1. Mehedi v 2057161 Ontario
Inc., 2015 ONCA 670 (Cronk, Lauwers and van
Rensburg JJ.A.), October 6, 2015
2. Ferri v. Ontario (Attorney
General), 2015 ONCA 683 (Cronk, Tulloch and
Hourigan JJ.A.), October 8, 2015
3. Curoc Construction Ltd. v Ottawa
(City), 2015 ONCA 693 (Gillese, Epstein and
Roberts JJ.A.), October 15, 2015
4. Chrisjohn v.
Riley, 2015 ONCA 713 (Gillese, van Rensburg and
Miller JJ.A.), October 26, 2015
5. Puri Consulting Limited v Kim Orr
Barristers PC, 2015 ONCA 727 (Gillese, van
Rensburg and Miller JJ.A.), October 29, 2015
1. Mehedi v 2057161 Ontario Inc.,
2015 ONCA 670 (Cronk, Lauwers and van Rensburg JJ.A.), October 6,
2015
The appellant, Golam Mehedi, claimed that the respondents,
operating as "Job Success", promised to find him a job
that paid $70,000 per year within two months, in exchange for a fee
of $3,700. When Job Success failed to secure such employment,
Mehedi sued.
The trial judge dismissed the case, finding that none of the
defendants made any promises or commitments that they did not
fulfill and, specifically, that there was never a promise to find
Mehedi a job within any specified time frame or at any specified
salary range. The Court of Appeal dismissed Mehedi's appeal in
January, 2012.
Less than a month later, the CBC broadcast an episode of
Marketplace entitled "Recruitment Rip-off", in which it
exposed "Toronto Pathways", a Toronto recruitment agency
which exploited vulnerable, unemployed persons – mainly
immigrants newly arrived in Canada – by promising to find
them good jobs in exchange for a fee. Using hidden cameras, the
program showed the defendant Dale Smith acknowledging that Toronto
Pathways and Job Success are the same business. It also revealed
company officials explicitly promising to find prospective clients
jobs in order to induce them to enter into a contract. The program
showed a Marketplace staffer asking the defendant Wendell Lacombe:
"So you're basically guaranteeing me that I'm going to
get a job?" and Lacombe responding "Absolutely. And we
are very good at it." The episode featured numerous
individuals making the same claims as Mehedi.
At the direction of Juriansz J.A., Mehedi brought a motion
before a judge of the Superior Court under Rule 59.06(2)(a) of the
Rules of Civil Procedure, R.R.O., 1990, Reg. 194, to
adduce fresh evidence and re-open the trial. Mehedi sought to
introduce as new evidence the Marketplace broadcast, as well as an
article in the Metro newspaper recounting similar statements
apparently made by Smith to a reporter posing as a Job Success
customer.
The motion judge dismissed Mehedi's motion, briefly
stating that the new evidence, if allowed, would not reasonably
affect the outcome of the trial. Mehedi appealed, invoking both
Rule 59.06 of the Rules of Civil Procedure and the
Court's inherent jurisdiction.
Writing for the Court of Appeal, Lauwers J.A. noted that a
motion judge's decision under Rule 59.06(2)(a) is discretionary
and attracts considerable deference from a reviewing court. The
decision should not be interfered with unless the motion judge
erred in principle, misapprehended or failed to consider material
evidence, reached an unreasonable decision or if the reasons failed
to set out his reasoning process and do not reflect a consideration
of the relevant factors. In Lauwers J.A.'s view, this was one
such case: the motion judge provided inadequate reasons and erred
in applying the test for setting aside an order under rule
59.06(2)(a).
The test for re-opening a trial after the judgment or other
order has been issued and entered was set out by the Court in
Tsaoussis (Litigation Guardian of) v. Baetz (1998), 41
O.R. (3d) 257. In that decision, Doherty J.A. explained that the
onus is on the moving party to demonstrate that the new evidence
could not have been put forward by the exercise of reasonable
diligence at the original proceeding. The Court must evaluate the
cogency of the new evidence, any delay in moving to set aside the
previous judgment, any difficulty in re-litigating the issues and
any prejudice to other parties who may have acted in reliance on
the judgment.
