IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20100311

Docket:
M034055

Registry:
Vancouver

Between:

Taryn
Burdett, an infant by her

Guardian
Ad Litem Terrence Burdett

Plaintiff

And:

Mohamed
Abdikani Mohamed, Joseph Samuel,

and
Christopher Brent Dubois,

Defendants

And:

Insurance
Corporation of British Columbia

Third Party

Before:
The Honourable Madam Justice Boyd

Ruling on Costs

1.0          
Introduction:

[1]            
This civil jury trial concluded on December 21,
2009 when the jury awarded the plaintiff damages against the defendant Mohamed
Abdikani Mohamed (“Mohammed”) in an amount totalling $1,813,440 (ie. following
20% deduction for contributory negligence).  The claim against the defendant Joseph
Samuel (“Samuel”) was dismissed.  The plaintiff now applies for the following
orders: 

·      
that she recover 100% of her costs of the entire
proceeding at Scale C, payable by the defendants Mohammed and Christopher
Brent Dubois (“Dubois”), pursuant to Rule 57(9) and Section 3 of the Negligence
Act. 

·      
an order pursuant to Rule 57(18)
requiring the defendants Mohammed and Dubois to pay the costs of the successful
defendant Samuel; and 

·      
an order pursuant to Rule 37B that she is
entitled to double costs from the defendants Mohamed and Dubois from November 10,
2009 to present. 

[2]            
The defendant Samuel opposes this application
and cross applies for costs against the plaintiff on the ordinary scale as well
as double costs following September 21, 2006, the date of Samuel’s offer
of settlement.  In the alternative, Samuel seeks costs throughout at Scale C. 

[3]            
The Third Party, Insurance Corporation of
British Columbia (“ICBC”), also opposes the plaintiff’s application and cross
applies for the following orders: 

·       that the plaintiff’s counsel disclose to the Court (or be subject to
examination under oath) as to when he first became aware the defendants’ Mohammed
and Dubois had third party insurance limits with ICBC of $1 million; 

·       that the plaintiff is not entitled to a Sanderson or Bullock
order against the defendants Mohammed and Dubois, regarding any costs
payable by the plaintiff to the defendant Samuel; 

·       that the plaintiff pay to ICBC all costs incurred by ICBC from March 25,
2008 onwards, or such other date as fixed by the Court; 

·       in the alternative, an order that the plaintiff is not entitled to
any costs from ICBC after March 25, 2008; and 

·       that any costs payable, are payable by the plaintiff to ICBC. 

2.0          
Background:

[4]            
This action concerns a motor vehicle accident
which occurred on December 19, 2002 when the plaintiff was riding in a
vehicle owned by the defendant Dubois and driven by the defendant Mohammed,
which vehicle collided with a vehicle owned and driven by the defendant Samuel. 
The Third Party, ICBC, insured Dubois and Mohammed up to $1 million plus court
ordered interest plus costs.  On impact, the plaintiff, who was riding in the
rear passenger seat, was ejected from the vehicle and suffered very serious
head injuries, including a traumatic brain injury. 

[5]            
Following the accident, the defendant Mohammed
was charged with dangerous driving and impaired driving.  The defendants Dubois
and Mohammed were deemed to be in breach of the ICBC insurance policy.  Neither
Dubois or Mohammed participated in any way in this action.  However, as
entitled to under statute, ICBC defended the action pursuant to the provisions
of a Third Party Notice filed in January 2004.  In its Statement of
Defence ICBC took the position the plaintiff’s injuries were suffered as a
result of the negligent actions of the co-defendant Samuel as well as the plaintiff’s
own contributory negligence in failing to wear a seat belt. 

[6]            
The accident gave rise to three separate
claimants, all of whom were passengers in the vehicle driven by Mohammed and
owned by Dubois:  the plaintiff Tarryn Burdett (subject action);  Nicole
Maxwell (BCSC Action No. M060929, Vancouver Registry) (“Maxwell”); and
Sundeep Sahota (BCSC Action No. M105304, New Westminster Registry)
(“Sahota”).  In the event that neither Mohammed or Dubois had any assets of
note, a finding of liability against them alone would result in the three
claimants sharing pro rata the $1 million available under the Third Party
liability limits, minus the $15,838.68 which had already been paid out by way
of material damage. 

[7]            
As of March 28, 2008, ICBC alleges that plaintiff’s
counsel wrote to ICBC’s counsel, indicating his knowledge the policy limit
extended by ICBC to the defendants Dubois and Mohammed was $1 million.

