Manufacturers Life Insurance Company v. Dahl

2005BCSC1800 IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Manufacturers Life Insurance Company v. Dahl, 2005 BCSC 1800 Date: 20051222 Docket: L050428 Registry: Vancouver In the Matter of the Insurance Act, R.S.B.C. 1996, c. 226, s. 71 and The Manufacturers Life Insurance Company and Jerrold Earl Albert Dahl, Deceased Before: The Honourable Mr. Justice Silverman Reasons for Judgment Counsel for Joyce Billsborough R.C. Campbell Counsel for Kenneth Dahl M. Katerberg Date and Place of Hearing: Written Submissions: November 18 and 23, 2005 Vancouver, B.C. INTRODUCTION [1] This judgment concerns costs. [2] The litigants are Mr. Dahl and Ms. Billsborough. Neither litigant who will be affected by this judgment is a "party of record" on a strict and literal reading of Rule 1(8) of the Rules of Court, nor was either a "party of record" in the judgment with respect to the substantive issue between those litigants which I delivered on August 29, 2005. Mr. Dahl's name appears in the style of cause. Ms. Billsborough's does not. [3] The litigants were competing beneficiaries of a life insurance policy. The insurance company, named in the style of cause, had commenced a proceeding by Petition, resulting in the payment into court of the life insurance proceeds. [4] A Notice of Motion was subsequently filed by one of the competing beneficiaries, Mr. Dahl, seeking payment out of the funds to himself. The other competing beneficiary, Ms. Billsborough, opposed Mr. Dahl's application, seeking an order that she be paid the insurance proceeds. The matter came before me in chambers on August 29, 2005. [5] I gave an oral decision that day, ruling that Mr. Dahl was the correct beneficiary and that the insurance proceeds should be paid out to him (the "Substantive Order"). [6] Immediately after the oral judgment, the following exchange occurred with Ms. Katerberg, Mr. Dahl's counsel, and Mr. Campbell, Ms. Billsborough's counsel: [26] THE COURT: All right. Very good. Then in the terms of the Notice of Motion, in term 1, to be paid out to the solicitor for Mr. Dahl in trust for his benefit. [27] What else? Costs? [28] MS. KATERBERG: Your Honour, we did make a formal offer on August 8 under the terms of the order that you just granted. [29] THE COURT: For less money? [30] MS. KATERBERG: For the exact amount. [31] MR. CAMPBELL: It was not accepted. [32] THE COURT: That's clear. [33] MR. CAMPBELL: Yes. [34] THE COURT: Does there need to be an assessment? What would you like the order for costs to say? [35] MS. KATERBERG: I'd just like the standard double costs. I'll provide the bill of costs to my friend and if there's any problem with that we'll deal with it later. [36] THE COURT: I take it your remedies from this point are in a different forum, Mr. Campbell. [37] MR. CAMPBELL: Yes. [38] THE COURT: So you are in agreement, subject of course to your right to appeal my decision, with what Ms. Katerberg has said; is that right? [39] MR. CAMPBELL: Well, I can't quarrel with the effect of Rule 57 [sic]. [40] THE COURT: Yes, I do not think you can either. Yes, double costs to the applicant. [41] MR. CAMPBELL: From the date of delivery of the -- [42] THE COURT: Yes, double costs from that date. [7] It is likely that Mr. Campbell intended to refer to Rule 37, not Rule 57. Rule 57 addresses costs generally, and Rule 37 addresses costs consequent upon offers to settle. The "effect" Mr. Campbell referred to in ¶ 39 of the transcript is Rule 37's double costs provisions. [8] I subsequently received correspondence, sent through the Registry in the usual and appropriate way, indicating (in my words) the following: a) That counsel for Ms. Billsborough now believed that he had erred on August 29 in acknowledging that an Offer to Settle had been sent and that double costs were appropriate. b) That his error was of a technical nature, with respect to the existence of one of the pre-conditions to double costs being awarded. c) That the exact nature of the error was in failing to realize that neither of the litigants was a "party of record", and therefore, the double costs provisions of Rule 37 were inapplicable, at least to the extent that they deprived me of exercising any discretion. d) That I had therefore been unintentionally misled as to the basis for the Order for double costs, and he now sought leave to have that issue reconsidered. e) That an order pursuant to the August 29 judgment had been drafted, signed by both counsel, and submitted to the Registry, but not yet entered (the "Submitted Order"). f) That counsel for Ms. Billsborough wished that signed Order put on hold, without being entered; pending whatever additional submissions I might be willing to hear. [9] I agreed to reconsider the issue of costs, and the Submitted Order remains on hold. [10] I have now received written submissions from both litigants. [11] Ms. Billsborough argues that I should now do the following: a) reconsider the previously made Order for double costs (the "Double Costs Order"); b) conclude that the Double Costs