A further decision dealing with the consequences of formal settlement offers under the New BC Supreme Court Civil Rules was released today by the BC Supreme Court, New Westminster Registry.
In today’s case (Gregory v. ICBC) the Plaintiff was injured in a BC motor vehicle collision. Prior to trial ICBC made a formal settlement offer of $164,000. The Plaintiff rejected this offer and at trial was awarded just over $131,000.
ICBC brought an application seeking costs or double costs from the date of the offer onward. Madam Justice Kloegman agreed that the Plaintiff ought to have accepted the formal settlement offer and accordingly deprived her of her costs and disbursements for the trial and awarded ICBC their costs and disbursements for steps taken shortly after delivery of the formal settlement offer.
In reaching this result the Court noted that Rule 9 (the New Formal Settlement offer rule) should be treated similarly to the old Rule 37B. Specifically Madam Justice Kloegman noted that “The parties agree that it is likely that the new Supreme Court Rules apply to this application and, in any event, very little turns on whether or not the old or new Rules apply. ”
While ICBC was awarded post offer costs, they were not awarded double costs. In reaching this decision the Court noted that ICBC’s financial ability to defend a lawsuit was “much greater than the (plaintiff’s) ability to prosecute” and that this factor must be taken into account in exercising judicial discretion under Rule 9. In considering this factor Madam Justice Kloegman stated as follows “I will not order double costs to the defendant, which would be about $50,000, because the impact on the financial circumstances of the plaintiff and on the amount of her award at trial would be grievous. ”
Reasons for judgement were released today addressing whether a Defendant who beat a formal settlement offer should be awarded costs.
In today’s case (Cue v. Breitkruez) the Plaintiff was involved in a rear-end collision. He sued the rear motorist for damages. Prior to trial the Defendant made a formal settlement offer for $1. With liability being hotly contested the Plaintiff proposed that the case be transferred to Small Claims Court. The Defendant refused to consent stating that “such a transfer would result in greater delay“.
At trial the Plaintiff’s case was dismissed with a finding that the Plaintiff was responsible for the collision. (You can click here to read my summary of the trial judgement). The Defendant then applied to be awarded double costs pursuant to Rule 9-1(5) because they beat their formal offer at trial.
Mr. Justice Smith dismissed the application noting that since Rule 14-1(10) generally restricts Plaintiff’s awarded an amount within the small claims court jurisdiction from being awarded trial costs that the Defendant should be refused costs for not agreeing to have the case heard in Provincial Court. Specifically Mr. Justice Smith noted as follows:
7] The matter remained in this court subject to an agreement to still limit the claim to what could be awarded in Provincial Court. Had my liability decision been different and the matter proceeded to an assessment of damages, Rule 14-1(10) would have been a bar to an award of any costs, other than disbursements, in favour of the plaintiff. In my view, fairness requires that the same limitation apply to the successful defendant, particularly as the defendant did not agree to the proposed transfer to Provincial Court.
 I therefore decline to award any costs to the defendant, other than disbursements. There is therefore no need to consider the offer to settle because there are no costs to double.
Reasons for judgement were released today considering whether strict compliance with Rule 37B is required for a Court to award a successful party Double Costs after beating a formal settlement offer at trial.
In today’s case (Eigeard v. Muench) the Plaintiff sued for personal injuries. Prior to trial the Plaintiff made a written settlement offer to resolve the claim for $107,500. The claim went to trial and the Plaintiff enjoyed success with a Jury awarding more than settlement offer.
The Plaintiff then asked the Court to award Double Costs under Rule 37B. The Defendant objected arguing that the formal offer did not strictly comply with Rue 37B(1)(c)(iii) which requires formal offers to contain the following sentence: “The ….[name of 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 judgment on all other issues in this proceeding.”
The Plaintiff argued that the Court still had the discretion to award double costs because “the defendant’s insurers are sophisticated and understood the content of the offer and there is no confusion.” and that “this was a legitimate attempt by the plaintiff to resolve the action.”
