IN THE SUPREME
COURT OF BRITISH COLUMBIA

Date: 20140312

Docket: 92117

Registry:
Kelowna

Between:

Francis Scott
Jackson

Plaintiff

And

Mark Yusishen

Defendant

Before:
The Honourable Mr. Justice Betton

Decision Re Costs

Introduction

[1]            
This is a decision in respect of costs following the conclusion of a
trial before a jury. That trial was to assess the plaintiff’s entitlement to
damages arising out a motor vehicle collision. The defendant admitted
liability.

[2]            
At the commencement of the trial, outstanding offers to settle pursuant
to Rule 9-1 of the Supreme Court Civil Rules existed. The defendant’s
was in the amount of $100,000. The plaintiff’s was for the defendant’s
insurance policy limit of $2 million.

[3]            
Following a 14-day trial, the jury awarded $5,000 for non-pecuniary
damages. No other award was made.

Background

[4]            
The collision giving rise to the claim was a minor one. None of the
occupants in the defendant vehicle or the passenger in the vehicle being driven
by the plaintiff were injured. It occurred on November 18, 2009.

[5]            
In the months that followed the collision, the plaintiff was diagnosed
with rib fractures. His recovery was complicated and several surgeries were
required. He was left with significant ongoing symptoms and limitations.
Approximately six months after the collision and before the rib fractures were
diagnosed, the plaintiff’s symptoms increased significantly following a
coughing episode.

[6]            
The most significant issue affecting the quantum of damages to which the
plaintiff would be entitled was causation. On the evidence the question for the
trier of fact was whether or not rib fractures requiring surgeries were caused
by the motor vehicle collision or the coughing incident.

[7]            
The plaintiff’s position in negotiations and at trial was that the motor
vehicle collision caused the injuries. In all negotiations and in presenting
offers to settle, he took the position that there was little if any prospect
that the trier of fact would reach a contrary conclusion and that if he succeeded
on the causation issue, damages would inevitably exceed the policy limits of $2
million.

[8]            
The defence made it clear in negotiations that it would argue that the
motor vehicle collision was not the cause of the rib fractures and that if was
successful in advancing that argument before the trier of fact, damages
recoverable would be modest. That is of course what the defence successfully
argued.

[9]            
Defence counsel’s alternative argument before the jury was that if the
jury found that the injuries were indeed caused by the motor vehicle collision,
appropriate awards for past and prospective loss of income would be in the
range of $450,000 to $550,000. Defence counsel’s submissions acknowledged that
the jury would include awards for non-pecuniary damages and costs of future
care.

[10]        
In the materials submitted in this costs application, various of the
written communications between counsel for the parties, which incorporated
their offers, was provided as well as mediation summaries that had been
prepared for what turned out to be an unsuccessful mediation. Generally
speaking, the plaintiff was persistent and consistent throughout in saying that
the plaintiff’s claim should be valued in excess of the policy limits of $2
million. The plaintiff’s mediation brief quantified the plaintiff’s claim at
$2,991,461.49.

[11]        
Following the mediation, the defendant provided an offer to settle dated
July 26, 2013, in the amount of $250,000.

[12]        
On July 28, 2013, counsel for the plaintiff responded with an offer to
settle in the amount of $2,200,000.

[13]        
On September 9, 2013, the defendant, through counsel, withdrew his
earlier offer of $250,000 and provided a new offer to settle in the amount of
$100,000 “new money”.

[14]        
The plaintiff had requested an advance and received a $5,000 advance on
June 4, 2013. When the advance was provided, the attached letter contained the
following:

…The advance is to be applied
first towards any heads of damage which will attract pre-judgment court ordered
interest.

[15]        
The plaintiff provided a further offer to settle on October 5, 2013, in
the amount of $1.85 million net of Part 7 deductions plus costs at Scale B.

Positions of the Parties

[16]        
Immediately following the jury’s verdict, counsel addressed the court
with respect to costs. They expressed agreement that the plaintiff would be
awarded his costs at Scale B to the date of the defendant’s offer dated
September 9, 2013, and that the defendant would have his costs thereafter at
Scale B.

[17]        
Defence counsel acknowledged that within hours, the plaintiff
reconsidered his position and concluded that he should be entitled to his costs
throughout in all of the circumstances. The defendant conceded that it was open
in the circumstances to return the issue of costs to the court for
determination, given that no order had been entered as to costs.

[18]        
On this application, the plaintiff says that he should be entitled to
his costs throughout the action and that there be no costs awarded to the
defence. Alternatively, the plaintiff says that if the defendant is entitled to
any costs, it should be on a reduced level.

[19]        
The plaintiff says that in applying the considerations set out in Rule
9-1(6), this is a circumstance where the court should exercise its discretion
as to costs and order that the plaintiff be entitled to his costs throughout.

