IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20140219

Docket: S021802

Registry:
Chilliwack

Between:

Bryan
Robert Keller

Plaintiff

And

Jason
Pearson and Janet Pearson

Defendants

Before:
The Honourable Chief Justice Hinkson

Reasons for Judgment

[1]            
On April 12, 2013, Mr. Justice Smart, now retired, dismissed the
plaintiff’s claim against the defendants in oral reasons for judgment following
a summary trial. The defendants seek an order that the plaintiff pay them
double costs from the date of their offer of settlement, made on February 27,
2013, pursuant to Rule 9-1(5)(b) of the Supreme Court Civil Rules, B.C.
Reg. 168/2009 [the Rules]. Given the retirement of the summary trial
judge, I will exercise my jurisdiction pursuant to Rule 23-1(10) and personally
deal with the defendants’ application.

Background

[2]            
The plaintiff asserts that he was injured in a single motor vehicle
accident on October 13, 2008, when a pick-up truck, owned by the defendant
Janet Pearson and operated by the defendant Jason Pearson, left a roadway and
rolled down an embankment. The plaintiff contends that he sustained serious
injuries as a result of the accident.

[3]            
The plaintiff’s notice of civil claim was filed on October 8, 2010 and
the defendants’ response to civil claim was filed on January 17, 2011. In their
response, the defendants denied liability for the accident and pleaded that the
accident was inevitable.

[4]            
The plaintiff was examined for discovery on September 30, 2011, and the
defendant Jason Pearson was examined for discovery on December 14, 2012.

[5]            
In December of 2012, the liability issue in the case was set for hearing
by summary trial on April 5, 2013.

[6]            
On February 27, 2013, counsel for the defendants sent a fax to counsel
for the plaintiff, offering to settle the plaintiff’s claims pursuant to Rule
9-1 of the Rules in the amount of $70,000 plus costs.

[7]            
Smart J. heard the summary trial application on the issue of liability
on April 5, 2013, and reserved judgment until April 12, 2013, when he accepted
the defence of inevitable accident and dismissed the plaintiff’s claim.

[8]            
At the conclusion of his reasons, Smart J. engaged in the following
colloquy with counsel:

The Court:       The
action against [the defendants] is dismissed pursuant to Rule 9 – 7. Ms. Risi,
you have sought costs in your application. Are you pursuing that?

Ms. Risi:          Yes,
My Lord.

The Court:       Any
submissions, Mr. Morgan?

Mr. Morgan:     I
do not have any submissions at this time on costs. I would like to be able to
make some submissions on that, but I have not turned my mind to it.

The Court:       I will make an order for
costs. If counsel disagree on costs you can come back before me. Thank you
both.

[9]            
The entered order, approved of by both counsel, provides in respect of
costs that:

The Plaintiff shall pay the
Defendants’ costs in this action, subject to the Plaintiff being at liberty to
request to reappear before the Court to make submissions in respect of same.

Discussion

a)       The Effect of the Entered Order

[10]        
The plaintiff contends that it is he, and he alone, who was permitted by
the entered order to reappear before the Court to make submissions as to costs,
and that the defendants have no basis upon which to advance any submissions
with respect to double costs.

[11]        
While it may have been open to the defendants to make submissions
seeking double costs before the entry of the order, the order addresses their
entitlement to costs, subject only to the plaintiff’s request to reappear before
the Court. No such request has been made by the plaintiff, and the defendants’
entitlement to costs in the matter has been determined by the summary trial
judge.

[12]        
In Buschau v. Rogers Communications Inc., 2004 BCCA 142 at paras. 26–27,
237 D.L.R. (4th) 260, Newbury J.A. stated:

[26]      …The Court also had the power to amend the entered
order on the basis that it contained an error in expressing the manifest
intention of the Court. As stated by Rinfret J. for the Supreme Court of Canada
in Paper Machinery, [[1934] S.C.R. 186]:

 The question really is therefore whether there
is power in the Court to amend a judgment which has been drawn up and entered.
In such a case, the rule followed in England is, we think — and we see no
reason why it should not also be the rule followed by this Court — that there
is no power to amend a judgment which has been drawn up and entered, except in
two cases: (1) Where there has been a slip in drawing it up, or (2) Where
there has been error in expressing the manifest intention of the court (In
re Swire [(1885) 30 Ch. D. 239]; Preston Banking Company v. Allsup &
Sons, [[1895] 1 Ch. 141]; Ainsworth v. Wilding, [[1896] 1 Ch. 673]).
[at 188; emphasis added.]