[8]            
As the Burdett action moved forward, Mr. Ragona,
ICBC’s counsel, became increasingly concerned about the mounting costs of the
litigation and the limited insurance funds available for distribution amongst
the three claimants.  On July 15, 2009, facing the impending trial date of
November 23, 2009, Mr. Ragona wrote to the three claimants or their
counsel (at this point Mr. Sahota was self-represented), suggesting that
“the claimants get together to divide among themselves the $1,000,000 third
party liability offered by our client in order to resolves these matters short
of trial.”  On July 24, 2009 ICBC’s counsel followed up that letter by
serving a Notice To Mediate. 

[9]            
Mr. Gordon, the plaintiff’s counsel,
responded by letter on July 27, 2009, noting that he saw no reason to
settle the plaintiff’s claim against Dubois unless he was also able to settle
her claim against the defendant Samuel.  He noted that since no settlement
funds had been offered on behalf of Samuel, the plaintiff’s action would
proceed to trial. 

[10]        
In his letter of reply dated August 26,
2009, and again on submissions on this motion, Mr. Ragona complained that Mr. Gordon’s
letter was not a “meaningful response” to his earlier letter.  As he noted in
his letter: 

We cannot imagine that at the end of trial, that the Jury would not
find the judgment as between the defendants and the plaintiffs to be several,
that is to say, both the plaintiffs, Burdett and Maxwell, to be found
contributorily negligent.  To respond that this matter should proceed to trial
because the insurers of Samuel (who in our view is not liable) will not contribute
to any form of settlement indicates to us that full consideration of this
matter has not so far been undertaken by the respective parties.

[11]        
Once again he suggested that an equitable
division of the proceeds of the third party policy take place as between the
plaintiff, Maxwell and Sahota, and that should any of those plaintiff wish to
proceed to trial they do so only on the issue of Samuels’ liability.  The
letter continues: 

To adopt the
procedure, as suggested, will stop the incurring of costs for all of our
respective clients which, as expressed on a number of occasions, we view as
unnecessary.  Indeed, we would go so far as to suggest that a continuance of
these actions in the manners now framed is an abuse of the judicial proceedings
and a waste of the court’s time and our respective clients’ time.

[12]        
On September 1, 2009, Mr. Cave,
counsel for the defendant Samuel, wrote to the plaintiff’s counsel, withdrawing
Samuel’s earlier Offer to Settle of September 21, 2006 (allowing the
plaintiff to dismiss the action against Samuels with no costs to either party)
and warning that in the event the action proceeded to trial and the action
against Samuel was dismissed, he would rely on this letter in support of an
application for costs. 

[13]        
On October 14, 2009 (the day before a
Mediation scheduled by ICBC and the co-defendant Samuel), Mr. Ragona once
again wrote to all three claimants counsel, repeating ICBC’s offer to tender
the $1 million third party liability limits, minus the amount paid for property
damages, plus court order interest and costs in exchange for a release against
Dubois, Mohammed, and Sahota.  (Regarding Sahota, a late action had recently
been commenced against Sahota regarding his allegedly negligent entrustment of
the vehicle to Mohammed.  That action was later discontinued).  He further
noted that any pro rata division of the policy would be subject to ICBC’s
review and satisfaction that there was an equitable division of the funds. 

[14]        
On November 10, 2009 the plaintiff’s
counsel forwarded a formal Offer to Settle to ICBC’s and Samuel’s counsel,
offering to settle the action for $1.5 million plus costs and
disbursements to be assessed or agreed.  The offer was open for acceptance
until 4:00 p.m. November 20, 2009. 

[15]        
As noted at the outset, the action did proceed
to trial before a judge and jury for four weeks in November-December 2009. 
The jury dismissed the action against the defendant Samuel, but awarded the sum
of $2,266,800 against the defendants Mohammed and Dubois.  Following the
reduction of that award by 20% (to reflect the jury’s finding the plaintiff was
contributorily negligent) reduces the total award to $1,813,440. 

3.0          
Analysis: 

3.1          
Is the plaintiff entitled to 100% of her costs
against Mohammed and Dubois? 

[16]        
Applying the usual rule set out in s. 3(1)
of the Negligence Act, since the jury found the defendants Mohammed and
Dubois 80% liable for this accident and the plaintiff 20% contributorily
negligent, the plaintiff would ordinarily not recover more than 80% of her
costs.  Section 3(1) of the Negligence Act provides:

Unless the court
otherwise directs, the liability for costs of the parties to every action is in
the same proportion as their respective liability to make good the damage or
the loss. 

[17]        
However relying on the decisions in Moses v.
Kim, 2009 BCCA 82 and Moore v. Dhillon (1993), 85 B.C.L.R. (2d)
69 (B.C.C.A.), the plaintiff submits that given the circumstances in the case
at bar, the Court has the discretion to depart from the usual rule.  The
principle consideration will be whether an injustice will result by adhering to
the usual rule: Forsyth v. Sikorsky Corp., 2002 BCCA 231. 

