IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20150414

Docket: M146862

Registry:
New Westminster

Between:

Laurie Smith

Plaintiff

And

Scott Neil and Rebecca
Neil

Defendants

Before:
The Honourable Mr. Justice Harvey

Ruling on Costs

Overview

[1]            
On January 7, 2015, I released reasons for judgment in this matter (Smith
v. Neil, 2015 BCSC 9) and invited the parties to reappear
before me as to the issue of costs if such were impacted by delivery of an offer
to settle.

[2]            
The underlying action involved the assessment of the plaintiff’s damages
arising from a motor vehicle accident. Liability was admitted on behalf of the
defendant.

[3]            
The plaintiff, relying upon a formal offer to settle served upon the defendant
on December 4, 2014 (the “Offer”), seeks double costs of the trial, which
commenced December 8, 2014 and occupied five days.

[4]            
At the conclusion of the trial I assessed the plaintiff’s damages at
$85,529, comprised of $85,000 in respect of non-pecuniary loss and $529 for
special damages. No damages were assessed under the claims for past wage loss,
loss of future earning capacity, costs of future care or loss of housekeeping
capacity.

[5]            
Although the action was not commenced “[s]ubject to Rule 15-1”, the
plaintiff concedes that her entitlement to costs is governed by Rule14-1(f) of
the Supreme Court Civil Rules, BC Reg 168/2009 (the “Rules”), which
engages Rule 15-1 where the plaintiff’s recovery is less than $100,000.

[6]            
Rule 15-1(15) limits recovery for costs to a lump sum of $8,000 for one
day or less of trial, $9,500 for two days, and a maximum of $11,000 for trials
in excess of two days. In Majewska v. Partyka, 2010 BCCA 236 [Majewska],
the Court of Appeal applied an approach under Rule 15-1(15) that attributed
$6,500 for all matters up to the commencement of trial, with $1,500 for each
day of trial thereafter.

[7]            
Rule 15-1(16) provides that the court may consider an offer to settle as
defined in Rule 9-1.

[8]            
In the result, the plaintiff seeks costs of $21,500: $6,500 to the
commencement of trial and double costs thereafter ($1,500 per day for five days
of trial).

[9]            
The defendant resists the application, arguing that costs be assessed as
provided for in Rule 15-1(15)(c), totalling $11,000 together with taxes and taxable
disbursements.

The Background

[10]        
The defendant, in November, 2014, served the plaintiff a formal offer of
$55,000 plus costs pursuant to Rules 14-1(1)(f) or 15-1(15) to (17). The
defendant clearly drew the application of Rule 14-1(1)(f) to the plaintiff’s
attention in its offer to settle.

[11]        
The plaintiff responded with a formal offer of its own. On November 28,
2014, the plaintiff served an offer to settle for “$85,000 new money plus costs
in accordance with Rule 14-1”.

[12]        
That offer was expressly revoked by the Offer provided by the plaintiffs
on December 4, 2014. The Offer upon which the plaintiff relies in support of
its application for double costs, based upon five days of trial, sought “$85,000
new money plus costs per attached ‘Schedule A’.”

[13]        
Schedule “A” claimed costs of $10,725, based upon 97.5 units at Tariff
Scale B, together with disbursements and an unidentified allowance for trial
preparation and cancellation fees for the plaintiff’s two expert witnesses. It
did not reference Rule 14-1(1)(f) or Rule 15-1(15).

[14]        
The plaintiff argues that the damages awarded exceed the $85,000
referenced in the Offer and, accordingly, the plaintiff is entitled to double
costs, albeit in accordance with Rule 15-1(15) and (16) given the total
recovery was less than $100,000. Implicit in the plaintiff’s submission is a
determination that circumstances exist which would cause the court to exercise
its discretion to depart from the $11,000 cap on costs set out in Rule 15-1(15)(c).

[15]        
What the plaintiff’s submission overlooks, according to the defendant,
is that the Offer, as presented, required payment by the defendant of $95,725, together
with taxable disbursements, when in fact, the plaintiff’s ‘recovery’, inclusive
of its entitlement to costs as at the date of the Offer, was $91,500 plus
disbursements to be taxed.

