IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20110411

Docket: M041927

Registry:
Vancouver

Between:

Michelle Marie
Danicek

Plaintiff

And

Susan Shou Yee Li
and Pao Fu Li

Defendants

Before: The Honourable Mr.
Justice Kelleher

Reasons for Judgment

[1]          
This decision addresses the parties’ dispute about costs.

[2]          
The matter arose from a motor vehicle accident, which occurred on
June 29, 2002.  It was consolidated for trial with two other actions. 
Both of the other actions arose from a fall in a nightclub on the evening of
April 5, 2001.

[3]          
The plaintiff was injured in both accidents.

[4]          
The trial was conducted over 29 days, between January 4 and
April 1, 2010.  The plaintiff claimed against these defendants that she
had suffered soft tissue injuries and exacerbation of a headache disorder,
which was caused by the 2001 fall.

[5]          
Judgment was rendered on August 9, 2010: Danicek v. Alexander
Holburn Beaudin & Lang, 2010 BCSC 1111.  The plaintiff received an
award of $10,595 in damages arising from the motor vehicle accident.  (The
plaintiff was awarded $5,913,783.54 in the 2001 fall action.)

[6]          
There were offers to settle.  On January 28, 2009, the plaintiff
offered to settle her claim for “$1,900,000 plus costs”.  The offer was open
for acceptance until February 20, 2009.  On February 16, 2009, the
defendants offered $500,000 to settle.  This offer was open for acceptance
until 4:00 p.m. “on the last business day prior to the commencement of the
first day of trial”.

[7]          
The trial was scheduled to commence on February 23, 2009.  However,
on that day there were a series of applications which resulted in the
adjournment of the trial until January 4, 2010.

[8]          
There were two subsequent offers.

[9]          
The motor vehicle accident occurred on June 29, 2002.  The
defendants admitted liability for the accident.  The plaintiff’s submission was
that she was on a trajectory of recovery from her serious injuries in the dance
floor fall.  The recovery was halted as a result of the motor vehicle accident.

[10]       
I did not accept that contention.  I awarded damages that amounted to a
small fraction of the amount sought by the plaintiff.  The award was less than the
defendants’ offer.

[11]       
The following issues remain to be addressed:

1.      Does the Court have
jurisdiction to award double costs?

2.      If so, should there be an
award for double costs incurred after February 16, 2009?

3.      Should costs be at
Scale C?

4.      Should there be an award of
increased costs?

5.      Should
there be special costs?

1.         Jurisdiction

[12]       
Rule 37B(5) of the Rules of Court came into effect on July 1,
2008.  It provided:

(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.

[13]       
On July 1, 2009, it was amended by adding paragraphs (c) and (d):

(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.

[14]       
The plaintiff submits that the defendants’ offer was made after
July 2008 and before the July 1, 2009 amendments.  There is no
jurisdiction to award a defendant double costs where the defendants’ offer was
higher than the amount awarded.  The plaintiff relies on E. (A.) (Litigation
guardian of) v. J. (D.W.), 2009 BCSC 505.  In that case, Goepel J.
considered the language of Rule 37B(5).  He reached these conclusions (at
paras. 51-52):

… Rule 37B(5) dictates the cost options open to a judge when
an offer to settle has been made.  A judge can either deprive the party, in
whole or in part, of costs to which the party would otherwise be entitled in
respect of steps taken in the proceeding after the date of the delivery of the
offer to settle or award double costs of some or all of the steps taken in the
proceeding after the delivery of the offer to settle.  As noted in [BCSPCA
v. Baker, 2008 BCSC 947], the section is permissive and a judge is not
compelled to do either.

