IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20150529

Docket: 20485/21823

Registry:
Cranbrook

Between:

Allan James Grieve

Plaintiff

And

Candice April
Bennett/Joseph Daniel Messer

Defendants

Before:
The Honourable Mr. Justice Steeves

Reasons for Judgment

A. INTRODUCTION

[1]           
This is a decision about costs.

[2]           
The plaintiff was injured in two motor vehicle accidents, on January 14,
2009 and March 22, 2010. There are two actions as a result of his claims for
damages. A trial for both actions took place over nine days before a jury, from
February 10, 2015 to February 20, 2015. Both parties focused on the first
accident on January 14, 2009 as being the most significant. The plaintiff has
been unable to work since August 2010.

[3]           
In submissions to the jury, at the conclusion of the evidence, the
plaintiff claimed $240,000 for past wage loss, future loss of earnings of
$880,000 and about $65,000 for future care. As is the practise, no submissions
were made on the specific amount of non-pecuniary damages.

[4]           
In its verdict the jury awarded non-pecuniary damages of $130,000,
$5,000 for past wage loss (“for the year 2009”) and $5,300 for special damages.
The total was $140,300.

[5]           
Prior to trial, on January 16, 2015 the defendants made a formal offer
to settle in the amount of $196,390 for both actions. The defendants also
advised that liability was not being contested.

[6]           
The defendants now submit that the plaintiff should receive costs up to
January 16, 2015 for both actions and the defendants should receive costs thereafter.
Double costs are not sought by the defendants, presumably on the basis of C.P.
v. RBC Life Insurance Company, 2015 BCCA 30.

[7]           
According to submissions made on behalf of the plaintiff, he should
receive costs for both actions or, in the alternative, each party should bear
their own costs.

B. ANALYSIS

[8]           
In light of the defendants’ offer of January 16,
2015, the legal principles applicable to the issue of costs in this case are in
Rule 9-1 of the Supreme Court Civil Rules, B.C. Reg. 120/2014. Sub-Rule 9-1(4)
states that a court “ … may consider an offer to settle when exercising the
court’s discretion in relation to costs.” The dominant purpose of Rule 9-1 is
to promote reasonable settlements, to attach some consequences for failures to
accept reasonable settlement offers and to discourage the continuation of
doubtful claims (Brewster v. Li, 2014 BCSC 463 at para. 15; citing,
among others, Catalyst Paper Corporation v. Companhia de Navegaҫăo Norsul, 2009 BCCA 16 at para. 16).

[9]           
Other cases have also discussed whether “may
consider” in Sub-Rule 9-1(4) creates a discretion as to whether to consider an
offer to settle or whether it applies to all offers to settle (Wong-Lai v.
Ong, 2012 BCSC 1569 at para. 36; also referencing Dodge v. Shaw
Cablesystems Ltd., 2009 BCSC 1765 at para. 18).

[10]       
Sub-Rule 9-1(5) sets out the “cost options”
where there has been an offer to settle as follows:

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.

[11]       
The reference to “one or more” of the above
options is interesting in that it suggests some combination of the options is
available or even that an option not listed may be consistent with Sub-Rule
9-1(5).

[12]       
As can perhaps be seen, the defendants’ position
is that Sub-Rule 9-1(5)(d) applies. The plaintiff’s submission, that he should
receive his ordinary costs or, alternatively, each party should bear its own
costs, is similar to Sub-Rule 9-1(5)(a).

[13]       
Sub-Rule 9-1(6) applies to decisions made under
Sub-Rule 9-1(5). The former is as follows:

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.

[14]       
In addition to the considerations under Sub-Rule 9-1(6), in this case the
plaintiff has raised issues of insurance subrogation and has alleged defects in
the defendants’ offer. I will consider those two issues and then the
considerations under Sub-Rule 9-1(6).

