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Tag: Rule 37B

BC Supreme Court Confrims Strict Adherence Necessary to Trigger Rule 37B

Written by admin on . Posted in BC Supreme Court Costs Cases, Civil Procedure, Uncategorized. 51 Comments on BC Supreme Court Confrims Strict Adherence Necessary to Trigger Rule 37B

Reasons for judgement were released this week by the BC Supreme Court confirming that strict adherence to the requirements of Rule 37B are necessary for a pre-trial settlement offer to trigger costs consequences. In this week’s case (Wormell v. Hagen) the Third Party to the lawsuit made a pre trial offer stating “the Third Party offers to settle the Defendant’s claim(s) for any contribution or relief from the Third Party in this proceeding on the following terms: Dismissal of the Third Party Notice; and costs in accordance with Rule 37(22) and (37)”

After trial the Defendant’s claims against the third party were dismissed.  The Third Party brought an application for double costs under Rule 37B as they beat their pre-trial settlement offer.  Mr. Justice Goepel refused to order double costs holding that the pre-trial settlement offer did not comply with the strict requirements of Rule 37B thereby giving the Court no authority under the Rule.

Mr. Justice Goepel reasoned as follows:

[5] Rule 37 was repealed by B.C. Reg. 130/2008, effective July 1, 2008.  At that time Rule 37 was replaced by Rule 37(b) which provides that:

37B(1) In this rule, “offer to settle” means

(a)      an offer to settle made and delivered before July 2, 2008 under Rule 37, as that rule read on the date of the offer to settle, and in relation to which no order was made under that rule,

(b)      an offer of settlement made and delivered before July 2, 2008 under Rule 37A, as that rule read on the date of the offer of settlement, and in relation to which no order was made under that rule, or

(c)      an offer to settle, made after July 1, 2008, that

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

(ii)        has been delivered to all parties of record, and

(iii)       contains that following sentence: “The … [name of the 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.” [B.C. Reg. 130/2008, s. 1]

[6] The offer served by Mr. Moses on the defendant does not contain the wording required in Rule 37B(1)(c)(iii)…

[7] In Lau v. Rai, 2009 BCSC 696, Powers J. considered the effect of a non-compliant offer and held that a non-compliant offer did not constitute an “offer to settle” as defined under Rule 37B.

[8] I agree with Powers J.’s conclusion.  “Offer to settle” is a defined term.  A proposal concerning costs made subsequent to July 1, 2008 that does not comply with the provisions of Rule 37B(1)(c) is not an “offer to settle” as defined in the Rules and does not trigger the cost options set out in Rule 37B(5).

[9] In the result, therefore, the third party’s application for double costs is dismissed.  I confirm the cost order set out in para. 144 of my initial reasons.  The defendant is entitled to the cost of this application to be set off against the costs otherwise awarded to the third parties.  As the third parties were both represented by the same counsel at trial and took the same positions with respect to defending the third party claim the third parties are collectively only entitled to one set of costs:  Malik v. State Petroleum Corp., 2009 BCSC 115.

Purpose of Rule 37B in Injury Litigation Discussed

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

(Update: December 14, 2011 – the below decision was modified somewhat by the BC Court of Appeal in reasons for judgement released today)
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Precedents with respect to costs consequences under Rule 37B are still developing as this rule is slowly being molded into place.  The one clear pattern under Rule 37B is that of varying results which is a welcome relief from the strict and sometimes harsh costs results that flowed to litigants who could not beat a formal offer under the old Rule 37.
Today, reasons for judgement were released by the BC Supreme Court, Vancouver Registry, discussing the purpose of Rule 37B in Personal Injury Litigation.
In today’s case (Fan v. Chana) the Plaintiff sued as a result of alleged disability flowing from a motor vehicle collision which occurred in 2000.  The Plaintiff’s claims were largely rejected at trial with Mr. Justice McEwan finding that the crash caused nothing more than an “unexceptional soft-tissue injury” and that the litigaiton was “driven largely by parents…and a series of medical interventions premised on their representations, which were significantly at odds with certain basic information“.  In the end Mr. Justice McEwan awarded the Plaintiff just over $31,000 in damages.  (click here to read my blog post on the trial judgement)
Before trial the Defendant made a formal offer of $75,000 plus costs.  Since the Defendant beat their formal offer they brought an application for costs under Rule 37B.  Illustrating just how expensive personal injury litigation can be the Plaintiff’s costs and disbursements totaled over $85,000 and the Defendants totaled over $43,000.
In making a rather conventional award giving the Plaintiff most of her costs and disbursements up to the time of the formal offer and awarding the Defendant their costs and the disbursements from the time of the offer forward Mr. Justice McEwan made the following useful observations about Rule 37B:

[14] I agree that it is very difficult to see how the plaintiff’s guardian ad litem could have accepted the offer given the medical evidence at hand.  I doubt that the public trustee would have considered it prudent.  Nor do I see how a pre-trial judge could have made a sensible suggestion without hearing the evidence.

