and overriding error.
The same proposition is sometimes stated as prohibiting an appellate court from
reviewing a trial judges decision if there was some evidence upon which he or
she could have relied to reach that conclusion.

[29]

The Court cited with approval the following passage from
Underwood v. Ocean City Realty Ltd.
(1987), 12
B.C.L.R. (2d) 199 (C.A.), at 204:

The appellate court
must not retry a case and must not substitute its views for the views of the
trial judge according to what the appellate court thinks the evidence
establishes on its view of the balance of probabilities.

[30]

In
H.L. v. Canada (Attorney General)
,
2005
SCC 25, [2005] 1 S.C.R. 401,
Fish J.
observed:

53

The standard
of review for error has been variously described. In recent years, the phrase
palpable and overriding error resonates throughout the cases. Its application
to
all
findings of fact  findings as to what happened  has been
universally recognized; its applicability has not been made to depend on
whether the trial judges disputed determination relates to credibility, to primary
facts, to inferred facts or to global assessments of the evidence.

[31]

In summary in that case,
Fish J. wrote:

74

I would
explain the matter this way. Not infrequently,
different
inferences may
reasonably be drawn from facts found by the trial judge to have been directly
proven. Appellate scrutiny determines whether inferences drawn by the judge are
reasonably supported by the evidence. If they are, the reviewing court cannot
reweigh the evidence
by substituting, for the reasonable inference
preferred by the trial judge, an equally  or even more  persuasive inference
of its own.  This fundamental rule is, once again, entirely consistent
with both the majority and the minority reasons in
Housen.

[Emphasis in
original.]

[32]

Findings of fact made by a trial judge in the face of competing expert
opinions receive the same deference as other findings of fact:
Slocan Forest
Products Ltd. v. Trapper Enterprises Ltd.
, 2011 BCCA 351;
Tangerine
Financial Products Limited Partnership v. Sutherland
, 2013 BCCA 283.

[33]

That is true, in particular of inferences of causation:
Laurentide Motels Ltd. v. Beauport (City)
, [1989] 1 S.C.R. 705
.

[34]

More recently, in

British
Columbia (Workers Compensation Appeal Tribunal) v. Fraser Health Authority
,
2016 SCC 25, in the context of an appeal from an administrative tribunal, the court
characterized a finding of causation as a finding of fact attracting deference:

[
30
]

The Tribunals conclusion that the workers breast cancers were
occupational diseases caused by the nature of their employment was a finding on
a question of fact (
Ediger v. Johnston
, 2013 SCC 18, [2013] 2 S.C.R. 98,
at para. 29). That finding is therefore entitled to deference unless
Fraser Health demonstrates that it is patently unreasonable  that is, that
the evidence, viewed reasonably, is incapable of supporting a tribunals
findings of fact (
Toronto (City) Board of Education
, at para. 45).

[35]

The Court noted that the statutory burden of proof
on workers under compensation schemes is not the stringent standard in civil
cases, but that was of limited importance:

[
33
]

All that said, the central problem in the handling of causation in the
courts below arose not in their failure to have appropriate regard to the less
stringent standard of proof required by s. 250(4), but from their
fundamental misapprehension of how causation  irrespective of the standard of
proof  may be inferred from evidence.

[36]

That process of inferring causation was elaborated
upon as follows:

[
38
]

The presence or absence of opinion evidence from an expert positing (or
refuting) a causal link is not, therefore, determinative of causation (e.g.
Snell
,
at pp. 330 and 335). It is open to a trier of fact to consider, as this
Tribunal considered, other evidence in determining whether it supported an
inference that the workers breast cancers were caused by their employment.
This goes to the chambers judges reliance upon the Court of Appeals decisions
in
Sam
and
Moore
and to Goepel J.A.s statement that there
must be positive evidence linking their breast cancers to workplace
conditions. Howsoever positive evidence was intended to be understood in
those decisions, it should not obscure the fact that causation can be inferred
 even in the face of inconclusive or contrary expert evidence  from other
evidence, including merely circumstantial evidence. This does not mean that
evidence of relevant historical exposures followed by a statistically
significant cluster of cases will, on its own, always suffice to support a
finding that a workers breast cancer was caused by an occupational disease. It
does mean, however, that it may suffice. Whether or not it does so depends on
how the trier of fact, in the exercise of his or her own judgment, chooses to
weigh the evidence. And, I reiterate: Subject to the applicable standard of
review, that task of weighing evidence rests with the trier of fact  in this
case, with the Tribunal.

