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Tag: Rule 9-1(6)

Court Declines to Award Plaintiff Double Costs Where Adverse Liability Finding was a “Live Possibility”

Often times when a plaintiff is awarded damages beyond their formal settlement offer the BC Supreme Court awards double costs.  Such an outcome is discretionary and not automatic and occasionally double costs are declined.  Reasons for judgment were published this week by the BC Supreme Court, Chilliwack Registry, with such an outcome.

In this week’s case (Enns v. Corbett) the Plaintiff was injured in a collision and sued for damages.  The Plaintiff was awarded damages approximately $30,000 above their formal settlement offer.  Despite this the Court declined to award double costs noting there was a ‘live possibility‘ of an adverse liability outcome.

In reaching this conclusion Mr. Justice Riley provided the following reasons:

[7]             I do not agree with the plaintiff that the offer ought reasonably to have been accepted as contemplated in Rule 9-1(6)(a). Rather, I agree with the defendant that at the time the offer was made, there was uncertainty as to the strength of the plaintiff’s claim, due in large measure to issues of contributory negligence and potential apportionment of liability. Despite the live issues as to liability, the plaintiff’s offer expressly rested on the premise that the defendant would be found “fully liable” for the collision; it made no allowance for the contingent risk that the plaintiff might be found contributorily negligent, which was a live possibility based on the evidence available to the parties when the offer was made. To quote from the defendant’s submission, the plaintiff’s offer “did not account for the real risk that the plaintiff’s claim might have been dismissed entirely or that liability might be apportioned, based on information available to the parties at the time”. As explained in Owen v. Folster, 2019 BCSC 407 at para. 12, the plaintiff’s offer did not put forward a “genuine compromise or an incentive to settle” in view of the litigation risks, such that the defendant did not act unreasonably in declining to accept it.

[12]         In my view, the most telling feature of this case is the fact that the offer to settle was premised on the plaintiff’s position that the defendant would be found fully liable for the collision, when there were live issues as to apportionment of liability. In these circumstances, it cannot be said that the offer “ought reasonably to have been accepted”. The other factors are less important in this particular case. The judgment obtained at trial was higher than the amount in the offer, but only marginally so as a proportion of the overall amount in issue. And, although the defendant’s insurance coverage placed her at some degree of financial advantage in terms of the decision to proceed to trial, there is no evidence that the defendant or her insurer used their financial strength in an untoward manner. The plaintiff was successful at trial and is therefore entitled to costs of the action at Scale B, but not double costs.

Court Finds "After the Event" Insurance a Factor To Consider When Awarding Post Trial Costs

In what, to my knowledge, is the first BC injury case commenting on the weight a court should place on “After the Event” insurance when awarding costs post trial, reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, addressing this.
In the recent case (Clubine v. Paniagua) the Plaintiff was injured in a crash and sued for damages.  Prior to trial the Defendant offered to resolve the claim for a total of $94,848.32 plus costs and disbursements.  The Plaintiff rejected this offer and proceeded to trial where he was awarded a total of $77,224.32 in damages.  The Defendant asked for costs of the trial arguing their offer should have been accepted.
The Plaintiff had ATE insurance which covers some of these adverse costs consequences.   The Court was asked to take this factor into account in stripping the plaintiff post-offer costs and making the Plaintiff pay the Defendant’s trial costs.  In finding this was an appropriate factor to consider Madam Justice Watchuk provided the following reasons:

[27]         On the costs application it was disclosed that the plaintiff purchased adverse cost insurance known as “After-the-Event” (“ATE”) insurance prior to trial.  In submissions the plaintiff explained that the ATE insurance would cover the defendant’s disbursements and costs from the date of the offer if costs were awarded against the plaintiff, and would also pay for the plaintiff’s disbursements incurred but not awarded from the date of the offer.  It will not pay for the plaintiff’s costs following the date of the offer. 

[28]         The defendant submits that the ATE insurance effectively undermines the intent of the offer to settle rule.  It allows a plaintiff to avoid the punitive costs consequences of the rule, ignore reasonable offers to settle, and with impunity take their chance at trial.  The winnowing function of the costs rules is obviated by ATE insurance; doubtful cases can proceed through litigation without risk of adverse costs consequences.  I conclude in this case that this insurance had such an effect. 

