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Tag: ICBC settlement offers

Defendant Awarded Trial Costs for Beating Formal Settlement Offer in ICBC Claim

While Rule 37B is still being shaped in its application one pattern that is relatively well established is that if a Plaintiff is awarded less at trial than ICBC’s formal settlement offer the Plaintiff will likely be deprived of their trial costs and be ordered to pay a portion of the Defendant’s costs.  Reasons for judgement were released this week by the BC Supreme Court, Courtenay Registry, demonstrating such a result.
In this week’s case (Berry v. LaBelle) the Plaintiff was injured in a motor vehicle collision.  He sued for damages.  The month before trial ICBC made a formal settlement offer to resolve the claim for $46,000.  This offer was rejected.  At trial the Plaintiff was awarded $30,000 in total damages by the BC Supreme Court (you can click here to read my article summarizing the trial judgement).
ICBC brought a motion under Rule 37B to be awarded double costs for all steps taken in the lawsuit after the formal offer was delivered.  Madam Justice Baker refused to award double costs, however the Court did deprive the Plaintiff of costs following the formal offer and ordered that the Plaintiff pay the Defendant’s costs from the week after the offer was made through to trial.
The Court recognized that such an order would significantly reduce the amount of damages the Plaintiff would receive.  Madam Justice Baker provided the following reasons justifying this result:
[13] Counsel for the defendant submits, and I agree, that the plaintiff did set his sights very high at trial.  In oral submissions at the end of trial, counsel for the plaintiff argued that the appropriate award for non-pecuniary damages was between $150,000 to $200,000; that the plaintiff should receive an award of $45,000 to $60,000 for past loss of income; and that the court should award $400,000 for loss of the capacity to earn income in future.  The submissions about income loss were particularly ambitious given that the plaintiff provided no documentary evidence whatsoever about income earned by the plaintiff before or after the accident…

[15]        I consider that the offer made by the defendant was one that ought reasonably to have been accepted, although the plaintiff would, in my view, have reasonably needed some time to consider his position and seek his counsel’s advice.

[16]        As stated earlier, the plaintiff ought to have anticipated significant difficulty in maintaining a loss of income claim without the ability, or willingness, to provide documentary evidence about his earnings before or after the accident.

[17]        By the date of the defendant’s offer, the plaintiff had available to him the medical opinion evidence on which he relied at trial.  Given that the medical evidence ruled out neurological injury; plaintiff’s counsel would have had plenty of precedents available to assist in assessing the likely range of quantum of non-pecuniary damages…

[19]        Certainly the effect of the costs order the defendant is seeking would be to deprive the plaintiff of the greater part of the compensation to which I concluded he is entitled by reason of the defendant’s negligence and the plaintiff’s injury…

[21] In all of the circumstances, I am satisfied that it would be inequitable to make an award of double costs in favour of the defendant.  The defendant having elected to proceed under Rule 66, I am satisfied that the defendant’s entitlement to costs should be governed by Rule 66.  I award the plaintiff his costs, on Scale B, not to exceed $6,600, up to and including April 21, 2009, plus disbursements incurred to that date.  In respect of proceedings after that date, the defendant shall have her costs, but also limited to $6,600 pursuant to Rule 66(29); and her disbursements from and after April 22, 2009.   There shall be no order for double 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 will likely have cases such as this one retain their value as precedents moving forward.

You can click here to access my archived posts discussing other Rule 37B cases.

The Debate Goes On – Rule 37B and the Relevance of Insurance

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:

[23]        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.

[24]        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.

I'd Buy That For a Dollar – Rule 37B and Nuisance Settlement Offers

As readers of the blog know Rule 37B of the BC Supreme Court Rules has given the Court considerable discretion with respect to awarding parties costs when formal offers of settlement are beat at trial.  One pattern that is becoming clear under the new Rule is that token offers of settlement are not particularly effective in triggering meaningful costs consequences.  Reasons for judgement were released today demonstrating this.
In today’s case (Skinner v. Fu) the Plaintiff was involved in a BC Car Crash and sued the other motorist.  The issue of fault was hotly contested by ICBC who argued that the Plaintiff was fully at fault for the accident and his injuries.  Mr. Justice Harvey of the BC Supreme Court agreed and dismissed the Plaintiff’s claim after a summary trial.
Having successfully defended the lawsuit ICBC (through the Defendant) applied for costs from the Plaintiff.  Prior to trial the Defendant made a formal offer to settle the claim for $1.  ICBC asked the Court to award them double costs.
Mr. Justice Harvey dismissed the motion for double costs.  In doing so he commented that a $1 offer in an ICBC Claim with contested liability is not a ‘reasonable offer’ which ought to trigger increased costs consequences for the losing party.  Specifically the Court held as follows:

