BC Court of Appeal Upholds Costs Awards To Plaintiff To Avoid “Pyrrhic Victory”

In 2017 the BC Supreme Court awarded a litigant injured in a vehicle collision costs despite receiving a jury verdict far less than a pre-trial settlement offer from ICBC.  The court concluded that if the Plaintiff was stripped of costs and ordered to pay ICBC’s costs the result would result in pyrrhic victory inconsistent with the result the jury was looking to achieve.

ICBC appealed arguing they should have been awarded costs.  In reasons released today (Bains v. Antle) the BC Court of Appeal dismissed the appeal and found the trial judge properly exercised their discretion in this case.  The Court provided the following reasons:

[32]         Trial judges have broad discretion in making costs awards under Rule 9-1, including the discretion to award costs as if the offer had not been made: Rule 9‑1(5)(c); Tisalona v. Easton, 2017 BCCA 272 at para. 94. As Justice Hunter explained in Tisalona, the evolution of the rule reflects the challenge of reconciling the expectation of a costs penalty in defined circumstances with the desirability of preserving judicial discretion to achieve justice for the parties before the court. Prior to enactment of the rule in its current form, the Rules provided for entitlement to costs based on the date a formal offer to settle was delivered. However, in 2008 the predecessor to Rule 9-1 was enacted to provide for the exercise of a broad judicial discretion and thus “to ameliorate the effects of the rigid application of [the rule providing for entitlement] adopted by this court in its earlier decisions”: Roach v. Dutra, 2010 BCCA 264 at paras. 50, 52.

[33]         While the judicial discretion provided by Rule 9-1 is broad, it must, of course, be exercised judicially and in a principled manner: Giles v. Westminster Savings and Credit Union, 2010 BCCA 282 at paras. 73, 88. In assessing the costs options under Rule 9-1(5), the court may consider the factors in Rule 9-1(6), although these factors are not mandatory: Giles at para. 88.

[34]         As the judge recognised, the court must consider the first factor under Rule 9-1(6)(a) without the benefit of hindsight. In other words, only the circumstances in existence at the time of the offer are relevant, not the award made at trial: Cottrill v. Utopia Day Spas and Salons Ltd., 2019 BCCA 26; Bailey v. Jang, 2008 BCSC 1372 at para. 24. The question is not whether the offer itself was reasonable, but whether it was unreasonable to refuse it: Cottrill at para. 30. In answering this question, the court may consider the recipient’s subjective reasons for rejecting the offer, but must also decide whether those reasons are objectively reasonable: C.P. v. RBC Life Insurance Co., 2015 BCCA 30 at para. 97.

[35]         In Hartshorne v. Hartshorne, 2011 BCCA 29 at para. 27, this Court set out several factors that may be considered in assessing the reasonableness of refusing an offer. They include: the timing of the offer; whether it had some relationship to the claim; whether it could easily be evaluated; and whether some rationale for it was provided.

[36]         The relationship of the offer to the claim is relevant because it speaks to whether a plaintiff should be penalized for proceeding to trial in hopes of achieving more than what was offered. It is not unreasonable for a plaintiff to refuse an offer that is a fraction of the amount sought, provided the plaintiff had reasonable confidence in her claim: Cottrill at para. 32; see also Tisalona at para. 102; Wafler v. Trinh, 2014 BCCA 95 at paras. 53, 64–65. In several decisions below, the court has considered this relationship to be important where there was objective evidence supporting a plaintiff’s claim for loss of earning capacity although the claim was ultimately rejected at trial. For example, in Payne v. Lore, 2010 BCSC 1313, Justice Wedge found that, had the plaintiff’s claim for future income loss been successful, the defendants’ offer would have fallen well short of the award at trial and, therefore, it was not unreasonable for the plaintiff to refuse the offer: at paras. 28–29. In Parker v. Martin, 2017 BCSC 1161, Justice Ball noted that by the time the offer in question was received, the plaintiff had retained expert medical witnesses whose opinions supported his belief that there was a “real and substantial possibility of future income loss”: at para. 26.

