IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20100611

Docket: M053841

Registry:
Vancouver

Between:

Linda Payne

Plaintiff

And

Wayne Tony Lore,
Ying Hang Lore, Travis Edward Payne

Defendants

– and –

Docket: M062091

Registry:
Vancouver

Between:

Linda Payne

Plaintiff

And

Robert Danyluk and
Bow-Wow Parts of B.C. Ltd.

Defendants

Before:
The Honourable Madam Justice Wedge

Oral Reasons for Judgment

[1]            
THE COURT: Written reasons in this litigation were published in
December of 2008 (2008 BCSC 1744), but the issue of costs remained outstanding
as a result of certain other post-trial applications.

[2]            
In this costs application, the defendants seek orders relating to the
following:  (1) a Rule 37B offer made by the defendants shortly before the
trial; (2) the costs and disbursements of various experts whose opinions were
not accepted at trial; (3) costs resulting from the failure of the plaintiff to
prove all of her claims at trial, and (4) costs concerning an earlier
post-trial application.

[3]            
The plaintiff, Ms. Payne, was injured in two car accidents, one on
October 13, 2004 and another on September 15, 2005. The first accident resulted
in serious injuries to Ms. Payne. The second was quite minor in nature and
contributed negligibly to the injuries she suffered in the first accident.

[4]            
In the October 13, 2004 accident, Ms. Payne was a passenger in a
small car driven by her son. The defendant’s car hit the passenger side of the
Payne car with great force. Ms. Payne suffered multiple trauma as a result
and was hospitalized for four weeks.

[5]            
Among Ms. Payne’s injuries were severe lacerations to the lower
half of her face which required dozens of stitches and, thereafter, plastic
surgery. She wore dentures at the time, supported by a number of teeth. In the
accident, due to the force with which the defendant’s car struck the Payne car,
Ms. Payne’s jaw was fractured and three of her teeth were sheared off at
the gum line. Three remaining teeth were pushed back in her mouth.

[6]            
Mrs. Payne suffered numerous other injuries which gradually
resolved over time. They included pelvic, ankle and lumbar fractures, multiple
soft tissue injuries to the cervical and lumbar spine and severe bruising to
her elbows and knees. She was also diagnosed during her initial hospitalization
with a mild traumatic brain injury.

[7]            
Ms. Payne suffered anxiety and depression as a result of her
injuries and, in particular, her facial injuries. Her facial lacerations
resulted in permanent scarring of the lower part of her face, extending from
the side of her mouth to her chin. Several experts gave evidence concerning the
injuries to Ms. Payne’s face and mouth and the reconstructive surgery that
was required.

[8]            
Ms. Payne advanced claims for non-pecuniary loss, past loss of income,
cost of future care, future loss of income and special damages.

[9]            
I concluded ultimately that Ms. Payne was entitled to damages for
non-pecuniary loss in the amount of $165,000, damages for past loss of income
in the amount of $160,000, and special damages in the amount of $71,238. The
$160,000 amount for past loss of income was to compensate Ms. Payne for
the four years she was unable to work prior to the trial at an annual salary of
$40,000.

[10]        
The defendants argued that Ms. Payne was capable of returning to
work two years post-accident. I rejected that position based on all of the
medical evidence, concluding instead that she was able to return to work only
as at the date of trial. I noted that as of the date of trial Ms. Payne
continued to receive long-term disability benefits.

[11]        
I also concluded that Ms. Payne was not entitled to damages for
cost of future care. I was satisfied that as of the date of trial she no longer
required ongoing medical care or other assistance.

[12]        
An issue that took up a great deal of time at trial concerned the dental
treatment Ms. Payne received. It was the position of the defendants that Ms. Payne’s
pre-existing dental problems would likely have required much of the dental
treatment at some point in the future. I rejected that argument and awarded Ms. Payne
the full amount of her claim for special damages, which was slightly over
$71,000.

[13]        
The award totalled almost $400,000. However, the net amount of the award
was $244,732.08 after a number of deductions. Some of the deductions reflected advance
payments she received from the insurer. Most of the special damages, that is,
over $60,000, were subsequently deducted from the tort award as an amount paid
or payable under (then) section 25 of Part 7 of the Motor Vehicle (Insurance)
Act, R.S.B.C. 1996, c. 231.

