IN
THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20100517

Docket:
M064870

Registry: Vancouver

Between:

Hieu Pham-Fraser

Plaintiff

And

Dean Gregory Smith and
Sheryl Anne Tanco

Defendants

Before: The Honourable Mr. Justice Greyell

Reasons for Judgment

[1]            
On March 15, 2010 I issued reasons awarding the
plaintiff $412,198.53 for damages arising from personal injuries sustained in a
motor vehicle accident which occurred January 16, 2006.

[2]            
The plaintiff now applies for:  double costs
pursuant to Rule 37B of the Rules of Court; an order for pre-judgment
interest on parts of the award; and special costs for the preparation of her
submissions on these issues.  The parties have filed submissions with the court
setting out their respective positions on these issues.

Background

[3]            
This matter came on for trial on September 21,
2009 and lasted for seven days.

[4]            
Prior to the trial there had been attempts at
settlement.  On August 27, 2009 they attended mediation in an effort to resolve
the outstanding issues.  Shortly thereafter the defendants delivered an offer
to settle to the plaintiff in the amount of $115,000.  The plaintiff did not
accept that offer but made a counter-offer on September 2, 2009 in the amount
of $149,000.  Both offers were pursuant to Rule 37B and both were left
open for acceptance until 4:00 p.m. on the last business day prior to the
commencement of the trial.

[5]            
The judgment was issued March 10, 2010 and
included amounts of $95,000 for non-pecuniary damages, $6,459 for past loss of income
and $225,000 for damages for diminished earning capacity.

Discussion of the applicable
principals governing the award of double costs

[6]            
The court’s jurisdiction to award costs
generally arises from Rule 57.  An award of costs is subject to the discretion
of the court, exercised judicially.

[7]            
Rule 37B was introduced in 2008 and was designed
to encourage parties to settle disputes rather than to litigate.  The purpose
of the rule is intended to cause both parties to pause and consider their
respective positions realistically in light of all the information available
and to assess the likely outcome of the trial.  The rule is intended to both
encourage that re-assessment and to deter parties who fail to do so realistically
by penalizing them with an extra burden of costs.

[8]            
In Catalyst Paper Corporation v. Companhia de
Navegaçäo Norsul, 2009 BCCA 16, 86 B.C.L.R. (4th) 17, Mr. Justice Hall, in
the context of addressing Rule 57(9) stated:

[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.

The above passage was recently quoted by
Mr. Justice Voith in Lakhani v. Ellioy, 2010 BCSC 281.

[9]            
In Hutson v. Michaels of Canada, ULC,
2009 BCSC 1587, I observed:

[7]        Rule
37B came into effect July 1, 2008.  It was intended to supplement gaps in
the former Rule 37A, to reinforce the principle of judicial discretion in the
awarding of costs and to provide for a mechanism to better promote the
settlement of disputes between litigants.  One of the main purposes behind
the Rule, as behind Rule 37A, is to endeavour to make the expense of litigation
less onerous to parties who act reasonably in prosecuting or defending their
claims while at the same time providing a sanction to those who do not.

[10]        
Rule 37B provides:

Offer may be considered
in relation to costs

(4)        The court may consider an offer
to settle when exercising the court’s discretion in relation to costs.

Cost options

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

(a)        deprive
a party, in whole or in part, 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
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. …

Considerations
of court

(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.

Application of Legal Principles to the
Present Case

[11]        
I will review each of the factors referred to in
Rule 37B(a) to (d) as each may be relevant to the facts in this case.

[12]        
The first factor is whether the offer to settle
was one that ought reasonably to have been accepted.

[13]        
The defendants argue it was not reasonable for them
to anticipate the plaintiff would be awarded such a significant amount for non-pecuniary
damages and for loss of future income.

[14]        
The defendants say that up to the date the trial
commenced they were not aware of any evidence the plaintiff intended to pursue
her Master’s degree in education.  The defendants say “there were no documents
to hint at or support this aspect of the Plaintiff’s claim” and that it “was
only at trial that evidence was presented by the Plaintiff and other witnesses
in support of this claim.”

