IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20140409

Docket: M120014

Registry:
Vancouver

Between:

Maria Da Luz Tomas

Plaintiff

And

Terra Mary Joan
Mackie,
Shelley Eva Centrone

Defendants

Before:
District Registrar Cameron

Reasons for Decision

INTRODUCTION

[1]            
This hearing concerns the assessment of costs arising from a settlement
of a personal injury action. The action was set to proceed to trial on April
14, 2014 and settled on March 6, 2014 with the Plaintiff accepting a formal
offer that was delivered by the Defendants on February 20, 2014.

[2]            
The offer read as follows:

The defendant, Terra Mary Joan Mackie, offers to settle this
action in its entirety on terms that upon acceptance of this offer to settle:

(a)        the plaintiff, Maria Da Luz
Thomas, will be entitled to payment by the defendant of $77,400 (the
“Settlement Payment”); and

(b)        the parties will be entitled to
costs in accordance with this offer to settle (the “Settlement Costs”).

The Settlement Payment (a) is offered 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 (in respect of policies in
force before June 1, 2007) and/or pursuant to section 83 of the Insurance
(Vehicle) Act, R.S.B.C. 1996, c. 231 (in respect of policies in force on
or after June 1, 2007); (b) is offered after taking into account any advances
paid to date; (c) includes court order interest; and (d) excludes the
Settlement Costs.

On acceptance of this offer, the parties agree that subject
to the terms and conditions of Appendix A:

1.         The
plaintiff is entitled to her costs of the action at Scale B and necessary and
reasonable disbursements to the date of delivery of this offer assessed in
accordance with Rule 14-1 of the Supreme Court Civil Rules, B.C.
Reg.168/09 (the “Civil Rules”); and

2.         The defendant is entitled to
her costs of the action at Scale B and necessary and reasonable disbursements
from the date of delivery of this offer assessed in accordance with Rule 14-1
of the Civil Rules.

[3]            
Both the Plaintiff and Defendants have delivered a bill of costs
consequent upon the settlement and counsel for the parties raised a “threshold
issue” at the outset of this hearing that must be determined before the
assessment of costs can proceed.

[4]            
Mr. Harbut for the Plaintiff relied upon a recent decision of Registrar
Sainty in Aujla v Sohal, 2013 BCSC 2452 in support of the proposition
that the Plaintiff should be entitled to a reasonable period of time to
consider the offer and by communicating her acceptance of the offer within 13
days of its delivery she ought to be relieved from any obligation to pay any
costs to the Defendants.

[5]            
Mr. Loewen for the Defendants submitted that the acceptance of the
formal offer which included clear terms relating to costs is binding amongst
the parties and the court has no jurisdiction to exercise any discretion to
vary the terms of settlement in respect of costs as urged by Mr. Harbut.

THE LAW

[6]            
In Aujla, Registrar Sainty considered a factual matrix that I
consider to be indistinguishable from this case. The Plaintiff in a personal
injury action considered a formal offer to settle for ten days before
communicating acceptance. The formal offer provided for costs to the Defendants
from the date of delivery of the offer.

[7]            
In relieving the Plaintiff from any obligation to pay costs to the
Defendants, Her Honour said:

[7]        Counsel for the plaintiff, Mr. McCardell, argues
that I ought to interpret the provisions of that second formal offer – the one
that was accepted – in such a manner as would allow the plaintiff some time to
consider the costs consequences of accepting or rejecting it. He says that it
would be incongruous to suggest that, to avoid the costs consequences of the Rules,
the formal offer must be accepted on the very date of the actual delivery, without
giving the plaintiff any time to consider it, especially when one considers
certain cases that have dealt with the specific provisions of Rule 9-1 [which
deals with offers to settle] and which have considered the costs consequences
of not accepting a formal offer to settle following a trial of the issues.

[8]        Rule 9-1(5) confirms that, in a proceeding in
which an offer to settle has been made, the court may do one or more things,
and then sets out four different things that the court can do:

(a)        deprive a party 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 or service 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 or service
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 or service of the offer to settle.

[9]        In Wong-Lai v. Ong, [2012 BCSC 1569], a
decision of Sewell J., His Lordship considers the provisions of Rule 9-1 and
notes that the Rules give the court discretion to refuse to consider the
terms of a formal offer in deciding costs, if it considers the offer was one
that the plaintiff could reasonably refuse. He notes that the policy underlying
the Rules 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.

[10]      In that case [Wong-Lai v. Ong], His
Lordship also refers to Dodge v. Shaw Cablesystems Ltd. [2009 BCSC
1765], a decision of Masuhara J., which case stands for the proposition that a
plaintiff ought to be given some opportunity to consider a formal offer before
the costs consequences of the Rules around formal offers kick in to
deprive the plaintiff of her costs and to allow costs to the defendant for all
steps taken since the delivery of the formal offer.