Order was inappropriately made; c) replace the Double Costs Order with a discretionary order for costs on a party and party basis. [12] Ms. Billsborough makes three arguments in support of her position: a) the Court retains a discretion to reconsider the issue of costs; b) Rule 37 is not applicable to the offer; and c) as there was no effective Offer to Settle, there should be a discretionary order for party and party costs. The Court Retains a Discretion to Reconsider the Issue [13] Ms. Billsborough argues as follows: a) The "usual rule" is that an order of this Court may be reconsidered before entry. The judge who made the order may, in his or her discretion, alter it or set it aside before it is entered. Once the order is perfected by being entered, the judge who made the order is functus officio and can no longer alter or set aside the order he or she has made: Asfordby Storage & Haulage Ltd. v. Bauer (1998), 115 B.C.A.C. 40. b) The Submitted Order has not been entered, and therefore, I retain the jurisdiction to alter it or to set it aside. c) When it is clear that a court has made an order based on erroneous information, it should exercise its discretion to reconsider, except in the most unusual circumstances. d) This situation is analogous to where new evidence becomes available after an order is pronounced. In this situation, it is not new evidence, but a new development: an awareness that the Court was provided with erroneous information. The Court should use the correct information that is now available to determine whether the costs order should be altered. e) The Double Costs Order was not an exercise of discretion in a judicious manner. The Court believed (as the result of erroneous information provided by counsel) that because Rule 37 was applicable, it had no discretion. Now it is known that Rule 37 is inapplicable. Therefore, there is discretion, and there would have been discretion if the Court had been aware of it on August 29. Now that it knows it has a discretion to exercise, it must exercise it. f) The Double Costs Order has not yet been entered. Therefore, this Court retains the discretion to alter the Double Costs Order or set it aside. Rule 37 is Not Applicable [14] Ms. Billsborough concedes that if Rule 37 is applicable, then the Court has no discretion and must award double costs. She acknowledges that the Court was told that Rule 37 was applicable. She now argues that this information was conveyed erroneously, and that Rule 37 is not applicable because: a) Neither litigant is a "party of record"; and b) The Order granted with respect to the substantive issue on August 29, 2005 was an interlocutory order. [15] Ms. Billsborough argues that Rule 37 is not applicable because neither she, nor Mr. Dahl, is a "party of record". She argues as follows: a) For Rule 37 (and thereby "double costs") to apply, an Offer to Settle must comply with Rule 37(2), the relevant portions of which are as follows: A party to a proceeding may deliver to any other party of record a written offer in Form 64 to settle.... b) It is clear from the wording of Rule 37(2) that the party delivering an offer to settle (in this case, Mr. Dahl) must be a "party to a proceeding", and that the party receiving the offer (in this case, Ms. Billsborough) must be a "party of record". c) Because the receiving "party of record" is modified by the words "any other", the delivering party must also be a "party of record". d) In fact, neither Mr. Dahl, nor Ms. Billsborough, are a "party of record" which is defined in Rule 1(8) as follows: "party of record" means a person who has (a) commenced a proceeding, (b) filed an appearance, (c) [Repealed. B.C. Reg. 161/98, s. 1 (c)], or (d) filed a third party notice as an insurer under the Insurance Act or the Insurance (Motor Vehicle) Act; e) Rule 37 is inapplicable because neither she nor Mr. Dahl have commenced a proceeding, filed an appearance, or filed a third party notice as an insurer under the Insurance (Motor Vehicle) Act. f) A "party" is not defined in the Rules of Court, nor is a "party to a proceeding", although a "proceeding" is defined as follows: "proceeding" means an action, suit, cause, matter, appeal or originating application; g) Ms. Billsborough would argue further that she is not even a "party" because she is not named in the style of cause. h) The phrase "party of record" should be interpreted strictly. As Registrar Horn observed in ¶ 11 of C. (P.T.) v. S. (C.) (1999), 33 C.P.C. (4th) 188 (B.C.S.C.): While the words "party of record" are defined in s. 1(8) the word "party" is not. The words "party of record" are generally used with precision (see for example Rules 36(1) and 40A(2)). i) The requirements of Rule 37 must be strictly complied with: Lennart's Grader Service Ltd. v. John Deere Ltd. (1988), 27 B.C.L.R. (2d) 131 (C.A.). [16] Ms. Billsborough also argues that Rule 37 is not applicable because the Substantive Order is an interlocutory order: a) Rule 37(4) states as follows: This rule does not apply to a claim for interim or interlocutory relief. b) It follows