IN THE SUPREME COURT OF BRITISH
COLUMBIA

Date: 20160121

Docket: M053418

Registry:
Vancouver

Between:

Kulbir Kaur Litt
a.k.a Kulbir Kelly Litt

Plaintiff

And

Hui Wu Guo a.k.a.
Steven Guo, Narinder Singh Johal

and Kulwinder Kaur
Johal

Defendants

– and –

Docket: M111513

Registry:
Vancouver

Between:

Kulbir Kaur Litt
also known as Kulbir Kelly Litt

Plaintiff

And

Peter Lawrence
Ratsoy and S-232 Holdings Ltd.

Defendants

Before:
The Honourable Mr. Justice Schultes

Oral Reasons for Judgment

1.              
INTRODUCTION AND BACKGROUND

[1]            
Ms. Litt, the plaintiff in this matter, is seeking double costs
from the dates of delivery of three formal offers to settle, preferably (in her
counsel’s submission) from the date of the earliest offer.

[2]            
This was a motor vehicle personal injury trial arising from two
accidents that Ms. Litt suffered, in 2003 and 2010. Liability was ultimately
admitted for both. I awarded her damages totalling $702,435.26.

[3]            
In essence, while I expressed the need for caution in accepting Ms. Litt’s
own evidence, because of some shortcomings that impaired her credibility, on
the whole of the evidence I was satisfied that she had developed a pain
disorder following the 2010 accident that had impaired meaningfully various
aspects of her functioning, although not to the degree that she claimed.

[4]            
The trial began on October 27, 2014, and extended for 22 days.

[5]            
The offers by Ms. Litt that are in issue here are:

·                
October 20, $682,000. This offer did not have a time limit
attached to it.

·                
October 23 at 1:49 p.m., $647,000. This offer revoked all
previous offers and was open until October 24 at 4:00 p.m.

·                
October 4, $550,000. This offer was open until 10:00 a.m. on the
first day of trial.

[6]            
The October 24 offer contained an appendix which included a term
reserving Ms. Litt’s right to seek special costs in addition to the
amounts offered for settlement.

[7]            
The defendants had delivered their own formal offers to settle during
the run up to trial:  October 20, $375,000; October 22, $456,708.07.

2.              
POSITIONS

[8]            
Ms. Neathway, on behalf of Ms. Litt, submits that the lengthy
history of litigation up to the point of these offers, which included a previous
trial date that had been adjourned about two weeks before it was scheduled to
begin and a mediation that had resulted in an offer emanating from Ms. Litt,
put the defendants in a good position to assess these offers.

[9]            
It should also have been clear, she argues, that by reducing her offers
from the one previously made at the mediation Ms. Litt was seeking to
compromise rather than to insist on what she was likely to receive based on
what Ms. Neathway calls “her best day in court”.

[10]        
Further, she submits that the process of exchanging offers that went on between
the parties demonstrates that they were engaged in an ongoing mutual process of
considering the value of their claims and assessing the risk of trial. The defendants’
counsel were experienced and the range of likely outcomes following trial was
quite predictable.

[11]        
Of course, these offers were exceeded by the award at trial, the last
one by a considerable margin.

[12]        
Other relevant factors put forward on behalf of Ms. Litt are: the
extensive amount of court time that was taken up with a claim that arguably
should have settled on the basis of Ms. Litt’s offers and the fact that by
and large Ms. Litt’s evidence and those of her supporting witnesses was
accepted.

[13]        
On behalf of the defendants, Mr. McHale stresses the overall
principle that there should be something unreasonable in the conduct of the
unsuccessful party before a court considers an award of double costs.

[14]        
As far as the defendants’ ability to evaluate these offers goes, he
points out that they came very shortly before trial and that there were still
document requests by the defendants outstanding at that point.

[15]        
Ms. Neathway has responded that these were not document requests
with which the plaintiff was actually required to comply and that they never
resulted in an application by the defendants to produce them, which is an
indication of their likely relevance to settlement.

[16]        
Mr. McHale argues that the October 24 offer is not one that
the defendants could reasonably have accepted because the reservation of the
right to seek specific costs in the appendix has been previously determined to
be antithetical to the concept of finality, as an essential component of
settlement. This is described in Wong v. Lee, 2011 BCSC 1087, at para. 30:

It clearly emerges from the
authorities that an important objective of offers to settle under the Rules
is to bring certainty and finality to litigation. The reservation of the
defendants’ right to seek special costs from the plaintiff after the acceptance
of the offer is antithetical to this objective. It cannot be said that the
Offer to Settle provided a genuine incentive to settle. As was stated in Giles
v. Westminster Savings and Credit Union, 2010 BCCA 282 (CanLII) at para. 88,
"plaintiffs should not be penalized for declining an offer that did not
provide a genuine incentive to settle in the circumstances."

