There were  two offers to settle made by the claimant in this case: one in the amount of $800,000 before trial and the other during the course of trial, in the amount of $1,010,000.  The defendant offered to settle for $55,000.00. At trial the claimant was found 50% at fault for a car accident and actually obtained an award of $159,052.75 for injuries suffered in the motor vehicle accident.
The issue addressed in this post is the impact of the offers to settle on the contribution toward the claimants legal fees and case costs. This case stands for the proposition that the court can consider the fact that offers to settle were made in determining costs under the Negligence Act ( Cornish v. Khunkhun, 2015 BCSC 832).
The claimant sought an order awarding her the whole of her costs of the proceeding whereas the defendants submitted that she should only get 50% of her costs and disbursements.
The $159,052.75 amount reflected a 50 per cent reduction in the damages that would otherwise have been awarded, based on the court’s finding that the defendant  and claimant were equally at fault for the accident. The claimant was driving west on 72 Avenue and as she entered the intersection at Scott Road in Surrey B.C., a vehicle heading east on 72 Avenue turned left in front of her and the vehicles collided.
The claimant’s second offer was accompanied by an email from the claimant’s lawyer purporting to provide an “explanation” of the second offer. That email includes the following paragraph:

If [the claimant] receives judgment for more than the policy limits, my instructions are to execute to the limits only of the law and my own ingenuity. We will take [the defendant’s] home (if necessary after a partition action). We will empty his bank accounts. We will take his business interests. We will seize and sell his personal chattels. We will garnish his income-including pensions. We will renew the judgment every ten years and continue execution until the debt is paid in full.

In addition to the offers to settle at trial the claimant submitted that damages should be awarded in the range of $2,824,915.50 to $4,940,120.50. For their part, the defendants at trial submitted that a proper range of damages was between $128,494.50 and $179,800.00.
The  claimant submitted that Rule 9-1 of the Supreme Court Civil Rules, which deals with offers to settle, must also be considered. Specifically, she said that the court must consider the factors set out in Rule 9-1(6) when determining the appropriate costs order.
The Judge found that the offer to settle Rule 9-1 was not engaged in this case. While offers to settle were exchanged between the parties, the result was such that each party did substantially better than what was offered by the other party. As such, none of the possible cost consequences set out in rule 9-1(5) should be applied, nor was the court required to consider the factors enumerated in rule 9-1(6). Although Rule 9-1 has no direct application,  the court may, as part of the section 3(1) analysis, consider the fact that offers to settle were made .
Ultimately, the central issue for the court is whether it would be unjust to apportion costs in accordance with section 3(1) and as the judge stated,

” In my view, it is open to the court to consider any and all factors that might inform the determination of what is just in the circumstances…

[41]   Offers to settle are an important component of pre-trial settlement negotiations and, as the court has said repeatedly, are intended to encourage the parties to act reasonably and to carefully assess the strengths and weaknesses of their own case as well as those of the opposing party. As part of the process, it is acceptable, and indeed often helpful, for counsel to provide an explanation of the considerations that led to a particular offer…

[43] However, in this case, the statements made by counsel go far beyond firm negotiation and amount to a threat to, in effect, hunt down [the defendant] and strip him of any possible funds or assets. In my view, the statements made by [the lawyer for the claimant] are both unnecessary and inappropriate.

[44]  Moreover, they run counter to the very objective of the offer to settle Rule which again is to encourage parties to be reasonable in the hopes of avoiding an expensive trial. Here, the unrealistic magnitude of [the claimant’s] offer to settle combined with the ill-advised statements made by counsel had the opposite effect and drove this matter to trial.

[45] In the circumstances, these considerations weigh against departing from Rule 3(1) and reapportioning costs in [the claimant’s] favour.

 The Judge found that it would not be unjust in this case to apply the normal costs rule as set out in section 3(1) of the Negligence Act.  The claimant therefore was entitled to recover 50% of her taxable costs ( contribution toward her legal fees) and case expenses.
Posted by Vancouver Personal Injury Lawyer Mr. Renn A. Holness, B.A. LL.B.

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