IN
THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20100401

Docket:
M073446

Registry: Vancouver

Between:

Lovey Cridge

Plaintiff

And

Elaine Ivancic and Marijan Ivancic

Defendants

Before: The Honourable Madam Justice Fenlon

Reasons for Judgment (Costs)

INTRODUCTION

[1]            
The defendants apply for costs under R. 37B
of the Rules of Court on the basis that they made a settlement offer
that exceeded the award made to the plaintiff.

BACKGROUND

[2]            
The plaintiff, Lovey Cridge, was involved in a
motor vehicle accident on September 29, 2005. The vehicle driven by the defendant,
Elaine Ivancic, hit Mrs. Cridge’s car from behind while the two vehicles
were slowly merging onto the 152nd Street onramp to Highway 1, near Surrey.

[3]            
At trial, Mrs. Cridge sought non-pecuniary
damages, special expenses and wage loss for the injuries she claimed stemmed
from the September 2005 accident. The injuries in issue included: 1) soft
tissue injuries to her neck, upper and left lower back, right elbow, and right
wrist; 2) problems with her left knee; and 3) pain in her right hip.

[4]            
Although the defendants admitted liability for
the September 2005 accident, they argued that Mrs. Cridge’s health
problems were either due to pre-existing injuries, or injuries she sustained after
the accident. In particular, the defendants point to six car accidents prior to
September 2005, two car accidents subsequent to that date, as well as other
traumatic incidents that occurred before the accident in issue, including
walking into a glass wall, walking into a door, having a large woman fall on
her from above while on an escalator, and being dragged half-in and half-out of
a car while trying to stop a robber pulling out of her driveway.

[5]            
Mrs. Cridge sought and obtained adjournments
of the trial of this action on the basis that the extent of her injuries had
not yet been determined. A third trial date was set for November 2009. Mrs. Cridge
made an adjournment application before Master Tokarek on October 19, 2009. She
argued that she was awaiting hip surgery so it was too early to be able to
determine the scope of her injuries. That application was dismissed on the
basis that there was no evidence that the hip surgery was related to the
September 2005 accident. Mrs. Cridge appealed that decision. Chief Justice
Bauman dismissed that appeal on October 23, 2009. The plaintiff again sought an
adjournment before me on the first day of trial, November 2, 2009; given the
procedural history, that application was denied.

[6]            
At trial, Mrs. Cridge sought non-pecuniary
damages of $100,000. The defendants argued that the plaintiff should be awarded
at most $1,500 to $2,500 for soft tissue injuries. Ultimately, in a decision
rendered on December 17, 2009, I awarded the plaintiff $10,000 for non-pecuniary
damages and $2,402 for special expenses. I dismissed her claim for wage loss,
and I held that the plaintiff was entitled to costs of $6,600 under R. 66 of
the Rules of Court.

[7]            
The defendants brought to the court’s attention
a settlement offer of $50,000 made to the plaintiff on October 26, 2007 (the
“Offer”). The Offer was made in the requisite form and in accordance with the
now repealed R. 37(2) of the Rules of Court. The offer remained open for
acceptance up to the commencement of trial, more than two years after it was
first made.

ISSUES

[8]            
There are two main issues to be addressed:

1.       How should costs be assessed in light of the Offer made by
the defendants?

2.       How does the application of R. 66 affect the assessment of
costs?

ANALYSIS

1.       How
should costs be assessed in light of the Offer made by the defendants?

[9]            
The defendants submit that the plaintiff should
receive costs to October 26, 2007 (the date of the Offer), and the defendants should
receive their costs from that date.

[10]        
The purpose of the rules regarding settlement
offers was recently articulated in Radke v. Perry, 2008 BCSC 1397, 90
B.C.L.R. (4th) 132 [Radke], by Madam Justice Boyd at para. 38:

… there are
important differences between Rule 37B and the predecessor rules,
Rule 37 and 37A. Notwithstanding the differences, I am confident the
underlying legislative policy remains the same. The goal has been and remains to
encourage the early settlement of disputes “…by rewarding the party who makes
an early and reasonable settlement offer, and by penalizing the party who
declines to accept such an offer” (See Mackenzie v. Brooks, 1999
BCCA 623, 130 B.C.A.C. 95, and Skidmore v. Blackmore (1995), 2 B.C.L.R.
(3d) 201, 55 B.C.A.C. 191). [Emphasis added.]