[15] The circumstances of this case illuminate a difficulty that arises with some kinds of personal injury cases.  Those with evident injuries and predictable consequences can usually be located within a range that allows for informed discussion.  Some soft tissue injuries, however, sometimes take a course that includes poorly founded medical opinions that seem to verify claimants’ beliefs that they have been seriously harmed.

[16] I have observed in other cases that it is not part of doctors’ function to cross-examine their patients.  On the other hand, I do not think it asks too much of medical professionals who know their reports are going to be used in forensic contexts, that matters that can be verified by objective evidence be verified.  The cogency of medical reports erodes pretty quickly when, for example, someone who plays on the school basketball team is otherwise described as seriously limited in his or her physical capacities.  There were several examples of such difficulties in this case.

[17] It is disturbing to find that a matter has come to trial on a costly series of opinions, founded on premises that a rudimentary effort at fact checking would reveal to be dubious.  It is not asking experts to trespass the fact-finding responsibilities of the court to ask that they take some responsibility for the soundness of the premises on which they proceed.  It may be that disbursements for such reports ought to be more carefully scrutinized for value, when bills of costs are taxed.

[18] Rule 37B is relatively recent.  I do not say new, because it amounts to a restoration of a broad discretion which had been curtailed by a series of rules amendments, the last of which occurred in 1999.  Even then, the court retained its inherent jurisdiction until that was essentially eliminated with respect to costs by appellate rulings (see: Cridge v. Harper Grey Easton, 2005 BCCA 33, 37 B.C.L.R. (4th) 62; Bedwell v. McGill, 2008 BCCA 526. The results were sometimes hard on parties who had guessed wrongly about their claims. The recent history of the costs rule is briefly, and helpfully, set out by Goepel J., in A.E. v. D.W.J., 2009 BCSC 505.

[19] The reintroduction of judicial discretion in costs certainly serves the ends of justice. Costs should be a penalty for unreasonable conduct in the litigation, not a penalty for failing to guess the outcome. In this regard, Courts must, I think, extend some leeway to litigants holding honest but, ultimately, mistaken views of their claims. It is generally better that such expectations be disposed of at law, rather than discouraged.  The public should not be given the impression that there is no reasonable access to a legal resolution.  It must be recognized that some people will only be comfortable if they “hear it from the judge.” This should be a valid option for those who seek it, not a form of deemed unreasonableness.  As such, inducements to settle, and to avail oneself of alternate dispute resolution, ought to complement rather than obstruct judicial determinations…

[21] The obstacle to the acceptance of a reasonable settlement offer in this case was clearly a belief that, by the alchemy of endorsement by experts, a set of facts that was or should have been assessed as dubious would be accepted by the trier of fact.

[22] These factual weaknesses should have been evident by the time the offer was made, but by then, a great deal had been invested in medical and other reports.  It seems likely that that investment contributed to an unreal expectation on the part of the plaintiff’s guardian.

[23] I am of the view that the fairest disposition of costs in the circumstances is to allow the plaintiff’s costs and disbursements to the date of the offer, and the defendant, its costs and disbursements thereafter, with the exception that I would disallow from the plaintiff’s disbursements the reports of Dr. Hahn, and the disallowed report of Dr. Kuttner.  Dr. Kuttner’s report was not proper opinion evidence.  Dr. Hahn’s reports should not be disbursements that the defendants should pay either before or after the tender of the offer to settle.

Another Rule 37B Case – Plaintiff Awarded Trial Costs Despite not Beating Defence Offer

Written by admin on . Posted in BC Supreme Court Costs Cases, Civil Procedure, Jury Trials, Uncategorized. 49 Comments on Another Rule 37B Case – Plaintiff Awarded Trial Costs Despite not Beating Defence Offer

(Please note the case discussed in this post was overturned on Appeal, you can click here for an updated post and click hear to read the BC Court of Appeal decision)
Reasons for judgement were released today dealing with costs consequences under Rule 37B.
Although Rule 37B has some flexibility to its outcomes, normally when a Plaintiff fails to beat a defence formal settlement offer after trial the Plaintiff is deprived of his/her costs and the Defendant is awarded theirs.  Today’s case had a result which departs from this norm.
In today’s case (Gehlen v. Rana) the Plaintiff was injured when she was a passenger involved in a rear-end car crash.  The Defendant admitted fault for the crash but denied liability to the Plaintiff claiming that the Plaintiff “was not present in the vehicle at the time of the accident“.  The Defendant made a formal offer to settle the Plaintiff’s claim for $22,000 plus disbursements.  The Plaintiff rejected this offer and went to trial.  After trial the Jury awarded the Plaintiff total damages of just over $13,000.
The Plaintiff brought a motion for her costs and the Defendant brought a counter motion for their costs from the time of the offer onward.  Mr. Justice Leask held that the Plaintiff should be awarded her full costs, even for steps taken after the formal settlement offer despite not beating the offer.  His reasoning was as follows:

[18]         As to s-s. (d), I consider two other factors to be relevant.  First, the defendant’s choice of trial by jury, which considerably increases the costs.  Second, the manner in which the defence was conducted – to accuse the plaintiff and her family of fraud – that accusation having been rejected by the jury.