[11]      Ms. Harrison, for the defence, says that the offer
itself is clear. It specifically notes that the plaintiff is only entitled to
costs “to the date of delivery” and that, in saying so, it sends a clear
message to the plaintiff as to when the costs consequences of accepting the
offer to settle come into play. She also submits that, in this particular case,
the plaintiff had received a previous formal offer to settle and would have had
an opportunity to consider that formal offer. Thus, Ms. Harrison argues, the
plaintiff would have had at least some understanding of a formal offer to
settle, including the cost consequences of it. Because of that, she then ought
to have been able to make her decision on the merits of the formal offer
certainly in very short order, if not almost immediately. Ms. Harrison also
notes that the formal offer was informally delivered on June 14 and then formally
delivered on June 17. As such, she submits the plaintiff did have time to
consider the formal offer and should not be accorded any additional time to
consider it.

[12]      I am persuaded by the submissions of Mr. McCardell
for the plaintiff that it is open to me to read into and to interpret the
provisions of the formal offer – specifically the reference to the “date of
delivery” – in such a manner as would allow the plaintiff some time to consider
the consequences of that formal offer.

[13]      In making this decision, I note that, in Rule 9-1
the words “date of delivery of the offer” are actually used, and yet the court
in many, many instances has refused to set that date as the actual date that
the costs consequences of the Rules come into play. For example – I
think it was in Arnold v. Cartwright Estate [2008 BCSC 1575] – where I
think the court allowed a plaintiff some 31 days – or another, not
insignificant amount of time – to consider an offer before invoking the costs
consequences of the Rules. At paragraph 22 of that decision Butler J.
notes that a reasonable period of time to consider an offer to settle is seven
days. He also refers to Bailey v. Jang [2008 BCSC 1372], another
decision of this court which indicates that seven days was appropriate to
afford the plaintiff an opportunity to properly consider a formal offer to
settle before being subjected to the costs consequences of the Rules in
respect of formal offers.

[23]      So in these
circumstances, I find that the plaintiff was entitled to some time to consider
the offer. She accepted it some 10 or 11 days after it was made – very shortly
before trial. In my view, here, the defendants ought not to be entitled to any
of their costs for the time period between the offer and its acceptance.

[8]            
Until I heard from Mr. Loewen I was inclined to follow this
decision of her Honour.

[9]            
Mr. Loewen submitted that the acceptance of the settlement offer
constituted a binding agreement and as a result the court has no discretion to
vary the terms of that agreement under Rule 9-1 or 14-1 of the Supreme Court
Civil Rules.

[10]        
Mr. Loewen referred to a number of authorities in support of his argument
that clearly were not before Registrar Sainty.

[11]        
In Buttar v. Di Spirito, 2009 BCSC 72, Madam Justice Gerow dealt
with the acceptance by a Plaintiff of a formal offer to settle and said:

[1]        Sandeep Singh Buttar commenced this action on
December 8, 2004 seeking damages for injuries he alleges he suffered in a motor
vehicle accident on June 24, 2003. The defendants delivered an offer to settle
the action on April 28, 2008 which Mr. Buttar accepted on November 28, 2008. On
this application, Mr. Buttar is seeking an order pursuant to Rule 37B that his
costs of this proceeding be paid up to November 15, 2008, and that the
defendants be paid their costs between November 15 and 28, 2008. Mr. Buttar
takes the position that it was reasonable for him to delay acceptance of the
offer until he received all of the expert reports from the defendant.

[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.

[12]      The offer made by the defendants reads as follows:

TAKE NOTICE that the Defendants offer to settle this
proceeding on the following terms:

1. the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00),
less deductible benefits paid or payable pursuant to Part 7 of the Insurance
(Vehicle) Regulation, and Section 83 of the Insurance (Vehicle) Act, R.S.B.C.
1996, c. 231, and less any advances paid to date; and,

2. Costs to be taxed in accordance with Rule 37(22) and
(37).

[13]      Although Rule 37 was repealed and replaced by Rule
37B, by incorporating the wording of Rule 37(22), the offer provided that the
defendants would pay costs to the plaintiff to the date the offer was delivered
and that, if the matter were to continue, the defendants would be entitled to their
costs from the date of delivery. Former Rule 37(22) provided that if an offer
made by a defendant was accepted by a plaintiff, the plaintiff is entitled to
costs to the day of the offer, and the defendant is entitled to costs from the
date of the offer.

[14]      In this case, there has been no determination of
any issues in this lawsuit. Rather, Mr. Buttar accepted the offer to settle as
presented by the defendants.

[15]      The letter of acceptance is unequivocal and states
the following:

We confirm that there have been no advances under Tort or
under Part 7 to our client.

We accept the Defendants’ Offer to Settle dated April 28,
2008.

I note that the Defendants’ Offer to Settle was made under
the old Rule 37, but our acceptance of that offer is clearly under the new Rule
37B which does not provide a form for acceptance. As such, out of an abundance
of caution, I also enclose an Acceptance of Offer in Form 65A.

[16]      On this application, the parties argued the effects
of Rule 37B(4),which provides that the award of costs is discretionary, and
Rule 37B(5)(a), which provides that the court may do one or both of the
following: deprive a party, in whole or in part, to costs that would otherwise
be entitled to and award double costs of all, or some, of the steps taken in
litigation after the date of the delivery of the offer to settle.

