Tag: Relevance of Insurance

Defendant's Insured Status Shields Plaintiff From Hefty Costs Consequences


As previously discussed, when a Plaintiff fails to beat a Defendant’s formal settlement offer at trial they can be exposed to significant costs consequences.  One factor that Courts can consider when using their discretion is the financial status of the parties including whether the Defendant is insured.  Reasons for judgement were released this week by the BC Supreme Court, New Westminster Registry, using this factor in shielding a Plaintiff from potentially hefty costs consequences.
In this week’s case (Cunningham v. Bloomfield) the Plaintiff was injured in a collision.  She sued for damages and the claim proceeded to jury trial.  Prior to trial the Defendant provided a formal settlement offer of $12,500.  The jury awarded $5,000 in total damages triggering a Defence application for payment of post offer costs.  Mr. Justice Crawford rejected the application finding stripping the Plaintiff of all her costs was a more appropriate result.  In addressing the financial position of the parties the Court provided the following reasons:

[15] The award of the jury was low. But as noted in Cairns at para. 50, the unpredictability of a jury is a relevant consideration.

[16] It is said that the plaintiff is not lacking in income and no evidence as to her assets have been put forward to properly consider her position. But as discussed in several of the cases, the defendant through their insurer is able to cover their costs. The plaintiff on the other hand has a dependent husband and a reduced income, though that by choice.

[17] The other factor I consider appropriate is of course my assessment of the plaintiff’s case upon the issuing of the writ and I have found counsel’s assessment was over-optimistic and therefore the plaintiff is already deprived of costs.

[18] In the circumstances I will allow the plaintiff her disbursements throughout, but I will make no order as to costs payable to either side.

Insurance Policy Limits Relevant to Formal Settlement Offer Costs Analysis


In 2010 the BC Court of Appeal found that Judges could consider the existence of insurance when exercising costs discretion following a trial in which a formal settlement offer was made.  Last week reasons for judgement were released by the BC Supreme Court, Victoria Registry, expanding on this principle finding that the limits of insurance coverage were equally applicable.
In last week’s case (Meghji v. Lee) the Plaintiff suffered brain trauma after being struck by a motorist while walking in a marked cross-walk in 2003.  At trial the motorist was found 90% at fault for the crash with the Ministry of Transportation shouldering the remaining 10% for designing the intersection with inadequate lighting.
Following trial the Plaintiff applied for double costs as the trial result exceeded a pre-trial formal settlement offer she made.   The Defendant wished to place information relating to his insurance policy limits before the Court before a costs decision was made.  In finding this was appropriate Mr. Justice Johnston provided the following reasons:

[6] Rule 7-1(4) reads:

(4)        Despite subrule (3), information concerning the insurance policy must not be disclosed to the court at trial unless it is relevant to an issue in the action.

[7] Subrule (3) requires a party to list in his or her list of documents insurance policies that, generally speaking, might be available to satisfy a judgment in whole or in part should the judgment be entered.

[8] Mr. Lee has responded by arguing that the trial is over (subject, of course, to an application to re-open prior to entry of judgment), and even if the trial is not at an end, his policy limits are now relevant to an issue in the action, being costs. That relevance can fall under one or more of the considerations set out in Rule 9?1(6).

[9] Counsel for the Ministry of Transportation and Highways (MoTH) disagrees as to the relevance of Mr. Lee’s insurance limits.

[10] I have concluded that the amount of Mr. Lee’s automobile liability insurance limits is relevant to the considerations set out in Rule 9-1(6). The amount of available insurance could affect the question whether the offer was one that ought reasonably to have been accepted, and it could also affect the weighing of the relative financial circumstances of the parties.

[11] Counsel for Mr. Lee is authorized and directed to disclose the amount of Mr. Lee’s liability insurance limits operative at the time of the accident.

