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"Unreliable" Plaintiff Punished With Double Costs Award After Failing to Best Defence Offer

Update Auguaat 16, 2013 – In an interesting development, the below judgement was overturned by the Chambers Judge before entry of the costs order.  You can find reasons here
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Reasons for judgement were released last week by the BC Supreme Court, New Westminster Registry, ordering a plaintiff to pay double costs to a defendant following a personal injury trial which failed to best the Defendant’s pre trial formal settlement offer.
In last week’s case (Gulbrandsen v. Mohr) was injured in a collision.  In the course of the lawsuit the Defendant offered to settle for $50,000.  The Plaintiff rejected this offer and proceeded to trial where a less favorable result was reached with damages being assessed at just over $28,000.
In the course of the trial the Court made negative findings about the Plaintiff’s reliability.  In stripping the Plaintiff of her post offer costs and ordering that the Plaintiff pay double costs to the Defendant Mr. Justice Affleck provided the following reasons;
[5]             In exercising that discretion there are three possible approaches I have considered. The first would be to award costs to the plaintiff up to the date of the offer and deprive her of costs thereafter. In my view that outcome cannot be justified. It would largely ignore the intent of the rules to provide for an award of costs in favour of a party who has made an offer which ought to have been accepted but was not. The second alternative would be to award the plaintiff costs up to the date of the offer and the defendant single costs thereafter. I would be inclined to make that award if the award of damages had fallen only slightly short of the offer. It did not.
[6]             The remaining possible outcome I have considered is to award the plaintiff costs to the date of the offer and to award the defendant double costs thereafter, as he proposes. The factor which might militate against doing so is the relative financial circumstances of the parties. The plaintiff is a woman of modest means. I know nothing of the remaining defendant, Mr. Mohr’s, means. The action was defended by counsel instructed by ICBC. The court may take into account the presence of insurance coverage when assessing the relative financial circumstances of the parties: Smith v. Tedford, 2010 BCCA 302 at para. 19. However, the presence of insurance coverage is not always a relevant factor. As the court observed in Hunter v. Anderson, 2010 BCSC 1591 at para. 22:
…it is in circumstances where a defendant’s insurance coverage creates an unfair advantage leading to unnecessary costs through testing the plaintiff’s case, where an insurer’s financial circumstances supplant those of the litigant as a factor to consider in determining costs.
[7]             I find that the presence of insurance coverage in the present case did not create an unfair advantage leading to unnecessary costs. It was the plaintiff who unreasonably rejected the defendant’s offer to settle. Therefore, I am unable to find a relevant significant disparity in the relative financial circumstances of the parties.
[8]             Unless there is some compelling reason to the contrary, the defendant is entitled to double costs from the date of the offer. Not only is there no reason to the contrary, in my view there is a compelling reason to accept the defendant’s argument. In my reasons for judgment which awarded damages to the plaintiff, I nevertheless found the plaintiff was an unreliable witness. This was not simply a matter of a witness who was honestly mistaken. I concluded the plaintiff had attempted to persuade me of facts that she knew were not true. On the costs hearing the plaintiff complained about my conclusions regarding her credibility but the costs hearing was not an occasion to re-argue her case for damages.
[9]             The plaintiff will be entitled to her costs up to the date of the offer to settle and the defendant will be entitled to double costs thereafter.

 One issue that apparently was not argued on this application was whether the Rules of Court allow for double costs in these circumstances.  While Rule 9-1 provides a Court with broad costs discretion following trials with formal offers in place, Rule 9-1(5)(b) seems to limit the Court to single post offer costs to a Defendant where they best their formal settlement offer.  I am not sure if this matter has been judicially considered but it is certainly an argument a Court would need to grapple with if asked to do so.