[18]        
For example in Bourelle v. Andrychuk (1998),
61 B.C.L.R. (3d) 191 (B.C.C.A.), the jury found the plaintiff 90% at fault and
the defendant 10% at fault for the accident.  The trial judge awarded the plaintiff
100% of his costs.  On appeal the Court of Appeal reduced the plaintiff’s
recovery for costs to two-thirds, since the time taken for proof of damages was
about two-thirds of the trial time and approximately one-third for liability. 

[19]        
In Moses at trial the plaintiff
pedestrian Moses was held 65% at fault for an accident, while the defendant
motorist Kim was held 35% at fault.  The plaintiff recovered damages of
$218,050, which amounted to approximately one-fourth of what he sought and one-third
of what he was assessed at trial.  The plaintiff was awarded 90% of his taxable
costs. 

[20]        
On appeal, the Court overturned this award of
costs and reduced the recovery of costs to 75%.  The Court of Appeal held the trial
judge erred in considering the plaintiff’s legal fees as well as failing to
consider the defendant’s success in terms of the finding of contributory
negligence.  It is notable that only one of day of evidence and one-half day of
argument in an overall trial of nine days was devoted to the issue of
liability.  The lion’s share of the time at trial concerned the issue of
damages. 

[21]        
Likewise in this case the plaintiff notes that
there are a number of factors the Court can rely upon in deviating from the
usual rule regarding recovery of costs: 

(1)           
the plaintiff suffered very serious injuries; 

(2)           
she was substantially successful in establishing
her damages; 

(3)           
most of the time at trial and most of the
disbursements incurred were with respect to the issue of damages; and

(4)           
the award, after taking in to account the
finding of contributory negligence, was greater than the plaintiff’s offer of
settle and no offers of any payment of funds had been made by or on behalf of
either of the defendants before trial.

[22]        
While none of the parties has provided any real
analysis of the time spent at trial on the issues of liability and damages, my
own recollection is that both issues were hard fought and consumed substantial
time.  I would estimate that approximately 40%–50% of the time was spent dealing
with issues of liability—that is the dynamics of the accident (including a
great deal of expert engineering evidence), the seat belt evidence and the volenti
issue.  (Of that time frame, the seat belt issue consumed no more than
approximately 1– 1½ days of evidence).  Approximately 50%–60% of the trial
addressed the issue of damages.  While the plaintiff recovered a substantial
award, it fell far short of the $7.8 million sought, largely due to a much
reduced future care costs award made by the jury.  That said, the future care
costs issue (including the time spent determining the admissibility of the
plaintiff’s expert report) took no more than approximately 2½ days of the 18
days of evidence at trial. 

[23]        
In the end result, I am satisfied that a fair
and just award of costs would be to award the plaintiff 90% of her taxable
costs, and 100% of her disbursements, other than the disbursements related to
engineering expert fees, in which case she will recover 80% of those
disbursements only.

3.2          
Is the plaintiff entitled to double costs against
the defendants Mohammed and Dubois pursuant to Rule 37B following the date of
her Offer to Settle made November 10, 2009?  Or is ICBC entitled to an
order for party and party costs or increased costs against the plaintiff following
March 28, 2008?

[24]        
The plaintiff seeks double costs from the defendants
Mohammed and Dubois following November 10, 2009, the date she offered to
settle her claims against them for $1.5 million plus costs and
disbursements.  This application turns on the fact that the plaintiff recovered
an award substantially more than the amount she offered to accept.  Applying
the factors set out in Rule 37B(6), she submits she is entitled to double
costs following November 10, 2009. 

[25]        
The Third Party, ICBC’s cross application for
costs against the plaintiff is based on two grounds:  (1) that the plaintiff’s
pursuit of this action following March 28, 2008 amounts to misconduct ; and
(2) that any costs ordered to be payable to the plaintiff must be subject
to the provisions of s. 69 of the Insurance (Vehicle) Regulations. 

A.            
The Misconduct theme and the application of Rule 37B:
 

[26]        
First ICBC submits the plaintiff should be
liable for costs following March 2008 on the basis that following that
date, notwithstanding her legal counsel’s knowledge her ultimate recovery would
consist of no more than her proportionate share of the $1 million
insurance policy limits, she nevertheless insisted on pursuing this action. 
While not suggesting that plaintiff’s counsel’s conduct was scandalous or
tantamount to an abuse of process, Mr. Ragona says the plaintiff’s
determination to pursue her action in the face of that knowledge, at least
constitutes a form of misconduct deserving of some form of reproof or rebuke. 
(Garcia v. Crestbrook Forest Industries Ltd. (1994), 9 B.C.L.R. (3d) 242
(B.C.C.A.)).

[27]        
In the alternative, ICBC submits that the offer
it extended to allow the claimants to share the insurance funds constituted an
offer within the meaning of Rule 37B, and that the reasonableness of that
offer must be viewed from the perspective of the state of the litigation at the
time that offer was made (Insurance Corporation of British Columbia v.
Patko, 2009 BCSC 578). 