Paper Machinery has been cited on numerous occasions
by Canadian courts, including this court in R. v. Blaker (1983), 46
B.C.L.R. 344, at 347, and in Racz v. District of Mission (1988) 22
B.C.L.R. (2d) 70. In the latter case, the Court set aside a “consent dismissal
order” entered by a solicitor who had acted without authority. The Court found
that it had inherent jurisdiction to correct what would otherwise be an abuse
of process and ruled that it was not necessary to require the plaintiff to
bring a fresh action in order to set the order aside. On this point, the Court
agreed with Chief Justice Sinclair in Morstad v. Quintal (1980) 14 Alta.
L.R. (2d) 369 (Q.B.), who had said that [at p. 371]:

… it must surely be within the inherent jurisdiction of
this court to grant the relief sought by the plaintiff on the present motion
without the necessity of going through the sterile routine of commencing a
separate action, a proceeding which would not result in the bringing forth of
additional facts or otherwise advancing the administration of justice.

Hutcheon J.A. in Racz noted that in Morstad,
the order nisi as entered had been “based on a mutual mistake of fact.”
(At 73.)

[27]      Even if the error in
the order was not a “clerical” one or an error arising from an “accidental slip
or omission” within the meaning of Rule 41(24), then, the court below had the inherent
jurisdiction to correct the order insofar as it did not reflect its manifest
intention. In the absence of any evidence that the respondents had taken any
irrevocable step in reliance on the order, or would suffer undue prejudice were
it corrected, I conclude that the Court should have exercised this jurisdiction
and corrected its order. In my view, it cannot be in the interests of justice
for the respondents to rely on that order to retain a sum to which they have no
entitlement in principle.

[13]        
I am unable to see that either of the two exceptions discussed in Paper
Machinery apply in this case. I am advised that the entered order was
drafted by counsel for the defendants.  There is no suggestion that there was
any “slip” in drawing it up, nor does it evidence any error in expressing the manifest
intention of the court. There is no suggestion before me that Smart J. was
asked to order double costs, and there is no basis upon which it could be
argued that he intended to do so.

[14]        
Nor is this a situation such as that dealt with by Mr. Justice
Burnyeat in GC Parking Ltd. v. New West Ventures Ltd. et al, 2004 BCSC
1700, 9 C.P.C. (6th) 245, where after an order awarding costs on Scale 3
against the defendants was made, the order entered made no reference to costs
as the plaintiff specifically advised the defendants that it intended to make
further submissions respecting an alleged entitlement to double costs. In that
circumstance, Burnyeat J. held at para. 17 that:

[17]      The court can be functus
officio where the entered order accurately deals with matters which were
dealt with in the Reasons for Judgment but retain jurisdiction to deal with
matters which were not set out in the entered order but which were dealt with
in the Reasons for Judgment. Bavelas v. Copley, [2000] B.C.J. (Q.L.) No. 523
(B.C.S.C.) dealt with an order entered with respect to liability and damages
but not with respect to costs. Drost J. held that the entry of the order
rendered the court functus offico “except with respect to the issue of
costs” (at para. 20).

[15]        
While I respectfully agree with this statement by Burnyeat J., in the
case before me, the entered order reflected the disposition of costs as set out
in the reasons for judgment.

[16]        
However, in Smart v. McCall Pontiac Buick Ltd., 2001 BCSC 467, [2001]
B.C.J. No. 682, special costs were awarded to the plaintiff in a written
judgment, and an order was entered providing for special costs. An application
was then brought by the plaintiff for double costs based upon an offer to
settle made by the plaintiff. Mr. Justice McKinnon reasoned that despite
the entered order, he could hear the plaintiff’s application for double costs
arising from the defendants’ failure to take advantage of an offer, which was
substantially below the amount awarded, as he was unaware of the offer to
settle and unentitled to know about it when delivering his reasons for judgment.

