Tag: Rule 9-1

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.

Formal Settlement Offers and Costs: A Matter of Discretion


As recently discussed, costs consequences following trial where a formal settlement offer is not beat is a matter of judicial discretion.  While the principles behind the exercise of that discretion are reasonably well formulated the costs results can be a little trickier to predict.  Two sets of reasons for judgement were released this week by the BC Supreme Court demonstrating this discretion in action.
In the first case (Khunkhun v. Titus) the Plaintiff advanced a personal injury claim in excess of one million dollars.  She claimed she suffered from “a significant and disabling vestibular injury” as a result of a collision.  The jury largely rejected the Plaintiff’s sought damages and awarded $45,000.
ICBC made a more generous settlement offer prior to trial which the Plaintiff did not accept (about 30% higher than the jury award).   As a result, Mr. Justice Willcock stripped the Plaintiff of her costs from the time of the offer onward.  The Court did not go so far as to order that the Plaintiff pay the Defendant costs finding that it would be unjust.  Mr. Justice Willcock repeated the following reasoning from Madam Justice Humphries in Lumanlan v. Sadler:
Given the significant injury to the plaintiff, which was caused by the defendant’s foolish and reckless behaviour, and the effect on the award of a further reduction for costs, even if not doubled, and taking into account all of the above considerations, in my view it would not be fair or just to require the plaintiff to pay ICBC’s costs after the date of the offer.
In the second case released this week (Mazur v. Lucas) the Plaintiff was awarded $538,400 following a jury trial to compensate her for injuries sustained in a collision.  ICBC appealed and succeeded in having a new trial ordered.
Prior to the second trial ICBC made a formal settlement offer of $300,000.  The Plaintiff rejected this and proceeded to trial again.   This time the jury came in lower awarding $84,000 in damages.
ICBC brought an application seeking costs for both trial.  The result of this would have been financially significant.    Madam Justice Humphries declined to allow this and instead awarded the Plaintiff costs for both trials despite not besting ICBC’s offer.  In exercising its discretion the Court provided the following reasons:
[62] This court has stated many times that parties should be encouraged to settle, and if unreasonable in not doing so, may be punished in costs.  As well, the fact that an award of costs against a party may wipe out their award of damages is not determinative.  However, given all the circumstances that existed at the time the offer was made which did not change throughout the trial, I am not persuaded that the plaintiff ought to be denied her costs on the basis that she ought reasonably to have accepted the offer that was made twelve days before the trial began.  Having in mind the amount of the first award, the narrow issue upon which a new trial was ordered, the amount of the second offer, and the expected similarity of the evidence at the second trial, the plaintiff was reasonable in deciding not to accept the offer and to have the action adjudicated by a second jury.
In addition to this final result, this case is worth reviewing for the Court’s discussion of advance payment orders.  Prior to the second trial ICBC paid the Plaintiff $250,000 in exchange for a stay of execution so the Plaintiff would not collect the damages from the Defendants personally.  Madam Justice Humphries found that an advance payment after judgement should not be factored into a costs assessment.  The Corut provided the following reasons:

[14] The defendants argue that the plaintiff should be deprived of her costs of the second trial as of December 24, 2009, the date on which the negotiated agreement was signed.  They cite cases dealing with situations in which awards at trial are less than an advance, and in which plaintiffs have been deprived of costs as of the date of the advance (McElroy v. Embelton (1996), 19 B.C.L.R. (3d) 1 (B.C.C.A.); Baxter v. Brown (1997), 28 B.C.L.R. (3d) 351 (B.C.C.A.).

[15] However, those cases are all advances before trial.  The basis on which the Court of Appeal in those cases concluded that the date of the advance was relevant to costs was because the plaintiff “had in hand more at the start of the action than the amount of the jury’s verdict.” (see McElroy).  The plaintiff, upon receipt of an advance, must realistically assess his or her claim knowing that proceeding to trial carries a risk in costs (Carey v. McLean, 1999 BCCA 222).

[16] This advance was one paid to avoid execution on an existing judgment, pending an appeal that would proceed regardless of whether the plaintiff wished to accept the money in final settlement of the action or not.  That option was not open to her.  The agreement signed by the plaintiff required repayment if a new trial were ordered and the results were not favourable to her, but did not give her the option of accepting the money and ending the proceedings.  This advance payment, unlike those in the cases cited by the defendant, is not the equivalent of an offer to settle.

