An Offer You Can't Refuse: Ontario Court Of Appeal Applies Flexible Framework For Enforcement Of An Accepted Rule 49 Offer To Settle

In Hashemi-Sabet Estate v. Oak Ridges Pharmasave Inc., 2018 ONCA 839, the Ontario Court of Appeal recently considered the principles relating to the enforcement of an accepted Rule 49 offer to settle. In this case, the Court upheld a motion judge's decision granting judgment in accordance with an accepted Rule 49 offer. The Court also held that it was open to the motion judge to find that counsel for one of the parties had intentionally submitted inaccurate information to advance her clients' position, without hearing viva voce evidence on that issue.

Background: The dispute arose when the plaintiff (respondent on the appeal), an estate trustee, sued the defendants, a pharmacy and two individuals, for damages in relation to the opening and operation of a pharmacy. The plaintiff claimed damages in excess of $1 million.

In June 2015, the defendants served the plaintiff with a written Rule 49 offer to settle the action for $55,555.55. The offer provided that it would remain open until the trial of the action.

The plaintiff accepted the offer in writing on the afternoon of September 20, 2016. The defendants disputed the validity of the acceptance on the basis that, among other things, they had served a second offer to settle for a lower amount on September 19, 2016, which expressly revoked the first offer.

Counsel for the plaintiff claimed that the second offer had not been served until later in the afternoon on September 20, 2016, after the first offer had already been accepted. The plaintiff took the position that the acceptance of the first offer was valid and brought a motion for judgment accordingly.

The Motion Decision: The motion judge, Bird J., found that the timing of service of the second offer would be dispositive of the motion. It was only if the second offer was served before the first offer was accepted that the first offer could be considered withdrawn. Under Rule 49, offers to settle can only be withdrawn in writing. The defendants' contention that the first offer had been withdrawn orally during a pretrial of the action on September 20, 2016 was therefore not valid.

Bird J. ultimately determined that the second offer was not served until the afternoon of September 20, 2016, after the first offer had been accepted. Her Honour found that counsel for the defendants had intentionally altered an invoice from the process server after-the-fact to make it appear as though the second offer was served on September 19, 2016, when it...