[37]

The challenge to the disputed findings must, therefore, be approached
with care and the privileged position of the trier of fact must be respected.

[38]

Finally, in relation to the standard of review, it
should be noted that the appellant challenges the trial judges exercise of his
discretion to permit the respondent to call evidence in reply and to call what
they say amounts to expert opinion or similar fact evidence without notice. An
appellant challenging the exercise of the trial judges discretion must
establish that the judge erred in principle:
Werian Holdings Ltd. v.
Prudential Assurance Co.
(1995),
58 B.C.A.C. 283.

Analysis

Evidence of Causation

[39]

The ground of appeal most forcefully advanced was that there was no
support in the evidence for the trial judges conclusion that the respondents
labrum was probably torn as a result of the error on the part of Nurse Tucker.
That argument can only be appreciated in light of both the manner in which the
respondents case emerged and the expert testimony at trial.

[40]

The respondents causation case was founded on the evidence of Dr. Gilbart,
her treating orthopaedic surgeon. In his first report, dated November 7,
2013, Dr. Gilbart described the facts and assumptions upon which his
opinion was based. They included:

Ms. Nelson was positioned in the supine position with
her hips flexed, abducted and externally rotated (frog leg position).

Her partner was holding her right leg, and the nurse was
holding Mr. Nelsons left leg.

Ms. Nelson was instructed to continue to push during the
delivery.

When Ms. Nelson was still in the frog-leg position, the
nurse who was holding her left leg turned and walked away from Ms. Nelsons
bedside, letting go of her left leg.

Ms. Nelson had no motor or
sensory function in her left leg, and as a result her left leg dropped from
this frog-leg position in an uncontrolled dead weight motion.

[41]

Based on that scenario, Dr. Gilbart expressed the following
opinions:

Temporally, the condition of Ms. Nelsons left hip pain
is related to the incident which occurred on May 1, 2009.

It is probable that this episode
in which her left leg was dropped caused her current left hip symptoms. It is
probable that the mechanism of this drop injury caused her left hip labral
tear.

[42]

He did not express an opinion on the precise mechanism of injury or
relate it to the height from which the leg was dropped, the angle of the leg or
the flexion of the hip or knee. He does not refer to a birthing bar or to the
respondent being at rest or stretching her legs when her leg was dropped. He
clearly assumed the patients legs to have been held in a frog-leg position
when the left leg was dropped. He described that position in cross-examination
as hips in a flexed and abducted position with legs out to the side in an
externally-rotated position.

[43]

In a subsequent opinion, dated November 14, 2014, Dr. Gilbart
addressed the respondents progress and her prognosis but he did not revisit
the question of causation.

[44]

Ms. Nelson acknowledged that she did not tell Dr. Gilbart her
leg fell from the birthing bar. She did not remember the use of the bar or her
adoption of the ski position until after seeing Dr. Gilbart. She also
acknowledged in cross-examination that she could not reach the birthing bar
with her ankles with her knees drawn up to her chest.

[45]

The appellant relied upon the expert opinion of Dr. McGraw. In his
report dated November 26, 2014, Dr. McGraw describes the history of
injury as recounted by the respondent, as follows:

I was positioned on my back for pushing. The nurse put a bar
up. I had no feelings in my legs. My husband held my right ankle and the nurse
held my left ankle. The ankles were on top of the bar. She then said, My
husband was holding the right leg and the nurse was holding the left leg. Ms. Nelson
said her head was raised on the bed. That is to say, her legs were up, balanced
on the bar with the ankles touching the bar. She said, I was not comfortable.
She said, I did not like being there.

Ms. Nelson said, The nurse
stepped away from the bed and let my leg go. I could not feel the leg but saw
it fall. The leg fell down either onto the bed or off the bed. I cant recall
which. She emphasised, There was no feeling in the left leg.

[46]

Dr. McGraw expressed the following opinion on causation:

If one assumes that the preoperative condition of the left
acetabular labrum was normal, the force required to cause the changes seen in
the MRI study [Jan. 15, 2014] and confirmed at surgery, in the writers
view, would have to have been significant. In the writers view, for a de novo
tear of the acetabular labrum, there would have to be the usual forces of
axial-loading (weight bearing), rotation and possible hyperextension.

