Tag: offer to settle
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whether the motion judge erred in giving judgment in accordance with a Rule 49 offer to settle because said offer was revoked before it was accepted.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 The Appellant maintains that the June 8, 2015 offer to settle was rescinded orally at the pre-trial conference and that the offer to settle served on September 19, 2016 revoked the June 8, 2015 offer, in any event.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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Ontario is a jurisdiction where parties are encouraged to settle their legal disputes well before reaching the ultimate hearing of a matter, and as such it is not uncommon for opposing parties to exchange offers to settle throughout the duration of the dispute.
An additional incentive provided for under the Rules of Civil Procedure to settle the matter is what is called a “Rule 49” offer to settle. Generally, it operates by ensuring a costs award that is favourable to a party who:
(i) makes an offer to settle that complies with the specifications of Rule 49; and
(ii) achieves a more favourable result at the hearing than offered under the offer to settle.
An offer to settle under this rule can be served by a plaintiff, defendant, applicant or respondent in an action, application, counterclaim, third party claim, crossclaim or motion. This means that this rule is applicable to motions on discrete issues within a legal dispute and is not limited only to offers made to settle the entire dispute.
In order to be eligible for the benefits provided under Rule 49, the following requirements must be met:
(i) the offer to settle must be made at least 7 days prior to the commencement of the hearing;
(ii) the offer to settle must be fixed, certain and understandable; and
(iii) it cannot be withdrawn or expire before the commencement of the hearing.
In deciding whether or not to make an offer to settle under this rule, it is important to take into account the fact that the court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.
Where a plaintiff or applicant makes an offer under this rule and the judgment is as or more favourable to that party than the offer to settle, the plaintiff or applicant is entitled to the following:
(i) costs on a partial indemnity basis to the date of the offer to settle; and
(ii) costs on a substantial indemnity basis from that date forward.
Where a defendant or respondent makes an offer under this rule and the judgment is as or less favourable to the plaintiff or applicant than the terms of the offer to settle, the following applies:
(i) the plaintiff or applicant is entitled to partial indemnity costs to the date that the offer to settle was served; and
(ii) the defendant or respondent is entitled to partial indemnity costs from that date forward.
In the event that a party that made an offer to settle under this rule wishes to withdraw it, such withdrawal must be clear and unequivocal.
For more information on the manner in which Rule 49 operates, the Ontario Bar Association summarized the general rules and case law related to it here: https://www.oba.org/getattachment/Sections/Civil-Litigation/Resources/Resources/Litigation-Fundamentals-Sunrise-Series/Offers-to-Settle/Rule49OffersToSettle.pdf
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