[14]        
The net award of $244,732 is relevant to the first aspect of the
defendants’ current costs application, which is based on an offer to settle
made by the defendants shortly before the trial.

[15]        
I will turn now to that offer to settle.

[16]        
The trial was scheduled to commence Monday, October 6, 2008. On
Saturday, September 27, 2008, the parties attended mediation. At the end of the
day on September 27, the defendants faxed to plaintiff’s counsel a Rule 37B
offer. The offer contained a choice of two amounts:  First, an offer of
$250,000 "new money" if the offer was accepted before 4:00 p.m. on
Wednesday, October 1; or second, an offer of $225,000 "new money" if
accepted after 4:00 p.m. October 1, but before the commencement of trial on
October 6. At the end of the day on Monday, September 29, counsel for Ms. Payne
rejected the defendants’ offer and instead presented the offer of $525,000
"new money."

[17]        
The term "new money" was understood to mean an amount in
addition to advance payments and amounts paid or payable under Part 7.

[18]        
As already noted, the net amount the plaintiff received pursuant to the
tort award following the trial was approximately $5,000 less than the first
amount offered and rejected. As a result, the defendants seek an award of costs
against the plaintiff from the date of the delivery of the offer, that is,
September 27, 2008. Specifically the defendants say the plaintiff would be
entitled to her costs up to that date, but that they are entitled to their
costs after that time.

[19]        
Rule 37B(5) of the Rules of Court provides as follows:

(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 defendant’s costs in respect of all or some of the
steps taken in the proceeding after the date of delivery of the offer to
settle.

[20]        
Subsection (6) states as follows:

(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 purpose of Rule 37B as noted in Bailey v. Jang,
2008 BCSC 1372 is to encourage conduct of litigation which reduces its duration
and expense and to discourage conduct that has the opposite effect.

[22]        
In Bailey v. Jones, Hinkson J. (as he then was) noted that Rule
37B "…brought about the reversion from a strict code to a reliance on
judicial discretion…" with respect to costs and offers to settle. Further,
it was noted that the discretion is unfettered. Of course, that discretion must
be exercised judicially.

[23]        
The plaintiff in Bailey v. Jang, which involved a personal injury
claim, was offered $35,000 after taking into account Part 7 benefits paid or
payable and any advances already received. The plaintiff rejected that offer. At
trial, which was heard by a jury, the plaintiff’s claim was dismissed in its
entirety. The defendant sought double costs from the date of delivery of the
letter and thereafter. Hinkson J. (as he then was) ultimately awarded double
costs for the period commencing seven days after delivery of the offer to
settle. He stated that the reasonableness of the plaintiff’s decision to reject
the offer must be assessed only prior to the date that the offer was open to
acceptance. I note that Hinkson J. concluded that it was not unreasonable for
the plaintiff to reject the offer at the time it was made.

[24]        
As stated by the court in ICBC v. Patko, 2009 BCSC 578, an offer
that is subsequently revoked and replaced with another is one that may still be
considered under Rule 37B if it was an offer that ought reasonably to have been
accepted while it remained open. On the issue of timing, the question is
whether the offeror gave time for consideration that was reasonable in all of
the circumstances.

[25]        
In this case there was no evidence concerning the financial
circumstances of the defendants. Accordingly, I must consider whether the offer
was one that ought reasonably to have been accepted at the time. I must also
consider the relationship between the terms of the settlement offer and the
final judgment of the court and any other factors I may consider appropriate in
the circumstances.

[26]        
The offer of $250,000, open for four days, was then reduced to $225,000.
The $250,000 offer exceeded the net tort award, but only by $5,000. Was it
unreasonable on the plaintiff’s part to reject that offer?  At the time of the
offer, which was made only a few days before trial, Ms. Payne was still
receiving long-term disability benefits. Some, albeit not all, of the medical
consultants, including some who were her treating physicians, supported her
assertion that she could not return to work in her previous job. I ultimately
concluded that she did not suffer any ongoing brain injury that would preclude
her from returning to work, albeit with the job and economic modifications to
which her employer testified and was prepared to put in place.