When Does An Award of $20,000 = A Significant Debt

No, this is not a trick question.  When can a judge awarding you $20,000 leave you in ‘significant’ debt?  The answer is when you fail to beat a formal offer at trial and have ‘loser pays’ costs assessed you.  I’ve discussed this reality previously and it was demonstrated yet again in reasons for judgement released last week by the BC Supreme Court, Vancouver Registry.
In last week’s case (Gonzales v. Voskakis) the Plaintiff was injured in a 2008 collison.  Prior to trial ICBC provided a formal settlement offer of $69,000.  The Plaintiff rejected this and proceeded to have a 12 day trial where she sought in excess of $385,000.  The claim was largely unsuccessful with the trial judge awarding just over $20,000 in damages.  ICBC asked that the Plaintiff be stripped of post offer costs and that the Defendant be awarded post offer costs and disbrsements.  The Plaintiff argued that such a result would “negate her entire judgement and leave her significantly in debt“.   Madam Justice Fitzpatrick noted that the underlying “behaviour modification objective” of the Rules of Court override any sympathy to the Plaintiff and levied substantial costs consequences.
The decision is also worth reviewing for the discussion of whether a post offer costs award to a Defendant can include disbursements.  The Plaintiff argued the Rules don’t contemplate this but the Court disagreed. In finding disbursements were also encompassed in the Rule Madam Justice Fitzpatrick provided the following reasons:
[65]         Rule 9-1(5) is headed “Cost options”. It is clearly intended to guide the court in deciding what costs award is just. Nevertheless, I do not see that subcategory (d) was intended to limit the discretion of the court to award a defendant’s disbursements in all cases when rewarding a defendant for making a reasonable offer. In many cases, disbursements are significant. In fact, the driving force behind an offer to settle may be the desire to avoid having to pay those disbursements. To limit the discretion of the court in awarding disbursements would defeat the clear intention of the Rule.
[66]         Although Brown J. came to another conclusion in Moore relating to double disbursements under Rule 9-1(5)(b), it appears that Kendall and Skidmore were not in front of her at that time. Therefore, in applying the principles set out in Re Hansard Spruce Mills Ltd., [1954] 4 D.L.R. 590, I do not consider that I am bound by her reasoning.
[67]         I acknowledge that the wording of Rule 9-1(5), in its reference to “disbursements” in subcategory (a) without an accompanying reference to “disbursements” in subcategory (d), is awkward and confounding. In my view, however, the fundamental purpose of the Rule — which, as stated by the Court of Appeal in Kendall and Skidmore, is to compensate for all “costs”, including disbursements — has not changed. One can only hope for some clarity on this issue by possible amendments to Rule 9-1(5).
[68]         In the meantime, I conclude that I have the discretion under Rule 9-1(5)(d) to award the defendant his costs, including disbursements.
[69]         I award such costs, which will include disbursements, in favour of Mr. Voskakis for the period from January 25, 2012 until February 29, 2012.

Plaintiff's "Financial Situation" Shields Her From Loser Pays Costs

A short but interesting exchange can be found at the end of reasons for judgement recently published by the BC Supreme Court, Chilliwack Registry, discussing loser pays costs and a Plaintiff’s financial circumstances.
In the recent case (Hunstad v. Cormier) the Plaintiff was injured when her bicycle was involved in a collision with the Defendant’s vehicle.  She sued for damages but her claim was dismissed at trial.  The Defendant sought costs but the Court declined to award these given the Plaintiff’s financial circumstances. This is an interesting development because while the financial position of parties can be considered if a formal offer has been made, it has been held that it is an irrelevant consideration in the normal course.  The below brief exchange, while arguably not conclusive as it is not a final order, can arguably be used to open the door to financial hardship as a factor when considering BC’s ‘loser pays’ costs consequences:
 
[86]         MR. KENT-SNOWSELL: Costs, My Lord?
[87]         THE COURT: I am not going to order costs because of Ms. Hunstad’s financial situation. If you want to make some submissions on that, I will consider it, but I don’t think they are appropriate in the circumstances.
[88]         MR. KENT-SNOWSELL: I will seek instructions.
[89]         THE COURT: Thank you.

