IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20150519

Docket: M102785

Registry:
Vancouver

Between:

Fay Carol Cornish

Plaintiff

And

Gian Singh
Khunkhun and Rajdeep Kaur Lalli

Defendants

Before:
The Honourable Mr. Justice Skolrood

Reasons for Judgment on Costs

Introduction

[1]            
On January 15, 2015, I gave reasons for judgment in this matter in which
I awarded the plaintiff, Ms. Cornish, damages totalling $159,052.75 for
injuries suffered in a motor vehicle accident that occurred on January 25,
2010. My reasons are now indexed at 2015 BCSC 52.

[2]            
This amount reflected a 50 per cent reduction in the damages that would
otherwise have been awarded, based on my finding that Ms. Cornish and the defendant
Mr. Khunkhun were equally at fault for the accident.

[3]            
The total damage award was broken down as follows, prior to the 50%
reduction:

[4]            
My decision followed an eleven day trial that ran September 15-19, 22-25
and 29-30, 2014.

[5]            
At the conclusion of my reasons, I stated that, subject to any
submissions that the parties may wish to make, Ms. Cornish was entitled to 50%
of her costs at Scale B.

[6]            
The parties are now back before me to address the issue of costs.
Ms. Cornish seeks an order awarding her the whole of her costs of the
proceeding whereas the defendants submit that Ms. Cornish’s recovery should be
limited to 50% of her costs and disbursements.

Background

[7]            
The background facts are set out in detail in my original reasons and I
do not propose to repeat them here. It is useful however to set out the brief
summary of the accident found at paragraph 2 of those reasons:

Ms. Cornish was driving west on
72 Avenue in a 2009 Chevrolet Uplander van. As she entered the intersection at
Scott Road, a 2002 Honda Civic heading east on 72 Avenue turned left in front
of her and the vehicles collided. The Honda Civic was driven by the defendant
Gian Singh Khunkhun and owned by the defendant Rajdeep Kaur Lalli.

[8]            
It is also relevant to note that liability was very much in dispute at
trial. In considering the liability issue, I referred to the decision of Madam
Justice Fleming in Lee v. Tse, 2013 BCSC 1740 where she noted at
paragraph 55 that “[t]he weight of the authorities dealing with left turning
drivers who commence their turn on a stale yellow or red light is to find the
straight through driver entirely at fault”.

[9]            
Notwithstanding the authorities referred to by Madam Justice Fleming, I
found that another line of authorities established an exception to that general
rule of liability when it can be shown that both drivers breached their
statutory duties and that both caused or contributed to the accident: Ziani
v. Thede, 2011 BCSC 895 and Shirley v. Regier (1997), 70 A.C.W.S.
(3d) 826, [1997] B.C.J. No. 1035.

[10]        
Based on that line of authorities, I concluded at paragraph 130:

…I find that the actions of both
Ms. Cornish and Mr. Khunkhun caused or contributed to the accident.
Considering the parties’ respective degrees of fault, and that both parties
breached statutory duties under the MVA, I find that this is a case,
like Ziani and Shirley, where fault should be apportioned
equally.

[11]        
At the costs hearing, counsel for Ms. Cornish advised the court that the
defendants had made one offer to settle in the amount of $55,000.00 dated May
12, 2012. Ms. Cornish relies on this offer, and the defendants’ failure to
increase the amount of the offer, to argue that the defendants acted
unreasonably and that she should therefore receive her full costs.

[12]        
Counsel for the defendants in turn advised the court of two offers to
settle made by Ms. Cornish: one in the amount of $800,000 dated September 3,
2014 and another dated September 26, 2014, during the course of trial, in the
amount of $1,010,000.

[13]        
This second offer was accompanied by an email from counsel for Ms. Cornish
to counsel for the defendants purporting to provide an explanation of the
second offer. That email includes the following paragraph:

If Ms. Cornish receives judgment
for more than the policy limits, my instructions are to execute to the limits
only of the law and my own ingenuity. We will take Mr. Khunkhun’s home (if
necessary after a partition action). We will empty his bank accounts. We will
take his business interests. We will seize and sell his personal chattels. We
will garnish his income-including pensions. We will renew the judgment every
ten years and continue execution until the debt is paid in full.

