IN THE SUPREME
COURT OF BRITISH COLUMBIA

Date: 20120711

Docket: M083927

Registry: Vancouver

Between:

Dale Currie

Plaintiff

And

Neil McKinnon, Floyd De Smoker, John
Doe and Jane Doe

Defendants

Before: The Honourable Madam Justice
Adair

Oral Reasons for
Judgment on Costs

In Chambers

July 11, 2012

[1]            
This is a motor vehicle accident claim in which the plaintiff, Mr.
Currie, was seeking non-pecuniary damages and damages for loss of income, loss
of future earning capacity, and special damages.  The defendants had admitted liability.

[2]            
On May 16, 2012, I issued reasons for judgment, which are indexed at
2012 BCSC 698, awarding Mr. Currie non-pecuniary damages of $22,000 and
dismissing the balance of his claims.

[3]            
In the course of
my reasons for judgment, I set out the various positions that were taken on
behalf of Mr. Currie and the defendants concerning the amount of non-pecuniary
and pecuniary damages that each side submitted should be awarded.  At the
conclusion of my reasons I said that counsel had liberty to make submissions
concerning costs, provided they took steps to do so within 30 days of the date
of the judgment, and otherwise Mr. Currie would have his costs at Scale B.

[4]            
I have now heard
submissions on costs. 

[5]            
The defendants,
Neil McKinnon and Floyd De Smoker, have made an application that Mr. Currie
have his costs on Scale B and disbursements in accordance with Rule 14-1 up to
and including November 11, 2011, and that the defendants have one set of double
costs at Scale B and disbursements in accordance with the Rules after November
11, 2011.  Those orders are sought on the basis of an offer to settle that was
delivered on behalf of the defendants under Rule 9-1.  That offer to settle is
found at Exhibit “A” to the affidavit of Palma D’Andrea.

[6]            
I have heard
submissions this morning from Mr. Dahlgren, plaintiff’s counsel, to the effect
that the terms of the offer to settle are not particularly clear and not
particularly certain.  I will read sub-paras. (a) and (b) from page 1 of the
letter containing the offer:

(a)        the plaintiff will be entitled
to payment by the defendant of $40,000 (the “Settlement Payment”); and

(b)        the
parties will be entitled to costs in accordance with this offer to settle (the
“Settlement Costs”).

The offer to settle goes on to set out additional terms,
including what are called “Standard Terms and Conditions of Settlement” set out
in an appendix.

[7]            
On behalf of Mr.
Currie, Mr. Dahlgren submits that the appropriate order as to costs is that Mr.
Currie should recover his costs throughout on Scale B, and that no effect
should be given to the defendants’ offer to settle.

[8]            
Before turning to
the issues arising out of the offer to settle, and the consequences of that
offer, I am going to deal with an issue that arises under Rule 14-1(10)
which says:

(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.

[9]            
Mr. Currie was
awarded $22,000 in non-pecuniary damages.  That amount would be within the
jurisdiction of the Small Claims Court.  I have not had a calculation of the
court ordered interest that would accrue on that judgment, so I am a little
unclear whether the total award would be above the small claims jurisdiction or
remain below it.  But in the event it remains below it, in my view there was
sufficient reason for Mr. Currie to bring his claim to the Supreme Court in
view of the scope of the claims advanced and the background facts, and I so
order.

[10]        
Turning then to
the issues that arise as a result of the offer to settle.

[11]        
Under Rule 9-1(4), the court may consider an offer to settle when exercising
the court’s discretion in relation to costs.  Rule 9-1(5) and (6) set out the
options available to the court and the considerations for the court in
addressing those options.

[12]        
The fact of an
offer to settle is an important fact, although the court is not bound to take
an offer into account.  However, the legislative policy behind the provisions
concerning offers to settle 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.

[13]        
As I mentioned,
the options available to the court are set out in sub-rule (5).  Sub-rule
(5)(b) says that the court may:

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.

That, in essence, is the order being sought on behalf of
the defendants by Mr. McKechnie.

[14]        
Sub-para. (a) of
sub-rule (5) says that the court may:

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.

[15]        
Sub-para. (d) says that, if the offer was made by a defendant (which it
was in this case):

. . . 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.

