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Defendant Refused Costs at Trial For Failing to Consent to Small Claims Court Transfer

Written by admin on . Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14, BCSC Civil Rule 9, Uncategorized.


Reasons for judgement were released today addressing whether a Defendant who beat a formal settlement offer should be awarded costs.
In today’s case (Cue v. Breitkruez) the Plaintiff was involved in a rear-end collision.  He sued the rear motorist for damages.  Prior to trial the Defendant made a formal settlement offer for $1.  With liability being hotly contested the Plaintiff proposed that the case be transferred to Small Claims Court.  The Defendant refused to consent stating that “such a transfer would result in greater delay“.
At trial the Plaintiff’s case was dismissed with a finding that the Plaintiff was responsible for the collision.  (You can click here to read my summary of the trial judgement).  The Defendant then applied to be awarded double costs pursuant to Rule 9-1(5) because they beat their formal offer at trial.
Mr. Justice Smith dismissed the application noting that since Rule 14-1(10) generally restricts Plaintiff’s awarded an amount within the small claims court jurisdiction from being awarded trial costs that the Defendant should be refused costs for not agreeing to have the case heard in Provincial Court.  Specifically Mr. Justice Smith noted as follows:

7]             The matter remained in this court subject to an agreement to still limit the claim to what could be awarded in Provincial Court. Had my liability decision been different and the matter proceeded to an assessment of damages, Rule 14-1(10) would have been a bar to an award of any costs, other than disbursements, in favour of the plaintiff.  In my view, fairness requires that the same limitation apply to the successful defendant, particularly as the defendant did not agree to the proposed transfer to Provincial Court.

[8]             I therefore decline to award any costs to the defendant, other than disbursements.  There is therefore no need to consider the offer to settle because there are no costs to double.

Mild Soft Tissue Injury Valued at $4,000; BC Supreme Court Rule 14 Discussed

Written by admin on . Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 14, ICBC Back Injury (soft tissue) Cases, ICBC Soft Tissue Injury Cases, ICBC Whiplash Cases, Uncategorized.

Reasons for judgement were released this week by the BC Supreme Court, New Westminster Registry, addressing the value of non-pecuniary damages (money for pain and suffering and loss of enjoyment of life) for a mild soft tissue injury.
In this week’s case (Brar v. Kaur) the Plaintiff was involved in a 2006 rear end collision.  Prior to trial the responsible motorist admitted fault for the crash.  The matter proceeded to court under the “summary trial” rule where the evidence was presented by affidavits.   The evidence established that the Plaintiff suffered a fairly minor soft tissue injury in the crash.  Mr. Justice Truscott awarded the Plaintiff $4,000 for his non-pecuniary damages and in doing so made the following comments about the severity of the injury and the difficulty in valuing a case without hearing live testimony from the Plaintiff:
[42] It is near to impossible to assess credibility on a summary judgment application supported only by affidavits. The plaintiff’s injuries were only soft tissue injuries caused by a very minor accident and those complaints were subjectively based and not objectively verifiable. Accordingly the Court must be cautious in accepting his complaints as proven.

[43]         However Dr. Sandhu does not suggest in his report the plaintiff is not to be believed on his complaints or even suggest that he is exaggerating. He appears to have accepted the plaintiff’s complaints as legitimate and consistent with the mechanism of the accident and I likewise am prepared to accept the complaints of the plaintiff as stated in his affidavit and as reported to Dr. Sandhu.

[44]         I am prepared to conclude that the plaintiff sustained mild soft tissue injuries to his neck and back areas. While Dr. Sandhu says the plaintiff was fully recovered in six months I observe that Dr. Sandhu’s last report of complaints from the plaintiff was on May 17, 2007, only five months after the accident. Thereafter it does not appear the plaintiff saw Dr. Sandhu again until over one year later and then it was for unrelated issues…

[54] I award the plaintiff $4,000 for non-pecuniary damages as his injuries lasted slightly longer than the injuries of the plaintiffs in Saluja and Bagasbas.

