Tag: formal settlement offers

"En Masse" Document Book and Discovery Transcript Admission Leads to New Trial Following Jury Verdict

Reasons for judgement were released today by the BC Court of Appeal ordering a new trial after a document book was admitted ‘en masse’ along with a discovery transcript in a personal injury  jury trial.
In today’s case (Han v. Park) the Plaintiff was injured in a 1999 collision that the Defendant admitted fault for.  The litigation had a “somewhat tortured history” finally coming to trial in October 2013.  The Plaintiff was awarded only a fraction of the damages she sought.  The Court of Appeal ordered a new trial finding it was inappropriate to give the jury access to a defence document book without careful limitations as to the use of the various documents contained therein and also for having access to a discovery transcript.  In criticizing these steps the Court of Appeal provided the following reasons:

[31]         This Court has held that medical records should not be entered en masse: Samuel v. Chrysler Credit Canada Ltd., 2007 BCCA 431:

[39]      The preferable approach is obvious. Clinical records should not be admitted into evidence, by consent or otherwise, unless counsel identify the specific purpose for particular portions of the records. Furthermore, it would be preferable to introduce discrete portions of the records when they become relevant so that their admissibility can be ruled on at that time, when the jury will better appreciate the purpose of those portions in the context of the case and will have the assistance of a contemporaneous limiting instruction. In no event should a “book” of documents simply be handed up to the court and admitted as a whole.

[Emphasis added.]

[32]         I would not restrict this comment to medical records. Further, the fact that an appellant may have consented to the admission of the records is not always the determinative factor in deciding whether documents should have been entered into evidence, and will not preclude the ordering of a new trial with costs to the appellant after prejudicial clinical records were entered into evidence: Owimar v. Greater Vancouver Transit Authority, 2007 BCCA 630, citing Samuel.

[33]         In Owimar the court held that a new trial was required where the admission of certain psychiatric records without a proper limiting instruction resulted in an unfair trial:

[41]      In my opinion, the admission of the psychiatric records in this case rendered the trial unfair. The records were left with the jury at the second day of trial. The limiting instruction as to opinions expressed in the records was given shortly before the jury retired to consider its verdict. In the meantime, there were many statements contained in the records that portrayed the plaintiff as unstable and out of touch with reality. Those statements might easily have been accepted by the jury as further diminishing the plaintiff’s credibility. Although there is no doubt that the plaintiff’s credibility was a central issue in the case and he had much to do to convince the jury of his truthfulness, that issue deserved to be proved independent from psychiatric evidence that had no bearing on the physical injuries he claimed to have suffered. I would accordingly order a new trial.

[34]         I agree with the appellant that like Owimar, the inclusion of some of the clinical records and material contained in the Exhibit had the effect of portraying the appellant as a difficult, manipulating, and stubborn individual. As appellant’s counsel states, this portrayal shifted the focus of the jury to the appellant’s negative character traits, rather than to the main issues of the trial.

[35]         The respondents’ trial counsel assured the judge all the documents in the Exhibit would be referred to in the cross-examination of Ms. Han but they were not. Some of the documents were irrelevant, some were prejudicial, and some were inflammatory. The Exhibit was marked outside the presence of the jury – the trier of fact – which is an irregularity. There was no document agreement in place, so the basis for the appellant’s consent to the admission of the Exhibit is not clear. Even with consent, the trial judge is always the gatekeeper.

[36]         In my view, the Exhibit should not have been admitted en masse. Some of the documents and records should not have been admitted at all, as their admission was highly prejudicial and resulted in a substantial wrong or miscarriage of justice.

[37]         On this ground alone, it is in the interests of justice to order a new trial….

[39]         I agree with the appellant there was a significant risk that the jury would give greater weight to the transcribed portions than to the appellant’s testimony since there was no transcript of her answers given in evidence in response. The judge’s instruction to the jury that the transcript was an aide memoir did not overcome the resulting prejudice to the appellant resulting from the jury having only one side of the picture during their deliberations.