[16]        
Mr. McKechnie’s
position in the alternative, in the event I conclude that double costs are not
appropriate, is that the defendants should be awarded costs on Scale B after
delivery of their offer to settle.

[17]        
It is important in
the exercise of my discretion in dealing with costs to keep in mind the
differing consequences to plaintiffs and defendants of costs awards.

[18]        
I think it certainly
can be argued that if a defendant who has made an offer to settle in an amount
higher than the amount awarded to the plaintiff at trial (and that is what has
been done in this case) was then awarded double costs, this would skew the
procedure in favour of defendants and unfairly penalize and pressure
plaintiffs.  This is because a plaintiff who rejected an offer to settle would
potentially risk a triple cost penalty if he or she were to win at trial an
amount less than the offer.  The plaintiff would suffer loss of the costs that
he or she would normally receive on obtaining judgment at trial, and face
double costs payable to the defendant.

[19]        
In my view, there
is a good reason to apply Rule 9-1 in a way that is even-handed, or more even-handed,
as between plaintiffs and defendants.  I would say for this reason one would
expect to see double costs awarded to a defendant, using the offer to settle
procedure, in exceptional circumstances only, such as a situation where the
plaintiff’s claim was dismissed all together after a plaintiff rejected an
offer to settle.

[20]        
That is not the
case here.  In my view, Mr. McKechnie, despite his able arguments, simply did
not identify for me how the circumstances here were so exceptional as to
justify an award of double costs against Mr. Currie.  While the purpose of the Rule
is to encourage reasonable settlements, parties should not be unduly deterred
from bringing meritorious, but uncertain, claims because of the fear of a
punishing costs order.

[21]        
Turning then to
the considerations under Rule 9-1(6).

[22]        
There were really
two considerations that were the focus of argument, and most of the argument
focused on the first consideration, namely:  whether the offer to settle was
one which ought reasonably to have been accepted.

[23]        
There is no
dispute that that factor is not determined by reference to the award that was
ultimately made at trial.  So you do not consider that factor from the
perspective of hindsight.  The reasonableness of the plaintiff’s decision not to
accept the offer to settle must be assessed without reference to the court’s
ultimate decision.  Reasonableness is to be assessed by considering factors
such as the timing of the offer; whether it had some relationship to the claim
as opposed to simply being a nuisance offer; whether it could be easily
evaluated; and whether some rationale for the offer was provided.

[24]        
Mr. McKechnie in
his submissions focused on the risks of the plaintiff’s case that, in his
submission, ought to have been obvious to the plaintiff and his counsel in
advance of trial.  Among other things, Mr. McKechnie highlighted the fact that
the plaintiff’s medical evidence was problematic.  I think it is fair to say
that a number of these problems with the medical evidence were highlighted in
my reasons for judgment.

[25]        
Mr. McKechnie
noted that Dr. Rawson did not see Mr. Currie until more than a year after the
accident.  Her report did not comply with Rule 11-1 in a number of respects,
some of which were detailed in my reasons for judgment.  Her clinical notes
were missing.  Dr. Sheik (the other expert who testified on behalf of Mr.
Currie) did not see Mr. Currie until almost five years after the accident.  His
diagnosis conflicted with Dr. Rawson’s.  There was no opinion evidence that was
put forward by the plaintiff of any doctor who actually examined him either
shortly after the accident or during the time period prior to his substantial
recovery.

[26]        
Mr. McKechnie
submits that the offer ought to have been accepted by Mr. Currie, since the
difficulties with this case were or should have been largely evident at the
time the offer was made and ought to have been fully evident to Mr. Currie and
his counsel by the time the offer expired on the eve of trial.

[27]        
Mr. Dahlgren, on
behalf of Mr. Currie, submits that the offer was not one that ought reasonably
to be accepted.  Mr. Dahlgren, in his submissions, focuses on what he says are
the complexities of the offer and how difficult the offer was to understand,
given the various terms and conditions that were attached to it.  It was not,
in his submission, a simple matter of the defendants offering to pay Mr. Currie
$40,000 to settle the case in exchange for a consent dismissal.

