Rule 37B – Formal Settlement Offers and Liability Trials
It is not uncommon for personal injury lawsuits to sever the issues of quantum and liability. What this means is that with a Court order a lawsuit can proceed on the issue of fault first and leave the issue of the value of the claim for a later date. This often makes sense in serious injury litigation with contested liability where the cost of proving damages will be expensive and the parties wish to save the money associated with this until its clear who is at fault for an accident.
As readers of this post know Rule 37B permits the Court to reward a successful party in a lawsuit with a double costs award if that party beats a formal settlement offer. In cases addressing quantum its easy to determine if a formal offer was beat at trial. You simply look at the numbers. But can Rule 37B be used in a liability only trial? Reasons for judgement were released today dealing with this issue for what I believe is the first time.
In today’s case (McLaren v. Rice) the Plaintiff made a personal injury claim against the various defendants. Liability and quantum were severed. Before the liability trial proceeded the Plaintiff made the following formal settlement to the Defendants:
The plaintiff, Matthew R.J. McLaren, offers to settle the liability trial in this proceeding on the following terms: that the defendant is 99 percent responsible for the motor vehicle accident of February 26, 2005, in which the plaintiff was a passenger in the vehicle owned and operated by the defendants and costs in accordance with Rule 37B.
The plaintiff reserves the right to bring this offer to the attention of the court or consideration in relation to costs after the court has rendered judgment on all other issues in this proceeding relating to liability for the accident.
This offer was rejected. The Plaintiff proceeded to trial and was successful with the Court finding that the defendants were jointly and severally liable for the accident.
The Plaintiff brought a motion seeking double costs under Rule 37B. The Defendants opposed this arguing that when the plaintiff added the words “relating to liability in this proceeding” to the offer it was rendered null because it did not comply with Rule 37B(1)(c)(3) which requires a formal offer to contain the following sentence “the…[name of the party making the offer]…reserves the right to bring this offer to the attention of the court for consideration in relation to costs after the court has rendered judgement on all other issues in this proceeding“.
Mr. Justice Brooke rejected this argument and held that Rule 37B can be used in liability only trials. The Court provided this short but helpful analysis:
 Despite the prescribed formulation in Rule 37B, 1(c)(3) being added to with the words “relating to liability in this proceeding”, I am satisfied that the plaintiff has complied with the definition of offer to settle contained in Rule 37B(1) and the issue is properly before me. On the trial of the quantum issue, it seems to me that Rule 37B may again be invoked. The two aspects of the trial are separate and discrete.
In my continued efforts to get us all prepared for the New BC Supreme Court Civil Rules I will again point out that Rule 37B will be replaced with Rule 9 under the New Rules. The new rule uses language that is almost identical to Rule 37B which should help cases such as this one retain their value as precedents.