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Tag: nuisance value offers

No Double Costs for "Walk Away Offer" In Defeated Lawsuit

Reasons for judgement were released today by the BC Supreme Court considering whether a Defendant should be awarded double costs for successfully defeating a lawsuit where they made a formal settlement offer before trial.
In today’s case (McVeigh v. McWilliams) the Plaintiff sued the Defendant alleging defamation.  Before trial the Defence lawyer made a ‘walk away’ offer under Rule 37B (click here to access my previous posts and recent video discussing formal settlement offers and costs consequences) which was phrased as follows:
Our client will waive costs in exchange for your consent to a dismissal of your claim on a “without costs” basis. Our client reserves the right to bring this offer to the attention of the court for consideration in relation to costs after the court has rendered judgment on all other issues in this proceeding, in accordance with Rule 37(b) of the Rules of Court.
The Defendant, who was awarded Costs for succeeding in the lawsuit, asked the Court to exercise its discretion under Rule 37B and award double costs.  Mr. Justice Shabbits refused to do so finding that the Plaintiff was entitled to his day in Court and should not be penalized with an order of double costs for failing to beat a walk away offer.  The Court reasoned as follows:

[23] A defendant in every case in which a non-monetary issue is at stake could offer to “settle” on the basis that the plaintiff concede the cause of action, and they could do so as soon as they file the statement of defence. The issue is whether such an “offer” should attract double costs.

[24] I acknowledge that in this case the defendant did offer to waive costs to the date of the offer. But, costs here were never the issue. In my view, the defendant’s offer did not really involve any meaningful element of compromise. In respect of the cause of action, the defendant’s position after delivery of the offer to settle was the same as before delivery. It was as set out in the pleadings.

[25] In my opinion, it was not unreasonable of the plaintiff to refuse the defendant’s offer. He, too, was entitled to have the issue tried.

[26] In my opinion, no order for double costs is warranted. The defendant is entitled to his costs on Scale B except for the costs of this application. The plaintiff has enjoyed substantial success on this application, and he is entitled to his costs of it on Scale B.

I should point out that it is possible for a Defendant to be awarded double costs for beating a settlement offer if the lawsuit is dismissed, however, in cases where the settlement offer was no more than a ‘nuisance’ offer or a ‘walk away’ offer the BC Supreme Court may be reluctant to make such an award.

In my continued efforts to get us all prepared for the New BC Supreme Court Civil Rules I will again point out that Rule 37B will be replaced with Rule 9 under the New Rules. The new rule uses language that is almost identical to Rule 37B which should help cases such as this one retain their value as precedents.

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.