IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20150213

Docket: M110420

Registry:
New Westminster

Between:

Glenn Loft

Plaintiff

And

Baljinder Singh
Nat and Rajinder Sandhu

Defendants

Before:
The Honourable Mr. Justice Jenkins

Reasons for Judgment on Costs

[1]            
This is an application for costs following a decision of mine (2013 BCSC
1568) dated August 28, 2013 granting damages to the plaintiff for injuries
incurred in a motor vehicle accident which had occurred in 2007. The plaintiff
had sought considerably more than I found to be owing, ie. he sought damages of
over $3 million. Due to pre-existing medical conditions, personality disorders
and in particular the plaintiff’s lack of credibility, I granted total damages
of approximately $63,000 for general damages, past wage loss and special
damages.

[2]            
An appeal of my decision resulted in a dismissal (2014 BCCA 108) save
the Court of Appeal allowed an appeal of my decision on costs stating “the fact
that [Mr. Loft] obtained a judgment in an amount less than the amount
sought is not, by itself, a proper reason for depriving him of costs” (at para. 47).
The Court referred the issue of costs back to me for further determination.

[3]            
The defendants now seek double costs from the date of offers to settle
made by them on December 21, 2012 and January 8, 2013 on the basis that one of
those offers ought reasonably to have been accepted by Mr. Loft. Mr. Loft
submits he could not have accepted the offers due to one of the conditions
attached to each of the offers and the circumstances in which the offers were
made, i.e. shortly before the trial was scheduled to commence.

[4]            
The plaintiff also seeks costs from the defendants on the basis that the
plaintiff was successful at trial.

Offers to Settle

[5]            
The two offers to settle included identical terms. The only difference
is that the offer of December 21, 2012 was to pay the sum of $125,000 in full settlement
of the claims of the plaintiff whereas the offer of January 8, 2013 offered a
settlement amount of $150,000. Both offers included court ordered interest to
the date of the offers but excluded costs. The offers were both clearly in
excess of the fruits of judgment.

[6]            
There was a unique clause in the offers to settle which related to the
Insurance Corporation of British Columbia (“ICBC”) having been served with a
Notice of Attachment and/or Requirement to Pay from the settlement funds,
assuming one of the offers was accepted, obligating ICBC to firstly pay the
Family Maintenance Enforcement Program (“FMEP”) the amount claimed in the
Notice of Attachment and/or Requirement to Pay before paying out the balance of
the settlement to Mr. Loft.

[7]            
By way of background, while this litigation was proceeding, Mr. Loft
was involved in family proceedings with his former spouse and with a previous
common law partner. In those two proceedings there were arrears of support
which at the time of service of the Notice of Attachment and/or Requirement to
Pay were in the range of $100,000. Apparently FMEP had gotten wind of the claim
in this action and were hoping the arrears of support could be paid from the
proceeds of settlement or a judgment in favour of Mr. Loft.

[8]            
The wording of the applicable paragraph in the offers to settle is
significant and stated:

The defendants confirm that this
offer is made with the acknowledgement that the Insurance Corporation of
British Columbia (“ICBC”) has been served with a Notice of Attachment and/or
Requirement to Pay and is therefore obligated to first pay to Family
Maintenance Enforcement Program (“FMEP”) from the Settlement Payment in this
matter. The defendants and /or ICBC are required to first meet any obligation
to FMEP before paying monies to the plaintiff in relation to the Settlement
Payment, pursuant to the Family Maintenance Enforcement Act, R.S.B.C.
1996, c. 127 and amendments and regulations thereto.

[9]            
The plaintiff did not respond to the offers to settle. This action
proceeded to trial commencing January 29, 2013 and concluded with submissions
in August 2013.

[10]        
ICBC was not a party in this action.

[11]        
After the offers to settle were delivered and following the trial of
this action, Mr. Loft was successful in an application to Mr. Justice
Groves of this court to reduce the arrears of support to an amount of
approximately $6,000.

[12]        
The plaintiff submits that the condition contained in the settlement
offers regarding FMEP made it impractical to accept either of the offers, in
that if the offer had been accepted, ICBC would have been enabled to pay a sum
of approximately $100,000 to FMEP with the balance to be paid to the plaintiff.
Considering that the amount claimed by FMEP was in dispute and the ultimate
reduction of the amount of arrears to a sum of $6,000, Mr. Loft’s reluctance
to accept the offers is understandable.