What a judge cannot do, however,
in my respectful opinion, as a result of an offer to settle, is to order costs
to a defendant where the offer to settle was in an amount greater than the
judgment.  While that cost option had existed since the time of the 1890 rules,
either as an exercise of the court’s discretion or because it was mandated by
the terms of the rule, it is not an option available under Rule 37B.  The
drafters of Rule 37B(5) have removed that option and presumably determined that
the potential deprivation of costs to which a plaintiff would otherwise be
awarded is a sufficient incentive for plaintiffs to settle litigation.  As
noted in [Cridge v. Harper Grey Easton & Co., 2005 BCCA 33, 37
B.C.L.R. (4th) 62], the Lieutenant Governor in Council has the right to limit
the court’s discretion.  Accordingly, I hold that pursuant to Rule 37B(5) the
court cannot award costs to the defendant but is limited to depriving a party
of costs or awarding double costs

[15]       
Grauer J. followed E. (A.) in Robyrts v. Robyrts,
2009 BCSC 583.  At paras. 16, he said this about E. (A.):  “In
other words, the party seeking double costs must first have been in a position
to be awarded costs. I consider that conclusion to be binding upon me.”  On
appeal, the Court of Appeal did not find it necessary to address this issue. 
In Robyrts v. Robyrts, 2009 BCCA 574 at para. 11, the Court upheld the
trial judge’s alternative finding: if Grauer J. did have the power to make the
order, it was not appropriate to do so on the facts of that case.

[16]       
The amended Rule 37B(5) came into force on July 1, 2009.  Under the
amended Rule, the Court has the undoubted jurisdiction to make the double costs
order sought by the plaintiff.

[17]       
The plaintiff, however, argues that she was unable to accept the offer
when the amended Rule came into force because the offer expired on
February 20, 2009.

[18]       
The offer expired at “4:00 PM, Pacific Time, on the last business
day prior to the commencement of the first day of trial in this proceeding.” 
The plaintiff says that the trial commenced on February 23, 2009, and was
subsequently adjourned.

[19]       
The trial was indeed scheduled to commence on February 23, 2009.  However,
due to a series of settlements between Ms. Danicek and defendants and
third parties in the dance floor matter, the third party, Lombard, found itself
as the only party to defend the action.  Lombard was not ready for trial.  The
trial was adjourned over the strenuous objection of the plaintiff. Consequently,
on February 23, 2009, no opening statement was made; no witness was called;
no exhibit was marked.

[20]       
The first day of trial was January 4, 2010. The defendants’ offer
was open until December 31, 2009, the last business day before the trial.

[21]       
The July 2009 amendment applies to the offer.

[22]       
The Court has jurisdiction to consider the defendants’ application.

[23]       
(The new Supreme Court Civil Rules, B.C. Reg.
168/2009, came into effect on July 1, 2010. Rule 9-1 replaced Rule 37B(5).
They are identical in wording and effect.)

2.         Should there be an award of double costs?

[24]       
The claim for double costs arises from the defendants’ offer of $500,000
in February 2009, and the eventual award of $10,595.  In Radke v. Parry,
2008 BCSC 1397 at para. 38, the legislative policy was described:

… Notwithstanding the
differences [between Rule 9-1 and its predecessors, Rules 37 and 37A]… 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).

[25]       
The factors are described in Rule 9‑1(6) of the Supreme Court
Civil Rules:  (a) was the offer one that should reasonably have been
accepted; (b) the relationship between the offer and the final judgment;
(c) the relative financial circumstances of the parties; and (d) any
other factor the Court deems relevant.

(a)    Was the offer one that should
reasonably have been accepted?

[26]       
In my view, it was reasonable for the plaintiff to decline the offer. 
$500,000 is far from insignificant, especially in light of the amount awarded. 
On the other hand, the offer was but 8% of Ms. Danicek’s eventually
losses.

[27]       
I agree with the plaintiff that there was a substantial risk that
Ms. Danicek would be undercompensated had she accepted the offer.  It was
Dr. Hunt’s opinion that Ms. Danicek had suffered another head injury
in the motor vehicle accident.  Had the Court concluded (as the plaintiff
argued) that the injuries suffered in the motor vehicle accident were
indivisible from the dance floor accident, there would have been joint and
several liability: Athey v. Leonati, [1996] 3 S.C.R.
458, 140 D.L.R. (4th) 235.

