IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20130508

Docket: S099424

Registry:
Vancouver

Between:

Karen Wepryk

Plaintiff

And

Gerhard Juraschka
and
Patricia Isable Juraschka

Defendants

Before:
The Honourable Mr. Justice Ehrcke

Reasons for Judgment

[1]            
The plaintiff was injured in a motor vehicle accident with the
defendants on December 5, 2008 and sued for damages. On July 5, 2012, I
rendered judgment for the plaintiff and awarded damages totaling $83,937. Those
reasons are indexed at 2012 BCSC 974. The breakdown of the damages was as
follows:

Special damages:  $2,937;

Non-pecuniary damages: 
$50,000;

Past wage loss:  $7,000;

Future loss of earning
capacity:  $23,000; and

Cost of future care:
 $1,000.

[2]            
The defendants then applied for an order reducing the damages by several
thousand dollars pursuant to s. 83 of the Insurance (Vehicle) Act,
R.S.B.C. 1996, c. 231 for benefits under Part 7 of the Insurance
(Vehicle) Regulation, B.C. Reg. 447/83.

[3]            
On October 26, 2012, in reasons indexed at 2012 BCSC 1584, I ordered
that the proper deduction for Part 7 benefits is $831.55, with the effect that
the total damages award after the deduction was $83,105.45. When pre-judgment
interest of $262.60 was added, the final amount of damages in the entered order
was $83,368.05.

[4]            
Ordinarily, the plaintiff, as the successful party at trial, would be
entitled to an order for costs pursuant to Rule 14-1(9), which provides:

14-1(9) Subject to subrule (12),
costs of a proceeding must be awarded to the successful party unless the court
otherwise orders.

[5]            
However, the defendants seek an order pursuant to Rule 9-1(4) reducing
the amount of costs payable to the plaintiff  in light of an offer to settle
made by the defendants, which was not accepted by the plaintiff. Rule 9-1(4)
provides:

9-1(4)  The court may consider an
offer to settle when exercising the court’s discretion in relation to costs.

[6]            
In fact there were three offers to settle. The defendants first made an
offer to settle in the amount of $62,000 on April 8, 2011. They made a second
formal offer to settle on April 19, 2012, for $83,500. The plaintiff did not
accept either offer, but rather made an offer of her own on May 11, 2012 in the
amount of $125,000. None of the offers was accepted, and the matter proceeded
to trial on June 4, 2012.

[7]            
Of the three offers, only the defendants’ April 19, 2012 offer for
$83,500 is now relevant. The April 19, 2012 offer was worded in this way:

The defendant, Gerhard Juraschka and Patricia Isable
Juraschka offer to settle this action in its entirety on terms that upon
acceptance of this offer to settle:

(a)  the plaintiff will be entitled
to payment by the defendants of $83,500.00 (the “Settlement Payment”); and

(b) the parties will be entitled to
costs in accordance with this offer to settle (the “Settlement Costs”).

The Settlement Payment (a) is
offered after taking into account Part 7 benefits paid or payable, pursuant to
section 25 of the Insurance (Motor Vehicle) Act, R.S.B.C. 1996, c. 231
(in respect of policies in force before June 1, 2007) and/or pursuant to
section 83 of the Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231
(in respect of policies in force on or after June 1, 2007); (b) is offered
after taking into account any advances paid to date; (c) includes court order
interest; and (d) excludes the Settlement Costs.

[8]            
The parties now know, with the benefit of hindsight, that the April 19,
2012 offer was for an amount that exceeds the amount of damages finally awarded
by $131.95 after taking account of Part 7 benefits and court order interest.

[9]            
Under the old Rule 37(24)(a) as it existed prior to 2008, the Court
would have had no discretion in this situation. That rule provided:

37(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

[10]        
That rule was replaced, however, by Rule 37B in 2008, which gave the
Court a discretion in determining the costs order in the face of such an offer
to settle. That rule has in turn now become Rule 9-1 of the current Civil
Rules.

[11]        
Rule 9-1(5) now affords the Court a number of options where there has
been an offer to settle, and Rule 9-1(6) sets out the relevant considerations:

9-1 (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.

