IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20110405

Docket: M98666

Registry:
New Westminster

Between:

Sherill Leanne
Cairns

Plaintiff

And

Inderjit Gill and
Gurjit Kaur Gill

Defendants

Before:
The Honourable Madam Justice E.A. Arnold-Bailey

Reasons for Judgment Regarding Costs

Introduction

[1]            
This is an application by Indirjit Gill and Gurjit Kaur Gill (the “defendants”)
for payment of their costs and disbursements after an offer to settle a
personal injury claim arising from a motor vehicle accident was refused by Sherrill
Leanne Cairns (the “plaintiff”).  The plaintiff declined to accept the defendants’
offer to settle her claim for $1,292 (the “offer to settle”) plus costs, and
proceeded to a three day trial before a judge and jury.  The plaintiff,
although the successful party at trial, received a total jury award of $851.

[2]            
In this application the plaintiff faces significant financial consequences
in terms of the Court’s determination of costs and disbursements.  The costs
order could substantially outweigh her modest award of damages.

[3]            
The defendants seek an order to recover their costs and disbursements
from the date of the offer to settle, and an order that the plaintiff not be
permitted to recover any costs or disbursements after the date of the offer to
settle.  The plaintiff agrees that she is not entitled to costs incurred after the
date of the offer to settle, but seeks to recover all disbursements incurred by
her up to the date of the trial.  The plaintiff submits that the defendants are
not entitled to any costs or disbursements.

[4]            
The defendants’ offer to settle, made prior to the implementation of the
present Supreme Court Civil Rules, B.C. Reg. 168/2009, is governed by
Rule 9-1, by virtue of the transition provisions contained in Rule 9-1(1). 
Rule 9-1(5) sets out what a Court may do in relation to costs and disbursements
when a party seeks to rely on an offer to settle; Rule 9-1(6) sets out the
considerations that apply.

[5]            
Rule 14-1(10) of the Rules of Court (previously Rule 57(10)) may
disentitle a plaintiff to costs other than disbursements when a plaintiff recovers
a sum within the jurisdiction of the Provincial Court, as occurred in this
case.

The Issues to be Decided

[6]            
The issues to be decided on this application are:

1.     Pursuant
to Rule 14-1(10), was there sufficient reason for the plaintiff to bring her
action in this Court?

2.     Given the
outcome for the plaintiff at trial in relation to the offer to settle, ought
the plaintiff be deprived of her disbursements as permitted by Rule 9-1(5)(a),
taking into account the considerations set out in Rule 9-1(6)?

3.    
Is the plaintiff required to pay the defendants for some or all of their
costs and disbursements incurred after their offer to settle, pursuant to Rule
9-1(5)(d), taking into account the considerations set out in Rule 9-1(6)?

The Facts

[7]            
The parties agreed as to the following statement of facts as to the
proceedings and evidence at trial:

1.     This was
an action for personal injury damages arising out of a motor vehicle collision
on May 16, 2005 (the “Accident”);

2.     The Plaintiff
was a passenger in a 1994 Acura Integra when it was rear-ended by the Defendant
who was driving a 2004 Nissan Sentra.  The vehicle in which the Plaintiff was a
passenger sustained some damage.  The Defendant’s vehicle was not damaged in
the Accident;

3.     The
attached photographs accurately depict how both vehicles appeared following the
Accident;

4.     At the
time of the Accident, the Plaintiff was a full time student and working at the
Brick furniture store in customer service;

5.     After the
Accident, the Plaintiff did not miss any classes, any exams, or homework
assignments.  The Plaintiff’s grades were not affected at all by the Accident;

6.     The Plaintiff
stated that she missed one day of work shortly following the Accident and
another day a few months later.  Dr. Rogal in his medical legal report dated
July 12, 2006 reported that the Plaintiff only missed one day of work following
the Accident.

7.     At trial,
the Plaintiff testified that her neck was sore and she developed a headache
immediately following the Accident.  She also developed pain in her shoulders
by the following day.  She also began to experience pain in her low back
sometime after the Accident.  The Plaintiff testified that she experienced pain
on a daily basis for one to two weeks, and thereafter, it came and went.  The Plaintiff’s
headaches persisted for several months and her shoulder pain lasted for
approximately one year.  The low back pain resolved about 18 months after the
Accident.

8.     The Plaintiff’s
first visit to her family doctor, Dr. Hacquebard, following the Accident was
not until October 3, 2005.  This visit concerned a breakup with her boyfriend
and only in “passing” did she mention her low back pain;

9.     Dr.
Hacquebard did not make any further notes concerning complaints related to the
Accident;

10.  Dr. Hacquebard, does not
have any notes in her records concerning any complaints of neck pain, shoulder
pain or headaches;

11.  The Plaintiff was treated by
a chiropractor, Dr. Rogal, who provided an expert report dated July 12, 2006 in
which he opined that the Plaintiff was suffering from a temporary partial
disability at the time of the report and would require treatment for a further
12 – 18 months.  Dr. Rogal opined at trial that the Plaintiff’s problems were
the result of injuries sustained in the Accident.