[28]       
The plaintiff also urged me to apply the approach in Long v. Thiessen
(1968), 65 W.W.R. 577 (B.C.C.A.).  It was not until long after the trial that
the Court of Appeal in Bradley v. Groves, 2010 BCCA 361, held that Long
v. Thiessen is no longer good law.

[29]       
(I note, as well, if this matter had settled there still would have been
a shorter but still lengthy trial.)

(b)    Relationship between the offer and
the final judgment.

[30]       
There is obviously a dramatic difference between the defendants’
settlement offers and the amount ultimately awarded at trial.

(c)    Financial circumstance of the
parties.

[31]       
The plaintiff bears the onus of proving she is financially disadvantaged
compared to the defendants. See: Arnold v. Cartwright Estate, 2008 BCSC
1575 at para. 23; Leus v. Laidman, 2008 BCSC 1819 at paras. 53-59.

[32]       
Ms. Danicek deposed that her financial circumstances are such that
if any significant costs award is made against her, she will have to refinance
her home.  This will require the cooperation of her partner, Frank Schober.

[33]       
There is no evidence that the defendants’ financial circumstances are
more advantageous.

[34]       
Although the named defendant is insured, it is now well established that
Rule 9‑1(6) does not invite consideration of insurance coverage.
See: Bailey v. Jang, 2008 BCSC 1372 at para. 34; Arnold at para.
23. Additionally, in this case there is no suggestion that the fact of
insurance coverage led to unnecessary or protracted proceedings:  Hunter v.
Anderson, 2010 BCSC 1591 at para. 22.

[35]       
In sum, the financial circumstance of the parties is not a significant
factor.

(d)    Any other factor the Court deems
relevant.

[36]       
Lack of candour is relevant in determining whether discretion should be
exercised under Rule 9‑1. See: McIsaac v. Healthy Body
Services Inc., 2010 BCSC 1033 at paras. 80-81.

[37]       
In determining the difficult issue of the relationship between the motor
vehicle accident and the headaches, I made certain observations about the
plaintiff’s testimony (Danicek at paras. 169-174):

I have major difficulties with certain aspects of the
plaintiff’s evidence. I must conclude that she is not a reliable reporter of
her symptoms.

Ms. Danicek has been examined for discovery by various
defendants and third parties on some 11 occasions over a period of several
years. This litigation has been protracted.

In these circumstances it is understandable that the
plaintiff made errors of recollection or that she confused one year for
another. Ms. Danicek is very intelligent but she is human. She can make and has
made errors in giving evidence.

But on some occasions her answers on discovery or in
cross-examination go beyond error.

Ms. Danicek, to state the obvious, has a significant stake in
the outcome of these proceedings. She is shrewd. She is anxious to put her case
in the best possible light.

At times, I conclude, this has
caused her to tailor her evidence to her own advantage. This may be unconscious
but several incidents of this tendency when considered together lead me to
conclude that there are sharp limits to the reliability of her evidence.

[38]       
Considering all the factors, I conclude that there should be no award of
double costs.  The plaintiff suffered, I found, career ending injuries.  I
cannot say it was unreasonable to decline the offer.  Although I considered
Ms. Danicek to be less than candid, I conclude on a consideration of all
factors that no double costs award should be made.

3.         Scale B or Scale C

[39]       
The scale of costs and increased costs are both addressed in
Appendix B of the Supreme Court Civil Rules:

2    (1)  If a
court has made an order for costs, it may fix the scale, from Scale A to
Scale C in subsection (2), under which the costs will be assessed, and may
order that one or more steps in the proceeding be assessed under a different
scale from that fixed for other steps.

(2)  In fixing the scale of costs,
the court must have regard to the following principles:

(a) Scale A is for matters of
little or less than ordinary difficulty;

(b) Scale B is for matters of
ordinary difficulty;

(c) Scale C is for matters of
more than ordinary difficulty.

