IN
THE SUPREME COURT OF BRITISH COLUMBIA
Citation: | Hambrook v. Sandhu, |
| 2010 BCSC 475 |
Date: 20100408
Docket:
M91535
Registry: New Westminster
Between:
David Hambrook
Plaintiff
And
Navtej Singh Sandhu and Daljit Singh
Sandhu
Defendants
Before:
The Honourable Mr. Justice Verhoeven
Reasons for Judgment
Counsel for the Plaintiff: | G. A. Smith | |
Counsel for the Defendants: | R. W. Parsons | |
Place and Date of Hearing: | New Westminster, B.C. |
|
Place and Date of Judgment:
| New Westminster, B.C. |
|
Introduction
[1]
In this matter the parties have each filed a notice
of motion seeking a determination by the court as to liability to pay costs on
a settlement agreement entered into between them.
[2]
The parties differ as to whether the court has a
discretion regarding the assessment of costs pursuant to Rule 37B of the Rules
of Court. They also differ as to how the court should exercise the
discretion, if it exists.
[3]
The defendants take the position that as a
matter of contractual agreement the parties settled the costs issue by express
reference to the terms of Rule 37 as it existed prior to July 1, 2008. Effective
that date Rule 37 was replaced by Rule 37B.
[4]
The plaintiff takes the position that the
settlement agreement between the parties must be interpreted in light of the
coming into force of Rule 37B, and on that basis the court has a discretion in
relation to costs. The plaintiff contends that, in the circumstances of this
case, the courts discretion should be exercised in a manner more favourable to
him than the terms of the agreement alleged by the defendants.
Factual Background
[5]
This action was commenced April 4, 2005, for
damages for personal injuries arising out of a motor vehicle accident that took
place February 29, 2004.
[6]
Liability was denied in the Statement of
Defence.
[7]
The matter was set for an eight day jury trial to
commence November 17, 2008. Both the plaintiff and the defendant served jury
notices.
[8]
The defendants made an offer to settle dated
July 26, 2007. The offer was made pursuant to Rule 37, the applicable rule at
the time. The defendants offer to settle was as follows:
The Defendants offer to settle this proceeding
on the following terms:
1. Payment of the sum of SEVENTY
FIVE THOUSAND DOLLARS ($75,000.00), after taking into account Part 7 benefits
paid or payable pursuant to Section 25 of the Insurance (Motor Vehicle) Act,
R.S.B.C.1996, c. 231, and any advances paid to date; and
2. Costs in accordance with Rule
37(22) and (37).
[9]
There is no evidence before me as to precise
date the offer to settle was delivered. I infer it was delivered on or shortly
after its date. For purposes of these reasons I will take the date of the offer
as equivalent to the date it was delivered to the plaintiff.
[10]
As can be seen, a term of the offer to settle
was to pay costs in accordance with Rule 37(22) and (37). Rule 37(37) is not
material. The former Rule 37(22)(b) read as follows:
Costs on acceptance
(22) Subject to sub rule 221 if an offer is accepted,
(b) if the
offer was made by the defendant, the plaintiff is entitled to costs assessed to
the date the offer was delivered to the plaintiff, and the defendant to costs
assessed from that date.
[11]
Therefore the defendants take the position that
their offer of settlement contained an express term: if the offer was accepted,
then the costs to which the plaintiff would be entitled would be only to the
date of the offer: July 26, 2007, and the defendants would be entitled to
costs after that date.
[12]
The plaintiff accepted the offer of settlement
three days before the trial was scheduled to commence, by letter from
plaintiffs counsel dated November 14, 2008. The letter stated:
I confirm you have been unable to obtain
instructions on our offer. The plaintiff accepts your settlement offer of
$75,000 (after taking into account Part 7 benefits paid or payable pursuant to
section 25 of the Insurance (Motor Vehicle) Act and advanced paid to
date) plus costs.
I confirm our discussion about the
uncertainty respecting the costs term given the repeal of Rule 37. It is my
understanding that your offer is necessarily revised due to the Rule being
repealed. The mechanical application that applied under the old Rule is
replaced by the current Rule.
In essence the new Rule results in your
offer being an offer to pay assessable costs subject to the discretion the
court may exercise under Rule 37B(6). As we discussed it was open to your
client to provide a new offer stating, for example, that you will pay costs up
to some specified date (e.g., July 2007). The uncertainty respecting the costs
term has recently been clarified, somewhat, by decisions such as Brewster v.
