Failure to attempt settlement can have significant costs consequences.
In Brophy v Harrison the Superior Court of Justice – Ontario awarded $275K in costs to a plaintiff who had received a $63K judgment. The defendant made no settlement offer, not even an offer to go without costs, in a personal injury case. The plaintiff was left with no choice but to go to trial where she did not beat her formal offer of $75K plus costs and disbursements. The defendant suggested costs of $70K.
The Court reiterated that the ‘overarching principles to be observed in the exercise of the court’s discretion to fix costs are fairness, proportionality and reasonableness.’ The Court noted that ‘limiting the losing party’s exposure to costs proportionate to the size of the claim would encourage those resisting legitimate but modest claims to take unreasonable positions.’
The Court concluded with: ‘ The defendant took what I would view to be a hard-ball approach to this claim, and now must accept the consequences of that decision.’
The lesson: make legitimate efforts to settle disputes. Mediation can be of great value where parties are unable to reach a settlement on their own.