Insurer Resources Considered in Determining Award of Costs

Insurer Resources Considered in Determining Award of Costs

In HUNTER V. ANDERSON, 2010 BCSC 1591 (“HUNTER”), a case related to a slip and fall incident, the Court provided a helpful summary of the relevance to the question of costs that a defence being provided by a large insurer may have. While the Court expressed the need for caution when considering the resources of an insurance company in this context, it did find that such a consideration can be relevant in specific circumstances. Where an insurer’s resources create an advantage by allowing for the defendant to “test” a plaintiff’s case despite the presence of a reasonable settlement offer, the Court confirmed that it is permissible to take this into consideration when conducting the requisite costs analysis under Rule 9-1 of the SUPREME COURT CIVIL RULES, B.C. Reg. 168/2009.

Rule 9-1(4) states that “[t]he court may consider an offer to settle when exercising the court’s discretion in relation to costs”. In addition, where a party with vastly superior resources proceeds to trial despite a reasonable offer to settle, the courts may penalize such a strategy when considering costs. The Court in HUNTER referred to Grist J.’s holding in SMITH V. TEDFORD, 2009 BCSC 905, a case in which the plaintiff’s offer to settle was accepted by the defendant, but only after 6 days of trial, “during which the Insurance Corporation twice had separate counsel appear to argue issues that might easily have been dealt with by the two trial counsel appearing on the defendants’ behalf” (at para. 16). Grist J. held at paragraph 11 of his judgment that “timeliness bears on this case because, in my view, there was sufficient time prior to trial to consider the offer eventually accepted”. It was the defendant’s delay in accepting the plaintiff’s reasonable offer, combined with the institutional resources which made such delay possible, that caused Grist J. to award the plaintiff costs assessed as double costs.

In HUNTER, however, the Court found that the Plaintiff’s offer to settle was much higher than the amount awarded at trial, and that it was reasonable for the Defendant not to accept the offer. The Court then summarized the case law it had previously canvassed, stating that “it is in circumstances where a defendant’s insurance coverage creates an unfair advantage leading to unnecessary costs through testing the plaintiff’s case, where an insurer’s financial circumstances supplant those of the litigant as a factor to consider in determining costs” (at para. 22). This statement of the law suggests that an insurance company’s resources can be a factor in the determination of costs in some circumstances.

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