[14]        
In addition to the offers to settle, it is also useful to note the
positions advanced by the parties at trial. Ms. Cornish submitted that damages
should be awarded in the range of $2,824,915.50 to $4,940,120.50. The largest elements
of the proposed damages were past income loss (with a proposed range from
$527,680 to $791,519), future income loss (from $732,997 to $1,817,578) and
cost of future care (from $1,276,144 to $2,040,529).

[15]        
For their part, the defendants at trial submitted that a proper range of
damages was between $128,494.50 and $179,800.00.

[16]        
Lastly, in terms of background facts, Ms. Cornish provided a draft Bill
of Costs totalling $60,845.30, of which $41,456.80 is comprised of costs and
the balance in disbursements. Counsel for Ms. Cornish submits that Ms. Cornish
is also responsible for an additional $3,891.79 in disbursements that are not
recoverable under the costs tariff.

[17]        
The defendants take issue with various aspects of Ms. Cornish’s draft
Bill of Costs and submit that total costs and disbursements in the range of
$50,000-52,000 is more reasonable.

Legal Framework

[18]        
Section 3(1) of the Negligence Act, R.S.B.C. 1996, c. 333
addresses the situation in which liability is apportioned between two or more
parties:

Unless the court otherwise
directs, the liability for costs of the parties to every action is in the same
proportion as their respective liability to make good the damage or loss.

[19]        
Section 3(1) sets out what might be characterized as the normal or
default rule in cases of apportionment of liability, but, as is apparent on the
face of the section, the court has the discretion to depart from that rule. Madam
Justice Gray provided a very useful summary of the principles informing the
court’s discretion under section 3(1) in Moses v. Kim, 2007 BCSC 1820 [Moses
(S.C.)], var’d 2009 BCCA 82 [Moses (C.A.)]:

[10]
The opening words of s. 3(1) of the Negligence Act give
the court discretion to depart from that usual rule. The court has an
unqualified discretion to award or refuse costs, even if there has been an
apportionment of liability between the parties. However, there must be some
reason connected to the case to justify the exercise of discretion to depart
from the usual rule: see Peters v. Davidson, [1981] 125 D.L.R. (3d)
753 (B.C.S.C.) aff’d (1982), 41 B.C.L.R. 330 (C.A.).

[11]
The principal consideration for the court is whether an injustice will
result by following s. 3(1): see Forsyth v. Sikorsky Aircraft Corp.
(2002), 100 B.C.L.R. (3d) 66, 2002 BCCA 231.

[12]
In Moore v. Dhillon (1993), 85 B.C.L.R. (2d) 69 (C.A.),
Taylor J.A. explained how the usual rule, as s. 3(1) of the Negligence
Act was then construed, might work well in some circumstances but
result in an injustice in others (at para. 13):

While the s. 3 prima facie
rule may work well in cases where liability is divided between defendants only,
and where there are cross-claims between plaintiff and defendant, there is
potential for injustice when the prima facie rule is applied without
exercise of discretion in cases, such as this, where division of fault is as
between a successful personal injury plaintiff and a defendant who has suffered
no injury or damage, or who has already been fully compensated for any injury
or damage suffered. This is demonstrated by the Law of Reform Commission of
B.C. in its 1993 report entitled ‘Apportionment of Costs and Contributory
Negligence: Section 3 of the Negligence Act.’ The prima facie rule would
plainly work an injustice in the present case.

[13]
The authorities demonstrate many factors the court has considered in
exercising this discretion. Among them are the following:

(a) the seriousness of the
plaintiff’s injuries;

(b) the difficulties facing the
plaintiff in establishing liability;

(c) the fact that in settlement
negotiations the amount offered was substantially below the ultimate amount;

(d) whether the plaintiff was
forced to go to trial to obtain recovery;

(e) the costs of getting to trial;

(f) the difficulty and length of
the trial;

(g) whether the costs recovery
available to the plaintiff, if costs are apportioned according to liability,
will bear any reasonable relationship to the party’s costs in obtaining the
results achieved;

(h) the positions taken by the
parties at trial, in particular whether the positions taken were appropriate
and reasonable in the circumstances;

(i) whether the defendants made any
settlement offers;

(j) the ultimate result of the
trial; and

(k) whether the plaintiff achieved substantial success that
would be effectively defeated if costs were awarded pursuant to s. 3(1) of the Negligence
Act.