[17]      I agree that subrules
37B(4) and (5) are permissive. However, it is my view that the court has no
discretion to consider costs in this matter because Mr. Buttar accepted an
offer which contained a term as to when costs would be payable and to whom.

[12]        
Madam Justice Gerow’s decision was followed by Mr. Justice
Verhoeven in Hambrook v. Sandhu, 2010 BCSC 475. His Lordship said:

[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 court’s 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 plaintiff’s
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.

[13]        
Most recently, in Sahota v. Sandulo, 2011 BCSC 87, Mr. Justice
Armstrong considered Rule 9-1 and an offer to settle that addressed costs and
said:

[28]      Generally, the Court has discretion in relation to
costs; however, where an offer to settle with specific terms as to costs has
been accepted, to which Rule 9-1 applies, the Court does not have discretion to
vary the terms of that agreement as they relate to costs.

[29]      In Buttar v. Di Spirito, 2009 BCSC 72, Gerow
J. held:

[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 discretion on the court to set aside an agreement that
has been entered into between the parties regarding costs.

[30]      In Hambrook v. Sandhu, 2010 BCSC 475,
Verhoeven J. provided a substantive summary of principles and law in this area:

[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.

…

[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.

…

[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 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 court’s 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 plaintiff’s
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.

[31]      In Nazmdeh v. Ursel, 2010 BCSC 136, Pearlman
J., following Buttar, held:

[99] Further, where, as in this case, an offer to settle has
been accepted and the parties have made a binding agreement regarding costs,
Rule 37B does not confer a discretion on the court to set aside that agreement:
Buttar v. Di Spiritu, 2009 BCSC 72 at paras. 11-17.

[32]      In Bamani-Moghaddam v. Mojdehie, 2010 BCSC
191, Registrar Sainty followed Buttar in relation to an assessment of
costs:

[33] In my view, one cannot get much plainer than that – the
plaintiff expected to be paid her settlement funds ($15,000) plus her
disbursements and to pay the defendants’ costs, not to receive anything for her
tariff costs. On the basis of that agreement, I (or any other registrar) am
given the jurisdiction to assess the plaintiff’s costs (disbursements only) and
those of the defendant and I ought to proceed. Further, as the evidence is
unequivocal – the offer was accepted and an agreement made as to costs – the
provisions of Rule 37B, including subrule (7) thereof, have no application in
this matter and any application by Mr. Harbut is bound, in any event, to fail:
see Buttar v. Di Spirito, 2009 BCSC 72, at paragraph 11.

[33]      The rule in Buttar has been consistently
applied in this Court and appears determinative of this issue.

[34] Buttar and cases following it did not
address Rule 9-1(4) as it relates to an accepted settlement that addresses
costs. Rule 9-1(4) states:

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

[35] Buttar held that the Court does not possess
discretion to vary costs where a formal offer to settle, specifically
addressing costs, has been accepted. If, in such circumstances, the Court is
not in a position to exercise discretion in relation to costs, Rule 9-1(4) is of
no application.

[36]      The rule in Buttar is applicable to the
defendant’s application in this case. The plaintiff’s offer to settle, accepted
by the defendant, created an agreement between the parties. This agreement is
not subject to the Court’s discretion as to costs. In my view, the purpose of
the rules would be frustrated if a party was free to accept an offer, clear and
unambiguous on its face, and then move to invoke the Court’s discretion to add
or vary terms to substantially rewrite the agreement reached by the parties.

[37]      The strategy of both parties was focused on the
risks, costs, and expense that would flow from a trial. The plaintiff could
have proceeded with an eight day trial in the hopes of obtaining judgment and
recovering costs through that mechanism. The defendant could have rejected the
plaintiff’s offer and proceeded to trial with the cost consequences flowing
from his offer to settle.

[38]      In this case, the plaintiff had a deliberate and
reasoned strategy for conducting further investigations of the claim,
notwithstanding the offer to settle from the defendant. In the end, both
parties were aware of the consequences of the settlement strategy at work. If
the defendant wished to attach conditions to his acceptance or make a counter offer
he could have done so. He chose not to. He accepted the settlement offer on the
terms advanced by the plaintiff, namely, “the defendant will pay $3,000 and pay
court costs and disbursements.” The defendant accepted this offer and agreed to
pay costs and disbursements without qualification.

[39]      To allow the defendant
to resile from his acceptance of the plaintiff’s offer to settle, and invoke
the Court’s discretion to deprive the plaintiff of costs and compel the
plaintiff to pay the defendant’s costs, would turn settlement negotiations into
an adventure into uncertainty. I do not believe that the intended purpose of
Rule 9-1 is to allow for a discretionary review of the parties’ conduct prior
to making a settlement offer accepted by the other.

CONCLUSION

[14]        
Applying these authorities, it is clear that I do not have the
discretion to vary the terms of the settlement agreement made by the parties
and they should obtain a date from the Registry for the assessment of both the
Plaintiff’s and the Defendants’ costs pursuant to Rule 14-1 of the Supreme
Court Civil Rules.

[15]        
The costs of this preliminary issue are left to the presider on these
two assessments.

“District
Registrar Cameron”