Tag: formal settlement offers

The Old, The New and The Ugly – Costs Consequences Involving Rule 37 and Rule 37B

I’ve blogged about most if not all of the recent reported BC Supreme Court judgements applying the new Rule 37B and don’t intend to summarize a history of the rule here (for a history of the rule and to read my previous articles on Rule 37B cases simply use the search feature on this site and type Rule 37B).
Reasons for judgement were released today considering an interesting issue.  Rule 37B, once it came into force, repealed Rule 37.  In recognizing that a transition period was necessary the rule permitted costs consequences to flow from formal offers delivered under the old Rule 37 if those offers were made before July 2, 2008.  Today;s case decided what costs consequences should flow when an old Rule 37 offer is accepted after Rule 37B comes into effect.
In this case the Defendants made a formal offer in April, 2008 under the old Rule 37.  The Plaintiff accepted the offer in November of 2008, after Rule 37B took effect.  The parties could not agree on the costs consequences of the acceptance and application was brought to the BC Supreme Court.  The point of contention was who should be responsible for the costs incurred after delivery of the offer to the time of acceptance.  The court dealt with this issue delivering the following reasons:

[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 a discretion on the court to set aside an agreement that has been entered into between the parties regarding costs.

[12]            The offer made by the defendants reads as follows:

TAKE NOTICE that the Defendants offer to settle this proceeding on the following terms:

1.         the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00), less deductible benefits paid or payable pursuant to Part 7 of the Insurance (Vehicle) Regulation, and Section 83 of the Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231, and less any advances paid to date; and,

2.         Costs to be taxed in accordance with Rule 37(22) and (37).

[13]            Although Rule 37 was repealed and replaced by Rule 37B, by incorporating the wording of Rule 37(22), the offer provided that the defendants would pay costs to the plaintiff to the date the offer was delivered and that, if the matter were to continue, the defendants would be entitled to their costs from the date of delivery.  Former Rule 37(22) provided that if an offer made by a defendant was accepted by a plaintiff, the plaintiff is entitled to costs to the day of the offer, and the defendant is entitled to costs from the date of the offer.

[14]            In this case, there has been no determination of any issues in this lawsuit.  Rather, Mr. Buttar accepted the offer to settle as presented by the defendants.

[15]            The letter of acceptance is unequivocal and states the following:

We confirm that there have been no advances under Tort or under Part 7 to our client.

We accept the Defendants’ Offer to Settle dated April 28, 2008.

I note that the Defendants’ Offer to Settle was made under the old Rule 37, but our acceptance of that offer is clearly under the new Rule 37B which does not provide a form for acceptance.  As such, out of an abundance of caution, I also enclose an Acceptance of Offer in Form 65A.

[16]            On this application, the parties argued the effects of Rule 37B(4),which provides that the award of costs is discretionary, and Rule 37B(5)(a), which provides that the court may do one or both of the following:  deprive a party, in whole or in part, to costs that would otherwise be entitled to and award double costs of all, or some, of the steps taken in litigation after the date of the delivery of the offer to settle.

[17]            I agree that subrules 37B(4) and (5) are permissive.  However, it is my view that the court has no discretion to consider costs in this matter because Mr. Buttar accepted an offer which contained a term as to when costs would be payable and to whom.

[18]            Accordingly, Mr. Buttar’s application is dismissed.  The defendants are entitled to the costs of this application.

How Can $125,000 really equal $0 in an ICBC Claim?

