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Tag: icbc claims and formal settlement offers

More on Formal Settlement Offers – Relevance of Insurance and a Novel Use of Rule 37B

In my continued efforts to write about the development of Rule 37B (the rule that deals with costs consequences after a party beats a formal settlement offer at trial) two cases were released this week further interpreting this rule.
The first case (Ostiguy v. Hui) the Plaintiff was injured in a 2003 BC car crash.  She ultimately represented herself.  In the course of the lawsuit ICBC made a formal settlement offer under the old Rule 37 for $30,000.  The Plaintiff did not accept this offer and went to trial.  The Jury awarded the Plaintiff $10,000.   The Defendants brought a motion for costs.
After addressing a technical issue about the offer’s general compliance with the old Rule 37 Mr. Justice Williams decided that the offer was capable of triggering costs consequences under the new Rule 37B.  The Court went on to award the Defendant 60% of their costs from the time that liability was admitted onward.  In reaching this decision the Court held that whether the Defendant was insured with ICBC was not to be considered (an issue the BC Supreme Court cannot agree on and needs to be addressed by the Court of Appeal).
The Court made the following notable comments:
[68] I have no knowledge as to the circumstances of the defendants; I will proceed on the basis that they are ordinary people of ordinary means. I should note parenthetically that, although they were represented by an insurer, it is their circumstances and not those of the insurer which are to be considered…

[71] In this case, the costs which the plaintiff is liable to pay are substantial. That is attributable in significant part to the fact that this litigation dragged on considerably. The plaintiff hired and subsequently discharged two different lawyers before proceeding to act for herself. There were a number of delays. Costs have mounted.

[72] The law is clear that sympathy is not a basis to determine the outcome of matters such as this. Nevertheless, it is quite disconcerting to see the plaintiff’s award of damages for her injury completely obliterated and overshadowed by a costs obligation, and for the consequences in fact to go further, to leave the plaintiff with a huge bill to pay as well.

[73] At the same time, the Court must be cautious that the sound and basic principles that underlie the costs regime are not simply disregarded because the plaintiff chose to represent herself and chose to proceed as she did.

[74] In the final result, the matter requires a balancing of a number of considerations and a significant application of judgment to try and fashion an outcome that is fair in the circumstances. Approaching the task in that fashion, I have decided as follows:

(a)      The effective date of the Offer will be July 14, 2008, when the defendants advised the plaintiff that liability was being admitted.

(b)      Up to July 14, 2008, the plaintiff is entitled to recover from the defendants her costs and disbursements.

(c)      For the time period following July 14, 2008, the defendants are entitled to recover from the plaintiff their disbursements and 60% of their costs.

For my readers not familiar with the potential extent of cost consequences I should point out that on these findings there is a good chance that the Plaintiff, despite being awarded $10,000 by the Jury, would end up owing ICBC money.  When preparing for trial it is imperative that parties consider the potential consequences of formal settlement offers.


The second case released this week was interesting because the Defendant made what appears to be a novel use of Rule 37B.  Usually parties restrict formal settlement offers to the issues to be addressed at trial.  In this week’s case (Moro v. El Mantari) the Defendant used Rule 37B in a Chambers application.

The parties could not agree on a lot of issues in the lawsuit.  Prior to trial the Parties brought cross motions to be decided in Chambers.  Prior to this pre-trial hearing the Defendant made a formal settlement offer under Rule 37B asking that the Plaintiff consent to various aspects of their motion.

The Defendant was largely successful in Chambers.  The Court was asked to award the Defendant double costs for Chambers because of the formal offer.  In the first case that I’m aware of using Rule 37B in this fashion Mr. Justice Chamberlist agreed that it was a permitted use of the Rule.  Specifically the Court held as follows:

[18] The defendant submits that it should be entitled to double costs on the basis of its offer to settle to the plaintiff made on June 26, 2009.  At that time the defendant asked the plaintiff to consent to items 1, 4, 6, 7, 8, and 10 of her notice of motion.

[19] The fact is that R. 37 has since 2008 been amended by deleting the subrules that an offer to settle did not apply to interlocutory proceedings.  The overriding fact is that there must be substantial success.  ..

22] Thus R. 37B(4) permits the court to consider an offer to settle when exercising the court’s discretion in relation to costs.

[23] As a result, the fact that the defendant has failed to meet the terms of the offer to settle will no longer necessarily mean that she would be deprived of her double costs.  In various decisions of this court it would appear that an issue which has been discussed in many cases is whether the offer to settle is one that ought reasonably to have been accepted (R. 37B(6)(a))….

[26] The enactment of R. 37B so that it now applies to interlocutory applications as well as trial, demonstrates the purpose of the new rule is to allow an offer to settle to be made, and if I were to follow the plaintiff’s position it would completely ignore the important deterrent function of the rule…

[32] In this case the offer to settle was made on June 26, 2009, and I find that the defendant was substantially successful.  The defendant shall have her costs of her attendance before me on August 27 and 28, 2009, as calculated in accordance with R. 37B, namely double costs.

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 which should help cases such as these retain their value as precedents.