that if the relief sought and obtained by Mr. Dahl is interim or interlocutory relief, then Rule 37 does not apply, the effect of which is that an order for double costs is not mandatory, and the question of costs remains a matter of discretion. c) In this case, the Substantive Order was interlocutory for the following reasons: (i) Mr. Dahl's application was brought pursuant to Rule 44 (which deals with interlocutory applications); (ii) Mr. Dahl's application was brought by way of Notice of Motion; and (iii) the matter originally arose by Petition by the Manufacturers Life Insurance Company; the result of that originating application was a final order. The Notice of Motion seeking payment out to Mr. Dahl is an interlocutory motion brought within that originating application. If Rule 37 Does Not Apply, What Should the Result Be? [17] Ms. Billsborough argues as follows: a) Mr. Dahl is entitled only to party and party costs; b) The Court has an inherent jurisdiction to make a costs order, including an order for costs against a non-party. c) Where Rule 37 is not applicable, the Court has a broad discretion to make an order for costs that is appropriate in all the circumstances. d) That discretion should be exercised having regard to the following considerations: (i) the general rule that costs should follow the event; and (ii) costs awarded to a successful litigant are intended to compensate for some of the expenses incurred during the course of litigation, but not to provide full indemnity for all those expenses, except in unusual circumstances. e) An order for costs in this case should not deviate from the general rule for the following reasons: (i) Ms. Billsborough had a fair issue to raise with respect to the disposition of the insurance proceeds; and (ii) Ms. Billsborough's arguments with respect to the substantive application were reasonable for her to have made: the insurance proceeds were of considerable significance to her, and neither counsel was able to find any judicial authority to indicate how the issue ought to have been resolved. [18] Ms. Billsborough concedes that, in the circumstances, Mr. Dahl is entitled to some costs. She submits he is entitled to reasonable party and party costs, not to full indemnity. ANALYSIS [19] I am satisfied that this is an appropriate case for me to reconsider the Double Costs Order. I have carefully considered the arguments which suggest that this is not an appropriate case for reconsideration. Specifically, I have considered the following: a) The cases Ms. Billsborough relies upon both involve admitting evidence that had arisen since the original hearing: Asfordby Storage and Clayton v. British American Securities Ltd. (1934), [1935] 1 D.L.R. 432, [1934] 3 W.W.R. 257, 49 B.C.R. 28 (B.C.C.A.). b) In the case at bar, there is nothing new which was unavailable on August 29, 2005. To the contrary, the argument which is now advanced was available on August 29, 2005, although Ms. Billsborough's counsel was unaware of it. It should have been and could have been advanced at that time. c) No intervening factors have changed the situation since August 29. d) The Order of August 29 had already been agreed upon between counsel, signed by both counsel, and submitted to the Registry for entry before Ms. Billsborough raised the current argument. Nevertheless, it has not been entered. [20] Despite these arguments, there is at least an appearance that the Double Costs Order was made on the basis of erroneous information. Now that the correct information is available, I consider it appropriate to consider that information and submissions based upon it. I have a discretion to reconsider in these circumstances, and I exercise my discretion to do so. Consequently, I now turn to a reconsideration of the question of costs having regard to the corrected information which is now before me, and arguments that have been made with respect to that new information: first, the argument that Rule 37 is inapplicable. [21] I reject Ms. Billsborough's argument that Rule 37 is inapplicable because neither she, nor Mr. Dahl, is "a party of record". My reasons for rejecting this argument are: a) The phrases "party to a proceeding", "party of record" and "party" must be interpreted to allow Rule 37 to have its intended effect. b) The litigants conducted themselves as if they were "parties to a proceeding" and "parties of record", even if they may not have fit the literal definitions of those phrases. c) The most sensible interpretation of Rule 37 is that these litigants are in the category of persons who were intended to be able to use Rule 37. d) If Ms. Billsborough's argument is correct, it would follow that, not only is Rule 37 inapplicable, but Rule 57 is also inapplicable, and the Court would not be able to make any order for costs under either Rule. The reason for this is because Rule 57 refers to a "party". More specifically, Rule 57(1) states the following: Where costs are payable to a party under these rules or by order (a) by another party, (b) out of a fund of other parties, or (c) out