In the writers view, these forces would not be consistent
with those that are proposed with the injury. The legs were elevated (hips
flexed), knee presumably slightly flexed and leg abducted away from the body.
It is suggested that the leg was dropped from this position onto the bed. In
the writers view this event is inconsistent with the pathology of labral tear
described. The engineering report indicates that it would not be possible for
the legs to have been on the birthing bar as described by Ms. Nelson.

The birthing position, with one
leg held by the husband and one leg held by the nurse in the frog-leg position,
would be consistent with current obstetrical practice. The writer is of the
view that if the leg were allowed to descend from this position to the bed
unrestricted, it would not be of sufficient shearing force to result in a de
novo tear of the acetabular labrum.

[47]

In his January 9, 2015 report, Dr. McGraw again expressed the
view that the forces involved in the incident would not be associated with
sufficient axial loading, rotation and impingement to result in a tear of the
labrum. Again, however, he described the incident as dropping of the
respondents leg from a frog-leg position.

[48]

In cross-examination at trial, Dr. McGraw made it clear that
although Ms. Nelson had told him her leg had dropped from the birthing
bar, he had addressed only the question whether a labral tear could have
occurred as a result of the leg dropping from a frog-leg position, with knees
drawn up as far as possible to the sides of the abdomen with legs apart, as
illustrated in a photograph in evidence depicting what the nursing staff
described as frog-leg position. In that position the legs are not extended and,
as Dr. McGraw suggested and the respondent conceded, cannot reach the
birthing bar. Dr. McGraw says a drop from that position would not have
generated sufficient shearing force. He discounted the report that the
patients legs had been resting on the birthing bar, considering that to be
improbable unless the legs were extended into a different position.

[49]

Neither expert, therefore, specifically addressed whether letting the
leg drop from the birthing bar could cause a labral tear.

[50]

Having found that the respondents leg was dropped from the birthing
bar, the judge, as noted above, rejected Dr. McGraws opinion on
causation, in part because he had not turned his mind to the scenario described
by the respondent. The judge wrote:

[103]    I place less weight on Dr. McGraws
opinion because I have very little evidence about the demonstration given by
the head nurse, or the conversations Dr. McGraw had during the
demonstration, and because his understanding of the frog-leg position, taken
from his discussion with the head nurse, is not the position I have found Ms. Nelsons
left leg was in when it dropped. Additionally, by conducting his own
investigation, Dr. McGraw has made it very difficult to determine what
facts or assumptions he relied on in forming his opinions.

[51]

He had earlier described Dr. Gilbarts evidence with respect to
whether Ms. Nelsons labrum was torn as a result of her leg dropping while
she was under Nurse Tuckers care as follows:

[38]

Dr. Gilbarts
opinion is that it was, based in part on the temporal relationship between the
leg drop, as Ms. Nelson described it to him, and the onset of left hip
pain. As Ms. Nelsons description included that her leg had dropped from
the top of a birthing bar,
Dr. Gilbarts opinion is also based in part
on that assumption
.

[Emphasis added.
]

[52]

That is not an accurate description of Dr. Gilbarts evidence. It
is not correct to say Dr. Gilbarts opinion was based on the assumption
that the respondents leg dropped from the birthing bar. The respondents
description of her injury at trial was that her leg had dropped from the top
of a birthing bar but that was not the description of the injury she provided
to Dr. Gilbart.

[53]

The appellant says the trial judge failed to appreciate that the
position that Dr. Gilbart was assuming for his causation opinion was
radically different from the position that the plaintiff was  describing at
trial.

[54]

The respondent says although Dr. Gilbart described the respondent
as being in the frog-leg position when her leg was dropped, that should not be
equated with the McRoberts position (which the respondent says has the knees
acutely flexed and drawn up toward the chest). The respondent says it was
possible for the respondent to have been in what might be described as a
frog-leg position with her legs elevated, flexed at the hip, abducted,
externally rotated and legs slightly bent at the knee while her ankles rested
on the birthing bar. So, the respondent says, Dr. Gilbarts evidence does
not address a scenario that differs from the facts as found by the trial judge.

