IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Owen v. Folster, |
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2019 BCSC 407 |
Date: 20190321
Docket: M65486
Registry: Nanaimo
Between:
Darrell Owen
Plaintiff
And:
Ginny Folster
Defendant
Before: The Honourable Madam Justice Watchuk
Reasons for Judgment on Costs
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Counsel for the Plaintiff: |
D.R. Brooks D.M. Kozlick |
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Counsel for the Defendant: |
R.K. Hornquist B.T. Durvin |
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Written Submissions: |
November 13, 2018 November 26, 2018 November 30, 2018 |
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Place and Date of Judgment: |
Vancouver, B.C. March 21, 2019 |
[1] Following a ten-day trial in which both liability and quantum were in issue, the award of damages to the plaintiff totalled $1,209,845.59. The Reasons are indexed at 2018 BCSC 143. On March 3, 2017, some ten days before the commencement of trial, the plaintiff made a formal offer to settle his claim for $1,200,000 (the “FOTS”). In thorough written submissions, the parties now seek a determination of costs.
[2] The plaintiff seeks double costs for steps taken after the delivery of the FOTS. The plaintiff also seeks costs of this application.
[3] The defendant opposes the order for double costs, but agrees that, as the plaintiff has been “substantially successful” as noted in the final paragraph of the reasons, costs should be awarded to the plaintiff on Scale B. The defendant seeks costs of this application in the event the court rejects the plaintiff’s application for double costs.
[4] Rule 9-1 of the Supreme Court Civil Rules, B.C. Reg. 168/2009 deals with offers to settle. It is no longer the case that a party will automatically receive double costs if the dollar value of a judgment exceeds that which the party offered. Rule 9-1 gives the court broad discretion to determine whether cost consequences ought to flow in cases where an offer to settle has been made. The relevant subrules are:
Offer may be considered in relation to costs
(4) The court may consider an offer to settle when exercising the court's discretion in relation to costs.
Cost options
(5) In a proceeding in which an offer to settle has been made, the court may do one or more of the following:
(a) deprive a party 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.
Considerations of court
(6) In making an order under subrule (5), the court may consider the following:
(a) whether the offer to settle was one that ought reasonably to have been accepted, either on the date that the offer to settle was delivered or 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.
[5] Much has been written about the application of Rule 9-1. In C.P. v. RBC Royal Life Insurance, 2015 BCCA 30 at paras. 94-95, leave to appeal denied [2015] S.C.C.A. No. 136, the Court of Appeal summarized the guiding principles of the offer to settle rule:
[94] The underlying purpose of the offer to settle rule was set out in [Hartshorne v. Hartshorne, 2011 BCCA 29]:
[25] An award of double costs is a punitive measure against a litigant for that party’s failure, in all of the circumstances, to have accepted an offer to settle that should have been accepted. Litigants are to be reminded that costs rules are in place “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” (A.E. v. D.W.J., 2009 BCSC 505, 91 B.C.L.R. (4th) 372 at para. 61, citing MacKenzie v. Brooks, 1999 BCCA 623, Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 (C.A.), Radke v. Parry, 2008 BCSC 1397). In this regard, Mr. Justice Frankel’s comments in Giles, are apposite:
[74] The purposes for which costs rules exist must be kept in mind in determining whether appellate intervention is warranted. In addition to indemnifying a successful litigant, those purposes have been described as follows by this Court:
“[D]eterring frivolous actions or defences”: Houweling Nurseries Ltd. v. Fisons Western Corp. (1988), 37 B.C.L.R. (2d) 2 at 25 (C.A.), leave ref’d, [1988] 1 S.C.R. ix;
“[T]o encourage conduct that reduces the duration and expense of litigation and to discourage conduct that has the opposite effect”: Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 at para. 28 (C.A.);
“[E]ncouraging litigants to settle whenever possible, thus freeing up judicial resources for other cases: Bedwell v. McGill, 2008 BCCA 526, 86 B.C.L.R. (4th) 343 at para. 33;
“[T]o have a winnowing function in the litigation process” by “requir[ing] litigants to make a careful assessment of the strength or lack thereof of their cases at the commencement and throughout the course of the litigation”, and by “discourag[ing] the continuance of doubtful cases or defences”: Catalyst Paper Corporation v. Companhia de Navegação Norsul, 2009 BCCA 16, 88 B.C.L.R. (4th) 17 at para. 16.
[95] A plaintiff who rejects a reasonable offer to settle should usually face some sanction in costs. To do otherwise would undermine the importance of certainty and consequences in applying the Rule: Wafler v. Trinh, 2014 BCCA 95 at para. 81. The importance of those principles was emphasized by this Court in A.E. Appeal at para. 41:
[41] This conclusion is consistent with the importance the Legislature has placed on the role of settlement offers in encouraging the determination of disputes in a cost-efficient and expeditious manner. It has placed a premium on certainty of result as a key factor which parties consider in determining whether to make or accept an offer to settle. If the parties know in advance the consequences of their decision to make or accept an offer, whether by way of reward or punishment, they are in a better position to make a reasoned decision. If they think they may be excused from the otherwise punitive effect of a costs rule in relation to an offer to settle, they will be more inclined to take their chances in refusing to accept an offer. If they know they will have to live with the consequences set forth in the Rule, they are more likely to avoid the risk.
[6] When making an order under Rule 9-1(5), the court may consider the factors set out in Rule 9-1(6). I will consider those factors in turn.
