Tag: Rule 9-1

Plaintiff's "Disadvantaged" Financial Circumstances Disentitle ICBC to Costs


There have been many cases dealing with “the relative financial circumstances of the parties” focussing on whether a Defendant is insured in deciding the costs consequences after trials with formal settlement offers. (The BC Court of Appeal weighed in on this issue earlier this year deciding insurance can in fact be considered).  There have not, however, been many cases dealing with the Plaintiff’s finances (or lack thereof) as a compelling circumstance.  This overdue issue was addressed earlier this week by the BC Supreme Court, Victoria Registry.
In today’s case (Dickson v. ICBC) the Plaintiff was injured in a bicycle accident involving an unknown motorist.  He sued ICBC under s. 24 of the Insurance (Vehicle) Act.  ICBC denied fault on behalf of the unknown driver.  Prior to trial ICBC offered to settle the issue of fault on a 50/50 basis.  The plaintiff rejected this offer and went to trial where Madam Justice Russell found both parties equally at fault.
Typically, when ICBC matches or beats their formal offer at trial, ICBC becomes entitled to post offer costs.  Madam Justice Russell refused to follow this usual course, however, noting that the Plaintiff’s financial circumstances put the plaintiff at a ‘serious disadvantage‘.  In awarding the Plaintiff costs to the time of the offer and depriving both parties of post offer costs Madam Justice Russell held as follows:

[13]    It is my view that the plaintiff’s position is one of serious disadvantage as a result of the accident.  I recall that he was unable to work for a long period of time as a result of his injury and was still unable to return to work by the time of the hearing.

[14]    The plaintiff is the sole support of his family and either had run out of disability benefits or was close to the end of those benefits by the time of the summary trial…

[17]    I view the financial circumstances of the plaintiff as compelling on the issue of whether double costs should be awarded.

[18]    In Osooli-Talesh v. Emami, 2008 BCSC 1749, the offer to settle matched the judgment achieved and Sigurdson, J. concluded that the court may award payment of double costs where an offer to settle matches the results at trial.  However, he went on to consider all the factors listed in Rule 37B.  He determined that the parties had divided success and should therefore bear their own costs.

[19]    I am guided by that decision and consider it apposite to the circumstances of this case.

[20]    I award costs of this case to the plaintiff to the date of the receipt of the defendants’ offer to settle and order both parties to bear their own costs thereafter.

Over 36,000 Reasons for Learning Motorists to Drive With A Qualified Accompanying Passenger


Reasons for judgement were released today demonstrating some of the real world consequences drivers with a learner’s licence could face if they are found to be in breach of their policy of insurance.
In today’s case (King v. ICBC) the Plaintiff was involved in a 2007 BC motor vehicle collision.  4 vehicles were involved in the crash.  The Plaintiff was insured with ICBC and they paid out over $36,000 with respect to the claims made from the crash.  At the time of the collision the Plaintiff had a Class 5L learners licence and was operating his vehicle “without a qualified accompanying passenger“.   As a result he was found in breach of his insurance.   He was found to be the at fault motorist and ICBC asked that he pay them back the over $36,000.
The Plaintiff sued ICBC arguing that he was not at fault and that he was not in breach of his insurance.  ICBC counterclaimed for $36,613.33.  Prior to trial ICBC made an offer to settle their claim against the Plaintiff for $33,000.  The Plaintiff declined this offer and proceeded to trial.  Ultimately Mr. Justice Pearlman found the plaintiff was the at fault motorist and that he was in breach of his policy of insurance.  He ordered that he pay back ICBC the funds they paid out with respect to the collision claims.
The Court went further and ordered that the Plaintiff pay ICBC double costs for failing to accept their pre trial offer.  In reaching this judgement Mr. Justice Pearlman provided the following reasons:

[30]         The plaintiff’s claim failed as a result of the court finding that neither his testimony, nor that of his witness, Ms. Gromova, was credible.  The court found that the plaintiff had wilfully made a false statement respecting Ms. Gromova’s presence in the vehicle at the time of the accident.

[31]          The over-riding principle is whether, if the Offer to Settle had been accepted, there would have been significant, or any savings in litigation costs to the parties or to the court: LeFler v. Anderson, 2008 BCSC 1563, at para. 18. Here, acceptance of the offer would have spared both parties the significant costs of a four day trial where the amount in dispute was, exclusive of court order interest, less than forty thousand dollars.

