IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: P.K.M.B. v. D.H.L., 2018 BCSC 1039 Date: 20180625 Docket: S158020 Registry: Vancouver Between: P.K.M.B. Plaintiff And D.H.L. also known as H.D.L. Defendant Before: The Honourable Madam Justice Forth Reasons for Judgment re Costs Counsel for the Plaintiff: Bruce M. Gordon Counsel for the Defendant: Fred C. Lowther Written Submissions from the Plaintiff: March 6 and June 12, 2018 Written Submissions from the Defendant: May 17 and June 5, 2018 Place and Date of Judgment: Vancouver, B.C.

June 25, 2018 Introduction [ 1 ] In Reasons for Judgment dated February 7, 2018, indexed at 2018 BCSC 186 (the “Reasons”), I granted judgment in favour of the plaintiff on a constructive trust basis. The defined terms are the same as the ones used in the Reasons. [ 2 ] Paragraph 200 of the Reasons stated: [200] The plaintiff is entitled to her costs on Scale B. If there are any submissions with respect to costs, contrary to that order, then written submissions may be provided.

Submissions must be served and filed within 60 days from the pronouncement of these reasons. [ 3 ] The following submissions were received:

a) Submissions of the plaintiff dated March 6, 2018 on double costs and settlement of the order;

b) Submissions of the defendant dated May 17, 2018 seeking a clarification or the amendment of para. 200 of the Reasons and seeking a further appearance to address the making of further specific orders;

c) Submissions of the defendant dated June 5, 2018 seeking an apportionment of costs; and

d) Submissions of the plaintiff dated June 12, 2018 in reply to the defendant’s submissions. [ 4 ] The defendant seeks an amendment to para. 200 of the Reasons to clarify that the issue of costs can still be fully addressed. I see no need for that. Paragraph 200 specifically reserved the right for the parties to make submissions as to costs. The parties have now done so. Issues Respecting Costs [ 5 ] The submissions raise the following cost issues: a. Who is entitled to costs as the “successful party” under subrule 14-1(9) of the Supreme Court Civil Rules [ Rules ]? b.

Should costs be apportioned under subrule 14-1(15) of the Rules? c. What impact does the plaintiff’s offer to settle under R. 9-1 of the Rules have on costs ?

Entitlement to Costs Legal Principles [6] The purpose of a cost award was summarized by the Court of Appeal in Giles v. Westminster Savings and Credit Union, 2010BCCA 282 at para. 74: [74] The purposes for which costs rules exist must be kept in mind in determining whether appellate intervention is warranted. Inaddition to indemnifying a successful litigant, those purposes have been described as follows by this Court: • “[D]eterring frivolous actions or defences”: Houweling Nursuries Ltd. v.

Fisons Western Corp. (1988), (BCCA), 37 B.C.L.R. (2d) 2 at 25 (C.A.), leave ref’d, [1988] 1 S.C.R. ix; • “[T]o encourage conduct that reduces the duration and expense of litigation and to discourage conduct that has the oppositeeffect”: Skidmore v. Blackmore (1995), (BC CA), 2 B.C.L.R. (3d) 201 at para. 28 (C.A.); • “[E]ncouraging litigants to settle whenever possible, thus freeing up judicial resources for other cases: Bedwell v.

McGill, 2008BCCA 526, 86 B.C.L.R. (4th) 343 at para. 33; • “[T]o have a winnowing function in the litigation process” by “requir[ing] litigants to make a careful assessment of the strength orlack thereof of their cases at the commencement and throughout the course of the litigation”, and by “discourag[ing] the continuance ofdoubtful cases or defences”: Catalyst Paper Corporation v. Companhia de Navegação Norsul, 2009 BCCA 16, 88 B.C.L.R. (4th) 17 atpara. 16. [7] The onus to displace the usual costs is on the party seeking to vary the usual costs order: Grassi v. WIC Radio Ltd., 2001BCCA 376 at para. 24.

The onus has been described as a “substantial one” and requires a party to prove special circumstances to displacethe general rule: Gill v. Canada (Minister of Transport), 2014 BCSC 2235 at para. 17. [8] In Fotheringham v. Fotheringham, 2001 BCSC 1321 (leave to appeal refused 2002 BCCA 454) [Fotheringham], the courtfound that to win the “event” the party must have substantial success, measured objectively by taking into account the weight of issuesand importance to the parties and the parties’ relative success or failure with respect to these matters: see paras. 37 and 60.

