IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20121211

Docket: M074718

Registry:
Vancouver

Between:

Rhiannon Elizabeth
Paskall

Plaintiff

And

Gabriel Joseph
Scheithauer

Respondent

Before:
The Honourable Mr. Justice N. Smith

Reasons for Judgment

[1]            
After a 19 day trial of this personal injury action, a jury found the
defendant 80 per cent liable for the plaintiff’s injuries, but awarded damages
that will be less than 10 per cent of the defendant’s most recent formal offer
to settle.

[2]            
The defendant now seeks a deduction from the award for benefits payable
under the Part 7 of the Insurance (Vehicle) Act, RSBC 1996, c 231 [Act]
regulations, Insurance (Vehicle) Regulation, BC Reg 447/83 [Regulations],
apportionment of the costs payable to the plaintiff, and costs arising from the
plaintiff’s rejection of offers to settle. The combined effect of these orders would
probably leave the plaintiff with a liability for costs far in excess of her net
judgment.

[3]            
The plaintiff is now 27 years old and is a pre-school teacher/day care
worker. She was 20 when she was struck by the defendant’s car while she was a
pedestrian in a marked crosswalk on November 27, 2005. In its verdict of June
21, 2012 the jury assessed the plaintiff’s total damages at $82,400. The
finding of 20 per cent contributory negligence will reduce that amount to
$65,920.

[4]            
The defendant made two formal offers to settle. The first, for $300,000,
was made on April 7, 2011, shortly before a then-scheduled trial date. The
defendant then successfully applied for an adjournment of the trial, but was ordered,
as a condition of the adjournment, to make an advance payment of $20,000. The
second offer, made on April 26, 2012, was for $700,000, including the $20,000
advance. The plaintiff’s claim at trial included claims for lost earning
capacity and cost of future care totalling more than $2 million.

[5]            
In addition to liability, the major issues at trial were the extent of
the plaintiff’s traumatic brain injury and the significance of a pre-existing condition.
The plaintiff was born with cerebral palsy, which, prior to the accident,
affected her mobility, but not her mental functioning.

[6]            
The plaintiff contended that she had suffered a severe and permanent
brain injury, as well as acceleration of physical deterioration that might have
occurred in the future due to cerebral palsy. The defendant agreed the
plaintiff suffered a brain injury, but said she recovered well from it and any continuing
symptoms are subtle and relatively mild. As for any physical problems the
plaintiff may have now or in the future, the defendant said these are part of
the ordinary process of cerebral palsy and are unrelated to the accident. There
was no dispute that the plaintiff also suffered a moderate left-side hearing
loss, which was related to her head injury and skull fracture.

Part 7 Deductions

[7]            
The plaintiff concedes that the $20,000 advance must be deducted from
the award, along with $900.90 that the plaintiff received from the Insurance
Corporation of B.C. (“ICBC” or the “corporation”) as total disability benefits.
The defendant seeks a further deduction of $37,104.20, representing
rehabilitation benefits he says the plaintiff is eligible to receive in the
future. That deduction, along with those agreed to, would reduce the
plaintiff’s net award, before any consideration of costs, to $7,914.90.

[8]            
The jury’s assessment of damages included $36,100 for the cost of future
care. That was far less than even the amount suggested by the defendant’s
expert on the cost of future care, to say nothing of the plaintiff’s expert, so
it is impossible to know what future expenses the jury accepted. The jury
accepted almost all of the plaintiff’s claim for special costs, which included
some past physiotherapy treatment.

[9]            
The Act and the Regulations made under it provide for
payment of certain medical and rehabilitation benefits. Where a plaintiff has
been awarded a judgment for cost of future care, deductions are to be made for
benefits the plaintiff has received or is entitled to receive under that
scheme. Section 83(2) of the Act reads:

(2) A person who has a claim
for damages and who receives or is entitled to receive benefits respecting the
loss on which the claim is based, is deemed to have released the claim to the
extent of the benefits.

(This action is governed by a previous statute that was in
force at the time of the accident, but the relevant provisions are
substantially the same.)

[10]        
The benefits to which s. 83 refers are benefits prescribed under Part 7
of the Regulations, including s. 88, which reads in part:

88 (1) Where an insured is injured in an accident for which
benefits are provided under this Part, the corporation shall, subject to
subsections (5) and (6), pay as benefits all reasonable expenses incurred by
the insured as a result of the injury for necessary medical, surgical, dental,
hospital, ambulance or professional nursing services, or for necessary physical
therapy, chiropractic treatment, occupational therapy or speech therapy or for
prosthesis or orthosis.

