ICBC Ordered to Pay "Double Costs" In Breach of Insurance Case; Timing and Finances of Parties Considered
Reasons for judgement were released today by the BC Supreme Court, Vancouver Registry, ordering ICBC to pay ‘double costs‘ after losing a breach of insurance claim.
In today’s case (Barsaloux v. ICBC) the Plaintiff was the owner of a vehicle that was stolen and subsequently recovered. It was damaged beyond repair. The Plaintiff had insurance with ICBC and applied for coverage. ICBC refused to pay stating that the Plaintiff was in breach of his policy of insurance for making a false declaration about the identity of the vehicle’s principal operator.
The Plaintiff successfully sued ICBC and was awarded $13,850 in damages. Prior to trial, the Plaintiff made a formal settlement offer of $13,700. The Plaintiff applied to Court to be awarded double costs under Rule 37B.
ICBC objected arguing that the offer was made only two days before trial and therefore there was no reasonable opportunity to consider it. Mr. Justice Smith disagreed and awarded the Plaintiff double costs. In doing so the Court made the following useful comments about two notable issues under Rule 37B, timing of settlement offers and the financial disparity between the parties:
 I stress that ICBC was directly a party to this action. That distinguishes this case from Bailey v. Jang, 2008 BCSC 1372, where Hinkson J. declined to consider the relative financial positions of the plaintiff and ICBC where ICBC’s involvement was in its capacity as insurer for the named defendant.
 The unequal position of the parties is not determinative because, as counsel for ICBC points out, the same situation will exist in any case where there is a coverage dispute between the corporation and a policy holder. However, I am also of the view that, in this case, ICBC used its position of strength to maintain what it should have known was an untenable, or at least an insufficiently considered, position…
 In the circumstances, ICBC should have realized the weakness of its position well before trial. The offer to settle was the only means the plaintiff had to exert additional, although modest, pressure and to provide ICBC with a further opportunity to re-assess and reconsider its position in light of the evidence that existed. I find that it was an offer that ought reasonably to have been accepted.
 That conclusion is not altered by the fact that the revised offer to settle was delivered only two days before trial. ICBC relies on Bailey, where the court said seven days was a reasonable period of time to consider an offer and ordered double costs for the period beginning seven days after delivery of the offer.
 I do not read Bailey as stating anything more than what was a reasonable period for consideration of an offer on the facts of that case. Rule 37B sets no time limit for delivery of a settlement offer. In that regard, it differs from the former Rule 37, where an offer delivered less than seven days before trial attracted different consequences than one delivered earlier. In fact, Rule 37B(6)(a) specifically refers to an offer that ought reasonably have been accepted “either on the date that the offer to settle was delivered or on any later date” (emphasis added).
 In the circumstances of this case, including the issues involved, the delivery date of the offer gave ICBC sufficient time to consider its position before trial. As said above, ICBC should have known well before the offer was delivered that it could not prove an essential part of what it was alleging. I find the plaintiff is therefore entitled to double costs for the trial of this action.
As readers of this blog are likely aware, Rule 37B will be replaced with Rule 9 on July 1, 2010 when the new BC Civil Rules come into force. The new rule uses language that is almost identical to Rule 37B which will likely have cases such as this one retain their value as precedents moving forward.