Madam Justice Hyslop disagreed and concluded that the Court did not have the discretion to award double costs in these circumstances. The Court went onto summarize the applicable law as follows: In Roach, the exact words of Rule 37B(1)(c)(iii) were not contained in the offer to settle pursuant to Rule 37B. Despite this, the trial judge ordered double costs. This was one of the grounds of appeal.
 The offer to settle was in the form of a letter directed to counsel. The letter set out an offer of settlement and then stated:
We reserve the right to bring this letter to the attention of the judge as a matter of costs in accordance with Rules 37 and 37A. [para. 32]
 Madam Justice Prowse, writing for the Court, stated:
 It is not disputed that the terms of Ms. Roach’s offer substantially complied with the requirements of an offer under Rule 37B(1)(c): it was made in writing; it was delivered to Mr. Dutra (through his counsel); and it contained a sentence in terms similar to those set forth in subrule (1)(c)(iii). Nor is there any suggestion that Mr. Dutra was misled by the offer in any way, or that he believed that he could disregard the offer with impunity with respect to costs because it did not track subrule (1)(c)(iii) word-for-word. Rather, Mr. Dutra takes what appears to be the highly technical point that if an offer does not contain the exact wording set out in subrule (1)(c)(iii), it does not come within the definition of an “offer to settle” within the meaning of Rule 37B(1) and, therefore, cannot attract an award of double costs.
 Madam Justice Prowse considered both a strict and relaxed interpretation of Rule 37B(1). In doing so, she reviewed the history of Rule 37 and the enactment of Rule 37B.
 She concluded that the enactment of Rule 37B was a move away from strict compliance as was the situation of Rule 37. In considering the offer, Madam Justice Prowse stated at para. 52:
That said, I am also of the view that the wording of the offer must be substantially compliant with the wording of subrule 1(c)(iii) such that no reasonable person could be misled as to the intent of the offer or the fact that it was an offer within the meaning of Rule 37B. In other words, the offer must be in writing, the wording must make it clear what party is making the offer and to whom it is made, and it must include the fact that the party making the offer is reserving the right to bring the offer to the attention of the court in relation to costs after judgment on all other issues in the proceeding.
 The court in Roach upheld the trial judge’s finding that the offer meant the requirements of Rule 37B. At para. 54, Madam Justice Prowse endorsed the trial judge’s admonition that:
…counsel would be well advised to ensure that the language of their offers complies precisely with subrule 1(c)(iii) (and, in future, Rule 9-1) to avoid any possibility of their offers being found deficient. In this case, the offer was made just days after the new rule came into effect. It may be that the same measure of flexibility will not be accorded to offers in the future which are non-compliant. That is especially so if it proves that flexibility in the application of the Rule undermines its purpose of encouraging settlement of disputes in a fair, timely and cost-efficient manner, in accordance with the object and spirit of the Rules as a whole.
Madam Justice Hyslop then dismissed the application for double costs with the following reasons:
 The offer does not meet the criteria set out in Roach. Rules 37(22) and (37) address the consequence of accepting an offer. There is nothing in the offer of the plaintiff to suggest that the plaintiff intends to bring the offer to the trial judge’s attention as it relates to costs.
 The court’s discretion under Rule 37B comes into play after the court determines whether the offer complies with Rule 37B(1)(c) and as interpreted by Roach.
 I dismiss the plaintiff’s application for double costs. The defendant shall have costs of this application pursuant to scale B to be set off against the costs otherwise awarded to the plaintiff.
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 so this case will likely retain its value as a precedent moving forward.
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.
When Plaintiffs have their injury claim dismissed in the BC Supreme Court, not only do they get nothing to compensate them for their injuries, they actually end up having to pay the Defendant money. How can this be? The reason is something called “costs“. Generally speaking, the loser has to pay the winner’s Court costs and disbursements.