[15] Liability was the central issue between the parties. The defendants, from the time the matter was first reported to the Insurance Corporation of British Columbia, took the position that no liability rested with the defendant driver despite his apparent breach of s. 187 of the Motor Vehicle Act, R.S.B.C. 1996, c. 318.

[16] Immediately after the writ of summons was issued, the offer to settle the matter for $1 was forwarded to the plaintiff.

[17] Where, as in the case at bar, the central issue is liability, I do not consider an offer of $1 plus costs of filing the writ of summons an offer which ought reasonably be accepted, either on the date that the offer to settle was delivered or on any later date. Were it so, all defendants in similar positions would follow suit and, as a result, enhance their entitlement to costs without promoting the underlying objective of Rule 37B, which is to encourage reasonable settlement.  As a result, this offer to settle will have no effect on the order of costs in this case.

This is not the first case interpreting Rule 37B in this way (click here to read my previous posts discussing the Court’s application of Rule 37B in BC Injury Claims) and the pattern seems well established that nominal offers will rarely be effective for triggering meaningful costs consequences.

In my continued efforts to get prepared for the New BC Supreme Court Civil Rules I am cross referencing Civil Procedure cases that I discuss on this blog with the New 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.

An Interesting but Short Lived Rule 37B Precedent

Reasons for judgement were transcribed today by the BC Supreme Court giving a new and interesting interpretation to Rule 37B.
In today’s case (Oliver v. Moen) the the Plaintiff sued for personal injuries as a result of a BC Car Crash.  The matter proceeded to trial by Jury.
Leading up to the trial the Plaintiff made a formal offer to settle under the now repealed Rule 37 for $400,000.  The Defendant countered with a formal offer of $100,000.  The Plaintiff then delivered a formal offer under Rule 37B for $185,000.  After 12 days of trial the Jury awarded approximately $14,000 in total damages for the Plaintiffs injuries and losses.
More often than not, when a defendant beats a formal settlement offer at trial they are entitled to costs under Rule 37B and in today’s case the defendant brought an application for such an order.  In an interesting twist, however, Mr. Justice Joyce of the BC Supreme Court declined to award the Defendant costs finding that when the Plaintiff made the formal counter offer of $185,000 this constituted a rejection of the Defendant’s offer.  A rejection of an offer, at common law, takes the offer off the table.  Mr. Justice Joyce held that since this occurred the Defendant did not have a valid offer to settle in existence from the time of the Plaintiff’s offer to settle onward thus the offer ‘cannot be considred under Rule 37B when deciding the issue of costs’
Specifically the Court reasoned as follows:

[12] Satanove J. noted that Rule 37(10) had been repealed when the counteroffer was made and Rule 37B did not contain an analogous provision. Accordingly, the common law rule relating to contract applied. At paras. 8 and 9 Madam Justice Satanove said:

8          Turning then to the common law of contracts, it is trite to say that a counteroffer constitutes non-acceptance of a previous offer. The previous offer must be revived in order to be accepted after a counteroffer has ensued. (United Pacific Capital v. Piché, 2004 BCSC 1524; Cowan v. Boyd (1921), 49 O.L.R. 335 (C.A.)).

9          Applying these principles to the chronology of facts in this case, when the plaintiffs issued the counteroffer of January 6, 2009, they were communicating non-acceptance of the Rule 37B offer of November 28, 2008 from the defendants, and this latter offer was no longer extant. [emphasis added]

[13] On the authority of More Marine, I am driven to conclude that when the plaintiff made its offer of January 30, 2009 that counteroffer constituted non-acceptance of the defendant’s offer of February 25, 2008 and rendered the earlier offer no longer extant because the saving provision of Rule 37(10) was no longer in effect.

[14] As the defendant’s offer was no longer in existence and therefore no longer capable of acceptance it cannot be considered under Rule 37B when deciding the issue of costs. This may seem a harsh result but it is one that, in my opinion, follows from the failure to preserve the saving effect of the former Rule 37(10) in Rule 37B.

