IN THE SUPREME
COURT OF BRITISH COLUMBIA

Citation:

Ward v. Klaus,

 

2012 BCSC 99

Date: 20120125

Docket: M034910

Registry:
Vancouver

Between:

Jodie Irene Ward

Plaintiff

And

Adolf Klaus

Defendant

Before:
The Honourable Mr. Justice Goepel

Supplementary
Reasons to: Supreme Court of British Columbia,
August 27, 2010, Ward v. Klaus, 2010 BCSC 1211, VA M034910

Supplementary Reasons for Judgment

Counsel for the Plaintiff:

V.J. LeBlanc

Counsel for the Defendant:

W.M. Finch, Q.C.

Place and Date of Hearing:

Vancouver, B.C.

December 16, 2011

Place and Date of Judgment:

Vancouver, B.C.

January 25, 2012



 

INTRODUCTION

[1]            
Following a 14-day trial, Justice Rice, in reasons indexed at 2010 BCSC
1211, awarded the plaintiff damages totalling $433,103.63.

[2]            
The trial commenced on June 7, 2010. On May 3, 2010, the defendant made
a formal offer to settle the plaintiff’s claim for $493,234.04 (the “First
Offer”). On June 4, 2010, the defendant made a formal offer to settle the
plaintiff’s claim for $595,000 (the “Second Offer”). Both offers were made
pursuant to the provisions of Rule 37B.

[3]            
The defendant now seeks an order that the plaintiff should be deprived
of her costs from the date of the First Offer, and the defendant should be
entitled to his costs thereafter. In the alternative, the defendant submits
that the plaintiff should be deprived of her costs from the date of the Second
Offer, and the defendant should be entitled to his costs thereafter.

[4]            
As Justice Rice has now retired, the Chief Justice appointed me, pursuant
to Rule 23-1(10), to hear this application.

BACKGROUND

[5]            
The plaintiff was injured in a motor vehicle accident on February 4,
2002. The defendant admitted liability. The trial was set to commence on
Monday, June 7, 2010.

[6]            
On May 3, 2010, the defendant’s counsel faxed the First Offer to the
plaintiff’s counsel. The defendant offered to pay Ms. Ward $493,234.04
together with costs to the date of delivery of the offer. The First Offer was
open for acceptance up to 4:00 p.m. on the last business day before the first
day of trial.

[7]            
I note that by May 3, 2010, the parties had exchanged expert reports and
the expert evidence ultimately adduced at the trial consisted of the reports
available to the parties as of May 3, 2010, supplemented by the oral evidence
of the experts.

[8]            
On May 28, 2010, Ms. Ward’s counsel faxed to the defendant’s
counsel an offer to settle the plaintiff’s claim under Rule 37B for $750,000 in
new money. The offer was stated to be open until the start of trial or until
withdrawn in writing.

[9]            
On Friday, June 4, 2010, at 11:04 a.m., the defendant’s counsel faxed to
plaintiff’s counsel the Second Offer. The pertinent terms of the Second Offer,
including the time for acceptance were the same as those of the First Offer,
except the amount offered was increased to $595,000. By its terms the offer
expired at 4:00 p.m. on the last business day before the first day of
trial, being approximately five hours after the offer was delivered.

[10]        
None of the offers to settle were accepted. The case proceeded to trial on
June 7, 2010. The trial lasted some 14 days.

[11]        
 In her submissions at the end of the trial, Ms. Ward asked for
damages totalling $1,779,636.96 broken down as follows:

Non-pecuniary Damages

$190,000.00

Past Loss of Income

$165,000.00

Loss of Future Earning Capacity

$650,000.00

Loss of Homemaking Capacity

$420,000.00

Cost of Future Care

$328,580.00

Special Damages

$26,056.96

[12]        
The defendant’s final submissions suggested an award of between $335,000
– $375,000 calculated as follows:

Non-pecuniary Damages

$100,000.00 –
$120,000.00

Past Loss of Income:

$5,000.00

Loss of Future Earning Capacity

$100,000.00 –
$120,000.00

Cost of Future Care

$130,000.00

Special Damages

To be determined

[13]        
The trial judgment required counsel to do certain calculations to
determine the cost of future care, loss of future earning capacity and past income
loss. The parties’ respective calculations differ by approximately $1,000.
The parties agree that the difference is not relevant in relation to the issues
that I have to deal with. In the result, the trial judgment with adjustments is
either $434,229.33 or $433,103.63. The breakdown is as follows:

 

PLAINTIFF

DEFENDANT

Non-pecuniary Damages

$150,000.00

$150,000.00

Past Loss of Income

$41,674.00

$41,674.00

Loss of Future Earning Capacity

$118,650.00

$118,650.00

Cost of Future Care

$117,173.70

$116,048.00

Special Damages

__$6,731.63

__$6,731.63

TOTAL

$434,229.33

 

$433,103.63

 

 

From these amounts must be subtracted the s. 83
deductions of $17,081.32 leaving a net award of either $417,148.01 or
$416,022.31. In either case, the plaintiff was awarded a sum substantially less
than either of the defendant’s pre-trial offers.

[14]        
The parties have both provided draft bills of costs. The plaintiff’s
bill indicates that subsequent to the First Offer she incurred taxable costs
and disbursements of approximately $61,000. The defendant’s bill indicates that
subsequent to the First Offer he incurred taxable costs and disbursements of
approximately $88,000.

POSITION OF THE PARTIES

[15]        
The defendant seeks an order that the plaintiff should be deprived of
her costs after the First Offer and the defendant should be awarded his costs thereafter.
In the alternative, the defendant submits that the plaintiff should be deprived
of her costs after the Second Offer and the defendant should be awarded his costs
thereafter.

[16]        
The defendant submits that both his offers should have been accepted. If
either offer had been accepted the parties would have both saved the not
inconsiderable costs of a 14-day trial. The defendant submits consequences must
flow from the plaintiff’s decision to proceed to trial.

[17]        
The plaintiff submits that in the circumstances the offers made by the
defendant were not ones that the plaintiff ought reasonably to have accepted. She
points out that prior to the trial she had evaluated her claim at $975,000
calculated as follows:

Non-pecuniary Damages

$175,00.00

Past Loss of Income

$125,000.00

Loss of Future Earning Capacity

$350,000.00

Loss of Housekeeping Capacity

$50,000.00

Cost of Future Care

$275,000.00

TOTAL:

$975,000.00

Taking into account the risk and costs of trial, she made a
formal offer to settle of $750,000.

[18]        
The plaintiff submits that her evaluation of the case before trial was
reasonable and she should not be punished for failing to accept the defendant’s
offer. She also submits that the Second Offer was only open for acceptance for
a matter of hours and the defendant should not be entitled to rely on same. Further,
both offers contained unreasonable conditions.

[19]        
In the alternative, the plaintiff submits that if the court is to give
some effect to the defendant’s offers, it should be for some lesser penalty
than those sought by the defendant. She notes that if the court makes the award
the defendant seeks, the cost to her, taking into account the amounts she must
forego, and assuming the accuracy of the draft bills, would be approximately
$149,000.

DISCUSSION

A.       Pre-Rule 37B:
Legislative and Judicial History

[20]        
In A.E. v. D.W.J., 2009 BCSC 505, 91 B.C.L.R. (4th) 372 at paras. 35-47
(“A.E.”), aff’d 2011 BCCA 279, 19 B.C.L.R. (5th) 350 (“A.E. Appeal”) I
traced the legislative and judicial history of pre-trial settlement offers. The
defendant’s right to make a payment into court while maintaining a denial of
liability can be traced back to the initial Supreme Court Rules adopted in 1890
(o. 22 r. 6). The rule initially only arose in circumstances in which the defendant
paid into court a sum greater than the plaintiff recovered. In such cases, the
default position was that the plaintiff would be awarded costs up to the time
of the offer, while the defendant would be entitled to the costs thereafter.

[21]        
In 1993, Rule 37 was recast (B.C. Reg. 55/93). Payments into court were
replaced by offers to settle. For the first time, plaintiffs were given the
right to make offers to settle.

[22]        
 Rule 37 provided different cost consequences depending on who made the
offer. In the case of defendant, the rule remained that if the plaintiff
obtained judgment for the amount of money specified in the offer or a lesser
amount, the plaintiff would be entitled to costs assessed to the date the offer
was delivered, and the defendant to costs thereafter. In regard to plaintiffs,
if they received an award greater than their offer, they would be entitled to
double costs thereafter.

