Dec 10, 2025 in News Legal News

Legal News: Big Costs Awards in Motor Vehicle Cases: Why Saying “No” to Reasonable Offers Is Getting Riskier for Insurers

Why Rejecting Reasonable Settlement Offers Is Becoming a High-Risk Strategy for Insurers in Ontario

In Ontario’s legal landscape — especially in motor vehicle cases — the strategy of waiting out a claim and rejecting settlement offers is becoming increasingly risky for insurers. Recent decisions by the Ontario Court of Appeal (ONCA) make clear that courts are no longer reluctant to impose large costs and interest awards on defendants whose settlement approach amounts to a “hardball” or “zero-offer” posture. For seriously injured plaintiffs — and skilled counsel — this trend underscores the growing power of offer strategy in personal injury litigation.

If you’ve been injured in a collision, having an experienced Personal Injury Lawyer in Toronto can make all the difference in leveraging these developments to your advantage.

Why Offer Strategy Matters — The Legal Framework

Under Ontario’s procedural rules, courts have broad discretion in awarding costs. Normally, the losing party pays the winning party’s legal costs (subject to the court’s assessment).

When settlement offers are made (or not made), those decisions influence whether the court awards standard costs, “indemnity” or “substantial indemnity” costs, and whether prejudgment or post-judgment interest will apply.

But recent ONCA rulings have made clear: even if the claimant’s ultimate damages award is modest, a stubborn refusal to offer — or accept — a reasonable pre-trial offer can lead to unexpectedly high cost consequences.

Also Read: Motorcycle Accidents: What to Do if You're Injured in a Commercial Vehicle Accident in Sudbury

Recent ONCA Decisions — What Insurers Should Watch

Barry v. Anantharajah, 2025 ONCA 603 — “No Offer, Big Costs”

In this recent decision, the defendant’s insurer repeatedly refused to make a meaningful monetary settlement offer. Instead, the defence maintained a “dismissal without costs” offer through to trial.

• The plaintiff — though claiming over $1 million — recovered only $16,160.50 after a jury verdict.
• Despite the modest damages, the trial judge awarded $300,000 in costs (fees + disbursements + HST), a decision the Court of Appeal upheld.
• The Court dismissed the defence’s argument that the costs award was disproportionate to the damages, emphasizing that the insurer’s “zero-offer” approach directly caused the plaintiff’s litigation costs.
• The Court concluded insurers cannot rely solely on “proportionality” to avoid costs when they have forced unnecessary litigation by refusing reasonable settlement offers.

Bottom line from Barry v. Anantharajah: Even modest claims can trigger major cost liability if insurers adopt an unreasonably aggressive settlement posture.

Pye v. Di Trapani, 2024 ONSC 2265 ? affirmed by 2025 ONCA 355 — Serious Injuries, Big Costs & Interest

In this high-stakes motor vehicle accident case, a motorcyclist suffered serious injuries when colliding with a defendant’s vehicle.

• The plaintiff had offered to settle for $799,000 in early 2023. Settlement offers failed, and the case proceeded to a jury trial.
• Jury verdict (Oct 2023) awarded $1,072,440.42 in damages — exceeding the settlement offer.
• In addition to the damages, the court awarded over $1.1 million in costs, plus prejudgment interest (at 3%) and post-judgment interest.
• The ONCA rejected the defendants’ appeal. It confirmed that the hourly rates charged by plaintiff’s counsel were reasonable, and the large cost award was justified in light of the case’s complexity and the success of the plaintiff.

Bottom line from Pye v. Di Trapani: When a case involves serious injuries and the plaintiff’s damages exceed prior offers, insurers risk not only damages but also very significant costs and interest liabilities.

Also Read: Motorcycle Accidents: Legal Requirements for Motorbikes and Dirt Bikes

What These Decisions Mean for Insurers — and for Plaintiffs

• Insurers can no longer rely on playing “hardball.” A zero-offer approach — or rejecting reasonable offers — may backfire dramatically. As Barry v. Anantharajah shows, even small verdicts can result in high cost awards when the defendant’s refusal to negotiate is unreasonable.
• Cost and interest exposure may dwarf the damages. In serious-injury cases like Pye v. Di Trapani, costs + interest can exceed or rival the damages award itself.
• Timely, reasonable offers benefit both sides. For plaintiffs represented by competent car accident lawyers, strategic offers can increase leverage significantly.
• The role of procedural principles and legislation. In Barry v. Anantharajah, the court invoked statutory context — including provisions from the Insurance Act (section 258.5) — and rejected the idea that proportionality automatically shields insurers.

