Reasons for judgement were released today by the BC Supreme Court, Cranbrook Registry, confirming a post trial ‘costs swing’ should not be avoided because the net payment will be less than a jury intended.
In today’s case (Grieve v. Bennett) the Plaintiff was injured in two motor vehicle collisions. Prior to trial ICBC made a formal settlement offer of $196,300. The Plaintiff declined this offer and proceeded to trial seeking over $1 million in damages. The jury verdict came in at $140,300.
In arguing that the Defendant should not be awarded post offer costs the Plaintiff noted that the costs swing would be some $80,000 and this would “thwart” the intentions of the jury. In rejecting this submission Mr. Justice Steeves noted as follows:
[59] The plaintiff submits that awarding costs to the defendants from the date of their offer (January 16, 2015) would thwart the clear intention of the jury because it would reduce the amount available to the plaintiff by about $80,000. This figure includes the costs of the defendants (estimated by counsel for the plaintiff to be $54,000). It also includes the costs of the plaintiff because the effect of awarding the defendants costs would “deprive the plaintiff of his costs.”
[60] In my view the answer to this submission is that the jury does not and cannot have a role in determining costs. Their role is to assess damages not costs. It follows that I do not agree with the plaintiff on this issue.
In an illustration that not all trial ‘losses’ trigger catastrophic costs consequences, reasons for judgement were released today by the BC Supreme Court, New Westminster Registry, ordering balanced costs consequences.
In this week’s case (Desharnais v. Parkhurst) the Plaintiff was involved in two vehicle collisions. Prior to trial the Defendants provided two formal offers, the first at $50,000 the second at $75,000. The Plaintiff, who was seeking in excess of $1 million rejected both offers and proeeded to trial. Following a thirteen day jury trial the Plaintiff’s damages were ultimately assessed at $30,100.
Both parties had medical evidence to justify their respective positions, however, the Court noted, some of the opinions of the Plaintiff’s experts were “highly suspect”.
The Defendants sought substantial costs having bested their formal settlement offers. The Court noted a more appropriate result would be to award the Plaintiff costs up to the date of the second formal offer and to have the parties bear their own costs thereafter. While such an order still has significant financial consequences for the Plaintiff it is far less sever than ordering payment of the Defendant’s costs. In reaching this decision Mr.Justice Saunders provided the following reasons: [42] On the whole, I do not consider either the First or the Second Offer as having reflected, objectively speaking, a genuine attempt at compromise. I find them to hae been more reflective of what the Applicants could reasonably have hoped to achieve if all or substantially all of the issues were resolved in their favour. I am not dissuaded from taking this view by the fact that the jury awarded even a lesser amount; I do not think it is unfair to counsel or to the jury for me to say that the jury’s decision was considerably less than what reasonably prudent counsel would have regarded as a “win” for the defence. I cannot find that either offer ought reasonably to have been accepted by the plaintiff. [43] As Goepel J. stated in Ward, that is the beginning, not the end of the analysis. The most basic principle underpinning the Rules relating to costs is that costs of a proceeding are to be awarded to the successful party (R. 14-1(9)). This expectation is intended to promote sensible conduct throughout court proceeding; it exists notwithstanding the broad judicial discretion to depart from the principle, which is generously built into the Rules. [44] In this case, the jury found that the plaintiff had successfully proven some damage. But for the offers to settle, he would be entitled to his costs. Having regard to the factors set out in Rule 9-1(6), including giving some weight to the plaintiff’s financial circumstances, I do not find that the offers were so substantial that the Applicants ought to be entitled to any indemnification against their own costs. The plaintiff’s position was not completely lacking in merit. It was not frivolous. However, the fact that the settlement offers exceeded the judgment amount cannot be ignored. The Applicants were forced to incur the expense of a trial which they were willing to avoid by paying the plaintiff a not insubstantial sum, a sum which ended up being considerably greater than the damages the plaintiff was judged to be entitled to. It would be unfair to require the Applicants to indemnify the plaintiff for the costs of advancing a claim that was ultimately judged to be greatly overvalued. [45] I find that the plaintiff is entitled to his costs up to the date of delivery of the Second Offer. The parties will bear their own costs thereafter.
