by Jesse Halperin, January 2011
In the normal course of a lawsuit, the party who is ultimately successful will get an order for costs. This means the unsuccessful party will be required to pay the costs and expenses incurred by the successful party in bringing the lawsuit through to trial. While these costs orders rarely cover the actual costs that a party is required to expend to succeed at trial, they do help to soften the blow of the increasing costs of litigation.
However, the ultimate success of a party is not the only thing a judge must consider when making an order as to costs. During the course of litigation, one party may invariably make an offer to the other party to settle the case for a stipulated amount without the necessity of going to trial. According to Rule 9-1 of the Supreme Court Civil Rules, rejection of a settlement offer can have serious costs consequences, as illustrated by the recent case of Brooks v. Gilchrist, 2011 BCSC 56 (trial decision is reported at 2010 BCSC 685).
In Brooks, the plaintiff sued for damages arising from two car accidents (only the first will be discussed here). In the first accident, the plaintiff was waiting at a red light when the car next to her was rear-ended. At the scene, there was uncertainty as to whether the plaintiff’s car was also hit. When she arrived home, her husband pointed out some scuff marks on the side of her vehicle, causing her to assume that she had been sideswiped by the car next to her during the accident. She claimed that as a result of the accident, she suffered an exacerbation of previous injuries to her neck and back, as well as a new injury to her hip.
Shortly before trial, the parties exchanged expert reports, authored by professional engineers, regarding the circumstances of the accident. Both experts agreed that the plaintiff had not been sideswiped which effectively defeated the plaintiff’s theory of the accident. As a result of this, the defendant made an offer to the plaintiff to settle her claim; specifically, the defendant offered to pay for the plaintiff’s disbursements – which in this case included expert medical and engineering reports – in addition to the nominal sum of $1.
The trial judge found that the plaintiff’s car was not hit in the first accident and dismissed the claim against the defendants. Due to the fact that the defendants “beat” their offer (i.e. were more “successful” at trial than they would have been had the plaintiff accepted their offer), they argued they should be awarded double their costs from the date the offer was made up until and including trial – a remedy specifically provided for in Rule 9-1(5).
In considering the defendants’ argument, the Honourable Mr. Justice Sigurdson noted that in some cases, nominal offers – such as ones for $1 – may not attract costs consequences under Rule 9-1. However, the trial judge ultimately held that in the unique circumstances of this case, in the face of the compelling expert reports negating the plaintiff’s theory of the accident, the defendants’ offer – which would have allowed the plaintiff to recoup the expenses associated with her lawsuit while at the same time absolving her of liability to pay the defendants’ expenses – was one that should have reasonably been accepted by the plaintiff, and awarded the defendants “double costs” from the date of the offer until trial.
Explicit in the reasons for judgment is the principle that a party must be constantly evaluating their chances of success at trial when considering an offer to settle from the opposing party; otherwise, serious costs consequences may result.
Jesse Halperin
Associate – Personal Injury & Motor Vehicle Accident Litigation
Lindsay Kenney – Vancouver Office