[15] The defendant submits that More Marine is distinguishable because in that case the offer in question was made under Rule 37B whereas the defendant’s offer in this case was made under Rule 37 and at a time when the saving provision of Rule 37(10) was in effect. It is my view, however, that one must consider the law as it was when the counteroffer was made on January 30, 2009. At that time there was no enactment in place to alter the common law principle that the defendant had to revive his offer in order to give it effect once again.

[16] The defendant argues, in the alternative, that where no formal offer exists, s. 3 of the Supreme Court Act gives the Court a broad discretion over costs and that in the exercise of that discretion I should award the plaintiff costs up to the date of the defendant’s offer and award costs to the defendant from the date of that offer. The defendant relies on British Columbia v. Worthington (Canada) Inc., [1988] B.C.J. No. 1214 (C.A.). That case was concerned with the discretion of a trial judge to order a party who was successful in the action as a whole to pay the costs of an issue in the action to the party who was successful in that issue but who lost the entire action. That issue does not arise in this case. This case does not concern success on separate issues. Mr. Oliver was successful in his action but the jury saw fit to award him only modest damages.

[17] The usual rule as set out in Rule 57(9) is that the “costs of and incidental to a proceeding shall follow the event unless the court otherwise orders”. Having concluded that there is no offer by the defendant that can be considered under Rule 37B, the defendant has not persuaded me that there is any other circumstance that should cause me to depart from the usual rule.

[18] I therefore award the plaintiff the costs of the entire proceeding at scale B.

As far as I am aware this is a novel interpretation of Rule 37B.

Interesting as this case may be, and whether or not it is a correct interpretation of Rule 37B, the case’s value as a precedent will be short lived.  This case, although transcribed today, was pronounced in June, 2009.   As of July 1, 2009 Rule 37B has been amended adding a subrule which specifically states that “An offer to settle does not expire by reason that a counter offer is made.”   which in effect addresses the courts concerns about the short comings of this rule.

ICBC's Trial Policy Gets Judicial Attention

It used to be that when ICBC claims went to trial ICBC would only require the people they insure to participate at trial as necessary.  For example if fault was at issue the defendant would testify as to how the crash happened or if the Plaintiff seemed uninjured at the scene the Defendant would share his/her observations with the court.
More recently, ICBC has created a policy where the people they insure have to get extensively involved in the trial even if they have no vital role to play.   Reasons for judgement were released today by the BC Supreme Court discussing this ICBC trial policy.
In today’s case (Coates v. Marioni) the Plaintiff was injured 2006 car crash.  The at fault driver was insured by ICBC.  In the lawsuit the issue of fault was admitted leaving the court to only deal with the issue of the value of the ICBC claim.  The matter went to jury trial.  Just before trial ICBC made an offer to settle.  The Victoria jury returned a verdict just below ICBC’s formal settlement offer.  The trial judge was asked to decide what costs consequences should follow under Rule 37B since ICBC beat their formal offer (click here to read my previous posts about Rule 37B in ICBC Claims).
Madam Justice Gerow, who presided over this jury trial, refused to give the Defendant their costs despite beating their formal offer.  The Plaintiff was awarded costs through trial.  2 factors leading to this decision were the late delivery of ICBC’s formal settlement offer and the fact that the jury award was very close to the formal offer.
In asking that the Plaintiff be deprived of trial costs the lawyer hired by ICBC noted that the Plaintiff attended fewer days of the trial than the Defendant.  The court rejected this argument and in doing so discussed ICBC’s policy of forcing their insured defendants to sit through trial even if they have nothing to add to the evidence at trial.  Below are the highlights of this discussion:

[53] The defendant also argues that the plaintiff should be deprived of her costs because the defendant attended all of the trial and the plaintiff did not.  However, the defendant chose to attend the trial.  Although she testified, her evidence was very brief as liability had been admitted.  There was no requirement that the defendant attend throughout the trial, particularly in circumstances where she had to take time off work and travel to Victoria.

[54] The plaintiff argues the fact that the defendant attended more of the trial than the plaintiff is not a factor to be considered in assessing whether the plaintiff should be deprived of her costs.  The plaintiff points to an ICBC claims bulletin dated June 13, 2008 outlining a policy that requires defendants to attend the trials from start to finish.  In the bulletin it sets out that:  “This policy applies even if they will not be testifying.  The intent of the new requirement is to present a ‘face’ for the defendant to the court.  Defence counsel will be instructed to have the defendant sit at counsel’s table if possible.”  In the circumstances, I do not accept the defendant argument that her attendance at the trial is a factor that should favour depriving the plaintiff of her costs.