[29]         The ATE insurance in this case strongly weighs in favour of the defendant’s costs application. ..

[30]         The defendant made reasonable efforts to settle this matter.  The plaintiff’s failure to accept the reasonable offer to settle should have costs consequences.  The ATE insurance held by the plaintiff is a factor that further weighs against costs following the event in these circumstances. 

[31]         The offer was open to the eve of trial, July 22, 2016.  In these circumstances the plaintiff is entitled to only his pre-trial costs of $6,500 plus disbursements.  The defendant’s application is granted and she is entitled to the costs and disbursements of the trial. 

"Marginal Difference" Between Trial Result and ICBC Settlement Offer Results in Full Costs to Plaintiff

Reasons for judgement were published today by the BC Supreme Court, Victoria Registry, awarding a Plaintiff full trial costs after the Plaintiff failed to beat an ICBC settlement offer by a “marginal difference“.
In today’s case (Goguen v. Maddalena) the Plaintiff was injured in a collision the Defendant accepted fault for.  The Plaintiff proceeded to trial where he was awarded total damages of $174,360.84.
Prior to trial ICBC made a formal offer to settle for $175,000.  The Defendant argued that the Plaintiff should be deprived of some of his post offer costs for failing to beat the settlement attempt.  In finding that a “marginal difference” does not warrant such an outcome Madam Justice Forth provided the following reasons:

[39]         The plaintiff submits that the Defendant’s Offer was greater than the judgment amount by only $639.16, or approximately 0.5%. He argues that this marginal difference should afford little weight. In support, the plaintiff cites Saopaseuth v. Phavongkham, 2015 BCSC 45 at para. 74, in which Bernard J. noted that an award 2% greater than an offer to settle “suggests that little weight should be given to this factor”. Furthermore, in Zhao v. Yu, 2015 BCSC 2342 at para. 11, Baker J. held that an offer that exceeded an award by $1,800 was “of little significance in arriving at a decision about costs”.

[40]         The defendant submits that the Defendant’s Offer was only with respect to the plaintiff’s tort claim and that acceptance of the offer would have allowed the plaintiff to collect Part 7 ICBC benefits. Therefore, the Defendant’s Offer exceeds the trial award by a larger margin that what appears on its face.

[41]         The plaintiff, in reply, submits that he understood that any settlement offers made by the defendant were full settlements of both the tort claim and Part 7 claims against ICBC, and that at no time did defence counsel convey that Part 7 benefits would still be available in the event that the Defendant’s Offer was accepted.

[42]         With respect to Part 7 benefits, I note the first page of the Defendant’s Offer reads in part:

The Settlement Payment:

(a)     is offered after taking into account Part 7 benefits paid or payable, pursuant to section 25 of the Insurance (Motor Vehicle) Act, R.S.B.C. 1996, c. 231 (in respect of policies in force before June 1, 2007) and/or pursuant to section 83 of the Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231 (in respect of policies in force on or after June 1, 2007);

[43]         Neither counsel have provided submissions on the implications of this settlement term or the quantum of Part 7 benefits that would have likely been available to the plaintiff. As a result, it would be speculative of me to attach significant weight to the submissions on these points.

[44]         Considering the marginal difference between the Defendant’s Offer and the ultimate award, this factor is of little significance in my determination…

[52]         Taken together, the factors pursuant to subrule 9-1(6) weigh in favor of the plaintiff. As a result, I exercise my discretion to award the plaintiff costs pursuant to R 9-1(5)(c). The plaintiff is entitled to his costs at Scale B.

