Offers must be Clear and unambiguous – Stay away from “Old Money” / “New Money”

A recent decision in Park v. Donnelly, 2018 BCSC 219 confirms that offers must be “clear and unambiguous.” Language is very important, and if you do not use clear language, you may have difficulties claiming costs from the date of such offer, if the offer is deemed ambiguous.  This decision suggests that in drafting offers, we should stay away from expressions such as “old money” or “new money” when making offers to settle and ensure that the terms of the offer are clearly identified.  It is recommended that the language of any offer should be clear and furthermore, it should advise a Plaintiff the net amount that he or she will receive apart from Part 7 or other advances previously made. In the alternative, the precise amounts that have been paid should be clearly identified.  All prior amounts that have been paid, or benefits that have been received should be carefully tracked, noted, and disclosed to the Plaintiff.

Conclusions and Suggestions

[55]        An offer to settle should be clear and unambiguous. It should use plain language. It should avoid colloquialisms or idioms that are understood by a limited audience. These largely self-evident propositions are all the more important if one considers the potentially serious double cost consequences that Rule 9-1(5)(b) can give rise to.

[56]        These conclusions are also supported by Rule 9-1(1)(c) which establishes formal requirements for an “offer to settle” that a party proposes to rely on, at a subsequent time, in support of various cost consequences. These formal requirements put opposing parties on notice that they may now face the various cost consequences in Rule 9-1(5). Though there are no magic words that need be used in such offers there is a requirement that the language of the offer clearly and unambiguously convey the import of Rule 9-1(1)(c): Roach v. Dutra, 2010 BCCA 264 at para. 52; M.S.G. v. S.K.R., 2015 BCSC 913 at paras. 13 and 14; and Hoisington v. Johnson & Johnson Inc., 2016 BCSC 1973 at paras. 26 and 27.

[57]        Further considerations are relevant. The central objects of Rule 9-1(5) were described in Giles v. Westminster Savings and Credit Union, 2010 BCCA 282, where Frankel J.A., writing for the Court, said:

[74]         The purposes for which costs rules exist must be kept in mind in determining whether appellate intervention is warranted.  In addition to indemnifying a successful litigant, those purposes have been described as follows by this Court:

    • “[D]eterring frivolous actions or defences”:  Houweling Nursuries Ltd. v. Fisons Western Corp. (1988), 37 B.C.L.R. (2d) 2 at 25 (C.A.), leave ref’d, [1988] 1 S.C.R. ix;
    • “[T]o encourage conduct that reduces the duration and expense of litigation and to discourage conduct that has the opposite effect”:  Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 at para. 28 (C.A.);
    • “[E]ncouraging litigants to settle whenever possible, thus freeing up judicial resources for other cases:  Bedwell v. McGill, 2008 BCCA 526, 86 B.C.L.R. (4th) 343 at para. 33;
    • “[T]o have a winnowing function in the litigation process” by “requir[ing] litigants to make a careful assessment of the strength or lack thereof of their cases at the commencement and throughout the course of the litigation”, and by “discourag[ing] the continuance of doubtful cases or defences”:  Catalyst Paper Corporation v. Companhia de Navegação Norsul, 2009 BCCA 16, 88 B.C.L.R. (4th) 17 at para. 16.

[58]        It is difficult for litigants to make a careful assessment of an offer if the terms of that offer and/or its language are ambiguous.

[59]        I have also, in the past, expressed a concern that cost applications can add an unnecessary level of expense and complexity to an action. In Clarke v. Clarke, 2015 BCSC 1005, I said:

[25]        Importantly, cost awards serve to promote efficiency and the “just, speedy and inexpensive” determinations (R. 1-3(1)), in a manner that is “proportionate” to the dispute (R. 1-3(2)). It is thus open to a trial judge to weigh the inefficiency of a party during a trial when making a cost award; British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71 at para. 25. These same considerations must necessarily be relevant post-trial. Some cases will clearly warrant extensive cost submissions. They may involve questions of principle. They may involve, following a lengthy trial, a potentially significant cost award that warrants development and detail. They may also involve some sanction, in the nature of special costs, whose consequences, whether reputational or financial, again justifies an enhanced level of consideration and detail. Such cases will similarly require the court to address those issues with the same level of thoroughness.

