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It Is Not Open For a Trial Judge To Award a Defendant Double Costs Where a Plaintiff Obtains Judgement

Reasons for judgement were released today by the BC Court of Appeal (C.P. v. RBC Life Insurance Company) confirming that a trial judge does not have the option of awarding a Defendant double costs in circumstances where a Plaintiff obtains a judgement at a quantum below a Defendant’s formal offer to settle.  In noting this restriction in judicial costs options the Court provided the following reasons:

[90]         Neither the trial judge nor the judge at Minhas made reference to the decision in Gulbrandsen v. Mohr, 2013 BCSC 1481. In Gulbrandsen the trial judge, in reasons indexed at 2013 BCSC 959, initially awarded the plaintiff costs up to the date of the defendant’s offer to settle, and double costs to the defendant thereafter. He then reconsidered the double cost award. After reviewing numerous authorities including A.E., A.E. Appeal,Ward v. Klaus, 2011 BCSC 99 and Currie v. McKinnon, 2012 BCSC 1165, he concluded that it was not appropriate to make an award of double costs to a defendant where the plaintiff had obtained a judgment.

[91]         I am of the same opinion. I do not believe that R. 37B intended to change the long-standing practice concerning the circumstances when double costs could be awarded. A plaintiff who obtains a judgment for less than an offer to settle is already subject to sanctions: R. 9-1(6)(a) allows the court to deprive the successful plaintiff of costs to which it would otherwise be entitled. Rule 9-1(5)(d) provides an even more punishing outcome as the plaintiff is not only deprived of costs he or she would otherwise receive, but must also pay the defendant’s costs subsequent to the offer to settle. To also allow a defendant double costs would skew the procedure in favour of defendants and unfairly penalize and pressure plaintiffs. I would adopt in that regard the comments of Madam Justice Adair in Currie:

[18]      I think it certainly can be argued that if a defendant who has made an offer to settle in an amount higher than the amount awarded to the plaintiff at trial (and that is what has been done in this case) was then awarded double costs, this would skew the procedure in favour of defendants and unfairly penalize and pressure plaintiffs.  This is because a plaintiff who rejected an offer to settle would potentially risk a triple cost penalty if he or she were to win at trial an amount less than the offer.  The plaintiff would suffer loss of the costs that he or she would normally receive on obtaining judgment at trial, and face double costs payable to the defendant.

[19]      In my view, there is a good reason to apply Rule 9-1 in a way that is even-handed, or more even-handed, as between plaintiffs and defendants.  I would say for this reason one would expect to see double costs awarded to a defendant, using the offer to settle procedure, in exceptional circumstances only, such as a situation where the plaintiff’s claim was dismissed all together after a plaintiff rejected an offer to settle.

[92]         In the result, I find that it was not open for the trial judge to award double costs to the defendant. It was an error in principle to do so. The decision in Minhas which made a similar order was also wrongly decided and should not be followed.

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