IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20140508

Docket: 71531

Registry:
Kelowna

Between:

Laurie-Ann Bay

Plaintiff

And

Todd Leslie
Pasieka

Defendant

And

Insurance
Corporation of British Columbia

Third
Party

Before:
The Honourable Mr. Justice Butler

Reasons for Judgment

[1]            
On January 27, 2010, following a two-day trial, the action of the
plaintiff, Laurie-Ann Bay, against the defendant, Todd Pasieka, was dismissed.
I ordered that the issue of costs be adjourned with liberty to the parties to
apply to the court if an agreement could not be reached. Three-and-a-half years
after the trial, the defendant now applies for costs. The defendant seeks costs
at Scale B and double costs from November 14, 2006, the date an offer to settle
was made, to the present. The plaintiff says that each party should bear their
own costs.

[2]            
I note that the Insurance Corporation of British Columbia (“ICBC”) was added
as a third party, but by the date of trial the same counsel acted on behalf of
ICBC and the defendant. This application is brought on behalf of both of those
parties, but for ease of reference I will refer only to the defendant as the
party seeking costs in this matter.

BACKGROUND

[3]            
The circumstances giving rise to the litigation between the parties are
somewhat unusual. On March 30, 2005, the plaintiff and the defendant were
involved in a minor motor vehicle accident (the “MVA”). The MVA occurred when
the defendant proceeded through an intersection making a left-hand turn as
directed by a green turning arrow with the plaintiff following behind him. Upon
hearing and seeing an approaching fire truck, the defendant stopped his vehicle
in the middle of the intersection. The plaintiff attempted to clear the
intersection by continuing to turn left and in doing so rear-ended the
defendant’s vehicle.

[4]            
According to the plaintiff, the defendant refused to provide his
personal information to her. She noted the licence plate number and details of
the defendant’s vehicle. In February 2006, the plaintiff attempted to obtain
the defendant’s contact information and liability documents from ICBC but was
unsuccessful. In April 2006, the plaintiff filed a writ of summons and
statement of claim advancing claims for personal injuries she allegedly
sustained in the MVA. Through ICBC, the plaintiff received the defendant’s
information and in September 2006, was granted an order for substitutional
service of the writ and statement of claim. ICBC became involved as a third
party in November 2006 and on November 13, 2006, made a formal offer to settle
(the “offer”) to the plaintiff for the sum of $1.00 for general damages,
special damages, and court ordered interest. The offer was open until the
beginning of the trial.

[5]            
On January 12, 2009, an examination for discovery of the defendant was
conducted. The defendant stated he had no memory of being involved in the MVA
and did not recall speaking with the plaintiff about the MVA after it occurred.
The defendant confirmed his ownership of the vehicle which the plaintiff said
she collided with in the intersection.

[6]            
The plaintiff applied to have the matter heard by way of summary trial.
That application was dismissed, but Groves J. ordered that the trial proceed
before a jury on the issue of liability only. The jury found the defendant not
liable for the MVA. Since January 2010, the parties have not been able to
resolve the issues of costs.

POSITION OF THE PARTIES

[7]            
The defendant seeks an order that the plaintiff pay costs to November
13, 2006 and double costs from the date of the offer, November 14, 2006, to the
present. Alternatively, the defendant asks the court to order that the
plaintiff pay costs and double costs from January 12, 2009, the date the
defendant was examined for discovery, to the present. In the further
alternative, if the court does not find that double costs are appropriate, the
defendant says the plaintiff should pay costs throughout the action as the
unsuccessful party.

[8]            
The defendant submits the offer was one that should have reasonably been
accepted on the date it was delivered, or within a short period of time
thereafter. Although it was delivered early on in the litigation – a week
after the defendant’s statement of defence was served on the plaintiff – it
should have been clear to the plaintiff that her case was tenuous at best and that
the defendant would vigorously contest liability.

[9]            
The offer was nominal, but the defendant argues, still provided the
plaintiff with a “genuine incentive to settle” as it would have permitted her
to recover the full value of her disbursements. The defendant submits the
plaintiff should have been aware that her claim was weak. Having rear ended the
defendant’s vehicle, the plaintiff should have known there was a presumption of
negligence against her. In order to rebut this burden she would have to establish
“unusual circumstances,” such as a surprising, unexpected, or erratic manoeuvre
by the defendant to support her claim in negligence. The defendant notes the
plaintiff never led evidence of any such manoeuvre by the defendant.

[10]        
With respect to the defendant’s alternative position that the plaintiff
be ordered to pay double costs from the date of the defendant’s examination for
discovery until the present, the defendant submits the plaintiff should have
accepted the offer after learning what the defendant’s evidence would be. The
bulk of the litigation expenses were incurred after the examination for
discovery. In addition to the costs associated with the trial, the plaintiff
brought two interlocutory applications before the matter proceeded to trial.

[11]        
The plaintiff says that the defendant’s claim for costs should be
dismissed entirely due to the length of the delay between the end of trial and
this application. The plaintiff submits that the delay in bringing the costs
application has caused her prejudice. She and her counsel have had difficulty
trying to recall the specifics of her case and the details of the litigation.
She says that any order for costs is inappropriate in these circumstances.