Earlier this year the BC Supreme Court dismissed a lawsuit following a fight between two adults at a Pee Wee baseball game. Prior to trial the Defendant made several fairly modest settlement offers, one of which was a formal offer giving the Court the discretion to award double costs. In finding it was unreasonable for the Plaintiff to reject the offer and proceed to trial Madam Justice Watchuk (Charland v. Cloverdale Minor Baseball Association) provided the following reasons ordering the Defendant to pay double costs: [17] Mr. Wheeler submits that the offers were offers which ought reasonably to have been accepted. There is now general agreement on the law that, “in determining whether the offer to settle ought reasonably have been accepted the court does not consider the final result… The reasonableness of a decision not to accept an offer must be assessed … [by] the circumstances existing when the offer was open to acceptance:” [Ward at para. 36]. [18] The first offer of $3000, although not a formal offer under the Rules, was made on March 13, 2012. It canvassed the minor injuries set out in Mr. Charland’s records, and noted that there was not the required supporting letter to substantiate the amount of an offer which had been made by Mr. Charland. [19] On June 8, 2012, a formal offer to settle in the amount of $5000 was served on counsel for Mr. Charland. It was open until five minutes after the commencement of the trial. [20] Discoveries of Mr. Charland were held in late July 2012. On August 2, 2012, counsel for Mr. Wheeler wrote to plaintiff’s counsel expressing reasons why Mr. Charland’s case was problematic. Those reasons, the credibility of Mr. Charland and the nature and extent of his injuries, were later the subject of findings made at the trial which supported the position of Mr. Wheeler. [21] At that time, previous offers were retracted and a “nuisance offer” of $250 was formally made. [22] Mr. Wheeler submits that the fact that the final offer was reduced significantly following discoveries should have no effect on the determination of whether double costs are appropriate in this case. I agree. [23] It was incumbent on Mr. Charland to “make a careful assessment of the strength or lack thereof of [his] case at the commencement and throughout the course of the litigation” [Hartshorne at para. 25]. Mr. Charland had knowledge, particularly after his Discovery, of the evidentiary problems in his case. He chose to proceed to trial despite knowledge of those problems. In light of that knowledge at the time the $5000 offer was made, and in light of the heightened knowledge at the time the nominal offer of $250 was made, his decision not to accept the offers was not reasonable. [24] As in Riley, Mr. Charland ought reasonably to have anticipated that his claim would be dismissed at trial. [25] With regard to the other factors listed in Rule 9-1(6), the relationship between the terms of settlement offered and the final judgment of the court may be considered by the court. The second and final offers were more favourable to Mr. Charland than the decision of the court since his claim was dismissed with costs. [26] The court may also consider the relative financial circumstances of the parties. Little is known regarding this factor. It appears from the evidence that both parties have similar financial circumstances. Both have legal costs arising from the litigation. [27] There are no other factors raised by Mr. Wheeler and, in the absence of submissions from Mr. Charland, no other factors that the court considers appropriate to take into account. [28] On consideration of the factors set out in Rule 9-1(6), I conclude that Mr. Wheeler is entitled to double costs from the date of the first formal offer, June 8, 2012.
Update Auguaat 16, 2013 – In an interesting development, the below judgement was overturned by the Chambers Judge before entry of the costs order. You can find reasons here
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Reasons for judgement were released last week by the BC Supreme Court, New Westminster Registry, ordering a plaintiff to pay double costs to a defendant following a personal injury trial which failed to best the Defendant’s pre trial formal settlement offer.
In last week’s case (Gulbrandsen v. Mohr) was injured in a collision. In the course of the lawsuit the Defendant offered to settle for $50,000. The Plaintiff rejected this offer and proceeded to trial where a less favorable result was reached with damages being assessed at just over $28,000.
In the course of the trial the Court made negative findings about the Plaintiff’s reliability. In stripping the Plaintiff of her post offer costs and ordering that the Plaintiff pay double costs to the Defendant Mr. Justice Affleck provided the following reasons; [5] In exercising that discretion there are three possible approaches I have considered. The first would be to award costs to the plaintiff up to the date of the offer and deprive her of costs thereafter. In my view that outcome cannot be justified. It would largely ignore the intent of the rules to provide for an award of costs in favour of a party who has made an offer which ought to have been accepted but was not. The second alternative would be to award the plaintiff costs up to the date of the offer and the defendant single costs thereafter. I would be inclined to make that award if the award of damages had fallen only slightly short of the offer. It did not. [6] The remaining possible outcome I have considered is to award the plaintiff costs to the date of the offer and to award the defendant double costs thereafter, as he proposes. The factor which might militate against doing so is the relative financial circumstances of the parties. The plaintiff is a woman of modest means. I know nothing of the remaining defendant, Mr. Mohr’s, means. The action was defended by counsel instructed by ICBC. The court may take into account the presence of insurance coverage when assessing the relative financial circumstances of the parties: Smith v. Tedford, 2010 BCCA 302 at para. 19. However, the presence of insurance coverage is not always a relevant factor. As the court observed in Hunter v. Anderson, 2010 BCSC 1591 at para. 22: …it is in circumstances where a defendant’s insurance coverage creates an unfair advantage leading to unnecessary costs through testing the plaintiff’s case, where an insurer’s financial circumstances supplant those of the litigant as a factor to consider in determining costs. [7] I find that the presence of insurance coverage in the present case did not create an unfair advantage leading to unnecessary costs. It was the plaintiff who unreasonably rejected the defendant’s offer to settle. Therefore, I am unable to find a relevant significant disparity in the relative financial circumstances of the parties. [8] Unless there is some compelling reason to the contrary, the defendant is entitled to double costs from the date of the offer. Not only is there no reason to the contrary, in my view there is a compelling reason to accept the defendant’s argument. In my reasons for judgment which awarded damages to the plaintiff, I nevertheless found the plaintiff was an unreliable witness. This was not simply a matter of a witness who was honestly mistaken. I concluded the plaintiff had attempted to persuade me of facts that she knew were not true. On the costs hearing the plaintiff complained about my conclusions regarding her credibility but the costs hearing was not an occasion to re-argue her case for damages. [9] The plaintiff will be entitled to her costs up to the date of the offer to settle and the defendant will be entitled to double costs thereafter.
One issue that apparently was not argued on this application was whether the Rules of Court allow for double costs in these circumstances. While Rule 9-1 provides a Court with broad costs discretion following trials with formal offers in place, Rule 9-1(5)(b) seems to limit the Court to single post offer costs to a Defendant where they best their formal settlement offer. I am not sure if this matter has been judicially considered but it is certainly an argument a Court would need to grapple with if asked to do so.