Plaintiff Stripped of Costs For Failing to Beat Defence Offer

Reasons for judgement were released today by the BC Supreme Court, New Westminster Registry, stripping a Plaintiff of post offer costs after receiving a jury award less than a pre-trial defence settlement offer.
In today’s case (Rutter v. Vadnais) the Plaintiff was injured and sued for damages.  About 2 years prior to trial the Defendant offered to settle for $50,000.  The offer was rejected and at trial a jury awarded global damages of $20,000.
The Court stripped the Plaintiff of costs from the time of the offer forward which would significantly impact the award given the costs of running the trial.  In reaching this decision Madam Justice Brown provided the following reasons:

[12]         Turning to the effect of the offers exchanged in this matter, Rule 9-1(5) and (6) provides:

Cost options

(5) In a proceeding in which an offer to settle has been made, the court may do one or more of the following:

(a) deprive a party of any or all of the costs, including any or all of the disbursements, to which the party would otherwise be entitled in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle;

(b) award double costs of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle;

(c) award to a party, in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle, costs to which the party would have been entitled had the offer not been made;

(d) if the offer was made by a defendant and the judgment awarded to the plaintiff was no greater than the amount of the offer to settle, award to the defendant the defendant’s costs in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle.

[am. B.C. Reg. 119/2010, Sch. A, s. 21.]

Considerations of court

(6) In making an order under subrule (5), the court may consider the following:

(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 served 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.

[13]         The plaintiff in this case had strong medical opinions to support her position. The defence position was contrary to the weight of the medical evidence. Although the jury award is less than that offered by the defendant, I am not persuaded that the offer made was one that ought reasonably to have been accepted either on the date that the offer was delivered or any later date. As Madam Justice Adair said in Currie v. McKinnon, 2012 BCSC 1165 at para. 20: “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.”

[14]         Second, while the amount recovered is less than the settlement offer, that is rarely a determinative factor, particularly as jury awards are more difficult to predict than judge assessments (Smagh v. Bumbrah, 2009 BCSC 623 at para. 13).

[15]         The relative financial circumstances are also a neutral factor in this case. Although Ms. Rutter does have some assets, I am not able to say that losing her costs or paying Ms. Vadnais her costs would not have a dramatic financial effect on Ms. Rutter.

[16]         Finally, although the defendant suggests that the history of negotiations between the parties is such that the offer of $50,000 was reasonable in response to the plaintiffs immediately preceding offer of $61,000, I am persuaded by the plaintiff’s response submissions that there were good reasons for her increasing her offer beyond $61,000 “as her retraining exposed her to physical demands of what she could expect to encounter ‘on the ward’ this showed her that her loss was likely to be more than she had previously thought.” The offer of $61,000 was made at the start of her retraining.

[17]         In conclusion, having considered the submissions of the parties and the factors set out in Rule 9-1, the plaintiff will have her costs of the action at Scale B until March 15, 2014, a reasonable time in which to consider the defendant’s offer. The parties will bear their own costs thereafter.

"Costs Awards Should Not Punish Plaintiffs From Taking Forward Meritorious Claims"

In a demonstration of the judicial flexibility that exists under the BC Supreme Court Rules when assessing costs consequences following trials with formal offers in place, reasons for judgement were released today by the BC Supreme Court, Vancouver Registry, awarding a Plaintiff full costs despite failing to beat a Defense formal settlement offer.
In today’s case (Anderson v. Kozniuk) the Plaintiff was involved in a pedestrian/vehicle collision.  Both parties were found partially at fault.  The Plaintiff suffered various physical injuries but also advanced a brain injury claim which was not accepted at trial.  Prior to trial ICBC issued a formal settlement offer of $125,000.  At trial the Plaintiff’s damages were assessed at $78,897 less 30% to reflect the plaintiff’s contributory negligence.
ICBC sought to strip the Plaintiff of post offer costs as a result but the Court exercised its discretion to award the Plaintiff full costs.  The Court was influenced by the fact that the costs of the prosecution were significant and an award of costs to ICBC would strip the Plaintiff of the totality of his damages.  In reaching this decision Madam Justice Sharma provided the following reasons:

[29]         The plaintiff submitted that the award of costs in this case exceeds the total amount of the judgment. In his written submissions, the plaintiff states that “[i]f the court orders that the Plaintiff is to pay costs to ICBC, it means that Mr. Anderson must pay the entire judgment award to ICBC, instead of spending this money on his health condition and prognosis.” I agree that is a significant factor if the court is to be mindful that costs awards should not punish plaintiffs from taking forward meritorious claims, as discussed above.