(a)      Subrogation

[15]       
The plaintiff was on weekly indemnity and then long term disability
under an employer paid policy from August 4, 2010 to November 30, 2012. His
benefits totalled $91,542.00 and the private carrier for those benefits has a
right of subrogation.

[16]       
According to the plaintiff, if he had accepted the defendants’ offer he
would have had to repay the carrier the total cost of his benefits of
$91,542.00. The plaintiff says that the amount of the defendants’ offer must be
reduced by this cost of his benefits. This reduces the offer to $104,848. This
is to be compared to the amount of $108,718.70 that the plaintiff will have as
a result of paying back the carrier of the benefits from the jury’s award of
$140,300.

[17]       
According to the plaintiff, since the net amount available from the
jury’s award ($108,718.70) is more than the net amount that would have been
available to the plaintiff if he accepted the defendants’ offer ($104,848), the
defendants’ offer is less than the jury’s award.

[18]       
In my view there are difficulties with the plaintiff’s submission on this
point.

[19]       
He received weekly indemnity benefits for the period January 15, 2009 to
March 14, 2009 (totalling $1,649.03). He returned to work but stopped work in August
2010 (and has not worked since). He received weekly indemnity and long term
disability benefits from August 18, 2010 to November 30, 2012. It appears the
latter date was the end of the “own occupation” period.

[20]       
Returning to the jury verdict, it totalled $140,300 including an amount
for past wage loss “for the year 2009.” There were no damages awarded for
future wage loss. Bearing in mind that the reasoning of a jury cannot be known,
it is at least clear that they concluded that the plaintiff was not entitled to
damages beyond 2009. The defendants say that is because the jury agreed with
them that the plaintiff’s undisputed back problems after 2009 were related to a
disc protrusion that was unrelated to either or both motor vehicle accidents.
That is consistent with the jury’s verdict but, again, we do not know their
reasoning.

[21]       
The significant point is that the jury found the undisputed disability
of the plaintiff after 2009 was unrelated to the two vehicle accidents
involving the defendants as third parties. Since they were found not liable for
the plaintiff’s disability, the carrier’s right to subrogation does not arise because
the right of a party claiming subrogation is only as good as the claim of the
party through which the right of subrogation arises.

[22]       
The defendants submit that the plaintiff should have accepted the
January 16, 2015 offer because he could not prove that his inability to work
was caused by the two accidents or that they contributed to his disability. I
deal with the reasonableness of the defendants’ offer below but there is a
degree of hindsight in that submission.

[23]       
In summary, as a matter of subrogation, there is no basis to deduct the
benefits received by the plaintiff for the period August 18, 2009 to November
30, 2012 from the damages awarded by the jury. Deducting the amount of
$1,649.03 for weekly benefits for the period from January 15, 2009 to March 14,
2009 still results in the defendants’ offer of January 16, 2015 being higher
than the damages awarded by the jury.

[24]       
Two final points remain. First, I accept that statutory benefits under
s. 83 of the Insurance (Vehicle) Act, RSBC 1996, c 231 are to be
deducted from an award of damages (Brewster at para. 34). However, as
discussed above, the issue of subrogation operates in a different way.

[25]       
Second, the plaintiff relies on Ryan v. Sun Life Assurance, 2005
NSCA 12. That case, as the plaintiff points out, sets out the principle that the
burden of establishing the allocation of a settlement is on the insured party.
Further, if the insured cannot discharge the burden of determining an
allocation of funds, “the insurer is entitled to set off the amount of its
benefits against ‘a reasonable amount for loss of earnings’ … or ‘against the
whole or part of the amount of settlement or judgment’” (para. 12).

[26]       
Beyond that, however, Ryan is of limited value to the plaintiff’s
submission since it is primarily concerned with the interpretation of the
specific subrogation clause in that case. It is silent on the point relied on
by the plaintiff in the subject case: whether disability benefits should be
deducted from a damages verdict (or judgment) in order to determine whether a
previous offer to settle is more or less than the verdict amount.

