Rule 49 of the Rules of Civil Procedure provides for a better cost award if the party making an offer obtains an equal or more favourable judgment than the offer made. Issues can arise when trying to determine what constitutes a more favourable offer, particularly when considering contingent interests.

This occurred in the case of Jackson v Rosenberg where a dispute arose over whether the sum offered in settlement was more or less favourable than the outcome achieved[1].

Ultimately, the Court found that Rosenberg held a 50% interest in the property in a resulting trust for Jackson. Jackson would retain all rights and interests in the property during his lifetime and was free to encumber or sell the property, while Rosenberg would receive through survivorship 50% of whatever equity remained of the property on Jackson’s death. If Jackson sold the property, Rosenberg would lose her interest.

Please see my colleague’s blog post dated September 26, 2023 for a more detailed analysis of the case.

In March 2023, Jackson served a Rule 49 offer, offering to pay Rosenberg $25,000 to settle the litigation.

During the cost submissions in November 2023, Jackson argued that the judgment obtained was less favourable than the $25,000 settlement offer as Rosenberg’s 50% interest in the property was contingent on Jackson not selling the property before his death. Jackson’s counsel relied on the proverb of “a bird in hand is worth two in the bush”. That is, the $25,000 was a guaranteed ‘bird in hand’, whereas the awarded contingent interest in the property was a less favourable ‘bird in the bush’. This relates to the popular quotation that an interest through right of survivorship relies on the “success in the so-call ‘ultimate gamble’ – survival”[2].

Despite these colourful quotations, the Court found that the favourability of the offer had to be determined at the time of the judgment. Therefore, as Jackson still owned the property at the time of the judgment, Rosenberg’s interest was worth more than the $25,000. The Rule 49 offer did not apply and was not factored into the cost award.

[1] 2023 ONSC 6210 (CanLII)

[2] Estate of Propst, Re, 788 P.2d 628268 (U.S. Cal. Sup. Ct. in Banco 1990) at 631