This case is also the first that I am aware of to apply the New BC Supreme Court Rule 14-1(10).  This rule prevents a Plaintiff who is awarded below $25,000 from being awarded costs unless they have “sufficient reason” to sue in the Supreme Court.  Mr. Justice Truscott held that the Plaintiff did not have sufficient reason to sue in the Supreme Court because “he could never have reasonably expected to obtain an amount in excess of the Small Claims jurisdiction“.

Mr. Justice Truscott applied this rule consistently with precedents developed under the old Rule 57(10) which reads identically to the new rule.  I should also point out that the BC Court of Appeal is expected to address the issue of whether Plaintiff’s in ICBC claims worth below $25,000 have sufficient reason to sue in the Supreme Court due to the “institutional” nature of ICBC and this upcoming judgement should add welcome clarity to this area of the law.

BC Court of Appeal: Hiring Multiple Lawyers not a Reasonable Disbursement

Written by admin on . Posted in BC Supreme Court Costs Cases, Uncategorized. 42 Comments on BC Court of Appeal: Hiring Multiple Lawyers not a Reasonable Disbursement


When a party succeeds in a BC Supreme Court lawsuit the losing party usually has to pay the winner’s ‘costs and disbursements‘.  Disbursements are the out of pocket expenses incurred in moving the lawsuit forward.  (common disbursements include Court filing fees and the costs of medical reports).
What if your case is complex and your lawyer needs to hire an additional lawyer to properly advance your case?  Is this extra legal expenses a reasonable disbursement?  Reasons for judgement were released today by the BC Court of Appeal addressing this topic.
In today’s case (Baiden v. Vancouver) the Plaintiff was injured at the hands of the Vancouver Police.  Before the matter could proceed to trial the Defendant’s raised a “s. 10 WCB Defence”.   A section 10 defence, when successful, prevents a plaintiff from suing in court where the Plaintiff is injured while acting within the scope and course  of his/her employment and the at fault entity is also a person or employer that caused the accident in the course of their employment.  In these circumstances the Plaintiff must turn to WCB for compensation.
Once this defence is raised, BC Courts cannot deal with its merits rather under s. 257 of the Workers Compensation Act the Workers Compensation Appeal Tribunal (WCAT) has the exclusive jurisdiction to determine the status of parties to a legal action.  This is frustrating to Plaintiffs because if this defence is pursued the lawsuit is basically put on hold, a hearing has to be had at WCAT, and only if the defence fails at WCAT can the Plaintiff carry on with their lawsuit.  That is exactly what happened in today’s case.
Before heading to WCAT the Plaintiff’s lawyer hired an additional lawyer to assist with the process.  Ultimately the WCAT hearing was successful for the Plaintiff and the case proceeded to trial.  After judgmenttThe trial judge awarded the Plaintiff $8,400 to compensate him for the additional fee of hiring a second lawyer to deal with the WCB issue.  (You can click here to read my article summarizing the trial judge’s reasons)
The Defendants appealed arguing that the judge was wrong in awarding this as a disbursements.  The BC Court of Appeal agreed with the Defendants and overturned the trial judge.  In doing so the BC High Court provided the following reasons making it clear that the expense of multiple lawyers will rarely be considered a reasonable disbursement:

[25]         The limited authority on this issue in this province supports the view that if counsel retains another lawyer to perform a specialized function due to his or her own lack of experience, it does not follow that such fees are recoverable from the opposing party, but remains a matter between the original lawyer and his client: Noble v. Wong, Bell v. Fantini (1981), 32 B.C.L.R. 322 (S.C.). That is a practical and appropriate approach, and should have been followed here. Outsourcing portions of legal work during litigation and then permitting recovery of that lawyer’s fees as a disbursement undermines the policy of party and party costs. While there may be cases in which this can be justified, they would be limited and exceptional.

[26]         This is not such a case. I would therefore allow the appeal, and set aside the order permitting Mr. Baiden to recover Mr. Ishkanian’s fees of $8,400 as a disbursement.

