Defence denied costs despite beating formal offer to settle

In reasons for judgment released today, the court in Rutter v. Vadnais, 2017 BCSC 76, declined to award the defence costs even though they beat their formal offer to settle by $30,000.  In Rutter, the plaintiff was awarded $20,000 by a jury at trial, far lower than the plaintiff’s offer to settle of $180,000, and lower still than the defence formal offer of $50,000.  The defence also argued the plaintiff should be denied all costs as the $20,000 recovered fell below the small claims limit of $25,000.  In dismissing the defence arguments, Madam Justice B.J. Brown wrote:

[1]             This matter went to trial before a jury in February 2016. The jury awarded $20,000 in general damages comprised of $10,000 for nonpecuniary damages $5,000 for special damages and $5,000 for future care.

[2]             The parties exchanged a series of offers. The last offer from the defendant on March 6, 2014 was for $50,000...On November 6, 2015 the plaintiff offered $180,000 and the defence did not respond.

[3]             The jury award was less than the defence offer of $50,000.

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[11]         I am not persuaded by the defendant's argument that the plaintiff should only receive disbursements to March 6, 2014 because she recovered damages in the range of a Small Claims’ award. The offers exchanged by the parties exceed the Small Claims’ limit. Those offers were reasonable estimates prepared by the parties of their view of the appropriate award of damages. Additionally, the plaintiff’s physician also diagnosed the injuries from the accident as not insignificant. Finally, the plaintiff’s conduct was not so egregious that she would not be entitled to costs. As such, there was sufficient reason to bring the proceeding in the Supreme Court.

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[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...

[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.

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[17]         In conclusion...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.

The text of the full decision can be found here: http://www.courts.gov.bc.ca/jdb-txt/sc/17/00/2017BCSC0076.htm