[17] The date of the advance is not appropriately considered in these circumstances.

"Nominal" ICBC Offer Fails To Trigger Double Costs Award


As previously discussed, BC has a true ‘loser pays‘ system which generally requires the loser of a lawsuit to pay the winners costs.  If a Defendant makes a formal settlement offer and defeats the Plaintiff’s lawsuit the Court has the discretion to award double costs.  Reasons for judgement were released recently by the BC Supreme Court, New Westminster Registry, refusing to make such an order in circumstances where the formal offer was little more than a walk-away offer.
In last week’s case (Habib v. Jack) the Plaintiff was injured while riding as a passenger in the Defendant’s bus.  The parties agreed on the value of the Plaintiff’s injuries but disagreed on the issue of fault.  Prior to trial ICBC made a formal settlement offer of $1,000.  The Plaintiff rejected this offer, proceeded to trial, and had her claim dismissed.
ICBC was awarded costs and asked the Court to award double costs pursuant to Rule 9-1(5).  Madam Justice Ross refused to do so noting that the offer was ‘nominal’ and that it was not unreasonable for the Plaintiff to have her day in court.  The court provided the following helpful reasons:

[15] The defendants submit that having regard to the factors enumerated in the Rule, the court ought to award double costs. Counsel submits that the offer was not nominal; it gave the plaintiff modest recovery and represented a willingness to compromise that the Rule is meant to foster. The offer was made at a time when the discoveries of both parties were complete and the evidence was known. The plaintiff’s position is that this was a nuisance offer and it cannot be said, without applying hindsight, that it ought to have been accepted.

[16] At the time the offer was made, it was clear that the plaintiff had suffered an injury. There was a dispute with respect to liability. Mr. Jack had limited recollection. The only two witnesses were Ms. Habib and Mr. Jack.

[17] In my view the offer was nominal given Ms. Habib’s injury. I agree with the observations of Burnyeat J. in Martin v Lavigne and Neufeld (Costs), 2010 BCSC 1610 at para. 13, that there are situations in which a nominal offer should have been accepted. However, in my view this is not such a case. It cannot be said that it was clear that the action had little chance of succeeding on the merits. Rather, there was a significant risk that the case would be lost on liability. This risk materialized and the action was lost at trial; however, in the circumstances it was not unreasonable for the plaintiff to reject the offer and proceed to trial.

[18] On balance I have concluded that this is not a case to make an order for double costs as sought by the defendants based upon the offer to settle. In the result, the defendants will have their costs.

More on Costs and the Flexibility of the New Rules of Court


(Update June 5, 2013- the underlying trial verdict was upheld in reasons for judgement released today by the BC Court of Appeal)
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As previously discussed, one of the best changes in the New Rules of Court is the ability for trial judges to have discretion in assessing costs consequences where one party bests their formal settlement offer at trial.
Generally where a Plaintiff fails to beat a Defence formal settlement offer they can be punished with a significant costs award.  Fortunately Rule 9-1 does not force a Court to this result and instead leaves some discretion in the process.   This discretion was demonstrated in reasons for judgement released last week by the BC Supreme Court, New Westminster Registry.
In last week’s case (Gatzke v, Sidhu) ICBC, on the Defendant’s behalf, made a formal settlement offer of $50,000.  The Plaintiff proceeded to trial and after a split finding of liability was assessed damages at “an amount to someting less than $10,000“.
ICBC brought a motion to be awarded post offer costs.  Mr. Justice Saunders refused to make this order instead simply ordering that the Plaintiff be deprived of her post offer costs and that the Plaintiff pay the disbursements associated with bringing the Defendant’s IME doctor to trial.  In reaching this result the Court provided the following reasons:

[14] …. Ordinarily, where a plaintiff obtains judgment for less than the amount offered in settlement, the legislative purpose of the Rule would be fulfilled by awarding the defendant its costs from the date the offer was made.  However, where there is a very significant gap between the judgment amount and the offer, it may be the case that a defendant is in a better position for having gone to trial, even taking its counsel’s fees into account.  This appears to have quite possibly been the case in the present circumstances.  The damages assessed, net of the plaintiff’s contributory negligence, are a small fraction of the offer.