Costs consequences, that’s how.  If ICBC beats their formal offer at trial they can be awarded costs under Rule 37B.  These costs can sometimes exceed the amount of a judgement and reasons for judgement were released today by the BC Supreme Court demonstrating this principle.
Trials can be risky and expensive and to the victor go the spoils.  In today’s case the Plaintiff claimed she suffered a brain injury as a result of 2 collisions.  The Defendants collectively offered to settle the Plaintiff’s claims for $450,000.  The Plaintiff made a settlement offer of $1,500,000.  After a 41 day trial Mr. Justice Gropper of the BC Supreme Court rejected the brain injury claim and awarded damages of $125,349.  The Defendants brought an application to be awarded costs from the date of their respective formal offers and succeeded.  In reading the judgement it appears that these consequences are so significant that the Plaintiff may be left with $0 or perhaps even owe money to the Defendants after all the dust settles.  In addressing this reality the court held that such an outcome in and ofitself is not enough to extinguish the Defendant’s entitlement to costs.  Specifically, Mr. Justice Gropper reasoned as follows:
As stated, the plaintiff received judgment.  The defendants’ costs and disbursements from the time of the offers may exceed the judgment.  This is an appropriate factor to consider in determining the appropriate order for costs.  It is not sufficient, in my view, to deny the defendants their costs arising from the offers to settle.  If the aim of the rule is to encourage reasonable settlements, denying the defendants their costs in the circumstance does not meet that aim.  It may be a reason to deny the defendants double costs, but the defendants have not sought double costs in this matter.  While it is an important factor to consider, it is not sufficient, in and of itself, to extinguish defendants’ entitlement to the costs.
Cases such as this which illustrate the potential costs consequences of an unsuccessful ICBC claim need to be reviewed when considering claim settlement.  Trials come with risk and settlement offers have to be weighed against this risk.  Reasons for judgement don’t always reflect who the real winner is.  In ICBC claims the real winner is often the party that beats their formal settlement offer and this is not always revealed in judgements.  
In addition to illustrating the significant costs consequences which parties can be exposed to in the BC Supreme Court, this case does a good job in discussing Rule 37B.   Mr. Justice Gropper summarized the authorities to date applying Rule 37B as follows:

[18]            The jurisprudence is developing in this court under Rule 37B(5) in regard to the effect of offers to settle on costs.  The following principles have been stated:

1.         “…Rule 37B is permissive in nature and provides the Court with a broad discretion to award double costs”: Radke v. Parry, 2008 BCSC 1397 at ¶37.

2.         “…there are important differences between Rule 37B and the predecessor rules, Rule 37 and Rule 37A.  Notwithstanding the differences … the underlying legislative policy remains the same.  The goal has been and remains to encourage the early settlement of disputes ‘… by rewarding the party who makes an early and reasonable settlement offer, and by penalizing the party who declines to accept such an offer’ (see MacKenzie v. Brooks, 1999 BCCA 623, 130 BCAC 95…)”:Radke ¶38.

3.         “Subrule (5) is permissive.  It empowers the court to make either type of order mentioned in the subrule.  By necessary implication, it contemplates that the court may make an order that denies one of the two forms of relief set out in the subrule”: BCSPCA v. Baker, 2008 BCSC 947at ¶ 15.

4.         “[Subrule (5)] does not specifically state that it is possible for the court to order costs to a defendant where an offer to settle was in an amount greater than the judgment.  Nevertheless, that is implied in the rule.  If the court can deprive a party of costs or order double costs, it must also be able to order costs, the intermediate step between those two extremes”: Arnold v. Cartwright Estate, 2008 BCSC 1575 at ¶15.

5.         “One of the goals of Rule 37B … is to promote settlements by providing that there will be consequences in the amount of costs payable when a party fails to accept an offer that ought reasonably to have been accepted.  That goal would be frustrated if Rule 37B(5) did not permit the court the option of awarding costs of all or some of the steps taken in a proceeding after the date of delivery of an offer to settle”: Arnold at ¶16.

He then went on to decide that the Defendants ought to be awarded their costs in the present case and came to the following conclusion:

[35]            In all of the circumstances, applying the factors addressed by the Rules and the parties, I find that it is reasonable that the defendants recover their taxable costs and disbursements in this action.

[36]            I therefore order that the defendants Paul be awarded their taxable costs and disbursements from June 8, 2005 onwards.  The plaintiff is entitled to her taxable costs and disbursements in the Paul action up to June 8, 2005 only.

[37]            The defendants Brandy are awarded their taxable costs and disbursements from October 26, 2006 onwards and the plaintiff is entitled to recover her taxable costs and disbursements in the Brandy action up until October 26, 2006.

What interested me most in these reasons was the judge’s refusal to look at the fact that the Defendant was insured with ICBC when weighing the relative financial circumstances of the parties under Rule 37B(6).  The courts are currently split on whether this is a relevant factor and once the BC Courts come up with a consistent analysis of this topic it will be easier for ICBC claims lawyers to better predict the costs consequences for their clients following trial.  Hopefully the BC Court of Appeal has an opportunity to shed some light on this subject in the near future.