[12]        
The defendants submit that in the circumstances of this case, the
plaintiff should be awarded ordinary costs at Scale B up to April 19, 2012, and
the defendants should be awarded ordinary costs at Scale B thereafter. In the
alternative, the defendants submit that the plaintiff should be awarded
ordinary costs at Scale B up to April 19, 2012, and the parties should each
bear their own costs thereafter.

[13]        
The plaintiff submits that she acted reasonably in not accepting the
defendants’ April 19, 2012 offer, and that she should be awarded ordinary costs
at Scale B with no deduction or set off.

[14]        
In looking at the four factors set out in Rule 9-1(6), I consider first
the relationship between the terms of settlement offered and the final judgment.
I have already noted that the amount offered exceeded the amount awarded, but
only by $131.95, which is less than two tenths of one percent.

[15]        
In terms of the relative financial circumstances of the parties, I find
that the position of the plaintiff is not significantly different from that of
the defendants personally. Although the defendants had insurance coverage by
I.C.B.C., I do not consider this to result in a significant disparity in the
relative financial circumstances of the parties in this case. The insurer here
did not use its financial resources in a manner that distorted the litigation
process, creating an unfair advantage or leading to unnecessary costs: see Smith
v. Tedford, 2010 BCCA 302; Hunter v. Anderson, 2010 BCSC 1591.

[16]        
As to other factors, I note that the defendants admitted liability
throughout. The only issue was the quantum of damages. Expert witnesses were
called by both parties. All the expert reports were available to both parties
as of the date of the offer to settle. The credibility of the plaintiff as a
witness was not a major issue at trial. The nature of the plaintiff’s
self-employment history, however, led to an issue as to the proper inferences
to be drawn from her records, which was relevant to the assessment of damages
for loss of past and future earning capacity.

[17]        
Thus, of the four factors listed in Rule 9-1(6), I find that the most
important in this case is whether the offer to settle was one that ought
reasonably to have been accepted. This is to be assessed by reference to the
circumstances existing at the time the offer was open, from the perspective of
the person receiving the offer, and not on the basis of hindsight once the Court’s
final decision is known: Bailey v. Jang, 2008 BCSC 1372.

[18]        
In Fan (Guardian ad litem of) v. Chana, 2009 BCSC 1497, McEwan J.
observed at para. 19:

The reintroduction of judicial
discretion in costs certainly serves the ends of justice. Costs should be a
penalty for unreasonable conduct in the litigation, not a penalty for failing
to guess the outcome. In this regard, Courts must, I think, extend some leeway
to litigants holding honest but, ultimately, mistaken views of their claims. It
is generally better that such expectations be disposed of at law, rather than
discouraged. The public should not be given the impression that there is no
reasonable access to a legal resolution. It must be recognized that some people
will only be comfortable if they “hear it from the judge.” This should be a
valid option for those who seek it, not a form of deemed unreasonableness. As
such, inducements to settle, and to avail oneself of alternate dispute
resolution, ought to complement rather than obstruct judicial determinations.

[19]        
The assessment of damages in a personal injury case is not a matter of
mathematical certainty. Damages are assessed, not calculated. The plaintiff and
her counsel cannot be faulted for having regarded the April 19, 2012 offer of
$83,500 as being one which would likely be exceeded if they went to trial.
Although the final judgment was for slightly less, it might just as easily have
been slightly more.

[20]        
Moreover, there was uncertainty in this case, not only about the
assessment of the damages, but also about the amount that might subsequently be
deducted on account of Part 7 benefits. If nothing had been deducted in this
regard, the damages award would have exceeded the amount offered by the defendants.

[21]        
In all the circumstances of this case, I cannot say that the defendants’
offer was one that ought reasonably to have been accepted by the plaintiff, and
I do not consider that the plaintiff should be penalized in costs for having
failed to do so.

[22]        
The plaintiff is entitled to her costs and disbursements on Scale B,
without deduction or set off on account of the defendants’ offer to settle.

The
Honourable Mr. Justice W.F. Ehrcke