[55] Having considered the factors set out in subrule 6, including the relationship between the offer and the award, I have concluded that this is not an appropriate case in which to exercise my discretion to deprive the plaintiff of her costs on the basis of the offer to settle.

If you are insured with ICBC and are at fault for a car crash and injure another do you think there is any value in being forced to trial even if you have nothing to add?  Does giving a ‘face to the defendant’ make any sense when the lawsuit is an insured claim?  As always, feedback is welcome.

More from BCSC on Rule 37B and ICBC Claims

Reasons for judgement were released today (Lumanian v. Sadler) by the BC Supreme Court giving further consideration to Rule 37B in an ICBC claim.
In this case ICBC made a settlement offer before trial.  The Plaintiff proceeded to trial and ultimately received judgement below ICBC’s formal offer.  In an application for costs the court refused to award ICBC costs or double costs but did deprive the Plaintiff of costs from the date of the offer onward.
The court’s key reasons are set out below.


[17]            ICBC presented a formal offer to settle on May 23, 2008, in the amount of $110,000 “after taking into account Part 7 benefits paid or payable,” and any advances, plus costs and taxable disbursements.  There is no disagreement that the plaintiff should get 75% of her costs up to May 23, 2008. 

[18]            The plaintiff submits she should have 75% of her costs to the end of trial; or in the alternative, that each party should bear its own costs after the date of the offer.  The defendant seeks double costs for all steps in the proceeding after May 23, 2008.

[19]            There is no dispute that the offer was a valid offer to settle within the terms of Rule 37, notwithstanding an issue that I will address below.

[20]            The relevant subsections of Rule 37B for the purposes of this application are:

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

(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.

[21]            Recent decisions on this new Rule are clear that the court’s discretion is now unfettered, but that the underlying purpose of the old rule – encouraging settlement through the use of costs — remains an important objective.

[22]            The amount the plaintiff will receive as a result of the judgment is approximately $81,000 before deductions.  The settlement offer was $110,000 plus costs.  ICBC submits that the result at trial was a significant win for them, and that the plaintiff, having rejected their reasonable offer, assumed the risk of cost ramifications and should pay double costs as a result.

Ought the offer to have been accepted?/Relationship to final judgment

[23]            Although Rule 37B(5)(a) and (b) separate the issues of “reasonable acceptance” and “relationship between the offer and the final judgment,” in the circumstances here, where the plaintiff received a substantial award but one which is less than the offer, it is in my view appropriate to consider these factors together.  The offer was for $110,000; the award at trial will be between $70,000 and $80,000, depending on deductions, and the plaintiff retains the potential to claim Part 7 benefits up to approximately $138,000.

[24]            Argument on this issue proceeded on the basis that the plaintiff would have been required, if she had accepted the offer, to sign a release of her Part 7 benefits.  I requested further submissions on that aspect of the argument, based on the decision of the Court of Appeal in Anderson v. Routbard, 2007 BCCA 193, 239 B.C.A.C. 98, in which a similarly worded offer was held to be clear and unambiguous, and was deliberately drafted to ensure that full access to Part 7 benefits remained unimpaired by acceptance of the offer.  Although the legislation makes no such differentiation, the Court of Appeal decided in that case that the use of the word “payable” in these offers means only those Part 7 claims that have been submitted and are outstanding at the time of the offer, leaving the rest of the potential Part 7 fund available to be claimed.

[25]            Counsel for ICBC now acknowledges that she was in error in submitting that the plaintiff would have been required to sign a release before accepting the offer, although she says it is common practice to settle both claims at once. 

[26]            Counsel for the plaintiff says it was clear in all negotiations concerning this matter that ICBC would require a release of both the tort and Part 7 claims if the offer were accepted.  He does not go on to say that the offer itself is unclear in these circumstances, but says the issue of the reasonableness of rejecting the offer should be analyzed on the basis that such a release would have been required.  Counsel for ICBC disputes plaintiff’s counsel’s assertion that there was an understanding that acceptance of the offer was predicated on a release of Part 7 claims.

