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Offers to Settle Double Costs

Offers to settle double costs

Sim v Sim estate 2017 BCSC 345 discussed offers to settle and rejected an award for double costs finding that the offer was one that ought not to have reasonably been accepted as it required the plaintiff to give up the claim entirely while providing no rationale.

[1]             The plaintiffs were unsuccessful in seeking a variation of the will of the late Alexander William Sim, pursuant to s. 2 of the Wills Variation Act, R.S.B.C. 1979, c. 435. Costs were awarded to the defendants. The defendants now seek double costs under Rule 9-1(5) of the Supreme Court Civil Rules.

Settlement Offers

[4]             By letter dated August 11, 2015,  the plaintiffs offered to settle all claims if the defendants: paid them $250,000; made a life insurance policy, under which the plaintiffs were beneficiaries, irrevocable; agreed to continue to pay the premiums on the policy and paid the plaintiffs’ costs and disbursements at Scale B. The plaintiffs’ offer was open for 30 days.

[5]             On August 13, 2015, the defendants rejected the plaintiffs’ offer and countered with an offer that Mrs. Sim would agree to make the life insurance policy irrevocable, the plaintiffs would agree to make the future premium payments and each party would bear their own costs. The defendants’ offer remained open until it was revoked on December 11, 2015 which was after the trial had commenced but before it finished.

[6]             Based on Mrs. Sim’s life expectancy the cost to the plaintiffs of agreeing to pay the future life insurance premiums would have been $20,857. The plaintiffs did not respond to that offer by the defendants.

[7]             At the Trial Management Conference on September 9, 2015, the presiding judge recommended that the parties try to settle the case. By email on September 10, 2015 the defendants’ counsel suggested to plaintiffs’ counsel that if he responded to his clients’ offer they may reach a settlement. On September 14, 2015 the defendants’ counsel emailed plaintiffs’ counsel and said he looked forward to a response to his offer on August 13, 2015 and a possible settlement without trial.

[8]             On the same day, plaintiffs’ counsel, in effect, rejected the defendants’ offer of August 13th and the case proceeded to trial.

Analysis

[10]         In Hartshorne v. Hartshorne, 2011 BCCA 29, our Court of Appeal offered some guidance when a trial court is asked to award double costs.

[11]         At para. 25 the Court of Appeal states:

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

[12]         The Court goes on to state, at para. 27:

[27] The first factor – whether the offer to settle was one that ought reasonably to have been accepted – is not determined by reference to the award that was ultimately made. Rather, in considering that factor, the court must determine whether, at the time that offer was open for acceptance, it would have been reasonable for it to have been accepted…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 be easily evaluated, and whether some rationale for the offer was provided.

[13]         I do not agree with the plaintiffs that the results of the trial were mixed. All of the plaintiffs’ claims were dismissed with costs.

[14]         The order that Mrs. Sim continue to pay the premiums on the life insurance policy and make the policy irrevocable simply confirmed what she had agreed to do in her testimony. As defendants’ counsel said, the court put her position “in stone”.

[15]         However, I do not consider the defendants’ offer to have been one that ought reasonably to have been accepted by the plaintiffs. In assessing reasonableness, I cannot consider the ultimate decision in the case. At the time of the defendants’ offer they were essentially asking the plaintiffs to give up their claim entirely and, in addition, pay the future premiums for the life insurance policy. Accepting the offer would have required the plaintiffs to completely accept the defendants’ position. Furthermore, no rationale was provided by the defendants to the plaintiffs for the terms of the offer.

[16]         In the end result the defendants’ application for double costs is dismissed and they remain entitled to costs at Scale B.

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