If I am found partially liable for a crash, will I have to pay part of the costs of taking my case to court? What if I reject a formal offer and then the court awards me a lower amount?
In the recent case Anderson v Kozniuk (2016 BCSC 783), the Court discussed the issue of costs in a personal injury case where liability was split between the plaintiff and the defendant. Typically, in lawsuits, costs are borne by the ‘loser’ – that is, the party who comes out successful is entitled to seek compensation for their legal fees from the other side. In the world of personal injury, this usually means that the injured person has their costs paid by the party that injured them (or, more frequently, the injurer’s insurance company).
In this case, the ‘quantum’ (that is, the total losses suffered by the plaintiff) had been split from liability (the determination of whose fault the incident was). In December of 2011, a trial was held solely on the issue of liability. At that trial, the defendant was held 70% liable and the plaintiff the remaining 30%. In October of 2013, the defendant issued a former offer to settle for $125,000.00, plus 70% of the plaintiff’s costs and disbursements. The plaintiff did not accept this offer and the matter went to trial in 2014, where the plaintiff was awarded $78,897.33 in damages – well under the 2013 formal offer.
Justice Sharma noted that the plaintiff had alleged a brain injury, which ultimately was not accepted at trial. Given the plaintiff’s entitlement to assume that he had some chance of proving the brain injury, turning down the $125,000.00 offer was not unreasonable. Rejected formal offers followed by smaller trial awards do not always attract costs consequences. Even where the difference is large (as in AE v DWJ, where the court awarded a whopping $270,000.00 less than the defendant’s formal offer), the court may find the plaintiff was not unreasonable in rejecting the offer.
Justice Sharma reviewed a number of other factors that played into her decision before concluding that the defendant should, indeed, pay 100% of the plaintiff’s costs:
[24] With regard to the factors in Moses v. Kim, three deal with the cost and difficulty of the trial. I did not have evidence of the costs of getting to trial, although I do note that the plaintiff had to endure a hearing and an appeal on liability, as well as a trial on damages. Accordingly, I find this factor to be neutral.
[25] With regard to the difficulty and length of the trial, I agree with the defendant that this is not a factor in favour of departing from the usual rule. I also agree that the defendant did not take any unreasonable positions at trial and therefore that factor favours a usual division of costs.
[26] The defendant also points out that the plaintiff’s award was just over $55,000, once the amount awarded at trial (just under $79,000) is reduced by 30% for his contributory negligence. The defendant submits that the plaintiff would have achieved a better outcome had he accepted the settlement offer and that this is particularly important because he knew the split of liability before the damages trial. The defendant says this is an important consideration because the court must determine whether the plaintiff would have been in a better position had he accepted the offer to settle.
[27] In Parwani v. Sekhon, 2010 BCSC 540, the plaintiff had alleged the defendants were 100% responsible for the accident, but at trial the plaintiff was found to be 75% liable. In the costs decision, the court concluded that the plaintiff had not achieved substantial success, and costs were awarded in proportion with liability. In that case the plaintiff claimed damages of $270,000 but was only awarded $25,000. I find that case to be distinguished from the present circumstances because of the great disparity (the ultimate award was over a factor of 10 times less than the offer) between the claim and the ultimate award.
[28] The final factor in the Moses v. Kim analysis is whether the plaintiff’s substantial success would be defeated if costs were awarded. The plaintiff says it is appropriate to consider whether the costs award could substantially outweigh a relatively modest award of damages: Cairns v. Gill, 2011 BCSC 420. However, the defendant points out that, “[i]t is not the court’s function to ensure that a plaintiff makes a net recovery from an action when it has ignored a reasonable offer”: Dempsey v. Oh, 2011 BCSC 627 at para. 19. I have already concluded it was not unreasonable for the plaintiff to reject the settlement offer, so the Dempsey case does not apply. Moreover, the amount awarded at trial in that case was less than 1/8 of the offer that was rejected: the offer was $165,000 and the trial judge only awarded $20,629.96.
[29] The plaintiff submitted that the award of costs in this case exceeds the total amount of the judgment. In his written submissions, the plaintiff states that “[i]f the court orders that the Plaintiff is to pay costs to ICBC, it means that Mr. Anderson must pay the entire judgment award to ICBC, instead of spending this money on his health condition and prognosis.” I agree that is a significant factor if the court is to be mindful that costs awards should not punish plaintiffs from taking forward meritorious claims, as discussed above.
[30] The plaintiff also says that the defendant was defended and funded by the insurer, whereas Mr. Anderson is impecunious having lost the ability to work, and previous cases have held this is a proper consideration: Smith v. Tedford, 2010 BCCA 302; Hunter v. Chandler, 2010 BCSC 1124 at paras. 23-25; Gregory v. Insurance Corporation of British Columbia, 2010 BCSC 1369 at para. 9; and Martin v. Lavigne at para. 23. I agree. Although there was no evidence before me about Mr. Anderson’s impecuniosity, I have no reason to doubt counsel’s word. Certainly at trial the evidence was consistent with counsel’s statement.
[31] Based on these factors (and all others), the plaintiff submits it would be unfair and unreasonable that the plaintiff be ordered to pay costs to the defendant.
[32] Finally, the plaintiff points to other factors that he says are relevant to the court’s exercise of discretion. He points out that two expert doctors did conclude that he suffered a brain injury. He also says it was not disputed that after the accident he displayed a number of characteristics consistent with having suffered a brain injury, including the fact that he had a flat affect and his behaviour around his family was different, as well as showing increased irritability, frustration and anger. The plaintiff also points out that the brain scans clearly show that he had brain lesions consistent with a brain injury. The plaintiff had increased difficulties with concentration and learning new tasks. Although I made a finding that both his alcohol consumption and anxiety had significant impacts on his life following the accident, the plaintiff suggests he should not be faulted for failing to guess that those factors would be essentially held against him when making a conclusion about whether he had a brain injury or not.
CONCLUSION
[33] The award of costs is an exercise of the court’s discretion, guided by the legal principles identified above. This is not an exercise of counting up which factors favour which party and doing a mathematical calculation. The court must take into account all of the factors weighed against the circumstances of the case. Remembering that ultimately the result must not impose injustice or unfairness on either party, I exercise my discretion and conclude the normal rule of apportionment does not apply and therefore the plaintiff is entitled to 100% of his costs at trial. Because he has been successful on this application, I also award him the costs of this hearing.
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