(3)  In fixing the appropriate
scale under which costs will be assessed, the court may take into account the
following:

(a) whether a difficult issue of
law, fact or construction is involved;

(b) whether an issue is of
importance to a class or body of persons, or is of general interest;

(c) whether the result of the
proceeding effectively determines the rights and obligations as between the
parties beyond the relief that was actually granted or denied.

…

(5)  If, after it fixes the scale
of costs applicable to a proceeding under subsection (1) or (4), the court
finds that, as a result of unusual circumstances, an award of costs on that
scale would be grossly inadequate or unjust, the court may order that the value
for each unit allowed for that proceeding, or for any step in that proceeding,
be 1.5 times the value that would otherwise apply to a unit in that scale under
section 3(1).

(6)  For the purposes of subsection (5) of this section, an
award of costs is not grossly inadequate or unjust merely because there is a
difference between the actual legal expenses of a party and the costs to which
that party would be entitled under the scale of costs fixed under subsection
(1) or (4).

[40]       
Counsel agree that the relevant factors for determining whether
Scale C costs should be awarded include:

–       the length of trial;

–       the complexity of issues
involved;

–       the number and the complexity
of pre-trial applications;

–       whether the action was hard
fought with little conceded;

–       the number and length of
examinations for discovery;

–       the number and complexity of
expert reports; and

–       the
extent of the effort required in the collection and proof of facts.

See: Mort v. Saanich School Board, 2001 BCSC 1473
at para. 6; 566935 B.C. Ltd. v. Allianz Insurance Co. of Canada, 2005
BCSC 3032 at para. 7.

[41]       
Based on these criteria, there will be an award at Scale C.

[42]       
The trial was 29 days.  A central issue was whether the plaintiff’s
symptoms would have resolved but for the motor vehicle accident.  There were
reports and/or testimony from physiatrists, neurologists, psychiatrists and
others.  The plaintiff alone relied on 21 expert reports.

[43]       
The action was complex. There were some seven parties involved. The
plaintiff was examined for discovery on eleven occasions over several years. There
were a number of applications both prior to and during the trial.  This case
bears similarity to Graham v. Marek, 2002 BCSC 214; Ramcharitar v.
Gill, 2007 BCSC 1268; and Mosher v. Sedens Estate, [1998] B.C.J. No. 2822.

[44]       
I have considered Hussack v. School District No. 33 (Chilliwack),
2010 BCSC 304, and Radke, when costs at Scale B were awarded.

[45]       
Hussack was a 23-day trial.  However, the liability issue was not
complex; there were only four pre-trial applications and none was complicated. 
The examination for discovery of the plaintiff was one full day and three half
days.  There was one plaintiff and one defendant.

[46]       
In Radke, Madam Justice Boyd cited these circumstances in
concluding that the matter was not a matter of “more than ordinary difficulty”
(at para. 26):

[26]      The one circumstance which I agree made this case
somewhat unusual was the fact that the defendant apparently took a very heavy
interest in this case, to the point of following her neighbour (the plaintiff)
about and gathering evidence to challenge her claims of disability.  In
response the plaintiff’s counsel apparently conducted an in- depth
investigation of the defendant, including her history of unusual behaviour in
the neighbourhood, so as to challenge her own credibility and
reliability.  The trial was settled before that evidence was heard.  

[47]       
The complexity of this matter is well beyond what was before the Court
in Hussack and Radke.

4.         Increased Costs

[48]       
I turn to increased costs.  Section 2(5) of Appendix B of the Supreme
Court Civil Rules permits the Court to award increased costs where there
are “unusual circumstances” that render costs on the normal scale “grossly
inadequate or unjust”.  In 380876 British Columbia Ltd. v. Ron Perrick Law
Corp., 2009 BCSC 1209 at para. 27, Allan J. made a useful list of
factors constituting unusual circumstances:

–             
the serious nature of the allegations;

–             
the complexity or difficulty of the issues in the litigation;

–             
the importance of the litigation to the parties or to the
development of the law; and

–             
misconduct by the unsuccessful party in the litigation.

