2008 BCSC 947 BCSPCA v. Baker

Before: The Honourable Mr. Justice Preston

Reasons for Judgment

(In Chambers)

Counsel for the Plaintiff	Donald P. Montrichard
Counsel for the Defendant Walter Baker	Duncan K. Magnus
Date and Place of Hearing:	March 30, 2008
	Vancouver, B.C.

[1] A trial of the issues in this action pursuant to Rule 18A took place on July 17, 2007. At trial, the defendant Walter Baker was represented by counsel. His co-defendant Tamara Baker did not appear. She had assigned herself into bankruptcy on February 8, 2007. The action of the plaintiff, British Columbia Society for the Prevention of Cruelty to Animals (“BCSPCA”) was dismissed after trial: BCSPCA v. Baker, 2007 BCSC 1717, 163 A.C.W.S. (3d) 881.

[2] The issue before me on this application is whether or not the defendant Walter Baker is entitled to an award of double costs pursuant to Rule 37(24)(b) of the Supreme Court Rules, B.C. Reg. 221/90. Mr. Baker relies upon an offer to settle in the amount of $1.00 dated February 13, 2007 delivered to the BCSPCA pursuant to Rule 37.

[3] The BCSPCA takes the position that the offer to settle is incapable of triggering the double costs provisions of the Rule because it was not made on behalf of both jointly sued defendants in the action.

Facts

[4] The action was commenced on January 11, 2007. The writ of summons named both defendants. Paragraph 13 of the statement of claim filed with the writ alleges that:

Pursuant to section 20 of the [Prevention of Cruelty to Animals] Act, the Defendants, Tamara Baker and Walter Baker, are joint and severally liable to the Society for the full amount of the Costs of Care.

[5] On January 30, Mr. Baker entered an appearance in the action. From January 31 to February 5, 2007, repeated attempts to serve the writ of summons and statement of claim on Ms. Baker were unsuccessful. On February 8, 2007, Ms. Baker assigned herself into bankruptcy pursuant to the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (“Bankruptcy Act”).

[6] On February 13, 2007, counsel for the BCSPCA delivered an offer to settle accompanied by a letter which stated, in part:

Given the recent declaration by, and the resultant stay of proceedings with respect to, the named Defendant, Tamara Baker, the Society takes the position that Rule 37(31) does not prevent it from addressing this Offer to Settle solely to the Defendant, Walter Baker.

[7] On the same day, Mr. Baker delivered his offer to settle for $1.00 which is the subject of this application.

[8] Neither offer to settle was accepted.

[9] At the Rule 18A trial, one of the issues was Mr. Baker’s claim to an entitlement to special costs. That claim was unsuccessful. He was awarded costs under Scale B.

[10] On March 30, 2008, Mr. Baker applied to have costs assessed as double costs pursuant to Rule 37.

[11] Written submissions were filed by both parties and I prepared written reasons in final form in April 2008. Inadvertently, those reasons were not handed down. Rules 37 and 37A were repealed by B.C. Reg. 221/90 and a new rule, Rule 37B, substituted effective July 1, 2008. On July 14, shortly after the repeal of Rules 37 and 37A, counsel wrote to the court concerning the effect of Rule 37B on the judgment which had not been handed down.

The Law

[12] Rule 37B(1) reads in part:

(1) in this rule “offer to settle” means

an offer to settle made and delivered before July 2, 2008 under Rule 37, as that rule read on the date of the offer to settle, and in relation to which no order was made under that rule …

[13] In the circumstances, Rule 37B applies to the offer made by Mr. Baker.

[14] Rule 37B (5) and (6) read:

(5) In a proceeding in which an offer to settle has been made, the court may do one or both of the following:

(a) deprive a party, in whole or in part, of costs to which the party would otherwise be entitled in respect of the steps taken in the proceeding after the date of delivery 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 of the offer to settle.

(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 on any later date;

(b) the relationship between the terms of settlement offered and the final judgment of the court;

(d) any other factor the court considers appropriate.

[15] Subrule (5) is permissive. It empowers the court to make either type of order mentioned in the subrule. By necessary implication, it contemplates that the court may make an order that denies one of the two forms of relief set out in the subrule.