[16]        
Further, the Offer, if accepted, required the defendant to pay unknown
cancellation fees of the plaintiff’s two experts without the right to challenge
the quantum through taxation of the expert’s account before a registrar.

[17]        
As such, the defendant says that the Offer was not one that ought
reasonably to have been accepted on the date it was delivered.

[18]        
In effect, the defendant says that the plaintiff failed to ‘beat’ its offer
in November 2014 and, accordingly, is confined to costs as set out in Rule
15-1(15)(c), which limits recovery of costs to $11,000 where the trial of the
matter exceeds two days.

Discussion

[19]        
There is no issue as to the application of Rule 14-1(f) governing the
plaintiff’s entitlement to costs, regardless of whether the action was
commenced under Rule 15-1: Axten v. Johnson, 2011 BCSC 1005; and Varga
v. Shin, 2012 BCSC 1643 [Varga], at para. 27.

[20]        
Here, as was stated by Registrar Sainty in Varga at para. 29, it
was open to the plaintiff to seek an order prior to trial that the cost
provisions of Rule 15-1(15) would not apply to the action. She did not do so.

[21]        
Rule 15-1(16) provides that, in exercising its discretion under sub rule
(15), the court may consider an offer to settle as defined in Rule 9-1.

[22]        
In Majewska, Neilson J.A. determined that the court has the discretion
to award cost beyond the limits established in the predecessor to Rule 15-1(15)
where special circumstances apply. Nonetheless, double costs, if appropriate,
must still be assessed within the framework of ‘fast track’ costs.

[23]        
Special circumstances may exist in cases where the trial took longer
than the maximum number of days referred to in the fast track rule, where the
action was complex or where a reasonable offer to settle was made but not
accepted: Peacock v. Battel, 2013 BCSC 1902, at para. 18; and Lam v.
Chiu, 2013 BCSC 1281 [Lam], at paras. 47-48.

[24]        
In Lam, Gray J. awarded $11,000 for the first three days of
trial, and $1,500 per day for the following eight and a half days of trial
time. However, she found at para. 60 that four days of trial had been wasted
arising from a mutual error, and thus, the plaintiff was not awarded the additional
costs for two trial days.

[25]        
In the case before me, there is no submission that the trial, set for
five days, was run inefficiently. However, there were numerous heads of damages
claimed by the plaintiff upon which she failed. The evidence which related to
those claims was necessarily interwoven with the evidence supporting the claim
for non-pecuniary loss and, in my view, the heads of damages claimed for which
no damages were awarded were not frivolous. Nonetheless, trial time was
undoubtedly prolonged by virtue of the advancement of claims which ultimately
failed.

[26]        
I am entitled to consider the plaintiff’s lack of success on the issues
of past wage loss, loss of earning capacity and loss of housekeeping capacity
in exercising my discretion as to whether I should depart from the $11,000 cap
set out in Rule 15-1(15)(c).

[27]        
However, such is offset by the plaintiff’s willingness to comprise the claims
and accept global damages of $85,000, thus militating, in my view, in favour of
allowing the plaintiff costs of the additional two days of trial.

Double Costs

[28]        
As to the issue of double costs after delivery of the Offer on December
4, 2014, I agree with the defendant that Rule 9-1 provides a broad discretion
to assess each case on its merits, keeping in mind the criteria contained in
sub rule (6).

[29]        
Rule 9-1(6) provides:

In making an order under sub
rule (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.

[30]        
The considerations which inform the result of whether double costs are
appropriate were succinctly summarized in Gichuru v. York, 2012 BCSC
1385, as follows:

[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”: Hartshorne v.
Hartshorne, 2011 BCCA 29, at para. 25 [Hartshorne].

[26] On the question of whether the offer was one which the
plaintiff ought reasonably to have accepted, the factors to consider are: (a)
the timing of the offer; (b) whether the offer is related to the claim; (c) how
easily the offer could be evaluated; and, (d) whether a rationale was provided
for the offer: Hartshorne, at para. 27.

[27] The court is to assess the reasonableness of the
rejection of the offer without reference to the ultimate decision after trial: Cairns
v. Gill, 2011 BCSC 420, at para. 18.

