Bowen v. Martinec,


2008 BCSC 104

Date: 20080128
Docket: M063920
Registry: Vancouver


Kevin Andrew Bowen



Heather Martinec and Josef Martinec


Before: The Honourable Mr. Justice Pitfield

Reasons for Judgment

Counsel for the Plaintiff:

Marcus G. Bolda

Counsel for the Defendants:

Angus M. Gunn, Jr.
Ryan W. Parsons

Date and Place of Hearing:

January 11, 2008


Vancouver, B.C.

[1]                The parties have stated the following question for the opinion of the court pursuant to Rule 33 of the Rules of Court:

Where a formal offer to settle made under Rule 37 of the Rules and in Form 64 is accepted before trial in an action to which Rule 66 of the Rules applies, are the costs in the action assessed by reference to the fixed scale of costs under Rule 66(29) of the Rules or by reference to Appendix B to the Rules?

[2]                The plaintiffs say that when a Rule 66 action is settled before trial upon acceptance of an offer made by the defendant, the plaintiff is entitled to recover costs in accordance with Appendix B to the Rules.  The defendants say that in such circumstances, the plaintiff’s recovery is restricted to a portion of the costs permitted by Rule 66(29).

[3]                The background to the application is the following.  The plaintiff was injured in a car accident.  He commenced an action against the defendants.  The endorsement specified that the action would be governed by Rule 66.

[4]                On October 11, 2007, the defendants delivered an offer to settle in the following terms:

TO:                  THE PLAINTIFF


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

1.         The sum of THIRTY TWO THOUSAND DOLLARS ($32,000.00), 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.

DATED at the City of Surrey, in the Province of British Columbia, this 11th day of October, 2007.

[5]                The offer was accepted on October 30, 2007.  In reliance upon clause 2 of the offer, the plaintiff prepared and submitted a bill of costs compiled by reference to Appendix B, Scale B in respect of 36 units at $110 per unit for a total of $3,960, exclusive of taxes and disbursements.  The defendants disputed the plaintiff's right to recover costs pursuant to Appendix B, and this application by way of stated case is the result.

[6]                Rules 66(29), 66(29.1) and 37(22) provide as follows:

66(29) Unless the court orders otherwise or the parties consent, and subject to Rule 57 (10), the amount of costs, exclusive of disbursements, to which a party is entitled is as follows:

(a)        if the time spent on the hearing of the trial is one day or less, $5,000;

(b)        if the time spent on the hearing of the trial is more than one day, $6,600.

66(29.1)           In exercising its discretion under subrule (29), the court may consider a settlement offer delivered in accordance with Rule 37 or 37A whether or not other special circumstances exist.

37(22)   Subject to subrule 22.1, if an offer is accepted,

(a)        if the offer was made by the plaintiff, the plaintiff is entitled to costs, or

(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.

[7]                The interaction between Rules 66 and 37 has been considered by judges of this court and by the Court of Appeal in the context of offers of settlement made, but not accepted, where the matter has proceeded to trial.  Judges of this court, but not the Court of Appeal, have considered the interaction of the Rules in circumstances where an offer to settle has been made and accepted before trial.

[8]                In Duong v. Howarth, 2005 BCSC 128, [2005] B.C.J. No. 207 (QL), Macaulay J. considered the interaction in circumstances where the plaintiff had delivered a formal offer to settle which the defendant did not accept and, after a two-day trial, the plaintiff had been awarded more than the amount for which he had offered to settle.  

[9]                At the time, Rule 66(29) restricted the costs of a one-day trial to $3,600, and the costs of a two-day trial, to $4,800.  Macaulay J. concluded that Rule 66(29) should be construed to attribute $1,200 per day to trial costs and $2,400 to pre-trial costs whether for a one-day or two-day trial.  The conclusion was derived from the fact that as it then stood, the difference in costs for a two-day trial and one-day trial was $1,200, with the result that it was fair to consider that amount to be the cost attributable to trial and the residual of $2,400, to be the cost attributable to preparation.

[10]            Macaulay J. then considered the proportion of pre-trial preparation which had been undertaken to the point at which the plaintiff made the offer.  In the circumstances that prevailed in Duong, Macaulay J. concluded that substantially all pre-trial preparation had been completed at the time the offer was made.  As a result, he determined that the plaintiff should recover pre-trial preparation costs of $2,400, and double costs thereafter in respect of two days of trial determined from a base rate of recoverable costs at $1,200 per day.  In the result, he awarded a further $4,800, to the plaintiff, and total costs of $7,200 exclusive of disbursements and taxes.

[11]            In his reasons, Macaulay J. also remarked that it would be unfair to require a defendant to pay double costs in respect of pre-trial preparation that antedated the plaintiff's offer.

[12]            In Anderson v. Routbard, 2007 BCCA 193, 67 B.C.L.R. (4th) 66, the Court of Appeal considered the defendant's entitlement to costs in circumstances where the plaintiff declined to accept an offer to settle and the plaintiff's action was dismissed following a two-day trial.  The Court of Appeal referenced the decision of Macaulay J. in Duong and endorsed his statement of principle that the main purpose of sub-rules 66(29) and (29.1) was to avoid the necessity of taxation.  At para. 47, the court said the following:

I also agree with Macaulay J. that the intent of the Rule was to avoid the necessity of a taxation and that it would frustrate that intent to order a taxation of costs under the Rule.  For that reason, his approach to double costs also makes sense.  Rather than have double costs assessed under Appendix B and then taxed, Rule 66 provides a mechanism whereby double costs can be given effect without the necessity of taxation.  That methodology is described by Macaulay J. in the passage quoted from his reasons for judgment at para. 40, supra.

