IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20160112

Docket: M113133

Registry:
Vancouver

Between:

Young
Ja Park

Plaintiff

And

Patrycja
Targonski and
Shane Jason Bunting also known as Shane Jason Ralph

Defendants

Before:
The Honourable Mr. Justice Fitch

Reasons for Judgment on Costs

A.       Introduction

[1]            
The plaintiff, Young Ja Park, was injured in a motor vehicle accident on
July 10, 2009.  The defendants admitted liability for the accident.  As a
consequence of the accident, the plaintiff suffered soft tissue injuries,
primarily to her neck and back.  She went on to develop chronic pain disorder
and lapsed into an episode of clinical depression of moderate severity lasting
from 2010 to the spring or summer months of 2012.

[2]            
The central issue at trial was whether the plaintiff’s injuries
prevented her from being able to return to her pre-accident level of employment
as a nurse.

[3]            
At the time of the accident, the plaintiff held a 0.83 FTE position at
the Vancouver Community Dialysis Unit.  In addition, she was working a significant
number of hours doing casual shifts for the Fraser Health Authority.

[4]            
On July 11, 2014, six weeks before the commencement of the trial, the
defendants made a formal offer to settle for $321,407.  The settlement amount
was offered after taking into account Part 7 benefits paid or payable to the
plaintiff under s. 83 of the Insurance (Vehicle) Act, R.S.B.C.
1996, c. 231.  The offer to settle was open for acceptance until 4:00 p.m.
on the last business day before the commencement of the trial.

[5]            
The plaintiff concedes that the offer to settle was in the form mandated
by Rule 9-1(1) of the Supreme Court Civil Rules (the "Rules"),
that it was clear, that it was delivered in time to permit evaluation and
consideration of its terms, and that it was not a mere nuisance offer.

[6]            
The matter proceeded to trial on August 25, 2014 and spanned over 13
days.

[7]            
By reasons for judgment dated April 13, 2015 (indexed at 2015 BCSC 555)
I awarded the plaintiff damages totaling $364,428.12, subject to netting out
the award for past wage loss.  The parties subsequently agreed on an amount representing
an award for net past wage loss.

[8]            
By reasons for judgment dated August 28, 2015 (indexed at 2015 BCSC
1531) I further reduced the award by a total of $10,849.40 to reflect
deductions for Part 7 benefits the plaintiff is entitled to receive.

[9]            
After netting out the plaintiff’s award for past wage loss and deducting
the Part 7 benefits to which she is entitled, I ordered the defendants pay to
the plaintiff a total of $302,643.63.

[10]        
The amount ultimately awarded to the plaintiff is $18,763.37 less than
the amount the defendants offered the plaintiff to settle the action.

[11]        
Against this background, the defendants seek cost orders pursuant to
Rules 9-1(5)(a) and (d).  Rule 9-1(5)(a) allows the court to deprive the
successful plaintiff of costs to which she would otherwise be entitled in
respect of steps taken in the proceeding after service of the offer to settle. 
Rule 9-1(5)(d) provides for a more punishing outcome as the plaintiff is not
only deprived of costs she would otherwise have received, but must also pay the
defendants’ costs in respect of steps taken in the proceeding after service of
the offer to settle.

[12]        
The defendants have presented a bill of costs totaling $63,769.  The
plaintiff’s post-settlement offer tariff item costs ($25,009) and disbursements
($31,198) total $56,207.  The costs sanction sought by the defendants therefore
totals $119,976.

[13]        
The plaintiff submits that if a sanction in costs is determined to be
appropriate, disallowing the plaintiff 50% of her post-settlement offer tariff
item costs, or approximately $12,500, would fulfil the purposes of the Rule
without unduly chilling the advancement of meritorious claims by future
plaintiffs.

B.       Framework for
the Analysis

[14]        
The rules and underlying principles governing resolution of the issues
arising on this application were conveniently summarized in C.P. v. RBC Life
Insurance Company, 2015 BCCA 30.  In that case, Goepel J.A., for the
Court, said:

[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.

