Court criticizes ICBC for "ticking time bomb" settlement offer

In reasons for judgment posted this week, the court in Deol v. Sheikh, 2017 BCSC 1343, declined to award the defence its costs despite the fact they had substantially beaten their formal offer to settle.  In Deol, the defence made a formal offer to settle on the Thursday before trial in the amount of $450,000 (with the offer expiring at the end of the next day).  The plaintiff rejected the offer and was awarded $334,000 at trial.  In declining to award the defence its costs, Madam Justice Griffin described the defence offer as a "ticking time bomb" and held that the offer was not one the plaintiff should reasonably have accepted:

[12]         The plaintiff is unlike the insurer who was on the defence side of the case. The insurer is a serial litigant that has institutional knowledge about the risks of trial and the legal and evidentiary issues that are common in these kinds of cases.

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[14]         In my view, it is unreasonable to expect a plaintiff suffering from this kind of medical condition to be able to make a reasoned, confident decision about an offer to settle in a high-stress situation on the eve of trial in the limited time of one day. The fact she earlier made a counter-offer within a day proves only that with her lawyer’s help she had the ability to react to earlier offers, but does not prove that she had time to react reasonably to the Offer made on June 2. In short, the earlier exchange of offers does not prove that she had reasonable time to consider the Offer made on June 2.

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[16]         This case was dealing with a plaintiff who had a serious claim with long-term repercussions for her. When receiving a settlement offer, she would need the necessary time appropriate to someone with her injuries in order to reflect on what might be in her best interests. To penalize her by depriving her of costs or awarding costs to the defendants for not making a split-second decision about something so important to her future would, in my view, be unfair.

[17]         While the possibility of an unfavourable costs award should encourage settlements, the offer to settle rule is not intended to be a tool to impose high stakes last-minute pressure on an injured litigant.

[18]         The accident occurred in 2012, four years before trial. There was plenty of time for the defendants to make a reasonable offer in a way that would allow the plaintiff enough time to reflect on it and seriously consider it objectively.

[19]         I conclude that the plaintiff’s decision not to accept a ticking time bomb of a settlement offer delivered on the Thursday before the start of trial and open for one day only was not unreasonable.

The text of the full decision can be found here: http://www.courts.gov.bc.ca/jdb-txt/sc/17/13/2017BCSC1343.htm

 

Defence denied costs despite beating formal at jury trial

In reasons for judgment released today, the court in Bains v. Antle, 2017 BCSC 590, declined to award the defence costs despite beating its formal offer to settle.  In Bains, the plaintiff was awarded $37,800 by the jury at trial.  The defence had made a formal offer of $185,000 before trial.  In declining to award the defence its costs Madam Justice Power said:

[1]             After a ten-day jury trial in October 2016, the plaintiff was awarded by the jury, $37,800.00, an amount which was substantially less than what she was seeking and expected to receive at trial for chronic myofascial shoulder pain.

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[3]             The defendants seek an order that the plaintiff have her costs up until the defendants’ first formal offer to settle and that the defendants be awarded their costs of the action thereafter with a set-off as appropriate.  The defendants argue that their formal offer of September 20, 2016 -- $185,000 of new money plus costs -- ought reasonably to have been accepted on the date it was delivered.

[9]             The defendants served a single report which was a records review report of orthopedic surgeon Dr. John Hummel.  Dr. Hummell was not called to provide expert testimony at trial.

[15]         The plaintiff argues that neither of the defendants’ formal offers to settle was reasonable to accept in all of the circumstances.  The plaintiff was confident that she had a meritorious claim for substantial damages including loss of future earning capacity.  The plaintiff argues that the defendants’ responsive reports supported her claim.  The plaintiff argues that the defendants’ rebuttal expert, Ms. Claudia Walker, alone supported a fairly large claim for costs of future care.

[16]         The plaintiff argues that she has incurred tens of thousands of dollars for disbursements and that as a result of the trial, the family is financially devastated, requiring withdrawal of money from her children’s accounts.

[17]         The defence argues that the plaintiff went to court attempting to obtain over a million dollar award for a soft tissue injury.  The plaintiff took a gamble and lost, and it is this kind of action that is driving insurance rates up.  The defendants offered over five times what the jury awarded and it was a reasonable offer that ought to have been accepted on the date it was delivered.

[25]         Although some of the plaintiff’s initial negotiating positions were clearly inflated, and were tactical in nature and in that regard overly optimistic, I agree with the plaintiff that her decision not to accept the offer tendered by the defendants before trial was a reasonable one.  The evidence available to the plaintiff at the time that the settlement offers were rejected included expert reports in respect of past wage loss, loss of future earning capacity, and cost of future care.

