IN
THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20100305

Docket: M061774

Registry:
Vancouver

Between:

Sharmila Diluckshi Lakhani

Plaintiff

And

Conan Elliott and 438113 B.C. Ltd.

doing business as Holland Landscapers (1990)

Defendants

Before:
The Honourable Mr. Justice Voith

Reasons for Judgment

[1]          
The plaintiff, Ms. Lakhani, advanced a claim for damages arising
out of a motor vehicle accident. Following the release of my Reasons for
Judgment, which can be found at 2009 BCSC 1058, the parties returned before me
to address two specific issues relating to an award of costs:

i)          did
the plaintiff’s failure to be forthright in the evidence she gave at trial
disentitle her to the award of double costs which she might otherwise receive
under Rule 37B?; and

ii)         given
Rule 57(7), is the plaintiff entitled to recover the costs and disbursements
related to several specific witnesses?

Background

[2]          
The following distinct events are relevant:

i)          the
plaintiff sustained injuries in a motor vehicle accident that occurred in
December 2005. Liability for the accident was admitted by the defendants;

ii)         the
Writ and Statement of Claim was filed on May 10, 2006. A Statement of Defence
was filed on December 7, 2006;

iii)        after
a series of consent adjournments the trial was set down for 13 days commencing
on September 15, 2008;

iv)        on
September 5, 2008, following a Judicial Settlement Conference, the plaintiff
delivered an offer to settle, under Rule 37B, in the amount of $95,000 plus
costs and disbursements (the “Formal Offer”);

v)         on
September 15, 2008, the trial was adjourned as no trial judge was available. The
trial proceeded on March 23, 2009 and was conducted intermittently for 11 days
over the course of the next several months; and

vi)        on
August 4, 2009, I delivered Reasons for Judgment and awarded an amount that
exceeded the Formal Offer. Specifically, the various components of the award I
made totalled $105,038.93, which sum was exclusive of costs and disbursements.

Rule 37B

[3]          
Supreme Court Rule 37B(1)(c) provides:

(1)        In this rule, “offer to settle” means

…

(c)        an offer to settle, made after July 1, 2008, that

(i)         is made in writing by a
party to a proceeding,

(ii)        has been delivered to
all parties of record, and

(iii)       contains the following
sentence: “The … [name of party making the offer] … reserves the
right to bring this offer to the attention of the court for consideration in
relation to costs after the court has rendered judgment on all other issues in
this proceeding.”

[4]          
The defendants accept that the Formal Offer complies with the
requirements of Rule 37B(1)(c).

[5]          
Rule 37B(5)(a) and (b) and 37B(6) establish the framework within which a
trial judge is to make an order for costs and provide:

(5)        In a proceeding in which an offer to settle has
been made, the court may do one or both of the following:

(a)        deprive
a party, in whole or in part, of costs to which the party would otherwise be
entitled in respect of the steps taken in the proceeding after the date of
delivery 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 of the offer to settle.

(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 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.

[6]          
The difference between the former Rule 37, Rule 37A and the new Rule 37B
have been identified and discussed at some length: Abma v. Paul, 2009
BCSC 60 at para. 18; Bailey v. Jang, 2008 BCSC 1372, 90 B.C.L.R.
(4th) 125 at para. 18; Jacobs v. McLaughlin, 2009 BSCS 325 at
para. 21; S.J.C. v. S.-J.C.A., 2009 BCSC 78 at para. 21; Brewster
v. Rominn Laboratories Inc., 2008 BCSC 1463 at para. 19.

[7]          
Despite the changes made to Rule 37B, it is recognized that one of the
dominant objectives of the previous Rule 37 – that of promoting reasonable
settlements – remains operative. Thus, in Bailey, Mr. Justice
Hinkson said:

[17]      In Mackenzie v. Brooks et al, 1999 BCCA 623
(sub nom. Mackenzie v. Brooks et al) 130 B.C.A.C. 95 at p. 21, the
British Columbia Court of Appeal described the predecessor rules to Rule 37B as
designed to encourage settlement by, among other things, “penalizing the party
who declines to accept” an offer to settle.

[18]      While Rule 37B has brought
about the reversion from a strict code to a reliance on judicial discretion
with respect to costs, the use of costs to encourage or to deter certain types
of conduct remains, albeit based upon the factors set out in subrule 37B(6).

[8]          
Similarly, in Jacobs, Mr. Justice Metzger said:

[23]      The policy underlying
the new Rule 37B remains the same as under the former Rule 37: to encourage
reasonable early settlement of disputes “by providing that there will be
consequences in the amount of costs payable when a party fails to accept an
offer that ought reasonably to have been accepted”: Arnold v. Cartwright
Estate, 2008 BCSC 1575, 86 B.C.L.R. (4th) 99, at para 16; Abma v. Paul,
2009 BCSC 60, [2009] B.C.J. No. 87, at para. 23. The rule also exists
to “deter certain kinds of conduct”: Bailey, at para. 18.

