IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20140513

Docket: 34970

Registry:
Penticton

Between:

Jason
Ostrikoff

Plaintiff

And

Daniel
Diogo Oliveira

Defendant

Before:
The Honourable Mr. Justice Kent

Reasons for Judgment – Costs

Introduction

[1]            
The plaintiff seeks an order that he be awarded double costs of all
steps taken in this proceeding following service of a certain offer to settle
dated February 17, 2014.  For the reasons that follow, I grant the order.

Background

[2]            
This action arose out of a motor vehicle accident which occurred on
August 15, 2009, near Peachland, B.C.  The plaintiff was injured in that
accident and sued the defendant driver for damages.  The matter proceeded to
trial before me in Kelowna, B.C. over a period of six days in late February and
early March 2014.  Judgment was delivered on March 28, 2014 (2014 BCSC 531)
whereupon damages were awarded to the plaintiff in the following amounts:

[3]            
Costs were directed to follow the event unless there were any particular
circumstances which should be brought to the attention of the court, in which
event the parties were granted liberty to make further submissions within 30
days.  Such submissions were delivered and, as indicated, the plaintiff is
seeking an order of double costs for all steps taken in the proceeding
following delivery of a certain offer to settle dated February 17, 2014.

[4]            
There were in fact no less than four different offers to settle made at
various times before the trial as follows:

1)             
On March 8, 2013, the plaintiff sent a settlement proposal offering to
settle this action for $325,000 plus assessable costs and disbursements.  The
offer took the form of a detailed 7-page settlement brief which reviewed the
evidence as it existed at that time and explained in detail the perceived value
of the claim under each heading of compensable damages.

2)             
On January 24, 2014, the defendant made an offer to settle in the amount
of $100,000 plus costs.  The offer was made by way of a 2‑page letter
which simply stipulated the amount involved without any stated rationale or
explanation.

3)             
On February 11, 2014, the plaintiff offered to settle the action for
$260,000 “new money” plus assessable costs and disbursements.  This was a
1-page letter and no explanation of the amount, or why it was reduced from the
earlier offer of $325,000 was provided.

4)             
On February 17, 2014, the plaintiff offered to settle the action for
$350,000 plus assessable costs and disbursements.  This was a 1‑page
letter and again no explanation or breakdown was provided in respect of the
increased sum identified.

[5]            
It should be noted that liability for the accident was admitted by the
defendant.  The issues for determination in the trial centred around the nature
and extent of the injuries sustained by the plaintiff and particularly the
compensable losses caused by same.  The major issue in dispute related to past
and future loss of earning capacity of the plaintiff in the context of his
unique occupation as a self-employed designer and fabricator of expensive,
custom-built motorcycles.

The Law Respecting Offers to Settle and Awards of Costs

[6]            
Rule 9-1 of the Supreme Court Civil Rules addresses Offers to
Settle and provides, in part:

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.

[7]            
Here, the plaintiff is invoking Rule 9-1(5)(b) in seeking an award of
double costs for all steps following delivery of the final offer to settle on
February 17, 2014 including, of course, the trial.

[8]            
Our Court of Appeal recently reviewed the guiding principles respecting
the double costs rule in Hartshorne v. Hartshorne, 2011 BCCA 29:

(ii) The double costs rule and its guiding principles

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] S.C.C.A. No. 200

*     “[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.

26        Rule 37B(6) of the Rules of Court (which is now R.
9-1(6) of the Supreme Court Civil Rules and remains the same as its
predecessor) lists the following factors to be considered in making an award
for double costs under R. 37B(5)(b):

(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 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.

27        The first factor –
whether the offer to settle was one that ought reasonably to have been accepted
– is not determined by reference to the award that was ultimately made. Rather,
in considering that factor, the court must determine whether, at the time that
the offer was open for acceptance, it would have been reasonable for it to have
been accepted: Bailey v. Jang, 2008 BCSC 1372, 90 B.C.L.R. (4th) 125 at
para. 24; A.E. v. D.W.J. at para. 55. As was said in A.E.
v. D.W.J., "The reasonableness of the plaintiff’s decision not to
accept the offer to settle must be assessed without reference to the court’s
decision" (para. 55). Instead, the 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.

[9]            
The Hartshorne case involved an offer to settle which was
presented 12 days before trial.  The trial court held, and the Court of Appeal
affirmed, that the offer was one which ought reasonably to have been accepted
in the circumstances of that case, and the discretionary award of double costs
following the date of the offer was justified.

Application of the Principles to the Present Case

[10]        
Although liability was admitted by the defendant, it tendered
essentially no evidence at trial to rebut the plaintiff’s case.  The report and
trial evidence of Dr. Regan was tendered to address mitigation issues and, most
particularly, to try and demonstrate that the most significant orthopaedic
injury giving rise to the plaintiff’s chronic pain might be capable of surgical
rectification.  That evidence was effective to some degree, but beyond that,
the defendant’s tactics to defend the case comprised putting the plaintiff to
strict proof combined with cross-examination of the plaintiff’s various
witnesses.

[11]        
The plaintiff, on the other hand, marshalled a combination of both
expert and lay evidence.  The essence of the plaintiff’s case was that the
plaintiff was involved in unique and highly skilled work which had a
significant physical component and that the plaintiff’s chronic pain and
physical impairments threatened both his business and his sole means of livelihood. 
The uncontradicted expert evidence was that the plaintiff was not a suitable
candidate for retraining.

[12]        
All of this was known to the defendant well before the trial began. 
Expert reports had been delivered from orthopaedic surgeons, treating
physicians, a functional capacity evaluator, a vocational consultant, a cost of
care consultant, and an economist (regarding future loss multipliers).  No
rebuttal reports were prepared by the defendants and much of the evidence was
uncontradicted at trial.

[13]        
Plaintiff’s counsel provided the defendant with a detailed rationale for
the quantum of the first settlement offer in the amount of $325,000 made on
March 8, 2013.  The nature and structure of the claim became obvious at that
point, if it had not already been obvious beforehand.  Service of the
plaintiff’s expert reports would have alerted the defendant to the possibility
of a very significant claim being presented and possibly succeeding at trial.

[14]        
The only submission made by the defendant in defence of its refusal to
accept the plaintiff’s settlement offer is that there was an absence of any
“documented pecuniary loss” and of any expert or other reliable evidence
supporting any pecuniary loss, whether past or future.  The submission, and
indeed the defence’s entire approach to both the case and the settlement offer,
fails to recognize the “capital asset” approach to assessment of damages for both
past and future earning capacity in circumstances where the financial loss is
not easily measurable.

[15]        
In my opinion, the February 17, 2014 settlement offer made by the
plaintiff was reasonable and one that ought reasonably to have been accepted by
the defendant before the commencement of trial.  A careful assessment of the
strength of the plaintiff’s case on the eve of trial, having regard to the
expert reports and the proposed lay testimony, as well as the principles of
damages assessment in chronic pain cases involving potentially significant loss
of capacity would have, and should have, resulted in a conclusion that a
recovery at trial of sums in excess of the offer was a realistic prospect. 
Instead, relying almost exclusively on tactics limited to cross-examination and
putting the plaintiff to strict proof of his case, the defendant chose to
proceed to trial to see what might happen.  Defendants are free to litigate the
case in such fashion as they consider appropriate.  But as stated in Hartshorne,
above, “[l]itigants 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”.

[16]        
For these reasons, I exercise my discretion to award party and party
costs to the plaintiff under Scale B up to February 17, 2014, and double that
scale for all steps taken in the proceeding thereafter.

“N. Kent J.”
The Honourable Mr. Justice N. Kent