[40]          This procedure was highly irregular and prejudicial to the appellant, resulting in a substantial wrong or miscarriage of justice.

[41]         I would also allow the appeal on this ground.

Lastly, the Court noted it is inappropriate to conduct a present value calculation when considering the costs consequences of a historic formal settlement offer.

Double Costs Rejected In Face of Plaintiff Credibility Concerns

Reasons for judgement were released today by the BC Supreme Court, New Westminster Registry, rejecting a request for double costs following a trial where a Plaintiff beat her formal settlement offer by a slim margin.
In today’s case (Griffith v. Larsen) the Plaintiff suffered an injury in a collision.  Prior to trial the plaintiff provided  a formal settlement offer of $85,000 which was rejected.  At trial she was awarded $85,159.  The Plaintiff asked for double costs but Mr. Justice Affleck refused to award these finding it would not be appropriate in the face of credibility concerns and further with the Defendant enjoying some success at trial on one of the most contentious issues.  In rejecting the request for double costs the Court provided the following reasons:

[5]             I have considered two factors which have influenced my decision against awarding double costs. The first is my findings of credibility which were not favourable to the plaintiff. While I concluded the plaintiff had suffered soft tissue injuries of some duration which were deserving of an award of damages, I also concluded that she had not given her evidence with candour. An award of double costs is meant in part to penalize a party for failing to accept a reasonable offer. On the other hand a party who has not been candid with the court at least in some instances ought not to be rewarded with double costs even if her damage award exceeds the offer. This is one of those instances.

[6]             The second factor I have considered is the defendants’ relative success on the most contentious issue at the trial. The plaintiff advanced a claim far exceeding the award which was largely predicated on the proposition she would need surgery to overcome a disabling thoracic outlet syndrome. I did not accept the plaintiff’s evidence on that issue. The defendants largely succeeded in persuading me that the thoracic outlet syndrome, if the plaintiff actually experienced it, had little effect on her physical condition. That is a further reason for concluding it is not appropriate to penalize the defendants with an award of double costs.

[7]             In Mudry v. Minhas, 2010 BCSC 1110, Kelleher J. discussed apportionment of an award of costs for relative success on an issue under the then Rule 57(15). While the court concluded the plaintiff had not met the test for apportionment, the plaintiff’s success in that case on the issue of fault (although no damage was found and the action dismissed) was a relevant factor under Rule 37B(6)(d), now Rule 9-1(5)(b), on considering if the defendant was entitled to double costs when there had been a defence offer, which in Mudry obviously exceeded the damage award which was nil..

[8]             I acknowledge there is some merit to the plaintiff’s submission that, notwithstanding the absence of success on the issue of thoracic outlet syndrome, the plaintiff’s offer took into account the risk of failure on that issue. Nevertheless, in the circumstances of this action I am unwilling to penalize the defendants in costs when they largely succeeded on that question. The usual rule will prevail that party and party costs on Scale B follow the event.

