I Accept Your Settlement Offer…Wait a Minute, What Settlement Offer?


Reasons for judgement were released yesterday by the BC Supreme Court, New Westminster Registry, dealing with a very interesting set of facts.  Can a Defendant accept a Formal Settlement Offer from a Plaintiff when the Plaintiff forgot the offer was made in the first place?
In yesterday’s case (Burton v. Bakker) the Plaintiff was injured in a 2005 BC motor vehicle accident.  He hired a lawyer to help him advance his ICBC claim.  In the course of the lawsuit the Plaintiff’s lawyer made a formal settlement offer to resolve the claim for $40,000.  Some time after this the Plaintiff switched lawyers.  When the new lawyer took over the file “there was no copy of the settlement offer made (by the last lawyer) in the file and the correspondence accompanying the file made no reference to (the) offer“.
Almost one year passed.  During this time the potential value of the Plaintiff’s claim appreciated significantly.  The Plaintiff’s new lawyer continued to be unaware of the outstanding offer made by the first lawyer.  Then the Defendants lawyer, without any prior notice to the Plaintiff’s new lawyer, accepted the formal settlement offer.  The parties could not agree if there was a binding settlement which resulted in the Defendants applying to Court for “a declaration that there is a binding settlement agreement“.
Madam Justice Bruce of the BC Supreme Court presided over the application.   The Plaintiff’s lawyer argued that “the offer to settle was made under a misapprehension of the facts underlying the claim such that it would result in an injustice to enforce the settlement“.  Ultimately the Court held that this is an issue that would better be dealt with by the trial judge as opposed to in a pre-trial chambers application.  Before reaching this conclusion, however, Madam Justice Bruce provided a useful discussion of the powers of BC Courts to offer remedies in the enforcement of settlement agreements.  Here are the highlights of the Courts discussion:

[20] The enforcement of settlement agreements is not a separate field of law exempt from the ordinary principles of contract law and the rules of procedure. The various means of enforcing a settlement agreement may involve equitable principles, discretionary remedies, and rules regarding the entry of consent orders; however, this does not oust the general principles of contract law. This proposition of law is amply supported by the reasoning of the Court of Appeal in Robertson where Lambert J.A. says at 386:

The law in relation to the enforcement of settlement agreements by stays of proceedings brings together principles of contract law, principles of the law of agency as they apply to barristers and solicitors, rules of equity as they apply to discretionary remedies, and rules of procedure as they apply to the pronouncement and entry of consent orders. In each case, the issues between the parties must be dealt with in accordance with those principles. The effectiveness and the enforcement of settlement agreements does not constitute a separate field of law to which the ordinary principles of contract law, agency, and equity, and the ordinary rules of procedure, do not apply.

[21] It is because the enforcement of settlement agreements involves such a collage of legal and equitable principles that the remedies available to the court have become somewhat muddied. On the one hand, it is apparent that the Rules of Court and in particular, Rules 37A and 37B addressing settlement offers, are not a complete code that have ousted the principles of contract law in respect of the enforcement and interpretation of settlement agreements. As Madam Justice Ross says in Thom at paras. 33 to 34:

[33] In my view, the decision in Acadia Hotels did not have the effect contended by counsel for the respondent of completely ousting the principles of mistake from a consideration of Offers to Settle.

[34] I find support for this conclusion in Craig Estates and in Vickaryous v. Vickaryous (2001), 19 R.F.L. (5th) 195, [2001] B.C.J. No. 1343, 2001 BCSC 930 (S.C.) per Garson J. In both decisions, the principles applicable to unilateral mistake were applied in relation to the acceptance of an Offer to Settle. Moreover, in 256593 B.C. Ltd., Mr. Justice Donald approved of the statement of law made by Baker J. in the Craig Estate decision.

[22] Thus, on an application for a declaration that a settlement agreement is binding on the parties, the court may apply the ordinary principles of contract law to determine the matter and grant or dismiss the application based on these principles.

[23] On the other hand, in an application to enforce a settlement agreement, the court has a broader range of remedies available to it that in an ordinary contract case, particularly because of s. 8 of the Law and Equity Act. This provision authorizes the court to grant a stay of proceeding in any cause or matter before it if it is just and fit in all of the circumstances. Alternatively, the court may exercise its discretion to leave the issue of the settlement agreement to the trial judge. As Garson J. (as she then was) says in Vickaryous v. Vickaryous, 2001 BCSC 930, 19 R.F.L. (5th) 195 at paras. 28 to 29:

[28] This application is brought pursuant to Rules 1, 2, 18A, 27 and 57 of the Rules of Court and s. 8 of the Law and Equity Act.

[29] In an application such as this, the court may grant or dismiss the application to enforce a settlement, pursuant to Rule 18A. Alternatively, pursuant to s. 8 of the Law and Equity Act the court may exercise its discretion in favour of granting a stay of the proceedings pending completion of the settlement agreement. The court also has a discretion to leave the settlement issue to be resolved at trial. (English v. Storey, [1999] B.C.J. No. 1647 (B.C.S.C.) and Hawitt v. Campbell (1983), 148 D.L.R. (3d) 341, 46 B.C.L.R. 260 (C.A.).)

