William Bomford Plaintiff And: Wayden Transportation Systems Inc. Defendant, 2010 BCSC 1721

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Bomford v. Wayden Transportation Systems Inc., 2010 BCSC 1721 Date: 20101202 Docket: 09-4870 Registry: Victoria Between: William Bomford Plaintiff And: Wayden Transportation Systems Inc. Defendant Before: The Honourable Mr. Justice Macaulay Reasons for Judgment On Costs Counsel for the Petitioner: S. Hern and J. MacAdam Counsel for the Respondent: T.G. Lewis Place and Date of Trial: Victoria, B.C. November 17, 2010 Place and Date of Judgment: Victoria, B.C.

December 2, 2010 [ 1 ] On October 26, 2010, I awarded the plaintiff $51,048 in damages for wrongful dismissal together with interest pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79 (see 2010 BCSC 1506 ). The award was based on 10 months’ salary ($96,000), plus 10% for benefits, less the plaintiff’s actual earnings from other employment during the notice period. [ 2 ] The plaintiff now applies for double costs on Scale B for the proceeding arising out of a pre-litigation offer.

The defendant does not oppose an order for costs on Scale B but says that the plaintiff is not entitled to double costs. [ 3 ] Before commencing the proceeding, the plaintiff offered in writing to settle his claim:

(1) Upon payment of: (a) 10 months’ salary ($96,000 based on formula provided in offer); (

b) An amount in lieu of medical, insurance and related benefits for the notice period (no amount set out);

(2) The provision of a satisfactory letter of reference; and

(3) A revised Record of Employment showing his actual length of service. The defendant rejected the offer and about six weeks later the plaintiff commenced the proceeding. [ 4 ] For the reasons that follow, I am not persuaded that the plaintiff’s pre-litigation offer entitles him to double costs under the Supreme Court Civil Rules . There are no substantive differences between the previous rules of court and the new civil rules that came into effect on July 1, 2010, while the proceeding was extant.

Previous Rule 37B is now Civil Rule 9-1. [ 5 ] The plaintiff relies on authorities that, according to him, support a more expanded exercise of judicial discretion in determining entitlement to double costs. In particular, he relies on Radke v. Parry, 2008 BCSC 1397 at para. 37 and Hix v. Ewachniuk Estate, 2008 BCSC 1258 at para. 16 . [ 6 ] In Hix , the court described Rule 37B, which replaced previous Rules 37 and 37A on July 1, 2008, as “a return to a reliance on judicial discretion with respect to costs” (para. 16).

As the court pointed out, the Court of Appeal had earlier determined that Rule 37 was a complete code with respect to offers to settle allowing for no judicial discretion ( Cridge v. Harper Grey Easton , 2005 BCCA 33 at para. 24 ) and also observed that Rule 37A appeared to allow for some judicial discretion but only in limited circumstances. [ 7 ] In Radke , the plaintiff accepted an offer that the defendant made during the course of trial to pay an amount that was approximately double the amount of the plaintiff’s earlier offer to settle that she made during the course of the proceeding. The narrow

issue was whether there was a pre-condition that judgment be rendered before the double cost consequence of the rule applied. After observing that the rule does not mention any pre-condition for judgment to be rendered, the court concluded that Rule 37B was permissive in nature and that it provides a wide discretion to award double costs. [ 8 ] Rule 37B(1) defined offers to settle and included: (

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.” [ 9 ] Civil Rule 9-1(1)(

c) is to like effect. An offer to settle includes an offer to settle made after July 1, 2008, under Rule 37B or one made under the current rule that meets the same requirements previously specified in Rule 37B(1)(a)(i) - (iii). [ 10 ] The plaintiff concedes that his offer to settle did not contain the sentence required by both iterations of the rule.

He submits that is because “the matter was unsuited to an offer in that specific form – here, because an action had not yet been started.” I observe that the offer not only fails to contain the required sentence but expressly states that it is “without prejudice”. [ 11 ] Rule 37B(5) and (6) are substantially repeated in Civil Rule 9-1(5) and (6), 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 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 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. … 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 served 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. While the introduction of previous Rule 37B, now Civil Rule 9-1, did herald a significant broadening of judicial discretion respecting the awarding of double costs, the discretion must, in my view, be exercised within the broad parameters set by the rule. [ 12 ] There is no common law authority for ordering double costs in a proceeding. The discretion to order double costs in some circumstances in this jurisdiction arises solely as a result of the rules.

