What happens when you offer to settle?

Outside of a court

In a decision released November 27, 2017, Barnard v. Barnard, 2017 BCSC 2162, the Honourable Mr. Justice Armstrong analyzed costs after completion of a trial and the impact of a settlement offer that was made prior to trial.

[2]             At trial, issues of family property, debt, parenting, child support and family violence were addressed.
[3]             The claimant argued that each party should bear their own costs because neither party was substantially successful.
[4]             The respondent seeks ordinary costs until the date she delivered offers to settle in May and July 2014. She contends these offers should have been accepted by the claimant and double costs should be awarded from that day forward.

Double Costs/Offer to Settle

[47]         The purpose of the Rule concerning settlement offers and double costs is to encourage parties to carefully assess their respective claims and embrace reasonable proposals resulting in substantial savings in trial time and costs; failure to accept reasonable settlement offers will often result in costs penalties. Those principles were articulated in Hartshorne v. Hartshorne, 2011
BCCA 29:
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" (A.E. v. D.W.J., 2009 BCSC 505, 91 B.C.L.R. (4th) 372 at para. 61, citing MacKenzie v. Brooks, 1999 BCCA 623, Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 (C.A.), Radke v. Parry, 2008 BCSC 1397). In this regard, Mr. Justice Frankel's comments in Giles are apposite: [74] The purposes for which costs rules exist must be kept in mind in determining whether appellate intervention is warranted. In addition to indemnifying a successful litigant, those purposes have been described as follows by this Court:
[D]eterring frivolous actions or defences": Houweling Nurseries Ltd. v. Fisons Western Corp. (1988), 37 B.C.L.R. (2d) 2 at 25 (C.A.), leave ref'd, [1988] S.C.C.A. No. 200

*[T]o encourage conduct that reduces the duration and expense of litigation and to discourage conduct that has the opposite effect": Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 at para. 28 (C.A.);
*[E]ncouraging litigants to settle whenever possible, thus freeing up judicial resources for other cases: Bedwell v. McGill, 2008 BCCA 526, 86 B.C.L.R. (4th) 343 at para. 33;
*[T]o have a winnowing function in the litigation process" by “requir[ing] 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 "discourag[ing] the continuance of doubtful cases or defences”;: Catalyst Paper Corporation v. Companhia de Navegaçao Norsul, 2009 BCCA 16, 88 B.C.L.R. (4th) 17 at para. 16.

[48]         The respondent sent four separate settlement offers to the claimant dated May 30, 2014 followed by four additional settlement offers on July 3, 2014. None of the offers were dependent on acceptance or rejection of the other offers. Reasonableness of the offers:
[52]         Taking into account the considerations set out in Rule 11-1(4), (5) and (6), I am satisfied that the respondent’s offers were not ones that ought reasonably to have been accepted at any time before the trial began. Each offer was made on a “standalone” basis and if accepted would not have resolved all of the issues. Taken together, I am not satisfied the claimant could reasonably have accepted all four proposals.
[53]         As an example of the difficulty faced by the claimant in considering the respondent’s offer, if he had accepted the parenting arrangements, the litigation would likely have continued on the question of parenting time, support and property division. The respondent’s parenting time offer was substantially less advantageous to the claimant than was awarded in the judgment.
[63]         In the result, the respondent will have her costs of this proceeding on the basis that this proceeding
involved ordinary difficulty.

It is important to ensure that any offers to settle are reasonable so a trial judge dealing with costs can determine whether the offer should have been accepted prior to trial. In this case, the respondent received her ordinary costs, but, potentially, could have received double costs had the offers been more reasonable.

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