IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20150917

Docket: VI 12-1999

Registry:
Victoria

Between:

Kyla Wormald

Plaintiff

And

Jessalynn Chiarot
and Christopher Chiarot

Defendants

Before:
The Honourable Mr. Justice Funt

Ruling on Costs

I.              
introduction

[1]           
These Reasons address the award of costs following trial: Wormald v.
Chiarot, 2015 BCSC 272.

[2]           
The plaintiff claimed for physical and psychiatric injuries as a result
of a motor vehicle accident. The total claim was approximately $250,000. She
was awarded $5,100 for the scar, bruises, scrapes, and cuts she suffered.

[3]           
For the reasons that follow, the plaintiff will be entitled to her costs
of the action at Scale B and necessary and reasonable disbursements incurred on
or before May 16, 2014. The defendants will be entitled to their costs of
the action at Scale B and necessary and reasonable disbursements incurred after
May 16, 2014.

II.            
background

[4]           
The seven-day trial started May 26, 2014.

[5]           
The defendants made three offers. The third offer was made during trial.
The third offer did not comply with Rule 9-1(c) of the Supreme Court Civil
Rules in that it did not include the requisite language prescribed by Rule
9-1(c)(iii).

[6]           
The first offer to settle was dated May 9, 2014. The offer was for
$20,000 (after taking into account Part 7 benefits paid and any advances paid).
Costs were excluded from the $20,000 amount. If the plaintiff had accepted the
offer, the plaintiff would have had her costs at Scale B to the date of the
offer. After that date the defendants would have had their costs. The offer was
open for acceptance until 4 p.m. of the last business day before trial (May 23,
2014).

[7]           
The second offer to settle was dated May 23, 2014, the Friday
before the Monday, May 26, 2014 start of the trial. The offer was
delivered by fax at 12:34 p.m. on May 26, 2014. The offer was on the same
terms as the first offer, except that the amount pre-adjustment was $40,000 not
$20,000 and the plaintiff would have had her costs to the date of this second
offer if she were to accept the second offer. The offer was open for acceptance
until 4 pm that day.

[8]           
Between the first and the second offers, the plaintiff did not respond
to the first offer. The plaintiff did not reject the first offer or counter
offer.

[9]           
The first offer set forth the defendants’ reasoning for the basis of
their offer:

On review of the plaintiff’s
discovery evidence and the minimal medical records in support of her claims it
is apparent that the plaintiff suffered only relatively mild soft tissue
injuries and some lacerations and bruising as a result of this accident. She
missed no time from school or work over the past 5 years and has produced no
evidence of any income loss or any receipts for any special damages. The
evidence does not support an award for any loss of future earning capacity or
future care. The reports of the plaintiff’s experts rely wholly upon the
subjective reporting of the plaintiff which is inconsistent with her behaviour
and activity over the past five years. As such these opinions are highly
speculative and will carry little weight at trial.

[10]       
The defendants pleaded specifically the Negligence Act, R.S.B.C.
1996, c. 333, as amended, and that at trial they would seek an
apportionment of liability. During the costs hearing, the Court was told by the
defendants’ counsel that at the examination for discovery of the plaintiff held
approximately 3 weeks before the date of the first offer, the plaintiff was
asked questions respecting the events and surrounding circumstances in the
hours before the accident.

III.          
law

[11]       
In considering matters, I have been greatly assisted by the recent
decision of our Court of Appeal in C.P. v. RBC Life Insurance Company,
2015 BCCA 30, leave to appeal ref’d [2015] SCCA No. 136. This decision
provides useful guidance regarding the interpretation of the Rules regarding
cost awards where an offer was made.

[12]       
Rules 9-1(1), (4), (5) and (6) and Rule 14-1(9) are applicable for the
matter at bar.

[13]       
In providing an overview with respect to costs, our Court of Appeal in C.P.
states:

[70] Unless the court otherwise orders, costs in a proceeding
must be awarded to the successful party: R. 14-1(9). The successful party is
the plaintiff who establishes liability under a cause of action and obtains a
remedy, or a defendant who obtains a dismissal of the plaintiff’s case: Loft
v. Nat, 2014 BCCA 108 at para. 46.

[71] One circumstance in which a court may order otherwise
under R. 14-1(9) is where the plaintiff fails to accept an offer to settle
under R. 9-1. Rule 9-1(5) sets out the options that are open to a court in
circumstances in which an offer to settle has been made:

(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.

[72] When making an order under R. 9-1(5) the Court may
consider the factors set out in R. 9-1(6):

(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

IV.          
analysis

[14]       
In C.P., the Court of Appeal considered the plaintiff to be the successful
party where the plaintiff was awarded $10,000 as damages for mental distress despite
claiming approximately $1,500,000 in damages (which included punitive damages).

[15]       
In the case at bar, the plaintiff was the successful party and would
normally be awarded costs. The question becomes what is the effect, if any, of
the defendants’ offers to settle.

[16]       
The defendants sought double costs from the date of the first offer.
Double costs are not available: see C.P. paras. 75 – 92 for a thorough
analysis. As the Court of Appeal in C.P. states at para. 91 (in
part):

[91]      … A plaintiff who
obtains a judgment for less than an offer to settle is already subject to
sanctions: R. 9-1(6)(a) allows the court to deprive the successful plaintiff of
costs to which it would otherwise be entitled. Rule 9-1(5)(d) provides an even
more punishing outcome as the plaintiff is not only deprived of costs he or she
would otherwise receive, but must also pay the defendant’s costs subsequent to
the offer to settle. To also allow a defendant double costs would skew the
procedure in favour of defendants and unfairly penalize and pressure
plaintiffs.

