Tag: Rule 9-1

"It Is No Impediment That The Offer Was Withdrawn" In Triggering Costs Consequences

Last month I discussed the fact that withdrawn formal settlement offers are capable of triggering costs consequences.  Reasons for judgement were released recently confirming this fact and awarding a Plaintiff double costs after besting a formal settlement offer which was withdrawn in the course of trial.
In the recent case (Pitts v. Martin) the Plaintiff was injured in a 2008 collision.  The injuries included chronic soft tissue injuries and post traumatic stress which limited the Plaintiff in physical tasks.
Prior to trial she provided a formal settlement offer of $100,000.  During the course of the trial the Plaintiff withdrew her formal offer.  The trial judgement exceeded her offer by $7,500.  The Plaintiff asked for double costs.  The defendant objected arguing a withdrawn offer could not trigger costs consequences.  Mr. Justice Dley disagreed and awarded double costs.  In doing so the Court provided the following reasons:
[68]  …I am satisfied that in a case like this, an offer made on May 15th would have given the defendant sufficient time to make a reasoned analysis and respond in a timely fashion.  It is not an offer that was made on the eve of the trial commencing, without an opportunity to have it fully considered.  It is no impediment that the offer was withdrawn at the close the the Plaintiff’s case.  I am satisfied that this is an appropriate case for double costs following the offer…
To my knowledge this judgement is not publicly available.  As always, I’m happy to provide a copy to anyone who contacts me and requests one.

Punishing Costs Orders Should Not "Unduly Deter" Meritorious but Uncertain Actions

Further to my previous posts detailing the potential costs consequences following trials with formal settlement offers in place, reasons for judgement were released last week addressing this topic finding that costs consequences should be applied in an “even-handed” way and further should not unduly deter Plaintiff’s from bringing meritorious, but uncertain claims “because of the fear of a punishing costs order“.
In last week’s case (Currie v. McKinnon) the Plaintiff sustained soft tissue injuries in a collision which substantially recovered within one year.  Prior to trial ICBC made a formal settlement offer of $40,000.  The Plaintiff rejected this offer and proceeded to trial where he was awarded $22,000 in damages.
ICBC applied for double costs from the time of the offer onward.  Madam Justice Adair found that such a result was unwarranted and instead stripped the Plaintiff of post offer costs and disbursements.   In doing so the Court provided the following sensible comments:

[18] I think it certainly can be argued that if a defendant who has made an offer to settle in an amount higher than the amount awarded to the plaintiff at trial (and that is what has been done in this case) was then awarded double costs, this would skew the procedure in favour of defendants and unfairly penalize and pressure plaintiffs.  This is because a plaintiff who rejected an offer to settle would potentially risk a triple cost penalty if he or she were to win at trial an amount less than the offer.  The plaintiff would suffer loss of the costs that he or she would normally receive on obtaining judgment at trial, and face double costs payable to the defendant.

[19] In my view, there is a good reason to apply Rule 9-1 in a way that is even-handed, or more even-handed, as between plaintiffs and defendants.  I would say for this reason one would expect to see double costs awarded to a defendant, using the offer to settle procedure, in exceptional circumstances only, such as a situation where the plaintiff’s claim was dismissed all together after a plaintiff rejected an offer to settle.

[20] That is not the case here.  In my view, Mr. McKechnie, despite his able arguments, simply did not identify for me how the circumstances here were so exceptional as to justify an award of double costs against Mr. Currie.  While the purpose of the Rule is to encourage reasonable settlements, parties should not be unduly deterred from bringing meritorious, but uncertain, claims because of the fear of a punishing costs order…

[36] Having considered all of the factors in this case, I am not satisfied that it would be appropriate to award the defendants double costs as sought by Mr. McKechnie.  I have discussed earlier in these reasons my concerns about how that can have the effect of skewing the procedure in favour of defendants and unfairly pressurize and penalize plaintiffs, and I think that would be the result in this case.  Liability was admitted by the defendants.  Mr. Currie’s case was not dismissed.  Rather, he recovered judgment for non-pecuniary damages in an amount that was greater than what the defendants argued at trial he should recover.