12.  The Plaintiff met with Dr.
Rogal in the middle of June 2006 to discuss her injuries in order to prepare a
medical report at the request of Plaintiff’s counsel;

13.  Dr. Rogal’s report was
largely based on what the Plaintiff reported to him and he relied on the Plaintiff
to be honest and open with him;

14.  Dr. Rogal gave an opinion
that the Plaintiff suffered from a temporary partial disability with regards to
home and work activities;

15.  The Plaintiff did not tell
Dr. Rogal that one month before the interview with Dr. Rogal that she was in
Mexico and was snorkeling, walking around ruins, and dancing and that none of
her injuries interfered with these activities.

16.  This action was commenced by
Writ of Summons and Statement of Claim filed on May 2, 2006.  A Statement of
Defence admitting liability but denying injury or damages was filed on
September 26, 2006.

17.  In the Statement of Claim,
the Plaintiff claimed for past wage loss, special damages and general damages
for pain and suffering resulting from the following injuries:

a.     Loss of
resistance to further injuries;

b.     Neck;

c.      Shoulders;

d.     Back;

e.     Headaches;

f.       General
Stiffness;

g.     Pain and
discomfort;

h.     Nervous
tension;

i.       Depression;

j.       Anxiety
and apprehension;

k.      Shock;

l.       Other
injuries.

18.  On December 22, 2006, the Defendants
delivered an Offer to Settle (dated December 13, 2006), in the prescribed form
under Rule 37, in the amount of $1,292.00, plus costs in accordance with Rules
37(22) and (37).

19.  On August 1, 2007, the Defendants
filed a Notice of Trial scheduling the action for a five day trial commencing
February 23, 2009.  The Defendants also filed a Notice Requiring Trial by Jury.

20.  At trial, the Plaintiff
claimed special damages in the amount of $605.00 for 17 sessions of
chiropractic treatments received from Dr. Rogal from December 20, 2005 to March
21, 2007.

21.  The trial judge, in her
charge to the jury and with the consent of counsel, directed the jury that if
they found that the Plaintiff had been injured as a result of the Accident,
they should award compensation for two lost days of work, in the amount of
$192.00.

22.  After deliberation, the jury
awarded the Plaintiff $500 for non-pecuniary loss, $96.00 for past loss of
income, and $255.00 for special damages for a total of $851.00.

23.  The Jury Questionnaire
indicated the award for special damages was for the Plaintiff’s visits to her
chiropractor up to March 28, 2006.  The Plaintiff had three treatments with Dr.
Rogal between March 28, 2006 and the date of Dr. Rogal’s report on July 12,
2006.

24.  Had the jury awarded the Plaintiff
$192.00 for past wage loss and her full claim for special damages, the award
would have exceeded the Defendant’s Offer to Settle.

25.  The Plaintiff subsequently
made an application to set aside the jury award with respect to wage loss and
special damages on the basis that the jury did not follow the trial judge’s
charge to the jury.

26.  On May 13, 2009, the trial
judge, The Honourable Madam Justice Gill, released Reasons for Judgment in
which she dismissed the Plaintiff’s application to set aside portions of the
jury verdict.

[As in the original.]

[8]            
The background of these proceedings is discussed in the reasons for
judgment of Madam Justice Gill in Cairns v. Gill, 2009 BCSC 642, in
relation to an application by the plaintiff to set aside portions of the jury
verdict.  That application was dismissed.

The Law

Rule 9-1

[9]            
Formal offers to settle and their cost consequences are governed by
Rule 9‑1.  The transition provision in the current rule brings the
December 2006 offer, made under a previous rule, within the ambit of Rule 9-1:

(1)  In this rule, "offer to settle" means

(a) an offer to settle made and delivered before
July 2, 2008 under Rule 37 of the former Supreme Court Rules, as that rule read
on the date of the offer to settle, and in relation to which no order was made
under that rule,

[10]        
As to the Court’s discretion to order costs, Rule 9-1 provides:

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

(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 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.

(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 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.

[Emphasis
added.]

[11]        
The cost options pursuant to Rule 9-1(5), and the considerations
pursuant to 9-1(6), as well as other rules and legal principles determinative
of this issue, have been considered in a number of cases.

[12]        
A succinct summary of the principles underlying the previous rule, Rule
37B, is provided in A.E. v. D.W.J., 2009 BCSC 505, where Goepel J. held:

[61]            I
appreciate and accept that notwithstanding the differences between Rule 37B and
its predecessors, the underlying legislative policy behind Rule 37B is 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: MacKenzie v. Brooks (1999) BCCA 623, 130 B.C.A.C. 95; Skidmore
v. Blackmore  (1995),
2 B.C.L.R. (3d) 201, 55 B.C.A.C. 191 (C.A.); Radke v. Parry, 2008 BCSC
1397, 64 C.P.C. (6th) 176.  Parties should not however be unduly deterred
from bringing a meritorious, albeit uncertain claim, because of the fear that a
punishing cost order could potentially wipe out their award of damage
award.   In that regard I note the comments of McLachlin J.A., as she
then was, in Houweling Nurseries Ltd. v. Fisons Western Corp. (1988),
37 B.C.L.R. (2d) 2 at  25, 49 D.L.R. (4th) 205 (C.A.):

Costs in our system of litigation serve the purpose,
not only of indemnifying the successful litigant to a greater or lesser degree,
but of deterring frivolous actions or defences.  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.  Moreover, there is a sound reason for keeping costs within
relatively modest limits.  The possibility of high costs may unduly deter
a party from bringing an uncertain but meritorious claim or defence.