Rominn Laboratories Inc. and Radke v. Parry.
I confirm that the Part 7 action is not
settled. The plaintiff remains willing to modify the settlement by resolving
both actions and in doing so to reach a better understanding about costs.
[13]
There was no form 65A used on acceptance, as was
formerly required under former Rule 37(14). By the time of acceptance form 65A
was no longer in effect.
[14]
In response, and after the trial was adjourned,
the defendants counsel wrote to the plaintiffs counsel on November 25, 2008. The
letter stated as follows:
Please find enclosed a cheque for $75,000
pursuant to the settlement of the Plaintiffs claim arising from the motor
vehicle accident of February 28, 2004. The only outstanding matter to now be resolved
is costs. As the writer informed you prior to your clients acceptance of our
formal offer, the Defendants take the position that the Plaintiff is entitled
to costs up to the date of the formal offer (July 26, 2007) and the Defendants
are entitled to costs from the date of the offer onwards. We will be sending
you the Defendants Bill of Costs in the near future. In the meantime, we ask
that you please provide us with the Plaintiffs Bill of Costs.
Please do not hesitate to contact me if you
have any questions.
[15]
It was not denied by the plaintiff that, as set
out in the above letter, the defendants made their position clear concerning
the costs consequences of acceptance of the offer prior to the plaintiffs
acceptance of the offer.
[16]
On the hearing of the application, it was agreed
by the parties that the matter should be determined on the record before me. No
trial would be required to ascertain disputed facts.
[17]
The plaintiff takes the position that the
enactment of Rule 37B in effect revised the terms of the defendants offer, by
implication of law. Therefore, the plaintiff says, when he accepted the offer,
the settlement agreement created was for costs to be in the discretion of the
court in accordance with the terms of Rule 37B.
[18]
I am advised by plaintiffs counsel that in
practical terms, if the plaintiff were denied costs following the date of the
offer to settle, the plaintiff would be denied disbursements of approximately
$4,909.15 out of his total disbursement claim of $13,464.78, and would lose reimbursement
of fees of about 15 units, or $1,650, and corresponding taxes, out of a total
fees reimbursement claim of $9,900, and taxes. In addition the defendants seek
payment of their costs for the period after July 26, 2007. I was given no
estimate as to the defendants costs claims.
Issues
[19]
The primary issue is whether the court has a
discretion regarding costs in accordance with Rule 37B. The secondary issue is
how, if so, the discretion should be exercised.
Analysis
Legal Framework
[20]
Rule 37B in its present form is as follows:
Rule 37B Offer To Settle
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
defendants costs in respect of all or some of the steps taken in the
proceeding after the date of delivery of the offer to settle.
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.
Counter offer
(8) An
offer to settle does not expire by reason that a counter offer is made.
[21]
Amendments to Rule 37B effective July 1, 2009 added
subrules (5)(c) and (d) and subrules (7) and (8).
[22]
Some parts of the wording of Rule 37B suggest
that it was only intended to apply to cases in which the court has rendered a
judgment. For example this is suggested by the wording that must be
incorporated into the offer, as set out in Rule 37B(1)(c)(iii):
"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."
[23]
Similarly, it may be thought that courts
discretion in relation to costs as set out in subsection (4) refers to the
discretion the court has upon rendering judgment. The consideration set out in
rule 37B(6)(b) requires a comparison between the offer and the final judgment
of the court. Rule 37B(6)(a) refers to an offer which ought to have been
accepted; this suggests that the offer was not accepted.
[24]
On the other hand, Rule 37B(5) requires only
that an offer to settle has been made; it does not say, where an offer is
made and not accepted.
[25]
Rule 37B(7), added July 1, 2009, clearly
contemplates a situation where there is a settlement agreement.
[26]
It has been held that the Rule applies to
settlements; i.e., where the court has not rendered judgement: Radke v.
Parry, 2008 BCSC 1397; Brewster v. Rominn Laboratories Inc., 2008
BCSC 1463.
[27]
These are the authorities referred to in the acceptance
letter sent by plaintiffs counsel in this case.
[28]
But it has also been held that a settlement
agreement containing terms as to payment of costs leaves the court with no room
for the exercise of discretion pursuant to Rule 37B: Buttar v. Di Spirito,
2009 BCSC 72 at para. 17. The defendants here rely on the Buttar
decision, which they argue is on all fours with the case at bar.