[19]         Turning last to s-s. (a) – the most important question – whether the offer was one that ought reasonably to have been accepted.  On this issue, I agree with Goepel J.’s judgment in A.E. v. D.W.J., 2009 BCSC 505, at paragraph 55:

[55]      … this analysis is not one to be done based on hindsight once the final result is known.  The reasonableness of the plaintiff’s decision not to accept the offer to settle must be assessed without reference to the court’s decision.

[20]         I am satisfied that the defendant’s denial of liability, and the allegations of fraud that underlay that denial, dominated the plaintiff’s thinking at the time the offer to settle was made and, indeed, throughout the entire pre-trial period.  Knowing that her claim was not fraudulent and knowing the persuasive evidence she had to rebut the allegation of fraud, the plaintiff thought she had a good answer to the defendant’s “low ball” offer to settle.  With hindsight, it is obvious that her counsel did not anticipate the defendant’s vigorous attack on her credibility including the detailed attack on her employment resumé and the emphasis on her second accident.  Her counsel’s trial preparation did not include preparing her or her witnesses for these issues.  However, analyzing the plaintiff’s decision not to accept the defendant’s offer to settle without the benefit of hindsight, I am satisfied that it was not an offer that ought reasonably to have been accepted.

[21]         Analyzing all the Rule 37B(6) factors, I am satisfied that the plaintiff is entitled to a judgment under Rule 37B(5)(c) and is entitled “in respect of all … of the steps taken in the proceeding after the date of delivery … of the offer to settle, costs to which the party would have been entitled had the offer not been made” (emphasis added).

I turn now to the plaintiff’s submission for 1.5 times Scale B costs because of the allegation of fraud made by the defendant and the manner in which those allegations were pursued at trial.  Having taken that factor into account in my analysis of Rule 37B(6), I believe it would represent a form of “double counting” to award increased costs for this factor.  My conclusion is that the plaintiff is entitled to her costs and reasonable disbursements of the entire proceeding on Scale B.

Double Costs Awarded After Jury Dismisses ICBC Injury Claim

Written by admin on . Posted in BC Supreme Court Costs Cases, Civil Procedure, Jury Trials, Uncategorized.

Reasons for judgement were released today by the BC Supreme Court, New Westminster Registry, awarding a Defendant double costs following a Jury dismissing a Plaintiff’s ICBC Injury Claim.
This is one of the first cases that I am aware of under Rule 37B where a defendant was awarded double costs.
In today’s case (Luzuka v. Chuang) the Plaintiff was involved in an intersection collision.  Both fault and value of the claim were at issue.  ICBC, through the defendant’s counsel, made a formal settlement offer in 2007 for $40,000.  This offer was rejected by the Plaintiff.  The claim proceeded to trial which lasted 9 days before a Judge and Jury.  The Jury dismissed the Plaintiff’s claim finding that she did not prove the Defendant was responsible for the collision.
The Defendant sought an award of costs up to the date of delivery of the offer and double costs from that point on.  The application was largely successful and Mr. Justice Harvey noted that the “deterrent functions” of punishing a party who refused to accept reasonable settlement offer should not be ignored in such applicaitons.  Specifically Mr. Justice Harvey found as follows:

[24] The offer to settle was one which ought to reasonably have been accepted by the plaintiff within seven days of the disclosure to counsel of the identity of the witness, Ms. Kapil, which occurred during examinations for discovery on November 27, 2007.

[25] By that date, the plaintiff’s medical condition was well defined and it ought to have been clear to the plaintiff that liability for the accident was seriously in dispute.

[26] As was noted by Hinkson J. in Bailey, at para. 39, a refusal to award double costs following the date determined that the offer of the defendants ought reasonably to have been accepted, “would completely ignore the important deterrent function of the Rules”.

[27] Therefore, the defendants are entitled to costs and disbursements of the action until December 4, 2007, pursuant to Rule 57(9). Thereafter, the defendants are entitled to double costs together with actual disbursements, pursuant to Rule 37B(5)(b).

While no mention of the amount is made, the costs and disbursements stemming from this order would likely be in the tens of thousands of dollars.  This ‘deterrent‘ effect is a real one and unfortunately needs to be accounted for when preparing for trial where a formal settlement offer is made under Rule 37B.

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 should help cases such as this one retain their value as precedents.

