Double Costs / Punitive measure for failure to accept offer to settle

In this recent hearing, the Plaintiff was successful in an Order of double costs against the Defendant.

The trial had proceeded in November 2017 and judgment was delivered on March 27, 2018 referenced as Vine v. Taylor, 2018 BCSC 493.

The Court concluded that the offer made by the Plaintiff ought to have been accepted by the Defendant. The issue of double costs has been a common issue and was raised in this hearing.  The Plaintiff’s position was that the trial award far exceeded the Plaintiff’s formal offer to settle and therefore, the Defendant ought to have accepted the offer.

Rule 9-1 governs offers to settle and the following principles are noted:

An award of double costs is a punitive measure against a litigant for that party’s failure, in all the circumstances, to have accepted an offer to settle that should have been accepted. Litigants are to be reminded that costs rules are in place to “encourage the early settlement of disputes by rewarding the party who makes a reasonable settlement offer and penalizing the party who declines to accept such an offer”: Hartshorne v. Hartshorne, 2011 BCCA 29 at para. 25. This is said to have a winnowing function in the litigation process by requiring litigants to make a careful assessment of the strength or lack thereof of their cases throughout the litigation and to discourage the continuance of doubtful cases or defences: Catalyst Paper Corporation v. Companhia de Navegação Norsul, 2009 BCCA 16 at para. 16.

  1. There is no requirement that an offer to settle be made within a specific time from the start of trial. The question of timing of offers is largely driven by and governed by context: J.D. v. Chandra, 2014 BCSC 1272 at para. 18.
  2. An offer open for two days has been held to be a reasonable opportunity to consider the offer: Bennett v. Scanlan, 2010 BCSC 50 at paras. 34-36.
  3. The court should be reticent to conclude an offer is ambiguous when the issue is only raised by the recipient after the trial and in the face of an application for costs sanction. The burden is on the recipient to clarify the terms of the offer: Ballen v. Ballen, 2000 BCSC 261 at paras. 17-22; Saopaseuth v. Phavongkham, 2015 BCSC 45 at para. 58.
  4. The court may consider whether the defence is conducted by an insurer that is well able to assess the risks of proceeding to trial and would know that proceeding to trial could expose them to an award of double costs: Kostinuk v. Fellowes, 2015 BCSC 2327 at para. 13.

In analyzing this issue, Rule 9-1 (6) will be considered by the Court:

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.

It has already been stated that the trial award far exceeded the offer to settle made by the Plaintiff.

Interesting that for (c) above, the Defendant argued that the financial relationship of the parties should not be a consideration of the court in deciding on the legal issue of double costs especially if the party’s financial resources were not used to “distort” the litigation process. Reference was made to Wepryk v. Juraschka, 2013 BCSC 804 at para. 15. See also Barta v. DaSilva, 2017 BCSC 410.

However, the Court referenced Smith v. Tedford, 2010 BCCA 302 and quoted the following:

[16]      Having regard for Rule 37B(6)(c), the judge then considered the relative financial circumstances of the parties. He attached importance in this regard to the defence having been assumed by ICBC. He said:

[14]      Here, I think the consideration stipulated in Rule 37B(6)(c), “the relative financial circumstances of the parties,” also has a bearing. The plaintiff has very limited financial resources and the personal defendant had the advantage of a defence conducted by her automobile insurer. This fact should not constantly put the defence at a disadvantage on costs but, in my view, it is particularly relevant when a late acceptance of an outstanding offer has required the plaintiff to submit to a less certain and potentially prohibitively costly mode of trial.

[17]      The judge recognized an apparent conflict in two decisions of the trial court as to whether ICBC’s assumption of the defence was a relevant consideration under the rule: Bailey v. Jang, 2008 BCSC 1372, 90 B.C.L.R. (4th) 125; and Radke v. Parry, 2008 BCSC 1397, 90 B.C.L.R. (4th) 132. He then said:

[16]      I choose to follow Radke in this regard. The ability to have a case advanced by experienced and well funded counsel is, to my mind, a resource that should be taken into account in exercising the judicial discretion stipulated under the new Rule. As an example of how the obvious intent of the Rule can be perverted if the consideration is made independent of insurance coverage, here counsel for the defendant produced an affidavit speaking of her modest circumstances. She, like the plaintiff, is a young person employed at near minimum wage. This was particularly hard to accept as a relevant consideration after the 6-day course of this abbreviated trial, during which the Insurance Corporation twice had separate counsel appear to argue issues that might easily have been dealt with by the two trial counsel appearing on the defendants’ behalf.

[18]      The defendant contends that, for good policy reasons, insurance coverage is not to be taken into account in considering the relative financial circumstances of the parties. She says coverage limits are not universal and will vary between individuals. The defence of an action may be conducted by an insurer under a reservation of rights. Further, there will always be a substantial difference between the financial circumstances of most plaintiffs seeking personal injury damages and defendants’ insurers such that the considerations under Rule 37B(6)(c) will always favour such plaintiffs, and this is a consequence that could not have been legislatively intended.

[19]      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.

[20]        The reasons in J.D. also commend themselves to me:

[14]      As for the relative financial circumstances of the parties, there is no contest that the plaintiff was a student at the time of the trial and did not have any significant income that would afford her the luxury to ignore the risks of a trial. The defendants were represented by counsel for Insurance Corporation of British Columbia (ICBC) which is well-financed and could afford to take the risks of trial. This factor, therefore, also weighs in favour of taking the plaintiff’s offer to settle into account.

The Court took the position that the financial position of the parties was in favour of the Plaintiff.

Should the Offer have been accepted:

The Defendant’s position:

    1. There were contentious issues that hinged on the credibility of the Plaintiff
    2. The offer of the Plaintiff could not be accepted as there was not a breakdown of pecuniary and non-pecuniary damages; and also
    3. The defendants point to the terms of the offer which required “written Notice of Acceptance and the settlement proceeds of the offer to settle”. This was not a certain amount. The defendants also state that a settlement implies a promise to furnish a release and a consent dismissal, which are premised on no admission of liability. A clause in the settlement offer allows the plaintiff to use the settlement as an admission of liability, which the defendants say runs directly contrary to that premise.

The Court disagreed on these arguments see [22 – 32]


 [33]        The offer made by the plaintiff ought reasonably to have been accepted by the defendants. Even without having regard to the criterion of ability to pay, I conclude that an order for double costs is appropriate.


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