Analysis [9] The Reasons set out the various issues addressed as being: [8] The pleadings, evidence, and submissions raise the following issues: a. The credibility of the parties and witnesses; b. The nature of the parties’ relationship; c. Was there was an agreement reached in respect to the acquisition and financing of the Property? d. Is the Property subject to a trust? and e. Are occupational rents owed on the Property? [10] I will consider the relative “success” on each issue and then globally in the trial. a.

Credibility of the parties and witnesses [11] On the issue of credibility the findings made were: [146] Taking these principles into account, the following aspects of the defendant’s testimony regarding his personal relationship withthe plaintiff do not have the “ring of truth”, nor are they are consistent with the probabilities affecting the case as a whole:

a) After briefly meeting the defendant on two occasions at the Richmond public market and once at the concert, the plaintiff called him,came to his home where his wife and son lived, went to the basement studio with him, shared how she was an abused woman, and thenhad sex with him on a great big cushion.

b) The “couple” were trying to keep the relationship secret from the plaintiff’s two children. The defendant testified that he had “fooled”the children from 1998-2004 and yet also testified that sometimes A.M., with E.M. in the car, would drive the plaintiff to his home inVancouver and dropped her off. He would drive the plaintiff back to Richmond the next morning. Clearly her two children would haveknown that their mother had spent the night with the defendant in Vancouver.

c) After getting into a “fight” in 2007, the defendant called the police on her, and then after she got engaged in Sweden, the plaintiffreturned one night to the defendant’s bedroom, woke him up, “manipulated” him, and, in the words of the defendant, described “thelength of the guy in Sweden being much shorter than mine”.

d) He would attend at the plaintiff’s townhouse and sleep in the same bed with her, although for a period of time, the townhouse atwhich the plaintiff and her children resided only had two bedrooms: one used by E.M. and one shared by A.M. and the plaintiff.

… [152] I found that the plaintiff presented in a credible fashion. For example, when testifying about the allegations of a sexual nature, her demeanour and tone were that of disgust, which was in accord with her denial of the intimate relationship. I also note that during certain portions of her testimony, such as when she described the time she found out that the defendant could not pay his 50% of the mortgage, she became visibly emotional on the stand and was brought to tears. [153] I also found that the plaintiff’s adult children, E.M. and A.M., presented in a credible fashion.

I acknowledge that they may be viewed as advocates for their mother and that they may have downplayed the level of general assistance the defendant provided to them and their mother. However, I did not find their evidence unreliable, and further, their testimony was void of concerning inconsistencies. As a result, I find their evidence to be in harmony with the probabilities affecting the case. [154] The evidence of Mr.

Riach supports the evidence of the plaintiff and E.M. and not the defendant’s version of events. [155] Overall, I find that more reliance can be placed on the plaintiff’s and her children’s evidence than on the defendant’s. [ 12 ] The plaintiff was successful on this issue. b. Nature of the relationship [ 13 ] The defendant alleged and testified that he entered into a marriage-like arrangement with the claimant. He testified to sexual encounters they had. His evidence was not accepted. [ 14 ] The plaintiff alleged and testified to the nature of the relationship with the defendant as a family friend.

She agreed to purchase the Property with the defendant since this would be mutually beneficial to both of them. [ 15 ] The plaintiff was successful on this issue. c. Terms of an agreement [ 16 ] The plaintiff claimed that there was an agreement in which the defendant agreed to share 50% of all of the costs and expenses relating to the Property. That agreement was varied shortly after the Property was purchased, and the defendant gave up all of his interest in the Property.

The defendant submits that the plaintiff was not successful in establishing an agreement, and as such she lost on this issue. [ 17 ] The same submission applies on behalf of the plaintiff. The defendant sought to prove the existence of an agreement that the Property was acquired jointly and that the revenue from the Daycare would, within a short period of time, cover the costs and expenses. The particulars of the agreement the defendant says was reached were set out at para. 5 of the amended response to amended notice of civil claim filed November 15, 2016.