[29]
In Buttar, as in the case at bar, the
defendants made an offer to settle under Rule 37. The offer included the words costs
to be taxed in accordance with Rule 37(22) as the former rule required. Several
months later, one week before the scheduled trial, and after the enactment of
Rule 37B, the plaintiff accepted the offer. On the application heard by Madam
Justice Gerow, the plaintiff argued that it was reasonable for him to delay
acceptance until he had received all of the expert reports from the defendants,
and the court should exercise its discretion under Rule 37B to award him his
costs to the date of his acceptance of the offer.
[30]
Madam Justice Gerow held that the court had no
discretion to award costs in the matter before her. She stated at para. 11:
[11] Both parties advanced arguments
that the court has discretion under Rule 37B to make an order regarding costs.
However, it is my opinion that the court has no discretion to make an order
regarding costs in this matter. Mr. Buttar accepted the offer put forth by
the defendants, including the offer regarding costs, without reservation. It is
my view that Rule 37B does not confer a discretion on the court to set aside an
agreement that has been entered into between the parties regarding costs.
[31]
On this basis, where a party has specified the
costs consequences of acceptance of its offer to settle, within an offer to
settle to which Rule 37B applies, and a settlement agreement results in
accordance with the offer, the court does not retain a discretion to depart
from the terms of the agreement.
[32]
Put another way, it remains open to litigating
parties to make an offer to settle within the meaning of Rule 37B and to
specify the costs consequences of acceptance of the offer. In my view this is a
positive result. It allows the parties to create their own bargain. It provides
for certainty, and avoids the need for applications to court where a settlement
agreement is reached, while preserving the courts discretion in cases where no
settlement occurs.
[33]
This case provides a good example. If the
argument of the plaintiff is accepted, a costly and time consuming application
to court is required in order to determine the costs consequences of the plaintiffs
acceptance of the offer.
[34]
The plaintiff relies on the earlier decision of
Madam Justice Garson in Goertz v. Calin, 2008 BCSC 1716. Goertz
was not referred to in Buttar. In Goertz, Garson J. decided that
an offer and acceptance concluded in 2007 was governed by Rule 37B, not the
former Rule 37. The decision appears to be based strictly upon the wording of
Rule 37B(1)(a). It does not appear that Garson J. was asked to decide the issue
on the basis of a binding settlement agreement between the parties, which is
the reasoning accepted in Buttar, and upon which the defendants argue in
the case before me. In my view Buttar is the more pertinent authority in
this case.
Application to the Facts of this Case
[35]
In its acceptance letter of November 14, 2008,
the plaintiff took the position that the coming into force of Rule 37B on July
1, 2008 had the effect of amending the defendants offer, by implication of law.
I do not accept that proposition. Rule 37B contains no such stipulation
and I see no compelling reason to imply one.
[36]
On the hearing of the application, the
plaintiffs argument was somewhat more subtle: that the coming into force of
Rule 37B created an ambiguity in the defendants offer and hence an ambiguity
as to the settlement agreement that resulted from the acceptance of it. It was
argued that I should resolve that ambiguity by reference to extrinsic evidence,
including the understanding of the plaintiff himself concerning the costs consequences
of acceptance.
[37]
In my view the agreement that the parties made
was unambiguous. The defendants offer was clear in relation to the costs
consequence of acceptance; the defendants would pay the costs until the date of
the offer, and if the plaintiff were to accept the offer after that date, then
the defendants would be entitled to costs after that date.
[38]
After July 1, 2008, when the new rule came into
effect, the defendants offer remained open for acceptance in accordance with
its terms. The defendants had not withdrawn it or amended it. The new rule
affected the costs consequences in the event that the offer was not accepted,
and the court went on to render a judgment. That did not occur.
[39]
By counsels letter of November 14, 2008, the
plaintiff accepted the defendants offer in accordance with its terms. Although
this fact is not necessary to my reasoning, I note that based upon the
discussions between counsel, the plaintiff was well aware of the defendants
position as regards the costs consequences of acceptance. It would have been
open to the plaintiff at that time to make a new offer, unrelated to the
defendants offer. Or the plaintiff could have accepted the defendants offer,
but on amended terms, which in law would have amounted to a counteroffer. For
example the plaintiff could have said, I accept the offer of $75,000, but my
acceptance is on the condition that Rule 37B applies, and the question of costs
is within the discretion of the court. Instead, the plaintiff accepted the
offer, and went on to state through his legal counsel what his position was as
regards the legal consequences of the acceptance. However no new condition was
set out. Counsel did not insist that the defendants accept his interpretation
of the consequences of the plaintiffs acceptance of the offer.
