As readers of the blog know Rule 37B of the BC Supreme Court Rules has given the Court considerable discretion with respect to awarding parties costs when formal offers of settlement are beat at trial. One pattern that is becoming clear under the new Rule is that token offers of settlement are not particularly effective in triggering meaningful costs consequences. Reasons for judgement were released today demonstrating this.
In today’s case (Skinner v. Fu) the Plaintiff was involved in a BC Car Crash and sued the other motorist. The issue of fault was hotly contested by ICBC who argued that the Plaintiff was fully at fault for the accident and his injuries. Mr. Justice Harvey of the BC Supreme Court agreed and dismissed the Plaintiff’s claim after a summary trial.
Having successfully defended the lawsuit ICBC (through the Defendant) applied for costs from the Plaintiff. Prior to trial the Defendant made a formal offer to settle the claim for $1. ICBC asked the Court to award them double costs.
Mr. Justice Harvey dismissed the motion for double costs. In doing so he commented that a $1 offer in an ICBC Claim with contested liability is not a ‘reasonable offer’ which ought to trigger increased costs consequences for the losing party. Specifically the Court held as follows:
 Liability was the central issue between the parties. The defendants, from the time the matter was first reported to the Insurance Corporation of British Columbia, took the position that no liability rested with the defendant driver despite his apparent breach of s. 187 of the Motor Vehicle Act, R.S.B.C. 1996, c. 318.
 Immediately after the writ of summons was issued, the offer to settle the matter for $1 was forwarded to the plaintiff.
 Where, as in the case at bar, the central issue is liability, I do not consider an offer of $1 plus costs of filing the writ of summons an offer which ought reasonably be accepted, either on the date that the offer to settle was delivered or on any later date. Were it so, all defendants in similar positions would follow suit and, as a result, enhance their entitlement to costs without promoting the underlying objective of Rule 37B, which is to encourage reasonable settlement. As a result, this offer to settle will have no effect on the order of costs in this case.
This is not the first case interpreting Rule 37B in this way (click here to read my previous posts discussing the Court’s application of Rule 37B in BC Injury Claims) and the pattern seems well established that nominal offers will rarely be effective for triggering meaningful costs consequences.
In my continued efforts to get prepared for the New BC Supreme Court Civil Rules I am cross referencing Civil Procedure cases that I discuss on this blog with the New 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 this one retain their value as precedents.
One pattern that is becoming well developed under Rule 37B (the Rule dealing with Formal Settlement Offers in BC Supreme Court Lawsuits) is that of timing. Caselaw seems to require that formal offers need to be available for acceptance for a reasonable period of time before triggering cost consequences under Rule 37B. Reasons for judgement were released this week demonstrating this.
In this week’s case (Dodge v. Shaw Cablesystems [SBC) Ltd.) the Plaintiff sued for damages as a result of a slip and fall. As a result of the fall the Plaintiff injured her knee. Before trial the Defendant made a formal offer for $50,000 on an “all-in” basis (meaning inclusive of all damages, costs and disbursements). This offer was made two working days before the start of trial.
After trial, the Jury decided that the Plaintiff and the Defendant were equally at fault for the fall an awarded a net sum of $20,000 for her injuries. The Defendant then brought a motion for costs under Rule 37B. Mr. Justice Masuhara refused to award the Defendant any costs because the offer was not left open for consideration for a reasonable period of time. In coming to this conclusion Mr. Justice Masuhara stated as follows with respect to timing of formal offers under Rule 37B:
I conclude that the defendant’s offer was in effect from Wednesday, January 7, 2009 to Friday, January 9, 2009.
