Plaintiff Stripped of Partial Costs For Trial Judgment Below Advance Payments

Reasons for judgement were published today by the BC Supreme Court, Vancouver Registry addressing a somewhat unique fact pattern of what costs consequences should be after trial where a Plaintiff was awarded damages below the amount of money they received prior to trial by way of advances paid by the Defendants.

In today’s case (Singh v. Chand) the Plaintiff sued for damages as a result of two collisions.  The claim for the second collision was dismissed.  The Defendants for the first crash admitted liability.  Prior to trial they advanced the Plaintiff $250,000.   They agreed that they would not seek repayment regardless of the outcome of the trial.   At trial the Plaintiff’s damages were assessed below this amount with $137,288 being awarded.

The Court found that in these circumstances the Plaintiff should recover costs to the date of the advance payment and the Defendants entitled to their costs from that date onward.  In reaching this decision Madam Justice Watchuk provided the following reasons:

[19]         The potential costs consequences of an advance payment are inherent in the acceptance of such a payment.  In light of McElroy, a plaintiff who accepts an advance payment must be held to have accepted the possibility that its action may be dismissed if it recovers less than the advance.  It follows that a plaintiff therefore also accepts the possibility of cost consequences when it accepts such a payment.  In other words, the nature of an advance payment is itself sufficient notice of the potential for costs consequences.

[20]         I do not read McElroy, or any of the other governing cases, as requiring anything more to establish a defendant’s status as the successful party at trial.  The plaintiff attempted to distinguish the present case in that, unlike those authorities, the advance payment agreement in this case was silent on the question of costs.  However, nothing in those authorities suggests this is a relevant consideration.  In fact, in Carey, the “advance payment” in question was not the result of an agreement, but was a court-ordered payment made as a condition for receiving an adjournment.  In that case, it was the fact the payment had been made that was determinative, and not the presence or absence of language concerning costs.

[21]         In my view, the real question is what cost consequences should flow from the advance payment.  The concurring judgment of McEachern CJBC in McElroy states that a defendant should automatically be entitled to costs in such circumstances, as of the date of the advance: para. 15. 

[22]         If this is still the case, the court’s approach to advance payments diverges not merely in form, but in substance, from its approach to offers to settle.  Since McElroy, amendments to the Rules of Court have given the court much wider discretion in determining the costs consequences of offers to settle: LeFler v. Anderson, 2008 BCSC 1563 at paras. 10 and 11.  Under current Rules 9-1(5) and (6), the court can fashion an appropriate award of costs according to the circumstances, which include whether the offer was one that the plaintiff ought reasonably to have accepted.

[23]         In other words, where a defendant has made an offer to settle exceeding the award of damages at trial, the court is not required to award costs to the defendant as a matter of automatic entitlement.  Instead, the court may decide to deprive the plaintiff of the costs to which it would otherwise be entitled, or even award the plaintiff the costs to which it would have been entitled despite the offer.

[24]         That the costs consequences of an advance payment and of an offer to settle differ is perhaps not surprising given that the plaintiff is entitled to keep the entire advance despite achieving a lesser result in the trial.

[25]         Nevertheless, there has been some suggestion that the court now exercises a wider discretion in determining the cost consequences of an advance payment.  In Russell v. Parks, 2012 BCSC 1962, Abrioux J. (as he then was) appeared to suggest that the analysis of costs in this context could be guided by the discretionary considerations applicable to offers to settle, and in particular by whether the plaintiff ought reasonably to have proceeded to trial.  The payments in question in that case were ultimately found not to constitute an advance payment; however, in the alternative, it was found it was not unreasonable for the plaintiff to have proceeded to trial, despite having received more than the ultimate award of damages:

[42]      …if I were to consider the payments made to the plaintiff until January 2012 to be akin to a form of settlement offer, which I do not, it is difficult to conceive how it could be unreasonable for the plaintiff to decline this putative offer at the time.

[43]      This is not an appropriate case, in my view, to conclude as is submitted by the defendant that the plaintiff should not have proceeded to trial.  It was not readily foreseeable to either party what the result was going to be with respect to liability or the quantum of damages.  In so far as liability is concerned, I noted at para. 31 of my reasons for judgment that cases dealing with competing duties of pedestrians and operators of motor vehicles are highly fact specific.

[26]         Although this issue may invite further consideration in the future, in my opinion, McElroy remains good law, which I must follow.  Under the approach set out in that case, the defendants are entitled to a dismissal of the action against them, and to costs as of the date of the advance.

[27]         I would award the plaintiff her costs up to the date of the advance payment.  While misconduct in litigation can deprive a party of costs to which they may be otherwise entitled (See: Loft v. Nat 2014 BCCA 108 at para. 49), the plaintiff’s non-disclosure was ultimately discovered to the plaintiff’s detriment.  In all of the circumstances of this case I would not further punish the plaintiff by depriving her of the costs to which she is otherwise entitled.

[28]         Before leaving this issue, I will briefly address a point raised by the plaintiff.  In addition to the arguments summarized above, the plaintiff cited Mazur v. Lucas, 2011 BCSC 1685 for the proposition that once an advance has been made, but there is no option to avoid trial, it is inappropriate to deprive the plaintiff of costs.  As the defendants submit, that case is readily distinguishable: unlike this case, it concerned an advance made after trial, pending an appeal.  Further, the plaintiff in this case did have a choice.  She did not have to accept the advance payment, nor, having accepted it, was she obligated to continue the action.