LVI Defence, Liability Denial and Language Barriers Create Sufficient Reason to Sue in Supreme Court

While the BC Supreme Court Rules generally deprive a Plaintiff of costs who bring an action to trial that could have been brought in small claims court the BC Court of Appeal clarified that having ‘sufficient reason’ to sue in the BC Supreme Court is not limited to quantum of damages alone.  Reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, considering some such other factors.
In this week’s case (Bae v. Vasquez) the Plaintiff was injured in a 2010 rear-end collision.  The Plaintiff suffered relatively minor soft tissue injuries.  She sued in the BC Supreme Court and was awarded damages of just over $12,000.  ICBC argued she should not be awarded costs as the action could have been brought in small claims court.  Madam Justice Baker disagreed finding that ICBC’s initial denial of liability, LVI Defence and the Plaintiff’s language barriers were all reasons justifying bringing the action in the Supreme Court.  In awarding costs the Court provided the following reasons:
[69]         I am satisfied that this case had neither legal nor factual complexities that made the Supreme Court a necessary venue.  I have already referred to the fact that a jury trial was not an option in any case; and there will be no need to enforce the judgment outside of the province.
[70]         In some cases, the fact that the plaintiff had difficulty with the English language; and therefore would have difficulty pursuing the claim without the assistance of counsel, has been held to be sufficient reason to proceed in Supreme Court, where the possibility of recovering costs makes it easier for a plaintiff to find counsel willing to act.
[71]         Plaintiff’s counsel submits also that in this case, the defendant denied liability for the accident in the Response to Civil Claim.  Plaintiff’s counsel has advised the Court that prior to the action being commenced, the defendant’s insurer had indicated:
…that due to the “minimal nature of the impact forces involved in the collision”…the Plaintiff had not sustained any “compensable injury”.
[72]         The defendant did not admit liability until January 30, 2012 and even at that date, continued to maintain that the plaintiff had suffered no injury, loss, damage or expense as a result of the accident.
[73]         Plaintiff’s counsel submits that because the defendant was maintaining that the plaintiff’s negligence was the sole cause of the accident, an examination for discovery of the defendant was necessary and that procedure would not have been available to the plaintiff in Provincial Court.  Counsel pointed out that at the plaintiff’s examination for discovery in July 2011, she was asked questions pertaining to liability, including whether she had consumed alcohol or drugs prior to the accident; whether she was familiar with the location where the accident happened; whether her vehicle had been properly maintained and was in proper working order and whether she had a valid driver’s licence at the time.
[74]         It was not until August 18, 2011 – after both the plaintiff and defendant had been examined for discovery – that defendant’s counsel wrote to plaintiff’s counsel suggesting that the action should be heard in Provincial Court and seeking the plaintiff’s consent to transfer the action to that court.  Plaintiff’s counsel replied on September 21, 2011 indicating that if the trial could be heard in Provincial Court in the same time frame as the trial date set in Supreme Court – March 2012 – then the plaintiff would consider the request for a transfer.  Defendant’s counsel was asked to make inquiries to determine when the trial could be heard if transferred to Provincial Court.  No reply was received.
[75]         Ms. Bae testified at trial with the assistance of an interpreter.  She had been examined for discovery without an interpreter and at trial indicated she had misunderstood some of the questions asked of her.  Ms. Bae is not an assertive individual and I am satisfied she would have had considerable difficulty pursuing this action without the assistance of counsel.  Of course, parties may be and often are represented by counsel in Provincial Court, but the unavailability of costs makes it more difficult to find representation.  There was a denial of liability in circumstances where normally liability would be admitted and it was reasonable for the plaintiff to wish to examine the defendant for discovery on the issue of liability – a procedure unavailable in Provincial Court.
[76]         Taking all of these factors into account, I am of the view that there was sufficient reason for the plaintiff to bring her action in Supreme Court.  I award the plaintiff costs, the costs to be governed by Rule 15-1(15).