[27]            Although in law the plaintiff would not have been required to sign a release of Part 7 benefits as a term of accepting the offer, it appears from the positions of both counsel during oral argument and even from the subsequent written submissions that in the course of settlement negotiations, they both understood that a release would have been required.  To resolve the dispute between counsel as to their respective understandings of whether the provision of a release would also have been a condition of the acceptance of the formal offer to settle would require counsel to provide additional information about their discussions and the settlement process.  It might even require counsel to give evidence.  This application for costs risks being complicated unproductively by such an examination, which would only add expense to the proceeding.   

[28]            Since I have found that the amount of future care costs is low, I will proceed on the basis that the issue of Part 7 benefits would not be conclusive either way in the assessment of whether or not the offer ought reasonably to have been accepted.

[29]            ICBC says the plaintiff was unreasonable in rejecting the offer.  She was obviously able to quantify her claim by the time the offer came in, as she submitted her own offer to settle for $185,000 the day before.  ICBC then put in its offer, and also participated in mediation which the plaintiff instigated. 

[30]            Plaintiff’s counsel says he had medical and other expert reports backing up his client’s position, and to accept the offer would have meant ignoring all their evidence.  Counsel for ICBC responds quite properly that a consideration of an offer does not mean that a party must ignore its own evidence; instead it requires an assessment of whether the offer is reasonable and this requires a realistic look at the whole case.    

[31]            A significant difference between the plaintiff’s position at trial and the amount of the award is in the area of future care costs, and this is reflected in the disparity between the plaintiff’s own offer and the result at trial.  A trial judge is required to look into a crystal ball and assess future care costs for the tort claim based on the evidence adduced at trial, and then to look even further and assess future contractual Part 7 claims that might be made by the plaintiff insured against its insurer for the purpose of deductions from the tort award.  This is an exercise fraught with uncertainty and potential unfairness, especially for a plaintiff like Ms. Lumanlan, whose future care costs are not clear and are contingent on whether and to what extent she develops arthritis, whether she moves into a house, whether she assumes care of her son (which she now deposes she is attempting to do), and what career she decides to pursue.  She is young; her future plans are uncertain.  Prior to the accident she had two good hands.  Now she does not.

[32]            As counsel for the plaintiff pointed out, this type of claim for future care, unlike one where no future care is required, or one where significant future care is required, is difficult to assess. 

[33]            The court in this tort action was circumscribed by the lack of evidence, and by its duty to be fair to both the plaintiff and the defendant, which prevents speculation unsupported by evidence.  In terms of her relationship with her own insurer, however, within the Part 7 context, the plaintiff may well have to make claims in the future under her insurance contract as she matures and gains perspective on her limitations, especially if the court is shown, by the crystallization of events in the future, to have been unfairly limited by the lack of evidence at the tort trial.

[34]            The result at trial was not dismissal of the action; Ms. Lumanlan obtained a not insignificant award.  She suffered extensive damage to her hand.  She was uncomplaining and not particularly adept at putting forth her evidence, and these limitations did not accrue to her advantage, but she did have a serious claim to advance.

[35]            As well, an assessment of non-pecuniary damages, as every trial judge knows, is a difficult and somewhat subjective task, as hard as one tries to be consistent with other judgments.  A jury verdict can, of course, be even more disparate when compared to assessments by judges.  In my view, one should be cautious, with the advantage of hindsight, in equating having guessed wrongly with having been unreasonable in rejecting an offer, especially when the plaintiff receives a substantial award at trial.

[36]            In Bailey v. Jang, 2008 BCSC 1372, the plaintiff’s entire claim was dismissed by a jury.  Nevertheless, the trial judge held that he was unable to say she had been unreasonable in rejecting the offer.  Rule 37B is worded in the affirmative.  It is suggested that the court may consider “whether the offer … ought reasonably to have been accepted,” not whether the plaintiff was unreasonable in rejecting it.  Nevertheless, given the broad discretion now existing in the section, I am of the view that the important conclusion to be taken from that decision is that this consideration is not one to be done with “hindsight analysis.”

[37]            The trial judge in that case held that dismissal of the claim was not determinative of the reasonableness of rejection of the offer.  Conversely, however, in my view, the size of the award at trial may offer some assistance in assessing the reasonableness of the plaintiff’s position at the time the offer was made.  Here, the award was significant, although not as high as the offer. 