[94]        The underlying purpose of the offer to settle rule was
set out in Hartshorne [2011 BCCA 29]:

[25]      …Litigants are to be reminded that costs rules are in
place "to encourage the early settlement of disputes by rewarding the
party who makes a reasonable settlement offer and penalizing the party who declines
to accept such an offer" (A.E. v. D.W.J., 2009 BCSC 505, 91
B.C.L.R. (4th) 372 at para. 61, citing MacKenzie
v. Brooks, 1999 BCCA 623, Skidmore v.
Blackmore (1995), 2 B.C.L.R. (3d) 201
(C.A.), Radke v. Parry, 2008 BCSC 1397).
In this regard, Mr. Justice Frankel’s comments in Giles, [2010]
B.C.J. No. 1061, are apposite:

[74]      The purposes for which costs rules exist must be kept in
mind in determining whether appellate intervention is warranted. In addition to
indemnifying a successful litigant, those purposes have been described as
follows by this Court:

§ 
"[D]eterring frivolous actions or defences": Houweling
Nurseries Ltd. v. Fisons Western Corp. (1988), 37 B.C.L.R. (2d) 2 at 25 (C.A.), leave ref’d, [1988] 1 S.C.R. ix;

§ 
"[T]o encourage conduct that reduces the duration and expense
of litigation and to discourage conduct that has the opposite effect": Skidmore
v. Blackmore (1995),
2 B.C.L.R. (3d) 201 at para. 28 (C.A.);

§ 
"[E]ncouraging litigants to settle whenever possible, thus
freeing up judicial resources for other cases: Bedwell v. McGill, 2008 BCCA 526, 86
B.C.L.R. (4th) 343 at para. 33;

§ 
"[T]o have a winnowing function in the litigation process"
by "requir[ing] litigants to make a careful assessment of the strength or
lack thereof of their cases at the commencement and throughout the course of
the litigation", and by "discourag[ing] the continuance of doubtful
cases or defences": Catalyst Paper Corporation v. Companhia de
Navegaçao Norsul, 2009
BCCA 16, 88 B.C.L.R. (4th) 17 at para. 16.

[95]      A plaintiff who rejects a reasonable offer to settle
should usually face some sanction in costs. To do otherwise would undermine the
importance of certainty and consequences in applying the Rule: Wafler v.
Trinh, 2014
BCCA 95 at para. 81. The importance of those
principles was emphasized by this Court in A.E. Appeal 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.

[15]        
In Brewster v. Li, 2014 BCSC 463 at para. 15, Voith J.
similarly explained that the object of Rule 9-1 is "to promote reasonable
settlements and to attach some consequence to the failure of a party to accept
a reasonable settlement."

C.       Application of
the Governing Principles to the Case at Bar

(a)      Whether the Offer Ought Reasonably to Have Been Accepted

[16]        
Whether an offer to settle is one that ought reasonably to have been
accepted is not to be assessed with the benefit of hindsight by reference to
the award ultimately made, but under the circumstances that existed when the
offer was open for acceptance: Bailey v. Jang 2008 BCSC 1372 at
para. 24; Hartshorne v. Hartshorne, 2011 BCCA 29 at para. 27.

[17]        
As explained in C.P., at para. 97, the inquiry has
both a subjective and objective component.  The court is obliged to consider
the matter from the perspective of the person receiving the offer and may take
into account the reasons why that person declined to accept the offer to
settle.  The court must then consider whether those reasons are objectively
reasonable:  see also on this point Ward v. Klaus, 2012 BCSC 99 at
para. 36.

[18]        
The settlement offer in this case was made after mediation and after all
medical reports had been exchanged.  By this time, the main issue in dispute –
whether the plaintiff had regained all or most of her pre-accident capacity to
earn income – had crystallized.