[62]     
     Regardless of the merits of the plaintiff’s case the
defendant’s offer to settle cannot be ignored, because to do so would undermine
the purpose of the Rule.  Having decided to proceed in face of a not
insignificant and ultimately successful offer to settle, the plaintiff cannot
avoid some consequences. 

[13]        
This characterization of the object of Rule 37B appears applicable to
Rule 9‑1, given the essential similarity of the two rules; however,
there are some distinctions between Rule 37B and Rule 9-1, and several aspects
of Rule 9-1(5) and Rule 9-1(6), that are of importance.

[14]        
Rule 9-1(5) provides more cost options than its predecessor rule. In A.E.,
Goepel J., with reference to Rule 37B, stated:

[52]      What a judge cannot do,
however, in my respectful opinion, as a result of an offer to settle, is to
order costs to a defendant where the offer to settle was in an amount greater
than the judgment.  While that cost option had existed since the time of
the 1890 rules, either as an exercise of the court’s discretion or because it
was mandated by the terms of the rule, it is not an option available under Rule
37B. …

[15]        
However, pursuant to Rule 9-1(5)(d), if the judgment awarded is no
greater than the defendant’s offer to settle, the Court may award to the
defendant their costs in respect of all or some of the steps taken in the
proceeding after the date of the offer to settle.

[16]        
In Brewster v. Rominn Laboratories Inc., 2008 BCSC 1463, Rogers
J., at para. 18, summarized the factors under Rule 9-1(6) as concerning a
detailed examination into, among other things, the party’s knowledge of the
strength of its own case and that of its opponent, the proportionality of the
offer to the judgment, and the financial circumstances of all of the parties
involved.

[17]        
A further statement on the factors underlying Rule 9-1(6) is provided in
Giles v. Westminster Savings Credit Union, 2010 BCCA 282.  While
the discussion in Giles concerns the issue of double costs, statements
as to the discretion of the trial judge and the objectives of the rule appear
to be of some general application.  It was stated:

88        I appreciate there are
no mandatory factors under Rule 37B(6) and that trial judges have discretion to
take into account whatever factors they consider appropriate in a given case.
However, the ultimate discretion as to double costs must be exercised in a
just, principled, and consistent way. One of the goals of Rule 37B is to
promote settlement by imposing consequences on parties who have refused to
accept an offer that ought reasonably to have been accepted. While it may
not invariably be the case, I consider that it would be generally antithetical
to that goal to penalize an unsuccessful plaintiff with double costs for
proceeding to trial in the face of an unreasonable offer. Virtually all
litigation comes with a degree of risk. When faced with settlement offers,
plaintiffs must carefully consider their positions. However, they should not to
be cowed into accepting an unreasonable offer out of fear of being penalized
with double costs if they are unable to "beat" that offer. Put
somewhat differently, plaintiffs should not be penalized for declining an
offer that did not provide a genuine incentive to settle in the circumstances.
…                                                     [Emphasis added.]

[18]        
With respect to Rule 9-1(6)(a), the reasonableness of the offer and
whether it ought to have been accepted, the assessment is not done with the
benefit of hindsight.  The reasonableness of the plaintiff’s decision not to
accept the offer must be assessed without reference to the Court’s decision (Bailey
v. Jang, 2008 BCSC 1372 at para. 24).

[19]        
The relationship between the terms of settlement offer and the final
judgment of the Court, under Rule 9-1(6)(b), may contemplate the often
unpredictable nature of jury determinations.  In the circumstances of a jury
award, the Court should be cautious in placing too much weight on this factor (Lumanlan
v. Sadler, 2009 BCSC 142 at para. 35; Smagh v. Bumbrah, 2009 BCSC
623 at paras. 12-14).

[20]        
Until recently, the funding of litigation costs by an insurer, as a
matter of the relative financial circumstances of the parties under 9-1(6)(c),
was not a proper consideration in relation to costs.  This is no longer the
case.  In Smith v. Tedford, 2010 BCCA 302, Lowry J.A. stated:

19          While
I recognize arguments over the implications of a defendant’s insurance coverage
being considered in relation to an award of costs may go back and forth, like
the judge I consider precluding such from consideration renders an assessment
of the parties’ relative financial circumstances, at least in a case of this
kind, very artificial indeed. Clearly, with ICBC having assumed the defence,
the financial ability to defend was much greater than the financial ability to
prosecute, and that is of no small importance to considering whether and to
what extent the financial circumstances of the parties, relative to each other,
bear on an award of costs where, as here, there has been an offer of settlement
made ten days before a trial for the assessment of personal injury damages
which was not accepted until the seventh day of the trial.

[21]        
The timing of the settlement offer and its acceptance in Smith may
be distinguishable, and could limit the broad applicability of this principle;
however, several recent cases have generally accepted that a party’s defence
was assumed by their insurer as a relevant factor under Rule 9-1(6)(c) (Hunter
v. Chandler, 2010 BCSC 1124 at paras. 23-25; Gregory v. Insurance
Corporation of British Columbia, 2010 BCSC 1369 at para. 9).

Rule 14-1(10)

[22]        
When a plaintiff recovers a sum within the jurisdiction of the
Provincial Court, Rule 14-1(10) (previously 57(10)) provides:

(10)  A plaintiff who
recovers a sum within the jurisdiction of the Provincial Court under the Small
Claims Act is not entitled to costs, other than disbursements, unless the
court finds that there was sufficient reason for bringing the proceeding in the
Supreme Court and so orders.