[9]          
Recently, in Catalyst Paper Corporation v. Companhia de Navegação
Norsul, 2009 BCCA 16, 88 B.C.L.R. (4th) 17, Mr. Justice Hall, albeit
in the context of addressing Rule 57(9), said:

[15]      In the recent case of Bedwell v. McGill,
2008 BCCA 526, a case dealing with a particular aspect of costs not relevant to
this appeal, Newbury J.A., for the court, at para. 33, noted the purpose
of former R. 37(24) as being “aimed at encouraging litigants to settle wherever
possible, thus freeing up judicial resources for other cases.”

[16]      It seems to me that the
trend of recent authorities is to the effect that the costs rules should be
utilized to have a winnowing function in the litigation process. The costs
rules require litigants to make careful assessments of the strength or lack
thereof of their cases at commencement and throughout the course of litigation.
The rules should discourage the continuance of doubtful cases or defences. This
of course imposes burdens on counsel to carefully consider the strengths and
weaknesses of particular fact situations. Such considerations should, among
other things, encourage reasonable settlements.

[10]       
While the dominant objective of Rule 37B, found under the heading “Offers
of Settlement”, is likely to promote early or reasonable settlement, additional
factors, and in particular the conduct or honesty of one of the parties, can be
relevant in considering whether to make an order of double costs under
37B(5)(b). This is apparent from numerous sources.

[11]       
First, it has long been recognized that the purpose of an award of costs
extends beyond indemnification. Instead, such awards provide the courts with a
mechanism that allows for the promotion or advancement of given objectives
considered to be significant to the conduct of litigation or its resolution. Thus,
in Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 (C.A.), Cumming
J.A., speaking for a five member panel of the Court, said at para. 28:

28        … the view that costs are awarded solely to
indemnify the successful litigant for legal fees and disbursements incurred is
now outdated. A review of R. 37, which deals with offers to settle, reveals
that in certain circumstances a party may be entitled to costs, or double
costs, or to no costs at all. One of the purposes of the costs provisions in R.
37 is to encourage conduct that reduces the duration and expense of litigation,
and to discourage conduct that has the opposite effect. Thus, although it is
true that costs are awarded to indemnify the successful litigant for legal fees
and disbursements incurred, it is also true that costs are awarded to
encourage or to deter certain types of conduct.

[underlining added]

[12]       
The foregoing observation that costs serve the purpose of both
encouraging and deterring certain forms of conduct was reinforced in Catalyst
at para. 14 and, in the context of Rule 37B, in each of Bailey at
para. 18 and in Jacobs at para. 23.

[13]       
Second, both the permissive nature of Rule 37B(5), which establishes
that the new rule does not purport to create any automatic double cost
consequences, and the non-exhaustive list of factors in Rule 37B(6) acknowledge
the flexibility inherent in Rule 37B and the prospect that the Rule is amenable
to furthering legitimate policy objectives apart from settlement.

[14]       
Still further, it is clear that the actions of a party in its conduct of
litigation, and in particular the honesty of that party at trial, can be
relevant to:

(a)       Whether
that party is awarded costs notwithstanding its success in that litigation.
Thus, a party who has not made proper document disclosure has been denied all
or part of their costs, Forsyth v. Pender Harbour Golf Club Society,
2006 BCSC 1108; as have parties who substantially exaggerated their injuries, Gaudiuso
v. Walker, [1989] B.C.J. No. 2472 (S.C.); reversed in part on appeal
[1991] B.C.J. No. 2730, 64 B.C.L.R. (2d) 121, but not with regard to this
issue; as have parties who seek to obtain damages in respect of an injury they
knew did not arise out of the accident in question, Ireton v. Heizer,
[1970] B.C.J. No. 514 (S.C.) and Dhut v. Dhaliwal, [1986] B.C.J. No. 1703
(S.C.); or whose credibility was “found wanting” on critical matters, Forslund
v. Forslund, [1992] B.C.J. No. 43 (S.C.).

(b)      An
award of special costs. Thus, special costs under Rule 57(3) have been awarded
against a party whose evidence was “calculated to mislead the trial judge and
the jury”, Fullerton v. Matsqui (District) (1992), 74 B.C.L.R. (2d) 305,
14 B.C.A.C. 153 (C.A.); or who “deliberately misleads a court”, Rozen v.
Rozen, 2002 BCCA 537, 173 B.C.A.C. 102. In saying this I recognize that
special costs will not be ordered simply because a party’s evidence has been
rejected, Osooli-Talesh v. Emami, 2008 BCSC 1749 at para. 48 and Li
v. Huang, 2007 BCSC 1806 at paras. 3-6.