[49]       
The defendants point to the fact that legal fees totalled some $410,000
plus approximately $13,500 to retain independent counsel for a couple of
purposes.

[50]       
I accept that it was appropriate to obtain independent counsel.  I also
conclude it was appropriate to have two counsel prepare for and attend the
trial.  On this basis, even at Scale 3, costs will be $181,832, less
one-half the legal fees incurred by the defendants.

[51]       
The litigation was of real importance to the parties.  (This is not
usually a very important factor.  Litigation is always important to the parties;
otherwise, they would not be here.)  The defendant was facing a claim well in
excess of the limits of the insurance policy.  The plaintiff sought to be
compensated for a career-ending injury.

[52]       
The issues were complex.  However, that was a central reason for
awarding costs at Scale C.

[53]       
Was there “misconduct” here within the meaning of the decided cases?  Misconduct
need not reach the “reprehensible” threshold to justify special costs. See: National
Hockey League v. Pepsi-Cola Ltd. (1995), 2 B.C.L.R. (3d) 13,
122 D.L.R. (4th) 421 (C.A.).

[54]       
The defendants allege misconduct on the part of Ms. Danicek.  The
“misconduct” was in pursuing an allegation, unsuccessfully, that the disabling
symptoms resulted from the car accident.

[55]       
I conclude that increased costs are not appropriate here.  The
conclusion I reached, on all the evidence, was that the headaches were not
worsened by the motor vehicle accident.  The plaintiff, after all, was not a
malingerer.  There was some evidence of a concussion in the motor vehicle
accident. I did not accept that evidence.

[56]       
I found the plaintiff not to be a “reliable reporter of her symptoms”: Danicek
at para. 169.  That is in the context of injuries which I found to be severe.

[57]       
The conduct of the plaintiff, in giving her evidence in a less than
straightforward manner, arguably constitutes unusual circumstances.  However, I
do not agree that the award of costs at the fixed scale is a “grossly
inadequate or unjust award”.  After all, there was the evidence of
Dr. Hunt; i.e. his opinion that Ms. Danicek had suffered another head
injury in the motor vehicle accident.

5.         Special Costs

[58]       
The defendant seeks costs for one day: January 20, 2011.  The
hearing on costs was scheduled for that day, but adjourned.  The defendants say
the reasons for the adjournment that were put forward were untrue.  Specifically,
the defendants submit that the reason put forward for not accepting an offer of
settlement was untrue.  Such conduct, the defendants argue, is deserving of
rebuke: Garcia v. Crestbrook Forest Industries Ltd. (1994), 9 B.C.L.R.
(3d) 242, 119 D.L.R. (4th) 740 (C.A.) at paras. 14-17.

[59]       
The adjournment was not ordered because of the statements by plaintiff’s
counsel.  I am not persuaded that there should be any award of special costs in
respect of that day.

6.         Apportionment

[60]       
The defendants argue that costs should be apportioned.  This is based on
the assertion that Ms. Danicek should have recognized there was little
basis for the contention that the motor vehicle accident was a contributing
cause of her ongoing disability.

[61]       
I disagree.  As I explained above, the plaintiff suffered a serious
injury in the fall.  She alleged, but did not prove, that the motor vehicle
accident was a cause of ongoing symptoms.  The fact that, after a long trial
and on all the evidence, I was not persuaded to accept the plaintiff’s position
on this issue is not a justification for apportioning costs.

Conclusion

[62]       
 In the result, I conclude as follows:

1.      The Court does have
jurisdiction to award double costs.

2.      There should not be an award
for double costs.

3.      Costs should be awarded at
Scale C.

4.      There should not be an award
of increased costs.

5.      There should not be an award of
special costs.

6.      There will be no apportionment.

“Kelleher J.”