[20]        
The defendant asserts as his principal position that the defendant
should have his costs from the date of the September 9, 2013 offer of $100,000.
Counsel for the defendant argues, however, that in all of the circumstances it
would be within the court’s discretion to order that the defendant have his
costs from June 4, 2013, when the defendant provided an advance in the amount
of $5,000.

[21]        
He says that, given that advance equals the amount of the jury award,
the result is that the court order should be a dismissal of the plaintiff’s
claim.

Analysis

[22]        
Generally costs are awarded to the successful party. By nature of the
advance, that is the defendant. Rule 14-1 and Rule 9-1 of the Supreme Court
Civil Rules gives this court considerable discretion as to any order of costs
generally and in the circumstances of this case. Rule 9-1(6) sets out factors
that the court may consider in exercising that discretion as follows:

(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]        
The B.C. Court of Appeal has very recently dealt with costs issues in
the context of a personal injury claim in Wafler v. Trinh, 2014 BCCA 95.
It endorsed the following as stating the purpose for which costs rules exist (para. 50):

…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 [v.
Westminster Savings and Credit Union, 2010 BCCA 282] 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.

[24]        
The Court of Appeal then said at para. 81:

[81]      I do not quarrel with the general proposition that
a plaintiff who rejects a reasonable offer to settle should usually face some
sanction in costs, even in circumstances in which it cannot be said that the
plaintiff should have accepted the offer. To do otherwise would undermine the
importance of certainty and consequences in applying the Rule. The importance
of those principles was emphasized by this court in Evans v. Jensen,
2011 BCCA 279:

[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.

[25]        
I will deal first with the $100,000 offer dated September 9, 2013, and
review the considerations suggested in Rule 9-1(6) in order.

(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

[26]        
The law is clear and the parties agree that the determination of whether
the offer is one that ought reasonably to have been accepted is not made
through hindsight and based on or with reference to the judgment that was
ultimately pronounced.

[27]        
At the time the offer was presented, it would have been obvious to both
parties that the conclusions of the trier of facts with respect to causation
would be critically important. There was no doubt that the plaintiff had had
significant problems, and if he was successful in having the jury conclude that
those problems arose from the motor vehicle collision, damages were likely to
be significant. One needs to look no further than the defence submissions to
the jury to know that this was so. Obviously if causation was established,
there was still significant room for discussion and debate about what the
appropriate level of damages would be, but it would clearly be in a different
order of magnitude than if causation were not established.

[28]        
A litigant who receives an offer to settle must carry out a risk
assessment. The risk being assessed in a personal injury claim is not only the
exposure to cost consequences intended by Rule 9-1 but also with respect to
actual potential recovery. The plaintiff must assess the issues and evidence in
the case and consider the prospects that they will do better than what is
offered and measure them against the risks that they will do worse.

[29]        
In this claim, like many, the determination of a particular issue,
causation, would inevitably have a dramatic effect on the plaintiff’s recovery.
Each party had available to them at the time the offer was made extensive
medical evidence from well-qualified medical professionals expressing an
opinion on the causation issue. Those experts did not agree.

[30]        
This put the plaintiff in the position of having to assess whether and
to what extent he was prepared to discount his potential recovery in a
settlement in recognition of the risk that he would not succeed before the jury
on the causation issue. Based on the evidence available to the plaintiff at the
time of the offer, it would have been reasonable to conclude that the offer
represented only a small portion of what he would likely recover if he
succeeded on the causation issue.

[31]        
At trial, the defence argument to the jury was that if they found the
causation had been established, the award should be greater than $450,000 to
$550,000 (see para. 8 above). This might reasonably be viewed as the
lower end of the spectrum in the event that the jury found in favour of the
plaintiff on causation. Accordingly, the plaintiff was faced with accepting a
small fraction of what realistically would be awarded if he succeeded on causation.

[32]        
In my view, it cannot be said that the plaintiff in those circumstances
ought reasonably to have accepted the offer. The quality of the medical
evidence in support of his position and the upside potential in terms of damage
award if he succeeded on that issue did not warrant discounting the claim to
the level of the $100,000 offer.

[33]        
As Justice McEwan noted in Fan (Guardian ad litem) v. Chana, 2009
BCSC 1497, referenced by plaintiff’s counsel at para. 19:

[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

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

[34]        
Obviously the offer was far in excess of the ultimate award. This does
weigh in favour of the defendant.

(c) the relative financial circumstances of the
parties

[35]        
Both counsel referred to authorities that touch on this subject.

[36]        
Counsel for the defendant referred to Minhas v. Sartor, 2014 BCSC
47, where the court had noted that insurer had not used its financial strength
to take unfair advantage or that the plaintiff was unable by reason of relative
financial disadvantage to prosecute his claim. Certainly that statement applies
here. The plaintiff prosecuted the case aggressively supported by a significant
volume of expert evidence and two able counsel assisting him.

[37]        
The plaintiff led evidence at trial as to his inability to work and his
financial situation being dire, and that was augmented with affidavit evidence
in this application indicating he is financially destitute.