More on Rule 37B – Offers to Multiple Defendants and Reality of Insurance Discussed

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

Reasons for judgement were released last week by the BC Supreme Court, Vancouver Registry, dealing with several issues under Rule 37B.
In this case (Towson v. Bergman) the Plaintiff was involved in 2 BC motor vehicle collisions, the first in 2002, the second in 2004.    At trial liability was found as against a Defendant in the first trial.  The second case was dismissed.  Leading up to trial the Plaintiff made a formal offer to all of the Defendants for $500,000.  Following trial over $1.1 million dollars in damages were awarded (click here for my previous posting on the trial judgment).
The court was asked to consider whether the Plaintiff can have double costs when her formal settlement offer under Rule 37B was made to multiple defendants.  The liable defendant argued that “the offer under 37B was invalid…because it was made to multiple defendants…and could only have been accepted by all the defendants, including the defendant’s against whom (the Plaintiff’s) claim was eventually dismissed by the court”.
Madam Justice Gray disagreed with this submission and held that there is no reason why costs consequences can’t follow a formal offer made to multiple defendants under Rule 37B.  Her reasoning was as follows:

[59] Aspen Enterprises Ltd. v. Quiding, 2009 BCSC 50, is the only case I located which considered the effect of a global offer to settle made under Rule 37B.  The plaintiffs inAspen argued that Rule 37B is “intended to be broader in application than the former rules, and therefore should apply to global offers”.  They argued that the fact that a global offer has been made should not preclude a court from considering the factors set out in subrule 37B(6) and exercising its discretion to award double costs.

[60] Fenlon J. appeared to accept this argument, although she found, on consideration of 37B(6)(a), that the offer to settle was not one that ought reasonably to have been accepted by the defendants.  The offer as framed could not have been accepted by Aspen or Kingsway without the consent of the other, and without the further consent of Landmark, which was not even a party at trial.

[61] Rule 37B places no restrictions on the court’s discretion in relation to global settlement offers.  The purpose of the rule is to facilitate and encourage reasonable offers to settle.  It requires a settlement offer to be delivered to all parties of record.  The law developed under Rule 37 regarding global offers is of little assistance.  Pursuant to Rule 37B, the consideration for the court pertaining to global settlement offers is whether the offer was one that ought reasonably to have been accepted.

[62] In considering the effect of an offer to settle on an award for costs under Rule 37B, the court may consider the following factors:

(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 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.

[63] The Offer Under 37B was one that ought reasonably to have been accepted by MPS.  Despite the fact that the Offer Under 37 was addressed to all defendants, it was evident at the time that MPS was the party facing the greatest risk of liability to Ms. Towson.  When the Offer Under 37B was made, it was apparent that the liability, if there were any, of Ms. Chan, Mr. Ko, and Mr. Bergman was likely to be very significantly less than the liability of MPS.

[64] Although MPS could not accept the Offer Under 37B on behalf of Ms. Chan, Mr. Ko, or Mr. Bergman, MPS could have agreed to pay the $500,000 in full settlement of the claim against it.  The eventual judgment was for roughly $1.2 million, being more than double the amount Ms. Towson offered to accept.

[65] In this case, Ms. Towson’s award against the single unsuccessful defendant, MPS, is far greater than the amount she offered to accept. Global offers made in circumstances where there is more than one unsuccessful defendant may give rise to different considerations.

[66] Ms. Towson, at the time of trial, was in difficult financial circumstances.  She was unemployed, living with her parents, and receiving social assistance and disability payments.  MPS is a government ministry.  Ms. Towson’s financial circumstances were significantly worse than those of MPS.

[67] In all these circumstances, Ms. Towson is entitled to double costs, although when the double costs should begin is discussed below.

Madam Justice Gray went on to hold that double costs should begin one week following the delivery of the offer as that was a reasonable period for the Defendants to consider their response.

The other Rule 37B issue that was addressed was whether the existence of insurance should be considered when weighing costs consequences.  Our courts are currently split on this issue.  Madam Justice Gray held that Insurance should not be considered and set out the following reasons:

[113] The British Columbia Supreme Court has divided on the issue of whether insurance should be considered in assessing the relative financial circumstances of the parties.  InBailey, Hinkson J. considered that insurance should not be taken into account:

33.       While I accept that it is likely that most drivers in British Columbia are insured by ICBC, the wording of subrule 37B does not invite consideration of a defendant’s insurance coverage. There may be good policy reasons for this. Insurance coverage limits with ICBC are not universal, and will vary from insured to insured. Certain activities may result in a breach of an individual’s insurance coverage, or the defence of an action under a reservation of rights by ICBC. A plaintiff will not and likely should not be privy to such matters of insurance coverage between a defendant and ICBC.

34.       The contest in this case was between the plaintiff and the defendants, and the insurance benefits available to the defendants do not, in my view, fall within the rubric of their financial circumstances, any more than any collateral benefit entitlement that a plaintiff may have would affect that person’s financial circumstances for the purpose of determining their loss.

[114] Conversely, Madam Justice Boyd in Radke v. Perry, 2008 BCSC 1397, 90 B.C.L.R. (4th) 132, did consider the fact that the defendants were insured by ICBC, stating, at para. 42:

It is also clear that there is a substantial disparity in financial circumstances between the parties. The defendants, represented by ICBC, had substantially greater resources to finance a trial than the individual plaintiff. Had the defendants accepted the plaintiff’s initial reasonable offer, the plaintiff would not have had to incur the significant costs associated with nearly two weeks of trial.

[115] Bailey was released on October 16, 2008, six days before the October 22, 2008 release of Radke.  Radke does not refer to Bailey, and Bailey was likely not brought to the court’s attention.