of a fund in which the party whose costs are being assessed has a common interest with other persons, they shall be assessed as party and party costs .... e) Rule 57(2) states the following: On an assessment of party and party costs.... f) It follows that, if Ms. Billsborough and Mr. Dahl are not a "party" in the sense that they are not named in the style of cause, neither of these Rules would be applicable. Plainly, this cannot be the case. g) In C. (P.T.), supra, Registrar Horn states the following at ¶ 11-15: While the words "party of record" are defined in s. 1(8) the word "party" is not. The words "party of record" are generally used with precision (see for example Rules 36(1) and 40A(2)). The word "party" is often used without precision. Sometimes it is clear that the word refers to a person who is named as a party to a proceeding and is not a party of record (see, for example, Rules 14(1) and 15(5)) and sometimes it refers to a party of record (see for example Rules 34(1) and 35(1)). I conclude that in interpreting any Rule no great significance can be attached to the use of the word "party" as opposed to the word "person" or to the words "party of record" and that the context dictates whether a Rule applies to someone named as a party but who has neither entered appearance nor taken formal steps in the proceeding. Costs are not awardable only to parties of record. An examination of the tariff of costs under Appendix B shows that some items of costs may be allowed for activities in a proceeding which only a party of record could properly undertake. But not all. A party proceeding under Rule 13(10) for example, may do so without entering appearance, and may be awarded costs of an application to decline jurisdiction. In my opinion, Rule 36(4) is designed to allow costs to a party who has incurred fees or expenses in taking a step in a proceeding or preparing to do so, after being served with notice of the proceeding. Here Ms. S. did have notice and did participate, without objection, even though she did not enter appearance. She is a party and she has incurred costs which she is entitled to have assessed. [22] I agree with and adopt the comments of Registrar Horn. [23] I also reject Ms. Billsborough's argument that Rule 37 is inapplicable because the Substantive Order is an interlocutory order. My reasons are: a) While a Notice of Motion might well be governed by the provisions of Rule 44, an examination of Mr. Dahl's Notice of Motion reveals no reference at all to Rule 44. Rather, it indicates that the Rules relied upon will be 57 (costs) and 58 (money paid into court). b) Black's Law Dictionary, 6th ed., defines "interlocutory" as: Provisional; interim; temporary; not final. Something intervening between the commencement and the end of a suit which decides some point or matter, but is not a final decision of the whole controversy. An interlocutory order or decree is one which does not finally determine a cause of action but only decides some intervening matter pertaining to the cause, and which requires further steps to be taken in order to enable the court to adjudicate the cause on the merits. c) The proceeding brought by the Petitioner insurance company was analogous to interpleader proceedings under Rule 48: Dominion of Canada General Insurance Co. v. Mabyuhay Imports Ltd. (1984), 5 C.C.L.I. 79 (B.C.S.C.); and Savage v. First Canadian Financial Corp., [1996] B.C.J. No. 2854 (S.C.) (QL). d) In my view, the Substantive Order is a final order, because it resulted in a final disposition of the rights of the litigants: Thomson v. 338058 B.C. Ltd. (2002), 16 C.P.C. (5th) 223, 2002 BCCA 153; and British Columbia Power Commission v. Nanaimo-Duncan Utilities Ltd., [1948] 2 D.L.R. 111, [1948] 1 W.W.R. 417 (B.C.C.A.). e) Although it may be counter-intuitive, in the circumstances of this case, it is the Petitioner insurance company's originating application for payment into court which is the interlocutory application resulting in an interlocutory order: Frumento v. Shortt, Hill & Duncan, Ltd. (1916), 22 B.C.R. 427 (C.A.). Mr. Dahl's Notice of Motion sought and resulted in a final Order. [24] In view of all of the foregoing, I am satisfied that the Substantive Order was a final order. Consequently, Rule 37(4) does not negate the applicability of Rule 37 to this case. [25] Since Rule 37 applies, it follows that I was without discretion insofar as double costs are concerned, and I am without discretion to change that: Cridge v. De Vooght (2005), 37 B.C.L.R. (4th) 62, 5 C.P.C. (6th) 100, 2005 BCCA 33, leave to appeal to S.C.C. refused, [2005] S.C.C.A. No. 127. [26] As noted in the Order of August 29, the double costs will only be imposed with respect to services imposed from the date when the Offer to Settle was delivered. [27] If I am correct that Rule 37 applies, and that double costs are mandatory, then Ms. Billsborough's application for reconsideration fails at this stage, and no further reasons are required. However, in the event that I am wrong in that conclusion, I turn to what result should follow