The evolution of the offer rule to its present iteration suggests that the process has not been easy. [ 13 ] The reach of the current rule does not extend, in my view, to pre-litigation offers. While England has adopted rules setting out mandatory pre-litigation protocols with cost consequences, this jurisdiction has not.

I do not accept that the broadening of judicial discretion as set out in the offer to settle rule permits the court to fashion a remedy of double costs absent a proceeding. [ 14 ] The opening words of subrule (5) refer to “a proceeding in which an offer to settle has been made.” The additional requirements respecting the form and delivery of the offer become meaningless if there is no proceeding. There must first be a proceeding and then an offer to settle before Rule 37B or Civil Rule 9-1 applies. [ 15 ] The plaintiff quite properly directed my attention to Roach v.

Dutra, 2010 BCCA 264 , and conceded that the Court of Appeal concluded there that offers to settle must substantially comply with the requirement set out in Rule 37B(c)(iii).

In reviewing the legislative history of offers to settle before the enactment of Rule 37B, the court unanimously concluded that it was intended to ameliorate the effects of the rigid application of Rule 37 adopted by earlier decisions of the Court of Appeal and also to apply to those offers that previously fell within the purview of Rule 37A (see para. 52). [ 16 ] The court went on to point out that the emphasis in Rule 37B on the court’s discretion “would be undermined if subrule 37B(1)(c)(iii) was interpreted as requiring word-for-word compliance” (para. 52).

Substantial, rather than strict, compliance with the rule is required: [T]he offer must be in writing, the wording must make it clear what party is making the offer and to whom it is made, and it must include

the fact that the party making the offer is reserving the right to bring the offer to the attention of the court in relation to costs after judgment on all other issues in the proceeding. It follows from this

interpretation that my discretion to award double costs does not extend to an offer to settle that does not substantially comply with the requirements of Rule 37B, now replicated in Civil Rule 9-1. [ 17 ] The plaintiff contends that pre-litigation offers to settle should be encouraged at least as much as those made during the course of litigation. Even if that is so, the legislative intent does not extend that far.

I dismiss the application for double costs on the basis that offers to settle made before commencing a proceeding do not fall within Rule 37B or Civil Rule 9-1. [ 18 ] In case I err, there are other problems with the offer to settle. Even if the plaintiff had made the offer during the course of the litigation, the inclusion of the requirement for a “satisfactory letter of reference” in the offer takes it outside the realm of “one that ought reasonably to have been accepted.” [ 19 ] The defendant maintained that the plaintiff’s work performance was inadequate. Although it did not succeed at

summary trial in persuading me that dismissal without notice was justified, it does not follow that it reasonably should have agreed to provide a letter of reference in addition to paying salary and benefits in lieu of reasonable notice. This is particularly so given that the terms of the offer required negotiation of the terms of the letter of reference. [ 20 ] The question whether the offer was one that ought reasonably to have been accepted is also affected by the failure of the plaintiff to offer any offset for income earned or to be earned during the putative notice period.

If the defendant accepted the offer, it would have been required to pay $96,000 plus an amount to be negotiated for benefits and the plaintiff would have also been able to retain other monies earned during the putative notice period without having to account for it in any way. [ 21 ] The eventual judgment was only for $51,048 because of a substantial reduction to reflect the plaintiff’s actual earnings during the notice period.

It was unreasonable to expect the defendant to accept the pre-litigation offer to settle because it did not require the plaintiff to account to the defendant in any way for his earnings during the notice period. If accepted, the offer would have effectively released the plaintiff from his legal obligation to mitigate his losses by securing alternate employment. [ 22 ] On August 4, 2010, while the litigation was in progress, the plaintiff made a further offer to settle for $80,000 plus costs and disbursements.

That offer was “without prejudice except as to costs.” It also failed to include the sentence now required under Civil Rule 9-1, although it is unlikely the defendant was misled in that the offer was with prejudice as to costs. More importantly, however, the second offer also failed to take into account the plaintiff’s earnings during the notice period. In the result, this offer was also for more than the eventual judgment. [ 23 ] I am not persuaded that the plaintiff “beat” either of his offers.

The eventual judgment is for significantly less than either offer. [ 24 ] In all the circumstances, the plaintiff is not entitled to double costs. Subject to one proviso, the plaintiff is entitled to the costs of the proceeding on Scale B. The plaintiff failed on the application for double costs. The defendant is entitled to offset the costs of this application on Scale B against the costs to which the plaintiff is entitled. “M.D. Macaulay, J.” The Honourable Mr. Justice Macaulay