New Formal Settlement Offer Rule Gets First Judicial Interpretation

Written by admin on . Posted in BC Supreme Court Costs Cases, BCSC Civil Rule 9, Uncategorized. 41 Comments on New Formal Settlement Offer Rule Gets First Judicial Interpretation


The first judgement that I’m aware of dealing with the new formal settlement offer rule (Rule 9) was released today by the BC Supreme Court.
In today’s case (Demarzo v. Michaud) the Plaintiff was injured in a BC motor vehicle collision.  He went to trial and was awarded $356,000 in total damages.  (you can click here to read my post summarizing the trial judgement).  Prior to trial the Plaintiff made a formal settlement offer to resolve the claim for $150,000.
Having comfortably beat his pre-trial settlement offer the Plaintiff asked the Court to exercise its discretion and award double costs under Rule 9-1 (Rule 9 reads almost identically to the old Rule 37B.  You can access my archived posts dealing with Rule 37B by clicking here).
Prior to trial the Plaintiff obtained various independent medical reports.  The Plaintiff served these on the Defendant in compliance with the rules of Court but not as quickly as possible.  In an interesting application of the new rule Mr. Justice Brown held that double costs should not be ordered if a party failed to make “timely disclosure of documents“.  Specifically the Court held as follows in refusing to award the Plaintiff double costs:

[18]         The main purpose of Rule 9-1 is to encourage parties to settle, early if possible. But the purposes of the Rule, and modern practice, assumes timely disclosure of documents and reports that would significantly affect a party’s ability to make a rational assessment of the litigation risks they face. While it is true the Rules of Court provide parties means to discover facts and the parties can conduct their own investigations to assess litigation risks, in my view it is also incumbent on a party expecting an order for double costs to show timely disclosure of documents and reports that would have significantly affected the other party’s assessment of whether the offer ought reasonably to be accepted.

[19]         Further, while evidence at trial produced a judgment that was more than double what the plaintiff offered to settle for, I note that the plaintiff’s credibility, tested on cross-examination, and the specialist reports served in October 2009 were important factors in the damages awarded.

[20]         Considering these factors, I find an award of double costs is not in keeping with the purposes of the Rule and I decline an award.

More on ICBC Injury Claims and "Sufficient Reason" to Sue in Supreme Court

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If a Plaintiff sues in Supreme Court but is awarded damages of $25,000 or less (the current financial limit of the BC Small Claims Court) the Plaintiff is not entitled to Costs unless they had “sufficient reason” for suing in the BC Supreme Court.
It is becoming reasonably well established that a Plaintiff has sufficient reason to sue in Supreme Court when the Defendant is insured with ICBC.  The reason being that the Defendant will likely be represented by a lawyer paid for by ICBC whether the claim is filed in Small Claims Court or the Supreme Court.  In these circumstances it is reasonable for a plaintiff to hire a lawyer to balance the playing field.  Since the Supreme Court allows costs orders to offset some of the legal fees our Courts have held on a few recent occasions that this creates a ‘suffient reason’ for Plaintiff’s to bring modest claims to trial in the Supreme Court.  Reasons for judgement were released today demonstrating this.
In today’s case (Zale v. Colwell) the Plaintiff was injured in a BC motor vehicle collision.  She sued in the Supreme Court.  At trial she was awarded just over $10,000 for injuries and losses.  Mr. Justice Harvey went on to award the Plaintiff costs despite the fact that the Small Claims Court could have heard the case.  The Court provided the following reasons:

[7]             None of the factors identified in Spencer have application here. The matter was not factually complex; it proceeded by judge alone; liability was admitted, obviating the need for examination for discovery by the plaintiff; the defendant resided within the jurisdiction; and, the matter did not proceed by way of summary trial.

[8]             As was noted in Spencer, the desire of the plaintiff to have counsel, alone, is not a sufficient reason, of itself, to depart from the underlying proposition stated in R. 57(10). In any event, the plaintiff was represented when the action was originally commenced in Provincial Court in 2006.

[9]             Lastly, the plaintiff says costs should be awarded owing to the fact the defendant, in effect ICBC, is an institutional litigant with rigid policies in low velocity collision claims such as this.

