Oct 11, 2019

Pre-litigation offers to settle do not affect costs in BC Supreme Court

Bomford v. Wayden Transportation Systems Inc., 2010 BCSC 1721 (CanLII)

Summary: Pre-litigation offers to settle are not taken into consideration when assessing costs at BC Supreme Court

Facts: Prior to commencing a wrongful dismissal claim, the plaintiff issued an offer to settle his claim in exchange for the following from the defendant:

1) Upon payment of:

(a) 10 months’ salary ($96,000 based on formula provided in offer);

(b) An amount in lieu of medical, insurance and related benefits for the notice period (no amount set out);

2) The provision of a satisfactory letter of reference; and

3) A revised Record of Employment showing his actual length of service.

      The defendant rejected the plaintiff’s offer.

      Six weeks later, the plaintiff commenced a lawsuit which ultimately resulted in an award of $51,048 plus interest for his wrongful dismissal (the summary trial judgment can be found at 2010 BCSC 1506).

      The plaintiff sought double costs for the, relying on the defendant’s rejection of his settlement offer.

      The plaintiff argued that his offer was an “offer to settle” as defined in the Supreme Court Civil Rules. Rule 9-1(1)(c) (formerly Rule 37B(1)(c)) defines an “offer to settle” as one that:

        (i) is made in writing by a party to a proceeding,

        (ii) has been served on all parties of record, and

        (iii) contains the following sentence: "The ............[party(ies)]............, ............[name(s) of party(ies)]............, reserve(s) the right to bring this offer to the attention of the court for consideration in relation to costs after the court has pronounced judgment on all other issues in this proceeding."

          In determining whether an offer is reasonable, Rule 9-1(5)(b) (formerly Rule 37B(5)(b)) states:

          In a proceeding in which an offer to settle has been made, the court may do one or more of the following...award double costs of all or some of the steps taken in the proceeding after the date of delivery of the offer to settle..

          [Underlining added]

          At issue: Did the plaintiff’s pre-litigation offer meet the requirements of an “offer to settle” as defined in the Supreme Court Civil Rules?

          Decision: The BC Supreme Court held that a pre-litigation offer does not meet the definition of an “offer to settle” as defined in the Supreme Court Civil Rules, relying on the specific reference in subrule (5) to “a proceeding in which an offer to settle has been made”:

          [13] The reach of the current rule does not extend, in my view, to pre-litigation offers. While England has adopted rules setting out mandatory pre-litigation protocols with cost consequences, this jurisdiction has not. I do not accept that the broadening of judicial discretion as set out in the offer to settle rule permits the court to fashion a remedy of double costs absent a proceeding.

          [14] The opening words of subrule (5) refer to “a proceeding in which an offer to settle has been made.” The additional requirements respecting the form and delivery of the offer become meaningless if there is no proceeding. There must first be a proceeding and then an offer to settle before Rule 37B or Civil Rule 9-1 applies.

          The Court also noted that the offer itself was not one that reasonably ought to have been accepted in any event. The amount offered, which was substantially higher than what the plaintiff eventually received, did not take into consideration the plaintiff’s eventual mitigation earnings. Additionally, the offer would have required the defendant to provide a letter of reference to an employee which it had recently terminated on the basis of alleged incompetence.

          Author: Brendan Harvey is an employment lawyer in Vancouver, BC practicing on the North Shore with Yeager Employment Law.