More on Settlement Offers and Rule 37B

Reasons for judgement were released today refusing to award the successful litigant double costs pursuant to Rule 37B.
The Petitioner City sued the Respondent Kennel operator seeking a declaration that the Kennel was in breach of a Bylaw and seeking conjunctive orders.  Before trial (and before Rule 37 was replaced with Rule 37B) the Respondent offered to settle on the following terms ‘this proceeding on the basis that the Petitioner’s claim be dismissed and costs in accordance with Rule 37
The offer was delivered less than 7 days before the trial commenced.   The claim was dismissed at trial.
The Respondents asked that the City pay them Double Costs.  Madam Justice Loo refused to order double costs noting that the formal offer of settlement conferred no benefit to the Respondents aside from costs.  The key reasons are set out at paragraph 13-15 which hold as follows:

[13]            The Court of Appeal in a number of cases has stated that the purpose of the double costs provisions of Rule 37 is to encourage early and reasonable settlements of disputes and discourage frivolous litigation:  Skidmore v. Blackmore (1995), 122 D.L.R. (4th) 330, 2 B.C.L.R. (3d) 201 (C.A.) at para. 28; Vukelic v. Canada (1997), 37 B.C.L.R. (3d) 217 at paras. 9 to 13, 94 B.C.A.C. 147; Mackenzie v. Brooks, 1999 BCCA 623 at para. 24 (sub nom. Mackenzie v. Brooks et al.), 130 B.C.A.C. 95.

[14]            Although Rule 37 is no longer in force, I find these statements of principle helpful in view of the express language of Rule 37B(4).

[15]            The petitioner’s claim was not frivolous and it was not a claim that was bound to fail.  The offer to settle conferred no benefit on the petitioner aside from costs and conferred virtually no benefit to those who complained about the noise of the barking dogs.

This is the second case that I’m aware of in Rule 37-B’s short history which refuses to award double costs to a litigant who made what can be characterized as a nuisance value offer.  It appears that if a claim is not frivolous and is not bound to fail, double costs might not be granted when the claim does indeed fail at trial if the formal settlement offer conveys ‘no benefit aside from costs’ to the litigant.
If you are proceeding to trial in an ICBC claim or are considering an ICBC settlement offer cases such as this one are worth reviewing.  I will continue to post about Rule 37B cases as they come to my attention.

Rule 37B and ICBC – J. Boyd Considers fact Defendant Insured by ICBC

As you may know Rule 37-B is the new BC rule dealing with formal settlements and costs consequences in the BC Supreme Court.  (to find my previous posts on this case search this cite for ’37B’).
This new rule will take some time to work itself out.  There are already conflicting reasons for judgement addressing whether it is appropriate to look at whether the Defendant is insured when considering costs consequences.
Last week J. Hinkson refused to consider the insurance status of a defendant when deciding whether to award ‘double costs’ after trial.
Reasons for judgement were released today considering the fact that the defendants were ‘represented by ICBC’ when weighing the ‘financial circumstances’ of the parties.
In addition to being the first precedent that has looked at the insurance status of the defendant as a relevant consideration, this case is interesting because it is the first to trigger ‘double costs’ even though a matter settled before judgement.
In this case the Plaintiff alleged a Mild Traumatic Brain Injury after a BC car accident.  She sued and made a formal offer to settle for $500,000 which expired at the start of trial.  The case settled on the 11th day of trial when the defendant’s offered to settle for $1 Million ‘plus assessable costs and disbursements’ less advances paid.  The Plaintiff’s accepted this offer.
The parties could not agree on the costs implications of the settlement were.  The Plaintiff asked for double costs because the Plaintiff’s reasonable settlement offer (which complied with Rule 37B) was rejected and the Plaintiff had to incur significant expense in running 11 days of trial prior to achieving settlement.
The court agreed the Plaintiff was entitled to double costs in these circumstances.  The key finding being made at paragraph 42 which I set out below:
  In the case at bar, on a review of the Rule and the authorities, I conclude that the plaintiff is indeed entitled to double costs from the date of the August 12th offer of settlement forward.  Since the defendants ultimately settled for an amount which was double the plaintiff’s original pre-trial offer, it is clear in my view that her original offer to settle “…was one that ought reasonably to have been accepted”.  Certainly the terms offered in August were far more advantageous to the defendants than the ultimate amount represented by the settlement agreement.  It is also clear that there is a substantial disparity in financial circumstances between the parties.  The defendants, represented by ICBC, had substantially greater resources to finance a trial than the individual plaintiff.  Had the defendants accepted the plaintiff’s initial reasonable offer, the plaintiff would not have had to incur the significant costs associated with nearly two weeks of trial
 

