IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20130418

Docket: Docket: M103021

Registry:
Vancouver

Between:

Jennifer Lindsay
Gonzales

Plaintiff

And

Stavros T.
Voskakis

Defendant

Before:
The Honourable Madam Justice Fitzpatrick

Reasons for Judgment

Introduction

[1]            
This motor vehicle case resulted in a modest award in favour of the
plaintiff, Jennifer Gonzales, after a 12-day trial. Reasons were issued on
February 13, 2013: Gonzales v. Voskakis, 2013 BCSC 215 (the “Reasons”).

[2]            
The defendant, Stavros Voskakis, now seeks an award of costs to reflect
the fact that just before the commencement of the trial he forwarded an offer
to settle for an amount that exceeded what Ms. Gonzales was eventually
awarded.

Background Facts

[3]            
Ms. Gonzales was injured in a motor vehicle accident on September
16, 2008. Mr. Voskakis admitted liability for the accident. Ms. Gonzales
suffered soft tissue injuries as a result, a matter which Mr. Voskakis
also did not contest.

[4]            
The substantive question for trial arose from Ms. Gonzales’
contention that she had suffered an injury to her right shoulder joint in the
accident. Mr. Voskakis disputed that contention, taking the position that Ms. Gonzales’
injury arose from other matters. At trial, it was apparent that any number of
events could have caused the shoulder injury: Ms. Gonzales’ participation
in rugby and softball from a young age, a 1997 injury to her right shoulder (the
“1997 incident”), two motor vehicle accidents in 2002, the subject motor
vehicle accident, a sheriff testing incident in January 2009, or her subsequent
rugby play in the spring of 2009.

[5]            
Therefore, the crux of the issue was whether Ms. Gonzales had
proved, on a balance of probabilities, that the 2008 motor vehicle accident had
been a contributing factor, beyond a de minimis range, to the shoulder
injury.

[6]            
I found that Ms. Gonzales had not proven that the motor vehicle
accident had contributed to her shoulder injury. Accordingly, I awarded damages
only for her soft tissue injuries. The total damages award was $20,668.08: Reasons
at paras. 246‑262. I also awarded Ms. Gonzales her costs of the
action, with liberty to the parties to make further submissions if appropriate:
Reasons at para. 263.

[7]            
That costs award has been put in issue because on January 17, 2012, some
two weeks before the trial, Mr. Voskakis delivered an offer to settle in
accordance with Supreme Court Civil Rule 9-1. The offer was open for acceptance
until February 17, 2012, the Friday before the start of the trial. That offer
was in the amount of $69,000 plus costs; as such, it exceeded the amount
awarded at the trial.

[8]            
Ms. Gonzales delivered a counter-offer on February 13, 2012 in the
amount of $150,000 plus costs, which was similarly open for acceptance until
February 17, 2012.

[9]            
Accordingly, both offers had expired as of the commencement of the
trial.

Discussion

[10]        
The relevant portions of Rule 9-1 provide:

Offer may be considered in relation to costs

(4)        The court may consider an offer to settle when
exercising the court’s discretion in relation to costs.

Cost options

(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.

Considerations of court

(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.

[11]        
Mr. Voskakis takes the position that an appropriate award of costs
is that Ms. Gonzales obtain her costs up to January 17, 2012 and that he
be awarded his costs after that date, in accordance with Rule 9-1(5)(a) and
(d). He does not seek double costs after the offer: Rule 9-1(5)(b). Nor does he
seek an order limiting Ms. Gonzales to her disbursements, in accordance
with Rule 14-1(10), on the basis that her recovery was within the limits of the
Provincial Court under the Small Claims Act, R.S.B.C. 1996, c. 430.
He acknowledged that there was sufficient reason for her to bring the
proceeding in this Court.

[12]        
Ms. Gonzales takes the position that an award of all her costs, as
initially ordered, is appropriate. In the alternative, she says that she should
be awarded all her costs to January 17, 2012 and her disbursements following
that date to the conclusion of the matter. She argues against any award of costs
in favour of Mr. Voskakis.

