IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20151209

Docket: S149613

Registry:
Vancouver

Between:

Karena TeBaerts

Plaintiff

And

Penta Builders
Group Inc.

Defendant

Before:
The Honourable Madam Justice Fleming

Oral Reasons for Judgment
Re Costs

In
Chambers

[1]           
THE COURT: Following a four‑day trial of this wrongful
dismissal action, the plaintiff was the successful party. Almost the whole of
the trial focused on the defendant’s allegations of cause. I concluded the
defendants had not established cause and the plaintiff was entitled to
reasonable notice of 12 months. I dismissed her more minor claims for aggravated
and punitive damages, as well as a small tort claim for breach of privacy.

[2]           
In total, I awarded the plaintiff almost $94,000 in general damages that
included the loss of her salary, vehicle allowance, benefits, and management
bonuses she would have received during the notice period. I also awarded her an
amount equal to two days of vacation pay, which I asked counsel to calculate. That
amount is approximately $700.

[3]           
The trial judgment is indexed at 2015 BCSC 2008.

[4]           
The plaintiff now applies for an award of double costs from February 17,
2015, onward, the date she delivered an offer to settle to the defendants.

Background

[5]           
The plaintiff’s formal offer of settlement reads in part as follows:

Further to this matter and in the interests of achieving a
resolution without additional litigation, I have received instructions to
propose the following formal offer to settle this proceeding pursuant to Rule
9-1.

This matter is a straightforward wrongful dismissal action
and we fully expect for Ms. TeBaerts to be wholly successful in her claim. This
is particularly so in light of the fact that at the time of dismissal, Penta
was well-aware of all circumstances that it now relies on for cause and yet
offered severance to Ms. TeBaerts.

Our client’s reasonable notice period is at least 14 months. As
such, we expect her damages to exceed $120,000, plus the additional damages
sought, interest and costs.

Ms. TeBaerts offers to settle this matter at this time on the
following terms:

1.       She will execute a full and
final Release in favour of the Defendant in respect of this action only and she
will discontinue the same; and

2.       The Defendant will provide
to Ms. TeBaerts the sum of $90,000, less necessary deductions and withholdings (structured
in a tax-efficient manner to be negotiated), and Ms. TeBaerts’ taxable costs to
date.

This offer is being made at this
time specifically in an effort to resolve matters prior to discoveries and the
expense of the same.

[6]           
Then further on:

Should your client require
further time to reasonably consider this offer, as contemplated under Rule 9-1,
please advise me at your earliest convenience and we may receive instructions
to grant further time for acceptance.

[7]           
Two days later, the plaintiff provided the defendant with her list of
documents and the documents themselves. The offer remained open until March 12,
2015, and invited a request for an extension. No response was received from the
defendants.

[8]           
The next day, plaintiff’s counsel wrote again to the defendants by
email, stating in part as follows:

While I do not have instructions
on this point, I suspect that the formal offer would be sufficient to dispense
of all matters between the parties. However, given that Penta did not respond,
are we to assume that your client has no interest in a resolution prior to
discoveries and would rather litigate all three claims against it?

[9]           
At the hearing, I was advised the defendants made several informal
offers.

[10]       
Rule 9‑1 of the Supreme Court Civil Rules, B.C. Reg.
168/2009, permits the court to take into account an offer to settle in making
an award of costs. Rule 9‑1(5) deals with costs options for the court
when an offer to settle has been made, one of which is to award double costs of
all or some of the steps taken in a proceeding after the date of delivery or
service of the offer to settle.

[11]       
The factors the court may consider in making such an offer are set out
in Rule 9‑1(6) as follows:

(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.

[12]       
In Hartshorne v. Hartshorne 2011 BCCA 29, the Court of Appeal
described an award of double costs as a punitive measure taken against a party
for his or her failure to accept an offer to settle that in all the
circumstances should have been accepted at paras. 25 – 27.

[13]       
The court reviewed the purposes of the costs rules, which are as follows:

·      
deterring frivolous actions or defences;

·      
encouraging conduct that reduces the duration and expense of
litigation, and discouraging conduct that has the opposite effect;

·      
encouraging litigants to settle wherever possible, thus freeing
up judicial resources for other cases; and

·      
having a winnowing effect on the litigation process by requiring
litigants to make careful assessments of the strength or lack thereof of their
cases throughout the litigation.

[14]       
I turn to consider the factors set out in Rule 9‑1(6) bearing in
mind this framework.

[15]       
The first factor, whether the offer was one that ought reasonably to
have been accepted by the defendant, is not determined by hindsight with
reference to the award that was made. Instead, reasonableness is assessed based
on the circumstances that existed when the offer was open for acceptance (see: A.E.
v. D.W.J., 2009 BCSC 505 at para. 55). It must be considered from the
perspective of the party receiving the offer (Ward v. Klaus, 2012 BCSC
99 at para. 36; Hartshorne at para. 27).