[38]            Bearing in mind the above considerations and the relationship between the offer and the eventual award at trial, I am unable to say in all these circumstances that the plaintiff, who did not have the benefit of hindsight, ought reasonably to have accepted the offer at the time it was made and prior to the commencement of the trial.

Financial circumstances

[39]            ICBC submits that the relative financial circumstances of the parties should be at best a neutral factor.  Although they defended the action, it is really the defendant whose finances are relevant.  They will pursue their expenses against him.

[40]            The plaintiff submits that ICBC was the party who conducted the litigation, and they did so because the defendant breached his insurance by driving dangerously and injuring the plaintiff.

[41]            The fact that the defendant will have to pay ICBC back because he breached his contract through conduct which also resulted in the plaintiff’s injury should not be used to her detriment.  However, I agree with counsel for the Third Party that it is not reasonable to compare the plaintiff’s financial circumstances to those of ICBC, even where ICBC has entered the action as a Third Party.

[42]            The plaintiff deposes that she continues to make the salary she made at trial, that is $8.00 an hour, and she has moved out of her parents’ house to live with a friend temporarily while she asserts custody/access rights to her son, who is now cared for by her mother.

[43]            The defendant, 26, is presently unemployed but intends to look for work as a heavy machine operator, which has been his employment since he was 16, when he gets his licence back later in 2009.

[44]            There is not a sufficient imbalance in the parties’ relative financial circumstances to make this a significant factor in the present analysis.

Other factors

[45]            The plaintiff has presented a draft bill of costs to show what a substantial penalty she should incur if forced to pay double costs to the defendant for steps taken after the offer to settle.  It would indeed substantially deplete her award. 

[46]            In Bailey v. Jang, supra, double costs were awarded to the defendant under the new rule, even though the judge held that the offer was not rejected unreasonably, on the basis that to fail to do so would ignore the deterrent effect of the rule.  There, the defendants had made an offer to settle of $35,000 and the jury dismissed the plaintiff’s claim entirely. 

[47]            Obviously, in the case at bar, the plaintiff’s claim was not dismissed.  She received an award that is reasonably close to the offer, until reduced by contributory negligence.  Under Rule 37(24)(b), which was in effect when the offer was presented, the defendants would have been entitled to double costs only if the action had been dismissed.

[48]            ICBC argues that the plaintiff’s failure to acknowledge any contributory negligence was a barrier to settlement.  The plaintiff did indeed pursue that position at trial.

[49]            Counsel for the plaintiff takes the position that the mistake regarding the requirement for a release, which he contends was mutual and which counsel for ICBC contends was not, is another factor to consider.  It is unfortunate that this dispute has arisen and remains unresolved, but as I stated earlier, the ultimate significance of future care claims is small.

Result on costs

[50]            Whether or not the plaintiff was under the impression that she would have had to release future Part 7 benefits to accept the offer, it is apparent that she would have to establish entitlement to some $30,000 to $40,000 worth of Part 7 benefits to attain the amount of the offer, and she would, of course, have received taxable costs and disbursements.  This is all without regard to her own legal costs, which obviously increased through the trial.

[51]            Nevertheless, I have concluded that the plaintiff’s decision not to accept the offer was reasonable at the time, and although the award at trial was less than the offer, it was still substantial. 

[52]            Although the use of hindsight is not appropriate in the consideration of the reasonableness of accepting/rejecting the offer, an overall analysis of all of the factors under Rule 37B must be done with the advantage of hindsight, also keeping in mind the court’s unfettered discretion.  From that perspective, the plaintiff would have been better off if she had accepted the offer.  Her position on some aspects of the trial, such as contributory negligence, appears to have been a stumbling block to settlement. 

[53]            There should be some consequence in costs as a result, but in my view, it would be unfair and excessively penal to award double costs against the plaintiff, especially where these costs would not have been available under the rule in place when the offer was presented.  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.

[54]            In the result, it is appropriate to give the plaintiff 75% of her costs up to the date of the offer and to deprive her of her costs thereafter.  Each party will bear their own costs after the date of the offer.

This is the second ICBC Injury Claim that I am aware of that went to trial where ICBC beat their formal offer but were not awarded costs under Rule 37B.  It seems that a middle of the road approach is being taken in some circumstances where the ‘punishment’ purpose of Rule 37B is being fulfilled by simply denying the Plaintiff costs.  This may be a just result in cases where ICBC’s offer is not much greater than the amount awarded at trial and requiring a plaintiff to pay costs would be prohibitive in relation to the judgement.  Interestingly the court here seems to have considered the defendants ‘foolish and reckless behaviour’ in causing the collision as a factor in determining costs consequences.
The judgements applying Rule 37B to ICBC Injury Claims keep coming and I will keep posting these as they come to my attention.