[32]         Taking all these factors into consideration, I conclude that an award of double costs should be made in this case, and is consistent with the objective of deterring unreasonable conduct in litigation.  I find that the plaintiff was entitled to a reasonable time to consider the defendant’s Offer to Settle, following its delivery on September 24, 2010.  Taking into account the disclosure of the will say statements of the defendant’s witnesses on September 29, and allowing Mr. King a reasonable time to consider his position, and the defendant’s Offer following the delivery of the will say statements, I find that the defendant is entitled to an award of double costs  commencing October 7, 2010.

RESULT

[33]         The defendant will recover its costs and disbursements of this action from its commencement until October 7, 2010.  Those costs will be at Scale B.

[34]         The defendant is entitled double costs commencing October 7, 2010 and to disbursements incurred after October 7, 2010.  Disbursements will be allowed in the amount incurred, rather than at a double rate.

New Formal Settlement Offer Rule Gets First Judicial Interpretation


The first judgement that I’m aware of dealing with the new formal settlement offer rule (Rule 9) was released today by the BC Supreme Court.
In today’s case (Demarzo v. Michaud) the Plaintiff was injured in a BC motor vehicle collision.  He went to trial and was awarded $356,000 in total damages.  (you can click here to read my post summarizing the trial judgement).  Prior to trial the Plaintiff made a formal settlement offer to resolve the claim for $150,000.
Having comfortably beat his pre-trial settlement offer the Plaintiff asked the Court to exercise its discretion and award double costs under Rule 9-1 (Rule 9 reads almost identically to the old Rule 37B.  You can access my archived posts dealing with Rule 37B by clicking here).
Prior to trial the Plaintiff obtained various independent medical reports.  The Plaintiff served these on the Defendant in compliance with the rules of Court but not as quickly as possible.  In an interesting application of the new rule Mr. Justice Brown held that double costs should not be ordered if a party failed to make “timely disclosure of documents“.  Specifically the Court held as follows in refusing to award the Plaintiff double costs:

[18]         The main purpose of Rule 9-1 is to encourage parties to settle, early if possible. But the purposes of the Rule, and modern practice, assumes timely disclosure of documents and reports that would significantly affect a party’s ability to make a rational assessment of the litigation risks they face. While it is true the Rules of Court provide parties means to discover facts and the parties can conduct their own investigations to assess litigation risks, in my view it is also incumbent on a party expecting an order for double costs to show timely disclosure of documents and reports that would have significantly affected the other party’s assessment of whether the offer ought reasonably to be accepted.

[19]         Further, while evidence at trial produced a judgment that was more than double what the plaintiff offered to settle for, I note that the plaintiff’s credibility, tested on cross-examination, and the specialist reports served in October 2009 were important factors in the damages awarded.

[20]         Considering these factors, I find an award of double costs is not in keeping with the purposes of the Rule and I decline an award.

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.

More on Rule 37B – Offers to Multiple Defendants and Reality of Insurance Discussed

Reasons for judgement were released last week by the BC Supreme Court, Vancouver Registry, dealing with several issues under Rule 37B.
In this case (Towson v. Bergman) the Plaintiff was involved in 2 BC motor vehicle collisions, the first in 2002, the second in 2004.    At trial liability was found as against a Defendant in the first trial.  The second case was dismissed.  Leading up to trial the Plaintiff made a formal offer to all of the Defendants for $500,000.  Following trial over $1.1 million dollars in damages were awarded (click here for my previous posting on the trial judgment).
The court was asked to consider whether the Plaintiff can have double costs when her formal settlement offer under Rule 37B was made to multiple defendants.  The liable defendant argued that “the offer under 37B was invalid…because it was made to multiple defendants…and could only have been accepted by all the defendants, including the defendant’s against whom (the Plaintiff’s) claim was eventually dismissed by the court”.
Madam Justice Gray disagreed with this submission and held that there is no reason why costs consequences can’t follow a formal offer made to multiple defendants under Rule 37B.  Her reasoning was as follows:

[59] Aspen Enterprises Ltd. v. Quiding, 2009 BCSC 50, is the only case I located which considered the effect of a global offer to settle made under Rule 37B.  The plaintiffs inAspen argued that Rule 37B is “intended to be broader in application than the former rules, and therefore should apply to global offers”.  They argued that the fact that a global offer has been made should not preclude a court from considering the factors set out in subrule 37B(6) and exercising its discretion to award double costs.

[60] Fenlon J. appeared to accept this argument, although she found, on consideration of 37B(6)(a), that the offer to settle was not one that ought reasonably to have been accepted by the defendants.  The offer as framed could not have been accepted by Aspen or Kingsway without the consent of the other, and without the further consent of Landmark, which was not even a party at trial.