[19]        
In my respectful view, when the offer to settle was made the plaintiff
was in possession of very little evidence suggesting she could not return to
something very close to her pre-accident earning level.  I ultimately accepted
that the plaintiff established a real and substantial possibility of a
pecuniary loss; in other words, something more than a mere notional loss of the
capacity to take on medium-strength nursing duties in the future.  I was
satisfied, in this regard, that the plaintiff had, at minimum, lost her
capacity to work as a Post-Anaesthetic Recovery (PAR) nurse – a position
requiring the discharge of medium-strength duties for which a monthly
qualification differential is paid.

[20]        
Having said this, the evidence available to the plaintiff objectively
supported a conclusion that, by March 2011, she was able to discharge the
responsibilities of a community dialysis nurse on a full-time (1.0 FTE) basis,
and likely take on additional casual shifts.

[21]        
I highlight the following evidence relevant to this issue.

[22]        
In March 2011, the plaintiff completed a work-hardening program and
demonstrated an ability to complete the job-related tasks of a full-time,
community-based dialysis nurse.  She was cleared to return to work without
limitations and successfully completed a graduated return-to-work program.

[23]        
Dr. Lu testified that the plaintiff’s depression was in remission
by the early summer of 2012 and that it no longer functionally restricted or
limited her working capacity.

[24]        
Dr. Regan, the orthopedic surgeon who performed an independent
medical examination on the plaintiff in October 2013, was unable to identify
any organic pathology to explain the plaintiff’s poor response to treatment
interventions.  He did not foresee any permanent partial disability of an
organic nature flowing from the accident.

[25]        
Paul Pakulak, the occupational therapist called by the plaintiff at
trial, assessed her functional capacity for work as a dialysis nurse in a
community-based setting in April 2014.  Mr. Pakulak testified that the
plaintiff demonstrated the physical capacity to be employed as a dialysis nurse
in a community clinic on a full-time basis.  Mr. Pakulak understood full-time
employment to mean a 37-40 hour work week.  When she was assessed, the
plaintiff was working 33 hours per week.  Further, there is nothing in
Mr. Pakulak’s report to suggest the plaintiff would not be capable of
increasing her workload to more than a full-time equivalent by taking on extra
casual shifts in a community-based dialysis clinic or other light-duty nursing jobs.

[26]        
I found as a fact that if the plaintiff committed herself to the
exercise regime repeatedly recommended to her by healthcare providers, her
physical and emotional resilience as well as her functional tolerance to pain
would improve, thereby permitting her to work even more casual shifts.

[27]        
In light of the medical reports available to the plaintiff at the time
the offer was made, and viewing the matter from an objective perspective, the
plaintiff ought not to have been surprised by this factual finding.  Further,
the plaintiff ought to have known that the medical and other professional
assessments relating to her future capacity to earn income did not support a
substantial award for future loss of earning capacity, let alone the
$600,000-$650,000 award sought by her under this head of damages.

[28]        
Dr. Caillier, the physiatrist called by the plaintiff at trial,
testified the plaintiff was likely capable of working in a community dialysis
clinic on a full-time basis provided she improved her physical conditioning.  She
testified that she would not discourage the plaintiff from trying to work extra
shifts.

[29]        
Dr. Richardson, the orthopedic surgeon retained by the defendants
but called by the plaintiff at trial, agreed with Dr. Regan that there
were few objective clinical findings that might account for the plaintiff’s
ongoing pain.  He testified that the plaintiff was capable of full-time
employment duties as a renal dialysis nurse.  He also expressed the view the
plaintiff would not harm herself by engaging in any type of physical activity
she wished.  Her only limitation would be pain tolerance.

[30]        
The plaintiff’s co-workers, Sasha Ziegler and Barb Carter, did not observe the plaintiff to be
struggling to fulfil her responsibilities in the dialysis clinic.

[31]        
The plaintiff applied for additional shifts with the Fraser Health
Authority in December 2013.  I concluded in the main judgment that she did so
because she then believed herself to be capable of doing extra shifts.  In
addition, the plaintiff has, for the past two years, managed back-to-back 11 ½-hour
weekend shifts, three weekends out of five.  Her ability to tolerate the
demands of long back-to-back shifts is clear from her evidence that she sees no
reason to change her schedule.