Lauwers J.A. observed that the motion judge briefly referred
to the appropriate test, but found that his reasons for refusing to
re-open the trial were inadequate. He failed to describe the
proposed new evidence or explain why it failed to meet the test or
why it would not "reasonably affect the outcome" of the
trial. These failures precluded the Court of Appeal from conducting
a meaningful review of the basis for his dismissal of the
appellant's motion.
Lauwers J.A. concluded that Mehedi met the
Baetz
test. He held that the proposed new evidence was not available at
the time of the first trial or the appeal, that the appellant did
not delay in seeking relief and that there would be no prejudice to
the respondents if the trial were re-opened. He also found the new
evidence cogent: it appeared credible and, if accepted, would
likely have affected the result of trial. The new evidence, which
showed the respondents making the same or similar promises to
others that the appellant alleges were made to him, supported the
appellant's claim that the respondents had promised to find him
a job at a specified salary and within a specified time, promises
which the trial judge had dismissed as "unrealistic and
unreasonable".
2. Ferri v. Ontario (Attorney
General), 2015 ONCA 683 (Cronk, Tulloch and Hourigan
JJ.A.), October 8, 2015
The appellant, Mario Ferri, is a regional councillor for the
City of Vaughn. His son, Steven Ferri, is an associate at the law
firm Loopstra Nixon LLP, practising in the areas of municipal,
development and land use planning law. Following the adoption of
the Vaughan Official Plan 2010 by Vaughan City Council, Antonio Di
Benedetto retained Loopstra Nixon to appeal an aspect of the Plan
to the Ontario Municipal Board. Steven Ferri works directly on the
Di Benedetto Appeal, under the supervision of a partner of Loopstra
Nixon.
Pursuant to section 3 of the Municipal Conflict of
Interest Act, R.S.O. 1990, chapter M.50
("MCIA"), the pecuniary interest of any parent,
spouse or child of a councillor, if known to the councillor, is
deemed the pecuniary interest of the councillor. Section 5 of the
statute provides that where a councillor has a pecuniary interest,
direct or indirect, in any matter that is under consideration at a
meeting, that member shall declare his interest and is prohibited
from, among other things, discussing or voting in respect of the
matter or attempting to influence the vote. Under section 4(k) of
the MCIA, however, where the pecuniary interest of the
councillor is "so remote or insignificant in its nature that
it cannot reasonably be regarded as likely to influence" the
councillor, section 5 does not apply.
The appellant disclosed and declared an interest under section
5 of the MCIA with respect to any matter which he knew
that Loopstra Nixon was retained. He also brought an application to
determine whether he could participate in council proceedings with
respect to the Di Benedetto appeal without breaching the
statute.
The application judge dismissed his application, holding that
Steven Ferri has a pecuniary interest in the Di Benedetto appeal
that is neither remote nor insignificant, and that a reasonable
elector would likely conclude that the appellant's deemed
interest was not "so remote or insignificant in its nature
that it cannot reasonably be regarded as likely to influence the
member."
Mario Ferri appealed, submitting that the application judge
erred in dismissing his application by applying an overly broad
definition of the term "pecuniary interest" under the
MCIA, conflating the analyses required under subsection 3
and 4(k) and disregarding factors relevant to the analysis required
under section 4(k).
Writing for the Court of Appeal, Hourigan J.A. observed that
"pecuniary interest" in not a defined term in the
MCIA. The case law establishes, however, that a
"pecuniary interest" under the statute is restricted to a
financial, monetary or economic one. Hourigan J.A. explained that
while what constitutes a pecuniary interest sufficient to trigger
the provisions of the MCIA is not to be narrowly confined,
it must also not be construed so broadly that it captures
"almost any financial or economic interest such that it risks
needlessly disqualifying municipal councillors, and others captured
under the ambit of the MCIA, from participating in local
matters of importance to their constituents."
Hourigan J.A. found that it was unnecessary to determine
whether the appellant has a pecuniary interest in the Di Benedetto
appeal because he conceded on his application that his son has an
indirect pecuniary interest in it and, having made this concession,
the appellant cannot resile from it on the appeal. Hourigan J.A.
held that, in any event, any pecuniary interest is so remote or
insignificant that it falls within the exception in section 4(k)
and that the appellant is not required to comply with the
requirements of section 5.
