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[20] As noted above, the jury returned a verdict of $50,000, which was reduced to $12,016.67 due to the application of a statutory deductible. The trial judge entered a judgment of “$nil” after further reducing that amount by the $20,000 advance payment. He ordered costs against the appellant, whom he considered to be in the same position as if the action had been dismissed.
[21] On appeal, the appellant concedes that the trial judge entered the correct judgment amount. Section 120 of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides that a plaintiff who receives a payment from a defendant releases the defendant from liability to the extent of that payment, and will only be entitled to a reduced judgment:
Advance payments
120 (1) If a defendant makes a payment to a plaintiff who is or alleges to be entitled to recover from the defendant, the payment constitutes, to the extent of the payment, a release by the plaintiff or the plaintiff’s personal representative of any claim that the plaintiff or the plaintiff’s personal representative or any person claiming through or under the plaintiff or by virtue of Part V of the Family Law Act may have against the defendant.
Payment to be taken into account
(3) The court shall adjudicate upon the matter first without reference to the payment but, in giving judgment, the payment shall be taken into account and the plaintiff shall only be entitled to judgment for the net amount, if any.[2]
[22] Nevertheless, the appellant submits that the trial judge should not have considered the advance payment in his costs analysis. She argues that, in spite of the “$nil” judgment, she was successful against the respondents because she obtained a verdict greater than the statutory deductible. The appellant acknowledges that, even before deducting the advance payment, her recovery was less than the respondents’ offer to settle. As a result, she relies on r. 49.10(2) for the position that she is entitled to be partially indemnified for costs she incurred until the date of the respondents’ offer to settle and that the respondents are only entitled to be indemnified for costs they incurred after that date.
[23] We do not accept this submission. Under r. 49.10(2), the costs consequences flowing from a defendant’s offer to settle depend on the judgment obtained, not other amounts received during the litigation. If the plaintiff obtains a judgment less favourable than the defendant’s offer, the plaintiff is indemnified for costs incurred until the date of the offer and the defendant for costs incurred subsequently. The rule provides:
Defendant’s Offer
49.10(2) Where an offer to settle,
(a) is made by a defendant at least seven days before the commencement of the hearing;
(b) is not withdrawn and does not expire before the commencement of the hearing; and
(c) is not accepted by the plaintiff,
and the plaintiff obtains a judgment as favourable as or less favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer was served and the defendant is entitled to partial indemnity costs from that date, unless the court orders otherwise.