[38]        
This consideration does not, in my view, advance either party’s
position.

(d) any other factor the court considers
appropriate

[39]        
The plaintiff suggests that this “catch all” factor should include the
conduct of the defence witness, an expert radiologist, Dr. Connell. The
plaintiff’s written submissions in this application said:

39.       Dr. Connell’s conduct was
both dishonest and as a physician holding himself out to be an independent
radiologist, disgraceful.

And then went on to say:

40.       The conduct of an expert “rests
at the feet” of the party who called that expert

[40]        
The plaintiff’s counsel softened his characterization of Dr. Connell’s
conduct during oral submissions. While there may be room to criticize Dr. Connell
for his unwillingness to answer questions when asked to assume hypothetical
facts, this is not a circumstance where anything done by the doctor should
influence a determination of this issue.

[41]        
The plaintiff also references a defence biomechanical engineer. There
was voir dire to determine the admissibility of that expert’s report and
it was ultimately excluded. The plaintiff argues that regardless of any other
considerations, if the defendant is to obtain his costs, there should be some
adjustment in consideration of the time spent dealing with the admissibility of
that expert’s report.

[42]        
The defendant, on the other hand, refers to the pre-trial conduct of the
plaintiff. In his argument, he says:

34.       The Plaintiff forced
this matter to trial with its aggressive and intimidating limits demands
designed solely to put pressure on Defence counsel by placing him in a position
where he is potentially exposed to a negligence claim by the named insured when
they knew or ought to have known that the value of their claim would not exceed
limits even if causation were proven. The Plaintiff pushed this matter to trial
and should bear the consequences of his decision.

[43]        
The proposition of the defendant that the negotiating stance, strategy
or approach taken by the plaintiff should be a factor influencing costs is an
interesting one. There is no doubt that the plaintiff took a very aggressive
position and, at least in the material before me, provided little indication of
a willingness to compromise. They had communicated that it was their view that
the claim was worth in excess of $2.5 million and presented offers of $2
million and, immediately before trial, a willingness to accept $1.85 million.
The approach taken by the plaintiff’s counsel is exemplified by referencing an
email to defence counsel on August 14, 2013, which included the following:

I am confident that the Court will find that causation has
been established and enter an excess judgment. I do not think you or your
client will find any insulation in the fact that you both hoped a jury would
return a different result from a judge. Frankly, many might find this reckless.

If an excess judgment is entered,
your conduct of this case will be heavily scrutinized ‑ what did you
know; what could you have known; and what did you do to protect the defendant.
The degree to which the defendant was involved or apprised of the risk will be
reviewed with vigour. Merely advising a person to get ILA is not the end of the
matter or sufficient. Frankly if they do not get ILA, the argument exists that
greater care must be taken to protect and explain things to them. There remain
a host of other obligations that exist an [sic] run parallel to the notice to
get ILA.

[44]        
It is, of course, open to counsel to determine what negotiating
strategies and tactics to employ. This is, no doubt, influenced by a variety of
factors that might include the personality of counsel, instructions from
clients, confidence in results, and knowledge of opposing counsel’s own styles
and strategies. Sometimes aggressive strategies will generate significant
positive movement in the position of opposing parties and sometimes they will
effectively eliminate any willingness on the part of opposing counsel to move
at all.

[45]        
It would appear in this case, the effect was the latter.

[46]        
Counsel did not refer to any authorities that specifically addressed
this issue in the context of Rule 9-1(6)(d). I am unable to say generally that
the court should, in the absence of finding anything improper in the conduct of
counsel, engage in critiquing those strategies or measuring their negotiating strategies
against the court’s view of their effectiveness as a stand-alone factor in a
determination as to costs.

[47]        
However, the position of the plaintiff, at least as outwardly presented,
was aggressive, making no allowance for losing on the causation issue. The
Court of Appeal in Wafler did not make its comments quoted above at paragraphs 23
and 24 of this decision in the context of Rule 9-1(6)(d), but I find them
helpful in this context. Even if I am wrong and those comments are not
fairly applied in respect of Rule 9‑1(6)(d), I do find they
support the position of the defence.

Conclusion

[48]        
In all of the circumstances, it is my conclusion that this is a case
where the plaintiff should have his costs to the date of the $100,000 offer on
September 19, 2013, and that each party should bear their own costs thereafter.
This balances my observations in respect of Rule 9-1(6)(a) that favour the
plaintiff having his costs with those in respect of Rule 9-1(6)(b) and(d) that
support the defence position. It also, in my view, is consistent with the
general purposes of the costs rules.

[49]        
I will comment briefly on the advance payment of $5,000. This was not an
offer to settle in accordance with the formal requirements of Rule 9-1. It does
have the practical effect of making the appropriate order here a dismissal of
the plaintiff’s claim. I do not find that it has any bearing on my order as to
costs in the circumstances here.

“D.A. Betton J.”