[15]Defendants should not be discouraged from making generous settlement offers.  But where the end result is dramatically different than the offer resulting in a net savings to the defendant, a defendant found to be partially at fault can reasonably expect to bear some of the cost of obtaining that result.

[16]The plaintiff apparently has very limited financial means.  This factor, however, will be given the most weight where it is the subject accident, or other issue between the parties, which is responsible for the plaintiff’s circumstances.  That is not the case here.

[17]The defendants, on the other hand, were presumably being defended by the Insurance Corporation of British Columbia.  An insured defendant’s greater financial ability to defend is a factor which was described by the B.C. Court of Appeal in Smith v. Tedford, 2010 BCCA 302, as being a matter “of no small importance to considering whether and to what extend the financial circumstances of the parties, relative to each other, bear on an award of costs”.

[18]This appears to have been a case where both parties undertook a course of action based on an overestimation of the risk to the defendants.  There is no compelling case, in the circumstances, for awarding the defendants the entirety of their post-offer costs.  Given the plaintiff’s financial circumstances and the very modest damages, the purpose of the Rule will be met by awarding the plaintiff 30% of her costs to the date of the offer, and awarding the defendants only the disbursements incurred in association with the attendance at trial of their expert witness, Dr. Sovio.  Dr. Sovio’s attendance at trial was only required for cross-examination at the plaintiff’s request, and it is appropriate that this cost be borne by the plaintiff.  That amount is to be set off against the plaintiff’s award of damages.

"Special Costs" Clause Takes the Teeth Out of ICBC's Formal Settlement Offer


I’ve written many times about the risks and consequences formal settlement offers can create in the course of a personal injury lawsuit.  Interesting reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, refusing to give ICBC double costs after the dismissal of a lawsuit because of a ‘special costs‘ clause in their formal offer.
In this week’s case (Wong v. Lee) the Plaintiff was injured in a 2003 motor vehicle collision.  She sued her driver but the lawsuit was dismissed with a Jury finding the driver was not negligent.  Typically such a result obligates the Plaintiff to pay the Defendant’s costs due to the BC Supreme Court’s Loser Pays system.
Prior to trial ICBC made a formal settlement offer of $60,000.  In these circumstances the Court has the discretion to award ‘Double Costs‘.  ICBC, on the Defendant’s behalf, asked for the Court to make such an order.  Madam Justice Dardi refused, however, finding that the ‘special costs’ clause which is contained in many of ICBC’s formal settlement offers operates to create uncertainty in the settlement process.  The Court provided the following useful reasons:








[27] The plaintiff’s overarching submission is that the inclusion of para. 6 in Appendix A of the Offer to Settle is fatal to the defendants’ application for double costs. The Offer to Settle was subject to the conditions in Appendix A which provides in para. 6 as follows:

Nothing in this offer detracts from the Defendants’ right to seek special costs against the Plaintiff or his counsel above and beyond the Defendants’ entitlement to costs under this offer. Neither the making nor the acceptance of this offer shall be deemed a waiver or estoppel by the Defendants in respect to any reprehensible or improper conduct on the part of the Plaintiff and / or his counsel in respect of this proceeding. [Emphasis added.]

[28] Based upon these terms, even if the plaintiff had accepted the Offer to Settle, the defendants nonetheless would have been at liberty to pursue the plaintiff for special costs. Thus, there was a potential risk that the acceptance of the offer may not have ended all of the outstanding disputes between the parties.

[29] The Court of Appeal, in discussing Rule 9-1(5) in Evans v. Jensen, 2011 BCCA 279, articulated at para. 35 that “the most obvious and accepted intent of this Rule, namely to promote settlement by providing certainty to the parties as to what to expect if they make, or refuse to accept, an offer to settle”. The Court reasoned as follows:

[41]      This conclusion is consistent with the importance the Legislature has placed on the role of settlement offers in encouraging the determination of disputes in a cost-efficient and expeditious manner. It has placed a premium on certainty of result as a key factor which parties consider in determining whether to make or accept an offer to settle. If the parties know in advance the consequences of their decision to make or accept an offer, whether by way of reward or punishment, they are in a better position to make a reasoned decision. If they think they may be excused from the otherwise punitive effect of a costs rule in relation to an offer to settle, they will be more inclined to take their chances in refusing to accept an offer. If they know they will have to live with the consequences set forth in the Rule, they are more likely to avoid the risk.