[10]         The defendant, while admitting liability, put the plaintiff to the strict proof of any damages whatsoever arising from the accident. That position did not change throughout the trial process. As in Spencer, I am left with the conclusion that but for the trial process, the plaintiff would be left without a remedy…

[13]         In each of the above three decisions, the primary reason for awarding the plaintiff costs, in circumstances not unlike these facing the plaintiff here, was the consideration that given the need to retain counsel to battle an institutional defendant,  a reasonable consideration in determining the forum is the matter of indemnity for the costs of counsel.

[14]         Recognizing that the onus rests on the plaintiff to demonstrate sufficient reason to have raised the matter from Provincial Court to Supreme Court, I am not persuaded that the distinguishing factor noted by the defendant, that counsel was retained (albeit not the same counsel) for the Provincial Court proceeding, is sufficient to deprive the plaintiff of the costs of the proceeding under R. 66.

[15]         I conclude that in the circumstances, it was ultimately reasonable for the plaintiff to make the decision to have the matter heard in Supreme Court.

[16]         Accordingly, the plaintiff will have her costs pursuant to R. 66(29)(b).

I should point out that today’s case relied on BC Supreme Court Rule 57(10).  This rule has now been repealed and replaced with Rule 14-1(10) which reads identically to Rule 57(10) so the precedents developed under Rule 57(10) regarding costs should continue to assist litigants under our new rules.  I should also point out that the BC Court of Appeal is expected to address the issue of sufficient reason for suing in the BC Supreme Court and provide further clarity and certainty to this area of the law.

A Lesson in Math: Winners and Losers in Personal Injury Lawsuits

Written by admin on . Posted in BC Supreme Court Costs Cases, Uncategorized.


When a personal injury claim goes to trial there is a winner and a loser.  Who the winner is, however, is not always apparent by reading the Court judgement.  To know who the winner really is you have to know the behind the scenes formal settlement offers.
Reasons for judgment were released today demonstrating, yet again, the steep costs Plaintiffs can face when on the losing end of a BC personal injury lawsuit.
In today’s case (Smagh v. Bumbrah) the Plaintiff was injured in a motor vehicle collision.  She sued for damages.  Before trial the Defendants made a formal settlement offer for $20,000.  The Plaintiff rejected this offer and went to trial.  After 10 days of trial a BC Jury awarded $2,200.  The Defendant was awarded ‘costs’ from the date of the formal offer onward.  (You can click here to read my summary of the costs judgement).
On the face of it the Plaintiff clearly lost because she was awarded far less by the Jury than the settlement offer.  But the full extent of the loss is far greater than the difference between $20,000 and $2,200.  The Plaintiff actually ended up owing the Defendant money for this result.  How much money?  Approximately $40,000.
You can read today’s judgment in full to see the types of items a losing litigant can end up owing the winning side to a lawsuit and to see just how quickly a ‘costs’ award can add up.
Today’s case helps illustrate an important point I’ve previously stressed.  Before a case goes to trial it is important to fully consider the potential risks and rewards including the significant toll a costs award can have.  Without knowing and weighing these risks it is very difficult to make an informed choice about whether to settle or proceed to trial.

