2005 BCSC 128 Duong v. Howarth

Before: The Honourable Mr. Justice Macaulay

Reasons for Judgment

On Costs

Counsel for the Plaintiff:	D.D. McKnight and R. Tweedie
Counsel for the Defendant:	M.R. Mark
Date and Place of Trial:	20041223
	Victoria, B.C.

[1] On December 3, 2004, the plaintiff delivered a formal offer to settle to the defendant pursuant to Rule 37(22) and (37) for $42,000 plus costs and disbursements. The defendant did not accept this offer and the trial proceeded under Rule 66 ten days later, lasting just over two days. At the conclusion of the trial, I awarded damages in favour of the plaintiff totalling $52,869.62 plus court order interest, which significantly exceeded or “beat” the plaintiff’s offer.

[2] The questions before me now are whether the plaintiff is entitled to the additional costs benefit under Rule 37 due to obtaining judgment in an amount greater than his offer and, if so, how that benefit should be calculated. These questions arise because ordinarily, the plaintiff’s costs at the end of a fast track trial are capped under Rule 66(29) at $4,800 exclusive of disbursements, "unless the court orders otherwise".

[3] Rule 66 makes no allowance for costs based on the actual steps taken in the litigation, or for the additional benefit of costs available under Rule 37 where a plaintiff obtains judgment in an amount greater than the offer to settle. Under Rule 37, the plaintiff would be entitled to his costs calculated in the usual way to the date of his offer and double costs thereafter.

[4] Following the enactment of Rule 66, a line of authority established that the court should only order costs "otherwise" where justified by special circumstances. There is no longer any question that making a successful offer to settle may constitute a special circumstance justifying a different costs order than provided in the rule itself.

[5] Rule 66 was amended effective July 1, 2003. Subrule (29.1) now states:

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.

[6] Although a number of judges of this court earlier disagreed on the question whether an offer to settle alone could constitute a special circumstance, the amendment put that debate to rest and it is unnecessary to review those decisions. The divergent positions are canvassed in Beaubier v. Klassen, [2003] B.C.J. No. 27; 2003 BCSC 7.

[7] Counsel for the defendant agrees that the judgment exceeds the offer but contends that awarding double costs in Rule 66 actions remains a matter of judicial discretion. He contends that issues such as the wage loss calculation in the case at bar were inherently difficult and that double costs are inappropriate notwithstanding the offer.

[8] There is ample authority in this court for the proposition that awarding double costs in a Rule 66 action is a matter of discretion even where the plaintiff beats his formal offer to settle. See Beaubier, at para. 14 (pre‑amendment), as well as Engler v. Dizdarevich, [2004] B.C.J. No. 1586 (S.C.) and Linekar v. Andreko, [2004] B.C.J. No. 1986, at para. 8 (post-amendment).

[9] The Court of Appeal has very recently affirmed, in a non-fast track case, that Rule 37 constitutes a complete code admitting no judicial discretion other than as provided in the rule itself. See Cridge v. Harper Grey Easton, 2005 BCCA 33. Counsel did not have any opportunity to argue whether this applies to fast track cases under Rule 66. Based on the discretionary considerations set out in the case law, I would give effect to the offer to settle in the present case in any event and accordingly, it is not necessary that I invite counsel to address the issue raised by Cridge.

[10] In the present case, the offer was made ten days before trial. Given the amount at issue, this was an adequate time for the defendant to make a reasoned decision about whether or not to accept the offer rather than proceed to trial. At the conclusion of trial, the plaintiff obtained a judgment that was significantly greater than the amount of his offer.

[11] The defendant contends that the wage loss calculation was inherently difficult but I disagree. Because the plaintiff was partially self-employed during the relevant time period, his lack of complete records presented some hurdles, but not enough to dismiss his claim out of hand. At trial, counsel for the defendant contended that the plaintiff was sufficiently recovered by March 2004 to return to all full-time work. That submission did not succeed. The awards for non-pecuniary and pecuniary losses reflected a longer period of disability attributable to the accident.