[23]        
In 1999, Rule 37(24) was further amended in order to allow awards of
double costs to defendants when an action was dismissed subsequent to an offer
to settle (B.C. Reg. 149/99). The amended Rule read:

(24)      If the defendant has made an offer to settle a
claim for money and the offer has not expired or been withdrawn or been
accepted,

(a)        if the plaintiff obtains
judgment for the amount of money specified in the offer or a lesser amount, the
plaintiff is entitled to costs assessed to the date the offer was delivered and
the defendant is entitled to costs assessed from that date, or

(b)        if the plaintiff’s claim is dismissed, the
defendant is entitled to costs assessed to the date the offer was delivered and
to double costs assessed from that date.

[24]        
The 1999 amendment was introduced after a series of trial decisions in
which judges had awarded double costs to defendants in cases where the action
had been dismissed: Jetha v. Shefield & Sons-Tobacconists Inc.,
[1997] B.C.J. No. 317 (Q.L.) (S.C.); 32262 B.C. Ltd. v. Balmoral
Investments Ltd.
, [1998] B.C.J. No. 23 (Q.L.) (S.C.); and Cook v.
Bhanwath
(1999), 73 B.C.L.R. (3d) 305 (S.C.). The rationale for the award
of double costs to both plaintiffs and defendants was that in cases in which
they succeeded they would already be entitled to ordinary costs.

[25]        
Over time the cost provisions of Rule 37 were determined to be a
complete code with respect to offers to settle, allowing for no judicial
discretion: Cridge v. Harper Grey Easton, 2005 BCCA 33, 37
B.C.L.R. (4th) 62.

[26]        
The operation of Rule 37(24)(a) was the subject of some criticism. It
was suggested that it worked an unfair hardship on plaintiffs because an
injured plaintiff was deprived not only of costs and disbursements to which he
or she would otherwise be entitled, but also had to pay the defendant’s costs
and disbursements. The amount of those costs and disbursements would often be
unknown in advance of trial making it difficult for a plaintiff to calculate
with precision their potential exposure if unsuccessful. Counsel’s attempt to
convince the Court of Appeal to modify the rule did not meet with success: Bedwell
v. McGill
, 2008 BCCA 526, 86 B.C.L.R. (4th) 343.

[27]        
Some controversy arose as to whether double costs should be paid to a
defendant who made a nominal offer to settle an action which was subsequently
dismissed. In Clark v. Sidhu, 2005 BCSC 914, 51 B.C.L.R. (4th) 119 (“Clark”),
the defendant had made an offer to settle a motor vehicle case in the sum of $1.00.
After the action was dismissed, the trial judge held at para. 23 that an offer
must be reasonable to attract the sanction of double costs.

[28]        
In Kurylo v. Rai, 2006 BCCA 176, 53 B.C.L.R. (4th) 214 (“Kurylo”),
Southin J.A. held that Clark was wrongly decided and must be
overruled. At paras. 7-8, she said:

[7]        In my opinion, with great respect, the judgment in
Clark v. Sidhu is wrong and must be overruled. There is an underlying
reason. When a defendant assesses his position in litigation of any kind he may
consider that the plaintiff has no case and if the case goes to trial, will
fail. But the defendant may also be willing to make some minor offer which
would carry with it the costs in the hope that the action will go away and that
he will not, thereafter, incur large legal bills to establish his legal
position that the plaintiff has no case.

[8]        The reasonableness of
an offer under Rule 37 is no business of the Court when it is a monetary offer.
… But the reasonableness of the offer when it is a monetary claim, whether
made by the plaintiff or the defendant, is not a matter for judicial
consideration.

B.       Rule
9-1

[29]        
Rule 37B came into effect on July 1, 2008. It is now Rule 9-1. The
relevant provisions of the Rule are:

(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 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 or service 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 or service 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 or
service 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 served 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.

[30]        
Rule 9-1(5) sets out the various cost options open to the court in a
proceeding in which an offer to settle has been made. The court is limited to
those options: A.E. Appeal at paras. 35-40.

[31]        
In BCSPCA v. Baker, 2008 BCSC 947, Justice Preston, at para. 15,
concluded that Rule 9-1(5) was permissive and empowered the court to make any
of the orders mentioned therein. He noted that by necessary implication, the
Rule contemplated that the court may deny any of the forms of relief.

[32]        
Since its inception in 2008, much ink has been spilled explaining the Rule.
LexisNexis Quicklaw presently references some 231 decisions in
which the Rule has been discussed. From the decisions, some broad principles of
general application have emerged concerning how the Rule should be applied.

[33]        
It is now generally recognized that the Rule provides for the exercise
of a broad discretion by trial judges and provides principles to guide in the
exercise of that discretion: Roach v. Dutra, 2010 BCCA 264, 5 B.C.L.R. (5th)
95.