Formal Offer on Eve of Trial Not "Too Late" To Trigger Costs Consequences

Reasons for judgement were released last week by the BC Supreme Court, Vancouver Registry, discussing the effects of a formal settlement offer made on the eve of trial.
In last week’s case (J.D. v. Chandra) the Plaintiff was injured in two motor vehicle collisions.  At trial she was awarded just over $500,000 in damages.  On the last business day before trial the Plaintiff made a formal offer to settle for $200,000.  The Plaintiff sought double costs for the trial arguing the offer should have been accepted.  The Defendant argued the offer was made too late in the process to trigger such consequences.  In rejecting this position Madam Justice Griffin provided the following reasons:
[16]         One of the defendants’ arguments is that the offer was delivered too close to the start of trial.  The offer was delivered at the end of the day on Friday, January 31, 2014, and counsel for the defendants submits that he did not see it until the next day, Saturday, February 1, 2014.  The trial was set to and did commence the following Monday, February 3, 2014.
[17]         The shortness of time to consider the offer does give me pause.  However, counsel for the plaintiff has pointed out case authorities where ICBC has taken the position that offers it has delivered to plaintiffs on the eve of trial ought to be considered by the court in depriving the plaintiff of costs.  These arguments have been accepted in some cases, for example, see Bevacqua v. Yaworski, 2013 BCSC 29.
[18]         As noted by Mr. Justice Voith in Brewster v. Li, 2014 BCSC 463, there is currently no requirement in the Rules that an offer be made within a specific time from the start of trial.  The question of what is a reasonable time to consider an offer is “largely driven and governed by context” (para. 26).
[19]         Here, the context was that counsel for the defendants had delivered an offer to settle on January 21, 2014; the parties had attended a Judicial Settlement Conference on January 29, 2014, and the defendants had delivered an additional offer to settle on January 30, 2014.  This context suggests that the defendants were in a position where they were well able to analyze the risks of going to trial and the relative merits of each side’s position.
[20]         There was nothing complicated about the offers to settle which required lengthy analysis.  The parties were just exchanging dollar amounts.  There was no revealing new analysis of the issues or last minute disclosure of material information.
[21]         The plaintiff’s form of offer to settle adopted a form similar to that of the defendants.
[22]         The defendants were represented by experienced counsel for ICBC.  I find that the defendants were in a good position to be able to analyze and respond to the offer within hours, if not minutes.  I find that the defendants had sufficient time to assess the reasonableness of the plaintiff’s offer to settle.
 

When Does An Award of $20,000 = A Significant Debt

No, this is not a trick question.  When can a judge awarding you $20,000 leave you in ‘significant’ debt?  The answer is when you fail to beat a formal offer at trial and have ‘loser pays’ costs assessed you.  I’ve discussed this reality previously and it was demonstrated yet again in reasons for judgement released last week by the BC Supreme Court, Vancouver Registry.
In last week’s case (Gonzales v. Voskakis) the Plaintiff was injured in a 2008 collison.  Prior to trial ICBC provided a formal settlement offer of $69,000.  The Plaintiff rejected this and proceeded to have a 12 day trial where she sought in excess of $385,000.  The claim was largely unsuccessful with the trial judge awarding just over $20,000 in damages.  ICBC asked that the Plaintiff be stripped of post offer costs and that the Defendant be awarded post offer costs and disbrsements.  The Plaintiff argued that such a result would “negate her entire judgement and leave her significantly in debt“.   Madam Justice Fitzpatrick noted that the underlying “behaviour modification objective” of the Rules of Court override any sympathy to the Plaintiff and levied substantial costs consequences.
The decision is also worth reviewing for the discussion of whether a post offer costs award to a Defendant can include disbursements.  The Plaintiff argued the Rules don’t contemplate this but the Court disagreed. In finding disbursements were also encompassed in the Rule Madam Justice Fitzpatrick provided the following reasons:
[65]         Rule 9-1(5) is headed “Cost options”. It is clearly intended to guide the court in deciding what costs award is just. Nevertheless, I do not see that subcategory (d) was intended to limit the discretion of the court to award a defendant’s disbursements in all cases when rewarding a defendant for making a reasonable offer. In many cases, disbursements are significant. In fact, the driving force behind an offer to settle may be the desire to avoid having to pay those disbursements. To limit the discretion of the court in awarding disbursements would defeat the clear intention of the Rule.
[66]         Although Brown J. came to another conclusion in Moore relating to double disbursements under Rule 9-1(5)(b), it appears that Kendall and Skidmore were not in front of her at that time. Therefore, in applying the principles set out in Re Hansard Spruce Mills Ltd., [1954] 4 D.L.R. 590, I do not consider that I am bound by her reasoning.
[67]         I acknowledge that the wording of Rule 9-1(5), in its reference to “disbursements” in subcategory (a) without an accompanying reference to “disbursements” in subcategory (d), is awkward and confounding. In my view, however, the fundamental purpose of the Rule — which, as stated by the Court of Appeal in Kendall and Skidmore, is to compensate for all “costs”, including disbursements — has not changed. One can only hope for some clarity on this issue by possible amendments to Rule 9-1(5).
[68]         In the meantime, I conclude that I have the discretion under Rule 9-1(5)(d) to award the defendant his costs, including disbursements.
[69]         I award such costs, which will include disbursements, in favour of Mr. Voskakis for the period from January 25, 2012 until February 29, 2012.