[23]        
Unlike other rules concerning costs, Rule 14-1(10) does not involve an
exercise of discretion. The Court must make a finding that there was sufficient
reason to bring the action in Supreme Court (Reimann v. Aziz, 2007 BCCA
448 at para. 13.)

[24]        
Whether there is sufficient reason to bring an action in the Supreme
Court is assessed in relation to the time of the initiation of the action.  The
plaintiff does not have an ongoing obligation to assess the quantum of a claim
(Reimann at para. 44).

[25]        
In Mohamadi v. Tremblay, 2009 BCSC 1583, Truscott J. reviewed the
legal principles underlying Rule 57(10).  He held that while there may be valid
reasons for a plaintiff to wish to proceed in Supreme Court, particularly in
personal injury actions, the rule operates to preclude a plaintiff from
entitlement to costs where the claim is relatively straightforward and the
evidence of damages clearly within the Provincial Court jurisdiction.  Truscott
J. stated:

6          The
law on the proper interpretation of Rule 57(10) has recently been clarified in
the Court of Appeal decision of Reimann v. Aziz, 2007 BCCA 448 (B.C.
C.A.) where Chiasson J.A., writing the decision, concurred with by Prowse J.A.
and Donald J.A., said in the penultimate paragraph of his reasons:

Considering Rule 57(10) in its legislative context and
applying its words in their grammatical and ordinary sense harmoniously with
the scheme of the legislation and its objects, I conclude that a plaintiff does
not have an ongoing obligation to assess the quantum of a claim and that the
point in time for a consideration of whether a plaintiff had sufficient reason
for bringing a proceeding in the Supreme Court is the time of the initiation of
the action.

7          Rule
57(10) itself states:

A plaintiff who recovers a sum within the jurisdiction of the
Provincial Court under the Small Claims Act is not entitled to costs,
other than disbursements, unless the court finds that there was sufficient
reason for bringing the proceeding in the Supreme Court and so orders.

8          Accordingly,
with the interpretation given to Rule 57(10) by the Court of Appeal, I must
determine if the plaintiff had sufficient reason for bringing the proceeding in
Supreme Court at the time of initiation of his action.

…

18        plaintiff’s
counsel cites a number of cases dealing with the application of Rule 57(10) to
personal injury claims where the court found that with the several injuries
sustained and the medical evidence surrounding those injuries there was sufficient
reason for bringing the proceeding in Supreme Court.

19        In Bhanji
v. Quezada, 2003 BCCA 445 (B.C. C.A.) Low J.A., writing the judgment of the
court, said that:

9. The purpose of R. 57(10) is to encourage actions to
be brought and continued in Provincial Court when there is no sufficient reason
to expect that the claim might give rise to damages in excess of $10,000 [the
limit of Small Claims jurisdiction at that time]. That is sometimes a difficult
decision for a plaintiff or his solicitor to make. If the plaintiff decides to
proceed in Supreme Court he must be prepared to justify that decision in the
event he recovers less than $10,000. In many cases, where there is sufficient
medical or other evidence capable of supporting the larger claim, it will not
be too difficult to justify the decision, especially if the damage award
approaches the Provincial Court limit.

20        At the
present time the Provincial Court limit is $25,000.

21        In the
decision of Master Horn in Smith v. Zimmermann, [1993] B.C.J. No. 1744
(B.C. Master), the Master said:

9. There is more, in my view, to the question of what
court should be selected than a consideration of what the damages are likely to
be. Personal injury claims are not commonly conducted in the Small Claims
Court. There are no pleadings and no provisions for discovery. Pre-trial
conference dates are assigned regardless of whether or not the plaintiff is
ready for trail [sic]. The plaintiff in the Small Claims Division cannot
recover any costs should he choose, as he would be well advised to choose in
this case, to be represented by counsel. These are all, in my view, legitimate
considerations to be taken into account and weighed with the likelihood of
damages being recovered within the jurisdiction of the Small Claims Court.

…

58        I
recognize that most plaintiffs with personal injury claims probably feel more
comfortable with counsel representing them and more confident that they will
obtain a greater amount of damages for their claim with the assistance of
counsel than by acting on their own in Small Claims Court.

59        However, the onus to prove
that at the beginning of the claim there is sufficient reason for bringing the
proceeding in Supreme Court, as Rule 57(10) states, lies in practice to some
great extent on plaintiff’s counsel who is advising the plaintiff on the value
of his claim and commencing the action.

60        Here, I am satisfied that if
Dr. Fox’s medical records pre-accident had been obtained and if his opinions
and the opinions of Dr. Cameron had been obtained before the writ of summons
was issued, with the plaintiff’s credibility at issue with respect to the
injuries he was alleging that were not supported by his doctors, with his false
statement to ICBC, and with the contrary evidence of his employer, it could and
should easily have been determined that the action should be commenced in Small
Claims Court and not this Court.

[26]        
In Bagasbas v. Atwal, 2009 BCSC 793, Satanove J. held that a
plaintiff who did not provide full disclosure of relevant medical information
to the doctor providing the medical-legal report was not entitled to costs,
pursuant to Rule 14-1(10):

[9]         In
my view, a plaintiff who does not fully inform his or her treating physician
and legal counsel of the pertinent facts at the time medical or legal advice is
sought runs the risk of receiving inaccurate or erroneous advice through no
fault of the professional advisors.  If all the evidence I heard at trial
about the plaintiff’s condition before February 8, 2008, had been in the
possession of counsel at the time he commenced the action, I expect he would
have advised the plaintiff to start an action in Small Claims Court where this
case belongs.