More on ICBC, Rule 37B and Costs

I have previously blogged about the new Rule 37B (here and here) which deals with formal offers of settlement and the costs consequences of trial.
The first case that I’m aware of dealing with Rule 37B in an ICBC claim was released today.
In this case both fault and quantum were at issue.  The Plaintiff alleged that the Defendant was at fault for the car accident and claimed over $1million in damages.  The case was presented for over one week in front of a Vancouver jury.
The case was dismissed on the issue of liability meaning that the Jury found the Plaintiff was responsible for this collision thus making her entitlement to tort damages $0.
In this case ICBC (on the defendant’s behlaf) made a pre-trial offer to settle for $35,000.  This offer was made in compliance with Rule 37B.
The court refused to look at the fact that the Defendant was insured when considering ‘the relative financial circumstances of the Parties’ and concluded that the Defendant was entitled to Double Costs from the time the offer was made through trial.
I reproduce the court’s key analysis below:

a)         Ought the Defendants’ Offer to Have Been Accepted?

[20]            In her submissions, the plaintiff referred to the position that she said was taken by an unnamed ICBC adjuster respecting the responsibility for the collision.  That view was apparently a preliminary one, the basis for which is unexplained; it was not before the jury in this case, and, in any event, the conclusion would certainly not be binding on the jury or the court.

[21]            The plaintiff also referred in her submissions to the fact that she had offered to settle her claim for $160,000 plus her costs, a sum considerably less than her counsel sought from the jury.

[22]            Based upon her offer compared to the position taken by her counsel at trial, the plaintiff was clearly prepared to take a considerable gamble to achieve a significant award.  While it was open to the jury to make a sizeable award, in the event there was a finding of liability against the defendants, the discount the plaintiff was prepared to accept in order to settle the claim does not support the conclusion that she had confidence in the likelihood of securing a sizeable award at trial.  That, in my view, is one of the factors against which the reasonableness of her refusal to accept the defendants’ offer to settle must be assessed.

[23]            As I have said above, it was clearly open to the jury to dismiss the plaintiff’s claim by finding no liability against the defendants, but equally open to them to find some or even complete liability against the defendants.

[24]            While the defendants argued that the jury’s verdict proves that the plaintiff ought to have accepted their offer to settle, I do not read Rule 37B as inviting that sort of hindsight analysis.  Under Rule 37, an offer to settle was revoked once trial began.  Although Rule 37B contains no such provision, the defendants in this case stated in their offer that it was open for acceptance “at any time before 4:00 pm, Pacific Time, or the last business day prior to the commencement of the first day of trial”.  In my view, the reasonableness of the plaintiff’s decision not to accept the defendants’ offer to settle must be assessed, under that offer, only prior to the last date that the offer could be accepted, and in any case, under Rule 37B, prior to the delivery of the jury’s verdict, but not thereafter.

[25]            Weighing these factors, I am unable to say that it was unreasonable for the plaintiff to have rejected the defendants’ offer to settle.

b)         Relationship between the Offer and the Final Judgment

[26]            Implicit in the defendants’ position on costs is the argument that the complete dismissal of the plaintiff’s claim obviates a consideration of subrule 37B(6)(b).  I do not accept that that is an appropriate reading of that subrule.

[27]            With respect to this subrule, the plaintiff argues that the jury’s verdict was not one that ought to have been “seriously contemplated” by the plaintiff.  The difficulty with this position is that counsel for the plaintiff took no objection to the charge, which instructed the jury that it was open to them to dismiss the plaintiff’s claim if they were not satisfied that the plaintiff had established liability on the part of the defendant Priscilla C. Jang.  The jury’s verdict could not in these circumstances be said to be perverse, as counsel for the plaintiff argued before judgment was entered.

[28]            I do not accept the plaintiff’s submission that the jury’s verdict is difficult to accept on the evidence before it.

c)         Relative Financial Circumstances of the Parties

[29]            The plaintiff asserts by affidavit that her annual income is between $33,000 and $34,000 per year, and that her share of the expenses in the apartment she shares with a friend together with her own monthly expenses amount to approximately $2000 per month.