…

(2) Where, in the opinion of the corporation’s medical
adviser, provision of any one or more of the following is likely to promote the
rehabilitation of an insured who is injured in an accident for which benefits
are provided under this Part, the corporation may provide any one or more of
the following:

…

(d) reimbursement to the insured for costs incurred from time
to time by the insured for the purchase and reasonable repair, adjustment or
replacement of one or more of the following items:

…

(iv) aids for communication, dressing, eating, grooming and
hygiene;

…

(8) The corporation is not liable
to pay for more than 12 physical therapy treatments for an insured for each
accident unless, before any additional treatment is given, the corporation’s
medical advisor or the insured’s medical practitioner certifies to the
corporation in writing that, in his opinion, the treatment is necessary for the
insured.

[11]        
Some benefits are mandatory under s. 88 (1), while others are
discretionary under s. 88 (2). In Li v Newson, 2012 BCSC 675 at para 14,
Abrioux J. summarized some of the governing principles relevant to an
application for deduction of benefits:

(a) the defendant bears the onus of proving that the
plaintiff is entitled to the benefits which the defendant seeks to deduct ;

(b) strict compliance with the statute is required;

(c) uncertainty as to whether a Part 7 benefit will be paid
must be resolved in favour of the plaintiff;

(d) the ability to make the deduction is not dependant on the
actual receipt of benefits by the plaintiff. Issues between the plaintiff and
ICBC regarding the benefits are not relevant to the deductibility by a
tort-feasor from an award to the plaintiff;

(e) it is no longer a requirement that there be a match
between the heads of damage for a tort award and specific heads of damages under
the benefit recovery scheme;

(g) the task of the court is to estimate the amount of Part 7
benefits, if any, the plaintiff is or would be entitled to receive for the
costs reflected in the future care award. It then must make the appropriate
deduction;

(h) benefits under s. 88 (2) of the Regulations arise when
ICBC’s medical adviser holds the opinion that the costs are "likely to
promote the rehabilitation" of the plaintiff. The term
"rehabilitation" is defined in s. 78 of the Regulation as follows:

"Rehabilitation" means the restoration, in the
shortest practical time, of an injured person to the highest level of gainful
employment or self-sufficiency that, allowing for the permanent effects of his
injuries, is, with medical and vocational assistance, reasonably achievable by
him.

(i) the uncertainty of the entitlement of payment created by
the Regulation may lead the court to conclude that only a nominal deduction is
appropriate. Trial judges must be cautious in their approach to determining the
estimate inasmuch as a reduction results in a lessening of the award in the
tort action. If that is a result of uncertainty created by the Regulation, ICBC
cannot be heard to complain;

(j) the court is to take into
account ICBC’s discretion with respect to whether certain amounts will be paid
in addition to restrictions in the Regulation with respect to amounts payable.

[12]        
The deductions sought by the defendant are for future replacement hearing
aids and related expenses ($22,155), physiotherapy ($9,672) and occupational
therapy ($5,278). Those figures are based on the recommendations contained in
the report of the defendant’s future care expert and the present value of those
recommendations as calculated by the defendant’s economic expert. The total
present value of the defendant’s expert’s care recommendations was $127,169.

[13]        
The replacement hearing aids and related expenses are a discretionary
benefit under s. 88(2). The defendant has provided an affidavit from an ICBC
claims examiner who says that the corporation paid for a hearing aid on one
occasion, in January 2007, and who says: “I expect ICBC will continue to re-imburse
reasonable incurred hearing aid expenses”.

[14]        
The examiner’s stated expectation falls far short of the evidence
required. Before discretionary benefits can be paid, s. 88(2) requires an
opinion from “the corporation’s medical advisor”. No evidence from any such
person has been put forward. The expert who provided a care opinion for the
defendant at trial is an occupational therapist. There is no evidence that ICBC
accepts her in the capacity of its “medical advisor” for purposes of s. 88.

[15]        
Although the opinion of a medical advisor is a precondition to the
payment of discretionary benefits, the corporation is still not bound to pay
them. The examiner’s expectation is no more than an opinion about what his
employer will do in the future. There is no evidence that he has the authority
to make that decision and no explanation of the basis on which he feels able to
express an opinion on what the corporation will do for the remainder of the plaintiff’s
life.

