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ICBC Settlement Offers now to Factor in Insurance Limits

Important implications for ICBC settlements arise from this ground breaking Court of Appeal case forcing ICBC to pay double costs for failing to accept a reasonable offer of settlement (Meghji v. British Columbia (Ministry of Transportation and Highways,2014 BCCA 105 ).

 The court found that it is improper for ICBC to reject all settlement offers above the limits of their insurance with impunity simply on the grounds that Defendants have  limited insurance coverage. This argument ignores the existence of other relevant insurance from Underinsured Motorist Protection,UMP, or from other parties to the action. The legal fiction that the court should regard the offer solely from the defendants position and not ICBC is no longer appropriate when assessing costs.

The accident occurred at the intersection of Blanshard Street and Cloverdale Avenue in Victoria, British Columbia. During a dark and rainy weekday commute a vehicle struck the claimants as she was walking in a marked crosswalk on Blanshard. The claimant suffered serious and permanent injuries.
The claimant offered to settle her personal injury case for $750,000. Neither the Province of British Columbia, sued for failing to have proper lighting, nor ICBC accepted the offer. An award  in an amount over $1.1 million was granted to the claimant against the Province and ICBC.
For the personal injury lawyers here are some important paragraphs from the Court of Appeal decision that cannot be better stated:

[125]     In the circumstances, it seems to us entirely reasonable, where there is no issue with respect to the insured’s liability, and where ICBC is apparently not looking to the insured to contribute to a settlement from his own resources, to look to the unitary interests of ICBC in relation to its liability to compensate [the Claimant] for her damages when considering whether or not a settlement offer ought to have been accepted. The evidence that was before the trial judge in relation to costs suggests that is how ICBC itself considered the case at bar. One adjuster addressed the claim, fully aware of the UMP coverage and the effect that costs would have upon the available insurance coverage, by eroding [the Claimant’s] first party liability insurance limits. In the circumstances of this case, it would have been open to the trial judge to consider the fact that acceptance of the offer on behalf of [the defendant] lay in the hands of ICBC as an appropriate factor for consideration under Rule 9-1(6)(d).

[126]     In our view, in cases where insurance plays a significant role in the acceptance or rejection of settlement offers, the objectives of the Rules can only be furthered by costs orders that take the insurance into account. In Smith v. Tedford, 2010 BCCA 302, 7 B.C.L.R. (5th) 246, this Court held that insurance coverage can be taken into account when weighing the financial circumstances of the parties under Rule 9-1(6)(c). To fail to consider the insurer’s dominant role in this litigation, in the words of the trial judge in Smith v. Tedford, would be to pervert the obvious intent of the Rules and, in the words of this Court, render the exercise of considering the parties’ relative claims to costs “very artificial indeed.” Had he chosen to do so, in our view, the trial judge might reasonably, on that basis, have made the order with respect to costs from which this appeal is brought…

[129]     The argument advanced on behalf of [the defendant], if successful, would lead to an undesirable result. Defendants with limited insurance coverage could reject all settlement offers above the limits of their insurance with impunity, without fear of incurring liability for costs. ICBC could refuse to contribute to reasonable settlements where the only real issue between the parties is the extent of the liability of ICBC to its insured for an underinsured judgment. Such an outcome ought to be avoided. We ought to interpret the Rules in such a fashion as to encourage the settlement of claims. The Rules clearly reflect the intention to do so by establishing a cost regime that will reward those who make reasonable settlement offers before trial and impose additional costs upon those who refuse to accept reasonable settlement offers:Mackenzie v. Brooks, 1999 BCCA 623 at para. 211, 30 B.C.A.C. 95.

[130]     Each appellant in the case at bar says they should not be faulted for failure to accept the settlement offer because of the other’s intransigence. Ms. Meghji has no part in that dispute. The appellants are jointly and severally liable for costs. If one can argue that the other unreasonably exposed it to costs; that may found a claim for indemnity. Such a dispute between defendants is not a bar to the plaintiff’s claim for costs arising from their collective failure to come to grips with the settlement offer and accept it in circumstances where the judge has found it reasonably ought to have been accepted.

 This case presents new risks to ICBC and personal injury litigants when considering whether to accept or reject an offer of settlement.
Posted by Personal Injury Lawyer Mr. Renn A. Holness, B.A. LL.B.
 
 

Tags: Costs, icbc case examples, ICBC Injury claim, ICBC settlement offers, Legal Fees, New Civil Court Rules, offer to settle, Rule 9-1 Offers to Settle, settlement offer

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