All-Inclusive And Without Costs Rule 49 Offers

• Published date: 30 June 2021
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: McCague Borlack LLP
• Author: Mr Van Krkachovski and Ryan R. Taylor

All-Inclusive Rule 49 Offers

In 1985, Rule 49 of the Rules of Civil Procedure was introduced to encourage parties to make and accept reasonable offers to settle. This has had the effect of discouraging parties from delaying the judicial process and increasing costs unnecessarily. Rule 49 has had a considerable effect on litigants by virtue of the risk of a large costs award following trial.

To trigger the cost consequences under Rule 49, an offer must meet strict requirements:

1. the plaintiff or defendant must make its offer at least seven days before the commencement of trial;
2. the offer must not be withdrawn or expire before the commencement of trial;
3. the offer must not have been accepted by the other side and
4. the judgment must be as favourable or more favourable than the terms of the settlement offer.

The offer must also be fixed, certain and capable of clear calculation in order to attract Rule 49 cost consequences.

...the burden of proving that the judgment is as favourable...is on the party who claims the benefit.

Additionally, the burden of proving that the judgment is as favourable as the terms of the offer to settle, or more or less favourable, as the case may be, is on the party who claims the benefit.

From the inception of Rule 49 in 1985 until the Ontario Court of Appeal decision in Rooney (Litigation Guardian of) v Graham, [2001] O.J. No. 1055, Ontario courts had taken a rigid view as to whether any level of uncertainty would invalidate a Rule 49 offer. However, Laskin J.A. in Rooney provided a paradigm shift, by noting:

This "uncertainty" should not invalidate Rule 49 offers. I recognize that some courts have taken the opposite view. It seems to me, however, that in evaluating a Rule 49 offer any "uncertainty" that arises from a provision for costs should only be relevant in deciding whether the party relying on the offer has met its burden of proof under rule 49.10(3). In other words, uncertainty or lack of clarity in an offer may prevent a party from showing that the judgment it obtained was "as favourable as the terms of the offer to settle, or more or less favourable, as the case may be.'

Following the Rooney decision, the Ontario Court of Appeal reasoned in Cobb v Long Estate, 2017 ONCA 717, that although a term in a Rule 49 offer may in some measure be uncertain, it does not invalidate an offer that is otherwise Rule 49 compliant.

On its face, based on the direction of the Ontario Court of Appeal, and the certain requirements of...