ICBC Claims, Settlement Offers and Timelines for Acceptance

Interesting reasons for judgement were released today by the BC Court of Appeal setting aside a settlement of an ICBC injury claim.
In this case the Plaintiff was allegedly injured as a result of a 2001 BC motor vehicle collision.  In September, 2006 the parties attended a mediation and ICBC made an offer to settle the Plaintiff’s claim for $50,000 plus costs and disbursements.  The Plaintiff did not accept the offer at mediation and the mediation came to an end.  
The following month the Plaintiff’s lawyer attempted to accept the settlement offer.  The defendants refused to proceed with the settlement, stated that the offer was revoked and attempted to proceed to trial.
The Plaintiff brought an application to enforce the alleged settlement and appeared before the BC Supreme Court.  The presiding judge ordered that there was a binding settlement.  The Defendants appealed.  The Court of Appeal ordered that there was no settlement or if a settlement was reached it was ‘void for uncertainty and unenforceable‘.
The court’s key discussion is set out at paragraphs 15 – 21 which I set out below:

[15]            In my view, on the evidence presented in this rather unsatisfactory record, a settlement cannot be said to have been reached for two reasons.  First, the offer made in mediation was not accepted within a reasonable time.  Second, the terms of the purported settlement lacked certainty. 

[16]            What is a reasonable time is a question of fact.  However, it is a question to which the learned chambers judge never directed her attention in either of the two sets of reasons she gave.  In the absence of any express provision, a reasonable time for acceptance of the offer at mediation depended on all the circumstances.  The mediation concluded with no agreement.  The trial date was approaching.  Both sides were no doubt preparing for trial and incurring the attendant costs.  The reasonable observer would, if asked, have concluded that the time for acceptance of the offer, even if it continued after the mediation had ended, had gone by.

[17]            Nor can the terms of the purported settlement be said to be certain.  The offer at mediation was to pay $50,000 plus costs and disbursements.  The letter of 20 October 2006 purported to accept an offer of $50,000 “plus party and party costs in the tort action”.  The letter did not specify the date at which such costs were to be determined.  It did not specify the amount of the costs, nor the manner in which they were to be determined.  If the letter of 20 October 2006 can be said to have concluded an agreement, it was at best an agreement to agree. 

[18]            The learned chambers judge recognized this difficulty.  She said:

It is apparent that the parties have not agreed upon the matter of costs.

[19]            She then directed that the issue “be referred to the trial judge”.  There was no trial, and there was no trial judge.  Moreover, there was no order as to who should pay what costs, at what level, or for what period of time.  None of the factors which might guide a judge in making a ruling on costs were known or knowable.

[20]            Even if one were to read this direction as one for taxation of costs before the Registrar, there is nothing in the evidence to suggest that this was what either party intended, or the basis on which a Registrar could conduct a taxation.

[21]            If there was any kind of an agreement reached, it was void for uncertainty and unenforceable.  And in any event, the offer not having been accepted within a reasonable time, no agreement can be said to have been reached.

This case illustrates the fact that if an informal settlement offer is made (as opposed to a formal settlement offer under Rule 37B) it is important for the parties to have a meeting of the minds and know exactly what is being offered.  Does the offer include court costs?  Disbursements?  How long is the offer open for acceptance?  These and other questions are important factors when considering a settlement offer for an ICBC claim.  