[13]        
There are numerous cases addressing costs awarded under Rule 9-1 or the
earlier iterations of the Rule. It is accepted that the court has a broad
discretion to award (or deny) costs and that the Rule provides guiding
principles to be considered in the exercise of that discretion: Ward v.
Klaus, 2012 BCSC 99 at paras. 31-33. The underlying legislative policy
is to encourage early settlement of the dispute and, in that regard, to reward
a party who makes a reasonable settlement and to penalize a party who declines
such an offer: Abma v. Paul, 2009 BCSC 60 at para. 18.

[14]        
Ms. Gonzales also relies on the more nuanced consideration of
“penalize” as it was described in Tompkins v. Bruce, 2012 BCSC 833:

[30]      The purpose of cost
consequences of reasonable offers is to encourage settlement. On the other hand,
onerous cost penalties should not discourage the seriously injured from a
proper hearing and a chance to obtain a higher award, nor should they seriously
subtract from what the court has found is appropriate compensation for the
injury.

(a)      Was the offer to
settle one that ought reasonably to have been accepted by Ms. Gonzales?

[15]        
The answer to this question is not to be assessed on the basis of a
hindsight analysis: A.E. v. D.W.J., 2009 BCSC 505 at para. 55,
aff’d 2011 BCCA 279.

[16]        
Both parties had substantial medical reports in hand at the commencement
of trial. Ms. Gonzales would later call Dr. Eng, a family physician,
to deliver two reports and Dr. Adrian, a physiatrist, to deliver his
report. In rebuttal, Mr. Voskakis called Dr. Regan.

[17]        
Other medical evidence was marshalled from two physiotherapists involved
in Ms. Gonzales’ care. Ms. Gonzales called evidence from Dana Storey,
the physiotherapist who had treated her after the accident. Mr. Voskakis
called Glenn Hendricks, a physiotherapist who had earlier treated Ms. Gonzales.

[18]        
With all expert evidence in hand, Ms. Gonzales would have been
quite aware that she faced the rather daunting prospect of challenging the
expert report of Dr. Regan, a renowned orthopaedic surgeon who specialized
in shoulder injuries. Nevertheless, she had in hand the reports of Drs. Eng and
Adrian, who, while less qualified than Dr. Regan in relation to shoulder
injuries, opined that the shoulder injury was caused to some extent by the 2008
motor vehicle accident. She also had the report of her treating orthopaedic
surgeon, although she chose not to serve that report for the purposes of trial.

[19]        
There is no doubt, as contended by Mr. Voskakis, that Ms. Gonzales
would have been aware of the risks of proceeding. It was acknowledged by both
parties, particularly the defence, that this was an “all or nothing”
proposition; in other words, if there was any basis upon which to find
causation, then all damages relating to the shoulder were to be considered.
Similarly, if no causation was found, then only minor soft tissue injuries
could be compensated.

[20]        
Ms. Gonzales says that when faced with the offer, she had a
difficult decision. She says that she strongly believed that the motor vehicle
accident contributed to her injuries. Importantly, her belief was buttressed
not only by the medical reports she had obtained, but also because she did not
recall any medical problems relating to her right shoulder joint before the
accident.

[21]        
That there were no previous problems with her right shoulder would turn
out to be a failed recollection. And these previous problems would become a
significant factor relevant to a determination of the causation issue.

[22]        
Before the trial, Ms. Gonzales had produced various records of her
family doctor, Dr. Kirkpatrick, going back to 2002. No earlier records
were requested or produced, and Dr. Eng, who practiced with Dr. Kirkpatrick,
did not mention any earlier records. Initially, Ms. Gonzales intended to
call Dr. Kirkpatrick as a witness, but she was deleted from the witness
list just before the trial. In turn, Mr. Voskakis subpoenaed Dr. Kirkpatrick,
anticipating evidence relating only to the 2002-2009 medical records.

[23]        
The conflicting and confusing state of the medical evidence only became
more uncertain once the trial had started. By that time, the defence had talked
to Dr. Kirkpatrick. In their discussions, Dr. Kirkpatrick mentioned
that her medical records from 1997 were relevant. This was news to everyone. On
February 21, 2012, the second day of trial, I granted an order for the
production of those earlier records from Dr. Kirkpatrick.

[24]        
Once produced, those documents were introduced at the trial during the
cross examination of Ms. Gonzales. By the time of the continuation of the
trial in April 2012, they were the subject of supplementary reports from both Dr. Adrian
and Dr. Regan. In fact, these new records resulted in Dr. Regan
changing his prior opinion as to when the labral tear of the shoulder took
place, although he continued to opine that the motor vehicle accident did not
cause the shoulder injury.