[30]         The plaintiff also says that the defendant was defended and funded by the insurer, whereas Mr. Anderson is impecunious having lost the ability to work, and previous cases have held this is a proper consideration: Smith v. Tedford, 2010 BCCA 302; Hunter v. Chandler, 2010 BCSC 1124 at paras. 23-25; Gregory v. Insurance Corporation of British Columbia, 2010 BCSC 1369 at para. 9; andMartin v. Lavigne at para. 23. I agree. Although there was no evidence before me about Mr. Anderson’s impecuniosity, I have no reason to doubt counsel’s word. Certainly at trial the evidence was consistent with counsel’s statement.

[31]         Based on these factors (and all others), the plaintiff submits it would be unfair and unreasonable that the plaintiff be ordered to pay costs to the defendant.

[32]         Finally, the plaintiff points to other factors that he says are relevant to the court’s exercise of discretion. He points out that two expert doctors did conclude that he suffered a brain injury. He also says it was not disputed that after the accident he displayed a number of characteristics consistent with having suffered a brain injury, including the fact that he had a flat affect and his behaviour around his family was different, as well as showing increased irritability, frustration and anger. The plaintiff also points out that the brain scans clearly show that he had brain lesions consistent with a brain injury. The plaintiff had increased difficulties with concentration and learning new tasks. Although I made a finding that both his alcohol consumption and anxiety had significant impacts on his life following the accident, the plaintiff suggests he should not be faulted for failing to guess that those factors would be essentially held against him when making a conclusion about whether he had a brain injury or not.

[33]         The award of costs is an exercise of the court’s discretion, guided by the legal principles identified above. This is not an exercise of counting up which factors favour which party and doing a mathematical calculation. The court must take into account all of the factors weighed against the circumstances of the case. Remembering that ultimately the result must not impose injustice or unfairness on either party, I exercise my discretion and conclude the normal rule of apportionment does not apply and therefore the plaintiff is entitled to 100% of his costs at trial. Because he has been successful on this application, I also award him the costs of this hearing.

Plaintiff Stripped of $56,207 of Costs and Disbursements for Not Beating Formal Defense Offer at Trial

Reasons for judgement were released today by the BC Supreme Court, Vancouver Registry, highlighting the judicial flexibility and potential financial risks that come into play when a formal offer of settlement is not beat at trial.
In today’s case (Park v. Targonski) the Plaintiff was injured in a collision and sued for damages.  Prior to trial the Defendants made a formal offer of $321,407.  The Plaintiff declined this offer and proceeded to trial where she was awarded $302,643 after applicable statutory deductions.
The Defendants asked the Court to strip the Plaintiff of her post offer costs and disbursements of $56,207 and further to pay the Defendants’ post offer costs and disbursements of $63,769.
The Court found that the offer ought to have been accepted and that it was appropriate to strip the Plaintiff of her post offer costs and disbursements.  The Court noted, however, that awarding the Defendant their costs would create “an unduly punitive sanction”.  In reaching this conclusion Mr. Justice Fitch provided the following reasons:

[47]         Upon consideration of the above-noted factors, as well as the overall purpose of the rules respecting formal offers, I conclude that, pursuant to Rule 9-1(6)(a), the plaintiff shall have her costs at Scale B up to the date of the offer to settle, but not thereafter.  The costs sanction to the plaintiff arising from this order is significant.  She will be denied her costs and disbursements totaling $56,207 from the date of service of the offer to settle.

[48]         I have given close consideration to whether the defendants should be awarded all or a portion of their costs for steps taken in the proceeding after service of the offer to settle pursuant to Rule 9-1(6)(d).  Balancing the applicable considerations as best I can, I have determined not to make this order.  In my view, it is unnecessary to make this order to give effect to the purposes underlying the rule.  More importantly, and for the reasons already given, doing so in this case would visit upon the plaintiff an unduly punitive sanction – one that fails to give any weight:  (1) to the challenges associated with forecasting how a court might assess her loss of future earning capacity claim; and (2) to the plaintiff’s compromised ability to accurately evaluate her own situation.