[17]       
In the case at bar, the Court rejects the defendants’ argument that
because the defendants were substantially successful that they should be viewed
as the successful party with double costs awarded. The defendants urged the Court
to distinguish C.P. on the basis that in the case at bar, there were
multiple issues. With respect, the Court does not read C.P. as
restricted to cases where there are only a few issues. Further, in the case at
bar, the evidence at trial intertwined the various heads of damages.

[18]       
The defendants also argued that the case at bar was one suitable for
apportionment: Lee v. Jarvie, 2013 BCCA 515. With the evidence
intertwined with the heads of damages in the particular case at bar, the Court
rejects the defendants’ argument that there should be an award of costs based
on apportionment. Such awards are “confined to relatively rare cases”: Loft
v. Nat, 2014 BCCA 108 at para. 49.

[19]       
Returning to the effect of the offers to settle, in C.P. the
Court sets forth the general rule (at para. 95): “A plaintiff who rejects
a reasonable offer to settle should usually face some sanction in costs.”

[20]       
In considering the Legislature’s purpose in encouraging the resolution
of disputes through settlement offers and the related importance of certainty, the
Court of Appeal cited with approval A.E. (by her Litigation Guardian J.D.)
v. D.W.J., 2011 BCCA 279 at para. 41:

[41]      This conclusion is
consistent with the importance the Legislature has placed on the role of
settlement offers in encouraging the determination of disputes in a
cost-efficient and expeditious manner. It has placed a premium on certainty of
result as a key factor which parties consider in determining whether to make or
accept an offer to settle. If the parties know in advance the consequences of
their decision to make or accept an offer, whether by way of reward or
punishment, they are in a better position to make a reasoned decision. If they
think they may be excused from the otherwise punitive effect of a costs rule in
relation to an offer to settle, they will be more inclined to take their
chances in refusing to accept an offer. If they know they will have to live
with the consequences set forth in the Rule, they are more likely to avoid the
risk.

[21]       
In the case at bar, the first offer should have been accepted. The first
offer sets forth the defendants’ observations as to the weaknesses of the
plaintiff’s case which, when compared with the Reasons for Judgment, were
prescient. As noted, the plaintiff did not respond to the offer. The plaintiff
had two weeks to consider the defendants’ first offer and the rationale
provided in support. One week was sufficient time for the first offer to be
analyzed and discussed with the plaintiff and instructions given, particularly
taking into account the upcoming trial date.

[22]       
It is not a surprise that offers may be made in the weeks and days before
trial. Many matters are settled on the proverbial “Court House steps”. As the
trial date approaches, counsel will usually discuss with their respective
clients that which would be a reasonable settlement. The plaintiff did not face
any particular challenges which would have made a review of the first offer not
practical within one week.

[23]       
As noted, the defendants’ first offer set forth the key weaknesses in
the plaintiff’s case to assist the plaintiff in determining the reasonableness
of the offer, including the “minimal” medical records in support of her claim.
The plaintiff would have known that the plaintiff’s family physician was
largely unaware of the plaintiff’s complaints arising from the accident: see para. 63
of the Reasons for Judgment.

[24]       
The Court finds that the first offer should have been accepted on or
before May 16, 2014.

[25]       
As described in C.P., the award at trial is the “mirror image” of
the consideration of the reasonableness of the offer and serves as an objective
measurement: C.P. para. 99. In the case at bar, the plaintiff was
awarded $5,100. The first offer was for $20,000.

[26]       
The Court was urged to consider the plaintiff’s financial circumstances
relative to those of the defendants as through their insurance with our public
insurer, the Insurance Corporation of British Columbia (“ICBC”).

[27]       
The Court finds C.P. to be applicable to the case at bar:

[102]    In this case, RBC is
undoubtedly a company of financial substance. However, there is no evidence
that it used its financial strength in an untoward manner. In my view, the
parties’ financial discrepancy in this case is not relevant to the proper cost
award.

[28]       
I have considered that ICBC, unlike the insurer in C.P., is a
public insurer serving as an agent of our provincial government: Insurance
Corporation Act, R.S.B.C. 1996, c. 228, s. 13. The Court does not
view the fact that the defendants are insured by ICBC as a relevant
consideration. To consider such a factor simpliciter, the Court would be
making a policy decision that should be left to the Legislature or ICBC as an
agent of the provincial government. In the case at bar, ICBC did not use its
financial strength in an untoward manner. As a result, this is not an
appropriate situation for a consideration of the plaintiff’s financial
circumstances to those of the defendants’ insurer, ICBC.

[29]       
With respect to s. 3 of the Negligence Act, I have
considered the leading authorities: Flatley v. Denike (1997), 32
B.C.L.R. (3d) 97 (C.A.); Bedwell v. McGill, 2008 BCCA 526; and Moses
v. Kim, 2009 BCCA 82. With the first offer to settle (and the second offer
to settle) stating that the plaintiff would have her costs and disbursements to
the date of the offer without qualification for the plaintiff’s contributory
negligence or relative fault, the Court will exercise its discretion so that
the plaintiff’s pre-May 16, 2014 costs and disbursements are not reduced
in reflection of the apportionment of liability.

V.            
conclusion

[30]       
The plaintiff will be entitled to her costs of the action at Scale B and
necessary and reasonable disbursements incurred on or before May 16, 2014.
The defendants will be entitled to their costs of the action at Scale B and
necessary and reasonable disbursements incurred after May 16, 2014.

[31]       
Each of the parties will bear their respective costs of the costs
hearing. A significant portion of the costs hearing addressed double costs; a
matter settled by our Court of Appeal in C.P.

“Funt J.”