[25]        
The evidence surrounding the 1997 incident would therefore figure quite
prominently in my decision that causation had not been proved and that injury
to Ms. Gonzales’ labrum had, in fact, occurred well before the motor
vehicle accident: Reasons at para. 219.

[26]        
Even after these documents were produced, Ms. Gonzales still did
not recollect the 1997 incident or her injuries at that time. And while the
1997 incident was significant in my decision after the trial, it was not known
to either party at the time of Mr. Voskakis’ offer. As such, it is an
irrelevant factor. To consider it would be to engage in a hindsight analysis of
whether the offer should have been accepted based on facts not yet known.

[27]        
Ms. Gonzales also gave evidence regarding shoulder joint complaints
in the fall of 2008 after the accident. She submits that it was her
recollection of such complaints, together with what she considered corroborating
evidence from Ms. Storey, that caused her to reject any concerns about Dr. Regan’s
initial report. I rejected her evidence and found that such complaints had not
been made and that she had suffered no symptoms of any such injury at that time:
Reasons at paras. 227-236. It was principally this finding that
allowed me to reject the opinions of Dr. Eng and Dr. Adrian.

[28]        
The defence cites a number of cases where the court found that the
offers had been unreasonably refused, and where the plaintiff recovered costs
to the date of the offer and the defence recovered costs thereafter.

[29]        
In Abma, the court found certain soft tissue injuries, but denied
the plaintiff’s claim that she suffered a mild traumatic brain injury. The
offers were higher than the damages awarded at trial, presumably in recognition
of the risk of proving such brain injuries. The offer also substantially
exceeded the amount sought at trial, which was found to be excessive.

[30]        
In Arnold v. Cartwright, 2008 BCSC 1575, there were competing
expert medical reports, as in this case. The court found that, with the defence’s
expert report in hand, the offer should have been accepted.

[31]        
In Dempsey v. Oh, 2011 BCSC 627, the court rejected the plaintiff’s
evidence on the issue of causation, which his medical reports had relied upon.
That is the same situation here (although I would point out that I did not
reject Ms. Gonzales’ evidence for any deliberate intention on her part to
mislead the court). Nevertheless, Ms. Gonzales was able to assess her
ability to recall such complaints and to marshal any corroborating evidence of
such symptoms. She did neither.

[32]        
In Gehlen v. Rana, 2011 BCCA 219, the court overturned the trial
judge’s conclusion that the offer should have been rejected because the plaintiff
did not anticipate a vigorous attack on her credibility:

[50]      In my view, this was a classic case in which the
defendant was obliged to closely probe the plaintiff’s evidence. Her injuries
were soft tissue injuries and depended for proof on the plaintiff’s subjective
complaints of pain in the face of a significant history of similar pre-accident
complaints.

[51]      I agree with the
defendant’s submission that the drafters of Rule 37B could not have intended
that a party’s failure to anticipate credibility issues would defeat the
operation of a reasonable offer to settle. In concluding otherwise, the trial
judge erred in principle.

[33]        
As stated by the court in A.E. at para. 59, this was a
complex causation case that failed, and the reasons for the failure are
relevant. Ms. Gonzales was, as of February 14, 2012, faced with
considerable risk at the trial in proving her claim in relation to her shoulder
injury. The weight of the medical reports was against her. In large part, she
relied on the temporal relationship between the accident and the later injury
suffered while completing the sheriff testing in early 2009, a matter which I
rejected: Reasons at para. 222. Nor did she convince me that she
actually suffered any symptoms in the immediate aftermath of the accident,
based on either her evidence or the evidence of other witnesses.

[34]        
In all the circumstances, I conclude that the settlement offer should
have been accepted. This factor clearly favours Mr. Voskakis.

(b)      What is the
relationship between the terms of settlement offered and the final judgment of
the court?

[35]        
In closing submissions, Ms. Gonzales sought a damage award between
$385,000 and $595,000, which was largely related to her non-pecuniary, loss of
capacity, and cost of future care claims. As I stated, the award was in the
total amount of $20,668.08.