The defendant was not successful in proving this agreement. [ 18 ] Neither party was successful on proving the existence of an agreement in regards to the parties’ contributions to the Property: see para. 174 of Reasons. d. Is the Property subject to a trust? [ 19 ] The finding made was that the Property was subject to a constructive trust in favour of the claimant: see para. 194 of the Reasons. I note that the defendant had also put forward a trust claim with respect to the Property and Daycare in a counterclaim filed with the Court on August 22, 2017, and amended December 1, 2017.

This counterclaim is mentioned at para. 5 of the Reasons. [ 20 ] The claimant was successful on this issue. The counterclaim was dismissed. e. Occupational Rent [ 21 ] Both parties were claiming occupational rent. The plaintiff made the claim against the defendant for the years that he lived in the Property while making no financial contribution. Her evidence was that the defendant had agreed to pay a monthly rent of $1,100 and he stopped making payments in July 2005. Her claim for rent arrears was not successful.

She was successful in the issue of proving that the payments of $1,100 made by the defendant until July 2005 was in the form of rent. [ 22 ] The respondent sought occupational rent against the plaintiff. His claim was not successful. Global success [ 23 ] The plaintiff “won the event” using the terminology in Fotheringham at paras. 30, 46. She was substantially successful on most of the issues, and, on the issues she was not successful, neither was the defendant. [ 24 ] There are no special circumstances that exists to deprive the plaintiff of a claim for payment of costs: see Sutherland v.

Canada (A.G.) , 2008 BCCA 27 at para. 26 [ Sutherland ]. Apportionment

Legal principles [25] Rule 14-1(15) permits a court to award costs: (15)The court may award costs (

a) of a proceeding, (

b) that relate to some particular application, step or matter in or related to the proceeding, or (

c) except so far as they relate to some particular application, step or matter in or related to the proceeding and in awarding those costs the court may fix the amount of costs, including the amount of disbursements [26] In Sutherland, the Court of Appeal held at para. 31 that the test for apportionment of costs under the predecessor Rule was: (1) the party seeking apportionment must establish that there are separate and discrete issues upon which the ultimately unsuccessfulparty succeeded at trial; (2) there must be a basis on which the trial judge can identify the time attributable to the trial of these separate issues; (3) it must be shown that apportionment would effect a just result. [27] In determining how to apportion costs the two approaches were explained in Waterhouse v.

Fedor (1987), (BC SC), 13 B.C.L.R. (2d) 186 at 190 (S.C.): I also agree that two methods may be used in determining “the degree of success”. One method involves the judge assessing a percentagefigure to the relative success of the parties. The other method involves determining the number of days spent in trial on “unsuccessful”issues in proportion to the time spent on “successful” issues.

Either way, the relative success of the parties is determined and each partyis entitled to that portion of his own costs, which are then set off against the other, and the difference, if any, is paid to the party inwhose favour the difference lies. [28] The apportioning of costs should not be a part of regular litigation and should be confined to relatively rare cases: Lewis v.Lehigh Northwest Cement Limited, 2009 BCCA 424 at para. 36. Analysis [29] I have already reviewed the relative success on each of the issues addressed at this trial above.

I will consider the three-prongtest set out in Sutherland. [30] Under the first branch, of separate and discrete issues, I am satisfied that this was met in this case.

Although the key dispute attrial revolved around the nature of the parties’ relationship with respect to the Property – which could arguably be characterized as an all-encompassing issue in itself – I accept that the question led to multiple lines of legal inquiry into issues of contract, trust, and familialrelations. [31] Under the second branch, it is not possible to divide out the time attributable to each of the issues at trial since the evidence thatwas led was necessary to set out the circumstances of the relationship between the parties, how the Property was acquired, and then theuse made of the Property after it was purchased.

All of this evidence was needed in order for the Court to make the findings on thevarious issues advanced. The evidence was very much intertwined on the various issues and cannot be dissected. I do not find that therewere discrete questions of fact that could be attributed solely to the various issues. As a result, there is no discernable basis upon whichto identify the time attributable to the separate issues. [32] Under the third branch, the plaintiff was ultimately successful and she did not prolong the case unnecessarily through herconduct on any of the issues.