BCCA Finds Courts Can Consider Insurance Under Rule 37B


Very important reasons for judgement were released recently by the BC Court of Appeal addressing a key factor under Rule 37B.
By way of brief introduction Rule 37B is the current rule dealing with formal settlement offers.   (Rule 37B will be replaced with Rule 9 next month but the new rule uses language that is almost identical to Rule 37B).
The Court can take formal settlement offers into account when awarding a party costs.  One factor the Court can consider in deciding whether to award costs or increased costs under Rule 37B is “the relative financial circumstances of the parties“.
In most personal injury lawsuits Defendants are insured such that they don’t have a significant financial stake in the outcome of the trial.  BC Supreme Court judges have been conflicted in whether insurance is a relevant consideration when viewing the financial circumstances of the parties.  Today the BC Court of Appeal addressed this issue for the first time.
In today’s case (Smith v. Tedford) the Plaintiff was injured in a motor vehicle collision.  Before trial the Plaintiff made a formal settlement offer.   Several days into trial the Defendant accepted the offer.   The parties could not agree on the costs consequences.  The trial judge awarded the Plaintiff costs to the time the offer was made and double costs for the time spent at trial.  (You can click here to read my post summarizing the trial judge’s reasons).  In doing so the Judge considered the fact that the Defendant was insured with ICBC as relevant to his ‘financial circumstances“.
ICBC, on behalf of the Defendant, appealed arguing that the Judge was wrong to consider insurance.   In a welcome development the BC Court of Appeal found as follows:
While I recognize arguments over the implications of a defendant’s insurance coverage being considered in relation to an award of costs may go back and forth, like the judge I consider precluding such from consideration renders an assessment of the parties’ relative financial circumstances, at least in a case of this kind, very artificial indeed. Clearly, with ICBC having assumed the defence, the financial ability to defend was much greater than the financial ability to prosecute, and that is of no small importance to considering whether and to what extent the financial circumstances of the parties, relative to each other, bear on an award of costs where, as here, there has been an offer of settlement made ten days before a trial for the assessment of personal injury damages which was not accepted until the seventh day of the trial.

Plaintiff Awarded Double Costs for Beating Pre Trial Formal Settlement Offer; Relevance of ICBC Insurance Considered


In my continued efforts to track the judicial development of Rule 37B, reasons for judgement were released today by the BC Supreme Court, Vancouver Registry, awarding a Plaintiff double costs for the trial of her ICBC claim.  The contentious issue of the existence of Insurance as a potentially relevant factor was also considered.
In today’s case (Pham-Fraser v. Smith) the Plaintiff was injured in a BC motor vehicle collision.  Before trial the Defendant (insured with ICBC) offered to settle under Rule 37B for $115,000.  The Plaintiff responded with a formal settlement offer of $149,000.  Neither party accepted the respective offers and proceeded to trial where the Court awarded just over $400,000 in total damages (click here to read my previous post discussing the trial judgement).
The Plaintiff, having comfortably beat her formal offer, asked the Court to award double costs under Rule 37B.  In granting the motion Mr. Justice Greyell held as follows:

[24] The second factor referred to in Rule 37B(6) also operates in the plaintiff’s favour.  There is a wide difference between the offer to settle and the final judgment.  The judgment is almost three times the amount offered.  The plaintiff’s offer was made because she wished to avoid court and having to give her evidence.  Some of her evidence was of a private nature relating to matters she did not wish to talk about in the public forum of a court of law (that is, how the accident affected her work and home life, her marital relationship with her husband after the accident, and the fact she suffered from incontinence).

[25] It is not necessary to consider factors set out in Rule 37B(6)(c) and (d).  I do not accept the plaintiff’s submission I ought to consider that the defendants, being represented by ICBC, are in a “sophisticated” position in terms of providing settlement instructions and that this is a factor to be taken into account and operate in the plaintiff’s favour in exercising my discretion under the rule.   The plaintiff’s argument seems to me to simply be another way of putting a “deep pockets” argument forward: an argument the courts have thus far rejected as being a factor to be considered in determining whether to award costs under Rule 37B.

[26] After considering the factors which I do consider relevant under Rule 37B, I conclude the plaintiff is entitled to an award of double costs.

As previously discussed, the BC Supreme Court is inconsistent on whether a Defendant being insured is a relevant factor under Rule 37B and clarity from the Court of Appeal would be welcome.  While more cases than not have held that insurance is not a relevant consideration it is not yet clear that this is correct.  If the law was settled it would assist lawyers in advising their clients of the potential risks and benefits of trial.

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.

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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.

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