[116] In my view, the reasoning in Bailey should be preferred, and the court should consider the “relative financial circumstances of the parties” without considering the insurance benefits available to the defendant.  Here, however, there was no evidence concerning the insurance benefits available to Ms. Chan and Mr. Ko.

I will continue to post about Rule 37B cases as they come to my intention despite the fact that the current BC Civil Rules are being repealed on July 1, 2010.  The reason for this is after July 1, 2010 formal settlement offers in the BC Supreme Court will be dealt with under Rule 9-1 which has language that is almost identical to the current Rule 37B making these precedents useful.

A Great Rule 37-B Precedent – Reality of Insurance in ICBC Claims Discussed

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Reasons for Judgement delivered by Madam Justice Dorgan on July 30, 2009 were recently transcribed and have come to my attention applying Rule 37B in a favourable way to a Plaintiff who failed to beat an ICBC formal offer of settlement.
In this case (Robbeson v. Gibson) the Plaintiff was injured in a BC Motor Vehicle Collision.  The Defendant (insured by ICBC) made a formal offer of $82,100 under Rule 37B.  At trial the Jury awarded the Plaintiff $52,700 for damages.  In other words, ICBC beat their formal settlement offer.
The defendant (through ICBC) brought a motion seeking to deprive the Plaintiff of her costs from the date of the formal offer forward and further seeking to have the Plaintiff pay the Defendant’s costs and disbursements from the date of the formal offer forward.  Such an order is not unusual when ICBC beats a formal offer at trial.  If this motion was granted the punishing effect would in essence leave the Plaintiff with $0 as the costs consequences would eat up almost the entire $52,700 awarded by the Jury.
Madam Justice Dorgan refused to grant the Defendant’s application and instead ordered that the Plaintiff ‘be deprived of all tariff items to which she would otherwise be entitled‘ from a few weeks following the delivery of the formal offer through trial and further awarding the Plaintiff to ‘all disbursements incurred from the comencement of the action to the conclusion of trial‘.
In reaching this conclusion Madam Justice Dorgan made some important comments when applying Rule 37B which I highlight below:
On the topic of the purpose of Rule 37B the Court stated  “the cost consequence (of Rule 37B) is meant to encourage litigants to reach settlements; reasonable settlements, and to impose penalties on those litigants who decline to accept offers which are reasonable in all of the circumstances...”
In considering “the relationship between the offer and the final judgement” the Court held that the gap between $80,000 and $52,000 was not ‘dramatically divergent’.  Specifically Madam Justice Dorgan noted that “the swing is not wild…the relationship between the offer and the award is, in my view, a neutral factor on the question of costs‘.  In coming to this conclusion it was noted that “the overall award clearly reflects the jury’s conclusion that the plaintiff was injured as a result of the defendant’s negligence and that she suffered losses, both non-pecuniary and pecuniary“.
When considering the relative financial circumstances of the parties the Court seems to have considered the fact that the Defendant was insured by ICBC.  Judgements to date are still inconsistent in determining whether a policy of insurance is a relevant consideration under Rule 37B.  Madam Justice Dorgan did not ignore the reality that this case was defended by ICBC through a policy of insurance as opposed to directly financed by the Defendant.  Addressing this issue the court noted as follows “the defendant’s financial position is unknown.  While he testified, he did not actively involve himself in this litigation.  ICBC defended the case.  I have no need to, nor should I, go into a comparison of the financial circumstances of a corporate citizen versus a private citizen, but each of the two citizens is entitled to competent counsel, entitled to pursue their claim on the basis of advice received by each of those counsel, and that is what happened here.  On the issue of financial circumstances, I am advised that the jury award, as I have earlier said, will be effectively cancelled if the defendant obtains a costs order from the date of the offer to the conclusion of trial…It is reasonable for me to conclude that (the plaintiff) has significant disbursements from prosecuting her claim.  Certainly, the trial disbursements would be significant.  In all those circumstances, this factor, I am satisfied, favours the Plaintiff”

Rule 37B and the Discretion of the Court

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As I’ve previously written, one of the biggest improvements in the new Rule 37B over it’s predecessor (Rule 37) is that it gives the Court discretion when assessing costs consequences when a party beats a formal settlement offer at trial.
Reasons for judgment were released today by the BC Supreme Court demonstrating the flexibility of this discretion in assessing fair costs consequences.
In today’s case (Petojevic v. Solari) the Plaintiff sued for personal injuries.  Prior to trial the Defendants made a formal settlement offer of $60,000.  After trial the Plaintiff was awarded a total of just over $42,000 in damages.  In the defence of the claim the Defendants incurred “costs” of $5,051 and disbursements of $2,060.
The Defendants brought an application to be awarded “double costs”.  Under the old Rule 37 the Judge would have had no discretion in making such an award and double costs would automatically be awarded in these circumstances.  Under the new Rule 37B, the court has significant discretion over the costs to be awarded when a formal settlement offer is beat due to Rule 37B(5) and (6) which read as follows:

Cost options

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

(a) deprive a party, in whole or in part, 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 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.

