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March 7, 2012

Costs in Cases Where There are Multiple Defendants

Lawson v. Vierson, 2012 ONCA 25 (C.A.)

How will a court apportion costs where both the plaintiff and a co-defendant fail to accept offers to settle/contribute?

Lawson was in two motor vehicle accidents seven months apart. The actions were consolidated and proceeded to trial. The first defendant, Hart, offered to settle for $300,000. The second defendants, the Viersons, offered to settle or contribute by making a $100,000 payment to Lawson. Lawson’s offer was $1,250,000.

The jury found the injuries suffered were separate and distinct, and made separate damages assessments for each accident. The net amount awarded against the Viersons was $7,926.71 and $344,260.37 against Hart. The trial judge awarded Lawson costs of $482,000 apportioned 35% against the Viersons and 65% against Hart. The Viersons appealed.

At issue was the interplay of the costs consequences of r. 49.10 and r. 49.11. Rule 49.11 provides that where there are multiple defendants “alleged to be jointly or jointly and severally liable to the plaintiff in respect of a claim and rights of contribution or indemnity may exist between the defendants, the costs consequences prescribed by rule 49.10 do not apply to an offer to settle”.

The Court of Appeal held:

[49] In the circumstances of this case, it is significant that the combined Viersens and Hart offers exceeded the Lawsons’ recovery. The reason that the combined total exceeded the Lawsons’ recovery was because of the Viersens offer. When the Viersens offer is viewed in context rather than in isolation, it is therefore apparent that the offer was a genuine and generous offer to settle and, particularly when taken together with the Hart offer, complied with the spirit of rule 49.10. In these circumstances, the Viersens offer is the type of offer that, as contemplated by rule 49.13, ought to be given considerable weight in arriving at a costs award.

[50] Further, the trial judge appears to have discounted the fact the Viersens offer far exceeded the amount of the award made against them. Although the allegation of joint and several liability meant that pursuant to rule 49.11 the presumption of costs consequences in rule 49.10 did not apply, it would not, as the trial judge found, have been “impossible” or “negligent” for Ms. Lawson to have accepted the Viersens offer. The claim of joint and several liability that made the Viersens offer non-compliant with rule 49.11 was not made out at trial. In light of the jury’s award, the Viersens offer can, therefore, only be seen as having been very reasonable. Contrary to the view expressed by the trial judge, it would have been no more impossible or negligent for Ms. Lawson to have accepted the Viersens offer, than for any plaintiff to accept an offer to settle for an amount substantially less than the amount claimed. Given the outcome at trial, an accurate assessment of Ms. Lawson’s claim was that there was no joint and several liability. As a result, accepting the Viersens offer would not have prejudiced the claim against Mr. Hart and, therefore, would have been the correct decision.

Justice Rouleau awarded costs against the Viersons up to the date their offer was served equal to 35% of Lawson’s costs incurred to the date of the offer. The Viersons were entitled to their partial indemnity costs from the date of their offer payable by Hart since their offer was also an offer to contribute.

Although this case may have somewhat unusual circumstances, I suggest that those defending cases where there are multiple defendants should take it into consideration when making offers.

- Tara Pollitt

1 comment:

  1. "As a result, accepting the Viersens offer would not have prejudiced the claim against Mr. Hart and, therefore, would have been the correct decision."

    This is surprising considering just how much greater this offer was.

    I definitely think this case is one to consider for any lawyer involved in cases with multiple defendant's, as it sets a new standard.