Rule 37 Dies a Natural Death

As most frequent visitors to this blog know, Rule 37 of the BC Supreme Court Rules (the rule that dealt with formal settlement offers and costs consequences in BC Supreme Court trials including ICBC personal injury claims) was replaced this summer with Rule 37B.  Rule 37B builds in a lot of judicial discretion in the process of awarding ‘costs’ to litigants where a formal offer was made compared to the old Rule 37 which had strict consequences resulting when a formal offer was made and beat at trial.
In what will likely be one of the last BC court cases dealing with the old Rule 37, unanimous reasons for judgment were released today by a 5 member panel of the BC Court of Appeal ruling that the old Rule 37 is not incompatible with the Negligence Act and both can work in harmony.
In this case the Plaintiff sued for injuries sustained as a result of a motor vehicle collision.  Pre-Trial the Defendant made a settlement offer under the old Rule 37 for $150,000.    The Plaintiff rejected this offer and proceeded to trial.  The trial judge found that the Plaintiff was 50% at fault and awarded damages of just over $56,000.
Having found that the Plaintiff was 50% at fault he awarded her 50% of her costs to the date the formal offer was made by the Defendant.  Since the Defendants ‘beat’ their formal offer the Court ordered that the Plaintiff pay all of the Defendants Tariff costs from the date of the formal offer through to trial.   This award of costs was apparently so significant that the Plaintiff ended up owing the Defendant money.
The Plaintiff appealed arguing that Rule 37 was in conflict with the Negligence Act, the relevant portions of which read as follows:

2.         The awarding of damage or loss in every action to which section 1 applies is governed by the following provisions:

(a)        the damage or loss, if any, sustained by each person shall be ascertained and expressed in dollars;

(b)        the degree to which each person was at fault shall be ascertained and expressed as a percentage of the total fault;

(c)        as between each person who has sustained damage or loss and each other person who is liable to make good the damage or loss, the person sustaining the damage or loss shall be entitled to recover from that other person the percentage of the damage or loss sustained as corresponds to the degree of fault of that other person;

(d)        as between 2 persons each of whom has sustained damage or loss and is entitled to recover a percentage of it from the other, the amounts to which they are respectively entitled shall be set off one against the other, and if either person is entitled to a greater amount than the other, he shall have judgment against that other for the excess.

3.         Unless the court otherwise directs, the liability for costs of the parties to every action shall be in the same proportion as their respective liability to make good the damage or loss. The provisions of section 2 governing the awarding of damage or loss apply, with the necessary changes and so far as applicable, to the awarding of costs, with the further provision that where, as between 2 persons, one is entitled to a judgment for an excess of damage or loss and the other to a judgment for an excess of costs there shall be a further set off of the respective amounts and judgment shall be given accordingly.

The relevant of the old Rule 37 read as follows:

R. 37(24) read:

37(24)  If the defendant has made an offer to settle a claim for money, and it 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.

(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.

The Plaintiff asked the Court of Appeal to find that Rule 37 was trumped by the Negligence Act and to adjust the costs award accordingly.
The Court of Appeal dismissed this argument finding that Rule 37 and the Negligence Act are not in conflict with each other and can stand together.  The Courts key analysis is set out at Paragraph 29 of the Reasons which I set out below:
[29]            I do not find this analysis altogether persuasive.  I would have thought that the Act, as superior legislation to the Rules, would be looked to first to determine each parties’ liability for costs in a situation to which s. 2 of the Act applies, and that R. 37, as an item of subordinate legislation, would then be applied if possible. Applying the classic definition of “conflict” – whether the two laws can “stand together and … operate without either interfering with the other” (see Tabernacle Permanent Building Society v. Knight [1892] A.C. 298 (H.L.) at 302, and the leading Canadian case, Friends of the Oldman River Society v. Canada (Minister of Transport) [1992] 1 S.C.R. 3, 88 D.L.R. (4th) 1 at para. 42) – however, I agree with the Court’s conclusion in Smith v. Knudsenthat s. 3 of the Negligence Act and R. 37(24) do not conflict.  I reach this conclusion not only on the basis of the opening phrase of s. 3, but also on a close construction of the Act.  As was held in Flatley, the phrase “person sustaining the damage or loss” in s. 2(c) is apt to refer only to the plaintiff in any case in which the defendant sustained no injury or damage.  Section 3 states that each party’s liability for costs shall be in the same proportion as his or her liability to make good the damage or loss.  Having sustained no damage or loss, the defendant has no ‘entitlement’ to recovery under s. 2(c) and thus his or her liability for costs does not “track” under s. 3.  As McFarlane J.A. stated in Lutes, s. 2(c) “does not provide for the awarding of damages as between persons who are at fault.  This sub-section cannot apply to entitle [a defendant] to recover anything because he has sustained no damage or loss.”  (Supra, at 466.)
This will be, in all likelihood, one of the last judgements dealing with the old Rule 37.  I look forward to continue reporting on judgements dealing with the new Rule 37B particularly in the context of ICBC injury claims.

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”.


[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.