[26]        Cost awards should not, however, in the main, become a second trial. They should not give rise to some new level of complexity or inefficiency. In this case, the parties’ costs submissions pertained to a four-day trial, with no experts, where any cost award and the parties’ respective disbursements should be relatively modest, and where the means of both parties are limited. These cost submissions, which occupied almost a full day, took longer than the submissions that followed the full trial. The reasons arising from this cost application are nearly as lengthy as the Reasons themselves.

See also Mohamed v. Intransit BC Limited Partnership, 2016 BCSC 321 at para. 18.

[60]        Cost applications should, in most cases, require the principled application of a discretion that is based on a well established and well understood legal framework: Paskall v. Scheithauer, 2014 BCCA 26, leave to appeal to SCC refused on July 17, 2014 in 2014 CarswellBC 2058. Cost applications should not, in most instances, require the court to have to engage in a further fact-finding exercise or to engage in resolving additional questions of principle. Clear and unambiguous offers to settle will, of necessity, simplify cost applications.

[61]        Finally, I do not consider that expressions such as “old money” or “new money” are terribly helpful. In this case counsel, both of whom are experienced, were unable to address certain questions I had about the content of these expressions and disagreed on other issues. I consider, particularly in circumstances where the Insurance Corporation is making an offer, that it should fix, with some precision, what money it is offering and what money it says it has paid or advanced to a plaintiff. My impression, from having overseen numerous such trials, is that plaintiffs will have often failed to carefully track the various forms of payment or benefits that they may have received from the Insurance Corporation over the course of some years. The Insurance Corporation, on the other hand, will have, or should have, these figures at hand.

[62]        This can be done in one of two ways. It can either be done, as was the case in Anderson, by providing an offer that tells a plaintiff exactly what net amount he or she will receive apart from Part 7 benefits or other advances. Alternatively it can be done, as was the case in Kerpan v. Insurance Corporation of British Columbia and Henry’s Autobody Inc. et al. and Lambert et al., 2007 BCSC 203, by identifying what precise amounts have been paid. Thus, the offer in Kerpan stated:

[10]            ICBC’s offer purports to be under Rule 37A of the Rules of Court.  The offer, made by ICBC’s counsel, reads as follows:

Your client has already been advanced $28,500.00.  ICBC is prepared to pay your client $171,500.00 new money ($200,000.00 old money), inclusive of costs and disbursements in return for a complete settlement and full release of all claims by Ms. Kerpan with respect to the accidents dated March 22, 2000, December 2, 2002, April 22, 2003, and September 25, 2005.

We reserve the right to bring this offer of settlement to the attention of the Court for the [sic] consideration in relation to costs after the Court has rendered Judgment on all other issues in the proceeding.

[63]        Finally, offers to settle are often made close to a trial date. The suggestions that I am making will obviate the need for counsel for the parties to go back-and-forth about the dollar value of the benefits or advances that a plaintiff has received. Fixing these figures will crystallize what further offer, apart from the monies that have been paid or advanced, the Insurance Corporation is making.

[64]        I appreciate that these proposals will not address all cases. In some cases an offer to settle may be made early in a case and further payments will be made to a plaintiff over the course of time. Furthermore, some Part 7 benefits are “payable” even after an action is settled. In such cases the form of offer used in Anderson will be more useful: see Anderson at para. 26.

[65]        I consider that the Offer was ambiguous. I do not consider that I need address the additional issues that are raised by the application of Rule 9-1(6). Accordingly, the Third Party’s present application is dismissed. I do not consider that the Plaintiff’s claim for special costs of this application was seriously advanced. Nor do I consider that there is anything in the Third Party’s conduct of this matter that warrants any rebuke or sanction. The Plaintiff should receive the costs of this application.

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