Offers to Settle in Nova Scotia Personal Injury Claims
I have been a personal injury lawyer in Nova Scotia for 23 years. So I have been involved in countless cases where the parties have been able to settle their claims and avoid the risk and expense of trial.
But offers to settle can also have significant legal impact even if a case doesn't settle before trial. That's why this article by Matt Maurer was of interest, since it provides a perfect illustration of the strategic use of offers to settle.
Formal Offer to Settle
During any litigation there are usually informal "without prejudice" discussions designed to try to resolve the case that takes place during the litigation process.
However most provinces court rules have specific rules that govern formal offers to settle.
What is an offer to settle? A simple example would be if two parties are involved in a lawsuit. Party A was a pedestrian who was hit by Party B’s car.
A sues B for $100 thousand to cover pain and suffering, loss of income and cost of medical treatment.
B defends the lawsuit, saying that A stepped on to the street before the light changed.
At any time before the trial begins either party can make a formal offer to settle. B might offer to pay A $50 thousand to conclude the proceedings. The offer may also contain other conditions, for example A may be required to keep the amount paid confidential.
Offers to settle are an alternative to the “winner take all” court route. Through settlement the parties can negotiate the outcome and achieve certainty without leaving the final result in the hands of a judge or jury.
What happens if settlement not accepted?
An offer to settle can cause favourable results even if it is not accepted. If a party obtains a “favourable judgment” meaning that, following the rejection of a settlement offer, the Court gives a result that finds the rejecting party in no better position than they would have been if they accepted the offer, the Court will award certain costs to the offering party.
To apply this to the example above: If Party A rejects Party B’s offer of $50 thousand and the matter goes to trial and the judge orders B to pay A $50 thousand (or less), then B will have some of his legal fees paid for by A.
According to the Civil Procedure Rules in Nova Scotia the following guidelines respecting costs apply:
A judge may award costs to a party who starts or who successfully defends a proceeding and obtains a favourable judgment, in an amount based on the tariffs increased by one of the following percentages:
(a) one hundred percent, if the offer is made less than twenty-five days after pleadings close;
(b) seventy-five percent, if the offer is made more than twenty-five days after pleadings close and before setting down;
(c) fifty percent, if the offer is made after setting down and before the finish date;
(d) twenty-five percent, if the offer is made after the finish date.
Essentially the rules try to allow the offering party to recover their legal fees they were forced to spend as a result of the other side not accepting a reasonable offer. They also serve to encourage parties to make reasonable offers instead of low-balling.
I have written about the importance of making a reasonable settlement offer: How Can You Win Your Trial But Still Lose? Cost Awards and Formal Offers to Settle
Back to Mr. Maurer's article, in the case he reviewed, the plaintiff was injured in a car accident. The plaintiff was successful at trial winning on both the issue of liability (who was at fault for the accident) and damages (being awarded compensation).
The defendant lost both the main action and the counterclaim and was ordered to pay $12,875 to the plaintiff.
However, back in 2011 the defendant offered to settle the lawsuit by paying $13,500 plus legal costs to the date of the offer. This offer was left open until the start of trial and was not accepted by the plaintiffs.
The result is that even though the plaintiffs were completely successful on liability in both their claim and in defending the counterclaim, they had to write a cheque for over $12,000 to the defendant.
Won the battle but lost the war
This case is a perfect example of how a plaintiff can win the battle (trial) but lose the war (adverse cost award). It is also teaches plaintiffs to carefully consider every offer to settle received in advance of trial.