BC Supreme Court awards double costs over rejected settlement offers

The BC Supreme Court has allowed the plaintiff in a personal injury case to recover double costs after the defendant had unreasonably rejected her offers to settle.

In Gustafson v. MacFarlane, 2023 BCSC 2159, the plaintiff, Sharlene Gustafson, had sought damages from the defendant, Doreen MacFarlane, for catastrophic injuries sustained, with the primary focus on the cost of future care. The defendant raised a defence of contributory negligence.

The court found the defendant solely at fault and awarded the plaintiff approximately $5.3 million in damages, including $4.44 million for the cost of future care. Further proceedings in July 2023 led to an additional award of $493,000 for the plaintiff. The subsequent hearing addressed the plaintiff's claim for a housing allowance as part of the cost of future care.

The latest development in the case revolves around the plaintiff's application for an order to recover double costs from the defendant. The plaintiff's argument was based on offers to settle made on August 5, 2022, and August 31, 2022, amounting to $3.4 million and $4.7 million, respectively. The defendant opposed, contending that these offers were unreasonable and should not be penalized by an order for double costs for having rejected them.

The BC Supreme Court, in its analysis, considered the legal framework surrounding double costs, including the factors outlined in Rule 9-1(6). These factors include whether the offer to settle was one that ought reasonably to have been accepted, the relationship between the settlement offers and the final judgment, the relative financial circumstances of the parties, and any other relevant factors.

The court found that the defendant's rejection of the plaintiff's offer on August 5, 2022, for $3.4 million plus costs was unreasonable. The judgment highlighted that the defendant, given the information available at the time, should have accepted the offer, especially considering the plaintiff's substantial claim. The court rejected the defendant's argument that informal discussions between counsels justified the rejection, emphasizing that only the presented offer was relevant.

Ultimately, the court concluded that double costs should be awarded to the plaintiff from August 12, 2022, seven days following the delivery of the August 5 offer. The court emphasized that the lawsuit could and should have been settled before trial, highlighting the plaintiff's generous compromise that the defendant rejected.