[20]        
In Moses, the plaintiff was found to be 65% liable for the
accident in issue and the defendant 35%. However, Madam Justice Gray, applying
the above factors, awarded the plaintiff 90% of his costs.

[21]        
On appeal, the Court of Appeal reduced the plaintiff’s cost recovery to
75%: Moses (C.A.) at paras. 46 – 78. The Court of Appeal did not however
disagree with the factors enumerated by Madam Justice Gray going to the exercise
of the court’s discretion under section 3(1) (at paras. 70 -71).

[22]        
Ms. Cornish submits that Rule 9-1 of the Supreme Court Civil Rules, which
deals with offers to settle, must also be considered. Specifically, she submits
that the court must consider the factors set out in Rule 9-1(6) when
determining the appropriate costs order. Ms. Cornish cites Wong-Lai v. Ong, 2012
BCSC 1569 where Mr. Justice Sewell considered the relationship between Rule 9-1
and section 3(1) of the Negligence Act.

[23]        
Wong-Lai involved a situation in which the plaintiff was found
75% liable for the accident which resulted in a damage award of less than what
the defendant had offered to pay by way of a formal offer to settle. As a
result, both section 3(1) of the Negligence Act and Rule 9-1 came into
play on the issue of costs. Mr. Justice Sewell said the following with respect
to how to approach the two provisions:

[21]
The fact that there are competing applications raises the issue of the
order in which I should consider the issues before me. I have decided that it
is appropriate for me to decide whether I should make an order varying the cost
apportionment provided for in s. 3(1) of the Negligence Act before
considering what order I should make pursuant to Rule 9-1 of the Supreme
Court Civil Rules as a result of the settlement offer.

[22] This is the approach suggested
in the dicta of Newbury J.A. in Bedwell v. McGill, 2008
BCCA 526, 86 B.C.L.R. (4th) 343 at paragraph 29. However, the authorities
direct that in determining whether to exercise discretion under s. 3(1), I may
take into account the fact that the defendants made a settlement offer. I will
therefore also address the settlement offer in the context of the s. 3(1)
consideration.

[24]        
In my view, Rule 9-1 is not engaged in the case at bar. Here, while
offers to settle were exchanged between the parties, the result was such that
each party did substantially better than what was offered by the other party. As
such, none of the possible cost consequences set out in rule 9-1(5) should be
applied, nor is the court required to consider the factors enumerated in rule
9-1(6).

[25]        
Mr. Justice Pearlman came to a similar conclusion in Erikson v.
Asmussen, 2009 BCSC 951, another case in which the amount of the damage
award, after the apportionment of liability between the plaintiff and
defendant, was more than what the defendant offered to settle for but less than
what the plaintiff offered. In the circumstances, Mr. Justice Pearlman held
that rule 37B (the predecessor to the current Rule 9-1) had no application and
that costs were therefore to be determined in accordance with section 3(1) of
the Negligence Act (at paras. 16 – 18).

[26]        
Counsel for Ms. Cornish submitted that it would be an error of principle
for the court not to consider the factors set out in Rule 9-1(6), specifically
the relevant financial circumstances of the parties, as referred to in Rule
9-1(6)(c). I disagree. For the reasons set out above, Rule 9-1 simply has no
application in this case and costs are to be determined in accordance with
section 3(1) of the Negligence Act and the various factors developed by
the courts thereunder. That said, notwithstanding that Rule 9-1 has no direct application,
the court may, as part of the section 3(1) analysis, consider the fact that
offers to settle were made (Wong-Lai at paragraph 22).