[36]        
Accordingly, the offer was approximately 333% higher than the ultimate
award. This factor again favours the defence. But as stated in Smagh v.
Bumbrah, 2009 BCSC 623 at para. 14, the court should not place undue
weight on this factor.

(c)      What are the relative financial circumstances of the parties?

[37]        
It is now well settled that the involvement of ICBC on behalf of the
defendant is a factor that may be considered: Smith v. Tedford, 2010
BCCA 302 at paras. 16‑19. As with the first two factors, each case
must be analyzed based on the particular circumstances at hand. It therefore
remains to be decided whether this is a relevant factor and, if so, what weight
should be given to it: Mazur v. Lucas, 2011 BCSC 1685 at para. 53.

[38]        
The defence submits that the resources of ICBC are not a significant
factor, citing Hunter v. Anderson, 2010 BCSC 1591. In that case, the
court held that the insurance coverage did not create any unfair advantage
leading to unnecessary or protracted proceedings: para. 22.

[39]        
In this case, I find the reasoning in Hunter persuasive. I do not
consider that ICBC’s greater financial clout is a significant factor. It is
easy to portray ICBC as a large, well-funded corporation, able to run roughshod
over less financially secure plaintiffs. But it must be remembered that
although ICBC is well-funded, its resources largely come from the premiums of many
individual insurers, who expect that these funds will be managed for the
benefit of the insurance system as a whole. As such, costs either against or in
favour of the defence must reflect the decisions that are generally made in
litigation — such as making an offer to settle — in light of the benefits and detriments
that the underlying policy holders would have borne themselves. These policy
holders should not be penalized per se simply because they have
insurance.

[40]        
I now turn to Ms. Gonzales’ financial circumstances. Ms. Gonzales
did not file any further material on this point, but rather chose to rely on
the evidence at trial in terms of her personal financial circumstances. This
approach was not ideal, since evidence relating to her earnings was dated. That
evidence indicated that Ms. Gonzales was making between $25,000 and $30,000
per year at her employment.

[41]        
Her counsel indicated that she has funded her disbursements, although it
is not known how she arranged that. I have no other financial information, such
as any assets she may own. I am assuming, as her counsel intimated, that she
pursued this matter on a contingency basis.

[42]        
This factor does not weigh in favour of either party.

(d)      Are there any other appropriate factors to consider?

[43]        
Ms. Gonzales says that if she is deprived of her trial-related
disbursements, that will negate her entire judgment and leave her significantly
in debt. She says that it would be even more prejudicial to her if she is
required to pay Mr. Voskakis’ costs and disbursements after January 17,
2012.

[44]        
In Abma, the court rejected that such circumstances, although a relevant
factor, were sufficient to deprive a defendant of his costs:

[34]      As stated, the
plaintiff received judgment. The defendants’ costs and disbursements from the
time of the offers may exceed the judgment. This is an appropriate factor to
consider in determining the appropriate order for costs. It is not sufficient,
in my view, to deny the defendants their costs arising from the offers to
settle. If the aim of the rule is to encourage reasonable settlements, denying
the defendants their costs in the circumstance does not meet that aim. It may
be a reason to deny the defendants double costs, but the defendants have not
sought double costs in this matter. While it is an important factor to
consider, it is not sufficient, in and of itself, to extinguish defendants’
entitlement to the costs.

[45]        
Similarly, in Dempsey at para. 19, the court stated: “[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. That would defeat the
purpose of the Rule and does not accord with common sense”.

[46]        
While one might have great sympathy for Ms. Gonzales given the
circumstances, the underlying behavior modification objective of the Rule is to
encourage settlement of claims where appropriate. It is not to encourage
plaintiffs to “take a flyer” and litigate each and every claim in any
circumstance, without any costs consequences arising from an offer to settle.

Conclusion

[47]        
Most of the factors discussed above favour Mr. Voskakis. The cases
he has cited — Abma, Arnold, and Dempsey — support an
award of costs in Ms. Gonzales’ favour to February 14, 2012 and an award
of costs in Mr. Voskakis’ favour thereafter.

[48]        
 I reject Ms. Gonzales’ argument that the original costs award
entirely in her favour should be maintained. That award gives no consideration to
the offer to settle and would defeat the purpose behind the Rule.

