"All-Inclusive" Formal Settlement Offers Can Trigger Costs Consqeunces
Reasons for judgement were released today by the BC Supreme Court, Vancouver Registry, finding that an “all inclusive” formal settlement offer is capable of triggering costs consequences.
In today’s case (Wettlaufer v. Air Transat A.T. Inc.) the Plaintiff sued for damages after an “aircraft touched down and then braked, an unsecured food cart struck, with force,(struck) the back of the plaintiff’s seat.”. Prior to trial the Defendant made an offer, inclusive of costs and disbursements, of $250,000. The Plaintiff rejected this offer, proceeded to trial and sought damages of over $1 million. Much of the Plaintiff’s claimed damages were rejected with an award of approximately $110,000.
The Plaintiff argued the all inclusive offer should not trigger costs consequences. Mr. Justice Funt disagreed finding there is no prohibition to formal offers which have costs and disbursements built into them. In reaching this decision the Court provided the following reasons:
[18] The present Rules of Court provide greater discretion to the Court and avoid the formulaic approach reflected in the older rules set forth above. Justice Masuhara in Dodge v. Shaw Cablesystems, 2009 BCSC 1765, described the rationale for the rejection of all-inclusive offers under Rule 37 (the old rule in Helm):
[22] The old Rules provided a complete code which determined the costs consequences of an offer to settle: Cridge v. Harper Grey Easton, 2005 BCCA 33 at para. 20, 37 B.C.L.R. (4th) 62. Under the old Rule 37(24)(a), if the defendant made a monetary offer to settle which the plaintiff did not accept, and the plaintiff obtained a judgment equal to or less than the settlement amount, the defendant was entitled to costs from the date the offer was delivered. With such rigid cost consequences from which the judge had no discretion to depart, the rationale for the rule against “all-in” offers in Helm was engaged. Where the judge was unable to discern what part of the settlement offer was for costs and what part was for discharge of the action, the judge could not precisely evaluate whether or not the plaintiff obtained judgment more favourable than the settlement offer, leading to potentially drastic consequences.
[Footnote omitted.]
[19] In his October 18, 2012 letter, defendant’s counsel, Mr. Dery, rejected the plaintiff’s offer to settle for $996,025 plus taxable costs and countered with the $100,000 all-inclusive offer. The plaintiff did not provide a bill of costs and disbursements.
[20] Absent a bill of costs, the defendant’s further all-inclusive offer of $250,000 is understandable. Most litigants seeking to resolve a dispute prefer finality.
[21] With Helm decided on the significantly different rules, the Court is not bound by the rule in Helm that all-inclusive offers cannot be considered. The Court’s consideration of the $250,000 all-inclusive offer accords with the text, context and purpose of the current Rule 9‑1.