[27]        
Further, the list of factors identified by Madam Justice Gray in Moses
is not a closed list. Ultimately, the central issue for the court is whether it
would be unjust to apportion costs in accordance with section 3(1) (Moses (S.C.)
at paragraph 11). In my view, it is open to the court to consider any and all
factors that might inform the determination of what is just in the
circumstances.

Analysis

[28]        
While, as I have noted, the Moses factors are not the sole or
exclusive factors that the court may consider, they nonetheless provide a
useful framework for the analysis, and accordingly, I will consider them in
turn.

Seriousness of the Plaintiff’s Injuries

[29]        
In my original reasons, I made the following findings concerning Ms.
Cornish’s condition resulting from the accident:

[131]  The evidence of Ms. Cornish’s condition was largely
uncontradicted. I find that she suffers from a Major Depressive Disorder, as
found by Dr. Riley, as well as a Somatic Symptom Disorder which results in her
experiencing chronic pain. I also find that she experiences confusion and
memory loss which Dr. Riley notes is consistent with her depressive disorder.

[132]  I also find that Ms.
Cornish’s injuries have had a significant impact on her enjoyment of life. Her
own evidence, and that of her supporting witnesses, paints a compelling before
and after picture of a once vibrant woman who, as Ms. Fraser-Biscoe said, is
now a different person.

[30]        
The defendants concede that Ms. Cornish’s injuries were reasonably
serious, but say that they were not to the extent of other cases like Moses in
which the court departed from the section 3(1) apportionment rule.

[31]        
As set out above, I found that Ms. Cornish’s injuries have had a significant
impact on her enjoyment of life. This was reflected in the award of
non-pecuniary damages of $160,000, before apportionment. This factor favours
Ms. Cornish.

Difficulty in Proving Liability

[32]        
Ms. Cornish points to the observation in my original reasons, citing
Madam Justice Fleming in Lee, that the weight of authority in cases of
this type favoured a finding of 100% liability on Ms. Cornish as the through
driver. She submits as well that she was faced with the eye witness evidence of
Ms. Reimer that put Ms. Cornish entering the intersection on a stale
yellow light. Ms. Cornish submits that these factors made it a difficult
liability case from her perspective.

[33]        
The defendants submit that liability cases are always difficult,
particularly intersection collision cases, where the drivers will often provide
different and competing versions of events. They cite a number of cases in
which the “normal” apportionment rule was applied, notwithstanding difficult
liability issues (see for example Currie v. Taylor, 2013 BCSC 1071 at paragraph
31 aff’d 2014 BCCA 51 and Hurdle v. Lagore, 2015 BCSC 691 at paragraphs 14-15).

[34]        
In my view, there was nothing out of the ordinary in this case in terms
of the liability issue. Moreover, the fact that I found that both drivers breached
their statutory duties and that the actions of both caused or contributed to
the accident militates in favour of an apportionment of costs pursuant to
section 3(1).

Amounts Offered in Settlement Negotiations and Offers to Settle

[35]        
I will address Moses factors (c) and (i) together as both invite
the court to consider the offers to settle exchanged between the parties.

[36]        
Ms. Cornish cites the decision of Fan (Guardian ad litem of) v.
Chana, 2009 BCSC 1497 where Mr. Justice McEwan described the objective of
the offer to settle rule (referring to predecessor Rule 37B) in these terms at
paragraph 19:

The reintroduction of judicial
discretion in costs certainly serves the ends of justice. Costs should be a
penalty for unreasonable conduct in the litigation, not a penalty for failing
to guess the outcome.

[37]        
Ms. Cornish submits that the defendants acted unreasonably by not
reassessing their position and increasing their offer to settle of $55,000,
made May 7, 2012, based on evidence that came to light after that date and
before trial.

[38]        
The defendants submit that their offer amount was much closer in value
to what the plaintiff was ultimately awarded than the amounts proposed by Ms.
Cornish in her two offers to settle.

[39]        
It is apparent that both parties missed the mark significantly with
their respective offers to settle. Put another way, were this an assessment of
the Rule 9-1(6) factors, the offers to settle of both parties were not ones
that ought reasonably to have been accepted within the meaning of Rule
9-1(6)(a).