[28]        
In this regard, the Third Party’s counsel has
sought disclosure or at least the right to examine the plaintiff’s counsel
under oath in order to confirm the date when plaintiff’s counsel was aware of
the $1 million policy limits. 

[29]        
I reject the submission that ICBC is entitled to
any information concerning the date when plaintiff’s counsel was aware of the
applicable insurance coverage in this case.  I agree with Mr. Gordon that
Rule 26(1.5) and Rule 27(22.2) render inadmissible in evidence any
information concerning an applicable insurance policy unless details of that
policy are “relevant to an issue in the action”.  While ICBC joined itself as a
Third Party to this action, this does not in itself render the Third Party
insurance liability policy relevant.  Indeed the action at bar in no way raises
any issue relating to the policy.  Thus, I conclude that ICBC is not entitled
to any order for disclosure nor an order to compel plaintiff’s counsel to
reveal what knowledge he had about the policy and when. 

[30]        
However while details of the policy itself are
irrelevant, I acknowledge that this does not necessarily exclude consideration
of whether there is, or the amount of, insurance in deciding the issue of
costs.  There are a series of conflicting decisions of our Court regarding
whether the existence of insurance is or is not a relevant factor in
considering a party’s entitlement to double costs under Rule 37B.  (The
Court in Wright v. Hohenacker, 2009 BCSC 996, and Towson v.
Bergman, 2009 BCSC 978 has ruled that the fact there is a well funded
insurer driving the defence is not a factor to be taken into account.  The
Court in Radke v. Parry, 2008 BCSC 1397 and Smith v. Tedford,
2009 BCSC 905 reached the opposite conclusion.) 

[31]        
While I now have some doubts as to the
correctness of my own decision in Radke (at least regarding the
relevance of the insurance issue under Rule 37B), in my view that is of no
particular import here.  All of the decisions cited are concerned with the
matter of whether an insurer’s conduct of the case on behalf of the defendant
is relevant to the issue of costs.  In particular, is the fact that a personal
defendant has the advantage of having his or her defence conducted by an
automobile insurer one of factors to be considered under Rule 37B(6)(c)–ie.
“the relevant financial circumstances of the parties”?

[32]        
In the case at bar, the Third Party ICBC has
turned that factor on its head.  Rather than opposing the submission that
insurance is in any way relevant to the analysis, ICBC now submits that
insurance is not simply one of the factors to be considered, but is the central
factor driving the Court’s analysis under Rule 37B. 

[33]        
Specifically, ICBC submits that knowing of the third
party liability policy limits, the plaintiff was obliged to restrict her claim
against Mohammed and Dubois to a pro rata share of the insurance (as ICBC
offered), regardless of the actual value of her claim.  ICBC asserts that the
plaintiff should be subject to punitive costs (i.e. no entitlement to
costs for any proceedings after date her counsel learned of the policy limits)
for failing to restrict her claim to the value of the insurance money which may
have been available to her. 

[34]        
I entirely reject this submission for several
reasons.  First, I reject the notion that ICBC’s suggestion the three claimants
share the insurance proceeds amounted to an “offer to settle”.  The two letters
which set out ICBC’s proposal in no way meet the requirements of Rule 37B(1)(c)
and therefore cannot trigger the costs options set out in Rule 37B(5). 

[35]        
Further, in my view, given the following
circumstances in this case, the plaintiff cannot be criticized for not
responding to ICBC’s suggestion of a pro rata sharing of the insurance limits:

·      
ICBC’s “offer” asserted that all three injured
plaintiffs (Burdett, Maxwell and Sahota) would have to agree to share the $1 million
insurance policy while also requiring those parties to release Mohammed and
Dubois from any further liability; 

·      
The release of Mohammed and Dubois was being
demanded in circumstances in which the plaintiff had no knowledge of the
whereabouts nor the financial circumstances of either Mohammed or Dubois. 
(Neither of those defendants chose to participate in these proceedings. 
Neither filed an Appearance to the action); 

·      
It was clear that the quantum of Burdett’s claim
would likely be well in excess of any pro rata share of the insurance policy
proceeds; 

·      
In any event the plaintiff’s pro rata share of
the $1 million policy limits could not be determined until all of the
parties, including the plaintiff, reached an agreement concerning the value of
their respective claims.  While Maxwell’s claim was settled prior to the trial
here, the Sahota action remains outstanding and will apparently not proceed to
trial until late 2011.  As to the plaintiff’s own claim, the value of that
claim either had to be determined by agreement with the other claimants or her
action had to proceed to trial and judgment.  At no time did the Third Party
suggest any valuation of the claims;