[30]            The plaintiff lists a debt to her lawyers of some $29,000 as well as other debts of a further $35,000, and swears that “If I am obliged to pay ICBC’s defence costs for this trial, I will be unable to meet my ongoing expenses and debts.”  I have no evidence of the extent to which the plaintiff could arrange financing to address her position, but I do not accept that her present debts or even greater financial obligations could not be accommodated by financing.  While the defendants argue that the plaintiff’s obligations to her counsel are a result of her refusal to accept their offer to settle, I do not see that the cause of the plaintiff’s debts is a relevant consideration.  The fact is that she is indebted to her counsel.

[31]            There are, however, two difficulties with the plaintiff’s position on this factor.  First, she argues that her financial circumstances are difficult.  This alone is insufficient to meet Rule 37B(6)(c).

[32]            Second, she places her financial position against that of ICBC, as opposed to that of the defendants.

[33]            While I accept that it is likely that most drivers in British Columbia are insured by ICBC, the wording of subrule 37B does not invite consideration of a defendant’s insurance coverage.  There may be good policy reasons for this.  Insurance coverage limits with ICBC are not universal, and will vary from insured to insured.  Certain activities may result in a breach of an individual’s insurance coverage, or the defence of an action under a reservation of rights by ICBC.  A plaintiff will not and likely should not be privy to such matters of insurance coverage between a defendant and ICBC.

[34]            The contest in this case was between the plaintiff and the defendants, and the insurance benefits available to the defendants do not, in my view, fall within the rubric of their financial circumstances, any more than any collateral benefit entitlement that a plaintiff may have would affect that person’s financial circumstances for the purpose of determining their loss.

[35]            There is no evidence before me as to the defendants’ financial circumstances.  What little I do know of the circumstances of the defendant Pricilla C. Jang is that, at the time of the accident, she was driving her mother’s motor vehicle, and that she was employed as a parts delivery person for a motor vehicle dealership.  That does not suggest to me that her financial circumstances are appreciably different from those of the plaintiff.

d)         Other Factors

[36]            No submissions were made by the plaintiff suggesting that there are other factors in this case that should influence the appropriate cost option to be employed in this case.

DISPOSITION

[37]            While I am not prepared to find that the plaintiff’s failure to accept the defendants’ offer to settle was unreasonable, I am equally unprepared to accept that the jury’s verdict was unreasonable.  I am also unprepared to conclude that there is any significant disparity in the financial circumstances of the parties so as to invoke subrule 37B(6)(c).

[38]            What then, of the function of the Rules to encourage or to deter the types of conduct referred to by Cumming J.A. in Skidmore?  As mentioned above, the plaintiff was prepared to take a considerable gamble to achieve a significant award.  Had she succeeded, she doubtless would have sought an order for double costs against the defendants following her offer to settle.

[39]            I conclude that the refusal of an award of double costs from August 11, 2008 would completely ignore the important deterrent function of the Rules.  The factors set out in subrule 37B(6) do not, in this case, persuade me that such a result would be appropriate.  I find that the defendants are entitled to an award of double costs beginning a reasonable period of time after which the plaintiff could consider their offer.  That period I find commenced on August 18, 2008, seven days after the defendants’ offer to settle.

[40]            The defendants are entitled to recover their taxable costs and disbursements of this action from its commencement until August 18, 2008 pursuant to Rule 57(9).  Those costs will be taxed at Scale B.

[41]            The defendants are entitled to double costs commencing August 18, 2008 and to their disbursements as incurred after August 18, 2008.  The disbursements will be allowed only in the amount incurred, and not at a double rate.

Rule 37B – The First Precedent

Today I’m blogging from the sunny City of Vernon, having completed an examination for discovery a little earlier than expected with some time on my hands prior to returning to Victoria.
In the first precedent that I am aware of concening Rule 37B (The new BC Supreme Court Rule dealing with formal settlement offers) reasons for judgement were released today refusing to award a successful defendant double costs after trial.
While this is not and ICBC claim, nor even a personal injury claim for that matter, the factors that the court considered in refusing to order double costs may be relevant in an ICBC claim.
The facts of the case briefly are as follows: The Defendant was sued by the SPCA for the costs of care the SPCA incurred for some neglected animals. The Defendant denied liability and made a formal offer to settle the claim for $1. The Defendant succeeded at trial. In such a scenario, under the old Rule 37, the Defendant would likely be entitled to ‘double costs’. Here, the Defendant asked the court to excercises its discretion under the new Rule 37B to award double costs.
The court refused to do so setting out the following reasons:

The Law

[12] Rule 37B(1) reads in part:

(1) in this rule “offer to settle” means

an offer to settle made and delivered before July 2, 2008 under Rule 37, as that rule read on the date of the offer to settle, and in relation to which no order was made under that rule …

[13] In the circumstances, Rule 37B applies to the offer made by Mr. Baker.

