According to Rule 49.09 of the Rules of Civil Procedure, a party may bring a motion for judgment in accordance with the terms of an accepted offer and the judge may grant judgment with respect to same or continue the proceeding as if there had been no accepted offer to settle.
In a recent Court of Appeal decision (Hashemi-Sabet Estate v Oak Ridges Pharmasave Inc. 2018 ONCA 839) the Court had to determine whether the motion judge erred in giving judgment in accordance with a Rule 49 offer to settle because said offer was revoked before it was accepted.
The Respondent (the Estate), sued the Appellant for damages for breach of contract, oppression and various other causes of action relating to the opening and operation of a pharmacy.
On June 8, 2015, the Appellant served the Respondent with a written Rule 49 offer to settle the action. In accordance with Rule 49, the offer provided that it would be open until the trial of the action.
In April, 2016, the Appellant retained new counsel, and a Notice of Change of Lawyer was served in accordance with the Rules of Civil Procedure.
On September 20, 2016, the parties attended a pre-trial conference. The Appellant maintains that the June 8, 2015 offer to settle was rescinded orally at the pre-trial conference and that the offer to settle served on September 19, 2016 revoked the June 8, 2015 offer, in any event.
The Respondent on the other hand, maintained that when counsel returned to their office following the pre-trial conference, a written acceptance of the June 8, 2015 offer to settle was sent by fax at 1:27 p.m. on the same day. According to further evidence tendered by the Respondent, opposing counsel’s office called and requested a copy of the June 8, 2015 offer to settle following the pre-trial conference on September 20, 2016 and that a copy was sent to opposing counsel via email at 2:34 p.m. that day (arguably after acceptance of same was sent via fax).
The Respondent acknowledged receipt of the second offer to settle but maintained that it was not served until 5:23 p.m. on September 20, 2016 (hours after the June 8, 2015 offer was accepted).
The Respondent brought a motion for judgment in accordance with the June 8, 2015 offer to settle and the motion judge granted same. The Appellant appealed the decision to the Court of Appeal.
Court of Appeal Decision
The Court agreed with the motion judge. The Court found that the revocation of the June 8, 2015 offer to settle did not comply with Rule 49.02(1) which requires that the revocation be made in writing. As such, the timing of service of the second offer to settle would be determinative of the motion.
The Court held that in determining whether to enforce a Rule 49 offer to settle, a two-step approach is to be undertaken, similar to the pre-Hryniak v Mauldin 2014 Supreme Court of Canada decision Rule 20 summary judgment analysis.
As such, the Court agreed with the motion judge’s analysis in accordance with the above-noted framework was appropriate as follows:
- Whether an agreement to settle had been reached;
- Whether, on all the evidence, the agreement should be enforced.
The Court agreed that the motion judge had to make credibility findings and held that the Respondent’s position was more credible such that the June 8, 2015 was accepted and that judgment in accordance with the said offer should be enforced. In particular, the Court had trouble with the fact that the Appellant had known for over a year that the Respondent took the position that their counsel was not served with the second offer to settle until 5:23 p.m. on September 20, 2016, but did not submit an Affidavit of Service from the process server.
In light of this decision, it is particularly important to be mindful of the particular rules related to Rule 49 offers to settle, both in making an offer to settle and considering to revoke same. Particularly in relation to service of an offer to settle, it may a good idea to serve it in such a manner as to be able to confirm receipt of same by the other side, such as via facsimile. It is important to remember that service via email will not qualify as proper service, particularly if the opposing side maintains the email was never received.
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In many cases, we see offers to settle that are open for acceptance until a few minutes after the commencement of the hearing of the matter. They are structured this way so as to trigger the costs consequences under Rule 49.10 of the Ontario Rules of Civil Procedure, if not accepted. Rule 49.10 provides for adverse costs consequences if a favourable offer is not accepted that “is not withdrawn and does not expire before the commencement of the hearing”.
In Re Galeveski, 2012 ONSC 3460, a decision released June 12, 2012, the issue was whether the offer, which was to expire 5 minutes after the commencement of the hearing of the Application to pass accounts, was still open for acceptance. There were several procedural orders made in the proceeding. The court held, however, that the matter was not actually “heard” on any of the preliminary dates as the application was never dealt with on its merits, and no judge was seized of the matter.
The court noted that in in the context of a trial, it is commonly understood that the trial commences when evidence begins to be heard. In some cases, it has been held that the trial commences when the judge is present and prepared to hear the matter on its merits.
In Re Galeveski, the offer was held to be open for acceptance. The court went on to consider whether the offer should be enforced. Although the court has discretion whether to enforce a settlement or not, the court concluded that the settlement should be enforced.
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Paul Trudelle – Click here for more information on Paul Trudelle.