[17]        
This was also a case where, given the concerns about Ms. Litt’s
credibility and the magnitude of some of the things she was claiming, the defendants
were not in a position to accept offers in the amounts she was seeking. Mr. McHale
points out that I made the finding that Ms. Litt’s evidence was directed
more towards the outcome of the litigation than giving a candid account of
events, which bears out to a great extent the defendants’ concerns when they
were contemplating settlement.

[18]        
He also notes that the October 20 offer is a very small amount, just 2.8%
below the judgment after trial and I should also take into account the
possibility that the net award, after deduction of Part 7 benefits, may
actually fall below the offer.

[19]        
In response Ms. Neathway emphasizes that it is very much an open
question, both in this case and generally in motor vehicle litigation, whether
such a deduction will occur. Before it can, there needs to be a discrete
application by the defendants.

[20]        
The defence also relies on the proposition that negative findings about
the credibility of a party, of the kind that I made here, can be considered in
assisting the propriety of an order for increased costs, and not just as
reasons justifying the rejection of an offer to settle. The reference for that
is the reasoning in Lakhani v. Elliott, 2010 BCSC 281, at para. 16:

Having regard to the foregoing
authorities, and the underlying rationale that drives them, I can see no
principled reason why a lack of candour or probity on the part of a party who
gives evidence at trial should not constitute an "other factor the court
considers appropriate" under Rule 37B(6)(d) in any potential award of
double costs. An award of double costs, or a refusal to award such costs, is
one of the means available to a court of signalling to litigants the types of
conduct or behaviour it considers as either worthy of promotion or, conversely,
as worthy of rebuke.

[21]        
In response to this submission Ms. Neathway notes that the
plaintiff’s credibility problems in that case were found to be much more
egregious than the relatively mild comments that I made about Ms. Litt.

[22]        
Finally, a relevant factor pointed to by Mr. McHale is that the considerable
length of this trial means that any increased cost award will be unduly
punitive to the defendants. This is an outcome, he argues, that is contrary to
the objectives of the rule.

3.              
DISCUSSION

[23]        
The applicable portion of Rule 9-1(5) in this case is the authority to
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. Pursuant to Rule
9-1(6), the factors to be considered in making such an award are:

(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.

[24]        
There is no dispute that the purpose of the rules governing double costs
is set out in Hartshorne v. Hartshorne, 2011 BCCA 29, at paras. 25
and 27:

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. 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."

The first factor – whether the
offer to settle was one that ought reasonably to have been accepted – is not
determined by reference to the award that was ultimately made. Rather, in
considering that factor, the court must determine whether, at the time that the
offer was open for acceptance, it would have been reasonable for it to have
been accepted

[25]        
I would not weigh the timing of Ms. Litt’s offers, or the
defendants’ state of knowledge of the case at that stage against the
reasonableness of accepting these particular offers. They were made in the
final few days before a trial that had a long history. It would have been
extensively prepared by then, with current defendants’ counsel on board by that
point for the better part of two years. Even if some new experts were added in
the preceding year, counsel would still have been very familiar with the
prospective evidence.

[26]        
More importantly, I agree with Ms. Litt’s counsel that the
defendants must have been actively evaluating for themselves their prospects of
success and risks of failure during that period, because they were making
offers that were in their own way significant. If outstanding disclosure was a
concern, it was certainly not impacting on the defendants’ ability to settle
the action on what they apparently viewed at that point as realistic terms.

[27]        
It was certainly reasonable for the defendants to take into account their
concerns about Ms. Litt’s credibility when they were assessing offers to settle
from her, but by then this was self‑evidently a negotiation process in
which each side was attempting to buy down their risk at trial on the most
favourable terms. The defendants came to the table, as I have said, with very
substantial offers of their own despite their credibility concerns, which tells
me that at this point the parties were really just crunching numbers, with the
defendants during the last few days simply not being prepared to value the risk
of Ms. Litt being believed at trial above a certain level.

[28]        
At the end of the day, if one compares the highest offer from the
defendants with the last offer by the plaintiff, the parties got within about
$93,000 of each other’s positions. I am hard put to view that as an instance of
the defendants making a stand on a point of principle relating to the strength
of the plaintiff’s case, or as a gap in numbers that, in the context of the
overall amounts being sought by the plaintiff and previously discussed for
settlement, was so large as to justify, in itself, taking the matter to trial. Ms. Litt’s
final offer seems to me to be within the range of outcomes that could
reasonably have been expected.