[55]

The trial judge dealt with the evidence with respect to what was meant
by frog-leg position as follows:

[53]

The
evidence revealed a range in what witnesses meant or understood by frog-leg as
a position employed during labour and delivery. At one end of the range is the
McRoberts position, in which the birth mothers hips are flexed so that her
knees are drawn up close to her chest, or, as described by the witness Ms. Stahl,
where the patient is on her back with her legs up on either side of her body or
as far back as she can get them. That generally corresponds with Dr. McGraws
understanding of the frog-leg position, based on an explanation given to him by
nurses at B.C. Womens Hospital while he was investigating for his written
opinion. Ms. Nelson was not in this position until after Ms. Tucker
went off shift, as described by Dr. Beaudoin and as recorded in the
hospital chart.

[54]

At the other end of the
range is Ms. Nelsons description. In her evidence in chief she referred
to it as having her knees out a bit, and she referred to  the position of her
legs position shown in some photos taken when she went back to the defendant
hospital to inspect birthing beds, and took the opportunity to re-enact having
her feet and ankles on a birthing bar. At trial she referred to this as a
frogs legs position. Those photos show Ms. Nelsons elevated legs
slightly bent at the knee and slightly flexed at the hip, but her knees are
nowhere near her chest. This is not far off the description given by Dr. Mangat,
who has been Ms. Nelsons family doctor since August 2012. When he was
asked what he understood the frog position to mean, he answered that the
patient was supine on her back with her knees slightly flexed and rotated.

[56]

After citing from the cross-examination of the respondent, the trial
judge observed:

[56]

It appears from the
emphasized interjection that counsel and the plaintiff had somewhat different
views on what the phrase frog-leg was meant to convey. In argument, defence
counsel referred to a patient whose legs flexed up towards her chest, a
description that coincides with the McRoberts position described by Ms. Stahl,
and equated the frog-legs position to the McRoberts position. As indicated, Ms. Nelson
was not in the McRoberts position until after Ms. Tucker went off-shift,
and before she was taken to the operating room for the forceps-assisted
delivery.

[57]

However, Dr. Gilbart did not make the distinction between the
frog-leg and McRoberts positions that counsel urges upon us; nor did he address
the distinction described by the trial judge. He did not say whether he was
assuming the respondents knees were slightly flexed or fully flexed with her
legs drawn up toward her abdomen as far back as she could get them. His
description of a frog-leg position is similar to Dr. McGraws description.
Dr. Gilbart described the position, in his examination in chief, as:
[P]atient is lying supine  and the patients hip is brought up into a flexed,
an abducted
their leg is out to the side and an externally-rotated
position
 (emphasis added). Dr. McGraws description, taken from his
report, is: The legs were elevated (hips flexed), knee presumably slightly
flexed and
leg abducted away from the body
 (emphasis added).

[58]

The judge rejected Dr. McGraws evidence, in part because his
understanding of the frog-leg position was not the position the judge found Ms. Nelsons
left leg was in when it dropped. The same appears to be true of Dr. Gilbarts
understanding of the frog-leg position.

[59]

It might have been open to the judge to draw a common sense
inference sufficient to resolve the causation issue. But he did not draw that
inference. Rather, he appears to have adopted the opinion of Dr. Gilbart
in the mistaken belief that Dr. Gilbart based his causation opinion on the
assumption that the respondents leg had dropped from the top of a birthing
bar. In fact, two eminently qualified orthopaedic surgeons had differing
opinions on the question whether letting a leg drop from a frog-leg position could
have caused a labral tear but neither was asked to specifically consider
whether dropping the leg from a birthing bar in the manner described by the
respondent (and accepted by the judge) could have caused such an injury. The
judge found there was a temporal connection between the labour and delivery and
the emergence of symptoms. The key causation issue, however, required him to
determine whether dropping the respondents leg from the birthing bar would
generate sufficient shearing force to result in a
de novo
tear of the
acetabular labrum. I cannot say there was no evidence in support of the
respondents claim but it is clear there was an error in weighing the causation
evidence.

[60]

In what was largely a contest between two experts, the trial
judge rejected one, believing that expert based his opinion on an inaccurate
assumption, and accepted the other experts views in the mistaken belief the
latter had not done the same thing. It cannot be said that the trial judge
regarded the difference between the positions as immaterial; it was expressly
relied upon as one basis for rejecting the evidence of Dr. McGraw.

