What is a settlement offer and how does it work in Ontario litigation?
A settlement offer is a formal proposal made by one party to another to resolve a lawsuit without going to trial. In Ontario civil litigation, settlement offers are governed by Rule 49 of the Rules of Civil Procedure. Either side can make an offer at any time, and the offer can propose a full resolution or deal with specific issues only.
One of the most important aspects of Rule 49 is its cost consequences. If a plaintiff makes an offer and then wins at trial equal to or better than what they offered, the defendant may be ordered to pay the plaintiff's legal costs on a higher scale from the date the offer was made. The same logic works in reverse for defendants. These rules create a real financial incentive for both sides to seriously consider reasonable offers.
Settlement offers under Rule 49 must be in writing and must state clearly that they are made under that rule to attract the cost consequences. An offer can be accepted at any time before it is withdrawn or before the court delivers its judgment.
Key takeaways
- Rule 49 of the Rules of Civil Procedure governs formal settlement offers in Ontario.
- Rejecting a reasonable offer and then doing worse at trial can result in adverse cost orders.
- Offers must be in writing and clearly invoke Rule 49 to attract cost consequences.
- Either party can make or accept a settlement offer at any stage of the proceeding.