[16]       
The defendant submits that for a number of reasons, the offer was not
one it reasonably should have accepted. First, the defendant argues the
plaintiff’s offer was not one capable of acceptance because, if accepted, would
not have resulted in a firm and binding agreement, being subject to negotiating
a tax‑efficient manner for payment. Penta suggests the plaintiff’s claim
for punitive damages, for example, would potentially complicate such
negotiations.

[17]       
I am not persuaded by this argument. It is clear to me the formal offer
of $90,000 was for general damages, given the language that precedes it. I
agree with the plaintiff, the risk of negotiation would have fallen to her, but
the amount of the proposed settlement, if accepted, would have been binding.

[18]       
The defendant also argues the offer was not one they reasonably ought to
have accepted, because it was made prior to discoveries, when they had no
knowledge of the plaintiff’s damages, whether she had secured other employment,
or would do so prior to trial.

[19]       
A claim for damages for wrongful dismissal is a claim based on breach of
the employment contract. Where there is no written employment contract, as was
the case here, the claim for general damages is based on breach of an implied
term that reasonable notice will be given before dismissal. It is clear from
the evidence at trial, the defendant had the benefit of legal advice prior to
and at the time the plaintiff was summarily dismissed. The company, as her
employer, was aware of the compensation she received for her work prior to termination.

[20]       
Although the offer was made prior to examinations for discovery, it was
accompanied by production of the plaintiff’s list of documents and the
documents themselves, including documents relating to the issue of mitigation.

[21]       
The factors to be considered in assessing the quantum for general
damages in wrongful dismissal cases are well established and not difficult to
apply in this case. Given the allegations of cause, the defendant had refused
to provide the plaintiff with a letter of reference. Prior to working for the
defendants for 11 years, the plaintiff had no work experience or formal
qualifications in relation to her position with Penta as a designer/project
consultant or accounts manager. The defendant, and not the plaintiff, possessed
the information relevant to its allegations of cause.

[22]       
All of these circumstances made the prospect of the plaintiff finding
other comparable employment unlikely.

[23]       
Again, I am not persuaded by these arguments. For some of these same
reasons, I also reject the defendant’s further suggestion the offer was flawed
by failing to include a reduction or proposed reduction for wages she may have
earned prior to the expiry of the notice period. I agree with the plaintiff
that this deduction was factored into the formal offer, which outlined her
assessment of the general damages at $120,000, but offered to settle for
90,000. I note the defendant did not argue a failure to mitigate at trial.

[24]       
Finally, the defendants complain the offer was not a global one, given
Employment Standard’s and Human Right’s proceedings had also been commenced. I
am not satisfied however that Penta would have been reasonably concerned about
further awards being made to the plaintiff in those proceedings, despite
acceptance of the proposed settlement.

[25]       
In my view, therefore, the defendants were in a position to assess the
offer to settle prior to its expiry and it is one they reasonably ought to have
accepted.

[26]       
Rule 9‑1(6)(b) requires the court to consider the relationship
between the terms of settlement offered and the final judgment of the court. The
plaintiff’s offer is less than the amount I awarded her. This factor favours
the plaintiff. Though this factor should not be given undue weight, it is not
insignificant.

[27]       
Rule 9‑1(6)(c) engages a consideration of the parties’ relative
financial circumstances. The plaintiff did not provide any further evidence as
to her financial circumstances. The evidence at trial, however, established the
plaintiff remained unemployed at that time, and I have no difficulty finding
her financial resources were significantly less than those of the defendant. I
therefore conclude this factor also favours the plaintiff.

[28]       
Finally, under Rule 9‑1(6)(d), the court may consider a broad
range of other factors. Misconduct during the litigation, though not sufficient
to support an award for special costs, may be considered in awarding double
costs. Witzel Capital Corp. v. LED Medical Diagnostics Inc., 2010 BCSC
959.

[29]       
The plaintiff asks me to take into account my negative assessment of the
defendant’s conduct, as discussed in my trial reasons. During his testimony, Mr. Cavanaugh
admitted to lying at his examination for discovery and identified documents the
defendant had never disclosed, despite their relevance. I concluded he was
prepared to tailor his evidence to suit his own purposes. I also found his
evidence not credible for other reasons. In addition, I made unfavourable findings
regarding the credibility of other witnesses for the defendant, who were family
members with strong financial ties to Mr. Cavanaugh.

[30]       
The effect of my assessment of the evidence was to reject many of the
facts the defendant alleged as giving rise to cause. In my view, the defendant
chose to proceed to trial and pursue allegations of cause it ought to have
known could not be sustained had they been assessed objectively and honestly. The
testimony related to those allegations occupied most of the trial. It is
appropriate that I consider these circumstances here.

[31]       
Weighing all of the factors, I conclude the plaintiff should have double
costs from shortly before the expiry of the offer on March 12, 2015, and so I
select the date of March 10, 2015.

[32]       
The plaintiff will also have her costs for this application.

“Fleming
J.”