[13]        
The plaintiff also submits that the Notice of Attachment and/or Requirement
to Pay should not have been included in the offers to settle as those documents
were issued to ICBC, not to the defendants, and ICBC was not and would not
become obligated to pay the settlement amount or the amount of any judgment.
The Family Maintenance Enforcement Act, R.S.B.C. 1996, c. 127
provides for a notice of attachment in s. 15 (1) which states:

15 (1)   If the debtor has at
any time defaulted in a payment required under a maintenance order, the
director may serve a notice of attachment in the prescribed form on a person
who is indebted or likely to become indebted to the debtor.

A “debtor” under the Act is
defined as:

“debtor” means a person required
under a maintenance order to pay maintenance;

[14]        
The plaintiff submits that service of the Notice of Attachment and/or
Requirement to Pay on ICBC would not attach the settlement funds, if one of the
offers had been accepted, as ICBC would not have been indebted to the
plaintiff. According to the wording of the settlement offers, it was the
defendants who had offered to pay the plaintiff the settlement funds. ICBC was
obligated to indemnify the defendants and had no obligation to pay the
plaintiff the settlement amount upon acceptance of an offer to settle.

[15]        
A second reason put forward by the plaintiff as to why the offers of
settlement ought not to have reasonably been accepted relates to the timing of
the offer and the plaintiff’s personal circumstances at the time.

[16]        
The first offer was made on December 21, 2012 and the trial of this
matter was scheduled to commence on January 29, 2013. The plaintiff submits
there was no reason a reasonable offer could not have been made many months
before the scheduled trial date in that discoveries had been completed long
before and circumstances had not changed for many months. It is submitted that
there was no new information available to the defendants that was not in their
hands many months before.

[17]        
Also, the plaintiff submits it was not reasonable for him to accept one
of the offers as he had been hospitalized for psychiatric issues on December
26, 2012 and was not released from the hospital until January 25, 2013, which
was a Thursday before the trial commenced on January 29, 2013. It is alleged
the plaintiff was in an agitated state, suffering emotional and psychiatric
issues and in the circumstances he would not have been in a position to
reasonably consider and accept the offers. It is also noted that the offers
were open for acceptance up to 4:00 p.m. on Friday, January 26, 2013.

[18]        
The plaintiff submits that in these circumstances it was not
unreasonable that the plaintiff proceeded to court on January 29, 2013.

[19]        
It was submitted on behalf of the defence that ICBC was not aware of Mr. Loft’s
hospitalization until a “few days” prior to the expiry of the offers.

Relevant Law

[20]        
The governing provisions concerning costs and offers to settle are set
out in the Supreme Court Civil Rules, B.C. Reg. 168/2009. Rule 14-1
provides the authority to order costs generally and Rule 9-1 allows the court
to consider offers to settle in the context of a costs order.

[21]        
In a case involving multiple issues where there has been divided
success, the court will engage in a “substantial success” analysis. In the
decision of Fotheringham v. Fotheringham, 2001 BCSC 1321, the court
dealt with what constitutes “substantial success”. Mr. Justice Bouck found
that substantial success is determined by comparing the position taken by a
party at trial against the end result, and it is a global assessment of who
substantially succeeded in the litigation as a whole (para. 17). He concluded
his discussion of what may constitute “substantial success” with the following
paragraph, in which he was making reference to Gold v. Gold (1993), 82
B.C.L.R. (2d) 180:

[45] Gold now seems to say
that substantial success in an action should be decided by the trial judge
looking at the various factors in dispute and weighing their relative
importance. The words, “substantial success” are not defined. For want of a
better measure, since success, a passing grade, is around 50% or better,
substantial success is about 75% or better. That does not mean a court must
descent into a meticulous mathematical examination of the matters in dispute
and assign a percentage to each matter. Rather, it is meant to serve as a rough
and ready guide when looked at all the disputed matters globally.

[22]        
As Mr. Justice Goepel states in Paul v. Pumple, 2013 BCSC
1844 at para. 16, an offer to settle should not be included in the
substantial success analysis; it will be considered afterwards because whether
one party is substantially successful will impact the availability of a costs
award made on the basis of an offer to settle.

[23]        
It may be the case that the court will conduct its substantial success
analysis and find that neither party had substantial success, and consequently
order that neither party be entitled to a costs award. The court may still
nonetheless proceed to make a costs award on the basis of an offer to settle
alone.