[10]
        The onus is on the
plaintiff under Rule 57(10) to establish sufficient reason for bringing the
proceeding in Supreme Court and I find that she has not done so.  In no
way is her counsel to blame.  This regrettable outcome for the plaintiff
lies at her feet alone.  Therefore, the plaintiff is not entitled to costs
other than her disbursements.

[27]        
However, as stated in Reimann, the time to assess the appropriate
Court in which to bring the action is when the action is commenced, not after
trial with the benefit of hindsight.

[28]        
Since the hearing of this application the Court of Appeal decided Gradek v. DaimlerChrysler
Financial Services Canada Inc. and Fletcher, 2011 BCCA 136.  In Gradek
Prowse J.A. considered the meaning of the words “sufficient reason” in Rule
57(10), the predecessor to Rule 14-1(10), in terms of whether they encompassed
reasons that did not relate solely to the quantum of the plaintiff’s claim.  In
Gradek the plaintiff was involved in a motor vehicle accident that
resulted in minimal damage to the vehicles involved.  The plaintiff suffered
relatively minor soft tissue injuries which kept him off work for three weeks.  The
defendants took the position that the plaintiff had not suffered any
compensable injury.  The action proceeded to a two-day trial in Supreme Court.  The
plaintiff was awarded damages of approximately $9,685.  In relation to the
application of Rule 57(10), Prowse J.A. held:

[14]         It is
noteworthy that the appellant is taking what I would describe as an “all or
nothing” approach on this appeal.  He reiterates the position he took
before the trial judge that the words “sufficient reason” in Rule 57(10) refer
only to factors affecting the quantum of the claim, assessed at the time the
action is commenced.  That being the case, the appellant submits that the
trial judge’s finding that it was likely that the quantum of the claim at the
time the action was commenced was within Provincial Court jurisdiction was
determinative of the issue of costs.  Since none of the reasons given by
the trial judge relates to the value of the claim assessed as of the date the
action was commenced, the appellant submits that it follows that they could
not, either individually, or cumulatively, amount to “sufficient reason” within
the meaning of Rule 57(10).

…

[16]         The
words “sufficient reason” are not defined in the Rules of Court. 
In their ordinary and grammatical sense, they do not suggest a specific
limitation in terms of application, although it is clear that “any reason” will
not do.  The reason has to be “sufficient”, but there is nothing in the
Rule to suggest that it has to be connected solely to the quantum of the claim. 
On the other hand, the words do not connote the exercise of a discretion, with
its attendant deferential standard of review.  That point was made by this
Court in Reimann v. Aziz, 2007 BCCA 448, 72 B.C.L.R. (4th) 1, at para.
13:

[13]      At the outset, I
observe that the application of Rule 57(10) does not involve an exercise of
discretion.  For a plaintiff who recovers a sum within the jurisdiction of
the Small Claims Court to recover more than disbursements, the court must make
a finding that there was sufficient reason for bringing the action in the
Supreme Court.

…

[19]         Without
endorsing all of the factors relied on by the trial judge as constituting
“sufficient reason” in this case, I am satisfied that there may be
circumstances which may constitute sufficient reason for bringing an action in
the Supreme Court, thereby triggering its costs provisions, despite the fact
that it is apparent from the outset that the award will fall within the
monetary jurisdiction of the Provincial Court.  It is open to a defendant
who believes that the claim should not have been brought in the Supreme Court
to apply under s. 15 of the Supreme Court Act, R.S.B.C. 1996,
c. 443, to have the matter transferred to the Provincial Court. 
Alternatively, if the matter proceeds in the Supreme Court, it is open to the
defendant to ask that a successful plaintiff be denied costs on the basis that
there was not sufficient reason to bring the action in the Supreme Court in the
first instance. 

[20]         I accept
that the narrow interpretation of the words “sufficient reason” advocated by
the appellant would provide greater certainty to litigants in knowing the
consequences of proceeding in Supreme Court where the matter falls within the
Small Claims monetary limit.  But I agree with the trial judge that if the
Legislature had intended to limit the scope of the words “sufficient reason” to
the extent suggested by the appellant, it could readily have done so.  While
I am satisfied that the words, “sufficient reason” should not be interpreted in
an expansive manner, but with restraint, I am also satisfied that they must be
read in such a way that a trial judge is not forced to deny a party costs where
he is satisfied, as here, that justice can only be achieved as between the
parties by an award of costs to the successful party.

[Emphasis
added.]

Other procedural rules

[29]        
Other procedural rules operate to move claims between Supreme Court and
Provincial Court if, as the case develops, it becomes appropriate to do so.  It
appears reasonable to consider the availability of these mechanisms in a costs
analysis pursuant to Rule 9-1(6)(d), as any other factor the Court considers
appropriate, and in the context of the sufficient reason determination at
Rule 14 1(10).

[30]        
Pursuant to Rule 7.1(1) of the Small Claims Rules, B.C. Reg.
261/93, a judge, on an application at any time or on their own motion, if
satisfied that the monetary outcome of a claim may exceed $25,000 not including
interest and expenses, must transfer a claim to Supreme Court.