[17]        
I am unable to distinguish the factual underpinnings in Smart from
those in this case. Despite the entry of the order in this case, based upon the
principle of judicial comity discussed in Re Spruce Hansard Mills Ltd., [1954]
4 D.L.R. 590, 34 C.B.R. 202, I find that I am obliged to hear the defendants’
application for double costs.

b)       The Merits of the Defendants’ Application

[18]        
Rule 9-1(4) of the Rules provides that the Court may consider an
offer to settle when exercising discretion in relation to costs. Rule 9-1(5)(b)
provides that a Court may:

(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;

[19]        
The Court of Appeal pointed out the following in Hartshorne v.
Hartshorne, 2011 BCCA 29 at para. 25, 14 B.C.L.R. (5th) 33:

[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 Navegaçao Norsul, 2009 BCCA 16, 88 B.C.L.R. (4th) 17 at para. 16.

[20]        
Although the plaintiff was unsuccessful in proving liability before Mr. Justice
Smart, I am unable to describe his action as frivolous. He reasonably agreed to
have the issue of liability heard by summary trial, separate from the issue of
quantum, thereby saving expense to the defendants and economizing the
expenditure of judicial resources.

[21]        
I am also unable to describe the plaintiff’s case as doubtful. The
accident which was alleged to have injured the plaintiff occurred due to what
the summary trial judge found was a latent mechanical defect in a vehicle
described by Jason Pearson as a “lemon”. Smart J., however, found that the
plaintiff had failed to establish that the defendants’ care and maintenance of
the vehicle was negligent.

[22]        
Rule 9-1(6) lists the following factors to be considered when an award
of double costs is sought:

(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.

[23]        
In this case the defendants’ offer to settle was only made after the
summary trial date had been agreed to, and only some five weeks before the
summary trial was to be heard. On the other hand, clearly the settlement offer
was not one of a mere nuisance value and the plaintiff’s claim failed in its
entirety.

[24]        
I have no real evidence as to the parties’ financial circumstances, and
am not prepared to decide the application on the basis that the defendants are
likely insured by the Insurance Corporation of British Columbia, for the
reasons expressed in Bailey v. Jang, 2008 BCSC 1372 at paras. 33–34,
90 B.C.L.R. (4th) 125:

[33]      While I accept that it is likely that most drivers
in British Columbia are insured by ICBC, the wording of subrule 37B does not
invite consideration of a defendant’s insurance coverage. There may be good
policy reasons for this. Insurance coverage limits with ICBC are not universal,
and will vary from insured to insured. Certain activities may result in a
breach of an individual’s insurance coverage, or the defence of an action under
a reservation of rights by ICBC. A plaintiff will not and likely should not be
privy to such matters of insurance coverage between a defendant and ICBC.

[34]      The contest in this
case was between the plaintiff and the defendants, and the insurance benefits
available to the defendants do not, in my view, fall within the rubric of their
financial circumstances, any more than any collateral benefit entitlement that
a plaintiff may have would affect that person’s financial circumstances for the
purpose of determining their loss.

[25]        
As I have indicated above, I do not consider that the plaintiff’s case
was either frivolous or doubtful when it proceeded before Smart J. The
defendants offered no expert evidence to support the plea of inevitable
accident as, according to the plaintiff, the vehicle driven by Jason Pearson
was destroyed before any inspection was performed on it. The defendants do not
deny this assertion by the plaintiff, stating only that “there is no evidence
to support the contention that the defendants’ vehicle was destroyed prior to
an inspection regarding any mechanical failure.” I do not consider this at all
persuasive. The defendants know whether the vehicle was destroyed before any inspection
occurred, and should not be permitted to suggest an absence of evidence when
the true facts relating to inspection are within their knowledge.

[26]        
The plaintiff also asserts that the defendants’ vehicle had mechanical
difficulties in the three years leading up to the accident that injured the
plaintiff, some of which could not be diagnosed by the mechanic who serviced it.
The defendants’ response to this allegation was also that there was no evidence
to support this assertion, as opposed to a denial of the assertion. Once again,
they know whether such mechanical difficulties existed and should not be
permitted to suggest an absence of evidence when the true facts relating to the
mechanical condition of the vehicle are within their knowledge.

[27]        
I do not consider that the plaintiff acted unreasonably by not accepting
the offer and continuing to the summary trial on liability alone. I therefore
dismiss the defendants’ application for double costs following their offer to
settle. The parties will bear their own costs of this application.

“The
Honourable Chief Justice Hinkson”