IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20140312

Docket:  M113323

Registry:
Vancouver

Between:

Kyriakoula Vapheas

Plaintiff

And:

Connor Noel Madden
and George Madden

Defendants

Before:
The Honourable Madam Justice Adair

Supplementary Reasons for Judgment on Costs

[1]            
The plaintiff’s action arises out of a motor vehicle accident that
occurred in September 2010.  The trial was with respect to liability only.  In
my Reasons for Judgment indexed at 2014 BCSC 138, I concluded that the
collision was caused by the failure of both Ms. Vapheas and the defendant
Connor Madden to meet the standard of care required of reasonable drivers in
the circumstances.  I apportioned liability 75% to Ms. Vapheas and 25% to Mr.
Madden.

[2]            
Counsel had leave to make submissions (in writing) on costs, provided
those submissions were filed within 30 days of the date of my judgment.  I
ordered that, otherwise, costs would follow the event.  The defendants filed
written submissions.  The plaintiff did not.

[3]            
The defendants say that the appropriate order with respect to costs is
that:

(a)      the
plaintiff should be paid 25% of her taxable costs up to the date of the
defendants’ offer to settle on October 22, 2013, and (based on Flatley v.
Denike (1997), 32 B.C.L.R. (3d) 97 (C.A.) the defendants are not
entitled to any costs up to that date; and

(b)      following
delivery of the defendants’ offer to settle, the defendants should be awarded
100% of their costs and the plaintiff nothing.

[4]            
In Flatley v. Denike, the court held (at para. 22) that
where a defendant suffers no damage or loss, but liability is divided, the
defendant must pay the plaintiff the same proportion of the plaintiff’s costs
as the defendant is liable for the plaintiff’s damages, but the plaintiff is
not liable to pay any portion of the defendant’s costs.

[5]            
The defendants say that, since liability and quantum were severed, and
the trial was with respect to liability only, the determination of liability is
the “event” for the purposes of considering costs.  They cite McLaren v.
Rice, 2010 BCSC 354, in support of that position and in support of the
position that separate offers to settle can be made in both the liability and
quantum portions of a trial.

[6]            
As I noted above, the plaintiff did not make any submissions on costs. 
I take from this that she says the appropriate order is that she recover 25% of
her costs of the liability trial and that (based on Flatley v. Denike)
there should be no costs ordered in favour of the defendants.  Implicit in this
is that there should be no effect given to the defendants’ offer to settle.

[7]            
The defendants’ offer to settle was contained in a letter dated October
22, 2013 from Mr. Perry to Mr. Spieker, which said:

This is an offer to settle
liability only.  This offer is without prejudice to and expressly does not
alter or revoke any offers previous or subsequent with respect to quantum in
this matter.

The Defendants offer to settle
the apportionment of fault for the Accident in accordance with section 1 of the
Negligence Act as follows:

a)         The Plaintiff’s degree of fault
is 51% and

b)         The Defendants’ degree of fault
is 49%.

On acceptance of this offer, the
parties agree that subject to the terms and conditions of Appendix A:

1.         The plaintiff is entitled to
49% of costs at Scale B and 49% of necessary and reasonable disbursements to
the date of delivery of this offer assessed in accordance with Rule 14-1 of the
[Supreme Court Civil Rules]; and

2.         The defendants are entitled to
costs at Scale B and necessary and reasonable disbursements from the date of
delivery of this offer assessed in accordance with Rule 14-1 of the [Supreme
Court Civil Rules].

The defendants reserve the right
to bring this offer to the attention of the court for consideration in relation
to costs after the court has rendered judgment on the issue of liability in the
proceeding.  . . .

This offer is open for acceptance
at any time before 4:00 PM, Pacific Standard Time, on the last business day
before the commencement of the first day of trial in this proceeding, after
which this offer to settle expires.

This offer to settle incorporates and is subject to the terms
and conditions contained in the Appendix A attached to this offer to settle . .
. .

[8]            
Appendix A sets out a page of additional terms under the heading
“Standard Terms and Conditions of Settlement.”

[9]            
The court may consider an offer to settle when exercising the court’s
discretion in relation to costs:  see Rule 9-1(4).

