Case Summary by Erik Magrakan
Re: Rule 9-1(4)
Case: Sahota v. Sandulo
                  
Court Lacks Discretion To Deviate From Costs Agreement In Formal Settlement Offers

Authorities under the formal Rule 37B held that when a formal settlement offer dealing with costs consequences was accepted the BC Supreme Court had no discretion to make a different order with respect to costs.  The first case I’m aware of dealing with this issue under the New Rules was released today.  The Court upheld the principle developed under the former rule.

In today’s case (Sahota v. Sandulo) the Plaintiff was involved in a 2004 motor vehicle collision in Surrey, BC.  He started a lawsuit which was set for trial by Jury.  In the course of the lawsuit the Plaintiff incurred significant disbursements advancing the claim.  Fearful that the Jury trial would not go favorably the Plaintiff delivered a formal offer of settlement of $3,000 “plus court costs and disbursements“.  The Defendant accepted the formal offer.

The parties then could not agree on the costs consequences.  The Defendant brought a motion to address this issue.  Mr. Justice Armstong held that precedents developed under Rule 37B remain good law and that the Court has no discretion with respect to costs awards in these circumstances.   The Court provided the following reasons:

[28] Generally, the Court has discretion in relation to costs; however, where an offer to settle with specific terms as to costs has been accepted, to which Rule 9-1  applies, the Court does not have discretion to vary the terms of that agreement as they relate to costs.

[29] In Buttar v. Di Spirito, 2009 BCSC 72, Gerow J. held:

[11]      Both parties advanced arguments that the court has discretion under Rule 37B to make an order regarding costs. However, it is my opinion that the court has no discretion to make an order regarding costs in this matter. Mr. Buttar accepted the offer put forth by the defendants, including the offer regarding costs, without reservation. It is my view that Rule 37B does not confer discretion on the court to set aside an agreement that has been entered into between the parties regarding costs.

 

[33]         The rule in Buttar has been consistently applied in this Court and appears determinative of this issue.

[34]         Buttar and cases following it did not address Rule 9-1(4) as it relates to an accepted settlement that addresses costs. Rule 9-1(4) states:

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

 

[35]         Buttar held that the Court does not possess discretion to vary costs where a formal offer to settle, specifically addressing costs, has been accepted. If, in such circumstances, the Court is not in a position to exercise discretion in relation to costs, Rule 9-1(4) is of no application.

[36]         The rule in Buttar is applicable to the defendant’s application in this case. The plaintiff’s offer to settle, accepted by the defendant, created an agreement between the parties. This agreement is not subject to the Court’s discretion as to costs. In my view, the purpose of the rules would be frustrated if a party was free to accept an offer, clear and unambiguous on its face, and then move to invoke the Court’s discretion to add or vary terms to substantially rewrite the agreement reached by the parties.