[49]        
Her alternate claim, that she should have her disbursements throughout
and tariff items to February 14, is supported by the comments of the court in A.E.:

[59]      In the circumstances of this case, I think it is
appropriate for the court to take into account the circumstances of the
plaintiff’s claim and why it failed. This claim did not fail because of the
plaintiff’s lack of credibility or because the plaintiff was in any significant
way at fault. The case was lost on a complex causation issue.

[60]      Civil cases are determined on the balance of
probabilities. In many cases, it is difficult to tell, particularly in advance
of trial, on what side the scales will ultimately fall. If the scales are
neatly balanced, as they were in this case, it is a factor that the court can
properly consider in determining cost consequences under Rule 37B.

Discussion

[61]      I appreciate and accept that notwithstanding the
differences between Rule 37B and its predecessors, the underlying legislative
policy behind Rule 37B is 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: MacKenzie v. Brooks (1999)
BCCA 623, 130 B.C.A.C. 95; Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d)
201, 55 B.C.A.C. 191 (C.A.); Radke v. Parry, 2008 BCSC 1397, 64 C.P.C.
(6th) 176. Parties should not however be unduly deterred from bringing a
meritorious, albeit uncertain claim, because of the fear that a punishing cost
order could potentially wipe out their award of damage award. In that regard I
note the comments of McLachlin J.A., as she then was, in Houweling Nurseries
Ltd. v. Fisons Western Corp. (1988), 37 B.C.L.R. (2d) 2 at 25, 49 D.L.R.
(4th) 205 (C.A.):

Costs in our system of litigation serve the purpose, not
only of indemnifying the successful litigant to a greater or lesser degree, but
of deterring frivolous actions or defences. Parties, in calculating the risks
of proceeding with a particular action or defence, should be able to forecast
with some degree of precision what penalty they face should they be
unsuccessful. Moreover, there is a sound reason for keeping costs within
relatively modest limits. The possibility of high costs may unduly deter a
party from bringing an uncertain but meritorious claim or defence.

[62]      Regardless of the merits of the plaintiff’s case
the defendant’s offer to settle cannot be ignored, because to do so would
undermine the purpose of the Rule. Having decided to proceed in face of a not
insignificant and ultimately successful offer to settle, the plaintiff cannot
avoid some consequences.

[63]      Taking all of the above
matters into account, I order that the plaintiff be deprived of all tariff
items to which she would otherwise be entitled in respect of the steps taken in
the proceeding after February 1, 2008. The plaintiff will, however, be entitled
to recover from the defendant all her disbursements. There will be no costs to
either party in regard to the April 6, 2009 hearing.

[50]        
Following the reasons above as to whether the
offer should have been accepted, I consider that the plaintiff in A.E. had
a better case toward asserting that the “scales are neatly balanced” between
the parties. The same can be said for a similar result ordered in Robbeson
v. Gibson (30 July 2009), Victoria 06-3778 (B.C.S.C.).

[51]        
I consider that the fairest outcome in these
circumstances is to award Ms. Gonzales her costs, including disbursements,
to January 24, 2012. This later date of one week following the offer recognizes
that she should have been afforded some reasonable period time within which to
consider that offer.

[52]        
The issue of what costs, if any, are to be awarded
after January 24, 2012 is more difficult. Both parties want their disbursements
to and including the trial. Mr. Voskakis also seeks his tariff costs after
that date.

[53]        
Both parties acknowledge that the issue of the
late produced medical records of Dr. Kirkpatrick was of particular
relevance to the outcome of the trial. Both parties share the blame for that
circumstance. Although I recognize that she had no recollection of the event, Ms. Gonzales
should have produced them. Dr. Kirkpatrick was well aware of them, and Ms. Gonzales’
counsel was in contact with her, having intended to call her as a witness. Equally,
the defence should have requested all of Ms. Gonzales’ medical records,
having known of her active involvement in sports activities from an early age.

[54]        
In the result, if those records had been
produced well before the trial, they may have prompted a settlement, or at least
a more efficient process by which the medical expert evidence was marshaled and
presented at trial. Mr. Voskakis’ counsel well acknowledged that after the
production of the further medical records, or even after the second report of Dr. Regan
was prepared, it was likely appropriate to renew an offer to settle based on
the new facts disclosed. No such renewed offer was delivered. By that time, the
original offer had expired. Thus, even if Ms. Gonzales had acknowledged
increased risk to her case in light of those records, there was no longer any offer
to accept.