[37] However, in my view, the defendants’ offer to settle cannot be ignored.  That would undermine the purpose behind the rule…

[39] In my view, therefore, the double costs sought by the defendants are neither a fair nor just result.  However, in my view, it is not a fair or just result for Mr. Currie to recover costs after he had had a reasonable opportunity with his counsel to review and consider the defendants’ offer to settle.  I would say that by November 30, 2011, Mr. Currie and his counsel had had a reasonable opportunity to review and consider the defendants’ offer and ask any questions they deemed necessary if they thought clarification was necessary.

[40] In my view, the defendants should not have to pay Mr. Currie’s costs after November 30, 2011.  However, I do not think it a fair result that Mr. Currie should have to pay the defendants’ costs after November 30, 20011, given his success ultimately at trial.

[41] My order then, with respect to costs, is that Mr. Currie will recover his costs and disbursements up to and including November 30, 2011, and that each side bear their own costs thereafter.

Double Costs Awarded Following Liability Only Trial

Adding to this site’s archived posts of costs consequences following trials with formal settlement offers, reasons for judgement were released this week by the BC Supreme Court, New Westminster Registry, addressing this topic following a ‘liability only’ trial.
In this week’s case (Cyr v. Blaine) the Plaintiff was involved in a 2009 collision.  The parties agreed that, subject to proving fault, the value of the claim was $60,000.  The parties could not agree on fault both arguing the other was to blame.  Prior to trial the Plaintiff delivered a formal settlement offer of $50,000.
At trial the Defendant was found fully at fault entitling the Plaintiff to the agreed damages of $60,000.  Mr. Justice Saunders found that it was appropriate to award the Plaintiff post offer double costs in these circumstances.  In doing so the Court provided the following reasons:

[13] The defendants say that it was reasonable for them to try the case on the basis of their theory that the plaintiff had a duty to look to her left as she passed by the front of the vehicle that had stopped for her in the intersection.  But even if the plaintiff had been under an obligation to anticipate that there might be another vehicle in the same lane as the stopped vehicle, attempting to pass that stopped vehicle on the left, the defendants had no evidence that, by the time she would have been able to see the defendants’ vehicle, she would have been able to bring her own vehicle to a stop in time to avoid the collision, given the defendants’ speed.

[14] The defendant Mr. Blaine passed a stopped vehicle, on its left, when he was in the same lane as that vehicle. As I found, it ought to have been apparent to Mr. Blaine from the opening in the divider separating eastbound and westbound traffic that he was passing through an intersection, and that cars travelling in his direction had stopped to let a vehicle or vehicles through the intersection. By the time the subject offer was delivered, it ought to have been apparent to the defendants that they would be found wholly or at least substantially liable for the accident.

[15] Given that damages had been agreed at $60,000, the plaintiff’s $50,000 offer represented a discount of roughly 17%, or, to put it another way, roughly a 50% chance of a finding of one-third contributory negligence on the plaintiff’s part.  It was an offer that reasonably ought to have been accepted upon delivery.

[16] The plaintiff, I find, is entitled to double costs of all steps taken after the offer was delivered.

Withdrawn Formal Offer Still Effective In Triggering Double Costs

In my continued efforts to track the judicial shaping of Rule 9-1, reasons for judgement were released recently by the BC Supreme Court, New Westminster Registry, ordering double costs following trial where a Plaintiff bested a withdrawn formal settlement offer.

In the recent case (Bartel v. Milliken) the Plaintiff was injured in a 2008 collision.  Prior to trial the Plaintiff delivered a formal settlement offer of $29,800.  This offer was withdrawn after trial but before judgement.  The trial ended in March of 2012 and judgement was delivered in April.  The judgement exceeded the Plaintiff’s formal offer by abot $9,000.  The Plaintiff applied for post offer double costs.  The Defendant argued these should not be awarded since the offer was withdrawn.  Madam Justice Gerow rejected this argument and awarded post-offer double costs.  In doing so the Court provided the following reasons:

[15] As stated earlier, the defendants submit the fact that Ms. Bartel withdrew her offer after trial is a factor which weighs against the awarding of double costs because it deprived the defendants of the ability to accept the offer at a later date as contemplated by the rule.