As such, there is no basis to support that an apportionment would effect a just result between the parties. [33] There exists no special circumstances that support that the plaintiff should be deprived of any of her costs. Offer to Settle History of offers to settle [34] An “offer to settle” is defined in subrule 9-1(1) of the Rules:

(1) In this rule, “offer to settle” means … (

c) an offer to settle made after July 1, 2008 under Rule 37B of the former Supreme Court Rules, as that rule read on the date of the offerto settle, or made under this rule, that (

i) is made in writing by a party to a proceeding,

(ii) has been served on all parties of record, and (iii) contains the following sentence: “The ............ [party(ies)] ............, ............[name(

s) of party(ies)]............, reserve(

s) the right to bring this offer to the attention of the court for consideration in relation to costs after the court has pronounced judgment on all other issues in this proceeding.” [ 35 ] On August 14, 2017, the plaintiff made a formal offer to settle the claim by agreeing to pay $22,000 to the defendant as well as releasing the claim for fair occupational rent due from the defendant (the “Plaintiff’s Offer”).

That offer expired on September 6, 2017 at 5pm. [ 36 ] The rationale for the Plaintiff’s Offer was explained in the letter as being more than the amount that the defendant had made in payments to the plaintiff in 2004 and 2005, the plaintiff’s share of any utility payments, plus prejudgment interest. [ 37 ] The Plaintiff’s Offer was not accepted. [ 38 ] The defendant did not make any offers to settle. [ 39 ] The matter proceeded to trial on December 4 to 8, 11, 12 and 14, 2017.

Legal Principles [ 40 ] Subrule 14-1(9) provides that “costs of a proceeding must be awarded to the successful party unless the court otherwise orders”. Subrule 9-1(4) provides that the court may consider offers to settle in exercising its discretion in relation to costs. These 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”: Hartshorne v.

Hartshorne, 2011 BCCA 29 at para. 25 [ Hartshorne ]. [ 41 ] Subrule 9-1(5) provides that the court may do one or more of the following in a proceeding in which an offer to settle has been made: (

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. [ 42 ] In making an order pursuant to subrule 9-1(5), the court may consider the following, at subrule 9-1(6): (

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. [ 43 ] In determining whether the offer to settle was one that ought reasonably to have been accepted, the ultimate award should not be considered. Instead, the court must determine whether at the time that the offer was open for acceptance it would have been reasonable for it to have been accepted.

Reasonableness may be assessed by considering such factors as the timing of the offer, whether it had some relationship to the claim (as opposed to simply being a “nuisance offer”), whether it could be easily evaluated, and whether some rationale for the offer was provided.

This list is non-exhaustive, and not all factors may be relevant in a given case: Hartshorne at para. 27 . [ 44 ] In Hartshorne , the Court of Appeal noted at para. 28 that the trial judge considered as a relevant factor that the offer had “provided sufficient information to permit the appellant to understand the content of the order”. [ 45 ] The court is entitled to take into account the reasons why a party declined to accept an offer to settle. The court must consider whether those reasons are objectively reasonable: C.P. v.

RBC Life Insurance Company, 2015 BCCA 30 at para. 97 [ C.P. ]. [ 46 ] In considering the relationship between the terms of the settlement offer and the final judgment, the court may make an objective measurement of the reasonableness of the offer and the decision to reject it: C.P. at para. 99 . To put it another way, the question to ask is would the “‘declining’ party have been financially better off, on a global basis, if he had accepted the offer as compared to going to trial”: Kopp v. Kopp, 2011 BCSC 889 at para. 7 . [ 47 ] The court is also entitled to consider any other relative factors: C.P. at para. 103 .

Analysis

[ 48 ] The plaintiff is seeking an award of double costs pursuant to subrule 9-1(5)(

b) after August 24, 2017.

a) Reasonable acceptance [ 49 ] The plaintiff submits that the offer was made over three months prior to the actual trial date.

At that time, the defendant knew all of the facts and was aware of the “truth of the Plaintiff’s claims”. [ 50 ] The defendant submits that the Plaintiff’s Offer of $22,000 was not fair and reasonable given the case law, his understanding of the facts, the pleadings and the law, and, as such, he was justified in refusing the Plaintiff’s Offer when it was made. [ 51 ] The plaintiff’s notice of civil claim raised an issue that an agreement was reached between the plaintiff and defendant in which each of them would be registered on title of the Property as joint tenants and each would be responsible for 50% of the mortgage fees and ongoing expenses related to the Property.