Rule 37B (6) (a)

[16] I will deal first with the consideration raised by Rule 37B (6) (a): whether the offer was one that ought reasonably to have been accepted.

[17] Rule 37(2), which governed matters at the time the offer in this case was made, read:

(2) A party to a proceeding may deliver to any other party of record a written offer in Form 64 to settle one or more claims in the proceeding in the terms specified in the offer.

Rule 37(31) read:

(31) Other than in an action for defamation, if several defendants are sued jointly, a plaintiff may not make an offer to settle except jointly to all defendants, and a defendant may not make an offer to settle except jointly with all other defendants.

[18] The rationale for this provision was explained by McLachlin J. (now C.J.C.) in Imperial Salmon House Ltd. v. Krdzalic (1983), 48 B.C.L.R. 256 at 260, 37 C.P.C. 152 (S.C.) at paras. 11-12:

… The requirement for joint payment into court where there is more than one defendant was introduced into the British Columbia Rules of Court in 1976. Under former M.R. 255(b), defendants were not required to pay in together or jointly. This created a problem in many cases. A plaintiff might accept payment in made by one defendant, intending to proceed against the other defendant, and then find himself faced with the defence that the two defendants were joint or concurrent wrongdoers, with the result that the plaintiff could not claim against the remaining defendant who had not paid money into court.

Rule 37(14) attempts to eliminate such problems by requiring that the payment into court must be joint. Defendants are expected to discuss and agree on their positions before payment is made. There is but one payment into court for the plaintiff to consider. If that payment is accepted, that is the end of the law suit. The requirement that any payment into court by multiple defendants be made jointly ensures that acceptance of payment in to court resolves the law suit once and for all in a manner fair to all parties. …

[19] The application of Rule 37(1) would dispose of this application in a straightforward manner were it not for Ms. Baker’s bankruptcy. She was a joint defendant and, in the normal course, would have been served with the writ and statement of claim. Her assignment into bankruptcy interrupted this normal course.

[20] The effect of the bankruptcy is to stay the proceeding against Ms. Baker. Section 69(1) of the Bankruptcy Act reads in part:

69. (1) Subject to subsections (2) and (3) and sections 69.4 and 69.5 [only s. 69.4 has application here], on the filing of a notice of intention under section 50.4 by an insolvent person,

(a) no creditor has any remedy against the insolvent person or the insolvent person’s property, or shall commence or continue any action, execution or other proceedings, for recovery of a claim provable in bankruptcy …

[21] Section 69.4 of the Bankruptcy Act states:

69.4 A creditor who is affected by the operation of sections 69 to 69.31 … may apply to the court for a declaration that those sections no longer operate in respect of that creditor or person, and the court may make such a declaration, subject to any qualifications that the court considers proper, if it is satisfied

(a) that the creditor or person is likely to be materially prejudiced by the continued operation of those sections; or

(b) that it is equitable on other grounds to make such a declaration.

[22] A stay of proceedings under the Bankruptcy Act does not bring the proceedings to an end or prevent their continuation, if a court permits, under s. 69.4. Nor does it end the proceedings if the trustee is discharged: Thiessen v. Antifaev, 2003 BCSC 197, 120 A.C.W.S. (3d) 723.

[23] Rule 37(31) prevents one of a number of defendants from making an offer to settle if he or she is sued jointly with the other defendant or defendants. In Browne v. Lowe, 2002 BCCA 7 at para. 157, 97 B.C.L.R. (3d) 246, Southin J.A., said of the requirements of Rule 37(31):

With all respect, the defendants here were not sued “jointly”. Under s. 4 of the Negligence Act, R.S.B.C. 1996, c. 333, their liability is joint but they are not joint tortfeasors. The cause of action against each is several. Tortfeasors can only be sued “jointly” if they have joined together in committing the tort and the liability of one is the liability of the other, e.g. if two landowners agree to enter on the land of another to cut down his trees.

[24] Here, counsel for Mr. Baker takes the position that the pleadings do not raise a claim of joint liability.

[25] BCSPCA’s claim is based on s. 20(1) of the Prevention of Cruelty to Animals Act, R.S.B.C 1996, c. 372 (the “Act ”). It reads:

20(1) The owner of an animal taken into custody under section 11 is liable to the society for the costs incurred by the society under this Act with respect to the animal.