[15]        
The defendants also say it was reasonable for them
to rely on the report they had from Dr. Schweigel, the medical expert
retained by the defendants to conduct an independent medical assessment of the
plaintiff.  The defendants say that up until the trial commenced they had a
much different view of the scope of the plaintiff’s injuries than ultimately
determined at trial and that given all the medical information they had
available at the time of trial it was reasonable for them not to accept the
plaintiff’s offer.

[16]        
The defendants argue that parties should not be
discouraged from litigating cases where it is difficult to tell, in advance of
trial, ‘on which side the scales will ultimately fall’:  see E. (A.)
(Litigation Guardian of) v. J. (D.W.), 91 B.C.L.R. (4th) 372, 2009 BCSC
505.

[17]        
In my view there are several flaws in the
defendants’ argument.  Based on the submissions of the parties it seems clear
the defendants were advised well in advance of trial that the plaintiff intended
to pursue her Master’s degree in education and that the accident had delayed
her ability to do so and her opportunity to earn a greater salary.  In a
settlement proposal written March 30, 2009 to the defendants’ counsel, her
counsel wrote:

For many years it has been a realistic
goal of Ms. Pham-Fraser’s to obtain a Master’s Degree in Education.  Before
2005, Ms. Pham-Fraser began considering a role in Administration as her next
career advancement.  She began canvassing
colleagues who had already embarked on this career path.  Ms. Maria Medic was
the person who originally suggested that Ms. Pham-Fraser would be a good
candidate for Administration.  She was Ms. Pham-Fraser’s Vice-Principal at the
time.

Ms. Pham-Fraser attended an informational
seminar delivered by UBC, which was offering a Master’s in Educational
Leadership.  She also requested information from a number of North American
Universities and Colleges regarding their graduate programs.  Ms. Pham-Fraser
was also interested in Distance Education and received replies in the form of
emails and phone calls from Walden University (Bryan Scienza), Capella
University (Cory LeFebvre) and a number of other institutions.

Although she has continued to work and has
shown great intestinal fortitude in returning to work as swiftly as she has,
Ms. Pham-Fraser’s income-earning capacity is impaired and her opportunities for
advancement have been delayed and restricted.  As you may know, the courts have
awarded loss of earning capacity based on a Plaintiff’s current salary or wage,
even though their injuries have not prevented them returning to full-time
employment after an accident…

If this matter does not presently settle, we
will be retaining an economist to provide better and further particulars as to
Ms. Pham-Fraser’s income loss relating to her lost or delayed opportunity.

(Emphasis in original)

[18]        
Plaintiff’s counsel again reiterated this advice
in a letter to defendants’ counsel on June 24, 2009.

[19]        
The plaintiff retained an economist, Mr. Carson,
to prepare a report on the plaintiff’s past and future income loss.  The report
was served on the defendants’ counsel July 22, 2009.  It contained the
following, at page 3:

You have further advised that absent the
accident Ms. Pham-Fraser had expected to complete a master’s degree in
education.  This would result in a change in
qualification from category 5 to category 6 and a pay increase.  There is, as
well, an intermediate classification, described as category 5+, with increased
pay for those who have reached certain levels of accomplishment while working
towards a master’s degree in teaching.

(Emphasis in original)

The issue was also fully canvassed in the
plaintiff’s mediation brief dated August 26, 2009.

[20]        
Furthermore, it was explicit from the reports of
Drs. Hartzell, Rickards and Hunt that the plaintiff would have diminished
earning capacity in the future as she dealt with her symptomatic back problems
and stenosis.

[21]        
Accordingly it is plain the defendants had notice
of the plaintiff’s claim in this regard well in advance of the trial and at the
time they received the plaintiff’s offer to settle.