[16]        
Physiotherapy and occupational therapy are mandatory benefits under s.
88(1), but only if the expenses are incurred “as a result of the injury”
sustained in an accident. That must be read in conjunction with s. 96, which
reads:

The corporation is not liable to pay benefits under this Part
in respect of the injury or death of a person

…

(f) whose injury or death is caused, directly or
indirectly, by sickness or disease, unless the sickness or disease was
contracted as a direct result of an accident for which benefits are provided
under this Part.

[17]        
The Regulations would therefore permit the corporation to refuse
to pay these expenses on the basis that the need for them arose from the
plaintiff’s pre-existing cerebral palsy, not from the injury suffered in the
accident. That position would be entirely consistent with what the defendant
argued, with apparent success, at trial.

[18]        
At this stage of the proceeding, I believe it is appropriate to acknowledge
the fact that in cases such as this the corporation has conduct of the defence
on behalf of its insured. There is certainly no evidence that the corporation
now disavows the position it instructed counsel to take at trial.

[19]        
Accordingly, I find that the defendant has failed to meet the onus of
proving the plaintiff is entitled to the benefits for which deduction has been
sought.

Apportionment of Costs

[20]        
The defendant seeks an order that the plaintiff receive only 80 per cent
of her costs, reflecting the division of liability. This arises from s. 3(1) of
the Negligence Act, RSBC 1996, c 333:

3 (1) Unless the court otherwise
directs, the liability for costs of the parties to every action is in the same
proportion as their respective liability to make good the damage or loss.

[21]        
Although payment of costs in proportion to the degree of liability is
the default rule, the court has discretion to depart from it. That departure
must be for reasons connected with the case, with the principle consideration being
whether application of the usual rule will result in an injustice: Moses v
Kim, 2009 BCCA 82 at para 70.

[22]        
In Moses the plaintiff was found to be 65 per cent at fault for
an accident and was awarded damages of $218,050, which was about a quarter of
what he had sought and a third of the total assessed at trial. The trial judge
awarded the plaintiff 90 per cent of his taxable costs. The factors considered
by the trial judge included the severity of the plaintiff’s injuries, the
defendant’s denial of liability, the amount of damages, the plaintiff’s legal
fees and the fact that only one day of evidence and one-half day of argument in
a nine-day trial  was devoted to the issue of liability.

[23]        
The Court of Appeal reduced the recovery of costs to 75 per cent, saying
that the trial judge erred in considering the plaintiff’s legal fees as well as
in failing to consider the defendant’s success on contributory negligence.

[24]        
In Bourelle v Andrychuk (1998), 61 BCLR (3d) 191 (BCCA), a jury
found the plaintiff 90 per cent at fault. The trial judge awarded the plaintiff
100 per cent of his costs. The Court of Appeal reduced that to two-thirds, based
on the division of trial time between liability and damages issues.

[25]        
In Burdett (Guardian ad litem of) v Mohamed, 2010 BCSC 310, a
jury awarded damages of $1.8 million, after a 20 per cent reduction for
contributory negligence. Boyd J. awarded the plaintiff 90 per cent of taxable
costs, and 100 per cent of most disbursements but only 80 per cent of
disbursements related to liability.

[26]        
A common feature of all of these cases is that the plaintiff had
substantial success in proving injury and damages. Based on the jury’s verdict,
that cannot be said to be the case here. In those circumstances, I cannot
ignore the defendant’s success on the contributory negligence issue and can
find no basis on which to depart from the usual rule set out in s. 3(1) of the Negligence
Act.

Offers to Settle

[27]        
Rule 9-1 of the Supreme Court Civil Rules provides for pre-trial
offers to settle, which the court may later consider when exercising its
discretion in relation to costs. Rules 9-1(5) and (6) read:

(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.

[am. B.C. Reg. 119/2010, Sch. A, s.
21.]

(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.

[28]        
Rule 9-1 is identical in wording and effect to former R. 37B, which in
turn replaced a rule under which a plaintiff’s failure to obtain a judgment in
excess of an offer to settle resulted in mandatory costs consequences. The
current rule gives the court “what is clearly intended to be an unfettered
discretion": Bailey v Jang, 2008 BCSC 1372 at para 19.

[29]        
The underlying purpose of the rule is to encourage settlement by
rewarding the party who makes a reasonable offer and penalizing the party who
declines to accept such an offer: AE (Litigation guardian of) v DWJ,
2009 BCSC 505 at para 61, aff’d 2011 BCCA 279. In Dempsey v Oh, 2011
BCSC 627 at para 19, it is made clear that “[i]t is not the court’s function to
ensure that a plaintiff makes a net recovery from an action when it has ignored
a reasonable offer.” However, this Court has said that “one should be cautious,
with the advantage of hindsight, in equating having guessed wrongly with having
been unreasonable in rejecting an offer”: Lumanlan v Sadler, 2009 BCSC
142 at para 35; Fan v Chana, 2009 BCSC 1497 at para 19.