[34]         
In Hartshorne v. Hartshorne, 2011 BCCA 29, 14 B.C.L.R.
(5th) 33 at para. 25   (“Hartshorne”), the Court discussed the
guiding principles:

[25]      An award of double costs is a punitive
measure against a litigant for that party’s failure, in all of the
circumstances, to have accepted an offer to settle that should have been
accepted. Litigants are to be reminded that costs rules are in place “to
encourage the early settlement of disputes by rewarding the party who makes a
reasonable settlement offer and penalizing the party who declines to accept
such an offer” (A.E. v. D.W.J., 2009 BCSC 505, 91 B.C.L.R. (4th) 372 at
para. 61, citing MacKenzie v. Brooks, 1999 BCCA 623, Skidmore v.
Blackmore
(1995), 2 B.C.L.R. (3d) 201 (C.A.), Radke v. Parry, 2008
BCSC 1397). In this regard, Mr. Justice Frankel’s comments in Giles are
apposite:

[74]      The purposes for which costs rules exist
must be kept in mind in determining whether appellate intervention is
warranted. In addition to indemnifying a successful litigant, those
purposes have been described as follows by this Court:

·       
“[D]eterring frivolous actions or
defences”:  Houweling Nurseries Ltd. v. Fisons Western Corp.
(1988), 37 B.C.L.R. (2d) 2 at 25 (C.A.), leave ref’d, [1988] 1 S.C.R. ix; “

·       
“[T]o encourage conduct that
reduces the duration and expense of litigation and to discourage conduct that
has the opposite effect”:  Skidmore v. Blackmore (1995), 2 B.C.L.R.
(3d) 201 at para. 28 (C.A.);

·       
“[E]ncouraging litigants to settle
whenever possible, thus freeing up judicial resources for other cases:  Bedwell
v. McGill
, 2008 BCCA 526, 86 B.C.L.R. (4th) 343 at para. 33;

·       
“[T]o have a winnowing function in
the litigation process” by “requir[ing] litigants to make a careful assessment
of the strength or lack thereof of their cases at the commencement and
throughout the course of the litigation”, and by “discourag[ing] the continuance
of doubtful cases or defences”:  Catalyst Paper Corporation v.
Companhia de Navegação Norsul
, 2009 BCCA 16, 88 B.C.L.R. (4th) 17 at para. 16.

[35]        
In A.E. Appeal the court discussed at para. 41 the importance of certainty
and consequences in applying the Rule:

[41]      This conclusion is
consistent with the importance the Legislature has placed on the role of
settlement offers in encouraging the determination of disputes in a    cost-efficient
and expeditious manner. It has placed a premium on certainty of result as a key
factor which parties consider in determining whether to make or accept an offer
to settle. If the parties know in advance the consequences of their decision to
make or accept an offer, whether by way of reward or punishment, they are in a better
position to make a reasoned decision. If they think they may be excused from
the otherwise punitive effect of a costs rule in relation to an offer to
settle, they will be more inclined to take their chances in refusing to accept
an offer. If they know they will have to live with the consequences set forth
in the Rule, they are more likely to avoid the risk.

C.       Rule 9-1(6)
Guiding Principles

i.        Should the Offer
Have Been Accepted

[36]        
There is now general agreement that in determining whether the offer to
settle should reasonably have been accepted the court does not consider the
final result. The reasonableness of a decision not to accept an offer to settle
must be assessed not by reference to the award that was ultimately made, but rather
the circumstances existing when the offer was open to acceptance: Bailey v.
Jang
, 2008 BCSC 1372, 90 B.C.L.R. (4th) 125 at para. 24 (“Bailey”);
and Hartshorne at para. 27. It is important to note that this
factor is considered from the perspective of the person receiving the offer.