[42]      This certainty in terms of the result of either making, accepting or refusing to accept an offer is also more conducive to the overall object of the Rules, which is “to secure the just, speedy and inexpensive determination of every proceeding on its merits”.

[30] It clearly emerges from the authorities that an important objective of offers to settle under the Rules is to bring certainty and finality to litigation. The reservation of the defendants’ right to seek special costs from the plaintiff after the acceptance of the offer is antithetical to this objective. It cannot be said that the Offer to Settle provided a genuine incentive to settle. As was stated inGiles v. Westminster Savings and Credit Union, 2010 BCCA 282 at para. 88, “plaintiffs should not be penalized for declining an offer that did not provide a genuine incentive to settle in the circumstances”.

[31] In short, para. 6 in Appendix A of the Offer to Settle militates against an award of double costs…





[34] In weighing all of the factors, the most significant being the inclusion of para. 6 in Appendix A of the Offer to Settle, I conclude that the plaintiff should not be required to pay double costs.



The High Risk of Personal Injury Trials: The Costs and Disbursements Swing


As previously discussed, personal injury trials can be risky and expensive.  The British Columbia Supreme Court has a so-called ‘loser pays’ system which generally makes the losing side pay the winning side’s costs and disbursements (the hard expenses associated with running a trial such as court filing and expert witness fees).  Last month the BC Supreme Court, Victoria Registry, released reasons for judgement demonstrating this reality.
In this recent case (Sartori v. Gates) the Plaintiff was injured in 2005 when a truck owned by his friend accidentally struck him.  The Plaintiff sued for damages.  As the lawsuit progressed ICBC made a formal settlement offer of $230,000 plus costs and disbursements.
The Plaintiff presented his own formal offer of $600,000 plus costs and disbursements.   These offers were rejected and the claim proceeded to trial.  Ultimately a jury found the Plaintiff 33.3% at fault for the collision but accepted that he was injured and awarded damages.
When all the dust settled, the Plaintiff was awarded $234,000.  ICBC argued that since the final result was “within a knife’s edge” of their offer that the Plaintiff should be stripped of his post offer costs and disbursements.  This was a significant development because the Plaintiff spent over $120,000 in disbursements while advancing his claim.
Ultimately Mr. Justice Wilson found that this result would not be fair.  However, the Court disallowed disbursements associated with one of the Plaintiff’s expert witnesses and further reduced the disbursements the Plaintiff was entitled to by 1/3 to take into account the jury’s finding of fault and section 3 of the Negligence Act.  Some quick math reveals this results in about $40,000 of the real costs of advancing the claim not being recovered by the Plaintiff.  This large swing highlights the need to consider potential costs consequences when deciding whether to settle an ICBC claim or to proceed to trial.
This recent case is also noteworthy for a few other reasons.  ICBC argued that the usual rule of a winner receiving costs should not be followed given how close the settlement offer was to the jury verdict.   Mr. Justice Wilson rejected this argument providing the following useful reasons:

[42] The governing principle on the first issue, is R. 14-1(9).  The material words of that subrule, on this application, are:

… costs of a proceeding must be awarded to the successful party unless the court otherwise orders.

[43] The onus is on the defendant to persuade me why I should otherwise order….

[55] The plaintiff reminds me that the discretion conferred by the cost rules must be exercised judicially.  The parameters of that judicial duty were referred to in Stiles v. B.C. (Workers’ Compensation Board), and iterated consistently thereafter.  The court said:

… The discretion must be exercised judicially, i.e. not arbitrarily or capriciously.  And, as I have said, it must be exercised consistently with the Rules of Court.  But it would be a sorry result if like cases were not decided in like ways with respect to costs.  So, by judicial comity, principles have developed which guide the exercise of the discretion of a judge with respect to costs.  Those principles should be consistently applied; if a judge declines to apply them, without a reason for doing so, he may be considered to have acted arbitrarily or capriciously and not judicially.