(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 of the offer to settle.

[am. B.C. Reg. 165/2009, s. 1 (a), (b) and (c).]

Considerations of court

(6) In making an order under subrule (5), the court may consider the following:

(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 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.

In today’s case Mr. Justice Williamson refused to award the Defendant double costs but did award increased costs at 125% of the actual costs.  In justifying this result Mr. Justice Williamson highlighted the following facts:

[5] Here, the offer was not accepted and the matter went to trial. Nevertheless, the Court retains a discretion with respect to costs. Generally, litigants will be limited to the maximum costs allowable pursuant to Rule 66 (29) unless the Court rules otherwise.  In determining whether to “otherwise order” the circumstances to be considered may include the making of an offer pursuant to Rule 37, the relationship of the award to the offer, the length of the trial, the degree of complexity, the conduct of the litigation, the financial circumstances of the parties, and any other relevant circumstances.

[6] In addition, I have in mind the express object of Rule 66 to provide a speedier and less expensive determination of certain actions, and the object of Rule 37 to encourage settlement.

[7] The defendant concedes that in exercising a discretion pursuant to Rule 37B(5) an award may be discounted for work done prior to the delivery of an offer to settle.  They note that the ceiling for double costs awards pursuant to Rule 66 would amount to $13,200. They therefore say that their claim for costs in the amount of $10,102.24 plus disbursements is reasonable as it is equivalent to a discount of approximately 25%. In addition, the defendants note that the plaintiff was granted several adjournments and given the fact that the plaintiff was represented by counsel during two periods after the delivery of the offer to settle, he had considerable time to consider the appropriateness of the offer and the consequences of failure to accept it.

[8] The plaintiff submits Rule 66 should apply. He submits in any case the offer came after examination for discovery, an attempt at mediation, and an application to strike portions of the plaintiff’s claim. As such, he submits, any award of costs to the defendants should be limited.

[9] Here the trial took two days, the period contemplated by Rule 66. Liability was admitted, and the trial was not particularly complex, although previously existing injuries were a somewhat complicating issue. The defendant submits the plaintiff’s conduct of the litigation had a negative impact on the proceedings, a situation unfortunately not unusual when litigants represent themselves. I have no direct evidence of the financial circumstances of the plaintiff, although I infer from the evidence of impact of his injuries that he is in financial difficulty.

[10] The amount awarded at trial is more than two thirds of the amount offered by defendants. As well, on the second day of the proceedings the plaintiff succeeded in obtaining an award of special damages greater than that offered at that point by the defendants.

[11] The defendants proffered Bill of Costs in the amount of $5,051.12 plus disbursements of $2,060.02. They seek a doubling of the costs plus the disbursements ($10,102.24 plus $2,060.02 = $12,162.26).

[12] Taking all of these factors into consideration, and exercising the discretion permitted a trial judge pursuant to the Rules, I am satisfied that it would be contrary to the object of these Rules to deny the defendants application. However, I am not persuaded in the circumstances of this case that the award of costs sought by the defendants is warranted. In the result, I award costs to the defendants at 125% of their claimed costs ($5,051.12 X 1.25 = $6,313.90) plus disbursements of 2,060.02 for a total of $8,373.92.

Rule 37B and the Significance of Insurance

Written by admin on . Posted in BC Supreme Court Costs Cases, Civil Procedure. 49 Comments on Rule 37B and the Significance of Insurance

(Please note the case discussed in this post was upheld by the BC Court of Appeal in June, 2010.  You can click here to read my post discussing the BCCA decision)
When a party beats a formal settlement offer at trial in the BC Supreme Court the existence of the offer can be brought to the courts attention and the Court can then award or deprive a party of Costs as permitted under Rule 37B.
In determining costs consequences Courts have discretion and are to consider various factors as set out in Rule 37B(6).  One of these factors requires the court to consider ‘the relative financial circumstances of the parties‘.  One of the matters still being worked out by BC Courts under Rule 37B is whether a party being insured is a relevant factor when weighing the financial circumstances of the parties.
Today reasons for judgement were released by the BC Supreme Court, Chilliwack Registry addressing this matter.  In today’s case (Smith v. Tedford) the Plaintiff made a settlement offer.  The defendant did not immediately accept and proceeded to trial.  Several days into trial the Defendant accepted the offer.  At issue was what costs the Defendant should pay the Plaintiff.
The Defendant was apparently insured with ICBC.  In arguing what costs consequences should follow the Defendant submitted that the fact insurance was in place was not a relevant consideration.  In asking the court to consider the ‘relevant financial circumstances of the parties‘ the defendant put forward an affidavit setting out her ‘modest circumstances‘.
Mr. Justice Grist rejected this argument and held that the existence of insurance was relevant and could properly be considered by the Court.  Specifically Mr. Justice Grist reasoned as follows:

[14]         Here, I think the consideration stipulated in Rule 37B(6)(c), “the relative financial circumstances of the parties,” also has a bearing. The plaintiff has very limited financial resources and the personal defendant had the advantage of a defence conducted by her automobile insurer. This fact should not constantly put the defence at a disadvantage on costs but, in my view, it is particularly relevant when a late acceptance of an outstanding offer has required the plaintiff to submit to a less certain and potentially prohibitively costly mode of trial.