Justice Hourigan agreed with the appellant that the
application judge conflated the analyses required
under subsection 3 and 4(k), improperly importing his
conclusions from his section 3 analysis into his consideration of
section 4(k). The analysis of whether a councillor's pecuniary
interest is too remote or insignificant to be reasonably regarded
as likely to influence that councillor cannot be premised on the
notion that, unless proven otherwise, the councillor has the same
level of proximity and significance as his child. The section 4(k)
analysis must occur separately, focusing on the proximity and
significance of the councillor's pecuniary interest in the
context of all the circumstances. The application judge erred in
his approach to section 4(k) by reading in a rebuttable
presumption. Hourigan J.A. held that the application judge further
erred in his consideration of the factors relevant to the analysis
required under section 4(k), failing to consider all of the
relevant circumstances.
The test to be applied under section 4(k) asks "[w]ould a
reasonable elector, being apprised of all the circumstances, be
more likely than not to regard the interest of the councillor as
likely to influence that councillor's action and decision on
the question?" Considering all of the circumstances
established in the evidence, including the appellant's
vigilance and conscientiousness in declaring potential conflicts of
interest under the
MCIA, Hourigan J.A. held that a
reasonable elector apprised of all these circumstances would not
conclude that the appellant's deemed interest in the Di
Benedetto appeal would be likely to influence his participation in
debate or voting on the matter before council.
3. Curoc Construction Ltd. v Ottawa
(City), 2015 ONCA 693 (Gillese, Epstein and Roberts
JJ.A.), October 15, 2015
The appellant, Curoc Construction Ltd., entered into a
contract with the respondent, the City of Ottawa, to remove,
refinish and replace vinyl floor in the office areas of City-owned
property. Curoc had completed most of the work when it was informed
that there was asbestos in the flooring of the construction area.
The parties agreed to stop the project and allow an asbestos
containment contractor to investigate and coordinate the clean-up
of the work site. After a brief work stoppage, Curoc completed
remainder of the work.
Curoc brought an action against the City, seeking for damages
and declaratory relief for alleged breaches by the City of the
Ontario Occupational Health and Safety Act, R.S.O. 1990,
chapter O.1 ("OHSA"). Curoc claimed that the
City knew that asbestos was present at the work site and violated
the OHSA by failing to disclose this information. Curoc
further argued that as a result of the City's breaches of the
OHSA, it failed to take appropriate precautions and its
employees were exposed to asbestos.
The City moved for summary judgment on the basis that the
action was premature, that Curoc had not actually sustained any
damages and that declaratory relief was inappropriate. Curoc
meanwhile brought a cross-motion for summary judgment on its
claims, submitting evidence that it had suffered damages in the
form of legal and administrative costs.
The motion judge granted the City's motion for summary
judgment and dismissed Curoc's cross-motion, finding that Curoc
failed to meet its evidentiary burden regarding damages. He
declined to make the declarations sought by Curoc due to his
concern that they might have an impact on the rights of Curoc's
employees, who were not parties to the proceedings.
Curoc appealed, submitting that the motion judge made a number
of errors. It argued that the motion judge erred by: (i) dealing
with the exposure of its employees to asbestos in only a cursory
way; (ii) failing to determine whether the City breached the
OHSA and, if it did, whether the City is accordingly
liable pursuant to section 30(5) of that statute; (iii) failing to
find that it had suffered damages, despite its evidence that it had
spent time on administrative tasks and incurred legal costs in
dealing with the incident at the work site; and (iv) finding that
the test for declaratory relief had not been met.
Writing for the Court of Appeal, Gillese J.A. considered the
first three issues together, noting that each turned on the motion
judge's finding that Curoc failed to adduce evidence sufficient
to satisfy its burden with respect to loss or damages.
Curoc's claim was based on alleged breaches of the
OHSA. Gillese J.A. observed that there is no nominate tort
of breach of contract in Canada, but noted that the City conceded
that section 30(5) of the OHSA creates a statutory cause
of action. That provision provides:
An owner who fails to comply with
this section is liable to the constructor and every contractor and
subcontractor who suffers any loss or damages as the result of the
subsequent discovery on the project of a designated substance that
the owner ought reasonably to have known of but that was not on the
list prepared under subsection (1).
Assuming, for the purpose of the appeal, that section 30(5) of
the OHSA creates a statutory cause of action, Gillese J.A.
noted that on a plain reading of the provision, liability is
dependent on Curoc suffering "loss or damages" as a
result of the subsequent discovery of asbestos. Curoc claimed that
it had incurred loss or damages in the form of administrative and
legal costs incurred in dealing with the discovery of asbestos at
the work site. In Gillese J.A.'s view, the motion judge was
correct to reject these claims.