[14] Rule 37B (5) and (6) read:

(5) In a proceeding in which an offer to settle has been made, the court may do one or both of the following:

(a) deprive a party, in whole or in part, of costs to which the party would otherwise be entitled in respect of the steps taken in the proceeding after the date of delivery of the offer to settle;

(b) award double costs of all or some of the steps taken in the proceeding after the date of delivery of the offer to settle.

(6) In making an order under subrule (5), the court may consider the following:

(a) whether the offer to settle was one that ought reasonably to have been accepted, either on the date that the offer to settle was delivered or on any later date;

(b) the relationship between the terms of settlement offered and the final judgment of the court;

(c) the relative financial circumstances of the parties;

(d) any other factor the court considers appropriate.

[15] Subrule (5) is permissive. It empowers the court to make either type of order mentioned in the subrule. By necessary implication, it contemplates that the court may make an order that denies one of the two forms of relief set out in the subrule……….

The court then went on to canvass some prinicples of Bankruptcy law and concluded that the Defendant’s offerwas not one that reasonably ought to have been accepted (pursuant to Rule 37B(6)(a) on the date of the offer to settle or before the Rule 18A hearing at which time, pursuant to Rule 37(13), the offer was no longer capable of acceptance.

The court then went on to deal with Rule 37B(6)(b) and held as follows:

Rule 37B (6) (b)

Rule 37B (6) (b)

[34] This subrule indicates that the court, when exercising its discretion under Rule 37B should consider the relationship between the offer and the result in the action. In this case, the offer to settle was for one dollar. There was no counterclaim. BCSPCA’s only risk was costs. An offer that would confer a significant benefit, aside from costs, on a party who failed to accept the offer would be more likely to attract double costs under Rule 37B that an offer of the type made by Mr. Baker.

Rule 37B (6) c)

[35] The means of the parties may be taken into consideration when exercising discretion under Rule 37B. The BCSPCA is a non-profit society dedicated to prevention of cruelty to animals. It is a substantial society. It had an operating surplus of $379,022 in 2007. Mr. Baker has not disclosed his financial circumstances. His counsel stated in submissions that he is of “modest means”.

Result

[36] In all the circumstances, Mr. Baker has not established that the offer he made was an offer that ought reasonably to have been accepted by BCSPCA under the law applicable during its currency. Acceptance would not have conferred a significant benefit on BCSPCA other that its effect on costs. Although BCSPCA is likely the party most able to bear the costs of the litigation, Mr. Baker has not shown that an award of double costs is, considering the other factors bearing on an award of costs under Rule 37B, necessary to avoid the imposition of hardship in the litigation.

It remains to be seen what the number of soon to be coming precedents will ultimatly hold for the interpretation of this rule, but this case illustrates that courts may not take to kindly to ‘nuisance value’ settlement offers of $1.

More on Court Costs, Settlement Offers, and Your ICBC Claim

If you are advancing and ICBC injury claim in BC Supreme Court, whether or not you are represented by an ICBC Claims Lawyer, you need to know something about Formal Settlement Offers. These settlement offers bring potential consequences if they are not accepted and these need to be considered when deciding whether an ICBC settlement offer is fair.
Rule 37 of the BC Supreme Court Rules permits parties to a lawsuit to make a Formal Settlement Offer and if the claim goes to trial and the settlement offer is beaten there can be significant Costs consequences (where the losing side has to pay the winning side tarriff court costs and disbursements which can easily exceed $10,000).
If you think of taking an ICBC claim to trial and winning I imagine you think of proving the other driver is at fault and being awarded money for your injuries. With formal settlement offers, winning is not quite that simple. If ICBC makes a formal settlement offer under Rule 37 and the judge or jury awards you less this can be considered a loss. Rule 37(24) sets out the consequences to a Plaintiff for failing to accept a Defendant offer to settle and ‘losing’ at trial, the subrule reads as follows:

Consequences of failure to accept defendant’s offer for monetary relief

(24) If the defendant has made an offer to settle a claim for money and the offer has not expired or been withdrawn or been accepted,

(a) if the plaintiff obtains judgment for the amount of money specified in the offer or a lesser amount, the plaintiff is entitled to costs assessed to the date the offer was delivered and the defendant is entitled to costs assessed from that date, or

(b) if the plaintiff’s claim is dismissed, the defendant is entitled to costs assessed to the date the offer was delivered and to double costs assessed from that date.

On the other side of the coin, there can be more than one way of winning. If you make a formal offer to settle your ICBC claim in compliance with Rule 37 and the judge or jury award you more money, Rule 37(23) sets out the consequences to the Defendant. The subrule reads as follows:

Consequences of failure to accept plaintiff’s offer to settle a monetary claim

(23) If the plaintiff has made an offer to settle a claim for money, and it has not expired or been withdrawn or been accepted, and if the plaintiff obtains a judgment for the amount of money specified in the offer or a greater amount, the plaintiff is entitled to costs assessed to the date the offer was delivered and to double costs assessed from that date.

Now, after absorbing all of the above you need to know that RULE 37 and 37A are being repealed as of July 2, 2008 and being replaced with Rule 37(B)!

That does not mean that you just wasted your time learning the above. If a formal offer to settle an ICBC injury claim is made before July 2, 2008 it needs to comply with Rule 37 or Rule 37A to trigger ‘costs consequences’.

To trigger costs consequences in an ICBC claim that goes to trial any offer made after July 2, 2008 has to comply with Rule 37B. To do so the offer must

1. be made in writing

2. be delivered to all parties of record, and

3. 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 judgement on all other issues in this proceeding”.

It seems that the purpose of Rule 37B) is to simplify the process of making formal settlement offers. The consequences of taking ICBC claims to court and beating (or not beating) a formal settlement offer seem to be less certain under this new rule. Rule 37B(4) sets out the consequences as follows: “The court may consider an offer to settle when exercising the court’s discretion in relation to costs”.

The options given to the court are set out in subrule 5 which states:

In a proceeding in which an offer to settle has been made, the court may do one or both of the following:

(a) deprive a party, in whole or in part, of costs to which the party would otherwise be entitled in respect of the steps taken in the proceeding after the date of the delivery of the offer to settle;

(b) award double costs of all or some of the steps taken in the proceeding after the date of the delivery of the offer to settle.

Subrule 6 sets out the factors a court may consider in exercising its costs discretion where a formal offer was made stating:

In making an order under subrule (5), the court may consider the following:

(a) whether the offer to settle was one that ought reasonably to have been accepted, either on the date that the offer to settle was delivered or on an later date

(b) the relationship between the terms of the settlement offered and the final judgment of the court;

(c) the relative financial circumstances of the parties;

(d) any other factor the court considers appropriate

I for one welcome Rule 37B. One of the biggest criticisms made by plaintiff ICBC injury claims lawyers was that the old Rule 37 was unfair to plaintiffs as a person injured in a car accident was always in a worse financial position to face the consequences of losing at trial than ICBC. This lopsided reality created a lot of pressure on people advancing ICBC injury claims in BC Supreme Court to consider settlement when faced with a Rule 37 formal settlement offer.

It will be interesting to see if our BC courts, when considering “the relative financial circumstances of the parties” will consider ICBC a party to the lawsuit of an ICBC injury claim. Typically, ICBC is not named as a defendant to a ICBC Injury tort Claim, instead those at fault for the collision are named and often they simply happen to be insured by ICBC. So ICBC is not formally a ‘party’ to most ICBC injury tort claims.

If the court is willing to consider the fact that the Defendant is insured when weighing the ‘relative financial circumstances of the parties‘ then this Rule is a welcome change for anyone advancing an ICBC injury claim. If not, perhaps the court is willing to consider this under “any other factor the court considers appropriate“.

Do you have questions about an ICBC settlement offer or the Rules of Court governing settlement offers in BC Supreme Court? If so click here to arrange a free consultation with ICBC Injury Claims lawyer Erik Magraken.

 

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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

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