[15]         Counsel for the defence argues that insurer’s conduct of the case is not a relevant feature and cites Bailey v. Jang, [2008] B.C.J. No. 1952, in this regard. In Bailey the court held that the fact a defendant’s case was conducted by the defendant’s insurer was irrelevant to the Rule 37B(6)(c) consideration of relative financial circumstances. Almost contemporaneous to this decision, however, the issue was independently considered in Radke v. Parry, [2008] B.C.J. No. 1991. In the Radke case, the court awarded the plaintiff double costs for a trial ultimately settled by the exchange of a further plaintiff’s offer and the defendants’ acceptance of the offer, in circumstances where the plaintiff had earlier made a much more modest initial offer. The relevant comment (at para. 42) was as follows:

…The defendants, represented by ICBC, had substantially greater resources to finance a trial than the individual plaintiff. Had the defendants accepted the plaintiff’s initial reasonable offer, the plaintiff would not have had to incur the significant costs associated with nearly two weeks of trial.

[16]         I choose to follow Radke in this regard. The ability to have a case advanced by experienced and well funded counsel is, to my mind, a resource that should be taken into account in exercising the judicial discretion stipulated under the new Rule. As an example of how the obvious intent of the Rule can be perverted if the consideration is made independent of insurance coverage, here counsel for the defendant produced an affidavit speaking of her modest circumstances. She, like the plaintiff, is a young person employed at near minimum wage. This was particularly hard to accept as a relevant consideration after the 6-day course of this abbreviated trial, during which the Insurance Corporation twice had separate counsel appear to argue issues that might easily have been dealt with by the two trial counsel appearing on the defendants’ behalf.

[17]         The appropriate order of costs is to award costs of the action to the plaintiff with the cost of the trial to be assessed as double costs, all at Scale B.

It appears that this interpretation may be gaining favor with BC Courts and hopefully this trend continues.  As always I will continue to report on these cases as they come to my attention.

An Interesting but Short Lived Rule 37B Precedent

Written by admin on . Posted in BC Supreme Court Costs Cases, Civil Procedure, Jury Trials, Uncategorized.

Reasons for judgement were transcribed today by the BC Supreme Court giving a new and interesting interpretation to Rule 37B.
In today’s case (Oliver v. Moen) the the Plaintiff sued for personal injuries as a result of a BC Car Crash.  The matter proceeded to trial by Jury.
Leading up to the trial the Plaintiff made a formal offer to settle under the now repealed Rule 37 for $400,000.  The Defendant countered with a formal offer of $100,000.  The Plaintiff then delivered a formal offer under Rule 37B for $185,000.  After 12 days of trial the Jury awarded approximately $14,000 in total damages for the Plaintiffs injuries and losses.
More often than not, when a defendant beats a formal settlement offer at trial they are entitled to costs under Rule 37B and in today’s case the defendant brought an application for such an order.  In an interesting twist, however, Mr. Justice Joyce of the BC Supreme Court declined to award the Defendant costs finding that when the Plaintiff made the formal counter offer of $185,000 this constituted a rejection of the Defendant’s offer.  A rejection of an offer, at common law, takes the offer off the table.  Mr. Justice Joyce held that since this occurred the Defendant did not have a valid offer to settle in existence from the time of the Plaintiff’s offer to settle onward thus the offer ‘cannot be considred under Rule 37B when deciding the issue of costs’
Specifically the Court reasoned as follows:

[12] Satanove J. noted that Rule 37(10) had been repealed when the counteroffer was made and Rule 37B did not contain an analogous provision. Accordingly, the common law rule relating to contract applied. At paras. 8 and 9 Madam Justice Satanove said:

8          Turning then to the common law of contracts, it is trite to say that a counteroffer constitutes non-acceptance of a previous offer. The previous offer must be revived in order to be accepted after a counteroffer has ensued. (United Pacific Capital v. Piché, 2004 BCSC 1524; Cowan v. Boyd (1921), 49 O.L.R. 335 (C.A.)).

9          Applying these principles to the chronology of facts in this case, when the plaintiffs issued the counteroffer of January 6, 2009, they were communicating non-acceptance of the Rule 37B offer of November 28, 2008 from the defendants, and this latter offer was no longer extant. [emphasis added]

[13] On the authority of More Marine, I am driven to conclude that when the plaintiff made its offer of January 30, 2009 that counteroffer constituted non-acceptance of the defendant’s offer of February 25, 2008 and rendered the earlier offer no longer extant because the saving provision of Rule 37(10) was no longer in effect.

[14] As the defendant’s offer was no longer in existence and therefore no longer capable of acceptance it cannot be considered under Rule 37B when deciding the issue of costs. This may seem a harsh result but it is one that, in my opinion, follows from the failure to preserve the saving effect of the former Rule 37(10) in Rule 37B.