·      
Finally, it must be noted that ICBC played a vital
role in this action.  While ICBC insists that it never participated in any real
defence of this action, the fact remains that throughout the trial the
Corporation’s position (as articulated in its Statement of Defence) was that
the accident had been caused by the negligence of the co-defendant Samuel as
well as the plaintiff’s own contributory negligence.  As I have articulated in
a previous ruling at trial, ICBC’s counsel originally insisted on the right to
cross examine the co-defendant’s expert witness until I ruled otherwise.  Even
at that stage, ICBC refused to resile from its pleading of contributory negligence
on the part of Samuel.  In the end, the co-defendant Samuel adduced evidence
regarding the dynamics of the accident (from both Samuel and various expert
witnesses), while ICBC’s counsel adduced evidence regarding the quantum of
damages.  Thus the defence presented a united dual front to the plaintiff’s
action.  This was not a case of the Third Party choosing to pay the insurance
monies into Court or a solicitor’s high interest bearing account and then
taking no further steps to defend the proceedings.  The Third Party was an
active participant throughout. 

[36]        
In my view, having never received an actual
offer of settlement from the Third Party, it was reasonable for the plaintiff
to choose to proceed to trial in this case.  She could expect that she would
recover judgment against at least Mohammed and Dubois.  The judgment would also
likely be in excess of the policy limits.  While the quantum of the judgment
actually recovered would not exceed her pro rata share of the insurance funds
(the calculation of which depended on settlements reached or judgments obtained
by Maxwell and Sahota), she would still be left with the ability for the next ten
years to pursue execution on the judgment against Mohammed and Dubois.  While
the Third Party apparently insists that any such judgment will be dry, there is
simply no evidence one way or another to confirm that likelihood.  It should
also be noted that had the insurance monies been paid into court, and had the
three claimants reached some agreement as to an appropriate division of the
funds, the Third Party could not have enforced any requirement for a release of
her claim against either Mohammed or Dubois.

B.             
Section 69 of Insurance (Vehicle) Act
Regulations

[37]        
In the alternative ICBC has submitted that
s. 69 of the Insurance (Vehicle) Act Regulations applies to this
case.  Section 69 provides that in addition to the amount payable under
the Third Party liability provisions of the policy, ICBC shall pay: 

(c)…that
portion of the costs taxes against an insured in an action under this Part that
(i) the amount offered by the Corporation as its total liability for indemnity
to the insured under this part in an offer to settle….bears to (ii) the
aggregate of all special and general damages awarded in respect of the amount
for which the claim is made. 

[38]        
In my view, since the action at bar is not one
brought under the provisions of the Insurance (Vehicle) Act, s. 69
is of no relevance here. 

[39]        
In all of these circumstances, I find that the plaintiff
is entitled to her costs on the ordinary scale against the defendants Dubois
and Mohammed, as well as double costs following the date of her offer to settle
made November 10, 2009.  The Third Party’s cross applications are
dismissed.

3.3          
Is Samuel entitled to an order for costs against
the plaintiff? 

[40]        
The defendant Samuel was entirely successful at
trial.  The jury found that Samuel was not negligent and accordingly, he was
entitled to a complete dismissal of the action against him.

[41]        
On this basis, Samuel seeks his costs against the
plaintiff.  He submits that an award of ordinary costs should be made to the
date of his Offer to Settle made September 21, 2006 and that he should be
entitled to double costs following that date to the conclusion of the trial. 
In the alternative he seeks costs throughout at Scale C. 

[42]        
An Offer to Settle was made by counsel for
Samuel on September 21, 2006.  The offer proposes that the claims of the plaintiff
against Samuel be dismissed and that no costs be payable to either party.  This
offer was never accepted by the plaintiff.  The plaintiff’s counsel
specifically declined any settlement whatsoever unless some funds were
forthcoming from the defendant Samuel.  Samuel’s formal offer was ultimately
withdrawn by letter dated September 1, 2009.  The plaintiff’s counsel
continued to insist on Samuel’s liability and demanded $500,000 on the eve of trial
and $1 million during the trial. 

[43]        
There is no dispute that in light of the jury’s
verdict, the defendant Samuel is at least is entitled to his ordinary costs
from the plaintiff.  The issue is whether he is entitled to double costs
following the date of the Offer to Settle? 

[44]        
The Offer to Settle made September 2006 is
what is known as a “walk away” offer.  The offer did not include any offer to
pay costs.  In this sense the Offer offended the strict working of Rule 37
which requires that an offer to settle must be exclusive of costs. 
Accordingly, plaintiff’s counsel submits he was entitled to conclude the offer
had no legal effect and thus to ignore it.

