2008 BCSC 1507 Coquitlam (City) v. Crawford

Before: The Honourable Madam Justice Loo

Reasons for Judgment

In Chambers

Counsel for Petitioner	D. R. Bennett
Counsel for Respondents	D. H. Goodwin
Date and Place of Hearing:	September 23, 2008
	Vancouver, B.C.

[1] This is an application by the respondents for double costs following my order dismissing the proceeding with costs to the respondents.

[2] The petitioner the City of Coquitlam sought a declaration that the respondents who operate a dog kennel, were in breach of the City’s Noise Regulation Bylaw and injunctive orders flowing from the breach. Following a 5-day trial that commenced May 12, 2008, I dismissed the proceeding on July 28, 2008.

[3] On May 5, 2008, the respondents delivered an offer to settle “this proceeding on the basis that the Petitioner’s claim be dismissed and costs in accordance with Rule 37”.

[4] On July 1, 2008, Rules 37 and 37A were replaced by Rule 37B which provides that it applies to offers to settle made both before and after July 1, 2008 where no order as to costs has been made. As no order as to costs has been made in this matter, Rule 37B applies.

[5] Rule 37B(4) provides that the court may consider an offer to settle when exercising the court’s discretion in relation to costs.

[6] The respondents’ offer to settle was delivered the afternoon of May 5, 2008, or less than 7 days before the trial commenced. Therefore, even under Rule 37(7), sub-rules (23) to (26) do not apply and the court may, in exercising its discretion as to costs, consider the offer and the date that it was delivered.

Rule 37B

[7] Rule 37B provides:

Offer may be considered in relation to costs

(4) The court may consider an offer to settle when exercising the court's discretion in relation to costs.

Cost options

(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.

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 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.

Argument of the Respondents

[8] The respondents argue that the facts were well known to both parties and the petitioner ought to have accepted the offer. Mr. Crawford was legally authorized to operate his dog kennel business and incurred legal fees of approximately $33,000 defending the claim. The respondents emphasize “particularly the imbalance of the economic situation” between the parties, and that under Rule 37B(6)(c) the Court may consider the relative financial circumstances of the parties. An award of double costs would increase Mr. Crawford’s costs from $8,250 to $16,500.

Argument of the Petitioner

[9] The petitioner argues that the Court should not award double costs on the ground that the offer to settle was not an offer which ought reasonably to have been accepted by the petitioner, and the Court should not consider the relative financial circumstances of the parties in light of the unreasonable offer to settle.

[10] The petitioner contends that Rule 37B should discourage a defendant or respondent from making offers that merely set the start time for calculating double costs. The offer to settle should not reasonably have been accepted because the only benefit it would have conferred on the petitioner is costs. The offer is similar to the offers to settle for $1.00 that were made in Clark v. Sidhu, 2005 BCSC 914, 51 B.C.L.R. (4th) 119 [Clark], and BCSPCA v. Baker, 2008 BCSC 947 [Baker]. In both of these cases the court declined to order double costs.

[11] In Clark a plaintiff sued for damages arising from a motor vehicle accident. A jury decided that the plaintiff was not injured in the accident and her claim was dismissed. The defendant argued that he was entitled to double costs on the basis that he had delivered an offer to settle for $1.00 and costs. Johnston J. stated:

[19] It is difficult to see how the policy underlying the sub-rule – that of encouraging early and reasonable efforts to settle litigation – is advanced by requiring double costs where the amount offered is so low as to amount to no offer at all. Indeed, there are situations where an offer of $1.00, or of some article having special significance to the litigants, intended to incur consequences under sub‑rules 24(b) or 26(b), has been calculated to inflame rather than placate the recipient of such an offer. To a plaintiff who genuinely feels injured or aggrieved, an offer of $1.00 may seem more of an insult than a genuine attempt to settle, even though, in the case of the money offer at least, the offer carries with it disbursements to that point. A plaintiff who feels wronged, then sues to make it right and loses, is doubly wronged if ordered to pay double costs merely because the opposing party, who took the contrary view of their respective rights, offered a pittance in settlement, an amount so low as to be no real offer at all.

…

[24] I find that a defendant seeking double costs under Rule 37(24), following a dismissal of the plaintiff’s claim, must show an offer to settle that was reasonable in the circumstances of the case in which it was made. I find further that, in the circumstances of this case, where liability for an accident was admitted by the defendant, where one or more other persons suffered injury in the accident, and where there was evidence of some injury, albeit slight, to the plaintiff whose claim was dismissed, an offer of $1.00, plus disbursements only, is not reasonable, and the defendant here is not entitled to double costs after the offer to settle.

[12] In Baker, Preston J. dealing with Rule 37B(6)(b) stated:

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 [than] an offer of the type made by Mr. Baker.

Analysis

[13] The Court of Appeal in a number of cases has stated that the purpose of the double costs provisions of Rule 37 is to encourage early and reasonable settlements of disputes and discourage frivolous litigation: Skidmore v. Blackmore (1995), 122 D.L.R. (4th) 330, 2 B.C.L.R. (3d) 201 (C.A.) at para. 28; Vukelic v. Canada (1997), 37 B.C.L.R. (3d) 217 at paras. 9 to 13, 94 B.C.A.C. 147; Mackenzie v. Brooks, 1999 BCCA 623 at para. 24 (sub nom. Mackenzie v. Brooks et al.), 130 B.C.A.C. 95.

[14] Although Rule 37 is no longer in force, I find these statements of principle helpful in view of the express language of Rule 37B(4).

[15] The petitioner’s claim was not frivolous and it was not a claim that was bound to fail. The offer to settle conferred no benefit on the petitioner aside from costs and conferred virtually no benefit to those who complained about the noise of the barking dogs.

[16] In Bailey v. Jang, 2008 BCSC 1372, Hinkson J. found the defendants entitled to an award of double costs beginning a reasonable period of time after which the plaintiff could consider their offer. He found that period to be 7 days after the defendants’ offer to settle.

[17] A party requires a reasonable time within which to consider an offer and decide in the circumstances existing at the time of the offer whether it should be accepted or rejected.

[18] I think it is fair to say that the cost of litigation increases and accelerates the closer a case gets to trial. By the time a case is ready for trial, (at least one that is not bound to fail) an offer that the plaintiff dismiss its claim and pay the defendant’s costs is in most circumstances not a reasonable offer. The plaintiff receives nothing towards its claim and the only benefit relates to costs.

[19] In support of their application, the respondents filed the affidavit of Mr. Goodwin’s legal assistant that attached all of the accounts that have been rendered to Mr. Crawford in these proceedings.

[20] I note that, with the exception of the legal fees incurred during the course of the 5-day trial, most of the fees were incurred after the hearing of the petition before Romilly J. By May 4, 2008, the day before the offer was delivered, counsel for the respondents had prepared the direct evidence of Mr. Crawford and assembled the book of authorities and book of documents. Giving the petitioner a reasonable time to consider the offer, which I find in this case to be 7 days, most of the costs of trial preparation had already been incurred.

[21] I do not find that the offer to settle was one that ought reasonably to have been accepted by the petitioner either on the date that it was delivered or on any later date.

[22] The respondents say that the relative financial circumstances of the parties merit an award of double costs. I know little of Mr. Crawford’s financial circumstances, and can safely assume that the City’s financial circumstances are greater than his. However, I do not think the circumstances of this case warrant an award of double costs on that basis alone when the offer to settle was not one that ought reasonably to have been accepted and was made so close to trial.

[23] The respondents’ application for double costs is dismissed.

“Loo J.”