[61]

In the circumstances, in my view, the appellant can fairly say
that the case meets the test described by Laycraft J.A. in
Whitehouse
v. Reimer
(1980), 116 D.L.R. (3d) 594 (Alta. C.A.) at 595; and adopted
by Doherty J.A. in
R. v. Morrissey
(1995), 22 O.R. (3d)
514 (C.A.); and by Bennett J.A. in
Tambosso v. Holmes
, 2016 BCCA
373:

Where a principal issue on a
trial is credibility [or I would say, reliability] of witnesses to the extent
that the evidence of one party is accepted to the virtual exclusion of the
evidence of the other, it is essential that the findings be based on a correct version
of the actual evidence. Wrong findings on what the evidence is destroy the
basis of findings of credibility [or reliability].

[62]

In my view
,
the conclusion
drawn by the trial judge from the testimony of Dr. Gilbart
is undermined by
a manifest error.
That being the case, I am
compelled to find that the judgment is fatally flawed.

[63]

There is some support, for example, in the judgment of this Court in
Toneguzzo‑Norvell
(Guardian ad litem of) v. Burnaby Hospital
(1992), 73
B.C.L.R. (2d) 116,

revd on other grounds, [1994]
1 S.C.R. 114, for the proposition that we are able to weigh expert opinion
evidence when there has been a misapprehension of that evidence and substitute
our assessment of the case for that of the trial judge. In that case this Court
held, at 121‑122:

There is no
issue with respect to the veracity of these expert witnesses. As the trier of
fact the trial judge was free to reject or adopt in whole or in part the
evidence of experts he found qualified but in the absence of findings of
credibility this court is in as good a position as the trial judge to review
the expert evidence and to draw inferences of fact therefrom:
New Brunswick
(Workmens Compensation Board) v. Greer
(1973), [1975] 1 S.C.R. 347, 7
N.B.R. (2d) 171, 42 D.L.R. (3d) 595, 1 N.R. 99. It should undertake this task
if the trial judge has failed to take into account some obvious feature of the
evidence or has misapprehended its significance:
Croke (A Minor) v.
Wiseman
, [1982] 1 W.L.R. 71, [1981] 3 All E.R. 852 (C.A.), per Griffiths L.J.
at p. 859 (All E.R.).

[64]

In the case at bar, however, the drawing of appropriate inferences from
all of the evidence is certainly not, in my view, a task for which this Court
is suited. As the Supreme Court of Canada noted in
Toneguzzo-Norvell
at 122:
[T]he
weight to be assigned to
the various pieces of evidence is under our trial system essentially the
province of the trier of fact, in this case the trial judge.

[65]

I would order a new trial.

[66]

That being the case, it is my view that it would not be helpful and might
adversely affect the re‑trial for us to address the appellants
submissions with respect to the adequacy of the trial judges assessment of the
evidence.

[67]

It might be of assistance to the parties, however, to have our
considered views on the alleged procedural errors.

Similar Fact Evidence in Reply

[68]

The trial judge held the reply evidence of Nurse Stahl, Ms. Mason
and Ms. Hastings to be admissible following a
voir dire
, for
reasons indexed as 2015 BCSC 2489. The appellant says he erred in allowing the
respondent to adduce what they submit was similar fact evidence in reply. I
would not have acceded to that argument.

[69]

First, it was appropriate to permit the evidence to be called in reply. It
was not incumbent upon the respondent to establish that nurses at the Hospital
have occasionally encouraged patients in labour to rest their feet on the
birthing bar. Nor was it necessary for the respondent to show that birthing
bars are commonly used for that purpose. It mattered not to the respondent
whether her case was an anomaly. As the judge noted, at para. 5 of his
ruling on the
voir dire
, when Ms. Stahl testified in chief in the
plaintiffs case the judge ruled that evidence with respect to the common use
of the birthing bar was not yet relevant evidence because no evidence had
been led at that point by the defendants to suggest that placing feet on a
birthing bar was anything other than normal.

[70]

I agree with the respondents submission that evidence of the use of the
birthing bar in other cases became relevant when the appellant attempted to
refute the respondents claim by leading evidence that placing a patients feet
or ankles atop a birthing bar would:

a)

be literally impossible;

b)

serve no purpose and be harmful to the mother and baby;

c)

be routinely charted, if it occurred;

d)

has never been done at the Hospital; and

e)

has never been
seen or heard of by the nursing staff.

[71]

In my view here, as in
Rudd v. Hayward
, 2001 BCCA 454,
where a similar objection was dismissed at para. 16, the evidence was
adduced in a proper sequential manner. The trial judge cannot be said to have
erred in permitting the respondent to lead rebuttal evidence that apparently
met the test described in
Sterritt v. McLeod
, 2000 BCCA 318 at para. 28:

evidence responsive to some
point made in the oral evidence of the witnesses called by the defendant.