[56] The Rules of Court mentioned in that extract are those cited above.  The “principles … developed …” or “purposes”, were referred to in Giles v. Westminster Savings and Credit Union:

The purposes for which costs rules exist must be kept in mind in determining whether appellate intervention is warranted.  In addition to indemnifying a successful litigant, those purposes have been described as follows by this Court:

•     “[D]eterring frivolous actions or defences”:  Houweling Nurseries Ltd. v. Fisons Western Corp. (1988), 37 B.C.L.R. (2d) 2 at 25 (C.A.), leave ref’d, [1988] S.C.C.A. No. 200, [1988] 1 S.C.R. ix;

•     “[T]o encourage conduct that reduces the duration and expense of litigation and to discourage conduct that has the opposite effect”:  Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 at para. 28 (C.A.);

•     “[E]ncouraging litigants to settle whenever possible, thus freeing up judicial resources for other cases”:  Bedwell v. McGill, 2008 BCCA 526, 86 B.C.L.R. (4th) 343 at para. 33;

•     “[T]o have a winnowing function in the litigation process” by “requir[ing] litigants to make a careful assessment of the strength or lack thereof of their cases at the commencement and throughout the course of the litigation”, and by “discourag[ing] the continuance of doubtful cases or defences”:  Catalyst Paper Corporation v. Companhia de Navegaçao Norsul, 2009 BCCA 16, 88 B.C.L.R. (4th) 17 at para. 16.

[57] Giles is also authority for the proposition that the “usual rule” is that costs follow the event…

Here, this plaintiff did succeed.  The defendant’s argument is that he did not succeed to the extent of his aspirations.  Therefore, goes the argument, the defendant should have the costs of establishing that failure.

[81] In my opinion, that proposition is not a phenomenon contemplated by R. 14?1(14) or Forrest v. Gaidner.

[82] My conclusion on the first issue is that the defendant has not persuaded me that this is a case on which I should otherwise order.  The plaintiff is entitled to his costs, subject to the disallowance of one day of trial and disbursements associated with Dr. Hunt’s involvement.

Winners and Losers: More on Costs Consequences and Formal Settlement Offers


How can a Plaintiff who is awarded damages following a personal injury trial end up owing ICBC money?  The answer relates to the costs consequences that can be triggered by formal settlement offers.  I’ve discussed this topic previously and two sets of reasons for judgement were released this week by the BC Supreme Court further demonstrating this reality.
In the first case (Dempsey v. Oh) the Plaintiff was injured in a bicycle accident when he was struck by the Defendant’s vehicle.  In the course of the lawsuit ICBC made a formal settlement offer of $40,000.  As trial neared ICBC increased their formal offer to $165,000.  The Plaintiff rejected this and proceeded to trial.  At trial the Court made some critical findings relating to the Plaintiff’s credibility and awarded damages of just over $20,000.
Following trial ICBC asked for an order pursuant to Rule 9-1(5) that the Plaintiff pay all of the Defendant’s costs following their first formal offer.  The Plaintiff objected to such a result arguing that “if he is ordered to pay the defendant’s costs he will end up owing it money“.  Mr. Justice Myers rejected this argument and ordered that the Plaintiff pay the Defendant’s post offer costs.  In rejecting the Plaintiff’s submission the Court made the following comment “It is not the court’s function to ensure that a plaintiff makes a net recovery from an action when it has ignored a reasonable offer.  That would defeat the purpose of the Rule and does not accord with common sense”.
On another note, this case is worth reviewing in full for the Court’s discussion of Rule 14-1(10).  The Defendant argued that the Plaintiff should be deprived of his pre-offer costs as there was no sufficient reason to sue in Supreme Court.   Mr. Justice Myers rejected this argument finding that when the lawsuit was started the Supreme Court was an appropriate venue.  In making this finding the Court provided the following useful reasons:
[11]    In part due to the loss of income, this was a more complicated case than Ghelen.  This action was commenced approximately six months after the accident.  At that point I find it was reasonable for the plaintiff to have commenced the action in this Court because he was reasonably entitled to see the impact of the accident on his prior condition.  There is nothing in the rules which imposes a cost penalty on a party who files its suit quickly after its cause of action arises.  And, in Reimann v. Aziz, 2007 BCCA 448, the Court of Appeal held that there is no ongoing obligation on a party to assess his action as it progresses in the Supreme Court in order to consider whether it should be moved to Provincial Court.
In the second case released this week (Miller v. Boughton) the Plaintiff was injured in a 2006 collision.  She sued for damages and her case went before a jury.  The trial lasted 7 days.  Prior to trial ICBC made a series of escalating formal settlement offers starting at $22,000 with the final offer made shortly before trial topping out at $62,500.
The Plaintiff rejected these offers and proceeded to trial.  The Jury found the Plaintiff 45% at fault for the crash and the Defendant 55% at fault.   After taking this split into account the Jury’s award was a modest $3,880.  ICBC’s motion for post offer costs and disbursements was granted.  After factoring these in the Plaintiff likely ended up owing ICBC a significant amount of money.   (UPDATE September 12, 2011 – click here for follow up reasons confirming the Defendant’s costs were assessed at over $42,000)
Cases such as these illustrate the important lesson that formal offers create a “loser pays” system which could result in significant costs swings following trial.  When considering ICBC formal settlement offers it is important to keep this in mind when deciding whether to accept the offer or proceed to trial.