[32]        
At the time the offer was made, every objective measure pointed to a conclusion
that the plaintiff was not only capable of working full time as a
community-based dialysis nurse, but that she had the capacity to work
additional casual shifts in light-duty nursing – a capacity that would increase
if she took reasonable steps to maintain her conditioning.

[33]        
Finally, it ought to have been apparent to the plaintiff at the time the
settlement offer was made that her credibility and the reliability of her
evidence would be seriously challenged at trial, particularly on the central
issue of whether her injuries supported an award for loss of future earning
capacity in the range she sought.  As demonstrated by the above-noted
references, her claim of substantial and ongoing functional incapacity
impairing her future ability to earn income is not well-supported by the
medical or related professional assessments and reports.  In addition, the
plaintiff failed to disclose to her healthcare providers the full extent of her
pre-accident pain symptoms.  Finally, the plaintiff ought to have been aware
that not pursuing a medically recommended exercise regime, and the extent to
which her deconditioning affected her symptoms, exposed her to a reduction in
the award to which she otherwise would have been entitled as a consequence of
failing to mitigate her damages.

[34]        
All of this information, and the risks associated with proceeding to
trial, were known to the plaintiff when the offer to settle was made.  This
body of information ought reasonably to have informed her assessment of the
defendants’ offer to settle as being one that fell well within the range of
outcomes that could reasonably have been expected.

[35]        
All of these considerations favour the defendants’ position advanced on
this application.

[36]        
What might be said for the plaintiff on this issue is that she was
working an unusually large number of extra casual shifts before the accident.  I
accept that forecasting the extent to which a court might find she was able to
replicate (or nearly replicate) her pre-accident working pattern at the time of
trial would have involved some challenges.  Having said that, it remains my
view that the defendants’ offer to settle ought reasonably to have been
accepted by her based on what she knew when the offer was made.

[37]        
There is, however, one countervailing consideration that has given me
reason for pause in this assessment of costs.  I do not doubt that the plaintiff
suffers from chronic pain syndrome.  She is, as a consequence, hypersensitive
to pain and, despite repeated assurances to the contrary, fearful that she will
re-injure herself through activity.  In addition, I had the benefit of watching
the plaintiff give evidence over a prolonged period.  I am satisfied that,
notwithstanding the many attempted educational interventions since the
accident, she honestly believes herself to be substantially less capable than
she actually is.  She has a well-documented tendency to catastrophize about the
future.  The plaintiff’s excessively negative self-assessment as to her future
working prospects is now well-entrenched.  It has proven to be resilient over
time and enduring in the face of interventions designed to educate her on the
importance of exercise and the difference between hurt and harm.  While the
plaintiff’s outlook is, to some extent, likely a product of her personality, I
am satisfied that it is, at least in part, attributable to the accident and
persistence of the plaintiff’s chronic pain disorder symptoms and behaviours.

[38]        
As noted in C.P., the inquiry is not purely objective.  I am
obliged to look at the reasonableness of the plaintiff’s decision to decline
the settlement offer through her eyes.  I do not think it is speculation to
conclude that the plaintiff’s appreciation of her claim, or her assessment of
the offer to settle, would inevitably be influenced, and powerfully so, by her
negative self-assessment as to her future capabilities.  In my view, that
inference is reasonably available on the evidence before me.  Although I do not
have before me an articulation of the plaintiff’s reasons for rejecting the
settlement offer, I do not think it is impermissible speculation to conclude
that her reasons for doing so would, at least in part, be grounded in her
steadfast view that the accident has made her much less capable of earning
income in the future.

[39]        
I do not say the plaintiff’s reasons for rejecting the settlement offer
are objectively reasonable.  They are not.  Moreover, I recognize that the
plaintiff was represented by experienced and capable counsel at the time the
settlement offer was received.