[28]        
I would say that
the offer was a genuine offer to settle.  It was not simply a nuisance offer. 
However, I think it is fair to say that there could be, at least, some
difficulties in evaluating the offer.  I would not go so far as to say that the
difficulties were as severe as Mr. Dahlgren suggests, but it was not an offer
presented in terms of $40,000 to settle the case in exchange for a consent
dismissal and release.  It did take some effort to work through the terms and
conditions and make an assessment of what exactly was being offered,
particularly in the lead-up to the trial.

[29]        
Mr. McKechnie’s
covering letter also did not – certainly not in any detail – set out any
explanation or reasons supporting the amount of the offer that was being made
by the defendants.  Some explanation might have assisted in helping the
plaintiff and his counsel to understand the defendants’ thinking in making the
offer that they did. 

[30]        
However, with
respect to the first factor under Rule 9-1(6), I would say on balance that that
factor, in my view, is neutral in this case.

[31]        
The next factor,
sub (b), is the relationship between the offer and the final judgment.  Clearly
Mr. Currie would have been better off, ultimately, if he had accepted the
defendants’ offer.  He would have recovered more money and everyone would have
avoided the time and expense of a trial.  However, that factor is not
necessarily determinative.

[32]        
The third factor
is the relative financial circumstances of the parties.  The defendants here
were defended by ICBC, and this is a factor that I can take into account.

[33]        
On the other hand,
I really have no evidence (other than the evidence that was adduced at trial)
concerning Mr. Currie’s financial circumstances.  I do not have evidence, for
example, that an order whereby the defendants recover some costs, or even that
the maximum double costs following their offer to settle, will be ruinously
expensive for him.  I do not even have any analysis of how an award of costs in
favour of the defendants would affect his ultimate recovery in this case.

[34]        
So I would say
that the third factor is neutral.

[35]        
Finally, sub-para.
(d) is any other appropriate factor.  I think here I can consider again whether
the offer was a genuine offer intended to encourage settlement, which in the
circumstances I am satisfied that it was.

[36]        
Having considered
all of the factors in this case, I am not satisfied that it would be
appropriate to award the defendants double costs as sought by Mr. McKechnie.  I
have discussed earlier in these reasons my concerns about how that can have the
effect of skewing the procedure in favour of defendants and unfairly pressurize
and penalize plaintiffs, and I think that would be the result in this case.  Liability
was admitted by the defendants.  Mr. Currie’s case was not dismissed.  Rather,
he recovered judgment for non-pecuniary damages in an amount that was greater
than what the defendants argued at trial he should recover.

[37]        
However, in my
view, the defendants’ offer to settle cannot be ignored.  That would undermine
the purpose behind the rule.

[38]        
I think there is
considerable force in Mr. McKechnie’s arguments that the difficulties and risks
in Mr. Currie taking his case to trial should have been more obvious than it
seems they were.  There were credibility issues in this case, which always
creates a risk for a plaintiff.  Although, based on Mr. Dahlgren’s submissions
that the stakes were high for Mr. Currie, and from Mr. Currie’s perspective he
had suffered significant injuries and significant losses, Mr. Currie and his
counsel also needed, in the time leading up to trial and in the face of a
genuine offer to settle, to give very serious consideration to the risks of
proceeding to trial, and the risks that were inherent in taking this case to
trial.  Mr. Currie must accept some of the consequences of proceeding to trial
in the face of the defendants’ offer.

[39]        
In my view,
therefore, the double costs sought by the defendants are neither a fair nor
just result.  However, in my view, it is not a fair or just result for Mr.
Currie to recover costs after he had had a reasonable opportunity with his
counsel to review and consider the defendants’ offer to settle.  I would say
that by November 30, 2011, Mr. Currie and his counsel had had a reasonable
opportunity to review and consider the defendants’ offer and ask any questions
they deemed necessary if they thought clarification was necessary.

[40]        
In my view, the
defendants should not have to pay Mr. Currie’s costs after November 30, 2011. 
However, I do not think it a fair result that Mr. Currie should have to pay the
defendants’ costs after November 30, 20011, given his success ultimately at
trial.

[41]        
My order then,
with respect to costs, is that Mr. Currie will recover his costs and
disbursements up to and including November 30, 2011, and that each side bear
their own costs thereafter.

“Adair J.”