[45]        
I agree with Samuel’s counsel’s submission that notwithstanding
the deficiencies of the offer, since the offer remained open for acceptance as
of July 2, 2008 (indeed the offer of settlement was not withdrawn until September 1,
2009), Rule 37B applies.  Rule 37B provides that an “offer to settle”
includes “(a) an offer to settle made and delivered before July 2, 2008
under Rule 37…”

[46]        
In that case, the issue of whether to impose any
of the costs options set out in Rule 37B(5) turns on the Court’s
consideration of the factors set out in Rule 37B(6),that is:

(a)           
whether the offer to settle was one that ought
reasonably to have been accepted, either on the date that the offer to settle
was delivered or on any later date; 

(b)           
the relationship between the terms of settlement
offered and the final judgment of the court;

(c)           
the relative financial circumstances of the
parties; and 

(d)           
any other factor the court considers
appropriate. 

[47]        
I will consider each of these factors in turn. 

[48]        
First, was the defendant Samuels’ walk away
offer of September 2006, one which ought reasonably to have been
accepted?  While conceding that the walk away offer offends the provisions of
the then applicable Rule 37, Samuel’s counsel submits this does not end
the matter.  In Bowen Contracting Ltd. v. B.C. Log Spill Recovery
Co-operative Association, 2009 BCSC 244, Wilson J. held that
non-compliance with Rule 37 was simply a factor to be taken into
consideration in determining whether an offer is one that “ought reasonably to
have been accepted”.  There the offer had offended the provisions of Rule 37(31)
since it was advanced on behalf of two defendants and not all four defendants
in the action.  While the court agreed the offer was not one that ought
reasonably to have been accepted, it held that this was but one factor for
consideration of the Rule and went on to consider the balance of the factors in
Rule 37B(6), ultimately holding that the defendants were entitled to
double costs following the date of the offer to settle.

[49]        
The plaintiff submits that the Bowen decision
neither overturns nor overrules the decision of Baker J. in Lewis v.
Abel, 2008 BCSC 140, handed down approximately a year earlier on February 6,
2008.  There the defendants had also made a “walk away” offer—that is offering
to allow a consent dismissal order to be entered with no costs to any party. 
Since Rule 37 did not allow an offer to be made exclusive of costs the
defendants submitted that Rule 37A applied, thus allowing them to pursue
their claim for double costs.

[50]        
While Baker J. found the defence position
both logical and persuasive, ultimately she decided that the weight of authority
was against her and reluctantly held the defendants were not entitled to rely
on Rule 37A and thus were not entitled to an award of double costs.  In
particular she relied on the British Columbia Court of Appeal decision in Cao
(Guardian ad litem of) v. Natt, 2004 BCSC 813, aff’d 2005 BCCA 351;
Coutu v. San Jose Mines Ltd., 2005 BCSC 1451; P.G. Restaurant
Ltd. v. Northern interior Regional Health Board, 2006 BCSC 1680; and Kerpan
v. Insurance Corp. of British Columbia, 2007 BCSC 203.  She concluded: 

These
authorities have interpreted the decision of the Court of Appeal in Cao
to mean that there is no possibility to escape the strictures of Rule 37
by making an offer on the condition that no costs be payable.  Where an offer
is made that excludes the payments of costs, it will fall outside Rule 37,
but also outside Rule 37A. 

[51]        
While I accept that the Lewis decision
properly reflected the law regarding the application of Rule 37A as at February 2008,
I agree with Samuel’s counsel that it is of little assistance here.  At the
time Lewis was decided, both Rule 37 and Rule 37A were in
effect.  Both those rules were repealed on June 6, 2008 and effective July 1,
2008, Rule 37B came into effect.  It is clear that the overly technical nature
of the old rules led to the redrafting of the rule and the creation of Rule 37B
which allows a far greater degree of discretion to the Court in awarding costs.
(see Gehlen v. Rana, 2009 BCSC 1484). 

[52]        
I am satisfied that the walk away offer made by
Samuel’s counsel in September 2006, which remained open for acceptance
until Sept 2009, constitutes an “offer to settle” within the meaning of
Rule 37B(1)(a). 

[53]        
The Bowen decision allows for a much more
expansive view of Rule 37B.  The subsequent decision in Insurance Corporation
of British Columbia v. Patko, 2009 BCSC 578, handed down April 29,
2009 offers an equally expansive application of Rule 37B. 

[54]        
Adopting the approach set out in those cases, I
will consider the factors set out in Rule 37B(6). 

