Late Formal Settlement Offers Still Capable of Triggering Costs Consequences
Two judgement were released this week by the BC Supreme Court demonstrating that formal settlement offers made late in the litigation process are still capable of triggering costs consequences.
In the first case (Dennis v. Fothergill) the Plaintiff was injured in a motor vehicle collision and sued for damages. The Defendant made a formal settlement offer for $279,000 days before the start of trial. Following trial global damages of just over $48,000 were awarded. The Plaintiff argued that no costs consequences should be triggered, in part, due to the timing of the late formal settlement offer. Madam Justice Bruce disagreed and awarded the Defendants costs and disbursements from the date of the offer onward and stripped the Plaintiff of her costs and disbursements of the trial. In addressing the timing of the offer the Court provided the following reasons:
[30] The plaintiff had three days to consider the offer and, while her counsel was out of town at the time the offer was served, she had an opportunity to speak with him by telephone prior to its expiry. The offer was straightforward and did not involve complicated calculations that would have required further time to consider and evaluate. Counsel deposes that the plaintiff’s alcohol consumption was interfering with his ability to obtain instructions from her at the time of the offer; however, the plaintiff’s mental health or state of sobriety was not of such a serious nature that it led counsel to apply for an adjournment of the trial that began within days of the offer. At no time was the Court advised that the plaintiff was unable to testify or appear for her trial due to mental health concerns.
[31] I find the terms of the offer were clear and unambiguous. The amount of Part 7 benefits and the possible income tax holdback was nominal compared to the amount of the defendant’s offer to settle. The offer was also expressed to be “new money”, which meant in addition to Part 7 benefits paid to the plaintiff in advance of trial. The offer of settlement was clearly not a “nuisance offer” that could be easily dismissed by the plaintiff.
[32] For these reasons, I find the plaintiff ought reasonably to have accepted the offer of settlement.
In the second case (Brewster v. Li) the Plaintiff was injured in a 2008 collision. The parties exchanged a series of formal settlement offers, the most relevant of which being a defence offer of $450,000 made 4 days prior to trial. At trial the Plaintiff sought damages of approximately $1,750,000. Much of the sought damages were not awarded with a judgement of just over $418,000.
The Plaintiff argued that no costs consequences should accrue. Mr. Justice Voith disagreed and stripped the Plaintiff of post offer costs and disbursements. In addressing timing of the offer the Court provided the following reasons:
[25] The timing of the Last Offer is also relevant. There is no requirement in Rule 9–1, as there was in earlier Rules, that an offer be made within a specific time from the start of trial. In several cases judges have used seven days as a reasonable time to consider an offer; see for example Bailey at para. 39; McIsaac v. Healthy Body Services Inc., 2010 BCSC 1033 at para. 87; Gonzales at para. 51.
[26] It is clear, however, that this issue is largely driven and governed by context. In Bennett, where the defendant made an offer that was open for two days, Madam Justice Dardi succinctly said:
[34] Mr. Bennett submits that the Second Offer should be given no force and effect because it was received “some two clear working days before the commencement of the trial.” Rule 37B does not contain the same seven-day notice provision as its predecessor. No inflexible “seven-day” rule is imposed by the Rules; rather every case must be judged on its own facts: Dodge v. Shaw Cablesystems Ltd., 2009 BCSC 1765. The proper issue for consideration is whether, in all the circumstances, the offeree had a reasonable opportunity to consider the offer: Uppal v. Rawlins, 2010 BCSC 11.
[35] The Second Offer was made shortly before trial. The impact of the lateness of the offer was tempered by Mr. Bennett’s awareness of the settlement negotiations that had previously occurred between counsel. Given Mr. Bennett’s personal knowledge of the material facts as referred to above and his representations to the CRA in April 2005 that he had no interest in the Property, I find that neither the timing of the offer nor the late disclosure of the income tax information negatively impacted his ability to meaningfully evaluate the Second Offer. In all the circumstances, I find that as of November 19, 2008, Mr. Bennett was in a position to reasonably evaluate the Second Offer, that the two days were reasonably sufficient time for him to do so, and that he should have accepted the Second Offer.
[27] In Enviro West, Madam Justice Boyd considered that an offer which was only open for less than two days provided the plaintiff with adequate time to properly consider the offer. She was influenced both by the fact that the defendants had made an earlier offer that “was not far different” from its last offer and by the fact that the plaintiff was “a sophisticated litigant” (at para. 55).
[28] In Uppal v. Rawlins, 2010 BCSC 11, Mr. Justice Grauer dealt with an offer that was open for 51 hours and said:
[20] In this case, although the offer was open for only a relatively short period of time, it was presented just before trial, when all discovery of documents and examinations for discovery had been completed, and when the issues had been fully aired in a Rule 18A application for judgment brought by the defendants. That application was dismissed because the chambers judge found that the case was not suitable for determination by summary trial given the credibility issues. Nevertheless, the position of the defendants was made abundantly clear to the plaintiffs. There would be no surprises at trial. Moreover, the perjury and forgery of the plaintiff Navjeet Uppal had been exposed, and the defendants had obtained admissions on discovery that had seriously imperiled the plaintiffs’ case.
[21] In all of these circumstances, I have no hesitation in concluding that the offer was one that ought reasonably to have been accepted within the 51 hours or so during which it was open for acceptance. Had the plaintiffs accepted it, they would have saved $26,000 that they will now lose, they would have received $40,000 that they will not now get, they would have saved the time and expense of many days of trial, and they would have avoided all their additional liability for costs.
[29] Finally, in Wright v. Hohenacker, 2009 BCSC 996, Madam Justice Fisher considered that four days was a reasonable time to weigh an offer in circumstances where the parties “were exchanging offers for a week before” (para. 17).
[30] In this case counsel for Ms. Brewster emphasized the plaintiff’s emotional frailty. He argued, and she deposed, that she had only been examined for discovery a week or so before the Final Offer was made, that that process had been upsetting to her and further that when she received the Last Offer she felt “doubtful, angry and bullied”.
[31] Though Ms. Brewster may have felt these things, there was no objective reason to feel bullied. Similarly, the fact that her examination for discovery only took place shortly before the trial does not appear to have been through any fault of the defendant.
[32] Having said this I do accept that receiving two different offers, which replaced an earlier offer, in close succession and without any explanation, late on the Friday before the week in which the trial started, had the prospect to confuse and be more difficult to deal with. I further accept, having seen Ms. Brewster give evidence, that she would have been somewhat fragile emotionally on the eve of trial.
[33] Accordingly, different aspects of the considerations raised by Rule 9–1(6)(a) favors each of the parties. On balance, therefore, this consideration is neutral…
[39] I return to where I started. The dominant object that animates Rules 9–1(5)–(6) is the promotion of reasonable settlements. The plaintiff’s position, that she be awarded the costs of the trial notwithstanding the Last Offer, completely ignores this object.
[40] I consider that a result which properly gives effect to Rule 9-1(4) and which properly reflects the additional considerations that I have identified, would be to deprive the plaintiff of all of her costs, including all disbursements, after February 11, 2013. This result accords with the result arrived at by the court, for example, in each of Tompkins at paras. 28-31 and Wafler at para. 41.