[29]        
As to the impact of the clause reserving the plaintiff’s right to seek
special costs notwithstanding a settlement, it seems, as I said during argument,
an oddly pointless thing to include in an offer to settle. This is especially
true if no circumstances that could justify special costs had yet arisen, since
the acceptance of the offer would end the proceedings. From the point of view
of a subsequent costs application, parties certainly include it at their peril.

[30]        
I am mindful as well of the conclusion on the facts in Wong that
the defendants’ inclusion of the clause in its offer to settle was antithetical
to the concept of finality that should inform reasonable offers.

[31]        
However, the over‑arching principle that was applied in reaching
that conclusion was the one stated by the Court of Appeal in Giles v.
Westminster Savings and Credit Union, 2010 BCCA 282, that (at para. 88):

Plaintiffs ‑‑

For which I read
"parties."

‑‑ should not be
penalized for declining an offer that did not provide a genuine incentive to
settle in the circumstances.

[32]        
In this case I find it difficult to accept that this clause, standing on
its own, was sufficient to displace the significant incentives that Ms. Litt’s
last offer otherwise provided to settle, in terms of the overall projected
risks to the defendants at a trial. Indeed, if they had rejected the offer
based on its inclusion without first seeking its removal through further
negotiation, that would have been in itself unreasonable in light of the
advantageousness of the offer to their position, as I have found it.

[33]        
While I also agree with the comments in Fan (Guardian ad litem of) v.
Chana, 2009 BCSC 1497, that a party should not be punished solely for
failing to estimate the outcome of litigation, I conclude that in all the
circumstances the offer of October 24 is one that ought reasonably to have
been accepted by the defendants.

[34]        
The disparity of about $150,000 between that offer and the ultimate
award also weighs in favour of an award of double costs.

[35]        
As counsel have accurately observed, the relative financial positions of
the parties are not a relevant consideration in relation to costs in this case.

[36]        
As to other relevant factors that have been put forward, I am not
persuaded that the length of the trial would make an order of double costs
unduly punitive. This was obviously going to be a lengthy trial, in keeping
with the magnitude of the damages being sought and the complexity of the
issues, and on a policy basis the consequences of a party’s failure to settle
appropriately should increase in keeping with the extent of the court resources
that are expended as a result of that failure.

[37]        
The impact of Ms. Litt’s credibility issues at trial is a
legitimate issue for the defendants to raise on the question of costs. As noted
in Lakhani, there is no principled reason why a party’s lack of probity
cannot constitute a reason for depriving them of costs to which they would
otherwise be entitled.

[38]        
As I have said, I found at trial that Ms. Litt minimized or did not
respond straightforwardly to matters that she perceived were contrary to the
successful progress of her case. Her ultimate success at trial was based on the
persuasiveness and reliability of other witnesses and surrounding circumstances.
While it was far from praiseworthy conduct on her part, I do not find it to
have been so deliberately subversive of the trial process that it should affect
her degree of entitlement to costs.

[39]        
Finally, I will address a broader concern raised by Mr. McHale,
relying on additional comments in Fan 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.

[40]        
Similar reasoning led to the exercise of the Court’s discretion to relieve
the plaintiff from some of her costs consequences in Park v. Targonski,
2016 BCSC 31.

[41]        
I agree with the proposition put forward in Fan, but what Rule 9‑1
addresses is unreasonable conduct as determined by an application of the
factors in subrule (6), as I have engaged in here. There is always the
discretion to modify what would otherwise be an order for increased costs
against an honest but mistaken plaintiff in appropriate circumstances, such as
in Park. And, even assuming that the language in Fan was also
intended to apply to those who give settlement instructions on behalf of
defendants in motor vehicle cases, which I strongly doubt, there is no evidence
at all here that any intransigence on settlement was motivated by an honest but
ultimately mistaken view of the claim.

[42]        
The inference I draw is that this had become, as I said earlier, a
question of numbers between the parties, in which the defendants elected to
take a stand in the face of an offer that was well within the range that could
be expected after trial. I think that qualifies as unreasonable conduct for the
purposes of the Rule.

[43]        
As a result I order that the plaintiff will receive double costs from a
point slightly after the delivery of her formal offer to settle of October 24,
2014, to recognize a reasonable period within which it could have been
considered. In all the circumstances I think that the date that should be used
is October 26, 2014.

[44]        
The plaintiff will receive ordinary costs for this application.

The
Honourable Mr. Justice T.A. Schultes