[12] I am satisfied that the making of the particular offer to settle in the present case constituted a special circumstance justifying a departure from the fixed cost consequence of Rule 66(29). This leaves the question of what the cost award should be.

[13] According to counsel for the plaintiff, the amount of costs, exclusive of disbursements, should be $9,600, a figure double the fixed amount available under Rule 66(29). I do not agree. Such an approach would not be consistent with either Rule 37 or 66. It is also inconsistent with the authorities.

[14] Joyce J. reviewed four possible approaches to the question of how to apply Rule 37 to Rule 66 actions in Linekar, at paragraph 10, as follows:

(1) Ordinary assessment of costs applying Rule 37 subject to a "double cap", as in [Bishop-Austin v. Brown, [2004] B.C.J. No. 1472 (S.C.)];

(2) Ordinary assessment of costs applying Rule 37 without any cap;

(3) Allow the fixed costs ordinarily provided by Rule 66(29) plus additional costs in accordance with the tariff for those items that occurred after the offer was delivered;

(4) Apply a pro-rated formula as was done in Girvan v. Raffele, [2002] B.C.J. No. 1795 (S.C.), where the plaintiff was directed to prepare a bill of costs (B1) in accordance with the tariff without regard to the effect of the offer and a second bill of costs (B2) in accordance with the tariff giving double units for those items that occurred after the offer was made. The difference between the two amounts created a percentage increase that was to be applied to the fixed costs under Rule 66(29) (in that case ($4,800), in accordance with the following formula:

(B2 – B1)/B1 x $4,800

Joyce J. concluded that, where the only special circumstance is an offer to settle, the approach taken in Bishop-Austin is preferable as it does not begin with a fixed amount yet provides a ceiling equal to double the fixed cost amount.

[15] I agree. In my view, the $4,800 cap in Rule 66(29) reasonably reflects the assessed costs under Scale 3 that would be available for any case of ordinary difficulty where there has been discovery of documents; limited examinations for discovery; perhaps a chambers application; and a two day trial. Without regard to Rule 66, such a case could typically result in an overall award of costs of about $4,800.

[16] For example, under Appendix B, items 24 and 25 relate to preparation for and attendance at each day of trial: five units for the former and ten for the latter. At Scale 3, one would reasonably expect to tax a bill of costs for each day of trial at $1,200 (15 x $80).

[17] Under Rule 66(29), the costs of a one day trial are capped at $3,600, exactly $1,200 below the cap for a two day trial. If one assumes that average pre-trial costs remain constant for a one or two day case, it is evident that the cap is not designed to deprive a successful litigant of costs available outside of the rule. Instead, the rule seeks to displace the need for unnecessary and expensive taxations in the relatively modest cases that proceed under the rule.

[18] Because Rule 66 does not, in itself, break down the apportionment between pre-trial and trial costs, this review is also helpful in considering how the court should apply the Rule 37 requirement that double costs only apply to steps taken in the litigation after delivery of the offer. It would be unfair to the defendant to impose a double cost burden for the litigation steps that preceded preparation for trial because the plaintiff chose not to deliver the offer until ten days before trial. If I were to accede to the plaintiff’s position, he would receive a greater cost benefit than is available under Rule 37.

[19] For these reasons, I reject the approach urged on behalf of the plaintiff. The plaintiff is entitled to the pre-trial portion of costs envisaged by Rule 66(29), that is $2,400 ($3,600 - $1,200) to cover the period up to delivery of the offer, and double costs for the period thereafter attributable to preparation and two days of trial, a further $4,800 (2 days x 2 x $1,200). In the result, the plaintiff is entitled to a maximum of $7,200 in costs, exclusive of disbursements.

[20] It is arguable that Rule 66 contemplates making an order for costs after trial in a fixed amount, exclusive of disbursements and, accordingly, there should be no need for a taxation of costs. In Bishop-Austin v. Brown, 2004 BCSC 944, the court held that costs following trial under the fast track rule are maximums subject to taxation. I am not persuaded that view is correct but feel obliged to follow it.

“M.D. Macaulay, J.”
The Honourable Mr. Justice M.D. Macaulay

Citation:	*Duong v. Howarth,*
	2005 BCSC 128