[31]        
Rule 1(7) provides that where a claim is transferred under 7.1(1) the
plaintiff may sue for an amount in excess of the Provincial Court limit, even
if that amount was previously abandoned.  Initiating an action in Provincial
Court does not prejudice the portion of a claim in excess of the limit.

[32]        
Conversely, a judge or master of the Supreme Court has the jurisdiction,
pursuant to s. 15 of the Supreme Court Act, R.S.B.C. 1996, c. 443, to
transfer proceedings to the Provincial Court, as identified in Gradek.

[33]        
In relation to Rule 9-1 and Rule 14-1(10), the Court in Reimann
identified s. 15 as a mechanism to transfer proceedings and avoid the
costs implications of those rules:

[43]     
     In my view, Rules 57(10) and 37 and s. 15 of the Supreme
Court Act serve different purposes, but provide a coherent legislative
scheme.  Rule 57(10) is directed towards the initiation of litigation and penalizes
parties who bring claims in the Supreme Court that should have been brought in
the Provincial Court.  Rule 37 promotes settlement.  Section 15 is a
mechanism whereby litigants can seek to avoid continuing in the Supreme Court
when they believe an action should not be in that court and a party prefers not
to be. 

[34]        
Of relevance to the case at bar, Rule 12-6(4) permits the transfer or
proceedings to Provincial Court through s. 15 of the Supreme Court Act
even where a party has filed a jury notice pursuant to Rule 12-6(3).

[35]        
In considering whether to proceed in Supreme Court or Provincial Court
or transfer proceedings, the costs consequences are relevant.  Costs in
Provincial Court are very limited.  Rule 20(2) states:

(2)  An unsuccessful party must pay to the successful
party the following expenses, unless a judge or registrar orders otherwise:

(a) any fees the party paid for filing any documents;

(b) reasonable amounts the party paid for serving any
documents;

(c) any other reasonable
charges or expenses that the judge or registrar considers directly relate to
the conduct of the proceeding.

[36]        
The Provincial Court jurisprudence suggests that the term “reasonable
charges or expenses …” under Rule 20(2)(c) is limited to matters such as the
cost of expert reports and the attendance of expert witnesses, and does not
apply to legal costs generally.

Analysis and Findings

Issue #1:  Was there sufficient reason for the plaintiff
to bring her action in this Court, or is she disentitled to her costs (other
than disbursements) because she recovered a sum within the jurisdiction of the
Provincial Court pursuant to  Rule 14-1(10)?

[37]        
In the circumstances of this case, the statement of principle of our
Court of Appeal in Karpondis v. Kantas, 2006 BCCA 400, is apt:

4          Costs considerations
are meant to guide counsel and litigants in the choices and strategies they
pursue in litigation. …

[38]        
The plaintiff recovered a sum within the Provincial Court jurisdiction. 
By operation of Rule 14-1(10), the plaintiff is not entitled to costs, other
than disbursements, unless the Court finds that there was sufficient reason to
proceed in Supreme Court.

[39]        
In the context of this case it is difficult for the Court to find that
there was not sufficient reason to proceed in Supreme Court.  The writ and
statement of claim were filed just under a year after the accident.  The report
of Dr. Rogal had not yet been sought or obtained.  The time of the commencement
of the action is the point in time at which the assessment of sufficient reason
to proceed in Supreme Court is based.  The plaintiff had not yet travelled to
Mexico, where she apparently engaged in physically strenuous activities, and
had not met with Dr. Rogal.  While this was a straightforward claim involving a
relatively minor neck injury, the plaintiff complained of headaches persisting
for several months, shoulder pain lasting for about a year, and lower back pain
that resolved in about 18 months from the date of the accident.  Had her
evidence and that of Dr. Rogal been accepted, the award might have approached
the top end of the jurisdiction of the Provincial Court and, given the wide
divergence in jury awards, could have exceeded the monetary limit of Provincial
Court.  The plaintiff was examined for discovery on October 2, 2007.  The defendants,
instead of seeking to have the matter transferred to Provincial Court,
maintained their jury notice.

[40]        
The recent decision of our Court of Appeal in Gradek (at para.
19) makes it clear that “sufficient reason” to proceed in this Court may exist,
“despite the fact that it is apparent from the outset that the award will fall
within the monetary jurisdiction of the Provincial Court.”  In the context of
the present case, that means even if it was apparent from the outset that the plaintiff’s
claim was within the jurisdiction of the Provincial Court that, in and of
itself, does not constitute sufficient reason for the plaintiff to become
disentitled to costs.  Because of how the appeal was framed in Gradek,
the Court of Appeal was not called upon to comment upon the reasons the trial
judge relied upon to constitute sufficient reason for Mr. Gradek to have
brought his action in Supreme Court.

[41]        
In the present case, there is no evidence in the agreed statement of
facts directed towards this issue.  As the trial judge has retired, another
judge who did not preside over the trial is required to decide this issue.  In Gradek
it is clear that the trial judge’s impression of Mr. Gradek was that he
required counsel to put forward his case and obtain a just result and whether
the defendant, funded by an insurer, was represented in Supreme Court by a
lawyer or in Provincial Court by an adjuster, Mr. Gradek would have been “outmatched.” 
In this case I am unable to rely on any impression of the plaintiff.