[27]       
The plaintiff’s submission on this issue is denied.

(b)      Was the defendants’ offer defective?

[28]       
The plaintiff submits that there were three defects with the defendants’
offer of January 16, 2015. These were communicated to counsel for the defendants
in a letter dated January 20, 2015 and no reply was received.

[29]       
The first defect in the defendants’ offer, according to the plaintiff,
is that it did not include a copy of a “Full and Final Release” for the
plaintiff to consider. In a previous case the lack of a release in an offer was
one factor (among others) leading to a conclusion that the plaintiff in that
case did not act unreasonably in not accepting the offer. However, in that case
the plaintiff was entitled to bring a claim under the Family Compensation
Act, RSBC 1996, c 126 and the offer did not clearly state that the
plaintiff’s claim under that statute was unaffected by the release (Wong-Lai
at para. 47).

[30]       
There is no such parallel claim in the subject case and the offer here stated
that the plaintiff was to sign a “Full and Final Release.” In my view that is a
self-evident statement of what was required. I am unable to find that the
absence of the actual release was a defect in the offer that justified the
plaintiff rejecting the offer.

[31]       
The plaintiff submits that a second defect in the defendants’ offer is
that there was an inconsistency or ambiguity about whether the plaintiff was
being asked to pay the defendants’ full bill of costs or was being asked to
account and pay any positive balance after a set off.

[32]       
The specific sub-sections of the offer that the plaintiff challenges are
as follows:

6. Upon acceptance of this offer to settle:

a.   
if a Settlement Amount has been offered, the Defendant shall pay the
Plaintiff the Settlement amount;

b.   
the parties shall pay the costs that they have agreed to pay contingent
upon the acceptance of this offer to settle;

e.   
the costs payable by the Plaintiff to the Defendants and by the
Defendants to the Plaintiff shall be set off each against the other;

[33]       
I conclude that these provisions are clear there was no defect.

[34]       
Finally, according to the submissions of the plaintiff, the January 16,
2015 offer from the defendants was defective because it restricted the
plaintiff’s ability to properly argue any interpretation about costs for the
two actions. It is true that the defendants’ offer was for both actions and
acceptance by the plaintiff would have settled both actions.

[35]       
However, while the offer does not separate out the two actions it is
clear by reference to the two action numbers, and the two accident dates, that
there was the potential for two costs. However, the two actions were heard
together and neither party attempted to bifurcate the trial in any way. This
made obvious practical sense for the court and the parties so that costs for
each action would not be necessary.

[36]       
In summary, I do not agree with the plaintiff that there are any defects
in the defendants’ offer of January 16, 2015 that make it invalid.

(c)       Was the defendants’
offer reasonable and should it have been accepted?

[37]       
Turning to the first factor in Sub-Rule 9-1(6), the plaintiff
submits that the defendants’ offer of January 16, 2015 was not one that ought
reasonably to have been accepted.

[38]       
By way of some context on this issue, previous decisions have pointed
out that damages are not measured to a mathematical certainty and are to be
assessed rather than calculated (Wepryk v. Juraschka, 2013 BCSC 804 at para.
19). Similarly, in Fan (Guardian ad litem of) v. Chana, 2009 BCSC 1497,
McEwan J. observed at para. 19:

The reintroduction of judicial
discretion in costs certainly serves the ends of justice. Costs should be a
penalty for unreasonable conduct in the litigation, not a penalty for failing
to guess the outcome. In this regard, Courts must, I think, extend some leeway
to litigants holding honest but, ultimately, mistaken views of their claims. It
is generally better that such expectations be disposed of at law, rather than
discouraged. The public should not be given the impression that there is no
reasonable access to a legal resolution. It must be recognized that some people
will only be comfortable if they “hear it from the judge.” This should be a
valid option for those who seek it, not a form of deemed unreasonableness. As
such, inducements to settle, and to avail oneself of alternate dispute
resolution, ought to complement rather than obstruct judicial determinations.