[7] The principles guiding this factor were recently restated by the Court of Appeal in Cottrill v. Utopia Day Spas and Salons Ltd., 2019 BCCA 26 at paras. 29-30:
[29] Whether an offer to settle is one that ought reasonably to have been accepted is assessed not by reference to the award that was ultimately made, but under the circumstances existing when an offer was open for acceptance. In Hartshorne v. Hartshorne, 2011 BCCA 29 at para. 27, this Court explained:
[27] The first factor - whether the offer to settle was one that ought reasonably to have been accepted - is not determined by reference to the award that was ultimately made. Rather, in considering that factor, the court must determine whether, at the time that the offer was open for acceptance, it would have been reasonable for it to have been accepted: Bailey v. Jang, 2008 BCSC 1372, 90 B.C.L.R. (4th) 125 at para. 24; A.E. v. D.W.J. at para. 55. As was said in A.E. v. D.W.J., “The reasonableness of the plaintiff’s decision not to accept the offer to settle must be assessed without reference to the court’s decision” (para. 55). Instead, the reasonableness is to be assessed by considering such factors 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. We do not intend this to be a comprehensive list, nor do we suggest that each of these factors will necessarily be relevant in a given case.
[30] As recently noted by Justice Gomery in Kobetitch v. Belski, 2018 BCSC 2247 at paras. 24–25, the wording of the subrule is important. The issue is not whether the offer was reasonable but whether it was unreasonable to refuse it. He explained the distinction as follows:
[24] In my opinion, the wording of the subrule stating this consideration is important. The consideration is not whether it would have been reasonable for the plaintiff to have accepted the offer. It is whether the plaintiff ought reasonably to have accepted the offer. The difference is this. An offer might be such that a reasonable plaintiff could choose to accept it or not. One might term it “a reasonable offer”. On the other hand, to say that an offer ought reasonably to have been accepted is to say that a reasonable person should have accepted it. It was unreasonable to refuse it.
[25] According to the distinction I am drawing, having regard to the wording of the subrule, the consideration is not whether the offer was a reasonable offer. It is whether it was unreasonable for the plaintiff to refuse it.
[Emphasis in original.]
[31] We agree with that analysis. It is also important to point out that the fact that it may be reasonable for a party to refuse an offer does not necessarily immunize that party from the consequences of a reasonable offer to settle: Wafler v. Trinh, 2014 BCCA 95 at paras. 79–82. For example, in the oft cited cases of Bailey v. Jang, 2008 BCSC 1372, and A.E. v. D.W.J, 2009 BCSC 505, referenced in the above quotation from Hartshorne, the plaintiffs were sanctioned in costs notwithstanding that the trial judges in each case found that it was not unreasonable for them to reject the offer to settle.
[8] In this case the plaintiff’s offer to settle accurately forecast the outcome of the trial. It may have been reasonable for the defendant to have accepted the offer. However, that is not the test. As noted by Gomery J. in Kobetitch, in the passage specifically approved by the Court of Appeal in Cottrill, the question is not whether it would have been reasonable for the defendant to have accepted the offer, but rather whether the defendant ought reasonably to have accepted the offer.
[9] The defendant submits that she was acting reasonably when she declined to accept the FOTS. The primary issue raised is the determination of liability which was highly contentious. Based on the circumstances of this case as known to the defendant at the time the offer was made, she says it was reasonable for the defendant to deny liability for this accident based on her recollection and understanding of the circumstances of the accident. She says the offer to settle failed to take into account the risks to the plaintiff that his claim may be dismissed.
[10] In response the plaintiff says the offer was within the range of reasonable outcomes and ought to have been accepted. He submits that by the time the plaintiff’s FOTS was presented, the defendant ought to have known that her position on the liability issue was unrealistic and unlikely to succeed.
[11] This case involved a cyclist, the plaintiff, who was injured when he fell at an intersection at which the defendant driver was at a stop sign; there was no impact between the cyclist and the vehicle. The issue regarding liability was whether the defendant caused the plaintiff’s fall by failing to yield at the stop sign at the intersection. In paras. 104-128 of the Liability section of the Reasons I discussed “Credibility and Findings of Fact” and the testimony and statements made by the plaintiff and the defendant. The conclusion was that the defendant’s failure to yield at the stop sign caused the accident.
[12] With respect, the plaintiff’s submission fails to fully recognize the real risks he faced at trial, particularly with the credibility findings necessary to resolve liability. In advance of the trial the resolution of the liability issue was far from certain. While the offer may have accurately forecast the quantum award, it did not take into account the possibility that the claim may be dismissed. It did not offer a genuine compromise or an incentive to settle. Given the amounts sought in the litigation, the defendant did not act unreasonably by proceeding to trial. I find that the offer was not one that the defendant ought reasonably to have accepted.
[13] This factor is the mirror image of the first factor. It provides the court with an objective measurement of the reasonableness of the offer that has been made and the decision to reject it. In this case, the offer was somewhat less than the award at trial. An offer such as this that correctly forecasts the outcome of the trial is objectively reasonable.
[14] This factor allows the court to consider the relevant financial circumstances of the parties. The plaintiff is of modest financial means and no longer competitively employable due to the injuries he sustained in the accident. The defence, on the other hand, has been conducted by ICBC, which has vastly greater financial resources. However, there is no evidence that ICBC used its financial strength in an untoward manner. In such circumstances the parties' financial discrepancy is not relevant to the proper cost award: C.P. at paras. 100-102.
[15] The court is also entitled to consider any other relevant factor. In this case, the relevant additional factor involves the fact discussed above that liability was seriously contested. If quantum had been the only issue at trial, the offer may well have been one that should have been accepted.
[16] Although one of the factors listed in subrule 9-1(6) (the amount of the offer relative to the result achieved at trial) favours an award of double costs, the other factors do not. I find that an award of double costs would not be appropriate in this case.
[17] The application for double costs is refused. The plaintiff is awarded costs of the action at Scale B. The defendant is entitled to the costs of this application.
“The Honourable Madam Justice Watchuk”