2008 BCSC 1372 Bailey v. Jang

Before: The Honourable Mr. Justice Hinkson

Reasons for Judgment

Counsel for the Plaintiff	Brian R. Brooke
Counsel for the Defendants	Sandra Katalinic Eric Lundberg
	Written Submissions

[1] The trial of this matter was heard by me, sitting with a jury, from Tuesday September 2, 2008 until Tuesday September 9, 2008. Both liability and the extent and consequences of the plaintiff’s injuries were in issue. The plaintiff advanced a claim in excess of $1 million.

[2] On Tuesday, September 9, 2008, the jury dismissed the plaintiff’s claim on liability, and as a result of the instructions that they had been given, made no findings with respect to the plaintiff’s injuries or the results of those injuries. Judgment was then entered in accordance with the jury’s verdict.

ISSUE

[3] The issue to be determined is the appropriate order as to costs of the proceedings.

BACKGROUND

[4] The plaintiff was injured in a motor vehicle accident during the morning rush hour on November 10, 2004. At that time she was driving alone in her vehicle, southbound on Mountain Highway, in North Vancouver, B.C. in a lane designated for use at that time by buses and bicycles only.

[5] At the same time, the defendant Priscilla C. Jang was driving a vehicle owned by the defendant Hoi Y. Jang, heading northbound on Mountain Highway and attempting to turn left across the plaintiff’s path. The two vehicles collided, and the plaintiff and Priscilla C. Jang both suffered injuries. Ms. Jang was given a ticket by the attending RCMP officers for failing to yield the right of way to the plaintiff. Ms. Jang did not dispute the allegation of failing to yield the right of way, and paid the requisite fine.

[6] On August 11, 2008, counsel for the defendants wrote to the plaintiff’s counsel offering to pay the plaintiff the sum of $35,000 “after taking into account Part 7 benefits paid or payable, pursuant to section 25 of the Insurance (Motor Vehicle) Act, R.S.B.C. 1996, c. 231, and any advances paid” up to the date of the letter. The letter also offered costs to the plaintiff at Scale B, up to August 11, 2008, with the defendants to be paid their costs at Scale B thereafter.

[7] The offer further stated, among other things, that the defendants “reserve the right to bring [it] to the attention of the court for consideration in relation to costs after the court has rendered judgment on all other issues in the proceeding.”

[8] The defendants seek an order that the plaintiff pay their costs and disbursements up to and including August 11, 2008, and double costs thereafter.

RULE 57(9)

[9] Rule 57(9) provides in part that: “costs of and incidental to a proceeding shall follow the event unless the court otherwise orders.”

RULE 37B

[10] Rule 37B came into force on July 1, 2008. It specifically states that it applies to offers to settle made both before and after July 1, 2008 where no order as to costs has been made. It is a return to a reliance on judicial discretion with respect to costs, as opposed to the strict code contained in its predecessors Rules 37 and 37A.

[11] Rule 37B provides that where an offer to settle has been delivered:

(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 both of the following:

(a) deprive a party, in whole or in part, of costs to which the party would otherwise be entitled in respect of the steps taken in the proceeding after the date of delivery of the offer to settle;

(b) award double costs of all or some of the steps taken in the proceeding after the date of delivery of the offer to settle.

(6) In making an order under subrule (5), the court may consider the following:

(a) whether the offer to settle was one that ought reasonably to have been accepted, either on the date that the offer to settle was delivered or on any later date;

(b) the relationship between the terms of settlement offered and the final judgment of the court;

(d) any other factor the court considers appropriate.

THE POSITION OF THE PARTIES

[12] The defendants argue that in the light of the jury’s verdict, their offer was one that ought reasonably to have been accepted prior to the commencement of trial. They say that their complete success at trial should result in an award of costs up to the date of their offer to settle, and double costs thereafter.

[13] The defendants also argue that the court should award double costs where an offer to settle for an amount greater than that recovered by a plaintiff is made, unless there is a sufficient basis for the court to exercise its discretion in a manner contrary to the outcome prescribed in Rule 37B(5).

[14] The plaintiff argues that I should exercise my discretion and not burden her with a punitive costs order that would further damage her ability to support herself, and pay her existing debts. She says that, given the circumstances that led to the collision between her vehicle and the vehicle driven by Ms. Jang, it was not reasonable for the plaintiff to accept the defendants’ offer.