So how much money are we talking about here? The answer is thousands, sometimes tens of thousands, sometimes even over one hundred thousand dollars. Reasons for judgement were released this week by the BC Supreme Court, New Westminster Registry, demonstrating this.
In this week’s case (Pearlman v. Atlantic Trading Company Ltd.) the Plaintiff was involved in a motor vehicle collision in 2004. He sued the party he claimed was responsible for his injuries. He also sued ICBC alleging that ICBC “had requested a medical report from his family doctor whose authorization to provide the report had been revoked by the Plaintiff.”.
A jury dismissed the Plaintiff’s first claim and a Judge dismissed the Plaintiff’s second claim. ICBC was awarded their Court costs. The BC Supreme Court assessed these at $66,000 for the two claims combined. The Plaintiff then appealed these costs awards. Madam Justice Gropper dismissed the Plaintiff’s appeals and upheld the awards.
While this case does not contain any unique or novel principles of law, it is worth reviewing because it demonstrates the stark realty that people can pay a very high price if they are on the losing end of an ICBC claim in the BC Supreme Court.
If you are interested in more information on costs consequences in BC Supreme Court injury lawsuits you can click here to read my archived posts on this topic.
As I’ve previously written, when a person wins in a lawsuit in the BC Supreme Court they are usually entitled to ‘costs‘.
The normal amount of costs a successful litigant is entitled to are set out in a tariff as an appendix to the Rules of Court (appendix B). However, in fast track trials, the amount of costs a person is entitled to is capped under Rule 66. A judge has discretion to waive this cap and award a litigant more. Today, the BC Court of Appeal released reasons for judgement dealing with the extent of that discretion.
In today’s case (Majewska v. Partyka) the Plaintiff was injured in a 2007 BC car crash. ICBC admitted that the driver was at fault. The lawsuit focused on the value of the Plaintiff’s claim. The Plaintiff made a formal offer to settle her case for $50,000. ICBC made a formal offer for $25,000. The trial judge ultimately awarded just over $62,000 in damages.
The Court went on to award the Plaintiff double costs under the ‘usual tariff‘. ICBC argued that while the Court did have discretion to award costs above the capped amount set our in Rule 66(29) the Judge was wrong in awarding them under the ‘usual tarriff’ and should have used the limited amounts set out in Rule 66 as guidance for the increased costs award. The BC Court of Appeal agreed and set out the following principles:  Thus, Anderson established two principles. First, it confirmed that there is discretion to award costs beyond the limits in R. 66(29) if there are special circumstances. Second, where such an award is justified, it affirmed that costs should be calculated using those limits as reference points, rather than under the usual tariff…
 I appreciate that Anderson dealt only with a settlement offer, whereas there were additional special circumstances in this case. The trial had run for three and a half days, and there was an issue of some complexity. However, the approach in Anderson can easily be adapted to calculate costs for extra days of trial by adding a further $1,600 for each day, based on the present figures of $5,000 and $6,600 in R. 66(29). This was the approach used by Gerow J. in Park, where the R. 66 trial had taken three days.
 Using the amounts in R. 66(29) as a basis for awarding increased costs because the issues were complex is not as straightforward. I am persuaded, however, that theAnderson approach could be adapted effectively to accomplish this, again by using those amounts as the basis for calculations.
 This approach brings desirable consistency and predictability to costs awards following fast track litigation. The varied approaches that have developed under R. 66 have led to uncertainty with respect to both exposure to and recovery of costs under the rule. Having opted into the R. 66 process, fast track litigants should be able to reliably assess their potential costs liability or recovery in making decisions about the conduct of the case….
 I would conclude that the discretionary nature of R. 66(29) is circumscribed by the objectives of R. 66: to provide a speedier and less expensive process for relatively short trials. Those objectives are best served by awarding lump sum costs, calculated by reference to the amounts in R. 66(29).
