10 / 17 / 2008
British Columbia recently introduced a new Rule of Court concerning formal offers (Rule 37B). Rule 37B has replaced predecessor formal offer rules.
Rule 37B gives the Court discretion in deciding whether a successful party, which has delivered a formal offer, is entitled to an award of double costs.
In considering whether double costs are warranted, the Court is directed to consider a number of factors, including the relative financial circumstances of the parties.
The question is whether the Court may consider the defendant’s insurance coverage under the “financial circumstances” heading. This question was answered by the B.C. Supreme Court in Bailey v. Jang, 2008 BCSC 1372, released today.
In Bailey the Court (Hinkson J.) refused to consider the defendant’s insurance coverage. The Court accepted that the defendant was covered by ICBC, but said this was not relevant as part of the “financial circumstances” inquiry. Mr. Justice Hinkson found that the proper contest is between the actual defendant and the plaintiff, not the defendant’s insurer and the plaintiff. As the defendant and plaintiff were both of similar financial means, this factor did not favour the plaintiff. The defendant was entitled to double costs.
The Relevant section of Rule 37B provides as follows:
Rule 37B provides that where an offer to settle has been delivered:
4) The court may consider an offer to settle when exercising the court’s discretion in relation to costs.
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;
(c) the relative financial circumstances of the parties;
(d) any other factor the court considers appropriate.
In Bailey v Jang, the Court held as follows (at paras. 29 to 35, concerning the insurance issue):
[29] The plaintiff asserts by affidavit that her annual income is between $33,000 and $34,000 per year, and that her share of the expenses in the apartment she shares with a friend together with her own monthly expenses amount to approximately $2000 per month.
[30] The plaintiff lists a debt to her lawyers of some $29,000 as well as other debts of a further $35,000, and swears that “If I am obliged to pay ICBC’s defence costs for this trial, I will be unable to meet my ongoing expenses and debts.” I have no evidence of the extent to which the plaintiff could arrange financing to address her position, but I do not accept that her present debts or even greater financial obligations could not be accommodated by financing. While the defendants argue that the plaintiff’s obligations to her counsel are a result of her refusal to accept their offer to settle, I do not see that the cause of the plaintiff’s debts is a relevant consideration. The fact is that she is indebted to her counsel.
[31] There are, however, two difficulties with the plaintiff’s position on this factor. First, she argues that her financial circumstances are difficult. This alone is insufficient to meet Rule 37B(6)(c).
[32] Second, she places her financial position against that of ICBC, as opposed to that of the defendants.
[33] While I accept that it is likely that most drivers in British Columbia are insured by ICBC, the wording of subrule 37B does not invite consideration of a defendant’s insurance coverage. There may be good policy reasons for this. Insurance coverage limits with ICBC are not universal, and will vary from insured to insured. Certain activities may result in a breach of an individual’s insurance coverage, or the defence of an action under a reservation of rights by ICBC. A plaintiff will not and likely should not be privy to such matters of insurance coverage between a defendant and ICBC.
[34] The contest in this case was between the plaintiff and the defendants, and the insurance benefits available to the defendants do not, in my view, fall within the rubric of their financial circumstances, any more than any collateral benefit entitlement that a plaintiff may have would affect that person’s financial circumstances for the purpose of determining their loss.
[35] There is no evidence before me as to the defendants’ financial circumstances. What little I do know of the circumstances of the defendant Pricilla C. Jang is that, at the time of the accident, she was driving her mother’s motor vehicle, and that she was employed as a parts delivery person for a motor vehicle dealership. That does not suggest to me that her financial circumstances are appreciably different from those of the plaintiff.