IN THE SUPREME COURT OF BRITISH COLUMBIA

Date:  20141021

Docket:  M091794

Registry:
Vancouver

Between:

Stephen Henry

Plaintiff

And

Danielle Bennett

Defendant

Before:
The Honourable Madam Justice Ballance

Ruling on Costs

[1]
In my Reasons for Judgment issued September 20, 2011 (indexed at
2011 BCSC 1254), I concluded that the plaintiff, Stephen Henry, was
entirely liable for the motor vehicle accident that is the subject matter of
this proceeding.  Accordingly, his claim was dismissed.

[2]
The defendant, Danielle Bennett, applies for an award of costs of
this proceeding at Scale B through to March 8, 2010, being the date
of the delivery of her first offer to settle, and double costs after that pursuant
to Rule 9-1(5) of the Supreme Court Civil Rules. The defendant’s
alternative position is that she is entitled to double costs after delivery to Mr. Henry
of her January 11, 2011 “without prejudice” settlement letter (the “Settlement
Letter”).  In the further alternative, she seeks double costs after March 8,
2011, when her second formal offer to settle was delivered.

BACKGROUND

[3]
The accident occurred on September 17, 2008, when Mr. Henry proceeded
southbound through a controlled intersection on an amber light as
Ms. Bennett was initiating her left turn.

[4]
Mr. Henry commenced this action on April 8, 2009.  On June 23,
2009, Ms. Bennett filed her statement of defence, which included a denial
of liability.

[5]
Mr. Henry was first examined for discovery on November 27, 2009.
He made a number of important admissions that had bearing on the intensely
disputed issue of liability.  Most notably, he testified that he had been about
a hundred feet away from the intersection when the light governing his path of
travel changed from green to amber.  He stated that when the light turned
amber, he kept going and took no steps to slow down.  He also said there had
been no vehicles ahead of him when he was a hundred feet of his approach to the
intersection.  Mr. Henry initially denied that there had been any
southbound vehicles stopped at the intersection as he entered it, but later
qualified his answer by saying that he simply could not recall whether there
were any stopped vehicles.  He ultimately adopted his discovery evidence on these
points at trial.

·  2010
Offer

[6]
A few months after Mr. Henry’s discovery, the defendant delivered a
letter dated March 8, 2010 containing a formal offer to settle for $9,000 (the “2010
Offer”).

[7]
The 2010 Offer reads in relevant part:

2.         The defendant offers to pay the plaintiff the
amount of $9,000 (the “amount offered”), after taking into
account Part 7 benefits paid or payable, … and any advances paid to date,
in satisfaction of this proceeding in its entirety.  The amount offered
includes court order interest assessed to the date of delivery of this offer
and excludes costs.

3.         On acceptance of this
offer, the parties agree that:

(1) The plaintiff is entitled to necessary and reasonable
disbursements only assessed to the date of delivery of this offer; and

(2) The defendant is entitled to costs at Scale B and
necessary and reasonable disbursements assessed from the date of delivery of
this offer. [Bolding in original]

[8]
An appendix attached to and forming part of the 2010 Offer contained a
provision that explained that the offer did not detract from Ms. Bennett’s
right to seek special costs against Mr. Henry or his counsel above and
beyond the defendant’s entitlement to costs under the proposed settlement terms.
Each party was permitted any costs and disbursements that had been awarded in
his or her favour in any event of the cause.

[9]
The 2010 Offer was left open for acceptance at any time before
4:00 p.m. on the last business day before the first day of trial.  Mr. Henry’s
counsel verbally rejected the 2010 Offer.

[10]
In April 2010, Mr. Henry travelled from his residence in Christina
Lake, British Columbia, to Castlegar where he flew to Vancouver and then rented
a car to drive to Abbotsford to undergo an independent defence medical
examination by Dr. Sovio.  Dr. Sovio’s expert report dated April 29,
2010 was served on Mr. Henry in October 2010, and was admitted as an
exhibit at trial.  That same month, Mr. Henry’s treating physician, Dr. Vala,
completed an expert report which was also admitted as an exhibit at trial.

[11]
In early January 2011, Mr. Henry produced extracts from his
Facebook page pursuant to a court order.