[13]            The court stated that it would give credence to the offer to settle and follow the same general approach that Macaulay J. outlined in Duong.  The court observed, however, that the defendant's offer was delivered much earlier in the proceedings, some 19 months prior to trial.  In the result, the Court of Appeal awarded the defendant double costs, but made a deduction to allow for the fact that the plaintiff had engaged in some amount of pre-trial preparation for which it was entitled to costs, but not double costs.  In this regard, the court said the following at para. 49:

By far, the greatest portion of the legal preparation was done following the offer to settle.  In these circumstances, I would exercise my discretion to award the defendant double costs for the entire period ($4,800 x 2 = $9,600) less a 10% discount for work done prior to the offer to settle.  The result is an order of costs in the amount of $8,640.  While this estimate of costs is somewhat arbitrary, it avoids the need for taxation, as envisaged by subrule 66(29), and gives significant credit to the defendant for making an early offer to settle, in accordance with Rule 37.

[14]            The Court of Appeal exercised discretion to adjust the award for double costs in order to give effect to Rule 37(24) which stipulates that where a plaintiff's claim is dismissed following rejection of an offer, the defendant is entitled to costs assessed to the date the offer was delivered, and to double costs assessed from that date.  By allowing a 10% reduction from a double costs award, the court was reflecting its view that 40% of the pre-trial work was completed before the offer was made.

[15]            The principal point that emerges from Anderson is that where an offer has been made but rejected, and the matter proceeds to trial, then depending upon the result, the terms of the offer and the time at which it was made, the costs award should reflect the offer to settle, but be quantified by reference to the cap on costs imposed by Rule 66.

[16]            Rule 66 has been amended since Duong and Anderson.  The maximum that may be awarded as costs for a one-day trial is now $5,000.  The maximum in respect of a two-day trial is $6,600.  Applying the rationale employed by Macaulay J., the Rule reflects the fact the costs per day of trial are $1,600, and the costs for pre-trial preparation are $3,400. 

[17]            Two decisions of this court have considered the question of costs payable where an offer has been accepted by a party before commencement of trial.  One decision precedes Duong and the other follows it.

[18]            In Gill v. Delgado, 2004 BCSC 1190, [2004] B.C.J. No. 1881 (QL), a district registrar concluded that a plaintiff who settled in response to an offer before trial was entitled to costs assessed pursuant to Appendix B of the Rules.

[19]            In Hamilton v. Watson, 2005 BCSC 1750, [2005] B.C.J. No. 2754 (QL), a master applied the rationale in Duong and awarded the plaintiff pre-trial preparation costs of $2,400 as opposed to the sum of $2,480 computed in accordance with the tariff set forth in Appendix B.

[20]            The difference in result can only be explained by the fact that the master had the benefit of the reasoning in Duong while the district registrar did not.

[21]            In my opinion, the principles that can be derived from Duong and Anderson should be applied in the determination of costs in circumstances where an offer has been accepted before the commencement of trial.  It is evident from Rule 66 that a cap has been imposed upon the recovery of costs in an action to which the Rule applies.  It is also clear that the court can give effect to Rule 37 offers to settle.  I am unable to identify any reason why the Rule 66 regime should apply in respect of the determination of costs following a trial where offers to settle have been made and rejected, but those situations where an offer is made and accepted before trial should justify taxation under Appendix B.

[22]            I adopt the view expressed by Macaulay J. which is that the amount of recoverable costs stipulated in Rule 66 should be allocated in part to trial and in part to pre-trial preparation.  The part allocable to trial should be determined by deducting the global costs contemplated in respect of a one-day trial from the global costs contemplated in respect of a two-day trial.  The costs for pre-trial preparation in either case should be determined as the difference between the global cost amount for a one-day trial and the daily trial costs.  As the Rule presently stands, the recoverable costs per day of trial are $1,600, and the recoverable costs attributable to pre-trial preparation, $3,400.

[23]            The fact that the result urged by the plaintiff should not prevail can be demonstrated by the facts in this case.  The plaintiff prepared a bill of costs based upon the fact that 36 units at $110 per unit were attributable to the preparation undertaken to the date of the offer.  The parties agreed that if the matter had proceeded to trial, a further 30 to 39 units would have been recoverable under Appendix B for additional pre-trial preparation.  Were the plaintiff's view to prevail, and had the offer to settle been made on the eve of trial, the plaintiff would claim in the range of 66 to 78 units at $110 per unit for a total of $7,260 to $8,250 in pre-trial preparation.  The claim would exceed the cap stipulated in Rule 66 for an action that proceeded to trial requiring not more than one day of hearing.

[24]            It will be incumbent upon the parties to agree on the proportion of the pre-trial preparation which had been undertaken by the plaintiff to the date of the defendant’s offer to settle.  In the absence of an agreement, the parties may resolve differences on taxation, whereupon the court will exercise the discretion conferred upon it by Rule 66(29.1).

[25]            It follows that the answer to the stated case is that costs in an action subject to Rule 66, settled before trial pursuant to an offer of settlement must be assessed by reference to the fixed scale of costs under Rule 66(29), and not by reference to Appendix B to the Rules of Court.

"The Honourable Mr. Justice Pitfield"

February 14, 2008 – Revised Judgment

Corrigendum to the Reasons for Judgment issued advising that on the first page, Ryan W. Parsons should be added as counsel for the defendants.

In line 5 of paragraph 12, the word “principal” should read “principle”.