[22]        
Further, I cannot accept the defendant acted
reasonably in relying solely on the report of Dr. Schweigel.  While it is not,
as argued by the defendants, appropriate to engage in hindsight, the defendants
had before them a number of other medical opinions that predated the date of
the plaintiff’s offer to settle which opined a very different medical picture
for the plaintiff than that opined by Dr. Schweigel.  The defendants chose to
rely on Dr. Schweigel’s opinion and to challenge the opinions of the other
experts who produced reports.  This is not a case of the evidence being a close
call.  The evidence supporting the plaintiff’s injuries was, in my view,
overwhelmingly against the opinion offered by Dr. Schweigel.  As I noted in my
reasons, Dr. Schweigel’s opinion was made without the benefit of reviewing a
number of the medical reports filed on behalf of the plaintiff and was
deficient for several other reasons.   Regardless, the defendants were in
possession of those reports at the time of the plaintiff’s settlement offer and
well before the trial, and chose to discount or reject the opinions expressed
in them regarding the current state of the plaintiff’s injuries and what the
future was likely to hold for her.

[23]        
For the reasons stated above, I am of the view
the offer to settle made by the plaintiff was one which the defendants ought
reasonably to have accepted.

[24]        
The second factor referred to in Rule 37B(6) also
operates in the plaintiff’s favour.  There is a wide difference between the
offer to settle and the final judgment.  The judgment is almost three times the
amount offered.  The plaintiff’s offer was made because she wished to avoid
court and having to give her evidence.  Some of her evidence was of a private
nature relating to matters she did not wish to talk about in the public forum
of a court of law (that is, how the accident affected her work and home life,
her marital relationship with her husband after the accident, and the fact she
suffered from incontinence).

[25]        
It is not necessary to consider factors set out
in Rule 37B(6)(c) and (d).  I do not accept the plaintiff’s submission I ought
to consider that the defendants, being represented by ICBC, are in a “sophisticated”
position in terms of providing settlement instructions and that this is a
factor to be taken into account and operate in the plaintiff’s favour in
exercising my discretion under the rule.   The plaintiff’s argument seems to me
to simply be another way of putting a “deep pockets” argument forward: an
argument the courts have thus far rejected as being a factor to be considered
in determining whether to award costs under Rule 37B.

[26]        
After considering the factors which I do
consider relevant under Rule 37B, I conclude the plaintiff is entitled to an
award of double costs.

[27]        
 I further conclude the date upon which double
costs will commence is on and from September 19, 2009.  That is the last
business day prior to the commencement of the trial – the date set out in the
offer for expiry of the offer.  The defendants could have waited until that
time to accept the offer without any penalty for double costs.  It would seem
inconsistent with the terms of the plaintiff’s offer to award double costs
against a party for an “open” period during which the offer could be accepted. 
Under the terms of the plaintiff’s offer, it was open to the defendants to make
an offer at any time up to close of business on September 18, 2009.  While they
did not do so I do not consider it appropriate to penalize the defendants in
double costs for not accepting the plaintiff’s offer prior to the expiry of the
term of the offer.

Special Costs

[28]        
The plaintiff claims special costs for having to
make the submissions of double costs.  I disallow this request.  Special costs
are payable where a party’s conduct is general considered scandalous,
outrageous or reprehensible.  It is conduct which tends to bring the courts and
its processes into disrepute and is deserving of the court’s rebuke: Glase
v. Glase, 2008 BCSC 887; Jampolsky v. Shattler, 2010 BCSC 408

[29]        
The fact the defendants have challenged the
plaintiff’s double costs argument does not meet the standard set by this court
for an award of special costs.

Pre-judgment Interest

[30]        
The parties have settled the plaintiff’s claim
for pre-judgment interest payable of special damages and past housekeeping
expenses and accordingly it is not necessary for me to deal with that issue.  Should
the parties be unable to resolve the matter either may make an application to
me in the usual manner.

Conclusion

[31]        
Accordingly the plaintiff will recover double
costs from September 19, 2009 and pre-judgment interest as agreed by the
parties.  The plaintiff will not recover special costs for the submissions on
double costs.

“GREYELL, J.”