·  Settlement
Letter

[12]
On January 7, 2011, Ms. Bennett was examined for discovery.  Five
days later, her lawyer sent Mr. Henry’s counsel the Settlement Letter,
which was explicitly stated to be “without prejudice”.  The Settlement Letter
contained a summary of the statements of the eyewitnesses to the accident and
the parties’ conflicting versions of the material facts in relation to its
unfolding.  In addition to emphasizing Ms. Bennett’s strong position on
liability, it summarized the leading appellate decision in respect of the
inherently hazardous scenario of turning left in a busy, controlled
intersection (approximating, in general terms, what had happened in this case).
The Settlement Letter further warned of issues pertaining to Mr. Henry’s
credibility stemming from his Facebook photographs and videos, which were said
to capture activities that contradicted his claims of injury and disability.

[13]
Defence counsel’s position in the Settlement Letter was that the worst case
outcome for Ms. Bennett would be for the parties to be found equally
liable.  Counsel reasoned that on a 50/50 apportionment, there was a very real
probability that any award to Mr. Henry may total only $10,000.  Relying
on that logic, the defendant offered $10,000 plus disbursements incurred to March 8,
2010 only, other than the cost of Dr. Vala’s report, no costs, and no Part 7
benefits.  The Settlement Letter closed by clarifying that the settlement
amount would not be paid until disbursements in the tort action had been agreed
to or assessed.

[14]
On January 12, 2011, counsel met for the purposes of a trial
management conference, at which time Ms. Bennett’s counsel handed Mr. Henry’s
lawyer a hard copy of the Settlement Letter.

[15]
Defence counsel conducted a further examination for discovery of Mr. Henry
on March 3, 2011.  The second discovery concentrated on issues surrounding
Mr. Henry’s employment and activities, as well as the photographs and videos
taken from his Facebook page, rather than on liability.

·  2011
Offer

[16]
On March 8, 2011, the defendant formally withdrew her 2010 Offer
and made another formal offer (the “2011 Offer”) to Mr. Henry.  The 2011 Offer
was faxed to the office of Mr. Henry’s counsel just before 3:00 p.m. on Tuesday
March 8.  The deadline for acceptance was stated to be 4:00 p.m. three
days later on Friday, March 11, 2011.  The trial was scheduled to commence
the following Monday, March 14.

[17]
The 2011 Offer offered payment to Mr. Henry of the sum of $30,000
and explained and/or incorporated the following key terms:

·  the
proposed settlement amount had taken into account Part 7 benefits paid or
payable and any advances paid to date and included court order interest;

·  on
acceptance of the offer, Mr. Henry would be entitled to his assessed costs
in accordance with Rule 15-1(15) and the costs ruling in Bowen v. Martinec,
2008 BCSC 104 up to the date of delivery of the 2011 Offer, and Ms. Bennett
would be entitled to the same from the date of delivery of the 2011 Offer.

·  Mr. Henry
was also entitled to his assessed necessary and reasonable disbursements up to
the date of delivery of the 2011 Offer, and Ms. Bennett was entitled to the
same from the date of delivery of the 2011 Offer;

·  the
foregoing terms concerning costs and disbursements were stated to be subject to
the terms of an attached Appendix A.  It stipulated that, upon acceptance of
the 2011 Offer, the parties would pay the costs they agreed to pay consequent
upon the acceptance of the offer, and would each pay the other any costs and
disbursements awarded in any event of the cause; and

·
the offer could be accepted only unconditionally, and only by
Mr. Henry delivering a written notice of acceptance.

[18]
Mr. Henry did not respond to the Settlement Letter or the 2011
Offer, nor did he at any time present a counter-offer or an independent offer
of settlement.

[19]
The matter proceeded to an eight day trial.  Liability and quantum of
damages were both in issue.  As mentioned, I concluded that the accident
was caused solely by the negligent driving of Mr. Henry.  As he was
entirely at fault for the accident, his claim was dismissed and it was
unnecessary to consider the nature and extent of his injuries and claim for
damages.

OVERVIEW OF THE PARTIES’ POSITIONS

[20]
Mr. Henry argues that the 2010 Offer should be seen as a nominal or
even a “walkaway” offer that he reasonably declined in the circumstances.

[21]
He asserts that the Settlement Letter does not qualify as an offer under
the applicable Rule and should not be considered in the analysis.

[22]
Mr. Henry urges that it was not unreasonable for him to reject the
2011 Offer primarily on the reasoning that the tight deadline it imposed did
not permit him a reasonable amount of time to consider whether to accept it.
Finally, he asserts that as he is a young person with no real financial
resources, an order for double costs would crush him and punish him beyond what
is reasonable and proportionate in the circumstances.