No Costs Consequences Triggered By Late Defence Formal Offer in Infant Claim

Update June 18, 2013 – Leave to Appeal the below decision was refused by the BC Court of Appeal
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Adding to the list of ‘other factors Courts can consider when deciding whether a formal settlement offer should trigger costs consequences following trial, reasons for judgement were released last week by the BC Supreme Court, New Westminster Registry, considering the fact that an infant settlement would require Public Trustee approval.
In last week’s case (Nemoto v. Phagura) the Plaintiff was involved in a collision when she was 13.   One week before trial ICBC made a formal settlement offer which was $300 greater than the damages she was ultimately awarded at trial.  ICBC applied to strip the Plaintiff of her post trial costs and to be awarded theirs.  Mr. Justice Smith refused to do so noting that the offer was only 1% greater than the trial award, that there was no competing defence medical evidence to better define risk and lastly that the Public Trustee’s approval would be required which would result in an abandonment.  Addressing the last factor the Court provided the following reasons:
[10]         A further complication arose in this case from the fact the plaintiff was 17 years old at the time of trial. That means a settlement based on the formal offer would have required the consent of the Public Guardian and Trustee (“PGT”) pursuant to s. 40 (7) of the Infants Act, R.S.B.C. 1996, c.223. The absence of defence medical evidence may have made it more difficult for plaintiff’s counsel to persuade the PGT of the appropriateness of the settlement.
[11]          In any case, the PGT’s views could not likely have been obtained in the week between the date of the offer and the date of trial, requiring an adjournment of the trial. The plaintiff had to consider the delay that would have been involved in proceeding to trial at a later date in the event, however unlikely, the PGT was not prepared to consent.
[12]         In these circumstances, I cannot say that the offer ought reasonably to have been accepted and I decline to give effect to it in the matter of costs.

Defendant Stripped of Costs For Expert Witness Advocacy

Reasons for judgement were released this week by the BC Supreme Court, New Westminster Registry, stripping Defendants of significant trial costs they otherwise would have been entitled to as a result of relying on an expert witness who crossed the line into advocacy.
In this week’s case (Jampolsky v. Shattler) the Plaintiff was involved in 4 collisions.  He alleged he sustained a traumatic brain injury and sought damages exceeding one million dollars at trial.  The Court rejected the brain injury claim and found that the Plaintiff sustained modest injuries awarding $15,000 in total damages.  Prior to trial ICBC made a formal offer of settlement of $125,000.   ICBC sought costs from the time of the offer onward. Mr. Justice Harvey held that normally such an order was appropriate but because of the Defendant’s expert witness’ evidence at trial which crossed into advocacy and further due to the Defendant lawyer’s conduct in the course of a mid-trial application, the Defendant should be stripped of their post offer costs.  In coming to this conclusion the Court provided the following reasons:
[72]         As  earlier observed, but for the matter of the conduct of defendants’ counsel in the application for withdrawal of the admission and my findings concerning the evidence of Dr. Rees, I would have made an order under Rule 9-5(d) awarding the defendants costs in respect of the proceeding after the date of delivery of the offer to settle.
[73]         The degree to which the evidence of Dr. Rees crossed the boundary from expert opinion into advocacy is a matter which rests at the feet of the defendants. He was their witness and the defendants assume responsibility for his conduct. The Rules require experts to certify that they will prepare their reports and provide testimony in accordance with their duty to assist the court and not assume the role of advocate:Jayetileke, supra.
[74]         In LeClair v. Mibrella Inc., 2011 BCSC 533, Voith J. reduced the amount of costs payable to a successful defendant by 50% to make clear to the defendant that its conduct, in certain respects, was improper. The rebuke in costs was to signal the court’s expectation that parties will expect in a manner that is consistent with the Rules of Court.
[75]         Here, similar to LeClair, I find that the conduct of the defendants, both through the actions of their counsel, Mr. Robinson, and in an expert called on their behalf, Dr. Rees, was sufficiently outside the boundaries of expected behaviour to warrant rebuke via a denial of costs to which the defendants would otherwise be entitled.
[76]         In the circumstances, despite the September Offer and the defendants’ success on the issue of whether the plaintiff suffered an MTBI as a result of any of the four accidents, it is appropriate to deny the defendants the costs of trial leaving intact the plaintiff’s entitlement to costs up to and including the date of the offer to settle but no costs thereafter.

Want Your Day In Court? Mortgage Your Property First!