[28] Applications for double costs have been dismissed where
the offer in question has “provided little incentive for the plaintiff to
settle” or where the offer fell short of providing “a genuine incentive to settle”:
Oh v. Usher, 2010 BCSC 122, at para. 10; and Brooks-Martin v. Martin,
2011 BCSC 497, at para. 38.

[29] The relationship between the
offer and the final judgment of the court is “an independent factor to be
considered in deciding whether a double costs award should be made”: Hartshorne,
at para. 30.

[31]        
Here, the plaintiff provided no analysis of the offer in terms of what
concessions it was making on the various heads of damages raised in the
pleadings. There were legitimate issues over the claims for past wage loss, and
all future economic claims.

[32]        
Both the Offer made on December 4 and its predecessor were put forward
late in the proceeding.

[33]        
As to the third and fourth factors set out in Hartshorne, G.C. Weatherill
J. provided the following useful commentary in Barnes v. Lima, 2014 BCSC
1475 [Barnes], at paras. 10-11:

[10] On the eve of the trial, the defendant had a legitimate
defence to the plaintiff’s claim, particularly his claim for loss of capacity
which in his earlier communications to the defendant the plaintiff had
indicated was significant. The plaintiff did not break his settlement offer
into its components and provided the defendant with no ability to assess how
much of it was to compensate the plaintiff for his loss of capacity claim. At
the time the offer was communicated, there was a reasonable possibility that
the plaintiff would not recover anything for that claim, which ultimately
proved to be the case. It was reasonable for the defendant to wish to test the
plaintiff’s position that his inability to work overtime at Carter Motors was
due to the accident and not to other factors such as his marriage, particularly
in the absence of supporting documentation.

[11] Moreover, most of the
plaintiff’s injuries were soft-tissue in nature. He had a pre-existing right
shoulder injury. There were live issues regarding whether the plaintiff’s T-4
vertebra fracture had healed and, if so, when, as well as the plaintiff’s
credibility relating to the extent that his injuries had affected his life.
Parties should not be unduly deterred from bringing meritorious, but uncertain,
defences because they fear a punishing costs order: Currie v. McKinnon,
2012 BCSC 1165 at para. 20.

[34]        
Here, as noted, there was no breakdown within the Offer as to its
constituent elements allowing the defendant to analyse what, if anything, was
being proposed for the contentious claims relating to the plaintiff’s future
losses.

[35]        
Barnes suggests double costs are less likely to be awarded where
there are ‘live issues’, such as there were in the present case. Those issues,
save for the quantum of non-pecuniary damages, were all determined in the
defendant’s favour.

[36]        
Nonetheless, the $85,000 suggested global figure contained in the Offer
was below the $85,529 awarded at trial.

[37]        
Here, in my view, the Offer on which the plaintiff bases its submission
for double costs was not one that ought to reasonably have been accepted as at
the date it was made, because had the defendant been in agreement with the
$85,000 damage assessment, the global offer exceeded the plaintiff’s recovery
when the fixed sum for costs is accounted for under Schedule “A”.

[38]        
Accordingly, the total amount sought by the plaintiff exceeded her
global entitlement to recovery given the application of Rule 15-1(15): Varga.

[39]        
Even if the Offer not attached Schedule “A”, but sought costs in
accordance with Rule 15-1(15), I would have not acceded to the plaintiff’s
claim for double costs.

[40]        
As was noted by Bernard J. at para. 74 of Saopaseuth v. Phavongkham, 2015
BCSC 45 [Saopaseuth], where the plaintiff’s offer was less than the
amount awarded by less than 2% of the total, the difference between the award
and the offer should attract less weight where the difference is nominal. The
difference between the Offer and the recovery amount in the present case was
less than 1%.

[41]        
As in Saopaseuth, I am of the view that awarding double costs for
the days of trial would “unduly punish the defendant for mounting a meritorious
defence” to the majority of the plaintiff’s claims (at para. 75).

[42]        
In the result, I am exercising my discretion to award costs beyond the
limit set under Rule 15-1(15)(c) given the additional two days of trial at an
amount of $1,500 per day. Accordingly, the plaintiff will have her costs in the
amount of $14,000 with disbursements as taxed or agreed to.

[43]        
I view success of the application for costs as divided. Each will bear
their own costs of this application.

“Harvey J.”