[37]        
In Giles v. Westminster Savings & Credit Union, 2010 BCCA 282,
5 B.C.L.R. (5th) 252 (“Giles”), the Court appears to suggest that the
reasonableness of an offer may be decisive in determining the nature of an
award of costs that should be made. At para. 88 it says:

[88]      I appreciate there are
no mandatory factors under Rule 37B(6) and that trial judges have discretion to
take into account whatever factors they consider appropriate in a given case.
However, the ultimate discretion as to double costs must be exercised in a just,
principled, and consistent way. One of the goals of Rule 37B is to promote
settlement by imposing consequences on parties who have refused to accept an
offer that ought reasonably to have been accepted. While it may not invariably
be the case, I consider that it would be generally antithetical to that goal to
penalize an unsuccessful plaintiff with double costs for proceeding to trial in
the face of an unreasonable offer. Virtually all litigation comes with a degree
of risk. When faced with settlement offers, plaintiffs must carefully consider
their positions. However, they should not to be cowed into accepting an
unreasonable offer out of fear of being penalized with double costs if they are
unable to "beat" that offer. Put somewhat differently, plaintiffs
should not be penalized for declining an offer that did not provide a genuine
incentive to settle in the circumstances. In this case, the Credit Union and Mr. Thomas
have not pointed to anything that would support a finding that the plaintiffs’
decision to refuse their offer was, at the time of the refusal, an unreasonable
one.

[38]        
I have some difficulty with that analysis. It appears to suggest that
plaintiffs who decline an offer that did not provide a genuine incentive to
settle should not be subject to costs sanctions regardless of the outcome of
the trial. That proposition would appear to be counter to the guiding principles
set out in the subsequent decision in Hartshorne.

[39]        
In that regard it is important to note that the Rule does not make any
reference to the impact of “unreasonable offers”. Further, it is with respect difficult
to describe an offer as being “unreasonable” when it provides a better result
to the plaintiff than that which he has obtained at trial. The fact that an
offer does not provide an incentive to settle cannot be determinative. As
Savage J. noted in MacKinlay v. MacKinlay Estate, 2008 BCSC 1570, 44
E.T.R. (3d) 48 at para. 34, in comments echoing Southin J.A. in Kurylo:

[34]      While a nominal offer
might be described as strategic, it was a strategy aimed at persuading the
Plaintiffs to discontinue the proceeding, an outcome that is favourable as
compared to the outcome the Plaintiffs obtained at trial. Such an offer is one
of the few tools in the arsenal of a defendant of relatively modest means which
might exert pressure on a plaintiff pursuing an unmeritorious claim.

[40]        
In certain circumstances a nominal offer may in fact be reasonable and
should be accepted to spare all parties the costs of an expensive trial.

ii.       Relationship
Between Offer and Judgment

[41]        
In Giles, at para. 89, it is suggested that the fact that an
action is ultimately dismissed in its entirety is not a consideration with
respect to double costs:

[89]      I am also of the view that when an offer
made by a defendant for the purpose of achieving a pre-trial settlement is
reasonably refused, the mere fact that the action is ultimately dismissed in
its entirety is not a consideration with respect to double costs. To take the
disposition of the action into account would result in the "hindsight
analysis" that Mr. Justice Hinkson, as he then was, cautioned against
in Bailey v. Jang, 2008 BCSC 1372, 90 B.C.L.R. (4th) 125 at para. 24.
See also: Dodge v. Shaw Cablesystems Ltd., 2009 BCSC 1765 at para. 17.
While I acknowledge that the relationship between the offer and the result at
trial is specifically mentioned in subrule 37B(6)(b), I consider it to have no
relevance in circumstances such as the present
.

[42]        
That comment appears contrary to the Rule which mandates that the court
consider the relationship between the terms of settlement and the final
judgment. I note in Hartshorne, the Court appears to have resiled from
that position at para. 30 where it notes that the relationship of the
offer to the court’s order is “an independent factor to be considered in
deciding whether a double costs order should be made”.

iii.       Relative
Financial Circumstances of the Parties

[43]        
In the first cases decided under Rule 37B, most judges concluded that
the fact that an insurer was involved should not be taken into account: Bailey
at paras. 32-34; and Arnold v. Cartwright Estate, 2008 BCSC 1575,
86 B.C.L.R. (4th) 99 at para. 23. In Smith v. Tedford, 2010 BCCA
302, 7 B.C.L.R. (5th) 246 at para. 19, the Court of Appeal held otherwise.
In that decision the court recognizes that in certain circumstances the
existence of an insurer can be taken into account. As I read the case, that is
not the inevitable result. In this regard I adopt the analysis of Humphries J.
in Mazur v. Lucas, 2011 BCSC 1685 at paras. 48-53 in which she
concluded at para. 53 “insurance coverage is not automatically a factor to
be considered… the facts of a particular case will govern whether it should
be considered, and if so, what weight should be given to it”.

iv.      Other Factors the
Court Considers Appropriate

[44]        
This part of the Rule gives the court wide latitude to consider case
specific matters in determining how its discretion should be exercised. For
example, a case that fails on a difficult causation issue may lead to a
different exercise of discretion than one that is lost because of credibility: A.E.
at para. 59. In my opinion, this is the appropriate place in the analysis
to consider whether an offer was intended to encourage a settlement.