ANALYSIS

[15] In Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201, 122 D.L.R. (4th) 330 (C.A.) [Skidmore], a five member panel of the British Columbia Court of Appeal considered whether a self-represented litigant should be deprived of his or her costs pursuant to the earlier decision in Kendall v. Hunt (No. 2) (1979), 16 B.C.L.R. 295 (sub nom. Kendall et al. v. Hunt et al.), 106 D.L.R. (3d) 277 (C.A.). In deciding the issue, Cumming J.A. for a unanimous court observed at para. 28 that:

… the view that costs are awarded solely to indemnify the successful litigant for legal fees and disbursements incurred is now outdated. A review of R. 37, which deals with offers to settle, reveals that in certain circumstances a party may be entitled to costs, or double costs, or to no costs at all. One of the purposes of the costs provisions in R. 37 is to encourage conduct that reduces the duration and expense of litigation, and to discourage conduct that has the opposite effect. Thus, although it is true that costs are awarded to indemnify the successful litigant for legal fees and disbursements incurred, it is also true that costs are awarded to encourage or to deter certain types of conduct.

[16] Cumming J.A. thus concluded at para. 51 that “changes to the Rules of Court and decisions considering the awarding of costs indicate that costs serve functions other than indemnification.”

[17] In Mackenzie v. Brooks et al, 1999 BCCA 623 (sub nom. Mackenzie v. Brooks et al) 130 B.C.A.C. 95 at p. 21, the British Columbia Court of Appeal described the predecessor rules to Rule 37B as designed to encourage settlement by, among other things, “penalizing the party who declines to accept” an offer to settle.

[18] While Rule 37B has brought about the reversion from a strict code to a reliance on judicial discretion with respect to costs, the use of costs to encourage or to deter certain types of conduct remains, albeit based upon the factors set out in subrule 37B(6).

[19] I do not, however, accept the defendants’ submission that the discretion must only be exercised in not awarding double costs in a case where the defendants’ offer exceeds the plaintiff’s recovery at trial, unless the case affords a sufficient basis for the court to exercise its discretion in a manner contrary to the outcome prescribed in Rule 37B(5). Such an interpretation would fetter what is clearly intended to be an unfettered discretion.

a) Ought the Defendants’ Offer to Have Been Accepted?

[20] In her submissions, the plaintiff referred to the position that she said was taken by an unnamed ICBC adjuster respecting the responsibility for the collision. That view was apparently a preliminary one, the basis for which is unexplained; it was not before the jury in this case, and, in any event, the conclusion would certainly not be binding on the jury or the court.

[21] The plaintiff also referred in her submissions to the fact that she had offered to settle her claim for $160,000 plus her costs, a sum considerably less than her counsel sought from the jury.

[22] Based upon her offer compared to the position taken by her counsel at trial, the plaintiff was clearly prepared to take a considerable gamble to achieve a significant award. While it was open to the jury to make a sizeable award, in the event there was a finding of liability against the defendants, the discount the plaintiff was prepared to accept in order to settle the claim does not support the conclusion that she had confidence in the likelihood of securing a sizeable award at trial. That, in my view, is one of the factors against which the reasonableness of her refusal to accept the defendants’ offer to settle must be assessed.

[23] As I have said above, it was clearly open to the jury to dismiss the plaintiff’s claim by finding no liability against the defendants, but equally open to them to find some or even complete liability against the defendants.

[24] While the defendants argued that the jury’s verdict proves that the plaintiff ought to have accepted their offer to settle, I do not read Rule 37B as inviting that sort of hindsight analysis. Under Rule 37, an offer to settle was revoked once trial began. Although Rule 37B contains no such provision, the defendants in this case stated in their offer that it was open for acceptance “at any time before 4:00 pm, Pacific Time, or the last business day prior to the commencement of the first day of trial”. In my view, the reasonableness of the plaintiff’s decision not to accept the defendants’ offer to settle must be assessed, under that offer, only prior to the last date that the offer could be accepted, and in any case, under Rule 37B, prior to the delivery of the jury’s verdict, but not thereafter.

[25] Weighing these factors, I am unable to say that it was unreasonable for the plaintiff to have rejected the defendants’ offer to settle.

b) Relationship between the Offer and the Final Judgment

[26] Implicit in the defendants’ position on costs is the argument that the complete dismissal of the plaintiff’s claim obviates a consideration of subrule 37B(6)(b). I do not accept that that is an appropriate reading of that subrule.