ICBC Denied Double Costs Despite Significantly Besting Formal Settlement Offer

(Update February 9, 2012 – the below decision is under appeal with the BCCA granting leave to appeal on February 9, 2012)

Last year highly publicized reasons for judgement were released assessing damages at $5.9 million for a lawyer who sustained a traumatic brain injury during a dance floor incident.   Despite the headline making award, only a fraction of the damages were recoverable due to the limits of the responsible insurer.  In what may be the final chapter of this long legal saga, reasons for judgement were released addressing costs.
As was widely reported, the Plaintiff was injured in a dance floor incident and successfully sued another lawyer that knocked her down causing her brain injury.  The reason why ICBC played a role is because the Plaintiff was involved in a subsequent car crash.  She sued the motorist for damages claiming the crash aggravated her brain injury.  Prior to trial ICBC made a formal settlement offer of $500,000.  The Plaintiff countered at $1.9 million.   Ultimately her allegations that the crash aggravated the brain injury were rejected and damages of just over $10,000 were awarded for the car crash.
ICBC asked the the Court to award them double costs under Rule 9-1.  Despite ICBC’s success in relation to their formal settlement offer and despite concerns about aspects of the Plaintiff’s trial testimony, Mr. Justice Kelleher declined to award ICBC double costs.  In today’s case (Danicek v. Li) the Court provided the following reasons:
[38] Considering all the factors, I conclude that there should be no award of double costs.  The plaintiff suffered, I found, career ending injuries.  I cannot say it was unreasonable to decline the offer.  Although I considered Ms. Danicek to be less than candid, I conclude on a consideration of all factors that no double costs award should be made.
Despite this, the Court did go on to award Costs and Disbursements at Scale C (the highest scale).  In reaching this decision Mr. Justice Kelleher provided the following Reasons:

[40] Counsel agree that the relevant factors for determining whether Scale C costs should be awarded include:

–       the length of trial;

–       the complexity of issues involved;

–       the number and the complexity of pre-trial applications;

–       whether the action was hard fought with little conceded;

–       the number and length of examinations for discovery;

–       the number and complexity of expert reports; and

–       the extent of the effort required in the collection and proof of facts.

See: Mort v. Saanich School Board, 2001 BCSC 1473 at para. 6; 566935 B.C. Ltd. v. Allianz Insurance Co. of Canada, 2005 BCSC 3032 at para. 7.

[41] Based on these criteria, there will be an award at Scale C.

[42] The trial was 29 days.  A central issue was whether the plaintiff’s symptoms would have resolved but for the motor vehicle accident.  There were reports and/or testimony from physiatrists, neurologists, psychiatrists and others.  The plaintiff alone relied on 21 expert reports.

[43] The action was complex. There were some seven parties involved. The plaintiff was examined for discovery on eleven occasions over several years. There were a number of applications both prior to and during the trial.  This case bears similarity to Graham v. Marek, 2002 BCSC 214; Ramcharitar v. Gill, 2007 BCSC 1268; and Mosher v. Sedens Estate, [1998] B.C.J. No. 2822.

