In Layes v. Stevens, 2017 BCSC 2011, a plaintiff who rejected a formal offer to settle before trial was ordered to pay for 2/3 of the costs from the time of the offer. On the Friday eve before trial, the defendant offered $490,125.45 to settle the claim. The plaintiff went on to be successful at trial, but was awarded damages of $101,475.74 less than had been offered. The defendants sought their costs since the offer to settle.
In determining an appropriate award of costs, Madam Justice Hyslop reiterated the purpose of costs rules from the seminal case of Hartshorne v. Hartshorne, 2011 BCAA; 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.
In determining what constitutes a “reasonable settlement offer”, the court does not look at what was awarded at trial, it looks at whether it would have been reasonable for the plaintiff to have accepted the former offer to settle.
In this case, Madam Justice Hyslop found that because the plaintiff should have known about weaknesses in her expert’s medical evidence and should have taken the offer.
In determining how costs were to be awarded, Madam Justice Hyslop held:
“In considering the several options proposed by both the plaintiff and defendant, I conclude the plaintiff should accept responsibility for the consequences of pursuing this litigation in face of the weakness of her medical experts’ opinions, as well as her own representations as to the loss of employment, particularly at TRU. I take into consideration the plaintiff’s financial situation, particularly as it relates to her employment at the time of trial. At the same time, the plaintiff has a reasonable award left.”
The plaintiff had cost of the action up until the time offer to settle was made, and the defendant was awarded his costs and disbursements from that point onwards.