 A party requires a reasonable time within which to consider an offer and decide in the circumstances existing at the time of the offer whether it should be accepted or rejected:Coquitlam (City) v. Crawford, 2008 BCSC 1507. There is case law on Rule 37B that suggests that a reasonable amount of time to consider an offer is seven days. In Arnold, Butler J. cited Bailey when he stated at para. 22 that “[a] reasonable period of time to consider an offer to settle is seven days”. In Towson v. Bergman, 2009 BCSC 978 at para. 70, Gray J. stated that the seven day period “has been applied in the case law.” I do not, however, read these cases as laying down a rule of general application. In Wright v. Hohenacker, 2009 BCSC 996, for example, Fisher J. did not consider a “seven day rule” when determining whether an offer should have been reasonably accepted, stating that, in the circumstances of that case, the fact that the offer was made only four days before trial was not particularly significant. Suffice it to say that every case must be judged on its own facts. Imposition of an inflexible rule as to what is considered a reasonable amount of time risks returning to the rigid consequences of the old Rule 37 and fettering the wide discretion intended under Rule 37B.
 In this case, the plaintiff was only given two days to consider accepting the offer before it expired. Apart from pointing out that the offer was made after mediation and after delivery of the defendant’s expert reports, neither party has led any evidence surrounding the circumstances at the time the offer was made. It is known, however, that the plaintiff was a resident of Ontario at the time, whereas her counsel was resident in Abbotsford. While this alone is not determinative (the plaintiff has not led any evidence of her whereabouts at the time of the offer), when an offer to settle is received, counsel and client are required to make a careful appraisal of the merits, taking into account complex and subjective factors in appraising the eventual outcome of a trial, in this case, a jury trial. Complexity is increased where the plaintiff is asked to evaluate an “all-in” offer where, by the very nature of the offer, the actual amount offered in discharge of the action is not immediately apparent.
 Taking into account that analysing the “all-in offer” would have required breaking out the appropriate cost consequences, and that plaintiff and counsel undoubtedly had many other things that required their attention, two days was an unreasonable amount of time in which to properly analyze the offer. Even if the offer did beat the result, counsel for the plaintiff did not have enough time to reach this conclusion within the deadline set by the defendant…
 Since I have decided that it was unreasonable for the defendant to expect that the plaintiff would accept the offer within two days, the policy underlying Rule 37B, which is to encourage the settlement of disputes by rewarding the party who makes a reasonable offer and penalizing the party who declines to accept such an offer, is not engaged. Accordingly, as permitted by Rule 37B(4), I decline to consider the defendant’s offer to settle in exercising my discretion relating to costs.
Another interesting point in this decision was the Court’s discussion of “all-inclusive” offers under Rule 37B. Under the now repealed Rule 37 such offers were not allowed and could not trigger costs consequences. Mr. Justice Masuhara ruled that such a strict prohibition is not warranted under Rule 37B but parties should make such “all-in” offers at their own peril, Specifically the Court stated as follows:
24] Since the introduction of Rule 37B, there is no longer a complete code to dictate the cost consequences of an offer to settle. Rule 37B contemplates a summary procedure to determine costs. It offers broad discretion to the trial judge to determine cost consequences of a failure to settle. While the defendant is no longer automatically entitled to costs from the date of the offer if the offer is more favourable than the judgment, Rule 37B(5)(d) still states that the court may in such a case “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.” While I accept that the consequences of an uncertainty in the calculation of costs up to the date of the offer to settle are no longer as stringent, as under the old Rules, the court is still faced with difficulty in summarily determining the relationship between the offer and the costs in an “all-in” offer. Consequently, the potential for injustice still exists. Thus, under Rule 37B, it does not appear to me that the rationale for the rule in Helm is no longer of assistance. In my view the language of Rule 37B is broad and assumes that the trial judge in every case is in the best position to determine whether an “all-in” offer can be considered. Provided that the proper form of an offer to settle is adhered to, the court has under Rule 37B the discretion to take into account that offer to settle. Nonetheless, defendants who make an “all-in” offer do so at their own peril.
In my continued efforts to get prepared for the New BC Supreme Court Civil Rules I am cross referencing Civil Procedure cases that I discuss on this blog with the New Rules. To this end it is worth pointing 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 this one retain their value as precedents.
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:
 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.
 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.
 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”.
 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.