[30]        
Some of the factors the court may consider in exercising its discretion
are set out in R. 9-1(6). The first of these–and, in my view, the most
important in this case–is whether the offer ought reasonably to have been
accepted. In Hartshorne v Hartshorne, 2011 BCCA 29 the Court of Appeal
said at para 27:

The first factor – whether the
offer to settle was one that ought reasonably to have been accepted – is not
determined by reference to the award that was ultimately made. Rather, in
considering that factor, the court must determine whether, at the time that the
offer was open for acceptance, it would have been reasonable for it to have
been accepted: Bailey v. Jang, 2008 BCSC 1372, 90 B.C.L.R. (4th) 125 at
para. 24; A.E. v. D.W.J. at para. 55. As was said in A.E. v. D.W.J.,
"The reasonableness of the plaintiff’s decision not to accept the offer to
settle must be assessed without reference to the court’s decision" (para.
55). Instead, the reasonableness is to be assessed by considering such factors
as the timing of the offer, whether it had some relationship to the claim (as
opposed to simply being a "nuisance offer"), whether it could be
easily evaluated, and whether some rationale for the offer was provided. We do
not intend this to be a comprehensive list, nor do we suggest that each of
these factors will necessarily be relevant in a given case.

[31]        
One test that has been applied on this question is whether “reasonable
counsel aware of all of the evidence in this case but unaware of the jury award
ought to have encouraged the plaintiff to accept the offer at the time it was
made”: Khunkhun v Titus, 2011 BCSC 1677 at para 25.

[32]        
In order to determine whether an offer is reasonable and ought to be
accepted, the plaintiff must be able to consider it in relation to the evidence
expected at trial and the apparent range of possible outcomes. In a personal
injury case, that exercise usually includes consideration of conflicting
medical opinions, along with the possibility and likely consequences of the
court preferring certain opinions over others. Plaintiff’s counsel who is
relying on an opinion from Dr. X can advise his or her client of the reduction
in damages that may result from the court rejecting the evidence of Dr. X and
accepting the opinion of Dr. Y that is being relied on by the defendant.

[33]        
In this case, the evidence relied on by the plaintiff included opinions
of a neuroradiologist, a neuropsychologist, a psychiatrist, an otolaryngologist
and two physiatrists. The only experts put forward by the defendant on the
question of damages were the occupational therapist dealing with cost of future
care and the economist. The defendant served no medical expert opinions,
although the plaintiff had attended two independent medical examinations at the
request of defence counsel.

[34]        
The onus of proof at trial is on the plaintiff. The defendant is under
no obligation to produce medical evidence and may rely entirely on
cross-examination of the plaintiff and the plaintiff’s medical experts to
support an argument that the plaintiff has failed to prove damages. That is
what defence counsel chose to do in this case, apparently with great success.

[35]        
But the onus of proof at trial is not necessarily relevant to the
question of whether an offer made before trial “had some relationship to the
claim” or “could be easily evaluated”. In choosing to defend this case in the
way he did, the defendant also chose not to provide the plaintiff with evidence
on which she could judge the reasonableness of the offers to settle. With the
plaintiff’s medical reports in hand, and in the absence of contrary medical
opinions, I do not see how reasonable counsel could have recommended acceptance
of either of the defendant’s offers or justified such a recommendation to the
plaintiff.

[36]        
A second factor for consideration set out in R. 9-1(6) is the
relationship between the offer and the final judgment. However, the court cautioned
against putting too much weight on this factor in cases involving jury trials,
given the unpredictability of jury awards: Smagh v Bumbrah, 2009 BCSC
623 at paras 13-14.

[37]        
In this case, I find the consideration under R. 9-1(6)(a) to be
determinative. I am not only unable to say the offers ought reasonably to have
been accepted, but I find that they could not reasonably have been accepted in
the context of the evidentiary vacuum in which they were presented. I conclude
the plaintiff is entitled to her costs as if the offers had not been made.

Conclusion

[38]        
After deductions in respect of contributory negligence, the advance and
total disability benefits, the plaintiff will have judgment for $45,019.10,
plus 80 per cent of her taxable costs and disbursements.

“N.
Smith J.”