Defendant Fails "To Recognize The 'Capital Asset” Approach"; Ordered To Pay Double Costs
Update August 5, 2015 – The below damages for Diminished Earning Capacity were overturned by the Court of Appeal and a new trial was ordered on the issue.
Reasons for judgement were released today by the BC Supreme Court, Penticton Registry, ordering a Defendant to pay double costs for refusing to accept a bested pre-trial formal settlement offer. In reaching this result the Court was critical in the Defendant’s failure to appreciate the ‘capital asset’ approach in assessing diminished earning capacity awards.
In this week’s case (Ostrikoff v. Oliveira) the Plaintiff was injured in a 2009 collision. Prior to trial the parties exchanged a variety of formal settlement offers with the Plaintiff’s last offer coming in at $325,000 and the Defendant’s last offer being $100,000. The matter proceeded to trial where damages of over $550,000 were assessed. The Plaintiff was awarded post offer double costs and in finding the Defendant should have accepted the Plaintiff’s offer the Court provided the following comments:
 The plaintiff, on the other hand, marshalled a combination of both expert and lay evidence. The essence of the plaintiff’s case was that the plaintiff was involved in unique and highly skilled work which had a significant physical component and that the plaintiff’s chronic pain and physical impairments threatened both his business and his sole means of livelihood. The uncontradicted expert evidence was that the plaintiff was not a suitable candidate for retraining.
 All of this was known to the defendant well before the trial began. Expert reports had been delivered from orthopaedic surgeons, treating physicians, a functional capacity evaluator, a vocational consultant, a cost of care consultant, and an economist (regarding future loss multipliers). No rebuttal reports were prepared by the defendants and much of the evidence was uncontradicted at trial.
 Plaintiff’s counsel provided the defendant with a detailed rationale for the quantum of the first settlement offer in the amount of $325,000 made on March 8, 2013. The nature and structure of the claim became obvious at that point, if it had not already been obvious beforehand. Service of the plaintiff’s expert reports would have alerted the defendant to the possibility of a very significant claim being presented and possibly succeeding at trial.
 The only submission made by the defendant in defence of its refusal to accept the plaintiff’s settlement offer is that there was an absence of any “documented pecuniary loss” and of any expert or other reliable evidence supporting any pecuniary loss, whether past or future. The submission, and indeed the defence’s entire approach to both the case and the settlement offer, fails to recognize the “capital asset” approach to assessment of damages for both past and future earning capacity in circumstances where the financial loss is not easily measurable.
 In my opinion, the February 17, 2014 settlement offer made by the plaintiff was reasonable and one that ought reasonably to have been accepted by the defendant before the commencement of trial. A careful assessment of the strength of the plaintiff’s case on the eve of trial, having regard to the expert reports and the proposed lay testimony, as well as the principles of damages assessment in chronic pain cases involving potentially significant loss of capacity would have, and should have, resulted in a conclusion that a recovery at trial of sums in excess of the offer was a realistic prospect. Instead, relying almost exclusively on tactics limited to cross-examination and putting the plaintiff to strict proof of his case, the defendant chose to proceed to trial to see what might happen. Defendants are free to litigate the case in such fashion as they consider appropriate. But as stated in Hartshorne, above, “[l]itigants 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”.
 For these reasons, I exercise my discretion to award party and party costs to the plaintiff under Scale B up to February 17, 2014, and double that scale for all steps taken in the proceeding thereafter.