More Judicial Interpretation of Rule 37B

I have blogged many times about the relatively new BC Supreme Court Rule 37B (the rule dealing with formal settlement offers).  You can search the archives of this blog to find my previous entries.
Useful reasons were released today by the BC Supreme Court providing further clarity and development of this rule.  
The key facts are as follows:
1.  The Defendant delivered a formal offer under the old Rule 37 on August 27, 2007 (rule 37B was not in force at the time).  That offer complied with Rule 37.
2.  The offer was for a monetary amount within the Small Claims Court jurisdiction.
3.  On August 21, 2007 the Plaintiff accepted the offer.
4.  The Plaintiff and the Defendant could not agree to the costs consequences of the acceptance and brought application to court.
5.  The applicaiton was heard after Rule 37B came into force.
One of the issues that was decided was whether under these facts Rule 37B applied or should the court consider the costs consequences under the old Rule 37?  Madam Justice Garson held that Rule 37B applied because:

[10]            Whether R. 37B applies to the Offer in question is determined by the definition of “offer to settle” in R. 37B(1).  Rule 37B(1) provides three alternative situations that fall within the meaning of “offer to settle.”  The situation applicable to the case at hand is R. 37B(1)(a) and thus paras. (b) and (c) are not applicable.

[11]            Rule 37B(1)(a) requires three criteria to be met to satisfy the definition of “offer to settle”:  first, the offer to settle must have been made and delivered before July 2, 2008; second, the offer to settle must have been made under R. 37 as that rule read on the date of the offer to settle; and third, there must have been no order made under R. 37 in relation to the offer to settle.

[12]            Applying R. 37B(1)(a) to the facts in this case, I note, the Offer was drafted on August 28, 2007, and delivered on August 29, 2007.  This is prior to July 2, 2008; therefore the first criterion is met.  The Offer was made pursuant to R. 37 as that rule read on August 28, 2007, and thus the second criterion is met.  Lastly, no order was made under R. 37 in relation to the Offer.  Thus, R. 37B applies to the offer made by the defendants and the new regime applies.

[13]            In Bailey v. Jang, 2008 BCSC 1372 at para. 10, Hinkson J. held that R. 37B “… applies to offers to settle made both before and after July 1, 2008 where no order as to costs has been made.”  (See also Brewster v. Rominn Laboratories Inc., 2008 BCSC 1463 at para. 13.)

[14]            In this case the defendants argue that because the offer was made and accepted pursuant to R. 37, R. 37 should continue to apply.  I cannot accede to that argument in the face of clear legislation to the contrary as well as the two authorities of this Court just mentioned.

Having decided that Rule 37B applies to these facts (even though the offer was made and accepted before Rule 37B came into force) The court went on to award the Plaintiff her ‘costs’ despite the fact that the offer was within the small claims courts jurisdiction.  In doing so the court provided the following reasons:

[19]            The defendants contend that the plaintiff is not entitled to her costs of the entire proceeding because the settlement is within the monetary jurisdiction of the Provincial Court.  Old R. 37(37) provided that a plaintiff was not entitled to costs if the offer accepted was within the jurisdiction of the Provincial Court under the Small Claims Act and could have been appropriately brought in the Provincial Court.  Rule 37(37) was not carried forward to R. 37B.

[20]            I turn back to R. 37B(5).

Cost options

37B (5)            In a proceeding in which an offer to settle has been made, the court may do one or both of the following:

(a)      deprive a party, in whole or in part, of costs to which the party would otherwise be entitled in respect of the steps taken in the proceeding after the date of delivery 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 of the offer to settle.

[21]            On the basis, that I have already decided that the words “after the date of delivery of the offer to settle” means costs incurred from and after the day following delivery, subsection (b) is inapplicable because no costs were incurred by either party after delivery of the offer to settle.

[22]            The “Cost options” as it is put in R. 37B are prescribed by the rule.  In this case the defendants argued that the plaintiff should be disentitled to all her costs because the case was one that ought to have been brought within the monetary jurisdiction of the Small Claims Court.  Even if that is one of the factors that could be taken into account under ss. (6), ss. (5) of R. 37B does not permit a court the option of depriving a party (in this case the plaintiff) of her costs before the date of delivery of the offer.

[23]            The rule only permits the Court to deprive a party, “in whole or in part” of her costs to which she “…would otherwise be entitled….after the date of delivery of the offer to settle;” [emphasis added].

[24]            Accordingly, there is no basis in R. 37B on which this Court could deprive the plaintiff of costs incurred before the date of the delivery of an offer regardless of whether the ultimate settlement is within the monetary jurisdiction of the Provincial Court.

Application of Rule 57(10)

[25]            Rule 57(10) of the Supreme Court Rules states as follows:

(10)        A plaintiff who recovers a sum within the jurisdiction of the Provincial Court under the Small Claims Act is not entitled to costs, other than disbursements, unless the court finds that there was sufficient reason for bringing the proceeding in the Supreme Court and so orders.

[26]            The purpose of R. 57(10) is to encourage actions to be brought and continued in Provincial Court when there is no sufficient reason to expect that the claim might give rise to damages in excess of the monetary jurisdiction of that Court.  If the plaintiff proceeds in the Supreme Court, and the resulting monetary judgment falls within the jurisdictional limits of the Provincial Court, the plaintiff must justify his choice of forum or be denied costs other than disbursements.

[27]            However, as the action did not actually proceed to trial, R. 57(10) has no application to the case at hand.

As an ICBC claims lawyer I welcome this judgement and all other judgements giving clarity to Rule 37B.  The more consistency this rule receives in its interpretation from the BC Courts the better position all ICBC claims lawyers will be in advising clients about the potential costs consequences of accepting or rejecting formal ICBC settlement offers.  I intend to continue to blog about this rule as it receives further judicial interpretation.