One principle that is becoming well defined with respect to Rule 37B is that settlement offers made on the eve of trial may not trigger any costs consequences. Reasons for judgement were released today demonstrating this.
In today’s case (Parwani v. Sekhon) the Plaintiff was injured in a 2004 BC car crash. The Plaintiff sued for damages. As trial approached the Plaintiff offered to settle his case for $37,000 plus costs and disbursements. On the last business day before trial the Defendants responded with a formal settlement offer under Rule 37B for $10,000 plus 50% of disbursements.
The claim went to trial and the Plaintiff claimed damages of $270,000. The claim was largely unsuccessful with the Plaintiff being found 75% at fault. Damages were assessed at $25,000 leaving an award of $6,250 for the Plaintiff (25% of $25,000).
The Parties could not agree on costs consequences. The Defendants argued that since they beat their formal offer they should be awarded the costs of trial. Madam Justice Ross disagreed with this submission finding that while the Defendants offer should have been accepted it was simply made too late. In declining to award the Defendants any costs the Court reasoned as follows:
 The defendants submit that the offer to settle was one that ought reasonably to have been accepted given the evidence with respect to the liability issue. In addition, the position taken by the plaintiff at trial with respect to his losses was unreasonable given the medical evidence and the paucity of evidence to support the claims. The offer exceeded the plaintiff’s recovery at trial. The position of the plaintiff was that he did not have adequate time to consider the offer, coming as it did on the eve of trial. Moreover, had the plaintiff accepted the offer, considering the disbursements already incurred, the plaintiff would have recovered only $765.34. Accordingly, it was not reasonable to accept the offer. The plaintiff had made an early offer to settle that reflected a considerable discount to reflect the uncertainties in the case.
 In my view, while the defendants’ offer was reasonable, it was not early. It came on the eve of trial, after substantial costs and disbursements had been incurred. Such an offer is not the embodiment of the conduct the rule intends to promote. In the circumstances, and considering the factors identified in the rule, I am not prepared to consider the offer in relation to the award of 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 should help cases such as this one retain their value as precedents.