[39]       
A further consideration here is that the assessment of damages in this
case was made by a jury. Previous authorities have pointed out that juries are
not constrained by authorities in assessing damages and “a jury trial raises
the prospect of a wider range of outcomes” (Smith v. Tedford, 2010 BCCA
302 at para. 13; citing the trial decision, 2009 BCSC 905 at para.12; also, Mazur
v. Lucas, 2011 BCSC 1685 at para. 60).

[40]       
With regards to the specific issues in the subject
case, part of the plaintiff’s submission is that he says that he did better
than the offer because of the set-off of the cost of his disability benefits. As
discussed above, I disagree with the plaintiff on this point.

[41]       
With respect to the timing of the defendants’ offer, previous cases have used seven days as a
reasonable time to consider an offer to settle, although context is also
important (Brewster at paras. 24-25). In this case the offer was made on January 16, 2015. I find there was adequate time to
consider it prior to the commencement of the trial on February 10, 2015.
Similarly, the fact that the plaintiff knew on January 16, 2015 that liability
was no longer an issue was sufficient time prior to the trial dates to prepare
for trial.

[42]       
The plaintiff also submits that there was a very
triable issue to go to trial because all three experts, including the experts
of the defendant, agreed the plaintiff’s disability was permanent. On this
basis, the plaintiff says that it was reasonable for him to have expected to
receive a significant award for loss of earnings.

[43]       
It is true that all three experts agreed that the plaintiff had a
serious and significant disability with his lower back and he has not been able
to work since August 2010. Two experts (one for the plaintiff and one for the
defendant) opined that the problem was a disc protrusion at L4-5 and this
prevented the plaintiff from returning to work as an auto body repairman. All
experts explained their opinions in some detail and this involved complex
descriptions of injuries to the spine as well as degeneration to it. To this
extent there was a complicated issue to be tried.

[44]       
What was very much in dispute was the medical issue as to whether the disc
protrusion was caused by one or both of the accidents (the primary focus being the
January 14, 2009 accident). The second expert for the defendants opined that
the plaintiff’s back disability was the result of spondylolisthesis. The
significant point of the defendants’ evidence was that, overall, the accidents
were not causative of the disc protrusion.

[45]       
According to the plaintiff’s expert, the disc protrusion was caused by
the January 14, 2009 accident. He provided two reports. The first opined that
the plaintiff suffered a disc injury on January 14, 2009, the date of the
second vehicle accident. In the second report he opined that the plaintiff’s
condition “evolved” to a herniation or that there had been a progressive
deterioration of function that resulted in the herniation. At trial, the
plaintiff’s expert was then shown information from medical examiners that there
had not been any back symptoms when the plaintiff was seen in emergency in
April 2009 and then no back complaints when examined in May 2009. It is a fair
interpretation of the jury’s verdict that they were influenced by the plaintiff’s
expert not having this history when he provided his two written opinions.

[46]       
Turning to the issue of costs, the information available to the
plaintiff’s expert at the time he prepared his reports is also relevant.

[47]       
At the time of the defendants’ offer of January 16, 2015 the plaintiff
declined the offer on the basis of the opinion of his own expert. Presumably he
weighed other information but his own expert’s opinion had to be a significant
factor. The plaintiff also had the expert reports of the defendants (and their
evidence at trial was consistent with their reports).

[48]       
Of significance is that the opinion of the plaintiff’s expert did not
include information that was relevant and important to that opinion. This
significance was demonstrated by the efforts of the plaintiff’s expert to
explain this information in his evidence at trial and after his reports. It was
apparent he did not have the information, at least for his first report. This information
was known to the plaintiff but was not produced to his own expert for the preparation
of his report.

[49]       
Evidence during a trial is a dynamic process and it sometimes happens that
facts arise after experts have completed their reports. That is not what
happened in this case. The evidence that arose during the trial, and that was
significant to the opinions prepared by the experts, was not made available to
the plaintiff’s expert. It was available to the defendants’ experts and used by
them for their opinions.