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[36]         It is my view that all of the financial evidence at trial supports the fact that the plaintiff was a person of modest means.  Having already concluded that the settlement offer was not one which ought to have reasonably been accepted, it is evident that an order requiring the plaintiff to either pay the well-funded defendants’ costs, or in the alternative denying the plaintiff her costs, from September 20, 2016 onwards, would result in a pyrrhic victory and could have the effect of discouraging plaintiffs from pursuing valid claims.

The full decision can be found here:  http://www.courts.gov.bc.ca/jdb-txt/sc/17/05/2017BCSC0590.htm

Court awards double costs despite “defective” wording in formal offer

In reasons for judgment released today, the court in Hans v. Volvo Trucks North America Inc., 2017 BCSC 555, awarded both plaintiffs double costs for the trial following the plaintiffs’ formal offer to settle.  The defence argued that double costs should not be awarded as the formal offer was defective, in that it purported to offer to settle the claims of only one plaintiff, rather than both.  Mr. Justice Davies rejected the defence arguments and wrote:

[55]         The Volvo defendants assert that other factors exist which should result in denial of the plaintiffs’ application for double costs. The three factors relied upon are:

  1. A defect in both offers to settle in that they are made by an unspecified single plaintiff rather than both plaintiffs;

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[56]         Concerning the first factor the Volvo defendants submit that both plaintiffs were advancing significant claims so that it could not be objectively determined whether they intended to settle Mr. Hans’ claims, Mrs. Hans’ claims or the claims of both.

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[64]         The reality of this litigation, at all times well known to the Volvo defendants was that liability would have to be established before either plaintiff would be entitled to any recovery. Similarly it was well known that the plaintiffs’ claims for loss of past and future income earning capacity were inter-dependent and based upon the extent of the psychological injuries suffered by Mr. Hans. This was not a case in which there could have been severance of the claims of the individual plaintiffs.

[65]         While the offers to settle were potentially ambiguous, it is, in my view obvious that the intent of both offers was to settle the entirety of the action and the claims of both plaintiffs. I am also satisfied that the Volvo defendants appreciated that fact and never had any intention of accepting either offer. The failure of the Volvo defendants to seek any clarification reinforces my view that at all times they intended to pursue an “all or nothing” approach to the litigation.

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[69]         The plaintiffs are entitled to double costs from the Volvo defendants after the plaintiffs’ first offer to settle for $3 million dated February 2, 2015, which ought to reasonably have been accepted before the second offer to settle for $3.7 million was made on August 21, 2015. The plaintiffs are also entitled to double costs from and after August 21, 2015, by reason of their second offer to settle which similarly ought to reasonably have been accepted.

The full decision can be found here: http://www.courts.gov.bc.ca/jdb-txt/sc/17/05/2017BCSC0555.htm#_Toc478719343

Defence denied costs despite beating formal offer; court says “no utility” in imposing costs on plaintiff

In a costs decision released earlier this week, the court in Barta v. Silva, 2017 BCSC 410, declined to award the defence costs despite the defence beating its formal offer by a substantial margin at trial.  About two months before trial the defence made a formal offer to settle for $150,000.  The plaintiff declined this offer and was ultimately awarded $77,750 at trial.  In ordering that the parties would bear their own costs for the trial, the court appeared to be swayed by the “generous” position taken by the defendant.  Mr. Justice Affleck wrote as follows:

[1]            The plaintiff was injured in a motor vehicle accident in July 2007. The trial to assess damages took place in June 2014. In reasons for judgment indexed at 2014 BCSC 2113, damages were assessed at $77,750. The plaintiff now applies for an award of costs.

[2]            The plaintiff alleged a number of injuries the most serious of which was a mild traumatic brain injury, which was said to have deprived him of the ability to make prudent financial decisions the consequence being that he lost about $4 million in capital, as well as about $1,850,000 income to the date of trial and thereafter.

[3]            The findings at trial were that the plaintiff had not suffered a brain injury and his loss of capital and income were not caused by the accident injuries.

[4]            On May 15, 2014, the defendant had made a formal offer to settle for $150,000 plus costs and disbursements. On May 27, 2014, the plaintiff had made a formal offer to settle for $970,000 plus costs and disbursements.

[12]        The defendant's offer of $150,000 plus costs and disbursements was a serious offer. The plaintiff ought to have known that the defendant's legal advisers had a plausible basis for concluding that the plaintiff would be unable to prove a causal connection between his accident injuries and his financial losses. In my opinion the defendant’s offer ought reasonably to have been accepted.

[15]        The evidence at trial indicates that the plaintiff's assets were severely depleted by the effects of the financial downturn in 2008 and 2009. Mr. Creighton informed me that his client's income is now meagre. I can see no utility in imposing the costs of the trial on the plaintiff.