At trial, there was a clear discrepancy in the evidence on the nature of the agreement that was reached. Ultimately, the evidence was insufficient to support any agreement. [ 52 ] Despite the mathematical basis provided in the Offer, I do not consider the Offer to be one that ought reasonably to have been accepted at the time it was open. The Offer did not provide a sufficient relationship or rationale with respect to the plaintiff’s overall claim.

I note that the wording of the Offer focuses primarily on the issue of fair occupational rent, and fails to draw a sufficient connection to the claim for the greater interest in the Property – the claim that dominated these proceedings. [ 53 ] In all of the circumstances this factor favours the defendant.

b) Terms of settlement and final judgment [ 54 ] The plaintiff submits that the question to ask is would the defendant have been financially better off, on a global basis, if he had accepted the offer as compared to going to trial? [ 55 ] The plaintiff submits, and I agree, that the defendant was financially worse off by going to trial. The defendant has not made any submissions that addressed this particular consideration. [ 56 ] This factor favours the plaintiff.

c) Relative financial circumstances [ 57 ] The plaintiff submits that while the defendant does not earn a large income, he is doing better than in the past and is a beneficiary of a significant estate, which includes a clear-title house on the west side of Vancouver.

She submits that she is still struggling to meet her commitments, she has CRA judgments against the Property, and she faces increased interest rates on her floating- rate mortgage. [ 58 ] The defendant submits that the plaintiff has profited immensely by being able to acquire full ownership to the Property, operate a daycare business that has been expanded and earns “many hundreds of thousands of dollars”. [ 59 ] In this case, the financial circumstances of the parties do not favour either party.

Both parties will obtain the benefit of the skyrocketing property values throughout the Lower Mainland in that the evidence supports that they both have interests in real property.

d) Additional factors [ 60 ] The plaintiff submits that an additional factor to consider is the “blameworthy conduct” of the defendant: see Hartshorne at para. 35 . Here, the Court found that the defendant’s evidence regarding his personal relationship with the plaintiff did not have the “ring of truth”: see para. 146 of Reasons. The defendant’s evidence in respect to there being a marriage-like or sexual relationship was rejected: see para. 156 of Reasons. [ 61 ] The plaintiff further submits that the defendant seriously misrepresented his expected earnings to the TD Bank and has not been truthful with the CRA.

She submits that the defendant gave incorrect testimony to the Court for the purposes of financial advancement. [ 62 ] I accept that the allegations of marriage-like and sexual relationship made by the defendant were a significant cause of stress and embarrassment to the plaintiff and her children. It was clear during her testimony that she was upset by the allegations that she had engaged in an intimate relationship with the defendant: see para. 152 of Reasons. [ 63 ] I find that this factor strongly favours the plaintiff.

Conclusion [ 64 ] It is my view that weighing all of the factors and the outcome of this trial, I am convinced that this case justifies an award of double costs against the defendant. The most persuasive reason to award the plaintiff with double costs is my negative assessment of the defendant’s conduct at trial. I found that the defendant was not credible in respect to the evidence on the nature of the relationship with the plaintiff. The defendant chose to proceed to trial and maintain his allegations that he was involved in an intimate relationship with the plaintiff.

He ought to have known that this allegation could not be sustained had it been assessed objectively and honestly. My view is that there was no merit in the claim that he was involved in a marriage-like or intimate relationship. The evidence was woefully inadequate to establish such a claim. The defendant lacked credibility on this aspect of the claim. The position taken and evidence given by the defendant on this aspect of the claim supports that some further costs sanction should be given.

[ 65 ] Weighing all of the factors, I conclude that the plaintiff should have double costs for two days of trial. This would consist of the units for preparation and attendance for two days of the trial only. [ 66 ] In light of all of the factors and my discretion, I make the following costs award: a. the plaintiff is entitled to her costs of the proceeding on scale B; and b. the plaintiff is entitled to double costs of two days of trial which will consist of the unit time for preparation and attendance at trial for two days. “The Honourable Madam Justice Forth”