[49]         The parties will bear their own costs arising out of this application.

No Costs Consequences With Formal Offer Bested by "Almost Negligible Difference"

Reasons for judgement were released today by the BC Supreme Court, Vancouver Registry, refusing to award discretionary costs where a defence formal settlement offer was not beat by a plaintiff by an “almost negligible difference“.
In today’s case (Zhao v. Yu) the Plaintiff was injured in a collision and sued for damages.  Prior to trial the Defendant issued a formal settlement offer of $93,500.  The Plaintiff declined and proceeded to trial where damages of $91,700 were assessed. The Defendant asked for trial costs but the Court dismissed the application finding it was not unreasonable for the plaintiff to reject the offer and proceed to trial.  In reaching this decision Madam Justice Baker provided the following reasons:

[13]         While in hindsight the Defendant’s Offer was indeed reasonable, that is not the test.  Rule  9-1(5) and 9-1(6) were not intended, in my view, to punish parties merely because the party’s assessment of the value of the claim proves incorrect, unless that assessment was based on irrelevant considerations; a clearly inadequate review of the available evidence and applicable authorities, or was, in view of the facts known at the time, unreasonable.

[14]         Here, the parties differed, as did some of the expert witnesses, about the Plaintiff’s prognosis; and the extent to which the injuries resulting from the accident, would affect his capacity to earn income in future.  While the Plaintiff did not succeed on this issue, I cannot say it was unreasonable for him to pursue the claim; or to believe that there was some prospect of success, even if there was a risk he would not succeed.  I note also the Plaintiff’s submission, which I consider persuasive, that even a slightly higher award for special costs or non-pecuniary damages would have resulted in an awarded that exceeded the Defendant’s Offer.

[15]         Having weighed the relevant factors, I am satisfied that this is a case in which I should award the Plaintiff the costs of the entire action, including all steps taken after the date of delivery of the Defendant’s offer, notwithstanding the Defendant’s Offer.

ICBC Punished 25% for Unproven Fraud Allegation

Reasons for judgement were released today by the BC Supreme Court, New Westminster Registry, finding that unproven allegations of fraud can be used as a factor to minimize a successful party’s costs entitlement after beating a formal offer.
In today’s case (Gupta v. Doe) the Plaintiff was involved in three separate collisions and sued for damages.   At trial the Plaintiff was awarded just over $43,000.  Priro to trial ICBC made several formal offers, the first at $90,000 and the last at $164,000.  Having beaten their formal offer by a considerable margin ICBC asked for post offer costs.
The Court agreed that ICBC was entitled to post offer costs and would have awarded these fully but did not due to ICBC’s unproven allegations of fraud with respect to one of the collisions.  In reducing ICBC’s costs award Mr. Justice Jenkins reasoned as follows –

[27]         One additional factor which I consider to be appropriate for consideration was the allegation of fraud on the part of the defence in the defence of the 2009 accident. The circumstances of that accident which involved a hit and run driver were included in the testimony of the plaintiff and no explanation was provided by the defence to support this most serious of allegations which subsequently was abandoned by the defence.

[28]         In these circumstances, it is appropriate that the plaintiff be awarded costs of the action for damages arising from the 2009 action. Such allegations should never be made without serious consideration by the accuser of the ability to be able to prove the allegations. In this case, it would appear as though the allegations could never have been substantiated and as a result, it is a factor in favour of the plaintiff in considering costs. The problem that follows is how to reflect this conduct on the part of ICBC in the award of costs.

[29]         I have come to the conclusion that this factor, i.e. the unproven and abandoned allegation of fraud and the third factor enumerated under Rule 9-1(6), i.e. the relative financial circumstances of the parties should be reflected in the award of costs with a 25% reduction in any amount of costs otherwise payable to the defendants.

[30]         Accordingly, the plaintiff is entitled to her full costs on Scale B in all three actions to August 14, 2014.

[31]         Considering the options available to a judge under R. 9-1(5), the factors which may be considered under R. 9-1(6) and all other factors where an offer has been made, I award 75% of one set of costs on Scale B to the defence in respect of all steps taken after delivery of the offer of settlement of August 14, 2014 as contemplated under R. 9-1(5)(d).