[24] In Hawitt v. Campell, (1983) 148 D.L.R. (3d) 341, 46 B.C.L.R. 260 (C.A.) [Hawitt CA], , the Court of Appeal articulated the circumstances in which the court may refuse a stay of proceedings and held that the same factors should apply whether the application is for a stay of proceedings or for summary trial on the issue. These factors are described by MacFarlane J.A. in Hawitt CA at paras. 20 to 23:

[20] The judge may refuse the stay if:

1. there was a limitation on the instructions of the solicitor known to the opposite party;

2. there was a misapprehension by the solicitor making the settlement of the instructions of the client or of the facts of a type that would result in injustice or make it unreasonable or unfair to enforce the settlement;

3. there was fraud or collusion;

4. there was an issue to be tried as to whether there was such a limitation, misapprehension, fraud or collusion in relation to the settlement.

[21] Refusal of a stay would leave the parties to their remedy in the action or in an action on the settlement.

[22] My fourth point arises from an analogy between a summary application to stay, and an application for summary judgment. In either case, if there is a triable issue then the parties ought to be left to their remedy at trial.

[23] In exercising his discretion to refuse to grant a stay, a judge will consider not only whether there was the required misapprehension by the solicitor but whether the result of that would be unreasonable or unfair to the client. It is in that sense that I understand the reference to reasonableness and fairness in the authorities cited.

[25] Finally, in Robertson the Court of Appeal clarified that the judgment in Hawitt CA deals with an application for a stay of proceedings or summary relief and does not address the legal and equitable principles that ultimately govern whether the settlement is binding on the parties. The latter question is to be determined by the ordinary principles of contract law. As Lambert J.A. says in Robertson at 388:

…But the remarks made in the course of the reasons in Hawitt v. Campbell that a stay might be refused if a settlement obtained as a result of a misapprehension was unreasonable or unfair should not be regarded as introducing a rule that settlements are not binding if they are unreasonable or unfair. In my opinion, those remarks were intended to apply to the exercise of the judge’s discretion upon a summary application for a stay. A judge hearing such an application might refuse a stay, if there had been a misapprehension of instructions, on the ground that to allow it might be unjust. The result of a refusal would be to leave the parties to seek their remedies in the action, in which the settlement might be pleaded, or to seek them separately in an action on the settlement. In short, Hawitt v. Campbell deals with the considerations which apply to the judicial discretion under s. 8 of the Law and Equity Act to grant or refuse a stay. But those same considerations do not determine whether a settlement is binding or not.

[26] Applying these principles to the case at hand, I find it would be inappropriate to grant a stay of proceedings or to grant the summary relief claimed by the defendants. In my view, Mr. Burton has raised a triable issue that there was a unilateral mistake and unfair reliance upon it by the defendants. Further, he has raised a triable issue that the offer to settle was made under a misapprehension of the facts underlying the claim such that it would result in an injustice to enforce the settlement. The parties should be left to pursue their remedies in respect of the settlement agreement at the trial of the action set to commence on April 19, 2010.

Ultimately this case serves as an important reminder that great care should be taken before making a settlement offer in an ICBC Claim otherwise the consequences could cause regret.  If the parties to this lawsuit are unable to come to a resolution before the case goes to trial the presiding Judge will certainly be asked to grapple with this interesting issue.  If that occurs I will be sure to write about the reasons for judgement once they are released

ICBC Injury Claims and Unfair Settlements – Getting The Adjusters Evidence


Buyer’s Remorse – that’s the feeling of regret people sometimes get after making a big purchase or an important decision.  When people settle their ICBC Injury Claim they sometimes get buyer’s remorse.  They can regret the settlement and wish they could undo it.
In most circumstances an ICBC Injury Settlement can’t be set aside after a full and final release has been signed.  Sometimes though, in circumstances such as fraud or unconsionability, these settlements can be undone.
Reasons for judgement were released today dealing with an interesting issue in the context of a case alleging an unfair ICBC settlement.   In today’s case (Coates v. Triance) the legal issue was whether a Plaintiff could examine the ICBC adjuster under oath before the trial began to discuss the circumstances of a supposed settlement.
The Plaintiff was involved in a motor vehicle accident in 1999.  In May of 2000 the plaintiff apparently signed a full and final release.  The Plaintiff was 19 at the time.  The Plaintiff later sued the alleged at fault motorist.  That motorist was insured with ICBC.  In the Statement of Defence the defendant stated that the claim was already settled.  The Plaintiff responded that the release should be set aside because the “settlement was manifestly unfair and unconsionable”.
As the lawsuit progressed the Plaintiff’s lawyer wished to examine the ICBC adjuster involved in the settlement discussions under oath.  The ICBC adjuster refused and a Court motion was brought to compel the examination.  The motion was granted and the Court ordered that the ICBC adjuster undergo a pre-trial examination to canvass the details of the supposed settlement.  The highlights of Madam Justice Griffin’s reasons were as follows:

[5] Thus, a key factual issue in this case on the pleadings is whether a settlement and release procured by ICBC from the plaintiff, when she was 19 and unrepresented, should be set aside.  As mentioned, the witness, Ms. Lo, is the adjuster who procured the settlement, and the plaintiff’s position is that she acted inappropriately.