[40]
Therefore in my view by accepting the
defendants offer, a settlement agreement came into effect which contained a
term stipulating that the plaintiff would only be entitled to costs up to the
date of the offer to settle, and that the defendants would receive costs
following that date, in accordance with the former Rule 37(22).
[41]
In the result, I agree with the defendants that
this case is on all fours with Buttar. Practically the only factual
distinction between that case and the one at bar is that in Buttar, the
acceptance of the offer included delivery of the old acceptance of offer form,
Form 65A, which was no longer required under Rule 37B. I do not consider that
difference to be material.
[42]
As to extrinsic evidence, such evidence is
sometimes allowed to resolve an ambiguity as to what the parties in fact
agreed, but it is not admissible in relation to the legal consequences of the
agreement that they made. As stated by Lowry J.A., for the Court of Appeal, in Water
Street Pictures Ltd. v. Forefront Releasing Inc., 2006 BCCA 459 at para. 26:
[26] An ambiguity can be said to exist
only where, on a fair reading of the agreement as a whole, two reasonable
interpretations emerge such that it cannot be objectively said what agreement
the parties made: Gilchrist v. Western Star Trucks Inc. (2000), 73 B.C.L.R.
(3d) 102, 2000 BCCA 70 at paras. 17-18; and Re Canadian National
Railways and Canadian Pacific Ltd. (1978), 95 D.L.R. (3d) 242 at 262,
[1979] 1 W.W.R. 358 (B.C.C.A.), aff’d [1979] 2 S.C.R. 668. Where extrinsic
evidence has been admitted, it has been to resolve an ambiguity in what the
parties in fact agreed as opposed to overcoming an uncertainty about the legal
consequences of the agreement they made.
[43]
In any event such extrinsic evidence would not
extend to the introduction evidence of the parties subjective understanding of
their bargain. Such evidence is simply not relevant to the analysis: Dumbrell v. Regional Group of Companies Inc., 2007
ONCA 59, 85 O.R. (3d) 616 at paras. 49-50.
Alternative Analysis Discretion of the Court
[44]
In the alternative, in case I am wrong with
respect to my conclusion above, I will go on to consider how the courts
discretion under Rule 37B should be exercised in this case.
[45]
The defendants argue that the plaintiff should
be deprived of costs following the delivery of the offer to settle, in accordance
with Rule 37B(5)(a).
[46]
The defendants also argue that they should
receive costs for the steps taken after the delivery of the offer. There is no
express provision in Rule 37B that provides the court with this power. The
defendants argue that Rule 37B(5)(d) applies. That subrule refers to an offer
made by a defendant where the subsequent judgment awarded is not greater than
the amount of the offer. The subrule does not refer to an acceptance of the
offer. I was provided with no authority that interprets the subrule as broadly
as the defendants contend.
[47]
The authorities are divided as to whether the
court has discretionary powers beyond those specifically set out in Rule 37B(5).
In A.E. v. D.W.J., 2009 BCSC 505, Goepel J. held that it does not. In
that decision Mr. Justice Goepel chose not to follow Arnold v.
Cartwright Estate, 2008 BCSC 1575, in which Mr. Justice Butler held
that the court could award a defendant costs although at that time Rule 37B did
not expressly provide for such a power. It was noted in Robyrts v. Roberts,
2009 BCCA 574 at para. 9, that there are appeals pending which will
address the debate. In the meantime I consider myself bound to follow A.E.
v. D.W.J., based upon the principles of Re Hansard Spruce Mills,
[1954] B.C.J. No. 136, [1954] 4 D.L.R. 590 (S.C.).
[48]
Arnold was
decided November 18, 2008, just a few days after the plaintiff settled this
case. Rule 37B(5)(d), which in any event refers to judgments, not settlements, did
not come into effect until July 1, 2009, long after the settlement in this
case.
[49]
On the authority of A.E. v. D.W.J., I do
not have the power to make an order granting the defendants costs following
delivery of their offer to settle, where a settlement results, because Rule
37B(5) does not provide for such a power.