[55]        
Rule 37(B)(6)(a):  First, was the walk away offer one reasonably capable of
acceptance?  While the Samuel offer did not offer any monetary compensation, it
allowed for dismissal without any costs payable to the defendant Samuel.  I am
satisfied that from the outset, the plaintiff faced a significant risk that no
finding of liability would be found against Samuel.  The claim against Samuel
turned on the theory that had Samuel been paying proper attention to the
roadway, he would have seen that the oncoming Dubois vehicle was out of
control, fishtailing on the road, and would have immediately, within a period
of 3 seconds, applied his brakes.  Had he done so he would have been able to
bring his vehicle to a stop within a short distance, thus avoiding any impact
with the Dubois vehicle.  The plaintiff’s theory, while apparently supported by
the engineering expert, Robin Brown, was completely discounted by a swath of
defence engineers.  Indeed those reports relied on an analysis of the black box
in the Samuel vehicle to prove that Samuel had actually reacted and applied his
brakes and had succeeded in substantially reducing the speed of his vehicle
before the collision, although not to the extent he was able to avoid the
impact.

[56]        
My own impression is that faced with the grim
realities of the other defendants’ limited insurance coverage, the plaintiff
made a calculated decision to pursue a claim of very doubtful merit against
Samuel, realizing that she would realize a substantial benefit even if Samuel’s
liability was limited to a small percentage.  But for the insurance situation,
I am confident that the Samuel offer would have been accepted early on by the plaintiff.
 

[57]        
Rule 37B(6)(b):  The second factor requires consideration of the final result. 
The claim against Samuel was entirely dismissed by the jury.  This was the best
possible result for the defendant Samuel and a complete loss for the plaintiff,
at least in terms of her case against him.  Had she accepted Samuel’s offer of
settlement, she would have avoided paying costs to Samuel at this stage, as
well as not recovering her own trial and preparation expenses relating to that
part of the trial.

[58]        
Rule 37B(6)(c):  The
third factor is a consideration of the relative financial circumstances of the
parties.  As I noted earlier, I have some doubt regarding my own earlier decision
in Radke.  I am satisfied that the weight of the authorities excludes
consideration of the fact Samuel’s insurer, ICBC, conducted his defence.  In
order to deprive a party of costs it would ordinarily receive under the Rule,
there must be some evidence of its financial circumstances.  Here there was
little evidence regarding the financial circumstances of either party.  The
evidence was that Samuel was and is a salesman at Future Shop.  He lives with
his family in Richmond.  The plaintiff holds a couple of part-time jobs but has
no substantial earnings.  On the other hand she has been awarded a significant
monetary judgment.

[59]        
Rule 37B(6)(d):  Rule 37B(6)(d) requires the Court to consider whatever other
factor it deems appropriate.  The defendant Samuel submits that the plaintiff’s
stubborn insistence on recovering some measure of damages from Samuel is what
ultimately drove this action to trial.  He points out plaintiff’s counsel’s
earlier letter to the effect that if no settlement funds were forthcoming from
Samuel, no settlement could be reached. 

[60]        
As Hinkson J. noted in Bailey v. Jang,
2008 BCSC 1372, the underlying purpose of the offer to settle provisions
survived the repeal of Rule 37 and the implementation of Rule 37B. 
That purpose is to encourage conduct which reduces both the duration and the
cost of litigation, while also discouraging the conduct which has the opposite
effect. 

[61]        
I conclude that all of these factors weigh in
favour of the defendant Samuel recovering double costs.  I accept that
initially, the offer was defective, at least in respect of the old Rule 37. 
However as of July 2, 2008, when Rule 37B came into effect, the offer
was still outstanding and was then an offer which was reasonably capable of
being accepted.  Thus I find the defendant Samuel is entitled to double costs
from the plaintiff as of July 2, 2008.

[62]        
In light of this decision I will not consider
Samuel’s alternative application for an order that Scale C costs be
awarded.

3.4          
Is the plaintiff entitled to a Sanderson order,
requiring the defendants, Mohammed and Dubois, to pay the costs which she must
pay to the successful defendant, Samuel?

[63]        
Rule 57(18) provides that: 

Where the costs
of one defendant against the plaintiff ought to be paid by another defendant,
the court may order payment to be made by one defendant to the other directly,
or may order the plaintiff to pay the costs of the successful defendant and
allow the plaintiff to include those costs as a disbursement in the costs
payable to the plaintiff by the unsuccessful defendant. 

[64]        
In Towson v. Bergman, 2009 BCSC 978,
Gray J. reviewed at length the law regarding Bullock orders and Sanderson
orders at page 14:

[78]      A Bullock order entitles the
plaintiff to claim the amount of costs the plaintiff pays to the successful
defendant as a disbursement in the assessment of costs against an unsuccessful
defendant.

[79]      A Sanderson order is one in which
the unsuccessful defendant is ordered to pay costs directly to the successful
defendant.