 I acknowledge there may be situations that justify a departure from such costs. I anticipate these would be “exceptional” circumstances rather than “special” circumstances, and might include situations deserving of special costs or solicitor client costs, however, such matters must be left for another day.
 I would therefore allow the appeal, and calculate costs under R. 66(29) as follows. Under the present limits of $5,000 and $6,600 I take the pre-trial portion of costs to be $3,400, and $1,600 as representative of each day of trial. The plaintiff’s offer to settle was delivered only six days before trial. Thus, she is not entitled to double costs for trial preparation. She is, however, entitled to double costs for three and a half days of trial, calculated at $3,200 per day. Total costs are thus $14,600 ($3,400 plus $11,200) before disbursements and taxes.
Despite winning the appeal, the BCCA ordered that ICBC pay the Plaintiff’s costs of the appeal because this was a ‘test case‘ and but for that reason ICBC would not have proceeded with the appeal. The Court stated as follows:
 In my view, an order that each party bear its own costs would not be appropriate. The amount in issue is not so significant that the parties would have undertaken the appeal of their own accord. Because the defendant’s insurer chose to use it as a test case, the plaintiff was put to the expense of responding to the appeal. The defendant’s late and unsuccessful attempt to raise a second ground of appeal increased that expense, as the plaintiff had to reply to the new ground as well. In Patterson v. Rankel (1998), 166 D.L.R. (4th) 574 (B.C.C.A.), Southin J.A. described the same insurer’s agreement to pay the plaintiff’s costs in a “test case” as “a very proper thing to do”, and ordered costs in those terms. I agree that is the appropriate result in such a case.
I should point out that Rule 66 is being taken off the books as of July 1, 2010 and being replaced with Rule 15. However, today’s case ought to retain value as a precedent under the new rule because Rule 15-1(15) has language almost identical to Rule 66(29).
Reasons for judgement were released today by the BC Supreme Court considering whether a Defendant should be awarded double costs for successfully defeating a lawsuit where they made a formal settlement offer before trial.
In today’s case (McVeigh v. McWilliams) the Plaintiff sued the Defendant alleging defamation. Before trial the Defence lawyer made a ‘walk away’ offer under Rule 37B (click here to access my previous posts and recent video discussing formal settlement offers and costs consequences) which was phrased as follows: Our client will waive costs in exchange for your consent to a dismissal of your claim on a “without costs” basis. Our client reserves the right to bring this offer to the attention of the court for consideration in relation to costs after the court has rendered judgment on all other issues in this proceeding, in accordance with Rule 37(b) of the Rules of Court.
The Defendant, who was awarded Costs for succeeding in the lawsuit, asked the Court to exercise its discretion under Rule 37B and award double costs. Mr. Justice Shabbits refused to do so finding that the Plaintiff was entitled to his day in Court and should not be penalized with an order of double costs for failing to beat a walk away offer. The Court reasoned as follows:
 A defendant in every case in which a non-monetary issue is at stake could offer to “settle” on the basis that the plaintiff concede the cause of action, and they could do so as soon as they file the statement of defence. The issue is whether such an “offer” should attract double costs.
 I acknowledge that in this case the defendant did offer to waive costs to the date of the offer. But, costs here were never the issue. In my view, the defendant’s offer did not really involve any meaningful element of compromise. In respect of the cause of action, the defendant’s position after delivery of the offer to settle was the same as before delivery. It was as set out in the pleadings.
 In my opinion, it was not unreasonable of the plaintiff to refuse the defendant’s offer. He, too, was entitled to have the issue tried.
 In my opinion, no order for double costs is warranted. The defendant is entitled to his costs on Scale B except for the costs of this application. The plaintiff has enjoyed substantial success on this application, and he is entitled to his costs of it on Scale B.
I should point out that it is possible for a Defendant to be awarded double costs for beating a settlement offer if the lawsuit is dismissed, however, in cases where the settlement offer was no more than a ‘nuisance’ offer or a ‘walk away’ offer the BC Supreme Court may be reluctant to make such an award.