Double Costs Awarded to Plaintiff After Besting Formal Settlement Offer

Reasons for judgement were released recently by the BC Supreme Court, New Westminster Registry, addressing costs consequences following a trial where a Plaintiff bested his formal settlement offer.
In the recent case (Delgiglio v. British Columbia (Public Safety and Solicitor General)) the Plaintiff was injured after a RCMP officer ran a red light resulting in a collision.  The officer was found negligent at trial and damages of just over $330,000 were assessed.
Prior to trial the Plaintiff provided a formal settlement offer of $175,000.  The Plaintiff sought double costs for besting the offer.  In finding it appropriate to award double costs Madam Justice Gropper provided the following reasons:

Consideration of the factors

Was the offer one that ought reasonably to have been accepted?

[6] At the time the offer was made, the parties were approximately two weeks to trial. They had exchanged all the documents, the examinations for discoveries were complete and all the medical reports were exchanged.

[7] The defendants’ response is that the case reflected complex causation issues involving indivisible injuries.

[8] I consider this factor to favour the plaintiff’s position. While causation was a significant issue, it was addressed by the plaintiff’s physicians in their medical legal reports. The defendants did not tender any medical legal reports. The defendants had the plaintiff’s medical legal reports at the time the offer was made and was therefore in a position to evaluate the offer in spite of its consistent position in respect of causation.

Relationship of Offer and Judgment

[9] The plaintiff asserts that the offer of November 15, 2011 contained a meaningful element of compromise. He also argues that the assessment of damages significantly exceeded the compromise of settlement which the plaintiff offered two weeks before the trial. The defendants state no position in respect of this factor. This factor supports the plaintiff’s position.

Relative financial circumstances

[10] This factor is self evident: the plaintiff is an individual and the defendants have significant resources available. This factor supports the plaintiff’s position.

Other factors

[11] The plaintiff raises the defendants’ contact, particularly in regard to the question of liability.

[12] While I have found that the defendants were entirely liable for the accident, I do not consider that this constitutes a basis for awarding double costs to the plaintiff.

[13] Based upon the application of the factors referred to in Rule 9-1(6), I find that the plaintiff is entitled to his costs at Scale B up to November 14, 2011, and double costs thereafter. The plaintiff is entitled to his assessable disbursements. The double costs rule does not apply to disbursements.

