In Wormald v. Chiarot, the Plaintiff was involved in a motor vehicle accident, and consequently advanced an ICBC claim for physical and psychiatric injuries. Prior to trial, ICBC’S lawyer had made two formal offers to settle, the first one being for $20,000.00. The second formal offer to settle was made two weeks later, which was three days before the start of trial, and which was double the amount of the first offer. The Plaintiff did not respond in any way to the first offer made by ICBC’S lawyer. The Plaintiff sought approximately $250,000.00 at trial, however was awarded just over $5,000.00 in damages.
At a later costs hearing, ICBC’S lawyer sought an order for double costs from the date of the first offer, to the date of the trial, however the Court refused to make such an order, citing relevant portions of the recent Court of Appeal decision in C.P. v. RBC Life Insurance Company, which stand for the proposition that double costs cannot be awarded to a Defendant where an award has been made in favour of the Plaintiff, even if such an award is lower than the Defendant’s formal offer to settle. This is because a Plaintiff in such circumstances is already subject to costs sanctions in that a Plaintiff can be stripped of his or her post offer costs and disbursements, and also may be required to pay the Defendant’s post offer costs and disbursements.
However, the Court was of the view that the initial formal settlement offer made by ICBC’S lawyer should have been accepted by the Plaintiff, given the inherent difficulties in the Plaintiff’s case at the time the offer was made. As such, and as the Court award was less than the amount of the Defendant’s formal offer, the Court ruled that the Defendant was entitled to costs from the date of the first formal offer to settle, up until the date of trial. The Plaintiff was awarded costs only for the time period up until the first formal offer to settle.
The case is a stark reminder of the serious costs consequences that can be faced by a Plaintiff who, even though successful at trial, does not beat the amount of the formal settlement offer made by ICBC before trial. In this particular case, the Plaintiff ended up owing ICBC more than the amount that she received at trial.
[16] The defendants sought double costs from the date of the first offer. Double costs are not available: see C.P. paras. 75 – 92 for a thorough analysis. As the Court of Appeal in C.P. states at para. 91 (in part):
[91] … A plaintiff who obtains a judgment for less than an offer to settle is already subject to sanctions: R. 9-1(6)(a) allows the court to deprive the successful plaintiff of costs to which it would otherwise be entitled. Rule 9-1(5)(d) provides an even more punishing outcome as the plaintiff is not only deprived of costs he or she would otherwise receive, but must also pay the defendant’s costs subsequent to the offer to settle. To also allow a defendant double costs would skew the procedure in favour of defendants and unfairly penalize and pressure plaintiffs.
[17] In the case at bar, the Court rejects the defendants’ argument that because the defendants were substantially successful that they should be viewed as the successful party with double costs awarded. The defendants urged the Court to distinguish C.P. on the basis that in the case at bar, there were multiple issues. With respect, the Court does not read C.P. as restricted to cases where there are only a few issues. Further, in the case at bar, the evidence at trial intertwined the various heads of damages.
[21] In the case at bar, the first offer should have been accepted. The first offer sets forth the defendants’ observations as to the weaknesses of the plaintiff’s case which, when compared with the Reasons for Judgment, were prescient. As noted, the plaintiff did not respond to the offer. The plaintiff had two weeks to consider the defendants’ first offer and the rationale provided in support. One week was sufficient time for the first offer to be analyzed and discussed with the plaintiff and instructions given, particularly taking into account the upcoming trial date.