D.       Application of Rule
9-1(6) Factors

i.        Should the Offer
Have Been Accepted

[45]        
Prior to the trial, the plaintiff’s counsel had carefully assessed the
strengths and weaknesses of the case and valued the claim at $975,000. Recognizing
the risks of trial, the plaintiff made an offer to settle for $750,000. It is
noteworthy that the plaintiff did suffer a significant injury which led to an
award of non-pecuniary damages of $150,000. Given counsel’s assessment of the
case, it was entirely reasonable to take the case to trial rather than accept
either of the offers that were made. In these circumstances, I cannot find that
the offer was one that ought reasonably to have been accepted.

ii.       Relationship Between
Offer and Judgment

[46]        
Both offers were substantially greater than the amount awarded to the
plaintiff at trial. Clearly, the plaintiff would have been better off if she
had accepted either of the subject offers. While this disparity is a factor to
properly consider, it is not in itself determinative.

iii.       The Relative
Financial Circumstances of the Parties

[47]        
The evidence indicates that the plaintiff is a full-time homemaker. She
lives with her husband and two sons. Her only source of income is the Canadian
Pension Plan disability benefit of $969.04 a month. Her husband is an
electrician and one of several shareholders in a company that carries on an
electrical business. In 2009, he earned approximately $121,000, which
included a bonus of $50,000. His 2010 estimated income, in which he did not
receive a bonus, is approximately $70,000. The family owns their own home which
has an assessed value as of July 2010 of $352,000. The mortgage on the
home is approximately $120,000 and the family also has a line of credit which
was used to finance a major renovation.

[48]        
The plaintiff will not be impoverished if she has to pay an award of
costs. However, such an award will certainly significantly reduce the value of
the judgment.

[49]        
I have no information concerning the personal defendant. I assume that
the cost award will be borne by his insurer.

[50]        
There is no suggestion in this case that the insurer has used its
financial strength to take any unfair advantage. In my view, the relative
financial position of the parties in the circumstances of this case is of no
import.

iv.      Other Factors the
Court Considers Appropriate

[51]        
The defendant made a significant offer of settlement. While it may have
been reasonable, from the perspective of the plaintiff, to take the case to
trial, the defendant’s offer was more than generous and was well in excess of
what was awarded at trial.

[52]        
The main reason the plaintiff failed to exceed the offer was because the
trial judge did not accept her evidence concerning her intentions to return to
work. He determined that she was never likely to have earned more than $6,000 a
year and awarded only $160,324 for past income loss and loss of future earning
capacity. Prior to trial, plaintiff’s counsel had calculated awards under those
heads of $475,000. A relatively modest increase in the trial judge’s award
under these heads of damage would have enabled the plaintiff to best the
defendant’s offers.

E.       Conclusion

[53]        
For the reasons I have stated, it cannot be said that the plaintiff
should have accepted either offer. That is, however, the beginning, not the end
of the analysis. Unlike Rule 37 which mandated the outcome regardless of the
circumstances, Rule 9-1 gives the court a broad discretion to determine
the consequence of a successful offer to settle. While the Rule is intended to
reward the party who makes a reasonable settlement offer and penalizing the
party who fails to accept it, the several options set out in Rule 9-1(5) allows
the court to determine with greater precision the penalty or reward appropriate
in the circumstances.

[54]        
 In this case, regardless of the merits of the plaintiff’s case, the
defendant’s offers to settle cannot be ignored. To do so would undermine the
purpose of the Rule. Having decided to proceed in the face of two not
insignificant and ultimately successful offers to settle, the plaintiff cannot
avoid some consequences. That said, in the circumstances of this case, to
deprive the plaintiff of her costs and have her in addition pay the costs of
the defendant would be too great a penalty. It would not be fair or just to
require the plaintiff to pay the defendant’s costs after the date of the First
Offer. Similarly, however, I find that the defendant should not pay the costs
of the plaintiff after the delivery of the First Offer, which costs were only
incurred because the plaintiff decided to proceed.

[55]        
Accordingly, I find that the plaintiff is entitled to her costs up to May
3, 2010. The parties will bear their own costs thereafter.

“R.B.T. Goepel J.”

________________________________________

The Honourable Mr. Justice
Richard B.T. Goepel