Why This Matters for You — If You’re Injured in a Motor Vehicle Accident

If you’ve been injured in a collision — whether on a motorcycle, car, or as a pedestrian — these rulings underscore the importance of experienced legal representation. A skilled Personal Injury Attorney who understands cost-award jurisprudence can:

• Help you evaluate and craft strategic pre-trial settlement offers.
• Ensure that your offer (or counter-offer) maximizes leverage without compromising your claim.
• Hold insurers accountable if they refuse to engage reasonably.
• Position your case to recover not just damages, but also costs, disbursements, and interest.

That is especially crucial for serious injury cases where long-term medical care, rehabilitation, and future losses weigh heavily.

Also Read: Motorcycle Accidents: Lending Your Car in Ontario? Here’s What You Are Liable For

Interpreting the Risk for Insurers: A Changing Landscape

These recent ONCA decisions reflect a broader shift in the balance of power — away from insurers who previously could confidently risk trial, and toward plaintiffs whose counsel is prepared to run a case to verdict.

With cost awards that may equal or exceed damages — multiplied by pre- and post-judgment interest — the financial calculus of litigation has changed.

Meanwhile, plaintiffs benefit from increased bargaining power — especially when represented by experienced car accident lawyers who understand how to leverage offers, costs, and interest. Hiring a personal injury lawyer in Toronto is therefore a strategic financial decision.

Conclusion

The message from recent Ontario appellate decisions is clear: refusing or failing to make reasonable settlement offers can lead to devastating financial consequences for insurers.

For victims of motor vehicle accidents in Ontario, this evolving jurisprudence strengthens the case for early and strategic legal intervention. Engaging a knowledgeable personal injury attorney can be the difference between a modest settlement and full justice.

If you or a loved one have been seriously injured in a collision, don’t leave your recovery to chance. Reach out to experienced counsel and make sure your rights — and your long-term interests — are protected.

Personal Injury Lawyer FAQs: Settlement Offers and Litigation Risk

Why are insurers in Ontario facing higher risks for rejecting settlement offers?

Ontario courts are increasingly penalizing insurers that refuse reasonable settlement offers. Recent Court of Appeal decisions show that unreasonable “zero-offer” strategies can result in substantial cost awards and interest, even when damages are modest.

How does a personal injury lawyer use settlement offers strategically?

A personal injury lawyer carefully times and structures settlement offers to create legal leverage. If an insurer rejects a reasonable offer and the plaintiff achieves a better result at trial, the insurer may be ordered to pay significant costs and interest.

Can legal costs really exceed the damages awarded?

Yes. Ontario courts have confirmed that costs and interest can equal or exceed the damages award when insurers force unnecessary litigation. This is especially common in serious injury cases.

What is a “zero-offer” strategy and why is it risky?

A zero-offer strategy occurs when an insurer refuses to make a meaningful settlement offer. Courts now view this approach as unreasonable and may impose severe financial penalties if it leads to avoidable trials.

Do these rulings help injured plaintiffs?

Yes. These decisions strengthen the negotiating position of injured plaintiffs, particularly when represented by an experienced personal injury lawyer who understands cost-award jurisprudence.

Does this apply only to large personal injury claims?

No. Courts have ruled that even low-damage cases can result in high cost consequences if insurers act unreasonably. Proportionality alone will not protect defendants from cost awards.

How does a personal injury lawyer evaluate whether an offer is reasonable?

A lawyer assesses medical evidence, future losses, liability risks, and comparable case law to determine whether an offer fairly reflects the claim’s true value.

What role does interest play in settlement disputes?

Courts may award prejudgment and post-judgment interest when insurers reject reasonable offers. Over time, interest can substantially increase the total amount payable.

Should injured victims accept early settlement offers?

Not without legal advice. Early offers may undervalue future medical care and income loss. A personal injury lawyer ensures settlements reflect long-term needs and legal risks.

Why is hiring a personal injury lawyer in Toronto a strategic decision?

Ontario’s evolving cost-award jurisprudence requires sophisticated offer strategy. A knowledgeable personal injury lawyer can maximize compensation while holding insurers financially accountable.