IN THE SUPREME COURT OF BRITISH COLUMBIA
Citation: | Mudry v. Minhas, |
| 2010 BCSC 1110 |
Date: 20100809
Docket: 07-4684
Registry:
Victoria
Between:
Amanda
Mudry
Plaintiff
And
Kirpaljit Kaur
Minhas
&
Amarjit S. Minhas
Defendants
Before:
The Honourable Mr. Justice Kelleher
Reasons for Judgment
Re
Costs
Counsel for the Plaintiff: | K.D. |
Counsel for the Defendants: | M.J.C. |
Date of Written Submissions: | June |
Place and Date of Judgment: | Victoria, B.C. |
[1]
On May 5, 2010, I published reasons for judgment in this matter. They
are indexed at 2010 BCSC 637. The case involves an action for damages arising
from a motor vehicle accident. I decided that the defendant Amarjit Minhas was
at fault but I dismissed the action because the evidence did not establish that
the plaintiff suffered damages.
[2]
On September 22, 2008, 18 months before trial, the defendant delivered
an offer to settle, pursuant to Rule 37B, of $10,000 plus disbursements. It was
not accepted. This offer was withdrawn on February 18, 2010. On the same day,
an offer of $40,000 plus assessable costs and disbursements was made in its
place. This offer expired on March 19, 2010, the last business day before the
trial.
[3]
The defendants seek costs on the basis that the plaintiffs claim was
dismissed, but also double costs pursuant to Rule 37B.
[4]
The plaintiffs position is that each party should bear its own costs. Alternatively,
counsel argues that there ought to be a reduction in costs because of divided
success on the two issues before the court. The plaintiff says that the
defendants offer to settle should not be considered or, alternatively, the
date of consideration of the final offer should be the last business day prior
to the commencement of the trial.
[5]
The defendant says that by September 22, 2008, the document exchange
included the plaintiffs statement to the adjuster, made 12 days after the
accident, that she was not injured, the records of the January 24, 2006
attendance at Emergency, where no mention of headaches or the motor vehicle
accident was made, and clinical notes of the plaintiffs physician indicating
that the plaintiff did not report the accident to be the cause of her
complaints.
[6]
The plaintiffs medical expert, Dr. James Filbey, said in his report of
March 17, 2008:
It appears as though the motor
vehicle accident is responsible/causative of her ongoing symptoms.
[7]
Dr. Filbey was not available on the trial date. By agreement of counsel,
he was cross-examined by video 12 days before the trial. In cross-examination,
he said it was only 51 percent likely that the accident caused the symptoms and
complaints. He also said at the time he wrote the report, he did not know of
the plaintiffs statement to the adjuster that she was not injured. He was not
aware that the first medical attention she sought was on January 24 and that
she did not complain at that time of headaches and did not mention the motor
vehicle accident.
[8]
The plaintiff’s submissions in this case focussed on Rule 57(15), which
provides:
57(15) The court may award costs
that relate to some particular issue or part of the proceeding or may award
costs except so far as they relate to some particular issue or part of the
proceeding.
[9]
This rule is intended to deter unnecessary steps in litigation which
prolong proceedings. In Hranka v. Zeibak, 2007 BCSC 1361, 50 C.C.L.T.
(3d) 157, Sigurdson J. stated:
[17] The purpose of Rule 57(15)
is "to effect a just result between parties in cases which have been
prolonged by issues" which the party who would otherwise be entitled to
costs has lost: British Columbia v. Worthington (Canada) Inc. (1988),
[1989] 1 W.W.R. 1; 32 C.P.C. (2d) 166; 29 B.C.L.R. (2d) 145 at 169 (C.A.). As
further explained in Webber v. Canadian Aviation Insurance Mangers Ltd.,
2003 BCSC 274; [2003] B.C.J. No. 381; 29 C.P.C. (5th) 226 (S.C.) at para. 23,
Rule 57(15) is "designed to redress the basic unfairness that would result
if a successful party were permitted to recover costs on unnecessary issues
that it (the ultimately successful party) deliberately raised at trial; that it
was not successful on; and that increased the costs of the trial to a
substantial degree."
[10]
Both time spent and the importance of an issue are factors to be
considered in the exercise of the court’s discretion under Rule 57(15): Gould
v. Royal Trust Corp. of Canada, 2010 BCSC 16 at para. 23, 55 E.T.R. (3d)
155.
[11]
However, it has been recognized that the apportionment of costs under
Rule 57(15) is an exception to the general rule and should only be granted in relatively
rare cases: Hammond v. Assn. of British Columbia Professional Foresters,
[1992] B.C.J. No. 3026 (S.C). Rule 57(15) was not designed to allow for a
minute dissection of the success or failure of litigants on the completion of a
trial: Gotaverken Energy Systems Ltd. v. Cariboo Pulp & Paper Co.