[11]        
Where an offer to settle has been made, the
court has a wide discretion in determining what order for costs should be made.

[12]        
In making an order under R. 37B(5), I may
consider the following pursuant to R. 37B(6):

(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;

(d) any other
factor the court considers appropriate.

(i)       Relationship Between the Settlement Offered and
the Final Judgment

[13]        
In terms of R. 37B(6)(b) of the Rules of
Court, the Offer of $50,000 far exceeded the final judgment obtained by the
plaintiff for $12,402. This factor supports the defendants’ position.

(ii)      Relative Financial Circumstances of the Parties

[14]        
Under R. 37B(6)(c), another consideration is
“the relative financial circumstances of the parties”. The defendants were
represented by ICBC. The plaintiff was unrepresented; she is a retired
accountant in her 70s, and appears to be of limited means, working only
part-time each spring during tax season.

[15]        
There is conflicting case law on the issue of
whether a defendant’s insurance coverage is relevant to the consideration of
the financial circumstances of the parties. In Bailey v. Jang, 2008 BCSC
1372 at paras. 32-34, 90 B.C.L.R. (4th) 125 [Bailey], Hinkson J.
held that the defendant’s insurance coverage should not be considered because the
wording of Rule 37B(6)(c) of the Rules of Court does not invite such consideration
and because an insurer is not generally a party to the litigation. Bailey has
been followed on this point in various cases, including Abma v. Paul,
2009 BCSC 60 at para. 32, 66 C.P.C. (6th) 100, and A.E. v. D.W.J.,
2009 BCSC 505 at para. 58, 91 B.C.L.R. (4th) 372.

[16]        
However, in Radke at para. 42, Boyd J.
held that the fact that the defendants were represented by ICBC and “had
substantially greater resources to finance a trial than the individual
plaintiff” is a relevant consideration under R. 37B(6)(c). Radke was
followed in Smith v. Tedford, 2009 BCSC 905, 77 C.P.C. (6th) 308, where Mr. Justice
Grist stated at para. 16 that “[t]he ability to have a case advanced by
experienced and well funded counsel is, to my mind, a resource that should be
taken into account in exercising the judicial discretion stipulated under the
new Rule.”

[17]        
I find Mrs. Cridge’s modest financial means
and the defendants’ representation by ICBC to be a relevant consideration,
although not a significant or determinative factor in my decision.

(iii)     Whether the Offer to Settle Ought Reasonably to
Have Been Accepted

[18]        
I regard R. 37B(6)(a) of the Rules of Court
to be the most significant factor in the circumstances of this case. Under that
subsection, the defendants submit that the Offer they made early in the
proceedings and left open for more than two years ought reasonably to have been
accepted. The defendants rely primarily on a report that Dr. Lu, the
plaintiff’s orthopaedic surgeon, provided to Mrs. Cridge and her former
counsel in 2008. Dr. Lu concluded that it was not possible to determine if
the plaintiff’s knee pathology was caused or contributed to by the September
2005 accident. On June 17, 2008, Mrs. Cridge filed a notice of intention
to act in person; she told the court on an adjournment application before one
of the first two trial dates that a dispute had arisen between her and her
previous counsel in relation to the Offer. The defendants submit that in light
of the content of Dr. Lu’s report, and given that the plaintiff had
counsel when it was received, it was unreasonable for Mrs. Cridge to continue
to refuse the Offer.

[19]        
However, the injuries at issue in the litigation
went beyond the knee problems dealt with in Dr. Lu’s report.  They included
the problems Mrs. Cridge experienced in her right hip. The plaintiff
submitted that her hip pain was also caused by the accident. She believed the
hip injury was a major issue in the litigation and would result in a significant
award of damages to her, particularly because she expected to have to undergo surgery
to correct the problem.

[20]        
At the time of trial, the plaintiff was still waiting
for an appointment with a specialist who she anticipated would provide a
definitive position on the cause and treatment of her hip pain. Despite two
previous adjournments, the plaintiff had not taken steps to obtain a medical
opinion to support her claim that the hip problem was caused by the car
accident. She operated under the mistaken assumption that the court would
continue to grant adjournments. 

