Great Wall Construction Ltd. Appellant (Plaintiff) v. Lulu Island Winery Ltd. and Blossom Winery Ltd., 2016 BCCA 227

COURT OF APPEAL FOR BRITISH COLUMBIA Citation: Great Wall Construction Ltd. v. Lulu Island Winery Ltd., 2016 BCCA 227 Date: 20160520 Docket: CA43456 Between: Great Wall Construction Ltd. Appellant (Plaintiff) And Lulu Island Winery Ltd. and Blossom Winery Ltd. Respondents (Defendants) Before: The Honourable Madam Justice Saunders The Honourable Mr. Justice Lowry The Honourable Mr. Justice Harris On appeal from: an order of the Supreme Court of British Columbia, dated February 12, 2016 ( Great Wall Construction Ltd. v. Lulu Island Winery Ltd. , New Westminster Registry No.

S170708) Oral Reasons for Judgment Counsel for the Appellant: D.K.S. MacDermid Counsel for the Respondent: K.E. Ducey Place and Date of Hearing: Vancouver, British Columbia May 20, 2016 Place and Date of Judgment: Vancouver, British Columbia May 20, 2016

Summary: Appeal of a dismissal of an application for a declaration that the claims that were the subject of the action were settled. The question was whether an email withdrawing an “offer to settle”, as defined by the Rules, which was received in the recipient’s email inbox but for some reason was not seen, was not an effective withdrawal of the offer that the recipient subsequently purported to accept. Held: appeal dismissed.

There was no error in the conclusion that the offer was withdrawn given that email was found to have been the agreed method of written communication. [ 1 ] LOWRY J.A. : The question that arises on this appeal is whether the withdrawal of an offer of settlement communicated only by an email message the recipient did not see precluded the offer from later being accepted. [ 2 ] The claim and counterclaim that are the subject of the action arise out of a contract for the excavation of land entered into between the plaintiff, Great Wall Construction Ltd., as contractor, and the defendants, Lulu Island Winery Ltd. and Blossom Winery Ltd., as developer and owner of the land respectively.

At issue is whether the contractor is entitled to more money than it has been paid or must compensate the defendants for breach of the contract. [ 3 ] After the pleadings were closed, and following an unsuccessful attempt at mediation, the defendants made what is referred to as a formal offer of settlement in compliance with Rule 9-1 of the Supreme Court Civil Rules . The offer was contained in a letter that was served, as the rule requires, upon being delivered to the plaintiff’s solicitors at their office, having the address given in the Notice of Civil Claim as the address for service.

It was also sent and received by fax transmission. The defendants offered to settle the dispute by paying the plaintiff $39,500 and reserved the right to draw the offer to the court’s attention with respect to the award of costs. No expiry date was given. The plaintiff’s solicitors responded by declining to accept the offer and making a counter-offer to settle the dispute by the defendants paying the plaintiff $109,500. The counter-offer was conveyed by email. It was not made under the rule and it was stated to be open for seven days. It was not accepted.

[4] Thereafter the defendants changed solicitors. The plaintiff’s solicitors referred the new solicitors to what was then the expiredcounter offer and asked for a proposal. They did so by email. In response, the new solicitors sent another offer of settlement to theplaintiff’s solicitors. The offer was sent by email. It was contained in a two-page letter to the plaintiff’s solicitors at their office address.The letter provided the original offer to pay the plaintiff $39,500 was withdrawn and replaced with an offer to settle the dispute upon theplaintiff paying the defendants $80,000. No expiry date was given.

The letter was sent to the plaintiff’s solicitors as an attachment to theemail. The email showed it was sent “To” the email address of the solicitor handling the plaintiff’s file “From” the solicitor handling thedefendants’ file. It referenced Great Wall Construction Ltd. and Lulu Island Winery Ltd. as the “Subject” under which it read“Attachments: ltr to [plaintiff’s solicitors] with offer. pdf”. The message read “Please see attached”. The email was received andremained in the inbox of the recipient’s email program for some weeks before it was removed as part of a general purge.