(1995), 9 B.C.L.R. (3d) 340 at para. 9 (S.C).
[12]
In Sutherland v. Canada (Attorney General), 2008 BCCA 27, 77
B.C.L.R. (4th) 142 at para. 31, the court stated the test for apportionment of
costs under Rule 57(15) as follows:
(1) the party seeking apportionment must establish that there
are separate and discrete issues upon which the ultimately unsuccessful party
succeeded at trial;
(2) there must be a basis on which the trial judge can
identify the time attributable to the trial of these separate issues;
(3) it must be shown that
apportionment would effect a just result.
[13]
In Sutherland, Finch C.J.B.C. held in determining whether it is
just to apportion costs, the court must look to whether the party which was ultimately
successful prolonged the case unnecessarily through their conduct with respect
to the issue which they lost. At paragraph 35, the Chief Justice referred to
three ways in which a party may prolong a case unnecessarily:
1. By raising an unnecessary issue.
2. By
raising a spurious or unsupportable defence to an issue raised by the other
party.
3. To "over
litigate" an issue properly raised by either party.
[14]
In such cases, it may be unfair to the party that is ultimately
unsuccessful to have to pay costs for issues raised or prolonged unnecessarily
by the other party. In order to remedy such unfairness, the court may exercise
its discretion to award costs to the party who succeeded on a particular issue,
but lost overall.
[15]
In Sutherland, the court found the trial judge had erred in
apportioning costs in favour of the plaintiffs regarding the issue of nuisance,
even though they had succeeded on that point. The court found that given it was
a cause of action, this issue could not be said to have been "raised"
by the defendant. Neither had the defendant "over litigated" the
issue.
[16]
The court’s reasons imply that a denial of liability which puts a
plaintiff to his or her burden of proof does not satisfy the "just
result" requirement in the test stated above, unless the defendant knew he
had no prospect of success:
39 The trial judge also erred
by taking an irrelevant factor into consideration. At para. 18 of his reasons
on costs, the learned trial judge, as part of his justification for
apportioning costs, suggests that the defendants should not have thought they
had much chance of success in defending against the allegation of nuisance.
With respect, this consideration is irrelevant in determining whether it would
be fair to apportion costs. As responsible public bodies, the defendants
were entitled to defend, by all lawful means, against their alleged liability,
including a denial of the alleged nuisance. The suggestion that the
defendants should not have thought they had much chance of success could be relevant
if the defendants had raised the issue knowing that to be so. In such a
situation, the defendants could be considered as having unnecessarily prolonged
the trial. However, as noted above, the defendants did not raise the issue of
nuisance, and there was no evidence that the defendants unnecessarily prolonged
the case through its litigation of the nuisance issue.
[Emphasis Added.]
[17]
While it would seem that in the circumstances of this case (in light of
the objective evidence of the damage to the vehicles) a bare denial of
liability may well have constituted an unsupportable defence, given the
analysis in Sutherland, it is questionable whether the plaintiff has
satisfied the third step of the test under Rule 57(15).
[18]
However, it is important to keep in mind the fact that the trial judge
in Sutherland had awarded costs against the successful defendant.
What the plaintiff seeks in this case is a reduction in the award of costs to
the Minhas defendants. Sutherland may be distinguishable on this basis,
as it is clear the courts power to deprive a successful party of costs is
greater than the power to award costs to a losing party. In Barclay
(Guardian ad litem of) v. British Columbia (Attorney General), 2006 BCCA
434, 57 B.C.L.R. (4th) 63, Mr. Justice MacKenzie stated:
[37] The discretion not to award
costs to a successful party is broader than the discretion to award costs to an
unsuccessful party
[19]
I conclude, however, that apportionment under Rule 57(15) is not
appropriate here. The defence was not spurious or unsupportable; the issue was
not over-litigated.
[20]
Rule 37B addresses offers to settle. Subrules (4), (5) and (6) provide
as follows:
(4) The court may consider an offer to settle when
exercising the court’s discretion in relation to costs.
(5) In a proceeding in which an offer to settle has
been made, the court may do one or more of the following:
(a) deprive
a party, in whole or in part, of any or all of the costs, including any or all
of the disbursements, to which the party would otherwise be entitled in respect
of all or some of the steps taken in the proceeding after the date of delivery
of the offer to settle;
(b) award
double costs of all or some of the steps taken in the proceeding after the date
of delivery of the offer to settle.
(c) award
to a party, in respect of all or some of the steps taken in the proceeding
after the date of delivery or service of the offer to settle, costs to which
the party would have been entitled had the offer not been made;
(d) if the
offer was made by a defendant and the judgment awarded to the plaintiff was no
greater than the amount of the offer to settle, award to the defendant the
defendants costs in respect of all or some of the steps taken in the
proceeding after the date of delivery of the offer to settle.
(6) In making an order under subrule (5), the court
may consider the following:
(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.