[10]        
The options available are set out in Rule 9-1(5):

(5)  In a proceeding in which an
offer to settle has been made, the court may do one or more of the following:

(a) deprive a party of any or all of the costs, including
any or all of the disbursements, to which the party would otherwise be entitled
in respect of all or some of the steps taken in the proceeding after the date
of delivery or service 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 or service of the offer to settle;

(c) award to a party, in respect of all or some of the steps
taken in the proceeding after the date of delivery or service of the offer to
settle, costs to which the party would have been entitled had the offer not
been made;

(d) if the offer was made by a
defendant and the judgment awarded to the plaintiff was no greater than the
amount of the offer to settle, award to the defendant the defendant’s costs in
respect of all or some of the steps taken in the proceeding after the date of
delivery or service of the offer to settle.

[11]        
The defendants say that (d) is the appropriate option in this case.

[12]        
The considerations for the court in making an order under Rule 9-1(5)
are set out in Rule 9-1(6):

(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 served or on any later date;

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

(c) the relative financial circumstances of the parties;

(d) any other factor the court
considers appropriate.

[13]        
The defendants say that the factors under Rule 9-1(6) that are most
relevant to this case are (a) and (b).

[14]        
The question whether the offer ought reasonably to have been accepted is
not determined by reference to the ultimate result.  Rather, the reasonableness
of a decision not to accept an offer to settle must be assessed by reference to
the circumstances existing when the offer was open for acceptance.  See Hartshorne
v. Hartshorne, 2011 BCCA 29, at para. 27.

[15]        
Here, the defendants say that the witnesses Ms. Lang and Ms. Laboucan
were known to both sides well in advance of the trial.  They point out that
both sides listed Ms. Lang and Ms. Laboucan as witnesses in trial briefs filed
in 2012, supporting the inference that the plaintiff either knew or ought to
have known what these witnesses would likely say if called to testify at
trial.  The defendants say that the plaintiff therefore ought to have realized
there was a significant risk of a finding of liability against her at trial. 
The defendants say further that the offer made was not a nuisance offer and
bore a reasonable relationship to the risk to the defendants.

[16]        
In addition, the defendants say that the offer could be easily
evaluated, and that, where the issues were relatively narrow and both sides
were aware of the conflicting evidence, there was no need for the defendants to
set out explicitly a justification or reasons for why they were making an offer
in the terms of their offer to settle.  They cite Paskall v. Scheithauer,
2014 BCCA 26, on this point.

[17]        
With respect to the relationship between the terms of the settlement
offered and the final judgment of the court, the defendants say that the
conclusion at trial, that liability should be apportioned 75% to the plaintiff,
was a significantly less favourable outcome to the plaintiff than the
defendants’ offer to settle.

[18]        
With respect to the relationship between the terms offered and the final
judgment, this factor favours the defendants, since a greater share of
liability was apportioned to Ms. Vapheas following the trial.  However, I
consider the factor under Rule 9-1(6)(a) – whether the offer ought reasonably
to have been accepted – to be more neutral.  The allocation of fault under the
defendants’ offer reflects a reasonable assessment of the risk to Ms. Vapheas
and to the defendants, based on what the parties could expect would be the
evidence at trial.  On the other hand, the offer does not take the allocation
of costs in Flatley v. Denike into account.  Of course, in making
the offer, the defendants were entitled to stipulate the terms on which they
were prepared to settle.  However, the terms proposed with respect to costs
made the offer less attractive and made it more reasonable for Ms. Vapheas not
to accept the offer.

[19]        
Moreover, I consider there are two other factors that should be taken
into account.

[20]        
First, but for the offer to settle, the defendants would not be entitled
to costs at all.  Second, the damages portion of the case is still to be tried,
so the ultimate outcome of the action is unknown.  In my opinion, in view of
these factors, awarding the defendants 100% of their costs from the date of the
offer to settle through to the conclusion of the trial on liability, and
depriving Ms. Vapheas of all of her costs from and after October 22, 2013,
would unfairly penalize Ms. Vapheas.

[21]        
In the result, taking the relevant factors under Rule 9-1(6) into
account, I conclude that Ms. Vapheas should recover 25% of her taxable costs
and disbursements through to the conclusion of the liability trial, and the
defendants should recover 75% of their taxable costs and disbursements for the
period from October 22, 2013 through to the conclusion of the liability trial. 
Costs are to be assessed on Scale B and the defendants are entitled to one set
of costs.  Costs payable by the defendants to Ms. Vapheas may be set off
against costs payable by Ms. Vapheas to the defendants.

[22]        
There will be no order with respect to costs of the submissions
concerning costs.

“Adair
J.”