BCCA Finds Courts Can Consider Insurance Under Rule 37B

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Very important reasons for judgement were released recently by the BC Court of Appeal addressing a key factor under Rule 37B.
By way of brief introduction Rule 37B is the current rule dealing with formal settlement offers.   (Rule 37B will be replaced with Rule 9 next month but the new rule uses language that is almost identical to Rule 37B).
The Court can take formal settlement offers into account when awarding a party costs.  One factor the Court can consider in deciding whether to award costs or increased costs under Rule 37B is “the relative financial circumstances of the parties“.
In most personal injury lawsuits Defendants are insured such that they don’t have a significant financial stake in the outcome of the trial.  BC Supreme Court judges have been conflicted in whether insurance is a relevant consideration when viewing the financial circumstances of the parties.  Today the BC Court of Appeal addressed this issue for the first time.
In today’s case (Smith v. Tedford) the Plaintiff was injured in a motor vehicle collision.  Before trial the Plaintiff made a formal settlement offer.   Several days into trial the Defendant accepted the offer.   The parties could not agree on the costs consequences.  The trial judge awarded the Plaintiff costs to the time the offer was made and double costs for the time spent at trial.  (You can click here to read my post summarizing the trial judge’s reasons).  In doing so the Judge considered the fact that the Defendant was insured with ICBC as relevant to his ‘financial circumstances“.
ICBC, on behalf of the Defendant, appealed arguing that the Judge was wrong to consider insurance.   In a welcome development the BC Court of Appeal found as follows:
While I recognize arguments over the implications of a defendant’s insurance coverage being considered in relation to an award of costs may go back and forth, like the judge I consider precluding such from consideration renders an assessment of the parties’ relative financial circumstances, at least in a case of this kind, very artificial indeed. Clearly, with ICBC having assumed the defence, the financial ability to defend was much greater than the financial ability to prosecute, and that is of no small importance to considering whether and to what extent the financial circumstances of the parties, relative to each other, bear on an award of costs where, as here, there has been an offer of settlement made ten days before a trial for the assessment of personal injury damages which was not accepted until the seventh day of the trial.

Formal Settlement Offers and Strict Compliance with Rule 37B

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Reasons for judgement were released today considering whether strict compliance with Rule 37B is required for a Court to award a successful party Double Costs after beating a formal settlement offer at trial.
In today’s case (Eigeard v. Muench) the Plaintiff sued for personal injuries.  Prior to trial the Plaintiff made a written settlement offer to resolve the claim for $107,500.  The claim went to trial and the Plaintiff enjoyed success with a Jury awarding more than settlement offer.
The Plaintiff then asked the Court to award Double Costs under Rule 37B.  The Defendant objected arguing that the formal offer did not strictly comply with Rue 37B(1)(c)(iii) which requires formal offers to contain the following sentence:
“The ….[name of party making the offer]…. reserves 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 all other issues in this proceeding.”
The Plaintiff argued that the Court still had the discretion to award double costs because “the defendant’s insurers are sophisticated and understood the content of the offer and there is no confusion.” and that “this was a legitimate attempt by the plaintiff to resolve the action.”
Madam Justice Hyslop disagreed and concluded that the Court did not have the discretion to award double costs in these circumstances.  The Court went onto summarize the applicable law as follows:
[16] In Roach, the exact words of Rule 37B(1)(c)(iii) were not contained in the offer to settle pursuant to Rule 37B. Despite this, the trial judge ordered double costs. This was one of the grounds of appeal.

[17]         The offer to settle was in the form of a letter directed to counsel. The letter set out an offer of settlement and then stated:

We reserve the right to bring this letter to the attention of the judge as a matter of costs in accordance with Rules 37 and 37A. [para. 32]

[18]         Madam Justice Prowse, writing for the Court, stated:

[35] It is not disputed that the terms of Ms. Roach’s offer substantially complied with the requirements of an offer under Rule 37B(1)(c): it was made in writing; it was delivered to Mr. Dutra (through his counsel); and it contained a sentence in terms similar to those set forth in subrule (1)(c)(iii). Nor is there any suggestion that Mr. Dutra was misled by the offer in any way, or that he believed that he could disregard the offer with impunity with respect to costs because it did not track subrule (1)(c)(iii) word-for-word. Rather, Mr. Dutra takes what appears to be the highly technical point that if an offer does not contain the exact wording set out in subrule (1)(c)(iii), it does not come within the definition of an “offer to settle” within the meaning of Rule 37B(1) and, therefore, cannot attract an award of double costs.

[19]         Madam Justice Prowse considered both a strict and relaxed interpretation of Rule 37B(1). In doing so, she reviewed the history of Rule 37 and the enactment of Rule 37B.