[27]        
Ms. Payne had been off work for almost four years at the date of
trial. I accepted that she had in fact been unable to work that entire time. For
three of those years, she had undergone painful and unsightly surgery to her
mouth. The evidence from her employer about the nature of her work and the
accommodations that could be made upon her return to work, as well as the opinions
of the experts, satisfied me that Ms. Payne did not suffer from ongoing
mild traumatic brain injury. On that basis, I concluded that Ms. Payne could
return to work. That conclusion precluded any award for future income loss.

[28]        
Notwithstanding that conclusion, it was not unreasonable of Ms. Payne
to anticipate, prior to trial, that she could receive an award for at least
some future loss of income, particularly as she was still off work and
receiving long-term disability benefits at the time. Had there been any award
under that head of damage, the $250,000 offer of the defendants would have
fallen well short of what she did receive as part of the ultimate tort award.

[29]        
Accordingly, in my view, the offer was not one that ought reasonably to
have been accepted by Ms. Payne. Accordingly, neither factor described in
Rule 37B militates in favour of the defendants’ position.

[30]        
I decline, therefore, to exercise my discretion to award the defendants
costs from the date of the offer.

[31]        
That takes me to the second issue.

[32]        
The defendants argued, in the alternative, that the plaintiff should be
deprived, and the defendants awarded, costs relating to the claims for future
income loss and future cost of care to reflect Ms. Payne’s lack of success
regarding those claims. The defendants sought costs for two-and-a-half days of
trial and disbursements for the parties’ experts relating to those issues. Further
(and in the alternative), the defendants sought orders that (a) the plaintiff
be denied all costs and disbursements relating to two experts, Drs. Mok and
Hyrman (both psychiatrists), and (b) that the defendants be awarded costs for
the one day of trial taken up with the evidence of those doctors.

[33]        
I will briefly review the parties’ respective positions at trial
concerning the various heads of damage.

[34]        
Ms. Payne claimed $200,000 for non-pecuniary damage, $160,000 for
past wage loss, representing her annual yearly income for the four years,
special damages in the amount of $71,000, loss of future earning capacity for a
five-year period, that is, to an anticipated date of retirement, and cost of
future care at $91,000.

[35]        
The defendants argued at trial that (1) non-pecuniary damages should be
in the range of $55,000 to $70,000; (2) past wage loss should be restricted to
two years’ income, alleging that Ms. Payne had been capable of returning
to work two years prior to trial; (3) there should be a much reduced award for
special damages on the basis that most of the dental work was not caused by the
defendants’ negligence, and (4) there should be no damages for cost of future
care or future loss of income.

[36]        
In essence, the defendants argued that Ms. Payne had malingered for
the two years prior to trial. They vigorously challenged the reasonableness of
the dental and medical treatment she received and the magnitude of the physical
and emotional trauma she had suffered post-accident.

[37]        
I concluded that Ms. Payne suffered significant physical and
emotional trauma, and that it was only at the time of trial she was ready for a
graduated return to work. I awarded all of her past income loss and special
damages sought and most of the non-pecuniary damages she sought.

[38]        
Ms. Payne did become focused on her injuries and limitations, but
that was, in my view, due to the years of pain, the multiple facial/dental surgeries,
and the psychological impact of her facial disfigurement. I described those
injuries and their impact at paras. 107 to 110 of my award. I did not
conclude that Ms. Payne was a malingerer, or that she purposely
exaggerated her symptoms. I simply concluded on the medical evidence that she
did not suffer from an ongoing traumatic brain injury, or a debilitating
psychiatric or psychological condition. There was no culpable behaviour on Ms. Payne’s
part which unduly prolonged the proceedings.

[39]        
The principles governing the application of Rule 57(15) have been well
summarized, but I will turn first to the wording of the applicable rules.

[40]        
Rule 57(7)(b) states:

(7) Where the court has made an order for costs,

…

(b)  the judge or master may direct that any item of costs,
charges or disbursements be allowed or disallowed…

Rule 57(15) states:

(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.

[41]        
However, subrule 15 is an exception to the directive in Rule 57(9) that
costs follow the event unless the court otherwise orders.

[42]        
In Sigurdson v. Fidelity Insurance Company of Canada et al (No. 2),
[1977] 6 W.W.R. 451 (B.C.S.C.) McKenzie J. drew a distinction between the
event, which he compared to a war, and an issue, which he compared to a battle
in the war.