[42]        
The trier of fact in the present case, as was the case in Mohamadi,
found that the nature and extent of the injury claimed was not supported by the
evidence.  The credibility of the plaintiff was undermined by material
non-disclosure to the medical expert her case rested upon.  In Bagasbas
this was held as a basis for denying costs to the plaintiff pursuant to Rule
14-1(10).  As discussed in Mohamadi, the onus is on a plaintiff’s
counsel, as provided in Rule 14-1(10), to properly assess at the outset of the
litigation the appropriate forum for the claim.  If counsel does not properly
assess the value of the claim they risk losing any entitlement to costs.

[43]        
While in Bagasbas it ought to have been evident from the outset
that the plaintiff should have brought her case in Provincial Court, I am
unable to conclude that is the case here.  The apparent nature of the injury as
understood at the time of commencement of the action, the critical time for
analysis under Rule 14-1(10), was such that it was possible that the claim
could approach or exceed the monetary limit of the Provincial Court.  I cannot
say that there was no basis for proceeding in Supreme Court and therefore no
sufficient reason to proceed in Supreme Court.  The decision of the Court of
Appeal in Gradek that the quantum of the claim is not determinative of
the sufficient reason analysis further supports this finding.

[44]        
Therefore, I find that there was sufficient reason for the plaintiff to
proceed in Supreme Court.  The plaintiff is not disentitled to costs on the
basis of Rule 14-1(10).

Issue #2:  Given the outcome for the plaintiff at trial
in relation to the offer to settle, ought the plaintiff be deprived of her
disbursements as permitted by Rule 9-1(5)(a), taking into account the
considerations set out in Rule 9-1(6)?

[45]        
It is open to the Court to deprive the plaintiff of any or all of her
costs, including disbursements, that she would otherwise be entitled to in this
proceeding after the service of the offer to settle, pursuant to Rule
9-1(5)(a).

[46]        
This case highlights the tension between the objective of costs
consequences guiding reasonable decisions in the course of litigation and the
potential for cost consequences forcing acceptance of unreasonable settlement
offers and preventing valid claims from proceeding to trial.

[47]        
The factors to consider as set out in Rule 9-1(6) apply to both this
issue and the third issue to be considered: whether it is appropriate to award
to the defendants their costs in respect of all or some of the steps taken in
this proceeding after the date of service of the offer to settle given that the
judgment awarded to the plaintiff was less than the offer to settle.  I will
address these factors as they relate to both issues here.

[48]        
The factors to be taken into account under Rule 9-1(6) are whether the
offer ought reasonably to have been accepted when served or later; the
relationship between the offer and final judgment; the relative financial circumstances
of the parties; and any other factors the Court considers appropriate.

[49]        
In relation to whether the offer to settle ought reasonably to have been
accepted, the assessment is not made with the benefit of hindsight.  In this
case, the plaintiff submits that she was not in a position to accept the offer
when it was made or shortly thereafter, as the costs component would have
exceeded the amount offered.  The plaintiff would not have obtained much, if
any, benefit from the offer at the time it was made or afterwards.  As stated
in Giles, this offer did not represent, at the time, “a genuine
incentive to settle in the circumstances.”  This factor favours the plaintiff.

[50]        
In relation to the terms of the offer and the judgment, the jury awarded
an amount that was roughly two-thirds of the offer.  However, the size of the
first offer was so small that any amount awarded would represent a significant
portion of the offer.  On its face, this factor favours the defendant; however,
in Smagh, Kelleher J. noted that the unpredictability of a jury is a
relevant consideration regarding this factor, and cautioned that one should not
put too much emphasis on this factor.

[51]        
In relation to the relative financial circumstances of the parties, that
the defence is assumed by an insurer is a relevant consideration.  Clearly, the
defendants are in a better financial position to cover their costs of this
litigation than the plaintiff, about whom little is known, except that at the
time of the accident she was a student working part-time at the Brick.  This
factor favours the plaintiff, but should not be determinative of the outcome.

[52]        
Under Rule 9-1(6), it is open to the Court to consider “any other factor
the court considers appropriate.”

[53]        
The case of Brewster characterizes Rule 9-1(6) as concerning, in
part, an ongoing assessment of the relative strength of a party’s case as
compared to the other side.  The plaintiff ought to have known at some point
leading up to trial that this claim had little chance of success for the amount
advanced.  The value of this claim could have been reasonably assessed on the
basis of the evidence available in advance of the trial.  If the plaintiff’s
counsel had considered the evidence of the plaintiff’s vacation against the
non-disclosure to the medical expert, they could have anticipated that her
claim was not worth what was initially advanced.  This is the decision the jury
reached; the decision was reasonable.

[54]        
After making such an assessment the plaintiff could have made an
application pursuant to s. 15 of the Supreme Court Act to transfer the
proceedings to Provincial Court.  This could have been done even after the defendants
filed a jury notice, according to Rule 12-6(4).  This would have mitigated
costs consequences for the plaintiff.  Conversely, had the proceedings been
initiated in Provincial Court, and it became apparent that the value of the
claim exceeded the $25,000 limit, an application could have been made at any
time, pursuant to Rule 7.1(1), to transfer the proceedings to Supreme Court,
without prejudice to any amount in excess of the limit that the plaintiff
previously abandoned.  These mechanisms are available so that litigation can
proceed in the appropriate forum.