[27] With respect to this subrule, the plaintiff argues that the jury’s verdict was not one that ought to have been “seriously contemplated” by the plaintiff. The difficulty with this position is that counsel for the plaintiff took no objection to the charge, which instructed the jury that it was open to them to dismiss the plaintiff’s claim if they were not satisfied that the plaintiff had established liability on the part of the defendant Priscilla C. Jang. The jury’s verdict could not in these circumstances be said to be perverse, as counsel for the plaintiff argued before judgment was entered.

[28] I do not accept the plaintiff’s submission that the jury’s verdict is difficult to accept on the evidence before it.

c) Relative Financial Circumstances of the Parties

[29] The plaintiff asserts by affidavit that her annual income is between $33,000 and $34,000 per year, and that her share of the expenses in the apartment she shares with a friend together with her own monthly expenses amount to approximately $2000 per month.

[30] The plaintiff lists a debt to her lawyers of some $29,000 as well as other debts of a further $35,000, and swears that “If I am obliged to pay ICBC’s defence costs for this trial, I will be unable to meet my ongoing expenses and debts.” I have no evidence of the extent to which the plaintiff could arrange financing to address her position, but I do not accept that her present debts or even greater financial obligations could not be accommodated by financing. While the defendants argue that the plaintiff’s obligations to her counsel are a result of her refusal to accept their offer to settle, I do not see that the cause of the plaintiff’s debts is a relevant consideration. The fact is that she is indebted to her counsel.

[31] There are, however, two difficulties with the plaintiff’s position on this factor. First, she argues that her financial circumstances are difficult. This alone is insufficient to meet Rule 37B(6)(c).

[32] Second, she places her financial position against that of ICBC, as opposed to that of the defendants.

[33] While I accept that it is likely that most drivers in British Columbia are insured by ICBC, the wording of subrule 37B does not invite consideration of a defendant’s insurance coverage. There may be good policy reasons for this. Insurance coverage limits with ICBC are not universal, and will vary from insured to insured. Certain activities may result in a breach of an individual’s insurance coverage, or the defence of an action under a reservation of rights by ICBC. A plaintiff will not and likely should not be privy to such matters of insurance coverage between a defendant and ICBC.

[34] The contest in this case was between the plaintiff and the defendants, and the insurance benefits available to the defendants do not, in my view, fall within the rubric of their financial circumstances, any more than any collateral benefit entitlement that a plaintiff may have would affect that person’s financial circumstances for the purpose of determining their loss.

[35] There is no evidence before me as to the defendants’ financial circumstances. What little I do know of the circumstances of the defendant Pricilla C. Jang is that, at the time of the accident, she was driving her mother’s motor vehicle, and that she was employed as a parts delivery person for a motor vehicle dealership. That does not suggest to me that her financial circumstances are appreciably different from those of the plaintiff.

d) Other Factors

[36] No submissions were made by the plaintiff suggesting that there are other factors in this case that should influence the appropriate cost option to be employed in this case.

DISPOSITION

[37] While I am not prepared to find that the plaintiff’s failure to accept the defendants’ offer to settle was unreasonable, I am equally unprepared to accept that the jury’s verdict was unreasonable. I am also unprepared to conclude that there is any significant disparity in the financial circumstances of the parties so as to invoke subrule 37B(6)(c).

[38] What then, of the function of the Rules to encourage or to deter the types of conduct referred to by Cumming J.A. in Skidmore? As mentioned above, the plaintiff was prepared to take a considerable gamble to achieve a significant award. Had she succeeded, she doubtless would have sought an order for double costs against the defendants following her offer to settle.

[39] I conclude that the refusal of an award of double costs from August 11, 2008 would completely ignore the important deterrent function of the Rules. The factors set out in subrule 37B(6) do not, in this case, persuade me that such a result would be appropriate. I find that the defendants are entitled to an award of double costs beginning a reasonable period of time after which the plaintiff could consider their offer. That period I find commenced on August 18, 2008, seven days after the defendants’ offer to settle.

[40] The defendants are entitled to recover their taxable costs and disbursements of this action from its commencement until August 18, 2008 pursuant to Rule 57(9). Those costs will be taxed at Scale B.

[41] The defendants are entitled to double costs commencing August 18, 2008 and to their disbursements as incurred after August 18, 2008. The disbursements will be allowed only in the amount incurred, and not at a double rate.

“Hinkson J.”

Citation:	*Bailey v. Jang,*
	2008 BCSC 1372