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.
One principle that is becoming well defined with respect to Rule 37B is that settlement offers made on the eve of trial may not trigger any costs consequences. Reasons for judgement were released today demonstrating this.
In today’s case (Parwani v. Sekhon) the Plaintiff was injured in a 2004 BC car crash. The Plaintiff sued for damages. As trial approached the Plaintiff offered to settle his case for $37,000 plus costs and disbursements. On the last business day before trial the Defendants responded with a formal settlement offer under Rule 37B for $10,000 plus 50% of disbursements.
The claim went to trial and the Plaintiff claimed damages of $270,000. The claim was largely unsuccessful with the Plaintiff being found 75% at fault. Damages were assessed at $25,000 leaving an award of $6,250 for the Plaintiff (25% of $25,000).
The Parties could not agree on costs consequences. The Defendants argued that since they beat their formal offer they should be awarded the costs of trial. Madam Justice Ross disagreed with this submission finding that while the Defendants offer should have been accepted it was simply made too late. In declining to award the Defendants any costs the Court reasoned as follows:
 The defendants submit that the offer to settle was one that ought reasonably to have been accepted given the evidence with respect to the liability issue. In addition, the position taken by the plaintiff at trial with respect to his losses was unreasonable given the medical evidence and the paucity of evidence to support the claims. The offer exceeded the plaintiff’s recovery at trial. The position of the plaintiff was that he did not have adequate time to consider the offer, coming as it did on the eve of trial. Moreover, had the plaintiff accepted the offer, considering the disbursements already incurred, the plaintiff would have recovered only $765.34. Accordingly, it was not reasonable to accept the offer. The plaintiff had made an early offer to settle that reflected a considerable discount to reflect the uncertainties in the case.
 In my view, while the defendants’ offer was reasonable, it was not early. It came on the eve of trial, after substantial costs and disbursements had been incurred. Such an offer is not the embodiment of the conduct the rule intends to promote. In the circumstances, and considering the factors identified in the rule, I am not prepared to consider the offer in relation to the award of costs.
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 should help cases such as this one retain their value as precedents.
Further to my numerous posts discussing the development of Rule 37B, reasons for judgement were released today demonstrating that this Rule’s application is still being shaped by the BC Supreme Court.
The one factor that has yet to receive judicial agreement is whether the defendant being insured is a factor the Court can consider when exercising its discretion to award costs under the rule. There are cases going both ways and today’s case shows that the debate goes on.
In today’s case (Wittich v. Bob) the Plaintiff was injured in a car crash. Her husband was the at fault driver. She sued for damages. Before the trial the Defendant (through his insurer ICBC) made a formal offer to settle the case for $40,100. Later the Defendant withdrew this offer and made a second formal under Rule 37B to settle the case for $65,000. The Plaintiff rejected this offer, made her own formal offer of $196,000 and proceeded to trial.
At trial the Plaintiff sought damages of $847,000. The claim was largely unsuccessful with the Court awarding just over $31,000 in damages. (You can click here to read my summary of the trial judgement).
The Defence then brought a motion to be awarded costs and disbursements. This application was partially successful with the Defendant being awarded their costs and disbursements from 6 weeks before trial through trial. Before coming to this decision, however, Madam Justice Bruce was asked to consider whether the fact that the Defendant was insured with ICBC was a factor the court can consider when weighing the financial positions of the parties. The Court ruled that this indeed is a relevant factor holding as follows:
 Turning to the financial circumstances of the parties, it is clear that, as a married couple, the plaintiff and the defendant have the same economic position. The authorities are divided as to whether the circumstances of the insurer should be considered as a relevant factor in an order for costs. In the particular circumstances of this case, I find it is appropriate to consider the insurer’s resources in comparison to the plaintiff’s. The defendant Mr. Wittich supported his wife’s claim and testified that her pain and suffering after the accident was considerable and prolonged; however, counsel for the defendant took an entirely different position in argument. Thus it must be inferred that counsel was taking instructions from the insurer and not the litigant.
