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Formal offer brings consequences

If I face formal offers and fail to beat them at trial, will I suffer costs consequences?  What if it turns out that I was misleading experts and my credibility unravels at trial?

In a decision released on August 16, 2018 (Gill v. McChesney, 2018 BCSC 1378), the court considered the implications of a formal offer to settle. Formal offers include wording to impose costs consequences for a failure to “beat” the offer at trial – essentially making the trial unnecessary because the claims should have settled if the offer was more than what resulted at trial. In this case, the defence had made two formal offers:

  1. $105,000 in August 2015; and
  2. $208,720 in September 2015.

At trial over October 2015 and February 2016, the plaintiff was awarded damages of $87,250, short of either formal offer. Her most recent pre-trial offer was $450,000, and she sought over one million dollars in damages at trial. Because they had made formal offers in excess of the damages actually awarded, the defendants sought an order that the plaintiff pay their costs from the date of the August 2015 offer, and sought an order that the plaintiff bear her own costs for litigation after the August 2015 offer.

 Mr. Justice Abrioux provided a detailed framework and analysis for whether the plaintiff should suffer costs consequences for forcing a trial when the defence offers were over the figure she was awarded at trial. A primary consideration is whether the offers were reasonable to accept in the circumstances. The plaintiff argued that they were not reasonable to accept because of her confidence in her claim for substantial damages. Mr. Justice Abrioux disagreed, noting that her claims were heavily dependent upon her credibility – an issue clearly recognizable. He ordered that the plaintiff pay the defendant’s costs after the August 2015 offer, finding as follows:

[54]          When I apply the legal framework to which I have referred and consider all the relevant factors, the real issue in my view is whether the plaintiff should pay the defendants’ costs after August 18, 2015, or whether the parties should bear their respective costs from that date onwards.

[55]         While not entirely analogous, this case does have certain similarities to those in Dennis, where the finder of fact concluded the plaintiff was untruthful and/or misled experts, as opposed to the situation where the plaintiff cannot be expected to know in advance how the court might assess his/her credibility in the witness box.

[56]         Here, the plaintiff did not accept a reasonable offer and the award at trial was significantly less than either the First or the Second Offers.

[57]         As was stated in Luckett v. Chahal, 2017 BCSC 1983 at para. 47:

[47]           But what happened here is that the plaintiff, well aware of the significant credibility issues at stake, chose to gamble or “take his chances” by going to trial and lost. He should live with the consequences which Rule 9-1(4) seeks to avoid: Wafler v. Trinh, 2014 BCCA 95 at para. 81.

[58]         In my view, that is what occurred in this case.

[59]         Accordingly, the plaintiff is entitled to her costs and disbursements at Scale B to August 18, 2015, and the defendants to their costs and disbursements at Scale B thereafter.