Formal Settlement Offers and Costs: A Matter of Discretion


As recently discussed, costs consequences following trial where a formal settlement offer is not beat is a matter of judicial discretion.  While the principles behind the exercise of that discretion are reasonably well formulated the costs results can be a little trickier to predict.  Two sets of reasons for judgement were released this week by the BC Supreme Court demonstrating this discretion in action.
In the first case (Khunkhun v. Titus) the Plaintiff advanced a personal injury claim in excess of one million dollars.  She claimed she suffered from “a significant and disabling vestibular injury” as a result of a collision.  The jury largely rejected the Plaintiff’s sought damages and awarded $45,000.
ICBC made a more generous settlement offer prior to trial which the Plaintiff did not accept (about 30% higher than the jury award).   As a result, Mr. Justice Willcock stripped the Plaintiff of her costs from the time of the offer onward.  The Court did not go so far as to order that the Plaintiff pay the Defendant costs finding that it would be unjust.  Mr. Justice Willcock repeated the following reasoning from Madam Justice Humphries in Lumanlan v. Sadler:
Given the significant injury to the plaintiff, which was caused by the defendant’s foolish and reckless behaviour, and the effect on the award of a further reduction for costs, even if not doubled, and taking into account all of the above considerations, in my view it would not be fair or just to require the plaintiff to pay ICBC’s costs after the date of the offer.
In the second case released this week (Mazur v. Lucas) the Plaintiff was awarded $538,400 following a jury trial to compensate her for injuries sustained in a collision.  ICBC appealed and succeeded in having a new trial ordered.
Prior to the second trial ICBC made a formal settlement offer of $300,000.  The Plaintiff rejected this and proceeded to trial again.   This time the jury came in lower awarding $84,000 in damages.
ICBC brought an application seeking costs for both trial.  The result of this would have been financially significant.    Madam Justice Humphries declined to allow this and instead awarded the Plaintiff costs for both trials despite not besting ICBC’s offer.  In exercising its discretion the Court provided the following reasons:
[62] This court has stated many times that parties should be encouraged to settle, and if unreasonable in not doing so, may be punished in costs.  As well, the fact that an award of costs against a party may wipe out their award of damages is not determinative.  However, given all the circumstances that existed at the time the offer was made which did not change throughout the trial, I am not persuaded that the plaintiff ought to be denied her costs on the basis that she ought reasonably to have accepted the offer that was made twelve days before the trial began.  Having in mind the amount of the first award, the narrow issue upon which a new trial was ordered, the amount of the second offer, and the expected similarity of the evidence at the second trial, the plaintiff was reasonable in deciding not to accept the offer and to have the action adjudicated by a second jury.
In addition to this final result, this case is worth reviewing for the Court’s discussion of advance payment orders.  Prior to the second trial ICBC paid the Plaintiff $250,000 in exchange for a stay of execution so the Plaintiff would not collect the damages from the Defendants personally.  Madam Justice Humphries found that an advance payment after judgement should not be factored into a costs assessment.  The Corut provided the following reasons:

[14] The defendants argue that the plaintiff should be deprived of her costs of the second trial as of December 24, 2009, the date on which the negotiated agreement was signed.  They cite cases dealing with situations in which awards at trial are less than an advance, and in which plaintiffs have been deprived of costs as of the date of the advance (McElroy v. Embelton (1996), 19 B.C.L.R. (3d) 1 (B.C.C.A.); Baxter v. Brown (1997), 28 B.C.L.R. (3d) 351 (B.C.C.A.).

[15] However, those cases are all advances before trial.  The basis on which the Court of Appeal in those cases concluded that the date of the advance was relevant to costs was because the plaintiff “had in hand more at the start of the action than the amount of the jury’s verdict.” (see McElroy).  The plaintiff, upon receipt of an advance, must realistically assess his or her claim knowing that proceeding to trial carries a risk in costs (Carey v. McLean, 1999 BCCA 222).

[16] This advance was one paid to avoid execution on an existing judgment, pending an appeal that would proceed regardless of whether the plaintiff wished to accept the money in final settlement of the action or not.  That option was not open to her.  The agreement signed by the plaintiff required repayment if a new trial were ordered and the results were not favourable to her, but did not give her the option of accepting the money and ending the proceedings.  This advance payment, unlike those in the cases cited by the defendant, is not the equivalent of an offer to settle.

[17] The date of the advance is not appropriately considered in these circumstances.

"Special Costs" Clause Takes the Teeth Out of ICBC's Formal Settlement Offer


I’ve written many times about the risks and consequences formal settlement offers can create in the course of a personal injury lawsuit.  Interesting reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, refusing to give ICBC double costs after the dismissal of a lawsuit because of a ‘special costs‘ clause in their formal offer.
In this week’s case (Wong v. Lee) the Plaintiff was injured in a 2003 motor vehicle collision.  She sued her driver but the lawsuit was dismissed with a Jury finding the driver was not negligent.  Typically such a result obligates the Plaintiff to pay the Defendant’s costs due to the BC Supreme Court’s Loser Pays system.
Prior to trial ICBC made a formal settlement offer of $60,000.  In these circumstances the Court has the discretion to award ‘Double Costs‘.  ICBC, on the Defendant’s behalf, asked for the Court to make such an order.  Madam Justice Dardi refused, however, finding that the ‘special costs’ clause which is contained in many of ICBC’s formal settlement offers operates to create uncertainty in the settlement process.  The Court provided the following useful reasons:








[27] The plaintiff’s overarching submission is that the inclusion of para. 6 in Appendix A of the Offer to Settle is fatal to the defendants’ application for double costs. The Offer to Settle was subject to the conditions in Appendix A which provides in para. 6 as follows:

Nothing in this offer detracts from the Defendants’ right to seek special costs against the Plaintiff or his counsel above and beyond the Defendants’ entitlement to costs under this offer. Neither the making nor the acceptance of this offer shall be deemed a waiver or estoppel by the Defendants in respect to any reprehensible or improper conduct on the part of the Plaintiff and / or his counsel in respect of this proceeding. [Emphasis added.]

[28] Based upon these terms, even if the plaintiff had accepted the Offer to Settle, the defendants nonetheless would have been at liberty to pursue the plaintiff for special costs. Thus, there was a potential risk that the acceptance of the offer may not have ended all of the outstanding disputes between the parties.

[29] The Court of Appeal, in discussing Rule 9-1(5) in Evans v. Jensen, 2011 BCCA 279, articulated at para. 35 that “the most obvious and accepted intent of this Rule, namely to promote settlement by providing certainty to the parties as to what to expect if they make, or refuse to accept, an offer to settle”. The Court reasoned as follows:

[41]      This conclusion is consistent with the importance the Legislature has placed on the role of settlement offers in encouraging the determination of disputes in a cost-efficient and expeditious manner. It has placed a premium on certainty of result as a key factor which parties consider in determining whether to make or accept an offer to settle. If the parties know in advance the consequences of their decision to make or accept an offer, whether by way of reward or punishment, they are in a better position to make a reasoned decision. If they think they may be excused from the otherwise punitive effect of a costs rule in relation to an offer to settle, they will be more inclined to take their chances in refusing to accept an offer. If they know they will have to live with the consequences set forth in the Rule, they are more likely to avoid the risk.

[42]      This certainty in terms of the result of either making, accepting or refusing to accept an offer is also more conducive to the overall object of the Rules, which is “to secure the just, speedy and inexpensive determination of every proceeding on its merits”.

[30] It clearly emerges from the authorities that an important objective of offers to settle under the Rules is to bring certainty and finality to litigation. The reservation of the defendants’ right to seek special costs from the plaintiff after the acceptance of the offer is antithetical to this objective. It cannot be said that the Offer to Settle provided a genuine incentive to settle. As was stated inGiles v. Westminster Savings and Credit Union, 2010 BCCA 282 at para. 88, “plaintiffs should not be penalized for declining an offer that did not provide a genuine incentive to settle in the circumstances”.

[31] In short, para. 6 in Appendix A of the Offer to Settle militates against an award of double costs…





[34] In weighing all of the factors, the most significant being the inclusion of para. 6 in Appendix A of the Offer to Settle, I conclude that the plaintiff should not be required to pay double costs.