[43]        
Rule 57(15) allows the court in appropriate circumstances to award costs
to the party who succeeded on a discrete issue (British Columbia v.
Worthington (Canada) Inc. (1988), 29 B.C.L.R. (2d) 145 (C.A.)).

[44]        
In Jacobsen v. Bergman, [1999] B.C.J. No. 2910 (S.C.) (QL)
Burnyeat J. discussed the limited circumstances in which costs should be
apportioned under Rule 57(15). At para. 17 he said:

Costs should be apportioned under
Rule 57(15) only where separate issues can be delineated clearly: Haida Inn
Partnership v. Touche Ross & Co. (1991), 48 C.P.C. (2d) 61 (B.C.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 the trial but rather was envisioned
that there would be discreet issues, occupying distinct portions of time in the
life of a trial and involving distinct questions of law or fact, upon which an
objective observer could say one or other of the parties was successful in the
result.

[45]        
The principles governing the application of Rule 57(15) were well
summarized in DiFranco v. Sung, [1998] B.C.J. No. 430 (B.C.S.C.)
(QL), cited with approval in White v. Stonestreet, 2006 BCSC 1605. Those
factors are as follows:

1.         Rule
57(15) [formerly R. 57(8)] is concerned with success on particular issues or
parts of the proceeding, not with success in terms of the relief granted.

2.         An
issue within the meaning of R. 57(15) is one which is a neatly severable part
of the pleadings or proceedings.

3.         It is
an error in principle to award every litigant costs on issues on which the
opposing party has failed.

4.         Proof
of misconduct is not a condition precedent to making an order under the rule.

5.         The
court will consider conduct in determining the severity of the order, eg.
whether to deprive a party of his costs or to award costs in his opponent’s
favour.

6.         Apportionment of costs should
occur in relatively few cases.

[46]        
While Ms. Payne’s claims for loss of earning capacity and cost of
future care were unsuccessful, the evidence of the treating practitioners and
consultants was sufficiently intertwined with the other issues at trial as to
render it inappropriate, in my view, to hive off portions of the evidence relevant
to those heads of damage. Ms. Payne was, in my view, substantially
successful in this personal injury litigation.

[47]        
Subrule 15 of Rule 57 was designed to be an exception to the general
rule and is not amenable to an application in most personal injury claims where
so much of the evidence is led to address the issues generally.

[48]        
I can do no better than cite Burnyeat J. in the DiFranco v. Sung
case at para. 12:

I am satisfied that this is not
one of those "relatively few cases" where there should be an
apportionment of costs. I cannot conclude that the case would have taken less
time or that it would have been settled if the prior medical and psychological
history of the plaintiff had been made known to all of the consultants from the
beginning. At the same time, it is impossible to find that the questions of
future wage loss and future care costs are "neatly severable."
Rather, these heads of damages are inseparable from the main question raised by
the pleadings: to what extent the admitted negligence of the defendants has
created long term effects for the plaintiff. While the claims may have been
exaggerated, I did not and cannot now conclude that they were imaginary. It is
merely the case that I could not be satisfied on a balance of probabilities
that the plaintiff had shown that there was any loss of earning capacity or any
need for future care costs as a result of the two accidents.

[49]        
Those observations apply equally to the defendants’ application to deny Ms. Payne
her costs with respect to Drs. Mok and Hyrman. I concluded their evidence was
not helpful on the issue of Ms. Payne’s cognitive ability or disability,
but that, in my respectful view, does not provide a basis to deny Ms. Payne
her costs with respect to their evidence. Accordingly, the defendants’ costs
applications are denied.

[50]        
As the substantially successful party, Ms. Payne is entitled to her
usual costs of trial at Scale B. That includes the costs of the present
application.

[51]        
However, the defendants are entitled to their costs for the application
heard July 6, 2009 and November 10, 2009 concerning the effect of section 25 of
Part 7 on the net tort award.

[52]        
In conclusion, then, counsel:  Following the notice of motion — paragraph
1 is no longer in issue.

[53]        
The relief sought in paragraphs 2, 3, and 4 is denied.

[54]        
The relief sought in paragraph 5 is allowed.

[55]        
The plaintiff is entitled to her costs at trial and is entitled to the
costs of the present application.

[DISCUSSION RE CORRIGENDUM]

[56]        
THE COURT:  Thank you.

The Honourable
Madam Justice C. A. Wedge