[15] The defendant submits that More Marine is distinguishable because in that case the offer in question was made under Rule 37B whereas the defendant’s offer in this case was made under Rule 37 and at a time when the saving provision of Rule 37(10) was in effect. It is my view, however, that one must consider the law as it was when the counteroffer was made on January 30, 2009. At that time there was no enactment in place to alter the common law principle that the defendant had to revive his offer in order to give it effect once again.

[16] The defendant argues, in the alternative, that where no formal offer exists, s. 3 of the Supreme Court Act gives the Court a broad discretion over costs and that in the exercise of that discretion I should award the plaintiff costs up to the date of the defendant’s offer and award costs to the defendant from the date of that offer. The defendant relies on British Columbia v. Worthington (Canada) Inc., [1988] B.C.J. No. 1214 (C.A.). That case was concerned with the discretion of a trial judge to order a party who was successful in the action as a whole to pay the costs of an issue in the action to the party who was successful in that issue but who lost the entire action. That issue does not arise in this case. This case does not concern success on separate issues. Mr. Oliver was successful in his action but the jury saw fit to award him only modest damages.

[17] The usual rule as set out in Rule 57(9) is that the “costs of and incidental to a proceeding shall follow the event unless the court otherwise orders”. Having concluded that there is no offer by the defendant that can be considered under Rule 37B, the defendant has not persuaded me that there is any other circumstance that should cause me to depart from the usual rule.

[18] I therefore award the plaintiff the costs of the entire proceeding at scale B.

As far as I am aware this is a novel interpretation of Rule 37B.

Interesting as this case may be, and whether or not it is a correct interpretation of Rule 37B, the case’s value as a precedent will be short lived.  This case, although transcribed today, was pronounced in June, 2009.   As of July 1, 2009 Rule 37B has been amended adding a subrule which specifically states that “An offer to settle does not expire by reason that a counter offer is made.”   which in effect addresses the courts concerns about the short comings of this rule.

Here We Go Again – Rule 37B Amended

Written by admin on . Posted in BC Supreme Court Costs Cases, Civil Procedure, Uncategorized. 65 Comments on Here We Go Again – Rule 37B Amended

A year ago the BC Rule dealing with formal offers in the BC Supreme Court, Rule 37, was repealed and replaced with Rule 37B.   One of the primary differences between the rules was the greater discretion given to trial judges in awarding costs to litigants after beating a formal settlement offer at trial.
I have written about every Rule 37B case that came to my attention over the past year keeping track of the judicial development of this rule.  Now, after being in force for a short period of time, Rule 37B is being amended with the changes taking effect on July 1, 2009.
The new changes seem to be in direct response to a recent judgement of Mr. Justice Goepel where he decided that Rule 37B does not give judges the discretion to award Defendants their trial costs after beating a formal offer of settlement at trial.  This interpretation was great for Plaintiffs in personal injury claims because it diminished the financial risks for personal injury trials that did not proceed favorably.  I thought that the Court of Appeal would likely determine whether Mr. Justice Goepel’s interpretation was correct but this no longer will be necessary as the Rule amendment specifically addresses this point.
Interestingly, the new rule does not specifically address whether a Defendant being insured is a relevant factor for the court to consider when looking at the ‘financial circumstances of the parties’.  BC Courts have been inconsistent in determining whether this is a relevant consideration in ICBC Injury Claims.
As of July 1, 2009 the new Rule will read as follows:

Definition

(1) In this rule, offer to settle means

(a) an offer to settle made and delivered before July 2, 2008 under Rule 37, as that rule read on the date of the offer to settle, and in relation to which no order was made under that rule,

(b) an offer of settlement made and delivered before July 2, 2008 under Rule 37A, as that rule read on the date of the offer of settlement, and in relation to which no order was made under that rule, or

(c) an offer to settle, made after July 1, 2008, that

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

(ii)  has been delivered to all parties of record, and

(iii)  contains 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.”

Offer not to be disclosed

(2) The fact that an offer to settle has been made must not be disclosed to the court or jury, or set out in any document used in the proceeding, until all issues in the proceeding, other than costs, have been determined.

Offer not an admission

(3) An offer to settle is not an admission.

Offer may be considered in relation to costs

(4) The court may consider an offer to settle when exercising the court’s discretion in relation to costs.

Cost options

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

(a) deprive a party, in whole or in part, 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 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.

(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 of the offer to settle.

[am. B.C. Reg. 165/2009, s. 1 (a), (b) and (c).]

Considerations of court

(6) In making an order under subrule (5), the court may consider the following:

(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 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.

Costs for settlement in cases within small claims jurisdiction

(7) A plaintiff who accepts an offer to settle for 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.

[en. B.C. Reg. 165/2009, s. 1 (d).]

Counter offer

(8) An offer to settle does not expire by reason that a counter offer is made.

[en. B.C. Reg. 165/2009, s. 1 (d).]