[40]        
For this reason, the existence of the settlement offers would be a
neutral factor but for one additional consideration. I cannot leave the
discussion of the offers to settle without addressing the “explanation”
provided by counsel for Ms. Cornish in support of replacing the first offer to
settle in the amount of $800,000, with an offer of $1,010,000, specifically the
statements reproduced at paragraph 13 above.

[41]        
Offers to settle are an important component of pre-trial settlement
negotiations and, as the court has said repeatedly, are intended to encourage
the parties to act reasonably and to carefully assess the strengths and
weaknesses of their own case as well as those of the opposing party. As part of
the process, it is acceptable, and indeed often helpful, for counsel to provide
an explanation of the considerations that led to a particular offer.

[42]        
It is also appropriate for counsel to take a firm stance in
negotiations, either in conjunction with or apart from an offer to settle. This
may include making it clear that if successful, execution will be pursued to
the extent permitted by law.

[43]        
However, in this case, the statements made by counsel go far beyond firm
negotiation and amount to a threat to, in effect, hunt down Mr. Khunkhun and
strip him of any possible funds or assets. In my view, the statements made by
counsel for Ms. Cornish are both unnecessary and inappropriate.

[44]        
Moreover, they run counter to the very objective of the offer to settle
Rule which again is to encourage parties to be reasonable in the hopes of
avoiding an expensive trial. Here, the unrealistic magnitude of Ms. Cornish’s
offer to settle combined with the ill-advised statements made by counsel had
the opposite effect and drove this matter to trial.

[45]        
In the circumstances, these considerations weigh against departing from
Rule 3(1) and reapportioning costs in Ms. Cornish’s favour.

Whether the Plaintiff was Forced to go to Trial to Obtain Recovery

[46]        
In Gowler v. Ngo, 2011 BCSC 1428, Madam Justice Gray noted that
the plaintiff in that case was not required to go to trial to obtain any recovery
because the defendant there had made an offer to settle. However, the offer was
for less than what the plaintiff recovered at trial (at para. 20).

[47]        
A similar situation exists here, however the amount of the plaintiff’s
offers to settle must also be considered. While Ms. Cornish did recover more
than what was offered by the defendants, it was substantially less than what
she was prepared to settle for.

[48]        
It is apparent from the significant difference between the competing
offers to settle that the parties had very divergent views on the likely
quantum of Ms. Cornish’s damages. As noted, liability was also very much
in issue. As implicitly recognized by Mr. Justice McEwan in Fan, in
cases in which the parties hold such different views of the case, it may be
that a judicial determination is necessary. As he said, at paragraph 19,
“[t]his should be a valid option for those who seek it, not a form of deemed
unreasonableness”.

[49]        
This factor does not favour departing from Rule 3(1).

The Cost of Getting to Trial and the Length and Complexity of the Trial

[50]        
I prefer to deal with these factors (Moses factors (e) and (f))
together as, obviously, the length and complexity of the trial impact directly
on the cost.

[51]        
On the question of cost, as noted by Ms. Cornish, many of the cases
which address this issue focus on the amount of the disbursements incurred to
gauge the expense of the trial. She submits however, that this is a somewhat
artificial exercise in that the court is rarely if ever provided with evidence
as to what the “normal” or “average” cost of a trial might be. Ms. Cornish
submits that a more principled approach would be to consider the cost of the
trial in light of the particular circumstances of the parties.

[52]        
Ms. Cornish submits further that when approached in this manner, her
disbursements, which total $18,060.49 in taxable disbursements and a further $3,891.79
that are not claimable, are significant when compared to her personal financial
circumstances.

[53]        
Ms. Cornish also submits that the length and complexity of the trial
support a higher cost award in her favour. As a particular complicating factor,
she points to the fact that late in the trial, the defendants advised that they
would not be calling their psychiatrist, Dr. Riley, as a witness. This led to
Ms. Cornish’s counsel applying to serve Dr. Riley’s report out of time as a
plaintiff’s report and then calling Dr. Riley as a witness in Ms. Cornish’s
case.

