Nominal Offers to Settle in Ontario: Why Defendants Make a $1 Offer

You are being sued, and your lawyer suggests sending the other side a formal offer to settle for one dollar. It sounds almost insulting — why offer anything if you believe you are going to win? The answer lies in how Ontario's civil courts handle legal costs, and it's one of the more counterintuitive tools available to a confident defendant.

A nominal offer to settle is a real, formal offer — just for a token amount instead of a meaningful sum. It isn't about inviting the plaintiff to accept a dollar. It's about creating a benchmark the plaintiff has to beat at trial, with real consequences if they don't.

This guide explains why defendants make these offers, whether they still carry weight when the amount is trivial, and what it means if you're the one who receives one.

What an Offer to Settle Actually Does

Ontario's civil procedure encourages settlement before trial by attaching cost consequences to formal written offers. In general terms:

• A party who receives a reasonable formal offer and rejects it takes on a risk: if the final result at trial is no better for them than the offer they turned down, the costs award can shift in the other side's favour from around the time of the offer.
• This mechanism applies to offers made by either a plaintiff or a defendant, and sits alongside the general "loser pays" principle that already applies to costs in Ontario litigation.
• The court still has discretion over the final costs award, but a formal offer that was ignored is one of the strongest tools a party has to influence that outcome.

Because of this, the value of an offer isn't always about the dollar amount. It's about locking in a comparison point for later.

Why a Confident Defendant Still Offers Something

If a defendant genuinely believes the claim will be dismissed, a plaintiff who is awarded nothing at trial has, by definition, done no better than almost any offer — including a token one. Making a formal, on-the-record offer, even a small one, puts that comparison in play well before trial.

Common reasons a defendant sends a nominal offer:

1. To start the costs clock early. The earlier a reasonable offer is on the table, the more of the case can potentially be covered by the resulting cost consequences if the plaintiff doesn't improve on it.
2. To signal confidence without conceding liability. A nominal offer is often paired with language making clear it is not an admission of wrongdoing.
3. To pressure a weak claim. A token offer highlights that the defendant sees little or no value in the case, while still creating formal settlement leverage.
4. To protect against an unpredictable trial. Trials carry uncertainty even for a strong defence; a nominal offer preserves a costs advantage without giving up anything meaningful if the case goes as expected.

Does a Nominal Offer Still "Count"?

Whether a very small offer still triggers a meaningful costs consequence isn't automatic — courts retain discretion and can look at whether the offer was a genuine attempt to settle or simply a tactic. Some general considerations:

• An offer generally has to be real, clear, and open to acceptance — not a symbolic gesture buried in other correspondence.
• Timing matters: an offer made very late, close to trial, may carry less weight than one made with enough time for the other side to meaningfully consider it.
• The overall context of the case, including how weak or strong the claim genuinely was, can influence how a court exercises its discretion.

Because these determinations are fact-specific and left to the court's judgment, no outcome is guaranteed just because a nominal offer was made — but the tactic is well-established practice in Ontario litigation.

What to Do If You Receive One

If you're a plaintiff and the defence sends you a nominal offer, don't dismiss it as a joke. Treat it the way you would any formal offer.

• [ ] Confirm it's a genuine, open offer — not just settlement talk
• [ ] Assess your case honestly: what's your realistic range of outcomes at trial?
• [ ] Understand that rejecting it and later doing no better could affect who pays costs
• [ ] Get a lawyer's opinion before letting any deadline on the offer pass
• [ ] Consider a counter-offer if you believe the claim has real value

Frequently asked questions