[37]         A further relevant consideration under Rule 9-1(6)(a) may be whether the plaintiff knew her claim was largely dependent on the court’s assessment of her credibility: Wafler at para. 73; Gehlen v. Rana, 2011 BCCA 219 at paras. 50–51. This is because there is more risk in proceeding to trial where a claim lacks objective evidence and, therefore, refusal of a reasonable offer may be unreasonable.

[38]         In my view, the judge was in the best position to assess the reasonableness of Ms. Bains’ rejection of the appellants’ offer. She sat through the 10-day trial and had the benefit of a deep appreciation of the evidence available to Ms. Bains at the time her decision was made.

[39]         Contrary to the appellants’ submission, the judge did not treat Ms. Bains’ subjective assessment of her case as determinative of whether she ought reasonably to have accepted the offer. It is apparent from her reasons that she considered Ms. Bains’ claims for loss of earning capacity and cost of future care to have objective support in the evidence, including that of the appellants’ own experts. As the appellants point out, their offer did not include the claims for loss of earning capacity. In my view, it was open to the judge in the circumstances to find it was not unreasonable for Ms. Bains to reject an offer that, while genuine, left out potentially significant claims.

[40]         I also see no error in the judge’s conclusion that there was no obvious reason for the jury to negatively assess Ms. Bains’ credibility. The medical evidence included both subjective and objective findings of injury by three doctors and, as the judge noted, there was nothing to suggest that Ms. Bains misled any of the experts. Nor was the judge obliged to find that Ms. Bains lacked confidence in the strength of her case or failed to assess it rationally based on her tactical assertion in the course of negotiations, as the appellants’ submission seems to imply. The judge reached the opposite conclusion on these matters, as she was entitled to do based on the evidence.

[41]         I would not accede to the appellants’ arguments on this aspect of the appeal.

[42]         The second enumerated factor for consideration in Rule 9-1(6) concerns the reasonableness of the offer itself, assessed against the objective measurement of the trial award: C.P. at para. 99. This Court has held that “a plaintiff who rejects a reasonable offer to settle should usually face some sanction in costs, even in circumstances in which it cannot be said that the plaintiff should have accepted the offer”: Wafler at para. 81. However, it is open to the trial judge to determine how much weight, if any, to place on this factor: British Columbia v. Salt Spring Ventures Incorporated, 2015 BCCA 343 at para. 20; Wafler at para. 82; and Smagh at para. 13. As I have noted, none of the factors in Rule 9-1(6) are mandatory: Giles at para. 88.

[43]         I see no error in the judge’s assessment of the second factor. She recognized that the significant discrepancy between the appellants’ offer and the award at trial favoured awarding the appellants their costs following the date of the offer. However, she was mindful that this factor is not determinative. In my view, her consideration of the mode of trial did not compromise her appreciation of the jury’s objective measurement of the damages. It simply placed that measurement into context, namely, an award of damages made in a jury trial.

[44]         As to the third factor, in Smith v. Tedford, 2010 BCCA 302, this Court held that a party’s insurance coverage may be considered under this factor and, in C.P., clarified that whether it should be considered in a given case will be determined by the facts: at para. 101. In this case, the judge noted that Ms. Bains was a person of modest means, that the costs award the appellants sought would “result in a pyrrhic victory” and that granting it could have a chilling effect on plaintiffs generally. In doing so, she was, in my view, merely considering the financial circumstances of the plaintiff and commenting on the overall interests of justice implicated by the application, individually and generally. I see no error in her application of this factor in the circumstances of the case.

[45]         Based on the judge’s reasons as a whole, I am satisfied that she exercised her discretion in a judicial and principled manner. She considered the relevant factors, the positions of the parties, and the specific facts of the case. None of these were typical. However, the order she made was expressly contemplated by Rule 9-1 and, in the final analysis, she was not persuaded to award the appellants their costs following the date of the offer taking into account all of the circumstances as she understood them having sat through the trial. While the case was unusual, bearing in mind the broad discretion provided by Rule 9-1 and the high degree of appellate deference that applies, I would not interfere with the award.

[46]         I would dismiss the appeal and order the appellants to pay Ms. Bains her costs of the appeal.