[6] Ms. Lo was a participant in a key factual event in question in this case.  What she knows and does not know about the circumstances of her dealings with the plaintiff and the settlement and release relates to a material issue at trial: the enforceability of that settlement and release.

[7] Sometimes it is preferable to deal with a non-party witness by written questions and answers.  But the fact that a witness is willing to proceed this way is not a complete answer to an application for a Rule 28 examination.  In this regard, I refer to the case of Cheema v. Kalkat, 2009 BCSC 736.

[8] Here there is evidence of the questions posed in writing and the written answers.  There were 200 questions.  I find the answers provided by Ms. Lo to be not responsive in a way which will help the plaintiff learn sufficient information to be able to assess the merits of the issue of whether or not there was an enforceable settlement and release.  The responses provided by Ms. Lo leave many questions unanswered on the material factual issues to which she was a witness.  Many responses are superficial and unhelpful.

[9] I conclude that if the plaintiff does not have the opportunity to examine this witness, the plaintiff cannot assess her case before trial and therefore cannot form an informed view and possibly settle the case, and the plaintiff could be taken by surprise at trial…

[14] There is no question that an examination of Ms. Lo will assist in a determination of the proceeding on the merits.  She is a key witness to events that form a central issue in the case.

[15] There is also no question that an examination of her will be just.  She is not prejudiced in any way.  Her involvement in the material events arose in the course of her employment with ICBC, which continues to be her  place of employment. Her evidence on these matters will not be personally embarrassing or tread on an area of her own personal privacy.  On the other hand, the plaintiff could be prejudiced if she is not allowed to investigate and explore Ms. Lo’s evidence in advance of trial.

[16] Here, I consider that a Rule 28 examination will be the most speedy and inexpensive way of proceeding to determine this case on its merits.  The written questions and answers exchanged already clearly reveal to me that the questions for Ms. Lo involve a scope of examination that is appropriate but that is most efficiently conducted by oral examination rather than by written questions and answers.  I am satisfied that more time will be taken up by lawyers drafting further written questions and drafting written responses than would be taken up by a Rule 28 examination…

[21] In this case, the most efficient way of proceeding so as to allow the merits of the issues in the case to be ultimately determined, would be by way of a free-flowing examination of the witness as counsel for the plaintiff sees fit, rather than requiring the plaintiff to follow the court’s checklist of acceptable and unacceptable questions.

[22] As noted in Yemen Salt Mining Corp. v. Rhodes-Vaughan Steel Ltd. (1977), 3 B.C.L.R. 90 at 100, a Rule 28 examination may extend to all that is relevant generally to all parties in the action.

[23] Therefore, in allowing the plaintiff’s application, I make no ruling on the acceptability of particular questions in the previously provided list of questions or on the validity of any objections to those questions.

Now to Cross-Reference:  Do the New BC Supreme Court Civil Rules change the law relating to pre-trial examination of witnesses?  Not really.  Rule 28 is reproduced almost identically in the New Rules and can be found at Rule 7-5.  The requirements mirror the current wording of the rule so this case ought to retain it’s value as a precedent after the New Rules come into force.

Do I Have to Pay Income Taxes on My ICBC Injury Claim Settlement?


Well folks, it’s that time of year again, tax time.  Time to figure out how much we’ve all earned and make sure that we pay the Government their cut.
If you settled a tort claim from a BC motor vehicle collision do you have to pay income taxes on the amount?  The short answer is no.
Generally a personal injury settlement covers a lot of areas which are not taxable, for example money for pain and suffering and loss of enjoyment of life, past medical expenses, future medical expenses. and so on. Oftentimes a settlement also includes money for past/future wage loss (also known as awards for diminished capacity).  You would think this portion of a settlement would be taxable but it is not.  The reason being that there is a restriction limiting past wage loss awards from BC motor vehicle accident tort claims to “net income”.  This restriction is set out in s.98 of the Insurance (Vehicle) Act which reads as follows:


You can click here to read more about the net income tax restriction for past wage loss awards in bc motor vehicle accident litigation.  As a result of s. 98 the amount of tax payable is already deducted before judgement/settlement making the money non-taxable.

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If you would like further information or require assistance, please get in touch.

ERIK
MAGRAKEN

Personal Injury Lawyer

When not writing the BC Injury Law Blog, Erik is the managing partner at MacIsaac & Company, based in Victoria, B.C. He is also involved with combative sports regulatory issues and authors the Combat Sports Law Blog.

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