[12]        
Alternatively, the plaintiff submits that if costs are awarded, they
should be reduced substantially to reflect the inordinate delay and as a
penalty for the negative impact the delay has had on the plaintiff.

ISSUES

[13]        
These circumstances raise the following issues:

1.       Is
the defendant entitled to double costs, either from the date the offer was made
or the date of the defendant’s examination for discovery?

2.       Should
the defendant be denied costs entirely, or in part, due to the delay in
bringing this application?

ANALYSIS

[14]        
The defendant has claimed double costs based on the offer he made to the
plaintiff. Formal offers to settle and their costs consequences are governed by
Rule 9-1. The transition provision of the current rule brings the November 13,
2006 offer, made under the repealed Rule 37, within the ambit of Rule 9-1.

[15]        
Pursuant to Rule 9-1(4), the court may consider an offer to settle when
exercising discretion in relation to costs. Specific factors to consider are
set out in Rule 9-1 (6):

(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.

[16]        
The court is given a broad discretion with respect to costs. This
discretion must be exercised judicially. The underlying purpose of Rule 9-1 is
to encourage settlement by rewarding the party who makes a reasonable offer and
penalizing the party who declines to accept such an offer: A.E. v. D.W.J.,
2009 BCSC 505 at para. 61, aff’d 2011 BCCA 279. I will examine the four
factors in light of the circumstances of this case.

(a)      Should the offer have been accepted

[17]        
Whether an offer should have been accepted is assessed by considering
whether, at the time that the offer was available, it would have been
reasonable for it to have been accepted: Bailey v. Jang, 2008 BCSC 1372.
This factor is considered from the perspective of the person who received the
offer: Ward v. Klaus, 2012 BCSC 99 at para. 36. Factors to consider
in determining the reasonableness of a plaintiff’s refusal to accept an offer
were outlined in Hartshorne v. Hartshorne, 2011 BCCA 29 at para. 27,
where the Court of Appeal stated:

…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.

[18]        
The plaintiff received the offer to settle immediately after she had
been served with the statement of defence. At that time, the plaintiff knew
that the defendant was going to deny liability but was unaware of the
particulars of the defendant’s case. In Brewster v. Rominn Laboratories Inc.,
2008 BCSC 1463, the court held at para. 18 that Rule 37B(6), now Rule
9-1(6), requires a court to examine a “party’s knowledge of the strength of its
own case and that of its opponent”. In my view, the plaintiff could not have
assessed the strength of her case against that of the defendant’s because at
the time the offer was made, she was unaware of what evidence, if any, could
have been expected at trial. However, as the action commenced, particularly
after examination for discovery of Mr. Pasieka, the plaintiff should have been
aware of the lack of available evidence to support her claim.

[19]        
The offer was a nominal offer and was clearly made by the defendant as a
strategic move to attempt to have the plaintiff settle the claim. Although a
nominal offer will not always entitle a successful defendant to double costs if
successful at trial, it may be considered in the case of an unmeritorious
claim. As Savage J. stated in MacKinlay v. MacKinlay Estate, 2008 BCSC
1570 at para. 34, it is one of the few tools available to a defendant:

[34]      While a nominal offer
might be described as strategic, it was a strategy aimed at persuading the
Plaintiffs to discontinue the proceeding, an outcome that is favourable as
compared to the outcome the Plaintiffs obtained at trial.  Such an offer is one
of the few tools in the arsenal of a defendant of relatively modest means which
might exert pressure on a plaintiff pursuing an unmeritorious claim.

[20]        
In some circumstances, a nominal offer may in fact be reasonable and
should be accepted. In this case, the plaintiff ought to have been aware of the
frailty of her case, if not from the start, then at the very least from the
time of the examination for discovery of Mr. Pasieka. Keeping in mind that “all
litigation comes with a degree of risk” and that plaintiffs should not be
“cowed into accepting an unreasonable offer out of fear of being penalized with
double costs”, I find that the offer was one that the plaintiff should have
accepted given she had neither legal nor factual support for her position.

(b)      Relationship between the offer and final judgment

[21]        
The offer was only for $1 plus disbursements and had the
plaintiff accepted it, she would have been in a better position than she was at
the end of trial but only barely. As well, that the trial was decided by a jury
and not a judge is a relevant consideration. In Cairns v. Gill, 2011
BCSC 420 at para. 19, Arnold-Bailey J. stated:

[19]      The relationship between the terms of settlement
offer and the final judgment of the Court, under Rule 9-1(6)(b), may
contemplate the often unpredictable nature of jury determinations. In the
circumstances of a jury award, the Court should be cautious in placing too much
weight on this factor.

[Citations omitted.]

[22]        
I find this factor to be neutral in these circumstances.

(c)      Relative financial circumstances of the parties

[23]        
The defendant was represented by ICBC and had substantially greater
resources to finance the trial than the plaintiff. Counsel for the plaintiff
argues that the relative financial circumstances between the parties should be
considered to either deny the defendant costs or reduce costs because Ms. Bay
does not have the financial means to pay a costs award made against her.

