Insurance Company Penalized At Trial For Refusing to Accept Our Client’s Settlement Offer

As we recently announced, after our client rejected ICBC’s $25,000 offer, we proceeded to trial and were awarded $204,000 in the Supreme Court of British Columbia.

With any successful judgment, we were also awarded “costs”, which is essentially an award of additional money to compensate for the work performed over the course of the litigation and, in turn, a means to lighten the amount of legal fees the client has to pay.

In this case, the costs were prescribed at $14,000. However, litigation rules allow for a “double costs” penalty if a settlement offer was made before trial, the offer was not accepted, and the trial award exceeded the offer.

In our case, our client offered to settle for $125,000 before trial. ICBC rejected this offer and refused to budge from $25,000.

At the costs hearing, ICBC argued that our client’s offer should not have been reasonably accepted, and therefore the additional costs penalty would not be appropriate.

The Court rejected ICBC’s argument as follows:

[9]             The plaintiff offered to settle both actions for $125,000 on October 1, 2012. The offer expired on Friday November 23, 2012 before the beginning of trial on November 27, 2012. The plaintiff argues that the conduct of the defendants in taking an unrealistic negotiating stance and the failure of the defendants to accept a reasonable offer entitles the plaintiff to double costs.

[29]         In my view, the plaintiff’s offer was reasonable at the time it was made and ought to have been accepted. I have a discretion to award double costs from the time of the offer. In exercising that discretion and to avoid the need to calculate tariff items and to avoid an assessment, I fix the costs, apart from disbursements, for both actions at $24,000.00.

This case underscores the risk of taking a hardline negotiating approach in the face of a reasonable offer to settle. If ICBC’s intention is indeed to keep costs down, it would behoove them to play less hardball and avoid these penalties at trial.

It should be noted that every case is different, and that past performance is no guarantee of future results. It should also be noted that very few injury claims require a resolution in a courtroom; in the vast majority of cases, we are able to negotiate a fair settlement with ICBC on behalf of our clients. However, in the event ICBC refuses to make a reasonable offer, we are always prepared to take the case to trial.