The messagewas, for reasons that are not clear, never seen by the plaintiff’s solicitors and there was no follow-up on the part of the defendants’solicitors. [5] Ultimately, examinations for discovery were conducted. The day after they were completed, the plaintiff’s solicitors purportedto accept the defendants’ initial offer to pay the plaintiff $39,500 to settle the dispute. They sent a letter by courier to the defendants’solicitors’ office as well as sending a copy of the letter both by fax transmission and by email. The defendants’ solicitors responded byemail.

They maintained the offer had been withdrawn (prior to the examinations for discovery) by virtue of the email and the letterattached to that effect that had been sent. The plaintiff refused to accept the position taken. [6] The plaintiff made application for a declaration that the dispute was settled by their acceptance of the defendants’ offer of$39,500. The judge found the offer could not have been accepted when the plaintiff’s solicitors purported to accept it because it had beenwithdrawn.

The plaintiff appeals, contending the judge erred in concluding the email the defendants’ solicitors sent withdrawing theoffer – which though received was not seen – constituted a legally effective withdrawal. [7] The defendants’ $39,500 settlement offer was, as indicated, made in compliance with Rule 9–1 the purpose of which is topromote settlement. To that end the rule prescribes a procedure litigants may follow to enhance their position with respect to therecovery of costs by making offers of settlement. It does so by defining what constitutes an “offer to settle” for the purposes of theprocedure.

It defines an offer to settle as one made in writing that is served on all parties of record and states the right to draw it to thecourt’s attention in relation to costs is reserved (9-1(1)(c)). Significantly, in its present form, the rule makes no provision that governscommunication with respect to an offer being accepted or withdrawn. There is no requirement that the acceptance or the withdrawal of anoffer to settle be in writing or be served.

The rule provides that a counter-offer does not render an offer made in compliance with theprocedure expired (R. 9-1(8)) such that the procedure does not incorporate all aspects of the traditional law of contract as this Courtrecognized when considering an earlier version of the rule in Mackenzie v. Brooks, 1999 BCCA 623 at para. 23.

The procedure is suchthat there may be more than one offer to settle, as defined by Rule 9-1(1)(c), outstanding at any given time with the advantage affordedwith respect to costs available to any given offeror. [8] The judge recognized the defendants’ solicitors’ withdrawal of the offer to settle the dispute for $39,500 was, as expressed inthe letter attached to their email to the plaintiff’s solicitors, clear and unambiguous and that the issue was communication.

He questionedwhether the delivery of the email to the plaintiff’s solicitors’ inbox was sufficient and, given what he found to be the parties’ agreedmethod of written communication, concluded: [30] In my view, it was. Just as the plaintiff and defendant had implicitly agreed to exchange communications via facsimile in Trans-Pacific Trading v. Rayonier Canada Ltd. (1998), (BC CA), 48 B.C.L.R. (3d) 296, the parties here agreed to the use ofemail as a form of communication for communications not requiring formal service.

Once delivered to the email inbox of counsel for theplaintiff, counsel for the defendant had the legitimate expectation that the email would be read. It is no different than if the defendanthad sent a letter via post or delivery to the plaintiff's address and it was left unopened or misplaced in the plaintiff's office.

Whileprudence, and perhaps courtesy, might have warranted some follow-up given there was no acknowledgment or response to the "newoffer", such was not required. [31] I find the revocation contained in the August 5 email effectively revoked the Offer and, as such, it was no longer capable ofacceptance thereafter.

Accordingly, the application is dismissed. … [9] Given that it was open to the judge to conclude as he did that the agreed method of written communication was email, it cannotbe said the judge was in error in concluding the offer to settle was withdrawn well before the plaintiff’s solicitors purported to accept it.The offer was withdrawn when the email was sent and received regardless of the fact it was for some reason not seen. [10] I would dismiss the appeal. [11] SAUNDERS J.A.: I agree. [12] HARRIS J.A.: I agree. [13] SAUNDERS J.A.: The appeal is dismissed. “The Honourable Mr. Justice Lowry”