[16] However, at the same time the defendants concede that the intention and spirit of the rule governing formal offers to settle is to avoid the cost of a trial. In my view, the fact that Ms. Bartel withdrew her offer to settle between the time the trial ended and judgment was rendered is not a factor that weighs against an award of double costs.

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.

Court Should Avoid "Unduly Punitive" Costs Awards in Face of Formal Settlement Offers

In a good demonstration of the Court’s discretion following a trial where a Plaintiff does not beat a pre-trial defence formal settlement offer, reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, taking a Plaintiff’s post offer costs and disbursements away but not requiring the Plaintiff to pay the Defendant’s costs and disbursements.
In this week’s case (Tompkins v. Bruce) the Plaintiff turned down a pre-trial formal settlement offer of $950,000.  Following trial the Plaintiff was awarded net damages of $851,437.  ICBC applied for post offer costs.  Mr. Justice Curtis found such a result would not be appropriate and instead took away the Plaintiff’s post offer costs and disbursements.  In doing so the Court provided the following reasons:

[28] When the offer in this case was received on October 6, 2011, the plaintiff and his counsel were in possession of the information necessary to make a realistic assessment of the potential recovery.  Naturally, there is no mathematical certainty in those matters and differing courts may give differing amounts.  The plaintiff and his counsel would clearly have contemplated a range of possible recoveryies.  The plaintiff, of course, hopes for the high end of the range and the paying party the low ? settlements are often made somewhere in between.

[29] The offer in this case was reasonable on the facts of the case as they were known to the parties.  It could reasonably have been accepted as being within the range of possible recovery, although likely it would not have been thought by either party at the high end of the range.  The amount of the Offer was reasonable as was its timing: the information necessary to assess the claim was in the possession of the parties, yet there was plenty of time to give careful consideration to the matter before the November trial date.  On the other hand, Mr. Tompkins was seriously injured.  He and his counsel’s view of the matter was that it was worthwhile going to court in the hope of getting a significantly higher award.  It cannot be said that such a decision was unreasonable at the time.

[30] The purpose of cost consequences of reasonable offers is to encourage settlement.  On the other hand, onerous cost penalties should not discourage the seriously injured from a proper hearing and a chance to obtain a higher award, nor should they seriously subtract from what the court has found is appropriate compensation for the injury.

[31] Considering the factors set out in the Rules, it is my opinion that the interests of justice are best served in this case by awarding Mr. Tompkins his costs and disbursements up to and including October 31, 2011, but disallowing them after that date, with the Third Party to bear its own costs.  There is then a consequence for not accepting a reasonable Offer, but the consequence is not unduly punitive in the circumstances.

Today’s case is also worth reviewing for the Court’s discussion of various Part 7 Deductions following a tort action.

ICBC "Nuisance Offer" Fails to Trigger Double Costs


One of the most welcome developments under the New Rules of Court (and for a short while prior to their introduction, Rule 37B) was the introduction of discretion to the costs process following trials where formal settlement offers were made.  It used to be that if a Plaintiff had their case dismissed at trial where a formal offer was made before hand (even a $1 offer) the Plaintiff was forced to pay double costs.  Reasons for judgement were released last week by the BC Supreme Court, Vancouver Registry, demonstrating this discretion in action.
In last week’s case (Byer v. Mills) the Plaintiff was one of two occupants of a vehicle involved in a serious collision.  Prior to trial the Parties agreed to quantum of $125,000.   The parties could not agree on the issue of liability with ICBC arguing the Plaintiff was the driver of the at-fault vehicle (not the passenger as he alleged).  ICBC made a formal settlement offer of $5,000.
At trial the Plaintiff’s case was dismissed with the Court finding he likely was the driver.  ICBC asked for double costs to be awarded.  Mr. Justice Harris refused to do so finding a nuisance offer that does not provide a genuine incentive to settle should trigger double costs.  The Court provided the following reasons:

[21] It is in these circumstances that one must assess whether the offer of $5,000 plus costs was one that ought reasonably to have been accepted by the plaintiff. Although the prospect of the plaintiff succeeding was always highly uncertain and difficult realistically to assess, I cannot see that it can fairly be characterised as a case that was lacking in some substantial merit. In my view, the offer does not rise above a nuisance offer. The merits of the case, on both sides, and the uncertainties facing all parties, called for a more substantial offer if the offer were to serve the purposes of the Rule. Accordingly, I cannot conclude that the offer was one that ought reasonably to have been accepted by the plaintiff while it was open for acceptance.

[22] In reaching this conclusion, I have approached the question whether the offer was one that ought reasonably to have been accepted by the plaintiff from the plaintiff’s perspective. It will be apparent, however, from my general comments about the inherent uncertainties affecting predicting the merits of the case, that I do not view the offer that was made as objectively reasonable. In that sense, I cannot conclude that it provided a genuine incentive to settle the case. The offer does not possess those characteristics that would justify rewarding the party who was successful at trial with an award of double costs.

[23] I turn to consider the other considerations that may justify an award of special costs, even though the offer is not one that ought reasonably to have been accepted. I approach these factors recognising that the Rule is intended to penalise a party for failing to accept an offer and reward a party who makes a reasonable settlement offer. In brief, I do not find that any of those considerations justify an award of double costs.

[24] Although the plaintiff would clearly have been substantially better off to have accepted the offer, this consideration standing alone is not determinative.

[25] I cannot conclude that the relative financial circumstances of the parties lend support to the conclusion that, nonetheless, an award of double costs is justified.

[26] I am not persuaded that there are any other considerations that would justify an award of double costs. The defendants criticised the cross-examination of their expert, which they characterised as suggesting guilt by association. I did not view the cross-examination as overstepping reasonable professional boundaries.

[27] The application for double costs is dismissed. There will be one set of costs.

Rule 9-1 Does Not Allow the Court to Award Double Disbursements


(Update – April 19, 2013 – The below decision should be cross-referenced with reasons for judgement released today (Gonzales v. Voskakis) where Madam Justice Fitzpatrick came to a different conclusion)
Reasons for judgement were released this week by the BC Supreme Court, Victoria Registry, confirming that the Court cannot award double disbursements following a trial where a formal settlement offer was bested.
In this week’s case (Moore v. Kyba) the Plaintiff was awarded substantial damages in a jury trial following a motor vehicle collision.  The damages awarded exceeded both the Plaintiff’s and Defendant’s pre-trial formal settlement offers.  The Plaintiff brought an application seeking double costs and double disbursements.  Mr. Justice Brown held that while it was appropriate to award double costs, Rule 9-1 does not go so far as to give the Court authority to award double disbursements.  Mr. Justice Brown provided the following reasons:
[8]I am not convinced by the applicant’s argument.  The repeal of the definition relied on in Browne v. Lowe is not determinative and does not require its reversal.  In any event, I conclude that the proper interpretation of Rule 9-1(5) does not permit the Court to award double disbursements.  In Rule 9-1(5)(a), the rule specifically provides for disbursements, while Rule 9-1(5)(b) does not.  Therefore, properly interpreted, Rule 9-1(5)(b) does not permit the Court to award double disbursements after the delivery or service of the offer to settle.

More on the Reality of Insurance and Costs Consequences Following Trial


Update March 21, 2014 – the Trial Judgement with respect to the relevance of insurance and costs was upheld today by the BC Court of Appeal
_____________________________________________________
In 2010 the BC Court of Appeal confirmed that Judges can look at insurance when considering the “financial circumstances” of litigants when addressing costs consequences following trials where a formal settlement offer was made.  Further reasons were released last week by the BC Supreme Court, Victoria Registry, confirming that costs consequences should not be applied with the ‘fiction‘ of ignoring insurance.
In last week’s case (Meghji v. Leethe 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.
Prior to trial the Plaintiff offered to settle for $750,000.  Neither Defendant accepted.  Damages at trial were assessed at just over $1.1 Million with the Defendants being jointly and severally liable.  The Plaintiff sought and was awarded double costs from the time of her offer onward.  In doing so Mr. Justice Johnston provided the following useful reasons addressing the reality of insurance and the risks of joint and several liability:

[33]Also relevant to consider is the fact that a well-funded party, such as MoTH,  faces higher risk with joint liability when other potentially liable parties have less means or no means with which to satisfy a possible judgment. In such circumstances, the well-heeled party may end up paying more than its proportionate share to the plaintiff if or when the impecunious party exhausts its ability to pay.

[34]This risk is balanced by the potential that the plaintiff might be held partly to blame for her losses, which would confine the well-funded party’s liability to its proportionate share of the loss through several liability: Leischner (Next friend of) v. West Kootenay Power, [1982] B.C.J. No. 1641…

[40]Quite apart from the fact that I am bound by the decision in Smith v. Tedford, its reasoning eliminates one fiction that ought not to complicate proceedings before a judge alone. That fiction is that there is no plan of universal compulsory automobile insurance in effect in British Columbia, mandated by statute, where the details of the coverage available are found in statute and regulation. If judges and others are presumed to know the law, there is little sense in requiring that judges ignore what the law provides when dealing with costs.

Formal Settlement Offers and Costs Consequences: A "Broad Discretion"


Reasons for judgement were released last month by the BC Supreme Court, Vancouver Registry, discussing the broad discretion that Judges have respecting costs consequences following trial where formal settlement offers have been made.
In last month’s case (Ward v. Klaus) the Plaintiff was involved in a motor vehicle collision.  Prior to trial ICBC tabled a $493,000 settlement offer.  As trial neared the offer was increased to $595,000.  The Plaintiff rejected these offers and went to trial.  At trial the presiding judge awarded just over $434,000.
ICBC brought an application to be awarded post offer costs.  This would have created a ‘costs swing‘ of $149,000.  Mr. Justice Goepel ultimately stripped the Plaintiff of her post offer costs but did not make her pay the Defendants costs reducing the sting of her failure to best the formal settlement offer.  In demonstrating the ‘broad discretion‘ of Rule 9-1 Mr. Justice Goepel provided the following reasons:

[32] Since its inception in 2008, much ink has been spilled explaining the Rule. LexisNexis Quicklaw presently references some 231 decisions in which the Rule has been discussed. From the decisions, some broad principles of general application have emerged concerning how the Rule should be applied.

[33] It is now generally recognized that the Rule provides for the exercise of a broad discretion by trial judges and provides principles to guide in the exercise of that discretion: Roach v. Dutra, 2010 BCCA 264, 5 B.C.L.R. (5th) 95…

[53] For the reasons I have stated, it cannot be said that the plaintiff should have accepted either offer. That is, however, the beginning, not the end of the analysis. Unlike Rule 37 which mandated the outcome regardless of the circumstances, Rule 9-1 gives the court a broad discretion to determine the consequence of a successful offer to settle. While the Rule is intended to reward the party who makes a reasonable settlement offer and penalizing the party who fails to accept it, the several options set out in Rule 9-1(5) allows the court to determine with greater precision the penalty or reward appropriate in the circumstances.

[54] In this case, regardless of the merits of the plaintiff’s case, the defendant’s offers to settle cannot be ignored. To do so would undermine the purpose of the Rule. Having decided to proceed in the face of two not insignificant and ultimately successful offers to settle, the plaintiff cannot avoid some consequences. That said, in the circumstances of this case, to deprive the plaintiff of her costs and have her in addition pay the costs of the defendant would be too great a penalty. It would not be fair or just to require the plaintiff to pay the defendant’s costs after the date of the First Offer. Similarly, however, I find that the defendant should not pay the costs of the plaintiff after the delivery of the First Offer, which costs were only incurred because the plaintiff decided to proceed.

[55] Accordingly, I find that the plaintiff is entitled to her costs up to May 3, 2010. The parties will bear their own costs thereafter.

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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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