[20]         She concluded that the enactment of Rule 37B was a move away from strict compliance as was the situation of Rule 37. In considering the offer, Madam Justice Prowse stated at para. 52:

That said, I am also of the view that the wording of the offer must be substantially compliant with the wording of subrule 1(c)(iii) such that no reasonable person could be misled as to the intent of the offer or the fact that it was an offer within the meaning of Rule 37B. In other words, the offer must be in writing, the wording must make it clear what party is making the offer and to whom it is made, and it must include the fact that the party making the offer is reserving the right to bring the offer to the attention of the court in relation to costs after judgment on all other issues in the proceeding.

[21]         The court in Roach upheld the trial judge’s finding that the offer meant the requirements of Rule 37B. At para. 54, Madam Justice Prowse endorsed the trial judge’s admonition that:

…counsel would be well advised to ensure that the language of their offers complies precisely with subrule 1(c)(iii) (and, in future, Rule 9-1) to avoid any possibility of their offers being found deficient. In this case, the offer was made just days after the new rule came into effect. It may be that the same measure of flexibility will not be accorded to offers in the future which are non-compliant. That is especially so if it proves that flexibility in the application of the Rule undermines its purpose of encouraging settlement of disputes in a fair, timely and cost-efficient manner, in accordance with the object and spirit of the Rules as a whole.

Madam Justice Hyslop then dismissed the application for double costs with the following reasons:

[25]         The offer does not meet the criteria set out in Roach. Rules 37(22) and (37) address the consequence of accepting an offer. There is nothing in the offer of the plaintiff to suggest that the plaintiff intends to bring the offer to the trial judge’s attention as it relates to costs.

[26]         The court’s discretion under Rule 37B comes into play after the court determines whether the offer complies with Rule 37B(1)(c) and as interpreted by Roach.

[27]         I dismiss the plaintiff’s application for double costs. The defendant shall have costs of this application pursuant to scale B to be set off against the costs otherwise awarded to the plaintiff.

In my continued efforts to get us all prepared for the New BC Supreme Court Civil Rules I will again point out that Rule 37B will be replaced with Rule 9 under the New Rules. The new rule uses language that is almost identical to Rule 37B so this case will likely retain its value as a precedent moving forward.

ICBC Ordered to Pay "Double Costs" In Breach of Insurance Case; Timing and Finances of Parties Considered

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Reasons for judgement were released today by the BC Supreme Court, Vancouver Registry, ordering ICBC to pay ‘double costs‘ after losing a breach of insurance claim.
In today’s case (Barsaloux v. ICBC) the Plaintiff was the owner of a vehicle that was stolen and subsequently recovered.  It was damaged beyond repair.  The Plaintiff had insurance with ICBC and applied for coverage.  ICBC refused to pay stating that the Plaintiff was in breach of his policy of insurance for making a false declaration about the identity of the vehicle’s principal operator.
The Plaintiff successfully sued ICBC and was awarded $13,850 in damages.   Prior to trial, the Plaintiff made a formal settlement offer of $13,700.  The Plaintiff applied to Court to be awarded double costs under Rule 37B.
ICBC objected arguing that the offer was made only two days before trial and therefore there was no reasonable opportunity to consider it.  Mr. Justice Smith disagreed and awarded the Plaintiff double costs.  In doing so the Court made the following useful comments about two notable issues under Rule 37B, timing of settlement offers and the financial disparity between the parties:

[17] I stress that ICBC was directly a party to this action. That distinguishes this case from Bailey v. Jang, 2008 BCSC 1372, where Hinkson J. declined to consider the relative financial positions of the plaintiff and ICBC where ICBC’s involvement was in its capacity as insurer for the named defendant.

[18]         The unequal position of the parties is not determinative because, as counsel for ICBC points out, the same situation will exist in any case where there is a coverage dispute between the corporation and a policy holder. However, I am also of the view that, in this case, ICBC used its position of strength to maintain what it should have known was an untenable, or at least an insufficiently considered, position…

[22]         In the circumstances, ICBC should have realized the weakness of its position well before trial. The offer to settle was the only means the plaintiff had to exert additional, although modest, pressure and to provide ICBC with a further opportunity to re-assess and reconsider its position in light of the evidence that existed. I find that it was an offer that ought reasonably to have been accepted.

