Facts: 11 months before trial, a defendant makes an offer to
settle. On the eve of trial, the plaintiff accepts the offer. The
offer includes as a term, "costs to be agreed upon or
assessed." After acceptance of the offer, the parties cannot
agree on costs.
Issue: under the terms of the accepted offer, is the plaintiff
entitled to the costs of the action up to the date of the offer or
up to the date of the acceptance?
This was the scenario in Milanovic v. Le (CV-04-1027)
[Milanovic], in which Justice Kent, of the Superior Court
of Justice in Kitchener, found that the law in Ontario is the
former: costs are payable to the date of the offer, not
the date of acceptance.
When the parties could not agree on costs, the Defendant brought
a motion pursuant to Rule 131(1) to determine the extent to which
costs were payable. There were two Ontario cases that conflicted,
one in the Defendant's favour and the other in Plaintiff's
In support of the Plaintiff's position was the case of Lamprakos v. Pickering, in which the
defendants made an offer to settle, including the payment of the
plaintiffs' party-and-party costs as assessed or agreed. Just
before the trial, the plaintiffs accepted the offer. Justice
Sutherland held that the matter should be settled, "by analogy
to contract principles. The offer is an offer that is outstanding
as long as it is left outstanding." Justice Sutherland held
that the defendants offer would therefore include the payment to
the plaintiff of his party-and-party costs to the date of
Justice Sutherland noted, however, that the defendant could have
protected himself by limiting his offer: "[o]n the plain
meaning of the language, "payment to the plaintiff of its
party and party costs as assessed or agreed", could have had
added thereto, "to date", "to the date of this
offer", or "to a date two weeks following the date of
this offer", but no such language was added."
In Rosero v.
Huang, Justice Nordheimer reached the opposite conclusion.
The defendants had proposed a settlement of the plaintiff's
action for $5,000 and "costs to be assessed or agreed
upon". The offer was expressly stated to be made in accordance
with the Rules of Civil Procedure. One month later, on the
eve of trial, the plaintiff accepted the offer. Justice
Nordenheimer held that the plaintiff was entitled to costs only up
to the date of the offer.
In Milanovic, Justice Kent held that the law in Ontario
should follow Rosero. To follow Lamprakos would
be to interpret an offer to settle as giving a "costs
holiday" to the plaintiff, by which the plaintiff can
"mull over the offer...while at the same time continuing to
expend costs." The reasoning in Rosero is more
consistent with the thrust and purpose of Rule 49: to bring
litigation to an early conclusion, with the least expense to the
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In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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