[50]       
Nor is this is not a matter of using hindsight to assess the importance
of factual information since the lack of symptoms in April and May was directly
relevant to the causation issue and known to the plaintiff. I accept that parties
should not be penalized for failing to guess the outcome of the litigation when
presented with an offer and they are entitled to be mistaken in their
assessment of the merits of their claims. But I conclude there is some
obligation on them to ensure all of the relevant information is being
considered by them and their experts.

[51]       
The weakness in the report of the plaintiff’s expert could have been
remedied by the plaintiff simply providing his expert with all of the relevant
information about his history. That information was not presented to the expert
and the resulting report was deficient in significant ways. A report based on
all of the relevant history would have provided a different basis on which the
plaintiff could have considered the offer of the defendants.

[52]       
In my view, this is a situation which the current rules are intended to
avoid. To decline an offer to settle on the basis of deficient information,
when the deficiency is in the control of the party considering the offer, is
not a reasonable decision. I conclude that there cannot be consideration of reasonable settlements when an expert report that is critical to
that consideration is deficient and the deficiency was very much in the control
of the plaintiff.

[53]       
For these reasons, I conclude that the plaintiff’s decision not to accept
the defendants’ offer of January 16, 2015 was unreasonable.

(d)      Relationship between the offer and the final verdict

[54]       
Again, the total damages awarded by the jury were $140,300 and the defendants’
offer of January 16, 2015 was $196,390. Obviously, with the benefit of knowing
the verdict, the defendants’ offer was to be preferred. Further, it cannot be
said that the offer was a perfunctory one solely intended to establish a basis
for making a submission for costs after the verdict.

(e)      Relative financial circumstances of the parties

[55]       
According to the plaintiff, the defendants had the resources of the
Insurance Corporation of B.C. while the plaintiff has not been employed since
August 2010 and has had to live off disability payments.

[56]       
I accept the plaintiff’s point that his resources are disproportionately
lower when compared to the ones available to the defendants. This has been
discussed in previous judgments (Smith; Wepryk). I also agree
with a previous decision that the financial consequences for the plaintiff are
greater than they are for the defendants who are represented by the insurance
carrier (Wong-Lai at para. 52).

[57]       
However, it is also the case that the plaintiff advanced its case
aggressively with evidence from an expert widely recognized for his expertise.
The fact that the jury did not accept the evidence of that expert does not mean
that the plaintiff was at a disadvantage. Further, I do not agree that the fact
that the defendants admitted liability on January 16, 2015 and the two-week trial
commenced on February 10, 2015 evidences a significant inequality between the
parties. Finally, it is arguable whether the defendants’ experts were assertive
or argumentative. But it was also the case that the plaintiff was very aggressive
in cross-examination of those experts.

[58]       
Overall, I do not agree that the defendants used their financial
resources to distort the litigation process, to create an unfair advantage or
to create unnecessary costs that “distorted the litigation process” (Wepryk
at para. 15).

(f)       Any other factors

[59]       
The plaintiff submits that awarding costs to the defendants from the
date of their offer (January 16, 2015) would thwart the clear intention of the
jury because it would reduce the amount available to the plaintiff by about
$80,000. This figure includes the costs of the defendants (estimated by counsel
for the plaintiff to be $54,000). It also includes the costs of the plaintiff
because the effect of awarding the defendants costs would “deprive the
plaintiff of his costs.”

[60]       
In my view the answer to this submission is that the jury does not and
cannot have a role in determining costs. Their role is to assess damages not costs.
It follows that I do not agree with the plaintiff on this issue.

C. SUMMARY

[61]       
For the above reasons, I conclude that Sub-Rule 9-1(5)(d) applies: the
plaintiff will have his ordinary costs up to January 16, 2015 and the defendants
will have their ordinary costs from January 17, 2015 forward.

“Steeves,
J.”