ICBC Formal Offers Seeking to Pay FMEP Deemed Not Reasonable

Update October 6, 2015 – today the BC Court of Appeal overturned the below reasoning finding “In my view, the judge erred in principle in finding that the reference in the offer to settle to ICBC’s obligation to remit settlement monies in the amount alleged to be owed by the plaintiff for arrears of support to FMEP rendered the offer not one that the plaintiff ought reasonably to have accepted.”
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Interesting reasons for judgement were released today by the BC Supreme Court, New Westminster Registry, finding that it is not reasonable for a Plaintiff to accept a formal settlement offer from a Defendant insured with ICBC where ICBC will first pay off debts the Plaintiff allegedly owes to the Family Maintenance Enforcement Program.
In today’s case (Loft v. Nat) the Plaintiff was injured in a motor vehicle collision and sued for damages.  At trial the Plaintiff sought substantial damages of over $1.8 million.  The Plaintiff’s claims were largely rejected with damages just over $60,000 being awarded.  Prior to trial the Defendant made two formal settlement offers, one for $125,000 and the second for $150,000.  Both offers contained the following term:
The defendants confirm that this offer is made with the acknowledgement that the Insurance Corporation of British Columbia (“ICBC”) has been served with a Notice of Attachment and/or Requirement to Pay and is therefore obligated to first pay to Family Maintenance Enforcement Program (“FMEP”) from the Settlement Payment in this matter. The defendants and /or ICBC are required to first meet any obligation to FMEP before paying monies to the plaintiff in relation to the Settlement Payment, pursuant to the Family Maintenance Enforcement Act, R.S.B.C. 1996, c. 127 and amendments and regulations thereto.
Mr. Justice Jenkins held that the offers were not reasonable on the basis that ICBC was not formally a debtor to the Plaintiff and as such deductions on the basis of the FMEP Notice of Attachment were not reasonable.  The court reasoned as follows:

[13]         The plaintiff also submits that the Notice of Attachment and/or Requirement to Pay should not have been included in the offers to settle as those documents were issued to ICBC, not to the defendants, and ICBC was not and would not become obligated to pay the settlement amount or the amount of any judgment. The Family Maintenance Enforcement Act, R.S.B.C. 1996, c. 127 provides for a notice of attachment in s. 15 (1) which states:

15 (1)   If the debtor has at any time defaulted in a payment required under a maintenance order, the director may serve a notice of attachment in the prescribed form on a person who is indebted or likely to become indebted to the debtor.

A “debtor” under the Act is defined as:

“debtor” means a person required under a maintenance order to pay maintenance;

[14]         The plaintiff submits that service of the Notice of Attachment and/or Requirement to Pay on ICBC would not attach the settlement funds, if one of the offers had been accepted, as ICBC would not have been indebted to the plaintiff. According to the wording of the settlement offers, it was the defendants who had offered to pay the plaintiff the settlement funds. ICBC was obligated to indemnify the defendants and had no obligation to pay the plaintiff the settlement amount upon acceptance of an offer to settle…

[31]         I am unable to make a costs award in favour of the defendants on the basis of the defendants’ two offers to settle as I conclude they were not offers that ought reasonably to have been accepted on the dates the offers were made. I accept both submissions put forward by the plaintiff in this regard. Even if the plaintiff was inclined to accept one of the offers to settle, the condition included in the offers relating to the Notice of Attachment and/or Requirement to Pay from FMEP should not have been a term of the offer. ICBC was not and would not have been indebted to Mr. Loft. ICBC was not a party to the action and its obligation was only to indemnify the defendants for negligence if the court awarded damages to Mr. Loft. As well, the offers of settlement were made by the defendants, not ICBC, and the defendants had no obligation to ICBC if one of the offers was accepted.