A Costs Argument That "Ought Not To Have Been Made"

Reasons for judgement were released today by the BC Supreme Court, Victoria Registry, criticizing a costs argument advanced by defense counsel after failing to best the Plaintiff’s formal settlement offer at trial.
In today’s case (Tenhunen v. Tenhunen) the plaintiff was injured when she tripped and fell on a deficient ramp constructed by the Defendant.  At trial both were found equally to blame for the incident.  Prior to trial the Plaintiff made a formal settlement offer of $80,000.  The Defendant did not accept this and the trial damages awarded amounted close to $125,000.
The Plaintiff sought post offer double costs but the Defendant opposed arguing, in part, that the Defendant was of modest means.  The court, suspicious of this argument asked about whether the claim was insured to which Defence counsel refused to answer citing the Code of Professional Conduct.  Plaintiff’s counsel then “provided a copy of the policy of insurance that the defendant was obliged to produce” which led to the following judicial criticism of the defence argument and an award of partial post offer double costs –

[27]        The defendant’s principal argument is based on Rule 9-1(6)(c), as she points to her own unfortunate circumstances, subsisting barely on a disability pension, and contrasts this to the far better financial position enjoyed by the plaintiff, who had been employed on an income between $77,000 and $101,511 in the five years between 2009 and 2013. The defendant argues that this financial disparity militates against an order for double costs. This submission, bearing in mind the evidence at trial, raises a logical question of insurance coverage.

[28]        The plaintiff and defendant are mother and daughter, respectively. They were and are close. The defendant ordinarily lives in the rented house where the plaintiff fell and suffered her injury, and from the photographs submitted into evidence, that residence would not suggest an ability to pay substantial damages. It is unlikely in the extreme that the plaintiff would sue her daughter, and proceed to trial, if the only prospects of recovery were limited to the defendant’s disability pension.

[29]        While the defendant’s straightened finances would argue against her being able to afford insurance premiums, those same financial constraints would argue more strongly against the defendant being able to afford to retain senior counsel for the entire action, or to offer to settle her mother’s claims for $80,000 all-inclusive on October 30, 2014. I recognize that an offer to settle is not a guarantee of payment, as it would simply have entitled the plaintiff to enter judgment for the amount of the offer, had she accepted it. In these circumstances, however, the plaintiff would have every reason to know that her daughter had no ability to pay the amount offered from her own funds.

[30]        The defendant’s argument under Rule 9-1(6)(c) made the question of insurance relevant to the costs issue, and by memorandum to counsel I invoked Rule 7-1(4) and asked if there were a policy of insurance to which the defendant could turn for indemnity. The Rule provides:

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.

[31]        Counsel for the defendant replied to this question in this way:

Finally, and more on the basis of a footnote, the Court has inquired as to whether there is a policy of insurance that the Defendant may look to for indemnification of damages and Costs. It would be entirely inappropriate for defence counsel to make any submission as to whether Ms. Kim Tenhunen may or may not look to a policy of insurance for indemnification. Defence counsel has a dual retainer in the circumstances and owes an obligation to both the Defendant and to an insurer not to compromise their respective interests: Professional Conduct Handbook, Chapter 6.4(a-d).

[32]        The Code of Professional Conduct for British Columbia (BC Code) replaced the Professional Conduct Handbook on January 1, 2013. I have examined the previous rule cited by counsel, and see nothing there to prevent the disclosure requested. I have examined the BC Code, with the same results.

[33]        The most charitable interpretation of counsel’s argument is that it is hypothetical. Even on that assumption, it still does not respond to the question posed under Rule 7-1(4), and that is whether the existence of a policy of insurance is relevant to the costs issue, and, if it is, whether there is a policy of insurance available to the defendant in this case.

[34]        How a lawyer’s duties are supervised by the Law Society – to both an insurer who retains the lawyer and the insured on whose behalf the lawyer acts under the retainer – have little to do with the question raised in this application. Nothing in the question put to counsel could raise a risk of dividing counsel’s loyalties to an insurer and insured, assuming that is the relationship that has existed.