[50]
This leaves for consideration the issue of
whether the plaintiff should be deprived of costs for events following delivery
of the offer to settle in accordance with Rule 37B(5)(a).
[51]
The only specifically relevant consideration for
the court under Rule 37B(6) in the case before me is item (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.
[52]
With respect to the factor set out in Rule
37B(6)(d) any other factor the court considers appropriate, the plaintiff
simply argued that his conduct was reasonable. This submission does not
materially add to the plaintiffs submission under Rule 37B(6)(a).
[53]
The plaintiff argues that, notwithstanding the
delay of in excess of fifteen months in accepting the offer, he should receive costs
up to the date of acceptance of the offer. He says it was reasonable for him to
wait in order to gain more information concerning the assessment of his claim.
[54]
The plaintiffs major injuries were primarily
soft tissue in nature. He was 46 years of age at the time of the accident. His
ongoing injuries were to his neck and lower back.
[55]
At the time the plaintiff received the offer he
had several medical reports available to him. His affidavit refers to the
reports of Dr. Domisse of September 18, 2005, Dr. Robinson of March
17, 2006, and his own family doctor, Dr. Ellison, dated July 19, 2006. Although
his affidavit does not refer specifically to these, I infer that he also at
that time or in any event soon thereafter the reports of Dr. Tessler of
June 8, 2007, Dr. Sinanan of June 18, 2007, and Dr. Longridge of
July 11, 2007. On balance these reports set out a generally favourable
prognosis for recovery of the soft tissue injuries incurred.
[56]
The only new report referred to by the plaintiff
that followed the date of the offer is that of Dr. Hershler dated July 30,
2008. The report is negative. Dr. Hershler opined that full recovery was
unlikely. So this new report militated against accepting the offer.
[57]
The plaintiff contends that following the offer,
he obtained a new position in his work as a general clerk in a grocery store,
and that the new position involved lighter duties. Despite that, there were
more such positions available to him within his employers business, and
therefore less basis for an award of future loss of income or income earning
capacity. On the other hand, in his affidavit he admits that his physical
condition did not materially change between time the offer was received and his
acceptance of it.
[58]
I am not persuaded that the plaintiff ought not
to have accepted the offer when it was made or within a reasonable time
thereafter. At the time the offer was received, there was no substantial
uncertainty that the plaintiff expected the passage of time to resolve or
diminish. More than three years had passed since the accident. As he
acknowledges, his physical condition remained more or less the same between the
time of receiving the offer and his acceptance of it. During that time no new
medical information was obtained that made the offer more reasonable than it
may have at first appeared. The changes in his employment prospects were minor.
In the circumstances it would not be fair to cause the defendants to pay the
costs of the delay in acceptance of an offer that the plaintiff ultimately came
to accept as reasonable. The result sought by the plaintiff is not in keeping
with the policy of the law, which favours early settlement.
[59]
Therefore, in the exercise of my discretion
under Rule 37B, I would order that the plaintiff have costs to the date of the
offer to settle, but I would deprive the plaintiff of costs following that date.
I would not however, order costs to the defendants for steps following that
date, for the reasons already indicated.
[60]
I note for the record, that on the hearing of
the application, the plaintiff abandoned an argument that the defendants should
be deprived of costs or should have to pay costs due to alleged misconduct in
the course of the proceedings, in relation to use by ICBC in these proceedings
of medical information obtained by it in its capacity as the plaintiffs
insurer under the Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231. The
plaintiff also abandoned an argument based upon the Rule 37B(6)(c), the
relative financial circumstances of the parties where that argument would
have been based upon the financial circumstances of the plaintiff as compared with
ICBC.
Conclusions
[61]
The plaintiff will receive costs in accordance
with Appendix B, Scale B, for the time leading to delivery of the defendants
offer to settle. The defendants will receive costs following that date. No
argument was presented to me that there should be any distinction between the
tariff items and disbursements. The applicable costs will include both tariff
items and disbursements.
[62]
The costs of this application are in the
discretion of the court. The amount involved in this application is small in
relation to the actual cost of the contest to the parties. It is my
understanding that this application is of importance to ICBC insofar is the
results may apply to other cases. From the plaintiffs point of view the only
significance of the application is the amount actually in issue. For those
reasons and in all the circumstances of the case I consider that it is
appropriate that each side bear their own costs of this application.
Verhoeven J.