[26] BCSPCA’s statement of claim contains the following averments:

8. At all material times, the Defendant, Tamara Baker, or the Defendant, Walter Baker, or both of them were the owners of, and/or persons responsible for, some or all of the seized animals.

…

10. At all material times prior to the execution of the Warrant, and contrary to the Act:

a) the defendants, Tamara Baker and Walter Baker, failed to provide the Seized Animals with adequate food, water, shelter and veterinary care;

b) the Seized Animals were sick, in pain or suffering;

c) the Seized Animals were neglected; and/or,

d) the Seized Animals were in distress, within the meaning of the Act.

…

13. Pursuant to section 20 of the Act, the Defendants, Tamara Baker and Walter Baker, are jointly and severally liable to the Society for the full amount of the Costs of Care.

14. The Society has demanded that each of the Defendants, Tamara Baker and Walter Baker, compensate it for the full amount of the Costs of Care.

[emphasis added]

[27] It is clear that the plaintiff raises a claim based on liability of the defendants as joint owners involved in a single delict, the contravention of the provisions of the Act, and seeks full indemnity from each of them.

[28] The defendant Walter Baker submits that the plaintiff is estopped from taking the position that the defendant Tamara Baker’s bankruptcy does not prevent the operation of the bar in Rule 37(31) because it took the opposite position when it delivered its offer to settle.

[29] I will observe first that the representation that is said to give rise to the estoppel is a representation of law not fact. Secondly, it is a representation with respect to a proposition of law made by one counsel to the other in the course of unresolved litigation.

[30] It appears to me that the defendant’s position may be stated as follows: if counsel advances an incorrect proposition of law to counsel for the opposing party, the first counsel is estopped from relying on the correct proposition later in the same litigation. To state the proposition is to doubt it. It is not a sound proposition.

[31] I am satisfied that no estoppel arises in this situation.

[32] The rationale of Rule 37(31) is clear. In respect of defendants sued jointly, it requires that a single offer be made on behalf of all defendants in order that the plaintiff can satisfy him or herself about the effect of accepting or ignoring the offer. In this case, one of the defendants, Ms. Baker, did not participate in the offer. The action had not been discontinued against her. There were circumstances in which the claim against her could continue to have vitality. In order for a party to claim the benefit of double costs under the Rule, he or she must make an offer that complies with its provisions. That is not the case here.

[33] I am satisfied that Mr. Baker’s offer was not one that reasonably ought to have been accepted on the date of the offer to settle or before the Rule 18A hearing at which time, pursuant to Rule 37(13), the offer was no longer capable of acceptance.

Rule 37B (6) (b)

[34] This subrule indicates that the court, when exercising its discretion under Rule 37B should consider the relationship between the offer and the result in the action. In this case, the offer to settle was for one dollar. There was no counterclaim. BCSPCA’s only risk was costs. An offer that would confer a significant benefit, aside from costs, on a party who failed to accept the offer would be more likely to attract double costs under Rule 37B that an offer of the type made by Mr. Baker.

Rule 37B (6) c)

[35] The means of the parties may be taken into consideration when exercising discretion under Rule 37B. The BCSPCA is a non-profit society dedicated to prevention of cruelty to animals. It is a substantial society. It had an operating surplus of $379,022 in 2007. Mr. Baker has not disclosed his financial circumstances. His counsel stated in submissions that he is of “modest means”.

Result

[36] In all the circumstances, Mr. Baker has not established that the offer he made was an offer that ought reasonably to have been accepted by BCSPCA under the law applicable during its currency. Acceptance would not have conferred a significant benefit on BCSPCA other that its effect on costs. Although BCSPCA is likely the party most able to bear the costs of the litigation, Mr. Baker has not shown that an award of double costs is, considering the other factors bearing on an award of costs under Rule 37B, necessary to avoid the imposition of hardship in the litigation.

[37] Mr. Baker’s application for double costs is dismissed. BCSPCA will have its costs of this application under Scale B.

[38] I am indebted to counsel for their full and thoughtful submissions.

“B.M. Preston J.”

_____________________________
The Honourable Mr. Justice Preston