 The plaintiff is not a wealthy person. She has not worked for a considerable period of time. The defendant has an income of less than $70,000 per year. I thus find that their economic circumstances are far less substantial when compared to that of the insurer. It is also apparent that an award of costs may deprive the plaintiff of the judgment awarded at trial. These are factors in her favour.
Rule 37B has been on the books now for almost two years. The Court is clearly conflicted about whether the availability of insurance is a relevant factor under the rule. When the New BC Supreme Court Rules come into force on July 1, 2010 Rule 37B will be replaced with Rule 9. Rule 9 uses language that is almost identical to Rule 37B so the lack of clarity will likely continue. In light of the on-going conflicting authorities it will be useful if the BC Court of Appeal addresses this issue.
Where to begin…
Important reasons for judgement (Burdett v. Mohamed) were released on Friday by the BC Supreme Court, Vancouver Registry addressing a host of topics in the context of BC personal injury litigation.
By way of background the Plaintiff was a passenger in a 2002 motor vehicle accident. She was riding in a vehicle operated by Mr. Mohamed and this vehicle collided with a vehicle operated by a Mr. Samuel.
The Plaintiff suffered various injuries including a traumatic brain injury.
The Defendant Mohamed was charged with Dangerous Driving and was deemed to be in breach of his insurance policy. Accordingly, ICBC, Mr. Mohamed’s insurer defended the claim as a ‘statutory third party.’
There was reason to believe that Mohamed was solely responsible for the collision however the Plaintiff’s lawyer sued both Mohamed and Samuel. The reason being was concern about limited insurance coverage. Mohamed only had $1 million in insurance coverage. The Plaintiff was not the only injured party and when sharing this money with the other claimants the Plaintiff was concerned she would be significantly undercompensated if this was the extent of her recovery.
ICBC made an offer to the various claimants to “get together to divide among themselves the $1,000,000 third party liability (coverage).” This offer was not accepted and the Plaintiff proceeded to trial.
Prior to trial the Plaintiff made a formal offer to settle her claim against Mohamed for $1.5 million. The Defendant Samuel made a formal offer to the Plaintiff to ‘walk away’ on a costs free basis. After a lengthy trial the case against Samuel was dismissed, the Jury found Mohamed responsible for the Plaintiff’s injuries and the Plaintiff 20% contributorily negligent for her own injuries. After this reduction in liability the Plaintiff was awarded over $1.8 million in damages.
The Court was asked to decide, amongst other things, whether the Plaintiff should be awarded double costs against Mohamed, whether Samuel should be awarded double costs against the Plaintiff and whether the Mohamed should pay to Samuel any costs the Plaintiff is exposed to. Rule 37B – Is it reasonable to go to trial for a claim exceeding the Defendants insurance coverage?
The Plaintiff was awarded double costs for beating her formal offer of settlement against Mohamed. In coming to this decision the Court had to grapple with an area of law that is still open to debate, specifically, when considering whether to award double costs can a court consider the insurance coverage available to the parties?
There are cases that go both ways on this topic and the law is not yet set in stone. Usually Plaintiff’s argue that this is a relevant consideration and Defendants argue it is not. Interestingly, here it was ICBC that was arguing the presence of insurance could be “the central factor driving the Court’s analysis under Rule 37B.”. The Defendant submitted that the Plaintiff was unreasonable in going to trial “knowing of the third party liability policy limits“.