[40]        
I say only that I am, in the exercise of my broad discretion, prepared
to make some allowance for how the plaintiff would likely have evaluated the
offer to settle.  While I am satisfied that the cost consequences to her for
failing to accept an eminently reasonable offer must be significant, I am
prepared on this account to mitigate the harshness of the costs award I might
otherwise have been inclined to make.

[41]        
Rule 9-1(6)(a) demands, at the end of the day, an objective assessment
of the reasonableness of a decision to reject a settlement offer.  I do not
believe there is room in the analysis mandated by Rule 9-1(6)(a) for consideration
of a plaintiff’s subjective state of mind unmoored from the inquiry’s objective
underpinnings.

[42]        
Having said that, I am prepared, in these unusual circumstances, to take
account of this dynamic under the basket clause found in Rule 9-1(6)(d), which
permits consideration of any other factor the court believes to be appropriate.
In my respectful view, failure to take account of this factor somewhere in the
analysis would risk the imposition of a costs sanction that is unduly punitive
having regard to the plaintiff’s still-operative condition which, as I said in
the main judgment, has a significant psychological component.

(b)      The
Relationship between the Terms of the Settlement Offered and the Final Judgment
of the Court

[43]        
The ultimate award made in favour of the plaintiff is fairly close to
the defendants’ settlement offer.  This is a factor capable of pulling the
analysis in opposite directions.  On the one hand, it provides the court with
an objective measurement of the reasonableness of the offer made.  On the other
hand, even a slight variation in the way in which the court came to view this
case could have resulted in an award that exceeded the settlement offer.  As
was noted in Fan (Guardian ad litem of) v. Chana, 2009 BCSC 1497, "Costs
should be a penalty for unreasonable conduct in the litigation, not a penalty
for failing to guess the outcome".  At the end of the day, I am
disinclined to give this factor much weight in the analysis.

(c)      The
Relative Financial Circumstances of the Parties

[44]        
In certain circumstances, the existence of an insurer can be taken into
account: Smith v. Tedford, 2010 BCCA 302 at paras. 16-19.  Whether
to take this factor into account, and how to weight it, are case-specific
inquiries: Mazur v. Lucas, 2011 BCSC 1685.

[45]        
In the case at bar, I do not consider that this issue materially informs
the analysis.  Both the plaintiff and her husband are employed and there is no
evidence before me that they are financially strapped.  My recollection of the
evidence at trial is that the plaintiff owns two rental properties.  More
importantly, there is no evidence that ICBC used its more significant resources
to lever an unfair advantage in the litigation.

(d)      Any
Other Factor the Court Considers Appropriate

[46]        
As noted above, I am prepared to consider the plaintiff’s chronic pain
disorder, and the extent to which it likely impaired her ability to accurately
assess her current and future functional abilities and earning capacity, as a
factor informing the nature of the costs award that should be made.

D.       Conclusion

[47]        
Upon consideration of the above-noted factors, as well as the overall
purpose of the rules respecting formal offers, I conclude that, pursuant to
Rule 9-1(6)(a), the plaintiff shall have her costs at Scale B up to the date of
the offer to settle, but not thereafter.  The costs sanction to the plaintiff
arising from this order is significant.  She will be denied her costs and
disbursements totaling $56,207 from the date of service of the offer to settle.

[48]        
I have given close consideration to whether the defendants should be
awarded all or a portion of their costs for steps taken in the proceeding after
service of the offer to settle pursuant to Rule 9-1(6)(d).  Balancing the
applicable considerations as best I can, I have determined not to make this
order.  In my view, it is unnecessary to make this order to give effect to the
purposes underlying the rule.  More importantly, and for the reasons already
given, doing so in this case would visit upon the plaintiff an unduly punitive
sanction – one that fails to give any weight:  (1) to the challenges associated
with forecasting how a court might assess her loss of future earning capacity
claim; and (2) to the plaintiff’s compromised ability to accurately evaluate
her own situation.

[49]        
The parties will bear their own costs arising out of this application.

"FITCH J."