Tag: trial costs

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A year ago the BC Rule dealing with formal offers in the BC Supreme Court, Rule 37, was repealed and replaced with Rule 37B.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).]

Working out the Kinks – More on Rule 37B and BC Injury Cases

Very important reasons for judgment were released today (AE v. DWJ) by the BC Supreme Court giving more interpretation to Rule 37B.  (Click here to read my previous posts discussing this rule.)
Rule 37B is still relatively new and the courts have not come up with a consistent application of this rule.  Today’s case takes this rule in a potentially new direction that can make access to justice a little less costly and risky for Plaintiff’s advancing injury claims.
In today’s case the Plaintiff was awarded damages of $348,075 after taking into account contributory negligence.  After statutory deductions the judgment in the Plaintiff’s favor was less than the Defendant’s formal offer of settlement.
The Defendant’s lawyer applied to court for an order that “the defendant should receive his costs (After the date that they made their formal settlement offer)”.
In declining to make this order Mr. Justice Goepel stated that under Rule 37B “the court cannot award costs to the defendant (where the defendant beats their formal settlement offer at trial) but is limited to depriving a party of costs or awarding double costs“.  This is the first case I’m aware of interpreting Rule 37B in this fashion.
Below I reproduce the highlights of Mr. Goepel’s reasoning:

Judicial Discretion In Awarding Costs

[48] The discretion a Supreme Court judge has in awarding costs was summarized in Stiles v. British Columbia (Workers’ Compensation Board) (1989), 38 B.C.L.R. (2d) 307 at 310, 39 C.P.C. 2(d) 74 (C.A.):

The power of a Supreme Court judge to award costs stems from s. 3 of the Supreme Court Act which confirms that the judges of the Supreme Court have the inherent powers of a judge of superior court of record.  The power to award costs is governed by the laws in force in England before 1858 and by the enactments, including the Rules of Court, affecting costs made in British Columbia since 1858.  Generally, the decisions on costs, including both whether to award costs, and, if awarded, how to calculate them, are decisions governed by a wide measure of discretion.  See Oasis Hotel Ltd. v. Zurich Ins. Co., 28 B.C.L.R. 230, [1981] 5 W.W.R. 24, 21 C.P.C. 260, [1982] I.L.R. 1-1459, 124 D.L.R. (3d) 455 (C.A.).  The discretion must be exercised judicially, i.e. not arbitrarily or capriciously.  And, as I have said, it must be exercised consistently with the Rules of Court.  But it would be a sorry result if like cases were not decided in like ways with respect to costs.  So, by judicial comity, principles have developed which guide the exercise of the discretion of a judge with respect to costs.  Those principles should be consistently applied: if a judge declines to apply them, without a reason for doing so, he may be considered to have acted arbitrarily or capriciously and not judicially.

[49] In Cridge, Lowry J.A. noted the right of the Lieutenant Governor in Council to restrict the exercise of a Supreme Court judge’s discretion in awarding costs at para. 23:

While, subject to abiding by established principles, a Supreme Court judge has a broad discretion in awarding costs, it remains open to the Lieutenant Governor in Council in promulgating the Rules of Court to restrict the exercise of that discretion as may be appropriate where it is thought that to do so will achieve a desired objective.  The purpose of Rule 37 is to encourage the settlement of litigation through prescribed consequences in costs as in sub-rule (24).  Given that the sub-rule provides for the litigants’ entitlement to costs while affording no discretionary alternative, I consider it clear that there is no room for judicial discretion where sub-rule (24) applies.

[50] A trial judge cannot impose cost sanctions that are not authorized by the Rules.  An example of an ill fated attempt to do so is Kurtakis v. Canadian Northern Shield Insurance Co.(1995), 17 B.C.L.R. (3d) 197, 45 C.P.C. (3d) 294 (C.A.).  In Kurtakis, the trial judge awarded the plaintiff three times special costs.  The Court of Appeal reversed noting at para. 9 that there was “no statutory authority for such an order … and therefore no basis upon which such an order could be made.”

[51] Rule 37B has returned to judges a broad discretion in regards to costs orders arising from an offer to settle.  The discretion is however not unlimited and must be exercised within the parameters set out in the Rule.  Rule 37B(5) dictates the cost options open to a judge when an offer to settle has been made.  A judge can either deprive the party, in whole or in part, of costs to which the party would otherwise be entitled in respect of steps taken in the proceeding after the date of the delivery of the offer to settle or award double costs of some or all of the steps taken in the proceeding after the delivery of the offer to settle.  As noted in Baker, the section is permissive and a judge is not compelled to do either.

[52] What a judge cannot do, however, in my respectful opinion, as a result of an offer to settle, is to order costs to a defendant where the offer to settle was in an amount greater than the judgment.  While that cost option had existed since the time of the 1890 rules, either as an exercise of the court’s discretion or because it was mandated by the terms of the rule, it is not an option available under Rule 37B.  The drafters of Rule 37B(5) have removed that option and presumably determined that the potential deprivation of costs to which a plaintiff would otherwise be awarded is a sufficient incentive for plaintiffs to settle litigation.  As noted in Cridge, the Lieutenant Governor in Council has the right to limit the court’s discretion.  Accordingly, I hold that pursuant to Rule 37B(5) the court cannot award costs to the defendant but is limited to depriving a party of costs or awarding double costs

[53] The defendant does not seek double costs in this case.  It would be a rare case that a plaintiff who recovers damages would face the sanction of double costs. I would expect those sanctions would be limited to situations in which a plaintiff’s case is dismissed or when the plaintiff was awarded more than its offer to settle.

If this precedent holds then Plaintiffs will face fewer financial risks when proceeding to trial.  The costs consequences of going to trial and losing (not beating an ICBC formal offer of settlement) can be prohibitive and today’s case may lead the way to better access to justice in British Columbia for the victims of others negligence.

Contact

If you would like further information or require assistance, please get in touch.

ERIK
MAGRAKEN

Personal Injury Lawyer

When not writing the BC Injury Law Blog, Erik is the managing partner at MacIsaac & Company, based in Victoria, B.C. He is also involved with combative sports regulatory issues and authors the Combat Sports Law Blog.

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