[23]
Ms. Bennett counters that the 2010 Offer was a genuine attempt at a
compromise that would provide for a modest recovery to Mr. Henry.  She
argues that he had ample time to consider it after completion of his first
examination for discovery, where he had given damaging testimony on the issue
of liability that ultimately led to the dismissal of his claim.  In the
alternative, the defendant submits that the Settlement Letter presented
Mr. Henry with a detailed rationale of the settlement terms and constituted
a bona fide attempt to settle Mr. Henry’s claim and that he ought
reasonably to have accepted it.

[24]
In the further alternative, Ms. Bennett contends that the more
generous 2011 Offer was plainly reasonable in the circumstances, particularly
given Mr. Henry’s discovery evidence about liability that was harmful to
his case, and in light of his evidence concerning damages.

legal framework

[25]
Rule 9-1(5) gives the court a broad discretion to determine whether
cost consequences ought to flow in cases where a formal offer to settle has
been made.  The underlying rationale of the Rule is to promote the early
settlement of disputes.  It does so by empowering the court to reward the party
who has made a reasonable settlement offer and punish (through an unfavourable
costs award), the party who refuses to accept a reasonable settlement offer: Hartshorne
v. Hartshorne, 2011 BCCA 29 [Hartshorne].

[26]
One of the cost options available to the court under Rule 9-1(5)(b)
is to award double costs of all or some of the steps taken in the proceeding
after the delivery or service of the offer to settle.  Rule 9-1(6) sets
out a list of considerations, including the catch-all provision of “any other
factor the court considers appropriate”, that the court may turn its mind to in
exercising its wide discretion under Rule 9-1(5).  Those considerations
are:

(a)  whether
the offer to settle was one that ought reasonably to have been accepted, either
on the date that it 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.

[27]
Whether a settlement offer is reasonably capable of acceptance is not to
be evaluated with the benefit of hindsight or by reference to the ultimate outcome:
Bailey v. Jang, 2008 BCSC 1372 (S.C.); E.(A.) (Litigation guardian
of) v. J.(DEW.), [2009] B.C.J. No. 748, 91 B.C.L.R. (4th) 372
(S.C.); Cairns v. Gill, 2011 BCSC 420.  The notion of reasonableness in
the context of Rule 9-1(6) is to be considered by reference to the recipient’s
knowledge of the circumstances at the time that the offer was made and during
the period it was left open for acceptance: Martin v. Laving, 2010 BCCA
1610 [Martin].

[28]
In Hartshorne, at para. 27, the Court of Appeal endorsed consideration
of the following factors in determining whether an offer ought reasonably to
have been accepted:

–  the
timing of the offer;

–  whether
the offer bore some relationship to the claim (as distinct from being a “nuisance
offer”);

–  whether
the offer could be easily evaluated; and

–  whether
a rationale for the offer had been provided.

[29]
An offer that amounts to nothing more than a “shotgun offer” or an enticement
to the plaintiff to effectively walk away from the claim, or otherwise
qualifies as a nuisance offer along the lines contemplated by the Court in Hartshorne,
does not truly provide an incentive to the plaintiff to settle, and does not
rise to an offer that a party ought to reasonably accept.

[30]
That is not to say, however, that an offer that is nominal will
necessarily be considered unreasonable; there are circumstances where a nominal
offer will be reasonably capable of acceptance: Martin at para. 13;
P.S.D. Enterprises Ltd. v. New Westminster (City), 2011 BCSC 1646; Habib
v. Jack, 2011 BCSC 1294.

[31]
The time period in which the offer to settle is open for acceptance is
relevant to the assessment of whether it ought reasonably to have been
accepted.  In Coquitlam (City) v. Crawford (c.o.b. Glenavon Kennels),
2008 BCSC 1507, the court concluded that seven days was a reasonable period of
time.  In Gichuru v. Smith, 2013 BCSC 1818, at para. 56, just over
three days was considered not time enough.

[32]
The authorities, however, do not mandate a minimum period of time that
must be made available to the recipient to consider the offer in every case: Dodge
v. Shaw Cablesystems Ltd., 2009 BCSC 1765, 2 B.C.L.R. (5th) 369; Wong-Lai
v. Ong, 2012 BCSC 1569.  The relative weight to be given to the timeline
imposed by the offer is highly fact-dependant.  In one set of circumstances,
the imposition of a deadline shorter than seven days may be considered
reasonable and in another, it may militate against the finding that the offer ought
to reasonably be accepted.