[35]        Counsel for the plaintiff has provided a copy of the policy of insurance that the defendant was obliged to produce as part of pre-trial document discovery. The argument against double costs based on the parties’ relative financial circumstances ought not to have been made.

Double Costs Denied Following Modest Besting of Formal Settlement Offer

Reasons for judgement were released today by the BC Supreme Court, Vancouver Registry, denying a Plaintiff double costs after modestly beating a pre-trial formal settlement offer.
In today’s case (Barnes v. Lima) the Plaintiff was injured in a collision and sued for damages.  The morning before trial the Plaintiff tabled a $60,000 formal settlement offer.  ICBC rejected this offer and proceeded to trial where damages just over $67,000 were assessed.  The Plaintiff applied for double costs although the Court did not award these finding it was reasonable not to accept the last minute offer.  In reaching this decision Mr. Justice Weatherill provided the following reasons:
[2]             The action arose from injuries sustained by the plaintiff in a motor vehicle accident. It was commenced on September 18, 2012. It was a fast track action commenced under Rule 15-1 of the Supreme Court Civil Rules, B.C. Reg. 168/2009 (the “Rules”). The trial was heard on June 24 to 26, 2014. It lasted 3 days. My Reasons for Judgment were pronounced on July 11, 2014, indexed as 2014 BCSC 1282. The plaintiff was awarded $67,214.19.
[3]             On June 23, 2014, the morning before commencement of the trial, the plaintiff communicated a formal offer to settle the claim for $60,000 plus reasonable disbursements. The offer was stated to be open for acceptance until that same afternoon at 4 p.m. The defendant did not respond to that offer, although it had responded to earlier settlement offers from the plaintiff including by making his own formal offer to settle for $39,651.69 plus funding for 12 active rehabilitation sessions…
[9]             I have considered how the offer compares to the amount ultimately awarded after trial. The award at trial was only $7,214.19 more than the plaintiff’s offer. As matters transpired, it turned out to have been a reasonable offer, although it was a short-fuse offer made on the eve of trial. It should have been made weeks earlier. Be that as it may, it was straight forward and contained no ambiguities. Counsel for the defendant candidly acknowledged that his client had sufficient time before the trial in which to consider it. However, the fact that the award at trial was greater than the offer is not determinative: Ward v. Klaus, 2012 BCSC 99 at para. 46. The reasonableness of a decision not to accept an offer to settle must be assessed not by reference to the award that was ultimately made but rather the circumstances existing when the offer was open for acceptance: Ward, at para. 36.
[10]         On the eve of the trial, the defendant had a legitimate defence to the plaintiff’s claim, particularly his claim for loss of capacity which in his earlier communications to the defendant the plaintiff had indicated was significant. The plaintiff did not break his settlement offer into its components and provided the defendant with no ability to assess how much of it was to compensate the plaintiff for his loss of capacity claim. At the time the offer was communicated, there was a reasonable possibility that the plaintiff would not recover anything for that claim, which ultimately proved to be the case. It was reasonable for the defendant to wish to test the plaintiff’s position that his inability to work overtime at Carter Motors was due to the accident and not to other factors such as his marriage, particularly in the absence of supporting documentation.
[11]         Moreover, most of the plaintiff’s injuries were soft-tissue in nature. He had a pre-existing right shoulder injury. There were live issues regarding whether the plaintiff’s T-4 vertebra fracture had healed and, if so, when, as well as the plaintiff’s credibility relating to the extent that his injuries had affected his life. Parties should not be unduly deterred from bringing meritorious, but uncertain, defences because they fear a punishing costs order: Currie v. McKinnon, 2012 BCSC 1165 at para. 20.
[12]         In addition, the plaintiff provided the defendant with several photographs of the plaintiff’s carpentry skill but gave no explanation for how he intended to rely upon those photographs until after his settlement offer had expired.
[13]         The court has a broad discretion when determining the issue of costs: Ward at para. 33.
[14]         In my view, having considered all of the foregoing circumstances, the offer was not one that the defendant ought reasonably to have accepted.