Winners and Losers: More on Costs Consequences and Formal Settlement Offers


How can a Plaintiff who is awarded damages following a personal injury trial end up owing ICBC money?  The answer relates to the costs consequences that can be triggered by formal settlement offers.  I’ve discussed this topic previously and two sets of reasons for judgement were released this week by the BC Supreme Court further demonstrating this reality.
In the first case (Dempsey v. Oh) the Plaintiff was injured in a bicycle accident when he was struck by the Defendant’s vehicle.  In the course of the lawsuit ICBC made a formal settlement offer of $40,000.  As trial neared ICBC increased their formal offer to $165,000.  The Plaintiff rejected this and proceeded to trial.  At trial the Court made some critical findings relating to the Plaintiff’s credibility and awarded damages of just over $20,000.
Following trial ICBC asked for an order pursuant to Rule 9-1(5) that the Plaintiff pay all of the Defendant’s costs following their first formal offer.  The Plaintiff objected to such a result arguing that “if he is ordered to pay the defendant’s costs he will end up owing it money“.  Mr. Justice Myers rejected this argument and ordered that the Plaintiff pay the Defendant’s post offer costs.  In rejecting the Plaintiff’s submission the Court made the following comment “It is not the court’s function to ensure that a plaintiff makes a net recovery from an action when it has ignored a reasonable offer.  That would defeat the purpose of the Rule and does not accord with common sense”.
On another note, this case is worth reviewing in full for the Court’s discussion of Rule 14-1(10).  The Defendant argued that the Plaintiff should be deprived of his pre-offer costs as there was no sufficient reason to sue in Supreme Court.   Mr. Justice Myers rejected this argument finding that when the lawsuit was started the Supreme Court was an appropriate venue.  In making this finding the Court provided the following useful reasons:
[11]    In part due to the loss of income, this was a more complicated case than Ghelen.  This action was commenced approximately six months after the accident.  At that point I find it was reasonable for the plaintiff to have commenced the action in this Court because he was reasonably entitled to see the impact of the accident on his prior condition.  There is nothing in the rules which imposes a cost penalty on a party who files its suit quickly after its cause of action arises.  And, in Reimann v. Aziz, 2007 BCCA 448, the Court of Appeal held that there is no ongoing obligation on a party to assess his action as it progresses in the Supreme Court in order to consider whether it should be moved to Provincial Court.
In the second case released this week (Miller v. Boughton) the Plaintiff was injured in a 2006 collision.  She sued for damages and her case went before a jury.  The trial lasted 7 days.  Prior to trial ICBC made a series of escalating formal settlement offers starting at $22,000 with the final offer made shortly before trial topping out at $62,500.
The Plaintiff rejected these offers and proceeded to trial.  The Jury found the Plaintiff 45% at fault for the crash and the Defendant 55% at fault.   After taking this split into account the Jury’s award was a modest $3,880.  ICBC’s motion for post offer costs and disbursements was granted.  After factoring these in the Plaintiff likely ended up owing ICBC a significant amount of money.   (UPDATE September 12, 2011 – click here for follow up reasons confirming the Defendant’s costs were assessed at over $42,000)
Cases such as these illustrate the important lesson that formal offers create a “loser pays” system which could result in significant costs swings following trial.  When considering ICBC formal settlement offers it is important to keep this in mind when deciding whether to accept the offer or proceed to trial.

Court Lacks Discretion To Deviate From Costs Agreement In Formal Settlement Offers


Authorities under the formal Rule 37B held that when a formal settlement offer dealing with costs consequences was accepted the BC Supreme Court had no discretion to make a different order with respect to costs.  The first case I’m aware of dealing with this issue under the New Rules was released today.  The Court upheld the principle developed under the former rule.
In today’s case (Sahota v. Sandulo) the Plaintiff was involved in a 2004 motor vehicle collision in Surrey, BC.  He started a lawsuit which was set for trial by Jury.  In the course of the lawsuit the Plaintiff incurred significant disbursements advancing the claim.  Fearful that the Jury trial would not go favorably the Plaintiff delivered a formal offer of settlement of $3,000 “plus court costs and disbursements“.  The Defendant accepted the formal offer.
The parties then could not agree on the costs consequences.  The Defendant brought a motion to address this issue.  Mr. Justice Armstong held that precedents developed under Rule 37B remain good law and that the Court has no discretion with respect to costs awards in these circumstances.   The Court provided the following reasons:

[28] Generally, the Court has discretion in relation to costs; however, where an offer to settle with specific terms as to costs has been accepted, to which Rule 9-1  applies, the Court does not have discretion to vary the terms of that agreement as they relate to costs.

[29] In Buttar v. Di Spirito, 2009 BCSC 72, Gerow J. held:

[11]      Both parties advanced arguments that the court has discretion under Rule 37B to make an order regarding costs. However, it is my opinion that the court has no discretion to make an order regarding costs in this matter. Mr. Buttar accepted the offer put forth by the defendants, including the offer regarding costs, without reservation. It is my view that Rule 37B does not confer discretion on the court to set aside an agreement that has been entered into between the parties regarding costs.