[61] Rule 37B places no restrictions on the court’s discretion in relation to global settlement offers.  The purpose of the rule is to facilitate and encourage reasonable offers to settle.  It requires a settlement offer to be delivered to all parties of record.  The law developed under Rule 37 regarding global offers is of little assistance.  Pursuant to Rule 37B, the consideration for the court pertaining to global settlement offers is whether the offer was one that ought reasonably to have been accepted.

[62] In considering the effect of an offer to settle on an award for costs under Rule 37B, the court may consider the following factors:

(a)      whether the offer to settle was one that ought reasonably to have been accepted, either on the date that the offer to settle was delivered or on any later date;

(b)      the relationship between the terms of settlement offered and the final judgment of the court;

(c)      the relative financial circumstances of the parties;

(d)      any other factor the court considers appropriate.

[63] The Offer Under 37B was one that ought reasonably to have been accepted by MPS.  Despite the fact that the Offer Under 37 was addressed to all defendants, it was evident at the time that MPS was the party facing the greatest risk of liability to Ms. Towson.  When the Offer Under 37B was made, it was apparent that the liability, if there were any, of Ms. Chan, Mr. Ko, and Mr. Bergman was likely to be very significantly less than the liability of MPS.

[64] Although MPS could not accept the Offer Under 37B on behalf of Ms. Chan, Mr. Ko, or Mr. Bergman, MPS could have agreed to pay the $500,000 in full settlement of the claim against it.  The eventual judgment was for roughly $1.2 million, being more than double the amount Ms. Towson offered to accept.

[65] In this case, Ms. Towson’s award against the single unsuccessful defendant, MPS, is far greater than the amount she offered to accept. Global offers made in circumstances where there is more than one unsuccessful defendant may give rise to different considerations.

[66] Ms. Towson, at the time of trial, was in difficult financial circumstances.  She was unemployed, living with her parents, and receiving social assistance and disability payments.  MPS is a government ministry.  Ms. Towson’s financial circumstances were significantly worse than those of MPS.

[67] In all these circumstances, Ms. Towson is entitled to double costs, although when the double costs should begin is discussed below.

Madam Justice Gray went on to hold that double costs should begin one week following the delivery of the offer as that was a reasonable period for the Defendants to consider their response.

The other Rule 37B issue that was addressed was whether the existence of insurance should be considered when weighing costs consequences.  Our courts are currently split on this issue.  Madam Justice Gray held that Insurance should not be considered and set out the following reasons:

[113] The British Columbia Supreme Court has divided on the issue of whether insurance should be considered in assessing the relative financial circumstances of the parties.  InBailey, Hinkson J. considered that insurance should not be taken into account:

33.       While I accept that it is likely that most drivers in British Columbia are insured by ICBC, the wording of subrule 37B does not invite consideration of a defendant’s insurance coverage. There may be good policy reasons for this. Insurance coverage limits with ICBC are not universal, and will vary from insured to insured. Certain activities may result in a breach of an individual’s insurance coverage, or the defence of an action under a reservation of rights by ICBC. A plaintiff will not and likely should not be privy to such matters of insurance coverage between a defendant and ICBC.

34.       The contest in this case was between the plaintiff and the defendants, and the insurance benefits available to the defendants do not, in my view, fall within the rubric of their financial circumstances, any more than any collateral benefit entitlement that a plaintiff may have would affect that person’s financial circumstances for the purpose of determining their loss.

[114] Conversely, Madam Justice Boyd in Radke v. Perry, 2008 BCSC 1397, 90 B.C.L.R. (4th) 132, did consider the fact that the defendants were insured by ICBC, stating, at para. 42:

It is also clear that there is a substantial disparity in financial circumstances between the parties. The defendants, represented by ICBC, had substantially greater resources to finance a trial than the individual plaintiff. Had the defendants accepted the plaintiff’s initial reasonable offer, the plaintiff would not have had to incur the significant costs associated with nearly two weeks of trial.

[115] Bailey was released on October 16, 2008, six days before the October 22, 2008 release of Radke.  Radke does not refer to Bailey, and Bailey was likely not brought to the court’s attention.

[116] In my view, the reasoning in Bailey should be preferred, and the court should consider the “relative financial circumstances of the parties” without considering the insurance benefits available to the defendant.  Here, however, there was no evidence concerning the insurance benefits available to Ms. Chan and Mr. Ko.

I will continue to post about Rule 37B cases as they come to my intention despite the fact that the current BC Civil Rules are being repealed on July 1, 2010.  The reason for this is after July 1, 2010 formal settlement offers in the BC Supreme Court will be dealt with under Rule 9-1 which has language that is almost identical to the current Rule 37B making these precedents useful.

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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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