[24]        
Where parties are not entitled to costs under the substantial success
analysis, subrules 11-1(5)(a)-(c) of the offer to settle analysis cannot apply.
As per Goepel J. in paras. 26-28 of Paul:

[26] Rule 11-1(5)(a) allows the court to deprive a party of
costs to which it might otherwise be entitled. As I have concluded that neither
party is entitled to costs, Rule 11-1(5)(a) does not apply.

[27] Rule 11-1(5)(b) allows the court to award double costs.
An award of costs simpliciter is an essential pre-requisite for an award of
double costs. As I have concluded that neither party is entitled to costs, Rule
11-1 (5)(b) does not apply.

[28] Rule 11-1(5)(c) concerns an
award of costs to which a party is already entitled. As I have found that Ms. Paul
is not entitled to costs, that subrule does not apply.

[25]        
It is important to highlight from this passage for the purposes of the
case at bar that a pre-requisite for a double costs award is an award of costs simpliciter.

[26]        
A court may apply Rule 11-1(5)(d), however, to award costs to a party
even when there is no award for costs simpliciter under the substantial
success analysis. In order to apply Rule 11-1(5)(d), the offer to settle must
be better than the result the other party obtained at trial. Since the
comparison is between the result and the offer, not between the result and the
positions taken at trial, an award of costs under this provision is not
dependent on a party being substantially successful at trial (Paul at para. 29).

[27]        
When considering an offer to settle, a court may take into account the
factors articulated in Rule 9-1(6), namely:

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.

[28]        
I will thus engage in a substantial success analysis followed by a
consideration of the two offers to settle in determining whether there should
be a costs award in this proceeding.

Discussion

[29]        
Applying the findings of Mr. Justice Bouck in Fotheringham, to
the issues and my findings in this action:

a)    The credibility
of the plaintiff was a very significant factor throughout all issues. I found Mr. Loft
was generally not credible and his evidence was even contradicted by his own
witnesses on occasion;

b)    The plaintiff
was awarded non-pecuniary damages of $40,000 after seeking an award in the
range of $100,000 – $150,000, which would amount to limited success;

c)     The
claimant was awarded past loss of income but only for a limited portion of the
time up to trial;

d)    The claim of the
plaintiff for future loss of income was dismissed. Considerable court time was
devoted to this claim. Again, Mr. Loft’s evidence of his lost
opportunities for work was not credible and was contradicted on occasion by his
own witnesses;

e)    The claim for
loss of future care was also dismissed; and

f)      The
award for special damages was approximately $1,900 out of a total claim of
$17,220, the difference being a claim for chiropractic sessions which were disallowed.

[30]        
Keeping in mind the “rule of thumb” of Mr. Justice Bouck of 75%
amounting to “substantial success”, and looking at the matters in dispute
globally, my conclusion is that neither party has achieved substantial success.
It is true that the plaintiff was successful in the sense that he was awarded
some damages for injuries he had suffered in the motor vehicle accident.
However, the plaintiff had serious credibility issues, and the defendant
successfully defended the bulk of the claims advanced by the plaintiff. The
plaintiff also wasted considerable court time with the claim for future loss of
income, which was ultimately dismissed. I also take into consideration the
mental health and other personal issues of the plaintiff and conclude that there
should be no award as to costs in this matter.

[31]        
I am unable to make a costs award in favour of the defendants on the
basis of the defendants’ two offers to settle as I conclude they were not
offers that ought reasonably to have been accepted on the dates the offers were
made. I accept both submissions put forward by the plaintiff in this regard.
Even if the plaintiff was inclined to accept one of the offers to settle, the
condition included in the offers relating to the Notice of Attachment and/or
Requirement to Pay from FMEP should not have been a term of the offer. ICBC was
not and would not have been indebted to Mr. Loft. ICBC was not a party to
the action and its obligation was only to indemnify the defendants for
negligence if the court awarded damages to Mr. Loft. As well, the offers
of settlement were made by the defendants, not ICBC, and the defendants had no
obligation to ICBC if one of the offers was accepted.

[32]        
I also find that the timing of the offers and the personal circumstances
of the plaintiff in and around the time the offers were made resulted in it
being unreasonable for the plaintiff to have accepted one of the offers.

[33]        
I conclude that it was not reasonable in the circumstances for the
plaintiff to accept either of the offers and the defendants are not entitled to
costs on the basis of the offers to settle. In the result, as neither party was
substantially successful, each party will be obliged to bear their own costs.

“Jenkins J.”