[55]        
Accordingly, each party will bear their own
costs following from March 1, 2012, the end of the first stage of the trial, to
today’s date.

[56]        
For the period from January 25, 2012 until
February 29, 2012, Mr. Voskakis will have his costs, particularly in light
of my conclusion that Ms. Gonzales should have accepted the original
offer.

[57]        
Ms. Gonzales disputes, however, that Rule
9-1(5)(d) allows this Court to order that such costs include disbursements. Although
the court in Wright v. Hohenacker, 2009 BCSC 996 proceeded on the
assumption that it could make that order, it did not decide that “costs” under
that subrule included disbursements: para. 35.

[58]        
Ms. Gonzales relies primarily on the
reasoning of the court in Moore v. Kyba, 2012 BCSC 577. In that case,
the plaintiff was seeking an award of double costs under Rule 9-1(5)(b) after
an offer to settle had been delivered. Madam Justice Brown awarded double
tariff costs. However, she held that no award of double disbursements could be
made because Rule 9-1(5)(b) did not specifically refer to “disbursements”:

[6]        Does subrule (5) permit the Court to double
disbursements as well as costs? In other words, does the reference to double
costs include disbursements.

[7]        The respondent argues that subrule 5(a) specifies
costs, including any or all of the disbursements, while subrule 5(b) refers
only to double costs and does not include disbursements. The respondent refers
me to the interpretation of former Rule 37 in Brown v. Lowe, 2001 BCSC
105. The applicant notes that in Browne v. Lowe Master Horn relied on a
definition of double costs in the Rules which was repealed in 2008 and not
replaced. The applicant suggests I should disregard Brown v. Lowe and
instead rely on the interpretation of double costs provided in M&M Movie
Fashions Ltd. v. Campbell, 1999 CanLII 5891 (B.C.S.C.) where it was held
double costs includes double disbursements. In M & M Movie, Master
Donaldson was interpreting subrule 37(23) which included no reference to
disbursements nor was there a definition of double costs in the Rules. The
applicant also points to the inclusion of disbursements in costs in subrules
9-1(5)(a) and (7) and subrule 14-1(5) and effectively asks me to make the
opposite inference to the one argued by the respondent.

[8]        I am not convinced by
the applicant’s argument. The repeal of the definition relied on in Browne
v. Lowe is not determinative and does not require its reversal. In any
event, I conclude that the proper interpretation of Rule 9-1(5) does not permit
the Court to award double disbursements. In Rule 9-1(5)(a), the rule
specifically provides for disbursements, while Rule 9-1(5)(b) does not. Therefore,
properly interpreted, Rule 9-1(5)(b) does not permit the Court to award double
disbursements after the delivery or service of the offer to settle.

Ms. Gonzales says that since Rule 9-1(5)(d)
similarly refers to “costs” without any reference to “disbursements”, following
Brown J.’s reasoning, it does not allow an award of costs that includes
disbursements.

[59]        
In response, Mr. Voskakis refers to a
number of decisions where such a costs award was made, with specific reference
to disbursements: Abma at paras. 36-37; Fan (Guardian ad litem
of) v. Chana, 2009 BCSC 1497 at para. 23; Hunter at para. 24;
Gehlen at paras. 52-53.

[60]        
Of more importance, however, are comments from the
British Columbia Court of Appeal that the word “costs” in the Supreme Court
Civil Rules, properly interpreted, includes both fees and disbursements.

[61]        
In Kendall v. Hunt (No. 2) (1979), 16
B.C.L.R. 295 (C.A.), the court was addressing whether self-represented
litigants could be awarded costs in excess of disbursements. The court unanimously
decided that they could not. But it also stated that, fundamentally, “costs”
include not only fees but disbursements. Chief Justice Nemetz said:

[2]        …I prefer the reasoning of Sir Gordon Willmer
who said at pp. 37-38:

“What a successful party who has got an order for costs is
entitled to recover falls, as is well known, under two headings. One heading
covers his disbursements; that is to say, money which he has actually had to
pay out to other people, such as witnesses, counsel, professional advisers and
so forth. The other heading is described as ‘costs’. This is intended to cover
remuneration for the exercise of professional legal skill. …”