[54]        
The defendants take the more conventional position and submit that there
is no evidence to establish that the costs of the trial are out of the ordinary.
They cite Sartori v. Gates, 2011 BCSC 419 where Mr. Justice R.D. Wilson
held that in the absence of such evidence, the cost of getting to trial was not
a factor favouring a departure from Rule 3(1) (at paragraph 95).

[55]        
Similarly, they cite cases of longer duration with more complicating
factors in which the courts nonetheless declined to depart from the normal rule
governing the apportionment of costs (Gowler at paragraph 22 and Rimmer
v. Township of Langley, 2007 BCSC 340).

[56]        
I accept that it is open to the court to consider the plaintiff’s
particular financial circumstances when looking at the cost of getting to trial.
However, in this case, Ms. Cornish’s disbursements of approximately
$22,000 are not excessive even when considered in light of her financial
circumstances. This was not a case in which the plaintiff relied on extensive
expert evidence to prove her case. In fact, at paragraph 110 of my original
reasons, I noted that the medical evidence was somewhat thin for a case of this
nature.

[57]        
Similarly, the trial was neither particularly long nor overly complex. Much
of the trial was taken up with lay witnesses, called by Ms. Cornish, testifying
to her condition before and after the accident.

[58]        
These factors do not support departing from section 3(1).

Relationship of the Plaintiff’s Costs after Apportionment to her Costs in
Obtaining the Result and to the Judgment Amount

[59]        
Again, I find it useful to consider these two factors (Moses factors
(g) and (k)) together.

[60]        
As noted, Ms. Cornish has presented a draft Bill of Costs totalling
$60,845.30. If costs are apportioned under section 3(1) of the Negligence
Act, Ms. Cornish will recover 50% of this amount, or $30,422.65. This of
course assumes that her costs are assessed as presented.

[61]        
Counsel for Ms. Cornish has produced his account to Ms. Cornish which
totals $69,892.34 in costs and disbursements. With apportionment of the costs,
Ms. Cornish would recover approximately 44% of that amount which, in my
view, does not bear an unreasonable relationship to her costs of obtaining the
result.

[62]        
In terms of the relationship of Ms. Cornish’s costs to the judgment
amount, the figures in this case are not dissimilar to those in Kimber v.
Wong, 2014 BCSC 2446 where Mr. Justice Pearlman held that costs of $33,000,
after an equal apportionment of liability, when measured against the damages
recovered of $184,500, would not defeat the success achieved. The same can be
said in this case where 50% of Ms. Cornish’s costs, as presented, is less than
20% of the judgment amount.

[63]        
These facts do not support departing from section 3(1).

Positions Taken at Trial and the Ultimate Result

[64]        
It is also useful to consider these factors (Moses factors (h)
and (j)) together.

[65]        
At trial, each party submitted that the other should be found 100%
liable for the accident. Success on that point was clearly divided as each was
found 50% responsible.

[66]        
In terms of quantum, the parties’ positions at trial are set out in
paragraphs 14 and 15 above. Ultimately, the damages awarded fell squarely
within the range submitted by the defendants and well below the range proposed
by Ms. Cornish. As noted in paragraph 14, the largest components of Ms.
Cornish’s claim were the claims for lost income and for the cost of future care.
However, the evidence presented fell far short of establishing those claims in
the amounts advanced by Ms.  Cornish.

[67]        
These factors do not support a departure from section 3(1).

Conclusion

[68]        
Taking account of all relevant circumstances, I find that it would not
be unjust in this case to apply the normal costs rule as set out in section
3(1) of the Negligence Act. Indeed, as held by Mr. Justice Scarth in Rimmer
at paragraph 27, “[a]pplying the general rule set out in s. 3 of the Negligence
Act would be commensurate with the result achieved by the plaintiff at the
trial”.

[69]        
Ms. Cornish is therefore entitled to recover 50% of her taxable costs
and disbursements.

[70]        
The defendants are entitled to their costs of this application.

“Skolrood
J.”