[33]         The rule in Buttar has been consistently applied in this Court and appears determinative of this issue.

[34]         Buttar and cases following it did not address Rule 9-1(4) as it relates to an accepted settlement that addresses costs. Rule 9-1(4) states:

(4)        The court may consider an offer to settle when exercising the court’s discretion in relation to costs.

[35]         Buttar held that the Court does not possess discretion to vary costs where a formal offer to settle, specifically addressing costs, has been accepted. If, in such circumstances, the Court is not in a position to exercise discretion in relation to costs, Rule 9-1(4) is of no application.

[36]         The rule in Buttar is applicable to the defendant’s application in this case. The plaintiff’s offer to settle, accepted by the defendant, created an agreement between the parties. This agreement is not subject to the Court’s discretion as to costs. In my view, the purpose of the rules would be frustrated if a party was free to accept an offer, clear and unambiguous on its face, and then move to invoke the Court’s discretion to add or vary terms to substantially rewrite the agreement reached by the parties.

Double Costs Ordered for Taking "Extremely Weak" Case to Trial


As recently discussed, when a party is on the losing end of a lawsuit in the BC Supreme Court they usually have to pay the winning sides costs.  If the successful party beat a pre-trial formal settlement offer the Court has the discretion of awarding double costs.  Reasons for judgement were released this week considering an application for double costs where a very modest formal offer was made prior to trial.
In today’s case (Brooks v. Gilchirst) the Plaintiff was involved in two motor vehicle incidents.  She sued for damages and both claims were heard at the same time.  ICBC disputed the allegation that a collision took place in the first incident.  Prior to trial ICBC made a $1 formal settlement offer.  The Plaintiff rejected this offer and went to trial.  Mr. Justice Sigurdson dismissed the claim finding that “no collision” took place.
ICBC applied for double costs.  The Plaintiff opposed arguing that the nominal offer should not trigger increased costs.  Mr. Justice Sidgurson agreed that while this was typically the case, in circumstances where an ‘extremely weak‘ case proceeds to trial double costs could be awarded in the face of a formal settlement offer.   In reaching this result the Court provided the following reasons:

[16]         In terms of the relationship between the terms of settlement offered and the final judgment of the court, the offer was better than the result, but the offer was only for the sum of $1 plus disbursements.  Ordinarily I would think that a nominal offer of one dollar may not attract orders for double costs but I know that in some cases even nominal offers may attract orders of double costs.  See for example MacKinlay v. MacKinlay Estate, 2008 BCSC 1570; Ludwig v. Bos, 2010 BCSC 695.

[17]         This is a case where there had been expenditures on medical and expert reports.  I think that where it becomes clear that liability will be extremely difficult to establish a nominal offer that has the effect of allowing the plaintiff to recover disbursements and avoid liability for the other party’s disbursements may nevertheless be a substantial offer.

[18]         In considering whether the offer ought reasonably to have been accepted, I think it was quite clear that the plaintiff’s original theory that she had been sideswiped as a result of the collision involving the other two adjacent cars was not maintainable once each side had filed their expert reports.  This was not merely a case where the plaintiff had a claim that was difficult to prove at trial; this was a unique case where on the evidence available to her before trial the plaintiff should have realized that she did not have a realistic position on liability…

[23]         In the circumstances, I think that the ICBC defendants should be awarded costs with respect to the main action.  I have estimated the main action consumed 90% of the time at trial.  The defendants were clearly successful and, in my view, it is not an appropriate order for each side to bear its own costs.

[24]         In terms of whether I should award double costs, I think that, in exercising my discretion, the offer reasonably ought to have been accepted in the days prior to trial.  Although the offer was modest, the circumstances at that time were clear that her case was extremely weak, she would have avoided liability for disbursements, and in fact recovered the disbursements she had incurred.

[25]         I award double costs for the period after two days prior to trial.

  • 1
  • 2
  • 5

Contact

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.

“Work hard, be kind and enjoy the ride!”
Erik’s Philosophy

Disclaimer