Case Commentary – Rule 49 Costs Awarded Against Insurer


Last week, we explained how offers to settle under Rule 49 of the Rules of Civil Procedure could have serious costs consequences if a claim went to trial. In this decision, the insurance company Aviva was ordered to pay over $235,000 in substantial indemnity costs to the plaintiff, after failing to beat the plaintiff’s most recent Rule 49 offer to settle.

Persampieri v. Hobbs

This case involved an elderly woman that was injured in a car accident. She began a legal claim against the other driver, who was insured by Aviva. Aviva took the position that the plaintiff was not entitled to any damages, and refused to discuss any settlement offers higher than $0.00. Aviva rejected two offers to settle made by the plaintiff pursuant to Rule 49 before the matter went to trial, with the last one being for $10,000.

The Rule 49 offer and costs at trial

At trial, the plaintiff was successful, and was awarded approximately $20,000 in damages, or $10,000 more than her last Rule 49 offer. This meant that she was entitled to costs on a substantial indemnity basis from the date of her last offer, through the end of the trial. However, as discussed in our last post, the court retains discretion to determine how much should be awarded in costs.

Aviva argued that the plaintiff did not win a lot of money, and regardless of her Rule 49 offer, the costs awarded should be proportionate to her $20,000 damages. The plaintiff disagreed, and asked the court for her reasonably incurred costs.

Although proportionality to a damages award is one consideration for the court in assessing costs, this was not relevant here. The court found that Aviva, as a sophisticated insurer, had made a strategic decision to reject any offer the plaintiff made, knowing full well that this could result in a modest offer being refused, and a costly trial for a correspondingly modest award. The court would not sanction such behaviour, as it would discourage plaintiffs from bringing such modest claims in similar circumstances, and accordingly awarded $237,017.50 to the plaintiff.

Personal injury lawyers helping accident victims fighting for compensation

At Jasmine Daya & Co., we are dedicated to helping seriously injured accident victims get full and fair compensation for their losses. We have over four decades of experience helping clients fight against insurance companies, and helping them make strategically sound decisions about their claim.

If you have questions about a potential claim, contact us online, or by calling our office at 416-967-9100. We offer free consultations to new clients.