[44] I have considered Hussack v. School District No. 33 (Chilliwack), 2010 BCSC 304, and Radke, when costs at Scale B were awarded.

[45] Hussack was a 23-day trial.  However, the liability issue was not complex; there were only four pre-trial applications and none was complicated.  The examination for discovery of the plaintiff was one full day and three half days.  There was one plaintiff and one defendant.

[46] In Radke, Madam Justice Boyd cited these circumstances in concluding that the matter was not a matter of “more than ordinary difficulty” (at para. 26):

[26]      The one circumstance which I agree made this case somewhat unusual was the fact that the defendant apparently took a very heavy interest in this case, to the point of following her neighbour (the plaintiff) about and gathering evidence to challenge her claims of disability.  In response the plaintiff’s counsel apparently conducted an in- depth investigation of the defendant, including her history of unusual behaviour in the neighbourhood, so as to challenge her own credibility and reliability.  The trial was settled before that evidence was heard.

[47] The complexity of this matter is well beyond what was before the Court in Hussack and Radke.


Formal Settlement Offers, Costs, and the Flexibility of the New Rules of Court


Interesting reasons for judgement were released this week by the BC Supreme Court, New Westminster Registry, discussing the ‘flexibility‘ that the New Rules of Court give Judges in making costs awards following trials where formal settlement offers were made.
In today’s case (Cairns v. Gill) the Plaintiff brought an ‘exaggerated’ personal injury claim to trial following a 2005 motor vehicle collision.  ICBC made an early formal settlement offer in 2006.   ICBC’s offer was modest at just over $1,200 plus costs.   The Plaintiff rejected the offer and proceeded to trial.   The trial did not go well and the Jury largely rejected the Plaintiff’s claim awarding just over $850 in total damages.
Having beaten their formal offer ICBC applied for an order that the Plaintiff pay their post offer Bill of Costs which was expected to exceed $16,000.  Despited the ‘exaggerated’ nature of the claim Madam Justice Arnold-Bailey found that such a result was unjust.  The Court stripped the Plaintiff of her post offer costs and disbursements however did not award ICBC their costs.  In reaching this result the Court provided the following reasons demonstrating the flexible (but perhaps somewhat unpredictable) nature of the current Civil Rules:
[57] The defendants seek costs and disbursements following the date of the offer to settle, despite the plaintiff obtaining judgment.  This is available pursuant to Rule 9-1(5)(d)…

[59] To make such an order would have a very negative effect on the plaintiff, and have the broader effect of further discouraging those with legitimate claims from bringing their actions in this Court when the defendant, funded by an insurer, has deeper pockets with which to bear the risk of a plaintiff achieving only a minor or, indeed, a pyrrhic victory.

[60] It is clear from the rules and the jurisprudence that costs consequences are to guide counsel in litigation decisions.  The object of the Rules is, “to secure the just, speedy and inexpensive determination of every proceeding on its merits.”  This object is to be conducted, as far as is practicable, with regard to proportionality.  While this object is frustrated to some extent by a claim worth $851 proceeding to its conclusion at a Supreme Court jury trial where it was more appropriate for determination in Provincial Court, the object and proportionality principle do not appear to accord with the potential cost of litigation in this case.  The bill of costs of the defendants is expected to exceed $16,000.

[61] I note that the Court of Appeal in Giles recognized when dealing with the issue of double costs that “all litigation comes with a degree of risk,” and that, “when faced with settlement offers, plaintiffs must carefully consider their positions.”  However, the court also indicated that plaintiffs, “should not to be cowed into accepting an unreasonable offer out of fear of being penalized with double costs if they are unable to ‘beat’ that offer.”  These considerations also appear relevant in these circumstances.

[62] In this case, pursuing a valid, although exaggerated, personal injury claim to trial, where the offer to settle did not provide a genuine incentive to settle in the circumstances, may, in the face of a defence funded by ICBC, cost the plaintiff almost twenty times what was awarded at trial.  It seems consistent with the object of the Rules generally, and of Rules 9-1 and 14-1(10), to have regard to the need to emphasize litigation decisions that direct cases to the appropriate forum without disproportionately penalizing a party that had some success, however limited.

