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Double Costs and Offers to Settle

Double Costs and Offers to Settle

Double costs and offers to settle were discussed in Lamperstorfer v Plett 2018 BCSC 607

Generally speaking costs of the proceeding must be awarded to the successful party unless the court otherwise orders.

The word success is being equated to substantial success. As a general rule of thumb substantial success occurs when the prevailing party succeeds on 75% of the matters in dispute, considered globally. This does not mean a court is to descend into a meticulous mathematical examination of the matters in dispute and assign a percentage to each matter. Rather it is meant to serve as a rough and ready guide when looked at all the disputed matters globally. (Fotheringham v Fotheringham 2001 BCSC 1321 at paragraph 45.)

 

Rule nine – 1 governs offers to settle. Subrules 9–1 (5) and (6) provide:

(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 of or service of the offer to settle.

B. Award double costs of all or some of the steps taken in the preceding 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, cost to which the party would’ve been entitled have the offer not be made.

D. If the offer was made by defendant and the judgment awarded to the plaintiff was no greater than the offer of the amount to settle, awarded to the defendant the defendants 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.

Considerations of the court

(6) In making an order under sub rule five, the court may consider the following:

A. Whether the offer to settle was one that ought reasonably to have been excepted either on the date of the offer to settle was delivered or served on or any later date,

B. The relationship between the terms of settlement offered on the final judgment of the court;

C. The relative financial circumstances of the parties;

D. Any other factors the court considers appropriate.

 

Principles of double costs rule

The BC Court of Appeal in Hartshorne v. Hartshorne 2011 BCCA 29 discussed the double costs rule and its guiding principles at paragraph 25:

25. An award of double costs is punitive measure against a litigant for that party’s failure, in all of the circumstances, to have accepted an offer to settle that should’ve been accepted. Litigants are to be reminded that costs rules are in place to encourage the early settlement of disputes by rewording the party who makes a reasonable settlement offer and penalizing the party who declines to accept such an offer.

The purposes for which cost rules exist must be kept in mind in determining whether appellate intervention is warranted. In addition to indemnifying a successful litigant, those purposes of been described as courts by this court:

  • Deterring frivolous actions or defences
  • To encourage conduct that reduces the duration and expense of litigation and to discourage conduct that has the opposite effect
  • Encouraging litigants to settle whenever possible, thus freeing up judicial resources for other cases
  • To have a winnowing function in the litigation process by requiring litigants to make a careful assessment of the strength or lack thereof of their cases at the commencement and throughout the course of the litigation, and by discouraging the continuance of doubtful cases or defences

With respect to whether the plaintiff should or should not have accepted an offer to settle, the reasonableness of the plaintiffs decision not to do so must be assessed with the reference to the courts decision.

Instead the reasonableness is to be assessed by considering such factors as the timing of the offer, whether it had some relationship to the claim, as opposed to simply being a nuisance offer, whether it could easily be evaluated, and whether some rationale for the offer was provided. This was not met by the court to be a comprehensive list.

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