if Rule 37 does not apply and double costs are not mandatory. [28] If Rule 37 does not apply, I would exercise my discretion in the circumstances of this case to order double costs payable from the date the Offer was delivered. [29] In addition to the specific circumstances of this case, in exercising my discretion I have considered some of the policy reasons that bear on the question of costs generally, including the importance of: a) indemnifying, or partially indemnifying a successful litigant; b) deterring frivolous and unnecessary litigation and/or steps in litigation; and c) encouraging the delivery and acceptance of reasonable offers of settlement. [30] In Brown v. Lowe (2002), 97 B.C.L.R. (3d) 246, 14 C.P.C. (5th) 13, 2002 BCCA 7, Finch C.J.B.C., dissented on the question of whether double costs are mandatory where there has been a proper offer to settle. However, with respect to those situations where a judge does retain discretion, his comments are instructive. He said at ¶ 120: ... The court's discretion with respect to costs is an important means of controlling the conduct of parties in court, and in the pre-trial process. It can be used to reward responsible and reasonable behaviour that is conducive to the better administration of justice, including good faith efforts to achieve amicable settlements, and to punish irresponsible and unreasonable conduct that has the opposite effect. The discretionary power is not completely unfettered. It must be exercised judicially and must give effect to the rules promulgated, so far as they apply.... [31] Considering all of the foregoing in the context of the circumstances of this case, if double costs were not mandatory, and I were ordering costs in my discretion, I would order double costs from the date the Offer to Settle was delivered. ASSESSING THE COSTS [32] Counsel have both indicated a desire for me to resolve all cost-related issues including applicable tariff items and numbers of units. I will attempt to do so. [33] In that regard, I order the following: a) Double costs will apply from August 9, 2005 (the date of the delivery of the Offer, according to the August 29 transcript) up to and including the date the Submitted Order is entered. b) Party and party costs will apply to: i. all costs prior to August 9, 2005; and ii. all costs that may be incurred after the entry of the Submitted Order. c) All costs will be at Scale 3. d) All costs will be subject to applicable taxes. e) Disbursements will be payable by Ms. Billsborough to Mr. Dahl. Counsel advised me that they anticipate being able to agree upon disbursements, and I encourage them to do so. [34] I have considered the following tariff items from Appendix B of the Rules of Court. I have concluded that the items in italics are not applicable and that Ms. Billsborough shall not compensate Mr. Dahl for them. 1........... Counsel agreed that this item applies. 16......... Ms. Billsborough argued that this item applies because it refers to an interlocutory application. Having determined that the matter was not interlocutory, I find this item is not applicable. 17 ........ This item does not apply for the same reason as the previous item. 18......... This item applies in place of item 16. 19(b).... This item applies in place of item 17. 20......... Mr. Dahl urged me to allow costs for this item. I decline to do so because there was no attendance "before a Registrar to settle an Order or to assess costs". Rather, counsel addressed costs by way of written argument and before me on August 29, 2005. 21......... Ibid. 26......... This applies to the written argument I considered on this application. 31......... This applies to the entry of the Substantive Order. 36......... Counsel agreed that this item applies. [35] I have considered counsel's submissions with respect to the number of units that should be awarded for each applicable item. For the reasons previously stated, double costs will be awarded for items 18, 19(b), 26 and 31. Incorporating the foregoing into the following chart, I assess the costs as: Item No. of Units Scale per Unit Total 1 2 x 80 $160.00 18 (3 x 2) = 6 x 80 $480.00 19(b) (6 x 2) = 12 x 80 $960.00 26 (2 x 2) = 4 x 80 $320.00 31 (1 x 2) = 2 x 80 $160.00 36 4 x 80 $320.00 TOTAL 30 Units $2,400.00 [36] If I am correct in holding that double costs are mandatory, then the amount of costs awarded is $2,400.00. [37] If I am wrong in holding that double costs are mandatory, such that I have a discretion to determine appropriate costs, counsel have consented to my fixing a lump sum as the costs of the whole proceeding, pursuant to Rule 57(13). In that event, I have considered what an appropriate lump sum would be. In addition to all the other relevant circumstances in this case, I have been influenced by the fact that the litigants wish this matter to be brought to an expeditious and certain end. [38] In that event, I award lump sum costs of the whole proceeding, exclusive of disbursements and expenses, in the amount of $2,400. "A. Silverman, J." The Honourable Mr. Justice A. Silverman