[63] To this end, as considered in relation to the first issue, Rule 14-1(10) permits the Court to limit a plaintiff to the recovery of disbursements when the amount of the judgment is within the jurisdiction of the Provincial Court, which I declined to do in this case.  Then, as considered in relation to the second issue, Rule 9-1(5)(a) permits the Court to deprive the plaintiff of any or all of their disbursements after the date of the offer, which I found to be appropriate.  Then, taking the matter even further, Rule 9-1(5)(d) permits the Court to consider requiring the plaintiff to pay the defendants’ costs in respect of some or all of the steps taken after the date of the offer to settle.

[64] This progression demonstrates the flexibility within the overall framework of the rules to craft an order for costs that is appropriate to the circumstances of each case.

[65] In the present case, the plaintiff, although the “successful” party at trial, agreed to forego her costs after the date of service of the offer to settle and is, by virtue of my decision on the second issue, without disbursements from the date of service of the offer to settle, which occurred very early in the proceedings.  To require her to pay all or some of the defendants’ costs after the date of service of the offer to settle, which at the time was an unreasonably low offer, would be excessive and unjust.  It would not be in keeping with the nature of the offer, the relative financial circumstances of the parties, the principle of proportionality, and the need to avoid decisions that inappropriately discourage plaintiffs from pursuing valid claims.

This case is worth reviewing in full for the Court’s length analysis of many authorities to date addressing costs discretion under the new Rules of Court and further addressing important issues such as sufficient reason to sue in Supreme Court, and the relevance of suing an insured defendant.

Court Lacks Discretion To Deviate From Costs Agreement In Formal Settlement Offers


Authorities under the formal Rule 37B held that when a formal settlement offer dealing with costs consequences was accepted the BC Supreme Court had no discretion to make a different order with respect to costs.  The first case I’m aware of dealing with this issue under the New Rules was released today.  The Court upheld the principle developed under the former rule.
In today’s case (Sahota v. Sandulo) the Plaintiff was involved in a 2004 motor vehicle collision in Surrey, BC.  He started a lawsuit which was set for trial by Jury.  In the course of the lawsuit the Plaintiff incurred significant disbursements advancing the claim.  Fearful that the Jury trial would not go favorably the Plaintiff delivered a formal offer of settlement of $3,000 “plus court costs and disbursements“.  The Defendant accepted the formal offer.
The parties then could not agree on the costs consequences.  The Defendant brought a motion to address this issue.  Mr. Justice Armstong held that precedents developed under Rule 37B remain good law and that the Court has no discretion with respect to costs awards in these circumstances.   The Court provided the following reasons:

[28] Generally, the Court has discretion in relation to costs; however, where an offer to settle with specific terms as to costs has been accepted, to which Rule 9-1  applies, the Court does not have discretion to vary the terms of that agreement as they relate to costs.

[29] In Buttar v. Di Spirito, 2009 BCSC 72, Gerow J. held:

[11]      Both parties advanced arguments that the court has discretion under Rule 37B to make an order regarding costs. However, it is my opinion that the court has no discretion to make an order regarding costs in this matter. Mr. Buttar accepted the offer put forth by the defendants, including the offer regarding costs, without reservation. It is my view that Rule 37B does not confer discretion on the court to set aside an agreement that has been entered into between the parties regarding costs.

[33]         The rule in Buttar has been consistently applied in this Court and appears determinative of this issue.

[34]         Buttar and cases following it did not address Rule 9-1(4) as it relates to an accepted settlement that addresses costs. Rule 9-1(4) states:

(4)        The court may consider an offer to settle when exercising the court’s discretion in relation to costs.

[35]         Buttar held that the Court does not possess discretion to vary costs where a formal offer to settle, specifically addressing costs, has been accepted. If, in such circumstances, the Court is not in a position to exercise discretion in relation to costs, Rule 9-1(4) is of no application.

[36]         The rule in Buttar is applicable to the defendant’s application in this case. The plaintiff’s offer to settle, accepted by the defendant, created an agreement between the parties. This agreement is not subject to the Court’s discretion as to costs. In my view, the purpose of the rules would be frustrated if a party was free to accept an offer, clear and unambiguous on its face, and then move to invoke the Court’s discretion to add or vary terms to substantially rewrite the agreement reached by the parties.

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If you would like further information or require assistance, please get in touch.

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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