In a very rare display of the BC Supreme Court’s powers pursuant to its inherent jurisdiction, and a strong reminder of the potentially high financial consequences of BC’s loser pays legal system, Mr. Justice Burnyeat released reasons for judgement ordering a Plaintiff to mortgage her properties to the amount of $100,000 as security for costs prior to allowing her claim to proceed to trial.
In today’s decision (IJ v. JAM) the Plaintiff sued the Defendants alleging sexual harassment   The Plaintiff had other costs orders made against her and the Court found she had “a pattern of ignoring orders for costs that have been made“:  The current Defendants applied for an order requiring $100,000 to be paid into court as security for costs.  Mr. Justice Burnyeat agreed security was appropriate and provided the following reasons:
[18]         I am satisfied that “very special circumstances” are present so that an order for security for costs should be made.
[19]         First, the Plaintiff has a pattern of ignoring orders for costs that have been made:  in the Petition for judicial review of the British Columbia Human Rights Tribunal decision where costs were awarded in favour of J.A.M. and, in these proceedings where an order for costs was made against the Plaintiff arising out of the dismissal of the civil claim against the G.S. and J.S.
[20]         Second, I take into account the merits of the claim of the Plaintiff.  As I will be the trial judge for the lengthy trial that is scheduled for June 2013, I do not express any final opinion about the merits of the claim other than to observe that, as presently drafted, the claim against J.A.M. and J.M. is expressed in an often confusing, emotional and vitriolic manner, with many allegations not relating directly to the very serious claim that the Plaintiff makes against J.A.M.  and J.M.  It is not appropriate at this stage to make a fine assessment of the relative merits of the claim of the Plaintiff but only to observe that the claims are not so weak that they are bound to fail.  However, regarding the claim, I take into account the agreement that was executed by the Plaintiff releasing the Company and officers, including J.A.M. for previous acts which occurred.  It is a fair assessment at this point that the case of the Plaintiff has many problems…
[25]         The Defendants request the payment into Court of the sum of $100,000.  It is clearly the case that such a sum is not available and that to require that sum to be paid would effectively deny the Plaintiff access to the Court.  However, the affidavit of the Plaintiff is that the two Whistler properties have a value of approximately $729,000 and have charges against them of approximately $550,000 so that her equity is in the neighbourhood of $279,000.  The Plaintiff also states that her property in Ontario has an approximate value of $560,000 with a mortgage of approximately $164,000 against it so that the approximate equity is $396,000.
[26]         Taking into account all of the circumstances surrounding the claim of the Plaintiff, I am satisfied that there is good reason and very special circumstances why an order for security for costs should be made.  Accordingly, a mortgage in the amount of $100,000 without interest will be granted by the Plaintiff against her two properties in Whistler with the mortgagee being the Registrar of the Supreme Court of British Columbia.  The mortgage is not to be discharged or enforced without the further order of the Court.
[27]         The Plaintiff will be required to sign that mortgage within ten days of it being tendered on her for her signature.

Rule 15 Costs Apply to Fast Track Settlement Agreement

Reasons for judgement were released this week by the BC Supreme Court, Victoria Registry, confirming that a settlement agreement made in a Rule 15 action for an amount “plus costs” contemplates costs capped under the fast track rule.
In this week’s case (Wan v. Smith Estate) the Plaintiff was prosecuting an injury claim under Rule 15.  As trial neared the Plaintiff accepted a defence settlement offer of $60,000 “plus costs and disbursements” .  The Plaintiff then sought Tarriff costs of over $17,000 as opposed to the capped pre-trial costs of $6,500 under Rule 15.  Mr. Justice Punnett held that Rule 15 costs applied to the settlement agreement.  In coming to this conclusion the Court provided the following reasons:
[13]         It is not disputed that the fast track rule governs.  The plaintiff asks the court to exercise its discretion under the fast track rule.  Her counsel refers to the wording in 15-1(15) “unless the court otherwise orders” in support.  The defendant submits that the reference to “the court” in that section is a reference to the trial court not this Court in chambers.  That is that cost awards are within the discretion of the trial court.  Further they submit that the offer and its acceptance were clear and the costs referenced in the settlement are to be awarded pursuant to Rule 15-1.
[14]         The difficulty with the plaintiff’s submission is counsel’s letter confirming settlement responds to the defendant’s offer of costs.  That offer was clearly for costs under the fast track rule.  In my view the plaintiff cannot now seek to redefine what was meant by “costs”.  It is inappropriate for the court to now vary the agreed upon terms of settlement.