[15]       
It is important to emphasize that in this case there is no issue of
depriving the plaintiff of the ordinary costs to which she is entitled or of any
award of special costs being made against her. Instead, the only issue is
whether she should be entitled to double costs in light of various findings
that I made in my Reasons for Judgment.

[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.

[17]       
In Karpodinis v. Kantas, 2006 BCCA 400, Mr. Justice Hall,
for the court, said at para. 4, “Costs considerations are meant to guide
counsel and litigants in the choices and strategies they pursue in litigation”.

[18]       
In Brown v. Lowe, 2002 BCCA 7, 97 B.C.L.R. (3d) 246, Finch C.J.B.C.
in connection with the previous Rule 37, observed:

[120]    …The court’s
discretion with respect to costs is an important means of controlling the
conduct of parties in court….It can be used to reward responsible and
reasonable behaviour that is conducive to the better administration of justice,
including good faith efforts to achieve amicable settlements, and to punish
irresponsible and unreasonable conduct that has the opposite effect.

[19]       
Finally, in Houweling Nurseries Ltd. v. Fisons Western Corporation, (1988),
37 B.C.L.R. (2d) 2 (C.A.) at 25, leave to appeal ref’d [1988] S.C.C.A. No. 200,
McLachlin J.A. (as she then was) said:

Parties, in calculating the risks
of proceeding with a particular action or defence, should be able to forecast
with some degree of precision what penalty they face should they be
unsuccessful.

[20]       
The same considerations apply to a party whose evidence is found by a
court to be dishonest or designed to exaggerate or inflate a claim. Such a
party should understand the seriousness with which that conduct will be
regarded. It should similarly understand the potential consequences of that
conduct, including its relevance to an award of double costs that the party
might otherwise be entitled to.

[21]       
In making these comments I am mindful that there are a great many cases
where a party’s evidence is not accepted by the court for a variety of reasons.
In many cases a party’s best recollection may simply not accord with other
objective evidence. A party’s candid evidence may not, in light of the expert
evidence, be accepted. Indeed it is not remarkable or unusual for a party to
place a somewhat positive slant on given events. The mere fact that a party’s
evidence is not accepted by the court, without more, does not engage the
considerations I have identified. There is nothing in the conduct of such a
party that warrants any reproach or criticism. It is, instead, the natural
result of all cases where competing memories or competing versions of given
events require resolution.

[22]       
In this case, I made a number of specific findings in my Reasons for
Judgment that are of a different nature:

[33]      The defendants asserted that Mrs. Lakhani’s
credibility was suspect. I agree in significant measure. I believe there are a
number of distinct factors that have caused me to question, in some cases
reject, and in other cases to significantly discount her evidence. In the main,
I find that Mrs. Lakhani has overstated her symptoms resulting from the
Accident; downplayed the significance of her 2001 workplace injury; and has
been untruthful regarding the Accident’s effect on her graduation from nursing
school. I will discuss these concerns in turn.

…

[40]      I believe that Mrs. Lakhani has tended to
considerably overstate the severity of the symptoms that she suffers from as a
result of the Accident.

…

[46]      For the plaintiff to assert that she has routinely
and consistently suffered from pain, from the date of the Accident to the
trial, which approaches the worst pain possible is not tenable. For her to
describe her pain in terms which would be comparable to that of patients who
are heavily medicated to assist with their pain management or who are in
extremis goes beyond mere subjectivity or imprecision. It is instead
either so inaccurate a description as to be of no value or it is a description
intended to overstate. In either case it is not a description that can be
relied upon.

…

[51]      The second significant concern with the plaintiff’s
evidence was a tendency to downplay the significance of her 2001 workplace
injury or to suggest some improvement in her symptoms in relation to that
injury prior to the Accident.

…

[54]      Indeed Mrs. Lakhani sought broadly to suggest
that in late 2004 she reclaimed or reassumed control of her life. She said this
was so with respect to spending time with her sister, with respect to gardening
and even with respect to her household activities. This too is all inconsistent
with the objective record of what she told others she could do, with the
medical assessment that her condition had plateaued or with her admission that
things had become “as good as they were going to get”.

…

[59]      Quite simply the overall picture which the
plaintiff sought to paint with her evidence was one where the very significant
“life altering changes” brought on by her low back injury occupied little or no
space. This absence of balance in her evidence had the affect of considerably
detracting from its weight.

[60]      A third concern with Mrs. Lakhani’s evidence
arises from having testified that the Accident caused her to graduate two terms
later than she otherwise would have. Specifically, Mrs. Lakhani said that
the pain and difficulty associated with the Accident caused her to skip the May
to August 2005, as well as the January to April 2007 academic terms. This is
not credible on an objective basis.