[80]      In Times Square Holdings Ltd.
v. Shimizu, 2001 BCCA 667, 95 B.C.L.R. (3d) 234, the Court of Appeal
set out the general rule for exercises of discretion granting Bullock or
Sanderson orders: 

[9]        The leading authority in this
area of costs is Robertson v. Wing (1980), 26 B.C.L.R. 225 (C.A.). 
There, Mr. Justice Lambert, in the judgment most often quoted in later
cases, decided that the only general rule applying to Sanderson and Bullock
orders is that for either of them to be considered, a threshold test must first
be met: it must have been reasonable for the plaintiff to have joined the
successful defendant in the action.  If the plaintiff can meet this threshold,
it is left to the judge to exercise his or her discretion in deciding what
distribution of costs would be just.  This discretion may be exercised without
being trammelled by a set of legal principles or burdened by precedent: see pp. 227-8.

[81]      In Grassi v. WIC Radio Ltd.,
2001 BCCA 376, 89 B.C.L.R. (3d) 198, after reviewing the historical development
of both Sanderson and Bullock orders, Southin J.A. stated that “reasonableness”
is not measured from the perspective of counsel for the plaintiff; rather,
“[t]here must be something which the unsuccessful defendant did, such as
asserting the other defendant was the culprit in the case, to warrant his being
made to reimburse the plaintiff for the successful defendant’s costs”: at para. 33. 
She noted further at para. 34 that such orders:

…are not restricted to cases where the
unsuccessful defendant in the course of the litigation has blamed the
successful defendant but may extend to acts of the unsuccessful defendant which
caused the successful defendant to be brought into the litigation. 

[82]      In
deciding whether to make a Sanderson as opposed to a Bullock order, the
question for the court essentially concerns apportionment of risk.  As between
the plaintiff and the successful defendant, who should bear the risk that the
unsuccessful defendant will be unable to pay costs? 

[65]        
Applying those principles, the plaintiff submits
she is entitled to a Sanderson order against the defendants Mohammed and
Dubois.

[66]        
 This raises the issue, was it reasonable for
the plaintiff to have sued and continued her action against the defendant
Samuel?  I accept that at the outset, given the evidence of the eyewitness to
the effect the Dubois vehicle (driven by Mohammed) had fishtailed back and
forth across the road before its collision with the oncoming Samuel vehicle, it
was reasonable for the plaintiff to have joined Samuel as a defendant to the
action.  However, after the receipt of the many engineering reports which
overwhelmingly laid the blame on Mohammed and absolved Samuel of any
negligence, was it reasonable for the plaintiff to have continued her action
against Samuel?

[67]        
The plaintiff submits she was required to
maintain her claim against Samuel since ICBC had not only pleaded the plaintiff
was contributorily negligent, but had also pleaded Samuel’s own negligence had
caused the accident.  As I noted earlier, at no time did ICBC seek to amend its
pleading or advise the Court it intended to resile from those pleadings.  The
matter was addressed directly by the Court in the course of a submission by
ICBC’s counsel that he be allowed to cross examine Samuel’s liability expert.  I
ruled that in spite of the pleadings (which ICBC would not withdraw), it
remained that there was no identifiable lis between the defendants, and that in
the absence of any adverse interest between the defendants, I would not allow
such a cross examination to occur.  While it decided not to withdraw the
pleading, ICBC ultimately decided not to cross examine any of Samuel’s
witnesses on the issue of liability. 

[68]        
Mr. Ragona has acknowledged that the Third
Party, ICBC, could perhaps have withdrawn its allegation of negligence against
Samuel, but he submits this was not something the Corporation could do without
some exposure to risk.  In his opinion the potential risks included the
possible allegation by the defendants, Mohammed and Dubois (who did not appear
to nor participate in the action), that the Third Party’s counsel was guilty of
professional negligence.  The other possibility was an allegation that their
insurer, as Third Party in the action, had acted in bad faith in not fully
defending their interests by alleging negligence on Samuel’s part.  He submits
that while ICBC never resiled from its pleading of contributory negligence
against the co-defendant Samuel, and tell the jury Samuel was not liable (or
that his negligence had not contributed to the accident), at least it had not adduced
any evidence before the jury to support such a finding.

[69]        
I have some difficulty with this position.  At
no time was the Third Party under any statutory obligation to defend either of
the defendants.  It was free to choose to participate in the action and do so only
to the extent of addressing the quantum of damages sought by the plaintiff. 
The choice to extend its mandate to include a full defence on the issues of
both liability and damages, was the Third Party’s.  In my view, the fact that
ICBC never called any evidence to prove any negligence on Samuel’s part is no
answer to the situation here. 

[70]        
In my view, faced with ICBC’s plea that Samuel
caused or contributed to this accident, the plaintiff had no choice but to
continue her claim against Samuel. 

[71]        
In all of these circumstances, I exercise my
discretion under Rule 57(18) and find that a Sanderson order is
appropriate in the case at bar, thus requiring the defendants Mohammed and
Dubois to pay the costs which the plaintiff would otherwise pay to the
successful defendant Samuel.

“The Honourable Madam Justice Boyd”