[23]         That conclusion is not altered by the fact that the revised offer to settle was delivered only two days before trial. ICBC relies on Bailey, where the court said seven days was a reasonable period of time to consider an offer and ordered double costs for the period beginning seven days after delivery of the offer.

[24]         I do not read Bailey as stating anything more than what was a reasonable period for consideration of an offer on the facts of that case. Rule 37B sets no time limit for delivery of a settlement offer. In that regard, it differs from the former Rule 37, where an offer delivered less than seven days before trial attracted different consequences than one delivered earlier. In fact, Rule 37B(6)(a) specifically refers to an offer that ought reasonably have been accepted “either on the date that the offer to settle was delivered or on any later date” (emphasis added).

[25]         In the circumstances of this case, including the issues involved, the delivery date of the offer gave ICBC sufficient time to consider its position before trial. As said above, ICBC should have known well before the offer was delivered that it could not prove an essential part of what it was alleging. I find the plaintiff is therefore entitled to double costs for the trial of this action.

As readers of this blog are likely aware, Rule 37B will be replaced with Rule 9 on July 1, 2010 when the new BC Civil Rules come into force. The new rule uses language that is almost identical to Rule 37B which will likely have cases such as this one retain their value as precedents moving forward.

BC Court of Appeal to Consider Discretionary Costs Awards and Formal Settlement Offers

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After dozens of trial judgements which have applied Rule 37B (the current rule dealing with formal settlement offers which will be replaced with the almost identical Rule 9 on July 1, 2010), the BC Court of Appeal has agreed to hear what I believe will be their first case dealing with the application of this rule.
Reasons for judgement were published today on the BC Court’s Website where the BC High Court agreed to hear such an appeal.  In today’s case (Gehlen v. Rana) the Plaintiff was injured in a BC motor vehicle collision.  The Plaintiff sued.  Prior to trial ICBC made a formal settlement offer of $22,000.  The Plaintiff rejected this and proceeded to trial.  At trial a jury awarded just over $13,000 in damages.
In these circumstances the trial judge had the discretion to order that the Plaintiff pay the Defendant’s trial costs.    Mr. Justice Leask refused to do so and instead ordered that the Defendant pay the Plaintiff’s costs.   (You can click here to read my article discussing the trial decision).
The Defendant (through ICBC) asked for permission for the BC Court of Appeal to hear the case and they agreed to do so.  In deciding that this case merits an appeal the BC High Court reasoned as follows:

[3]             I am satisfied that the defendant has met the test for leave to appeal on both grounds, as that test is set out in Power Consolidated (China) Pulp Inc. v. British Columbia Resources Investment Corp. (1988), 19 C.P.C. 3d 396 (B.C.C.A.) (Chambers). With respect to the merits of the appeal, I appreciate that an order for costs is a discretionary order to which an appellate court will give considerable deference. I am nevertheless satisfied that the first ground of appeal may be characterized as a question of law, and the second as an error in principle. In fact, counsel advises that leave has been granted in another appeal on the question of whether it is appropriate to adjust costs on the basis that one party chose a jury trial.

[4]             The issue is of significance to the parties as the order under appeal entitles the plaintiff to costs in the range of $47,000, while if the defendant is successful he will recover costs in the range of $8,000.

[5]             It is more difficult to see significance to the practice in this appeal, but I do not find that militates against granting leave. The defendant does say that this court has not had the opportunity to hear many cases that provide guidance on R. 37B and its interaction with R. 57(10).

[6]             Finally, being an order for costs at the end of the action there is no need to consider possible delay due to the appeal.

As I recently wrote, ICBC has asked the Court of Appeal to also consider the issue of ‘costs’ awards when Plaintiff’s receive a judgement below $25,000 at a BC Supreme Court trial and these appeals may be heard together.

Clarity from the BC High Court will be welcome on numerous issues regarding the effects of formal settlement offers and costs awards after trial and I will be sure to report the highlights of the decisions when they are pronounced.