Madam Justice Boyd “entirely reject(ed) this submission.” Specifically the Court held as follows:  In my view, having never received an actual offer of settlement from the Third Party, it was reasonable for the plaintiff to choose to proceed to trial in this case. She could expect that she would recover judgment against at least Mohammed and Dubois. The judgment would also likely be in excess of the policy limits. While the quantum of the judgment actually recovered would not exceed her pro rata share of the insurance funds (the calculation of which depended on settlements reached or judgments obtained by Maxwell and Sahota), she would still be left with the ability for the next ten years to pursue execution on the judgment against Mohammed and Dubois. While the Third Party apparently insists that any such judgment will be dry, there is simply no evidence one way or another to confirm that likelihood. It should also be noted that had the insurance monies been paid into court, and had the three claimants reached some agreement as to an appropriate division of the funds, the Third Party could not have enforced any requirement for a release of her claim against either Mohammed or Dubois. Can a “Walk Away” offer trigger Double Costs under Rule 37B?
A ‘walk away’ offer is one where a Defendant, confident of winning at trial, offers that if the Plaintiff discontinues the lawsuit pre-trial that the Defendant will waive their entitlement to costs. The Defendant Samuel made exactly such an offer to the Plaintiff. The Plaintiff rejected this offer and went to trial. The Plaintiff indeed was unsuccessful against Samuel. Samuel asked for an order of Double Costs for beating their formal offer.
Madam Justice Boyd sided with the Defendants and granted the order for double costs. The Court held that while not automatic, a walk away order is capable of triggering double costs and here it was appropriate to do so. Specifically the court held as follows:  My own impression is that faced with the grim realities of the other defendants’ limited insurance coverage, the plaintiff made a calculated decision to pursue a claim of very doubtful merit against Samuel, realizing that she would realize a substantial benefit even if Samuel’s liability was limited to a small percentage. But for the insurance situation, I am confident that the Samuel offer would have been accepted early on by the plaintiff. ..
 As Hinkson J. noted in Bailey v. Jang, 2008 BCSC 1372, the underlying purpose of the offer to settle provisions survived the repeal of Rule 37 and the implementation of Rule 37B. That purpose is to encourage conduct which reduces both the duration and the cost of litigation, while also discouraging the conduct which has the opposite effect.
 I conclude that all of these factors weigh in favour of the defendant Samuel recovering double costs.
The Sanderson Issue:
When a Plaintiff sues 2 parties and succeeds only against one (which was the case here) the Court has a discretion under Rule 57(18) to order that the unsuccessful defendant pay the successful defendants costs. This is called a “Sanderson Order”.
Here the Plaintiff, not wanting to have the ‘double costs’ order eat into into the limited $1,000,000 of insurance coverage applied for a Sanderson Order. Madam Justice Boyd granted the order and required Mohamed to pay Samuel’s court costs. Vital in this decision was the fact that ICBC, in their Third Party Statement of Defence, alleged that Samuel was negligent in causing the collision.
In reaching this decision the Court held as follows:
 This raises the issue, was it reasonable for the plaintiff to have sued and continued her action against the defendant Samuel? I accept that at the outset, given the evidence of the eyewitness to the effect the Dubois vehicle (driven by Mohammed) had fishtailed back and forth across the road before its collision with the oncoming Samuel vehicle, it was reasonable for the plaintiff to have joined Samuel as a defendant to the action. However, after the receipt of the many engineering reports which overwhelmingly laid the blame on Mohammed and absolved Samuel of any negligence, was it reasonable for the plaintiff to have continued her action against Samuel? …
 In my view, faced with ICBC’s plea that Samuel caused or contributed to this accident, the plaintiff had no choice but to continue her claim against Samuel.
 In all of these circumstances, I exercise my discretion under Rule 57(18) and find that a Sanderson order is appropriate in the case at bar, thus requiring the defendants Mohammed and Dubois to pay the costs which the plaintiff would otherwise pay to the successful defendant Samuel.
The lesson to be learned here is that if a Defendant is going to allege that another party is responsible for a car crash they should do so with caution. The Plaintiff is free to bring them into the lawsuit and if the claims are not successful ultimately it is the Defendant who may be on the hook for the extra court costs.
Not Done Yet…
One last point. A companion set of reasons was also released in this case on Friday addressing tax gross ups and management fees. You can find that decision here.
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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