Costs Awards For Settlements Below $100,000
(Note: The case discussed below was upheld on appeal in July, 2011 by Madam Justice Ker)
As previously discussed, Rule 15 is the new BC Fast Track Litigation Rule and it is mandatory for cases for damages seeking less than $100,000 and for cases that “can be completed within 3 days“.
Rule 15-1(15) generally limits costs awards for fast track lawsuits to no more than $11,000. Reasons for judgement were released today by the BC Supreme Court, New Westminster Registry, addressing whether this limit applies to non-fast track cases that settle for less than $100,000. In short, Master Keighley held that it can, however, when a case has been removed from the fast track the costs restriction does not apply.
In today’s case (Johnson v. Axten) the Plaintiff started the lawsuit under the former Rule 68. The parties consented to remove the case from Rule 68 prior to trail and obtained a Court order to that effect. The case then settled after the new Rule 15 came into force. The settlement was for $90,000 plus costs and disbursements. The Defendant argued that the Rule 15 cap on costs should apply. Master Keighley disagreed finding that while it could apply, it should not in the circumstances of this case. The Court provided the following useful reasons:
 The Majewska case does, however, contain this helpful observation on the issue of “opting out” of Rule 66, at para. 34:
Moreover, it is important to recognize that parties to a R. 66 action are not compelled to remain in the fast track process. If the spectre of “special circumstances” emerges at any time during the action, whether in the form of complex issues, offers to settle, increased trial time, or any other situation, the parties may consent to removing the case from R. 66, or obtain an order to that effect under R. 66(8). Thus, if a concern arises that costs under R. 66(29) will not be adequate, this can be remedied by taking appropriate action during the proceeding.
and at para. 36:
“Here, if the plaintiff was concerned that R. 66 was no longer appropriate, the proper response was to apply for removal from the fast track litigation. If she chose not to take that step, she should have no basis for complaint that her costs are limited by R. 66(29).”
 In other words, a party who opted out of Rule 66 prior to trial was not limited by Rule 66(29). It is noteworthy that Rule 68, which governed this action prior to the parties “opting out” contained no limitation on costs. Also noteworthy is that Rule 15?1 as well as the case with its predecessors, provides for opting out of the provisions for the Rule and in this case the parties did so.
 Ms. Deane-Cloutier says that although Rule 15-1 does not, on its face, contemplate settlement, neither did Rule 66(29), but that did not prevent the court from holding that the subrule applied to settlement of cases governed by the Rule. That submission, with respect, ignores however the very clear statement of the Court of Appeal in Majewska: that once Rule 66 ceased to apply to an action, a party would not be limited to costs recoverable under Rule 66(29).
 The plaintiff’s costs will be assessed pursuant to Schedule B of the Supreme Court Civil Rules. While I agree that Rule 15-1(1) provides that cost limitations apply to cases which were not “fast tracked” but should have been (regardless of the intentions of the parties), the rule nonetheless provides that even if otherwise applicable, it will not apply to cases where the court has ordered that it will cease to apply. The court did so here, with the consent of the parties and, as a result, the cost limitation set out in Rule 15-1, does not apply.