More on Rule 37B – Lack of a "Reasonable Counter Proposal" Considered
Reasons for judgement were released today by the BC Supreme Court, New Westminster Registry, considering a factor that I don’t believe has been previously considered under Rule 37B, the effect (or lack of) a reasonable counter offer.
In today’s case (Foster v. Juhasz) the Plaintiff was injured in a BC car crash. She sued for damages. Before trial she made a formal offer under Rule 37B for some $285,000 and at the same time indicated she would be willing to settle for $214,000. The Defendants rejected the offers, apparently did not make a counter offer and went to trial.
At trial the Jury awarded the Plaintiff over $450,000 in total damages. The Plaintiff then brought a motion for ‘double costs’ under Rule 37B.
The Defendants argued that they could not have accepted the offer because their insurance policy was only for $200,000. Mr. Justice Crawford rejected this argument and ordered that the Defendants pay double costs. He reasoned that the offer should have been accepted. In coming to this decision he took into consideration the fact that the Defendants did not make a “rational counter-proposal“. Mr. Justice Crawford provided the following reasons:
[14] While I accept the policy limits may have been a factor in not accepting the offer, it does not answer the question why a rational counter-proposal was not made by the defendants. There was no comment made by the defendants as to the reasonableness or otherwise of the plaintiff’s offer. Rather, the position was taken that the defendants had a meritorious case to present on the issues which could result in an award under policy limits. If that was so, then a sensible and rational defendant could have sat down and appraised the plaintiff’s case. For instance an assessment of general damages at $60,000, past wage loss at $2,000, future lost earning capacity at $35,000, and $25,000 for future care could be made. That would not have been unreasonable and at least if not accepted, might have created a pathway to settlement. Such an offer pales in comparison to the jury award, especially the future income capacity and future care components. More so in that I recall directing the jury to be moderate. I am obliged to say the jury’s award was far beyond the evidence on these aspects.
[15] However, I do not accept the argument that the defendants were in an impossible situation in terms of accepting the offer. They chose their own level of insurance, and their choice was, with respect, a very low one given current potential liabilities for motor vehicle owners. I accept counsel’s belief that there were reasonable arguments to advance as to the amounts of the plaintiff’s claims. It was not unreasonable to think a jury, in light of the small past income loss, might not give a large future lost income award. As to the reasoning of the jury on the future care aspect, that cannot be fathomed. But no direction is given to a jury on the quantum of general damages, save in catastrophic cases.
[16] The motion for judgment was not contested by the defendants at trial. Counsel does say the case is under appeal, so the quantum may not be settled. I agree with Humphries J. that while consideration should be given to the result, the court’s discretion is not to be driven by “hindsight analysis”: see Lumanlan v. Sadler, 2009 BCSC 142.
[17] Another aspect is deterrence. The difference in the offer and the final award is a factor, as is the failure of the defendants to make a sensible counter-offer. It was not a case where the plaintiff would not obtain a reasonable award. It was a case to be carefully assessed and the usual avenues for settlement explored. A reasonable counter-offer would show a sensible stance being taken by the defendants before trial. That course was not chosen.
[18] Under the previous rule, double costs would have been automatic. Now there is consideration of whether or not the offer could be reasonably accepted.
[19] While there may have been some grounds for not accepting the offer, no response was made, the defendants choosing to “keep their powder dry” for trial. In the circumstances, the plaintiff is entitled to her double costs, which I allow for preparation for trial, examination for discovery, and the trial. I do not allow costs for the notices to admit which I now address.
In my continued efforts to get us all prepared for the New BC Supreme Court Civil Rules I will again point out that Rule 37B will be replaced with Rule 9 under the New Rules. The new rule uses language that is almost identical to Rule 37B which should help cases such as this one retain their value as precedents.