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Double Costs Denied

If I am awarded more at trial than my last offer to settle on the ‘eve of trial’, will the judge award me extra costs because the defendant forced me to run a trial and wasted court time?  What does a judge consider in making that decision?

In today’s case of Mayer v. Umabao 2016 BCSC 2355 the trial started on January 18, 2016. The plaintiff was awarded damages totaling $446,120.16. My summary of the trial decision is here. On January 11, 2016 (a week before the trial started), he offered to settle his case for $247,599.80. After trial, he applied to the court for double costs on the basis that he offered to settle his case for less than he received at trial, and the defence should have accepted that offer.

The Supreme Court Civil Rules at 9-1 provide guidance, which Madam Justice Young referred to in her judgment, noting the court’s discretion in relation to costs, and the considerations regarding whether to make an award in relation to a settlement offer that was not accepted. She noted that it “is no longer the case that a party will automatically receive double costs if the dollar value of a judgment exceeds that which the party offered. Rule 9-1 gives the court broad discretion to determine whether cost consequences ought to flow in cases where an offer to settle has been made.”

She went on to assess whether the pre-trial offer was a reasonable one, which should have been accepted. She noted the following principles that have developed in the case law:

[6]             The authorities say that a reasonable offer is not to be evaluated with the benefit of hindsight or by reference to the ultimate outcome: Hartshorn at para. 27.

[7]             The notion of reasonableness is to be considered by reference to the recipient’s knowledge of the circumstances at the time the offer was made and during the period it was left open for acceptance: Jones at para. 13.

[8]             In Hartshorne, the Court of Appeal set out factors to consider when determining whether an offer ought reasonably to have been accepted:

a)    The timing of the offer

b)    Whether the offer bore some relationship to the claim (as distinct from being a “nuisance offer”);

c)     Whether the offer could be easily evaluated; and

d)    Whether a rationale the offer had been provided.

Applying the above, she concluded that the offer was made when all the evidence was known, and while the defendants had a very unrealistic assessment of liability at 50%, the quantum of the case was nevertheless very difficult to assess. She had awarded a substantial loss of earning capacity for the 69-year-old, which was unusual, but fit with the unusual circumstances. She ultimately denied the plaintiff’s application for double costs, providing the following rationale:

[19]         Although I conclude that the defendants were unrealistic in their assessment of liability, I cannot find that the defendants unreasonably rejected the settlement offer given that there were so many contentious issues to be tried. For that reason, I do not believe that the defendants should be penalized for failure to accept an offer that might later prove to have been reasonable but might just as well have been proven not to be. The offer was not so reasonable that it ought to have been accepted. There were sound reasons for not accepting the offer without the benefit of hindsight. It is my view that this is a case that needed to proceed to trial to sort out all of the unresolved issues.