[62]        
In separate reasons, Robertson J.A. similarly stated:

[7]        Consequently, when 1969 (B.C.), c. 38,
s. 14, included in an amendment to s. 80 of the Supreme Court Act,
R.S.B.C. 1960, c. 374, this subsection:

“(2) Subject to subsection (1), a Judge may, in his
discretion, award or refuse to award costs to any litigant in any civil
proceeding in the Court”

…, the word “costs” must have
been used in the legal sense in which it had long been used, which was the
sense expounded in the language in Harold v. Smith (1860), 5 H. & N. 381, 157 E.R. 1229, that
my brother has quoted. Equally long, I believe, costs had comprised both fees
and disbursements.

[63]        
Craig J.A. further added:

[20]      The fundamental principle of party-and-party costs
has always been that they are given as an indemnity to the party entitled to
them. The statement of Bramwell B. in Harold v. Smith (1860), 5 H. &
N. 381 at 385, 157 E.R. 1229 at 1231, is generally quoted. He said:

“Costs as between party and party are given by the law as an
indemnity to the person entitled to them: they are not imposed as a punishment
on the party who pays them, nor given as a bonus to the party who receives
them. Therefore, if the extent of the damnification can be found out, the
extent to which costs ought to be allowed is also ascertained.”

…

[23]      Although App. B deals
with the costs “exclusive of disbursements”, the word “costs” means the total
of fees and disbursements, including disbursements made by the party rather
than by his solicitor. The costs taxable under the tariff may be far less than
the amount which a party has to pay his lawyer, particularly today, but,
nevertheless, the purpose of costs has always been to provide some indemnity
for the legal expenses which the party has incurred in employing a solicitor
and in disbursing funds in connection with the action. …

[64]        
Moreover, although the decision in Kendall was
overturned in Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 (C.A.),
the court reaffirmed that the fundamental purpose of costs is to indemnify a
successful party for fees and disbursements:

28        In any event, the view
that costs are awarded solely to indemnify the successful litigant for legal
fees and disbursements incurred is now outdated. A review of R. 37, which deals
with offers to settle, reveals that in certain circumstances a party may be
entitled to costs, or double costs, or to no costs at all. One of the purposes
of the costs provisions in R. 37 is to encourage conduct that reduces the
duration and expense of litigation, and to discourage conduct that has the
opposite effect. Thus, although it is true that costs are awarded to
indemnify the successful litigant for legal fees and disbursements incurred,
it is also true that costs are awarded to encourage or to deter certain types
of conduct.

[Emphasis added.]

[65]        
Rule 9-1(5) is headed “Cost options”. It is clearly intended to guide
the court in deciding what costs award is just. Nevertheless, I do not see that
subcategory (d) was intended to limit the discretion of the court to award a
defendant’s disbursements in all cases when rewarding a defendant for making a
reasonable offer. In many cases, disbursements are significant. In fact, the
driving force behind an offer to settle may be the desire to avoid having to
pay those disbursements. To limit the discretion of the court in awarding
disbursements would defeat the clear intention of the Rule.

[66]        
Although Brown J. came to another conclusion in Moore relating to
double disbursements under Rule 9-1(5)(b), it appears that Kendall and Skidmore
were not in front of her at that time. Therefore, in applying the principles
set out in Re Hansard Spruce Mills Ltd., [1954] 4 D.L.R. 590, I
do not consider that I am bound by her reasoning.

[67]        
I acknowledge that the wording of Rule 9-1(5), in its reference to
“disbursements” in subcategory (a) without an accompanying reference to
“disbursements” in subcategory (d), is awkward and confounding. In my view,
however, the fundamental purpose of the Rule — which, as stated by the Court of
Appeal in Kendall and Skidmore, is to compensate for all “costs”,
including disbursements — has not changed. One can only hope for some clarity
on this issue by possible amendments to Rule 9-1(5).

[68]        
In the meantime, I conclude that I have the discretion under Rule
9-1(5)(d) to award the defendant his costs, including disbursements.

[69]        
I award such costs, which will include disbursements, in favour of Mr. Voskakis
for the period from January 25, 2012 until February 29, 2012.

“Fitzpatrick J.”