[21]        
In Brewster v. Rominn Laboratories Ltd.,
2008 BCSC 1463, [2009] B.C.W.L.D. 2288, Rogers J. suggested at para. 18 that
the court could consider “the circumstances that pertained at various stages of
the litigation relating to the party’s knowledge of the strength of its own
case and that of its opponent”. I take into account the fact that Mrs. Cridge
was self-represented after June 2008. Until her final adjournment application
was refused, Mrs. Cridge believed that she had a strong case in relation to
her hip injury and would be able to proffer the evidence needed to prove that
injury. In the circumstances of this case, I do not find she should have
accepted the Offer while she held that expectation. However, once Mrs. Cridge
realized that (through her own delay) she did not have the expert opinion
necessary to prove her case and had to proceed to trial without it, it would
have been reasonable for Mrs. Cridge to accept the Offer. Therefore, I
find that the settlement offer was one that ought reasonably to have been
accepted when Bauman C.J. denied Mrs. Cridge’s adjournment application on
October 23, 2009.

[22]        
Accordingly, the plaintiff is entitled to her
costs and disbursements up to and including October 23, 2009, and the
defendants are entitled to their costs thereafter.

2.       How
does the application of Rule 66 affect the assessment of costs?

[23]        
This action was subject to R. 66 of the Rules
of Court. Although initially set as a two-day trial, the evidence and
argument in fact took six days to complete.

[24]        
The relevant subrules of R. 66 state:

(29) Unless the court orders otherwise or
the parties consent, and subject to Rule 57 (10), the amount of costs,
exclusive of disbursements, to which a party is entitled is as follows:

…

(b) if the time
spent on the hearing of the trial is more than one day, $6 600.

(29.1) In
exercising its discretion under subrule (29), the court may consider a
settlement offer delivered in accordance with Rule 37, 37A or 37B whether or
not other special circumstances exist.

[25]        
The plaintiff submits that she should receive
her full costs and should not be limited by the cap stipulated in R. 66(29)(b) of
$6,600. In reply, the defendants say that the action was placed under R. 66 by
plaintiff’s previous counsel, and take the position that the usual R. 66 costs
should apply.

[26]        
In Anderson v. Routbard, 2007 BCCA 193 at
para. 46, 67 B.C.L.R. (4th) 66, Prowse J.A. for the Court of Appeal stated
the following in terms of the relationship between R. 37 and subrules 66(29)
and (29.1) of the Rules of Court:

… In my view,
a plain reading of subrules 66(29) and (29.1) makes it clear that the court can
exercise a discretion to depart from the fixed costs set forth in subrule (29)
if there are special circumstances, and an offer under Rule 37 is simply one of
the circumstances in which it may do so. Rule 37 is not given elite status as a
special circumstance and, in some cases, it may be only one of many special
circumstances which the court may consider in determining whether the fixed
costs under subrule (29) should apply.

[27]        
In another case, Petojevic v. Solari,
2009 BCSC 1156 at para. 5, [2010] B.C.W.L.D. 178, Williamson J. mentioned
other circumstances that a court may consider in exercising its discretion
under R. 66(29) of the Rules of Court:

… the Court
retains a discretion with respect to costs. Generally, litigants will be
limited to the maximum costs allowable pursuant to Rule 66 (29) unless the
Court rules otherwise. In determining whether to “otherwise order” the
circumstances to be considered may include the making of an offer pursuant to
Rule 37, the relationship of the award to the offer, the length of the trial,
the degree of complexity, the conduct of the litigation, the financial
circumstances of the parties, and any other relevant circumstances.

[28]        
In my view, this is not a case in which the
court should accede to the plaintiff’s request to depart from the maximum costs
allowable under R. 66. The trial exceeded two days primarily because of
the manner in which the plaintiff presented her evidence.

[29]        
The question then becomes how to allocate the
costs between the parties. Given my determination under R. 37B that the
plaintiff is entitled to her costs and disbursement up to and including October
23, 2009, about one week before trial, and that the defendants are entitled to
their costs and disbursements thereafter, I award the plaintiff costs of $3,300
and the defendants costs of $3,300, with the costs to be set off.

The
Honourable Madam Justice L. A. Fenlon