[55]        
While the Supreme Court may be the preferred forum of counsel and
plaintiffs in most cases, in this case, on the basis of evidence obtained after
the commencement of the litigation and in advance of trial, the plaintiff ought
to have recognized that the proceedings should not have continued in this
Court.  In this case, it is this last factor that tips the balance in favour of
the defendants regarding the plaintiff’s disbursements.

[56]        
For these reasons, I find that the plaintiff is not entitled to recover
her disbursements after the date of service of the offer to settle.

Issue #3:  Is the plaintiff required to pay the defendants
for some or all of their costs and disbursements incurred after their offer to
settle, pursuant to Rule 9-1(5)(d), taking into account the considerations set
out in Rule 9-1(6)?

[57]        
The defendants seek costs and disbursements following the date of the
offer to settle, despite the plaintiff obtaining judgment.  This is available
pursuant to Rule 9-1(5)(d), which permits the Court to, where the
plaintiff receives a judgment no greater than 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.”  This discretionary decision is also informed by the factors at Rule
9-1(6).

[58]        
The above analysis of these factors informs my decision in relation to
this issue.  A further consideration, that the defendants’ anticipated costs
far exceed the plaintiff’s judgment at trial, also informs my decision on this
issue.

[59]        
To make such an order would have a very negative effect on the plaintiff,
and have the broader effect of further discouraging those with legitimate
claims from bringing their actions in this Court when the defendant, funded by
an insurer, has deeper pockets with which to bear the risk of a plaintiff
achieving only a minor or, indeed, a pyrrhic victory.

[60]        
It is clear from the rules and the jurisprudence that costs consequences
are to guide counsel in litigation decisions.  The object of the Rules is, “to
secure the just, speedy and inexpensive determination of every proceeding on
its merits.”  This object is to be conducted, as far as is practicable, with
regard to proportionality.  While this object is frustrated to some extent by a
claim worth $851 proceeding to its conclusion at a Supreme Court jury trial
where it was more appropriate for determination in Provincial Court, the object
and proportionality principle do not appear to accord with the potential cost
of litigation in this case.  The bill of costs of the defendants is expected to
exceed $16,000.

[61]        
I note that the Court of Appeal in Giles recognized when dealing
with the issue of double costs that “all litigation comes with a degree of
risk,” and that, “when faced with settlement offers, plaintiffs must carefully
consider their positions.”  However, the court also indicated that plaintiffs,
“should not to be cowed into accepting an unreasonable offer out of fear of being
penalized with double costs if they are unable to ‘beat’ that offer.”  These
considerations also appear relevant in these circumstances.

[62]        
In this case, pursuing a valid, although exaggerated, personal injury
claim to trial, where the offer to settle did not provide a genuine incentive
to settle in the circumstances, may, in the face of a defence funded by ICBC,
cost the plaintiff almost twenty times what was awarded at trial.  It seems
consistent with the object of the Rules generally, and of Rules 9-1 and
14-1(10), to have regard to the need to emphasize litigation decisions that
direct cases to the appropriate forum without disproportionately penalizing a
party that had some success, however limited.

[63]        
To this end, as considered in relation to the first issue, Rule 14-1(10)
permits the Court to limit a plaintiff to the recovery of disbursements when
the amount of the judgment is within the jurisdiction of the Provincial Court,
which I declined to do in this case.  Then, as considered in relation to the
second issue, Rule 9-1(5)(a) permits the Court to deprive the plaintiff of any
or all of their disbursements after the date of the offer, which I found to be
appropriate.  Then, taking the matter even further, Rule 9-1(5)(d) permits the
Court to consider requiring the plaintiff to pay the defendants’ costs in
respect of some or all of the steps taken after the date of the offer to
settle.

[64]        
This progression demonstrates the flexibility within the overall
framework of the rules to craft an order for costs that is appropriate to the
circumstances of each case.

[65]        
In the present case, the plaintiff, although the “successful” party at
trial, agreed to forego her costs after the date of service of the offer to
settle and is, by virtue of my decision on the second issue, without
disbursements from the date of service of the offer to settle, which occurred
very early in the proceedings.  To require her to pay all or some of the defendants’
costs after the date of service of the offer to settle, which at the time was
an unreasonably low offer, would be excessive and unjust.  It would not be in
keeping with the nature of the offer, the relative financial circumstances of
the parties, the principle of proportionality, and the need to avoid decisions
that inappropriately discourage plaintiffs from pursuing valid claims.

[66]        
Finally, the plaintiff raises the possibility that she could lose her
driver’s license by operation of statute if she was to become a judgment debtor
of ICBC; the defendants indicate that this is a remedy only pursued after all
other viable collections options have been exhausted.  The plaintiff’s argument
is specious.  Many creditors’ remedies can have a very adverse effect on the
debtor, but that reality should not prejudice creditors from obtaining judgment
where appropriate.  This consideration does not bear on my decision.’

[67]        
I dismiss the defendants’ claim for costs after the date of the offer to
settle.

Conclusion

[68]        
There was sufficient reason, at the commencement of the action, to
proceed in Supreme Court.

[69]        
On the consent of the plaintiff, she is not entitled to costs after the
date of the offer to settle.

[70]        
Pursuant to Rule 9-1(5)(a), the plaintiff is denied all of her
disbursements incurred after the date of the offer to settle.

[71]        
The defendants’ claim for costs after the date of the offer to settle is
dismissed.

[72]        
As each party has had a measure of success in this application each is
to bear their own costs.

“The
Honourable Madam Justice E.A. Arnold-Bailey”