[16]        My order is that the plaintiff is entitled to his costs and disbursements to and including May 15, 2014, and that thereafter the parties will each bear their own costs and disbursements. I recognize that the usual order would be to impose the costs following the defendant’s offer on the plaintiff. The defendant, however, has proposed the disposition which I have made, which I consider to be generous to the plaintiff in the circumstances.

The full decision can be found here: http://www.courts.gov.bc.ca/jdb-txt/sc/17/04/2017BCSC0410.htm

Plaintiff awarded double costs after beating formal offer by $300,000

In reasons for judgment released last Friday, the court in Risling v. Riches-Glazema, 2017 BCSC 252, awarded the plaintiff double costs after the plaintiff beat the defendant’s formal offer by a substantial margin.  The court also refused to stay the costs award pending the outcome of the defendant’s appeal.  In Risling, the plaintiff made an offer to settle for $315,000 and was ultimately awarded $622,500 at trial.  In awarding double costs from the date of the offer and dismissing the application to stay the costs award, Mr. Justice Affleck said as follows:

[7]             In my view:

a) The plaintiff's case was well known to the defendants at the time of the offer. The plaintiff had been examined for discovery on two occasions; had attended two medical examinations at the request of the defendants, and a mediation had taken place in June 2016;

b) the offer was made one week before the trial began which gave the defendants a full opportunity to consider it;

c) the offer had a relationship to the claim and could not be characterized as a “nuisance offer”; and

d) the offer was expressed in plain language and thus easily evaluated.

[8]             The final judgment of the court greatly exceeded the offer. The plaintiff submits her offer was a true attempt to reach a reasonable compromise of the claim and that the rationale for the double cost rule is to encourage parties to settle by taking a realistic view of the probable outcome of a trial. The plaintiff submits that rationale would be thwarted if in the present circumstances she is not entitled to double costs.

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[10]         The defendants submit their limited understanding of the case made it difficult to quantify the claim and that, while the rationale for the rule for double costs is acknowledged, the defendants ought not to have been deterred from defending the claim for fear of a “punishing costs award”. Currie v. McKinnon, 2012 BCSC 1165 is relied on in support of that argument.

[11]         The defendants also submit that “no rationale for the offer was provided” in the plaintiff's letter of August 15, 2016.

[12]         I do not agree that no rationale was provided. The plaintiff described the heads of damages she would advance at the trial and advised that the offer took into account “Part 7 Benefits paid or payable pursuant to Section 83 of the Insurance (Vehicle) Act”. Furthermore, the defendants had an opportunity on the mediation to canvas fully with the plaintiff's legal advisers the extent of the plaintiff's claim and the evidence at trial which would be advanced to support the claim.

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15]         The plaintiff is entitled to the costs of this action including double costs from the date of the offer.

[16]         The defendants’ request a stay of this costs award pending the outcome of their appeal. I was not referred to authority.

[17]         I consider the better procedure to be for the defendants to apply to the Court of Appeal. In Western Forest Products Inc. v. Capital Regional District, 2009 BCCA 80, Frankel J.A. refused a stay of a trial award of costs pending an appeal but found the Court of Appeal had jurisdiction to do so.

The full decision can be found here: http://www.courts.gov.bc.ca/jdb-txt/sc/17/02/2017BCSC0252.htm

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

Plaintiff denied double costs even though formal offer bested by $200,000

In reasons for judgment released today, the court in Mayer v. Umabao, 2016 BCSC 2355, declined to award double costs to the plaintiff even though he beat his formal offer by close to $200,000.00. The plaintiff had issued a formal offer to settle for $247,599.80, and was ultimately awarded $445,120.16 at trial.  Madam Justice Young said:

[2]             The plaintiff was awarded costs at Scale B. He is now applying for double costs on the basis that he offered to settle the issues of quantum and liability on January 11, 2016 for the amount of $247,599.80…

[17]         … I agree with the defendants that quantum was very difficult to assess. The issue of causation of the plaintiff’s memory problems, dizziness, unstable walking and mood changes was very much in dispute. The neurologists gave opposing opinions. The neuropsychologist found evidence of deficits which he would have attributed to the Accident but for the evidence he received that the plaintiff did not strike his head at the time of the Accident.

[19]         Although I conclude that the defendants were unrealistic in their assessment of liability, I cannot find that the defendants unreasonably rejected the settlement offer given that there were so many contentious issues to be tried. For that reason, I do not believe that the defendants should be penalized for failure to accept an offer that might later prove to have been reasonable but might just as well have been proven not to be. The offer was not so reasonable that it ought to have been accepted. There were sound reasons for not accepting the offer without the benefit of hindsight. It is my view that this is a case that needed to proceed to trial to sort out all of the unresolved issues.

[20]         I therefore deny the plaintiff’s claim for double costs. The plaintiff will have his costs at Scale B.

The full text of the decision can be found here: http://www.courts.gov.bc.ca/jdb-txt/sc/16/23/2016BCSC2355.htm