[21]
The underlying policy of the Rule and its predecessor is to encourage
settlement by rewarding the party who makes a reasonable offer and penalizing
the party who declines to accept such an offer: MacKenzie v. Brooks,
1999 BCCA 623, 130 B.C.A.C. 95; Abma v. Paul, 2009 BCSC 60, 66 C.P.C. (6th)
100.
[22]
There are four factors in subrule (6). I make the following comments in
respect of each of them:
(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.
[23]
The only medical evidence put before the court favoured the plaintiff. No
evidence from an independent medical examination which the defendants obtained
was being tendered. The plaintiffs symptoms have caused her significant
problems, and require relatively expensive medical treatments. At first blush
then, the offer to settle could not be said to be one which ought reasonably
have been accepted. However, the cross-examination video of Dr. Filbey was
surely a turning point. It significantly weakened the only medical evidence of
the plaintiff.
[24]
The offer ought reasonably to have been accepted on March 10, 2010.
(b) The
relationship between the terms of settlement offered and the final judgment of
the court.
[25]
This factor obviously favours the defendant.
c) The relative financial circumstances of
the parties.
[26]
The plaintiff put forward assertions of the plaintiffs indebtedness and
adverse financial circumstances. These assertions are not evidence. The
evidence is that her salary for 2010 will be approximately $65,000. She pays
for expensive medical treatments. Many of her possessions were lost in a fire
in Old Crow, Yukon Territory, three years ago.
[27]
The defendant is a nursing student.
[28]
There was limited evidence on this point. Neither party appears to have
significant means. I find this to be a neutral factor.
(d) Any other factor the
court considers appropriate.
[29]
The plaintiff was successful in proving liability. The trial was
lengthened by testimony from both Ms. Mudry and Mr. Minhas about liability. There
was also expert evidence tendered and the testimony of an independent witness
on the issue of liability.
[30]
While the plaintiff has not met the test for apportionment in Sutherland,
her success on the issue of liability is a factor to be considered under Rule
37B(6)(d).
[31]
The defendants denial of liability for the accident extended
proceedings. In principle, this ought to be a relevant consideration in
determining the quantum of costs awarded to a party who seeks to take advantage
of the bonus of double costs provided in Rule 37B. A party should not be
allowed to fail to make legitimate concessions himself and subsequently point
to the failure of the other party to settle as a justification for increased
costs.
[32]
In Lakhani v. Elliott, 2010 BCSC 281, Voith J. noted that
the purpose of an award of costs extends beyond indemnification. Instead, such
awards provide the courts with a mechanism that allows for the promotion or
advancement of given objectives considered to be significant to the conduct of
litigation or its resolution. One of the purposes of the costs provisions in
Rule 37B is to encourage conduct that reduces the duration and expense of
litigation, and to discourage conduct that has the opposite effect.
[33]
Mr. Justice Voith also highlighted the flexibility inherent in Rule 37B
and the prospect that the Rule is amenable to furthering legitimate policy
objectives apart from settlement.
[34]
A party who makes a reasonable offer to settle litigation should be
rewarded pursuant to Rule 37B. But the value of that reward should not be
determined solely by reference to the fact that party made an offer. It should
also take into account the positions taken by that party at trial.
[35]
Simply put, it seems inconsistent with the intent of Rule 37B to provide
a defendant with an award of double costs for an issue on which the plaintiff
succeeded.
[36]
I note as well that the plaintiffs success on the issue of liability
was not a meaningless victory. As noted in Gould, the importance of an
issue is relevant when deciding whether to apportion costs against a party who
succeeded in the result.
[37]
In her written submissions on costs, the plaintiff notes that based on a
statement provided by the defendant, ICBC denied liability on his behalf, and
determined that the plaintiff was 100% at fault for the collision without the
benefit of hearing her version of the events.
[38]
The Insurance Corporation of British Columbia provides compulsory
liability insurance, pursuant to the Insurance (Vehicle) Act, R.S.B.C.
1996, c. 23. As is the case with policies of insurance generally, premiums are
determined on the basis of risk. Section 35 of that statute provides.
35 The corporation may establish discounts from premiums and
establish additional premiums to be paid by owners or drivers based on any one
or more of the following:
(a) the accident record of the owner or driver;
(b) the degree of fault of the owner or driver in respect of
an accident;
(c) the type or class of vehicle
to be operated, the use to which it will be put or any other basis approved by
the commission.
[39]
Accordingly, ICBCs determination of fault against the plaintiff for the
accident may have affected the amount she would have to pay to obtain
compulsory automobile insurance in the future. To the extent the fact the
defendant was found liable for the accident may have negated this future
expense, the plaintiffs success on this issue was meaningful in the
circumstances of this case.
Conclusion
[40]
In all the circumstances, the defendant is entitled to taxable costs but
not to double costs.
Kelleher
J.