[72]

I cannot see how an injustice may be said to have been occasioned by the
admission of the evidence; to the contrary, it seems to me appropriate for the
judge to have permitted the respondent to answer the appellants evidence to
the effect that, for many compelling reasons, a birthing bar would never be
used as a leg or footrest at the Hospital. I say that, of course, without
expressing any opinion on the weight that ought to be afforded to such evidence
by the trial judge.

[73]

The argument that the evidence proffered in reply was objectionable,
similar-fact, evidence was dismissed for the following reasons:

[12]

This
is a negligence case. The plaintiff has to show breach of the applicable
standard of care. The evidence, as I apprehend it, tends to establish that it
is not a breach of any standard of care to rest a womans feet on a birthing
bar. The evidence, if accepted, as tendered by the plaintiff, is that this is
virtually routine, at least in the evidence or experience of Ms. Stahl,
and would tend to establish that it is not unreasonable for a woman, with the
assistance of nurses or others, to have her feet placed on top of a birthing
bar to stretch them or to relax them, relax her legs, or to rest them in
between contractions during the delivery process. So it is not at all clear to
me that the evidence in question would tend to establish, if admitted, any form
of discreditable conduct on the part of Nurse Tucker or anyone else at B.C. Womens
Hospital.

[13]

It
is also a feature of similar fact evidence that it tends to focus on the person
in question, in a criminal case the accused, because it is the accuseds prior
similar acts that are in question, or in this case a defendant, whether it is Ms. Tucker
or B.C. Womens. The evidence here says nothing about Ms. Tuckers
previous conduct or actions, and so it is difficult to see how it would qualify
as similar [fact] evidence with respect to her. I do not understand that the
plaintiff complains here that B.C. Womens Hospital was negligent for allowing
its employees to place her feet on top of a birthing bar, so the same reasoning
applies.

[14]

If the evidence
tendered is not evidence of previous discreditable conduct, and I do not think
it is, if it is not evidence of a bad character, and I do not think it is, or
propensity, and I do not think it is, its admissibility would have to be
determined on the usual ground, whether or not it is relevant, and my comments
with respect to whether or not it is appropriate or proper reply or rebuttal
evidence establishes that it is indeed sufficiently relevant to be admissible.

[74]

I agree with that reasoning. The evidence was responsive to the defence
case that the use of a birthing bar for the purpose alleged by the respondent
was unheard of. It was not led as similar fact evidence in the sense in which
that term is ordinarily used. The judge did not err in principle in permitting
this evidence to be adduced.

Expert Evidence in Reply

[75]

The appellant further argues that the evidence of the use of the
birthing bar as a footrest in other instances was expert opinion evidence wrongly
admitted by the trial judge without notice to the appellant. I would not accede
to that argument. While the appellant argues that the trial judge seemed to be
unaware that the
Rules
now require notice in advance of trial of expert
evidence in reply, there is no reference in the judgment on the
voir dire
to any objection to admissibility of the reply evidence
as expert opinion
.
The argument apparently made and addressed by the trial judge related to the
requirement that a party give notice of an intention to lead
similar fact
evidence
. In response to that argument the judge held:

a)

The evidence was not proffered as similar fact evidence;

b)

The appellant had sufficient notice of most of the proposed evidence;
and

c)

If they
were prejudiced by short notice he would consider an application for an
adjournment to respond.

[76]

In response to the argument on appeal on a different footing, that the
reply evidence was
expert opinion
evidence, the respondent says simply
that it was not. It was, rather, evidence of observations made by nurses of
conduct without opinion on the propriety of the conduct. The respondent says the
evidence adduced in reply, like that adduced in
Egli et al v. Egli et al
,
2003 BCSC 1716, and
Anderson
v. Dwyer
, 2009 BCSC
1872,
was not expert opinion evidence because the witnesses drew no
inferences having complex interpretive or diagnostic components. I agree.

The Cross Appeal

[77]

In the circumstances, in my view, it is also unnecessary for us to
address the cross appeal and best not to do so, so as to avoid complicating the
new trial.

Order

[78]

I would allow the appeal, set aside the judgment and order a new trial.

The
Honourable Mr. Justice Willcock

I
agree:

The Honourable Mr. Justice Goepel

I
agree:

The
Honourable Mr. Justice Fitch