[33]
A finding that the recipient acted reasonably in declining the offer does
not close the inquiry.  Double costs or another costs award against the party
who received the offer may still be warranted in circumstances where the other
informing factors, such as the relationship between the proposed settlement
terms and the outcome at trial, indicate that the offer must be given a degree
of weight: see, for example, Jackson v. Yusishen, 2014 BCSC 406; Wafler
v. Trinh, 2012 BCSC 1708, aff’d 2014 BCCA 95.

discussion

[34]
I wish to clarify at the outset that, in my view, the defendant overly
emphasized the evidentiary strength of the extracts admitted at trial from Mr. Henry’s
Facebook page and their relevance to the double costs analysis.  Although it
was unnecessary for the Court to delve into the nature and effect of Mr. Henry’s
injuries, I would say that the Facebook snippets that showed him doing certain physical
activities were not necessarily inconsistent with his testimony concerning his injuries
and functional limitations.  The defendant’s contention to the effect that the
extracts played a part in tainting Mr. Henry’s credibility, which is a factor
to be taken into account under Rule 9-1(6), was not persuasive and did not feature
in my analysis on costs.

[35]
Given the modest settlement amount proposed by the 2010 Offer, the fact
that it did not include Mr. Henry’s costs and, to a lesser extent, because
it was made before any of the medical reports had been produced, I conclude
that it was reasonable for Mr. Henry to decline it.  Moreover, the value
to Mr. Henry of the already small amount of the 2010 Offer reduced considerably
when his out-of-pocket costs expended to attend Dr. Sovio were taken into
account.

[36]
The considerations articulated in Rule 9-1(6)(b) through (d) do not, in
my opinion, favour attributing any weight to the 2010 Offer.

[37]
Rule 9-1(1) imposes technical requirements in the definition of an
“offer to settle”.  Not all settlement offers exchanged between parties will
constitute an offer to settle within the meaning of the Rule.  In order to
qualify, the offer must be made in writing by a party, be served on all parties
of record, and contain an express reservation of the right to bring the offer
to the attention of the court for consideration in relation to costs, after the
court has pronounced judgment on all other issues in the proceeding.
Compliance with these essential criteria is important: Roach v. Dutra,
2010 BCCA 264; Royal Bank v. B.M.P. Global Distribution Inc., 2011 BCSC
1650.

[38]
The Settlement Letter did not contain the requisite reservation clause,
or even a modification of it that would sufficiently signal to Mr. Henry
that it was intended as an offer within the meaning of Rule 9-1.  The
phrase “without prejudice” in a letter that proposes settlement, without more,
does not serve as proximate language for the express reservation mandated in
the definition of “offer to settle”.  Accordingly, I do not regard the
Settlement Letter as an offer to settle under the Rule.

[39]
The 2011 Offer stood as a substantial improvement over the terms of the
2010 Offer.  The costs and disbursements permitted to Mr. Henry under the terms
of the former, while not quantified precisely, were capable of being readily
calculated based on accepted principles and, therefore, could be evaluated with
little difficulty.

[40]
The fact that the Settlement Letter does not amount to an offer to
settle under the Rule does not mean that it bears no relevance on this
application.  The contents provided Mr. Henry with the defendant’s
analysis of liability that would have played a role in her 2011 Offer.

[41]
I would ordinarily regard a three-day fuse attached to an offer that was
delivered close to the eve of trial, where it would be expected that the party would
be engrossed in the demands of trial preparation, as posing an unreasonable
time constraint within which to give it meaningful evaluation.  The difficulty
facing Mr. Henry, however, is that due mainly to his own damaging discovery
evidence, he ought reasonably to have anticipated that he faced significant exposure
of not only faring poorly on the issue of liability, but losing his case
altogether.  Knowing, as he did, his harmful evidence, Mr. Henry should have
appreciated the deep weakness of his claim and the risk of significant
apportionment against him or the outright dismissal of his suit and his
exposure for an adverse costs award.  All things considered, the 2011 Offer was
one that ought reasonably to have been accepted by Mr. Henry.

[42]
With respect to other the pertinent factors, in dismissing Mr. Henry’s
case, the Court placed heavy emphasis on his discovery evidence concerning
liability for the accident.  Relatively little is known about Mr. Henry’s
specific financial circumstances.  Based on the evidence at trial, it is
reasonable to infer that his financial situation is modest.  However, that, of
itself or in combination with any other factor, is not reason enough in this
case to refuse the defendant an award of double costs.

[43]
The defendant is entitled to costs of this proceeding at Scale B up to
and including March 8, 2011, and double costs thereafter.

“Ballance J.”