Tag: Rule 49

05 Nov

When Will a Rule 49 Settlement Be Enforced?

Kira Domratchev Litigation Tags: , , , , , 0 Comments

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whether the motion judge erred in giving judgment in accordance with a Rule 49 offer to settle because said offer was revoked before it was accepted.

Background

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 The Appellant maintains that the June 8, 2015 offer to settle was rescinded orally at the pre-trial conference and that the offer to settle served on September 19, 2016 revoked the June 8, 2015 offer, in any event.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:

  1. Whether an agreement to settle had been reached;
  2. 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.

Thanks for reading!

Kira Domratchev

Find this blog interesting? Please consider these other related posts:

What is a Rule 49 Offer to Settle?

Revoking a Rule 49 Offer to Settle

Cost Awards and Offers to Settle

26 Mar

What is a Rule 49 Offer to Settle?

Kira Domratchev Litigation Tags: , , , , , , , 0 Comments

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.

General Requirements

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.

Cost Awards

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

Thanks for reading.

Kira Domratchev

Find this blog interesting? Please consider these other related blogs:

Revoking a Rule 49 Offer to Settle

Cost Awards and Offers to Settle

Offers to Settle: Open Until When?

 

16 Jun

Cost Awards and Offers to Settle

Umair Beneficiary Designations, General Interest, Litigation, RRSPs/Insurance Policies Tags: , , , , , , 0 Comments

As we have previously blogged, the possibility of an adverse costs award should always be top of mind for parties who intend to litigate an estate-related matter. In Ontario, the general rule in civil litigation is that costs – some or all of the successful party’s legal fees – are to be paid by the losing party.

Costs are ultimately at the discretion of the Court. In addition to considering the result of the proceedings, the Court may also take any written offers to settle into consideration when making a determination regarding costs awards.

1920568BD3It is generally advisable for parties to make a reasonable offer early in the litigation. If the offer does not result in a settlement, it may still be helpful to the offeror on the issue of costs if the litigation proceeds.

In particular, an offer made pursuant to Rule 49 of the Rules of Civil Procedure can be an effective mechanism to reduce a party’s exposure to costs. Pursuant to Rule 49.10, where an offer to settle is made at least seven days before the commencement of the hearing and remains open for acceptance until the commencement of the hearing, there may be cost consequences if the offeree fails to accept the offer.

Manufacturers Life Insurance Co. v Sorozan Estate, 2016 ONSC 3805, a recent costs decision rendered by the Honourable Justice Dunphy, reiterates the importance of making an early and reasonable offer to settle.

Professor David Freedman recently blogged about Justice Dunphy’s judgment on the motion regarding the proper designated beneficiary of the Deceased’s group life insurance policy. The Deceased’s son brought a motion to have the disputed portion of the insurance proceeds paid to him, and the Deceased’s spouse brought a cross-motion for the proceeds to be paid to her. Justice Dunphy concluded that the Deceased’s spouse was the sole designated beneficiary of the policy.

In his subsequent reasons on the issue of costs, Justice Dunphy noted that the Deceased’s spouse had made two offers to settle: one offer to divide the disputed insurance proceeds equally prior to the commencement of the litigation, and a further less favourable offer after argument before the Court.

Justice Dunphy did not give any weight to the later offer, but did attach some weight to the offer made prior to the motion. Justice Dunphy noted that even though the offer was not in technical conformity with Rule 49 and was not an official offer to settle, and it was unclear if the offer was open for acceptance until the commencement of the hearing, “such an offer is entitled to some weight if not necessarily the same weight as one that was formally made and legally open to acceptance up until the commencement of the hearing the motion.”

In the result, costs were awarded against the Deceased’s son. Importantly, Justice Dunphy noted that if the offer had not been made, the Court would have been inclined to leave the parties to bear their own costs due to the “unusual circumstances” of the case.

Thank you for reading,

Umair Abdul Qadir

09 Jul

Revoking a Rule 49 Offer to Settle

Noah Weisberg Litigation Tags: , , , , , , 0 Comments

Throughout the course of litigation, it is often the case that counsel exchange offers to settle in accordance with Rule 49 of the Rules of Civil Procedure.  Should counsel decide to withdraw such an offer, proper steps must be taken to ensure that the offer is in fact withdrawn, and does not improperly linger.

The general rule with respect to revoking an offer can be found under the statute.  The Rules at Rule 49.04(1) – (4), provide three ways to revoke an offer: (i) by serving written notice of withdrawal of the offer on the party to whom the offer was made; (ii) by specifying a time within which it may be accepted whereafter, if not accepted, it is deemed to be revoked; or (iii) by disposition of the claim by the Court prior to acceptance of the offer.

Importantly, an offer to settle is not terminated by a counter-offer or rejection as indicated in Rule 49.07(2).  As such, even if the offeree rejects the offer to settle, it may thereafter be accepted, unless it has been properly withdrawn or the court has disposed of the claim.

According to the common law, a written offer can only be withdrawn in writing, and cannot implicitly be withdrawn by a subsequent oral offer.  However, a subsequent offer may constitute the withdrawal of the prior offer.  According to Justice Gray in Desforge v. E.D. Roofing Ltd., “…a decreasing offer by a plaintiff, without reference to the earlier offer, is by implication a withdrawal of the earlier offer”.  Therefore, the common law appears to impose an additional means to withdraw an offer to settle.  A further offer to settle, which is less generous than the previous offer, acts to withdraw the prior offer even if it is not specifically referenced.

Noah Weisberg

30 Dec

Offers to Settle in a Will Challenge

Hull & Hull LLP Litigation Tags: , , , , , , , 0 Comments

Offers to settle and more specifically, Rule 49.10 of the Rules of Civil Procedure, are intended to force the parties in a legal proceeding to consider the settlement of a matter prior to trial failing which, costs consequences will result if an offer is more favourable than the result obtained at the trial.

In the general litigation context, the Ontario Court of Appeal has held that the Court should depart from the prima facie costs consequences in Rule 49.10 only where, after giving proper weight to the policy of the rule and the importance of a reasonable predictability and the even applicability of the rule, the interests of justice require departure.  

The applicability of offers to settle and Rule 49 in a Will challenge context has been considered by Judges with different results. In the often quoted case of Olenchuk Estate, Re.  the Court found, amongst other things, that it would seem somewhat incompatible with the nature of these proceedings to apply rules designed to encourage settlement of adversarial, contentious, proceedings and when there appears to be a reasonable question whether the deceased was mentally capable of making the Will that is propounded; it imposes an obligation on the Court to be satisfied that the Will was the product of a capable testator before putting on it the imprimatur of the Court. In Olenchuk, the Court further held that Rules designed to encourage settlement of contentious litigation can be applied in estate matters, but the difference between certain kinds of estate litigation and other forms of litigation can make it difficult to apply Rules of Civil Procedure to estate proceedings.

The Ontario Court of Appeal discussed the traditional approach and modern approach to awards of costs in estate litigation in its 2005 decision of McDougald Estate v. Gooderham. The Court found that the modern approach to fixing costs in estate litigation is to carefully scrutinize the litigation and, unless the Court finds that one or more of the public policy considerations, set out in its decision applies, to follow the costs rules that apply in civil litigation.

The Court of Appeal noted that “Gone are the days when the costs of all parties are so routinely ordered payable out of the estate that people perceive there is nothing to be lost in pursuing estate litigation.”

In a Will challenge, offers to settle, whether informal or formal can be an important tool in regard to the disposition of costs; perhaps more so in light of the approach for costs set out in McDougald v. Gooderham.

Enjoy the Holidays! Craig

 

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