[24]        
In her affidavit, the plaintiff deposes she will suffer financially if
an award of costs is made against her. She says she is responsible for visiting
her ill father and expenses associated with that put her in a precarious
financial position. Moreover, she claims to have very few assets and
substantial debt. She deposes that she does not know how she will manage to pay
a costs award should one be made against her.

[25]        
In Smith v. Tedford, 2010 BCCA 302 at para. 19, the Court of
Appeal found that in certain circumstances the existence of an insurer can be
taken into account; however, as was recognized in Ward at para. 43,
this is not the “inevitable result.” In Mazur v. Lucas, 2011 BCSC 1685
at para. 53, Humphries J. stated, “… insurance coverage is not
automatically a factor to be considered against the insured party, the facts of
the particular case will govern whether it should be considered, and if so,
what weight should be given to it.” The relative financial circumstances of the
parties are a neutral factor in this case. The plaintiff is not in a strong
financial position but is not on the brink of bankruptcy. Her income in 2012
was $79,138.81, and although she has some debt, there is no indication that she
is having trouble meeting her financial commitments. As well, I note that there
is no indication that ICBC used its financial strength to take unfair advantage
over the plaintiff: Ward at para. 50.

(d)      Other factors

[26]        
In the circumstances of this case, it is appropriate, as the plaintiff
argues, to take into account the defendant’s delay in bringing this application
for costs. The trial was completed in January of 2010. By the time the
defendant brought this application, three-and-a-half years had passed. The
plaintiff argues that she has suffered prejudice as a result of this delay.

[27]        
The plaintiff relies on Xerox Canada Inc. v. Sweany (1990), 42
C.P.C. (2d) 101 (B.C.S.C.), where Finch J., as he then was, considered an
appeal of a registrar’s decision to disallow a defendant costs under Rule 57(32),
now Supreme Court Civil Rules, Rule 14-1(38). The registrar disallowed
costs sought to be taxed because the defendant failed to tax his bill of costs
for two years, thereby causing prejudice to the plaintiff. Justice Finch
allowed the appeal on the basis that the plaintiff failed to bring sufficient
evidence to show that he had been prejudiced. He found the burden of proving
prejudice due to delay was on the party alleging it and examined the facts that
were said to establish prejudice in that case, namely: (1) a predecessor
collections supervisor who had more knowledge of the matter had left her
position; (2) the whereabouts of another employee, who on behalf of the
plaintiff had instructed counsel at trial, were unknown; and (3) the
plaintiff had closed its file “a very long time ago”. Justice Finch did not
accept these facts as establishing prejudice; rather he concluded at p. 108
that there was nothing to support the allegation of prejudice unless it was
inferred “from the fact of delay alone.”

[28]        
In support of a finding that the defendant’s delay caused prejudice to
the plaintiff, plaintiff’s counsel advises that her memory of the sequence of
events has diminished with time. She says that a change in the computer
software used by plaintiff’s counsel and the fact that counsel’s support staff
mistakenly dismantled part of the plaintiff’s file made it difficult for her
counsel to piece together the steps taken in the litigation.

[29]        
The defendant acknowledges that a significant amount of time has passed
since trial. However, he argues the delay occurred in part due to the plaintiff
engaging in a complaint process against ICBC that took several months. While
that was ongoing, the defendant respected the integrity of that process by not
advancing a position on costs. As well, the defendant claims that scheduling
conflicts precluded counsel from being able to set down a date to bring the
matter of costs back to court.

[30]        
While some delay is understandable, the delay in this case far exceeded
a reasonable limit. Excessive delay is, of course, contrary to the object of
the Rules as set out in Rule 1-3(1): to secure “the just, speedy, and
inexpensive determination of every proceeding on its merits.” By waiting so
long to deal with the issue of costs, the defendant undoubtedly increased the
cost of dealing with the issue for both parties and delayed the final
resolution by years. It would be wrong to accept the delay without imposing any
consequence on the defendant. It is in the interests of the court and of the
parties to resolve disputes as soon as they arise to promote efficient use of
court time. The inordinate delay in bringing this application is not
acceptable.

[31]        
In Xerox, Finch J. found that a party alleging prejudice has the
evidentiary burden of showing that prejudice. While the evidence presented does
not establish significant prejudice, the plaintiff has established that the defendant’s
delay in pursuing a costs award caused her and her counsel difficulty in
responding to the application in as fulsome a manner as she would have been
able to had the defendant sought costs soon after trial. Similarly, it is much
more difficult for the court to consider the costs claim so long after the
trial has concluded.

[32]        
I find that the defendant has not provided a suitable reason for the
inordinate delay in bringing this application. The plaintiff has been
prejudiced as a result of this delay and the court has been inconvenienced.

[33]        
Without the delay in the application, I would have found that the
defendant was entitled to double costs from the date of Mr. Pasieka’s
examination for discovery. The plaintiff should have known from that time
forward her claim was weak and should have accepted the offer. However, given
the inordinate delay, I decline to make that order. Instead, I order that the
defendant is entitled to costs at Scale B throughout.

[34]        
As success on this application was divided, the parties will each bear
their own costs of this application.

“Butler J.”