In a previous blog article, we discussed what happens if you make a formal offer to settle to ICBC prior to trial and you beat that offer in that you are awarded the same or more than this offer by the judge.
But what happens if ICBC makes a formal offer to settle and you do not beat this offer at trial?
Our province’s Rules of Court provide that taxable costs and disbursements (legal expenses) are awarded to a successful party unless the court awards otherwise. This means that if you proceed to trial on a personal injury claim and you are successful in proving that the defendant is liable (at fault) for the accident and you are awarded compensation for your injuries and losses, then you are entitled to an award of taxable costs and disbursements payable by the defendant (ICBC or other insurance company) unless there is an exception to this general rule.
One exception to the general rule may arise when a formal offer to settle was made prior to trial by the opposing party that equaled or exceeded the amount of the judgment. In other words, if ICBC formally offers to settle your claim, you reject the offer, you proceed to trial and you are awarded the same or less than ICBC’s offer, then you may be denied payment of taxable costs and disbursements from the time the offer was made until the conclusion of trial or ICBC may be entitled to its own taxable costs and disbursements from the time the offer was made until the conclusion of trial. Either way, this penalty may be substantial and in the tens of thousands of dollars depending on certain circumstances. The impact of this is that the injured claimant is responsible for payment of these costs.
In Wiseman v. Wang 2020 BCSC 569, the injured claimant was awarded $79,000.00. Prior to trial, ICBC made 2 offers to settle that exceeded the judgement – the first offer was for $100,000.00 and the second offer was for $150,000.00. ICBC applied for an order that the injured claimant pay the costs of the trial as punishment for failing to accept its offers.
In this case, the judge considered the Rules of Court which allow judges to use discretion in deciding whether or not the injured claimant is subject to a financial punishment for failing to accept an offer that exceeded the amount of the judgement. Rule 9-1(4) to (6) provides:
Offer may be considered in relation to costs
(4) The court may consider an offer to settle when exercising the court’s discretion in relation to costs.
(5) In a proceeding in which an offer to settle has been made, the court may do one or more of the following:
(a) deprive a party of any or all of the costs, including any or all of the disbursements, to which the party would otherwise be entitled in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle;
(b) award double costs of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle;
(c) award to a party, in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle, costs to which the party would have been entitled had the offer not been made;
(d) if the offer was made by a defendant and the judgment awarded to the plaintiff was no greater than the amount of the offer to settle, award to the defendant the defendant’s costs in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle.
[am. B.C. Reg. 119/2010, Sch. A, s. 21.]
Considerations of court
(6) 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.
A factor that may be considered by a judge in exercising his/her discretion, is whether the offer was one that ought reasonably have been accepted at the time of the offer was made without regard for the result at trial. To put this another way, the focus is on whether it was reasonable for the injured claimant to have accepted ICBC’s offer at the time it was made instead of focusing on the result at trial which occurred after the offer was made.
ICBC argued that the injured claimant ought to have known when the offer was made that her case was weak in that it was largely based on her own subjective beliefs and her credibility.
The trial judge exercised his discretion in determining that it was not unreasonable for the injured claimant to have rejected ICBC’s offer. The decision to refuse to award ICBC costs and disbursements for trial was based on 2 factors. First, when ICBC made the offers to settle, ICBC did not have a competing expert opinion with opposite conclusions to her own expert which would have called into question this expert’s opinions. Second, it was the injured claimant’s own credibility that was undermined at trial and not her expert’s opinion. This was highly relevant because the determination of her credibility was made at trial and not at the time the formal offers to settle were made. Again, this is because the focus of the consideration is on the time period in which the offer was made and not on the result at trial.