Expert Witness and Plaintiff Preparation Time Recoverable In Bill of Costs

Reasons for judgement were released last week by the BC Supreme Court, Kamloops Registry, addressing costs for witness preparation.
In last week’s case (Carson v. Henyecz) the Plaintiff was injured in a motor vehicle collision.  She succeed at both a liability trial and subsequently at a quantum assessment.  The Plaintiff was awarded costs.  With the exception of experts, the Plaintiff was the only witness at trial.  The Plaintiff sought costs for interviewing witnesses for both the Plaintiff and expert witnesses.  ICBC argued this was not recoverable as item 18 of the Tarriff does not include parties nor experts.  Master McDiarmid disagreed and allowed costs for these items.  In doing so the Court provided the following reasons:
[24]         The most significant dispute between counsel was with respect to item 18. The plaintiff submitted that the process associated with interviewing witnesses included interviewing those witnesses with respect to their attendance at trial. The plaintiff submitted that this included interviewing the plaintiff, who was of course a witness on her own behalf in both trials. It was also submitted by plaintiff’s counsel that item 18 would also permit units to be awarded for interviewing the experts with respect to their attendance at trial…
[30]         Forms 20 and 21, the case plan proposal and case plan order, have separate sections for expert witnesses and contain provisions for providing a witness list. Form 41, the trial brief, has a heading entitled “Witnesses to be Called On,” which requires the parties to provide the names and addresses of the witnesses the filing party intends to call at trial, together with an estimate for the time each witness will need for giving direct evidence. There is no differentiation on a trial brief between witnesses who are parties, witnesses who are representatives of corporate parties, expert witnesses, or other witnesses.
[31]         From this I conclude that a party can claim under item 18 with respect to all witnesses for all parties, including in this case the plaintiff and including expert witnesses.

Fast Track Costs Apply Despite 4 Day Trial

As previously discussed, Rule 15 is applicable to BC Supreme Court injury trials with a quantum of less than $100,000 or to trials that can be completed in three days or less.   This week reasons for judgement were published by the BC Supreme Court, Vernon Registry, addressing what costs flow following a Rule 15 trial which exceeds three days.
In this week’s case (Travelbea v. Henrie) the Plaintiff was injured in a collision.  Following a four day trial which was prosecuted under Rule 15 damages of just over $68,000 and costs were awarded.  The Plaintiff sought costs under the Tarriff and the Defendant argued that the capped costs of Rule 15 should apply.  Mr. Justice Barrow agreed with the Defendant and noted that there is nothing sufficient in a trial exceeding three days to depart from Rule 15 costs.  The court provided the following reasons:
6]             In general, the case was conducted in accordance with the parameters set by Rule 15-1. The plaintiff did not conduct an examination for discovery of the defendant. The defendant’s examination for discovery of the plaintiff was completed within two hours. There were no interlocutory applications by either party. The only substantive exception to the limitations imposed by the fast-track regime is that the trial spanned four days…
[10]         The only aspect of this case to which the plaintiff points by way of special circumstance is that the trial was set for four days and, in fact, took almost four days to be heard. I am not persuaded that the circumstance is sufficient to justify otherwise ordering. First, when the notice of trial was filed indicating that four days would be necessary, the plaintiff was content that the matter should remain in the fast-track regime. That is apparent by virtue of the endorsement on the notice and the fact that no application to the court or request to the defendant was made seeking to remove the case from the regime. Second, although the trial took more than three days, it took only marginally more, less than half a day.
[11]         I acknowledge the plaintiff’s submission that the case may have taken much longer had counsel not dealt with the matter so efficiently and co-operatively. To accede to that submission would be, in effect, to sanction a party for doing that which the Rules are intended to promote, namely, to conduct trials in an expedient and efficient way.
[12]         In the result, I am satisfied that the lump sum costs provided for in Rule 15 ought to be imposed in this case, and I order that the plaintiff is entitled to costs under Rule 15-1(15)(c) in the amount of $11,000.