…

[66]      Plaintiff’s counsel
sought to persuade me that an eight month delay in Mrs. Lakhani’s
graduation was a very modest component of the plaintiff’s claim and not one
that would cause the plaintiff to be less than forthright. In my view, however,
the focus of the plaintiff’s evidence was not designed to obtain the modest
financial benefit that receiving her degree earlier would have generated, but
rather to impress upon the court the ongoing severity of her injuries. Quite
apart from her motivation, the documents I’ve referred to as well as the
admissions she made in cross examination, simply do not accord with the
evidence she first gave.

[23]       
In Roberts v. Willson (1997), 10 C.P.C. (4th) 188 (S.C.), Mr. Justice
Cohen, in an application for special costs, said at para. 25:

25        My assessment of the
case is that there is no conduct on the part of the plaintiff during the
litigation that requires reproof or rebuke. Insofar as I made findings against
the plaintiff on credibility, these findings were arrived at through the normal
trial process and not based on a finding that the plaintiff engaged in an
intentional attempt to mislead the court.

[24]       
In this case, the specific findings I referred to go beyond the “normal
trial process” and do extend to a finding that the plaintiff sought to mislead
the court and to significantly exaggerate the claim being advanced. Such
conduct is worthy of censure and, in the circumstances of this case, disentitles
the plaintiff to the award of double costs that she seeks.

Rule 57(7)

[25]       
The defendants argue that I should, pursuant to Rule 57(7), direct the
Registrar to disallow certain costs and disbursements incurred by the
plaintiff. Specifically, the defendants ask that I provide a direction to
disallow the costs and/or disbursements associated with the evidence and expert
reports of each of Dr. Miller, Ms. Smith and Mr. Carson.

[26]       
Rule 57(7) provides:

Assessment before registrar

(7)      Where the court has made
an order for costs,

(a)   any party
may, at any time before the registrar issues the certificate under subrule
(32), apply for directions to the judge or master who made the order for costs,

(b)   the judge
or master may direct that any item of costs, charges or disbursements be
allowed or disallowed, and

(c)   the registrar is bound by any
direction given by the judge or master.

[27]       
In Richardson v. Laynes, [1989] B.C.J. No. 2147, 40 C.P.C.
(2d) 66 (S.C.) at p. 70, Mr. Justice Hinds addressed the ambit of the
discretion granted under Rule 57(7), then Rule 57(2), and said:

Rule 57(2)(b), as presently worded, does not prescribe any
particular criteria to be considered by a judge in allowing or disallowing any
item of costs, charges or disbursements. However, without attempting to set out
an exhaustive list of criteria to be considered on an application under Rule
57(2)(a) & (b), in my view they should include the following:

(a)        whether the item was
necessarily or properly incurred;

(b)        whether,
in the course of the trial, circumstances arose which indicated that it would
be just or unjust to allow or disallow the item in question.

An application to the trial judge
for a direction under Rule 57(2)(b) should not be used as a substitute for a
normal taxation before a Registrar under the other relevant subsections of Rule
57. It should be restricted to a matter or to circumstances which arise within
the course of the trial which would be within the purview of the trial judge.
Moreover an application for a direction under Rule 57(2)(b) should include
sufficient details of the item or items in dispute to enable the trial judge to
rule thereon.

[28]       
In Chan v. Lee, 2006 BCSC 155, 23 C.P.C. (6th) 113, after
referring at length to the comments of Hinds J. in Richardson, Mr. Justice
Hood said at para. 10:

[10]      It appears clear that
an application pursuant to Rule 57(7) may be brought at any time prior to a
Certificate being issued. The purpose of the Rule is not to have judges become
taxing officers. The judge should not exercise his or her discretion under the
Rule, unless there are special circumstances (facts) which arose during the
trial (or application in the case of a master), which enables the judge to
determine, and then direct the registrar, that an item, or items of cost,
charges or disbursements be allowed or disallowed on taxation. If the judge is
not in this “uniquely favourable position” then he or she cannot make the
determination and give the direction envisaged by Rule 57(7).

[29]       
I do not consider that “special circumstances” arose during the course
of the trial in relation to the evidence or reports of Dr. Miller, Ms. Smith
or Mr. Carson, or that I enjoy a “uniquely favourable position” to address
the costs and/or disbursements resulting from that evidence. Instead, the
weight and value of the evidence and reports of each of these individuals was
addressed squarely by me in my Reasons for Judgment and are available to the
Registrar on any potential taxation that may take place. Accordingly, I decline
to make any directions under Rule 57(7).

[30]       
The parties are each to bear their respective costs of this application.

“Voith J.”