Curoc's claim for administrative costs related to the work
of its president, who allegedly spent sixty hours attending to
various administrative duties arising from the discovery of
asbestos at the work site. Gillese J.A. agreed with the motion
judge's decision to reject this claim, observing that the
evidence proffered was vague and general, and noting that there was
no evidence that Curoc compensated its president for these
administrative duties, nor was there evidence that the time devoted
to these duties caused an actual loss to the company.
Curoc's claim for legal costs was based on its retention
of legal counsel in order to determine how properly to respond to
the discovery of asbestos at the work site. Gillese J.A. agreed
with the motion judge that there was no evidence that Curoc's
"sample" bill showing fees of more than five thousand
dollars was ever paid or even rendered to the company. It was also
unclear how much, if any, of the sample bill related to time spent
on the litigation.
Gillese J.A. emphasized that in responding to the City's
motion for summary judgment, Curoc was required to put its best
food forward. The motion judge was entitled to assume that the
record before him contained all of the evidence which Curoc would
present if there were a trial. He did not err in finding that Curoc
had failed to meet its burden in respect of loss or damages and,
having so found, it was unnecessary that he provide more detailed
reasons about the employees' exposure to asbestos, nor was he
obliged to determine whether the City had breached the
OHSA.
Rule 20.04(2)(a) of the Rules of Civil Procedure,
R.R.O. 1990, Regulation 194, provides that summary judgment shall
be granted if the court is satisfied that there is no genuine issue
requiring a trial. With loss or damages a constituent element of
the statutory cause of action under section 30(5) of the
OHSA, once the motion judge found that Curoc had failed to
discharge its burden on the matter of loss or damages, there was no
genuine issue requiring a trial and summary judgment had to be
granted.
While it acknowledged that declaratory relief is
discretionary, Curoc submitted that the motion judge erred in
declining to grant its requested declarations, speculating about
the possible effects that such relief might have on third parties
instead of applying the test for declaratory relief. Curoc argued
that the test in Solosky v. the Queen, [1980] 1 S.C.R.
821, was satisfied because the declarations sought would determine
the issue of liability between it and the City, constituting a
determination of a present right.
Gillese J.A. rejected this submission, holding that even if
Curoc's employees were exposed to asbestos at the work site, it
was not known whether any of them would ever become ill as a result
of that exposure and, if they did, whether they would commence
legal proceedings. The first factor in
Solosky – the
utility of the declaration – was not established because the
proposed declarations concerned possible future legal proceedings
and related to future or hypothetical rights. Further, the motion
judge did not err in taking into consideration that the proposed
declarations could affect the rights of Curoc's employees who,
while identified in the claim, were not parties to the action.
Should one of them choose to initiate legal proceedings arising
from this incident, any declarations made about it might very well
have an impact on their rights.
4. Chrisjohn v. Riley, 2015 ONCA 713
(Gillese, van Rensburg and Miller JJ.A.), October 26, 2015
The appellants appealed an order refusing to set aside an
administrative dismissal of their personal injury action. Through
no fault of the appellants and due to the negligence of two sets of
counsel, no motion to set aside was brought until more than five
years after the action was dismissed, more than eight years after
the action was commenced and more than a decade after the accident
in which Deborah Chrisjohn was injured. The respondent insurance
company, having heard nothing from the appellants or their counsel
for almost three years until it received notice of a motion to set
aside the dismissal, had assumed that the case was over. In this
decision, the Court of Appeal weighed the competing interests of
these parties in determining whether the motion judge was wrong to
refuse to set aside the dismissal.
In August, 2004, an action was commenced by Deborah
Chrisjohn's first lawyer, R.N., seeking damages for her
injuries, and damages under the Family Law Act, R.S.O.
1990, chapter F.3, for the other appellants, her husband and
daughters. R.N. named two insurance companies among the defendants,
but pursuant to two orders made in unopposed motions in 2005 and
2006, the action against these insurers was dismissed and the
appellants were granted leave to amend the claim to add as
defendants the owner of the vehicle Chrisjohn was driving at the
time of the collision and the insurer of that vehicle, the
respondent, Langdon Insurance Company, with the requirement that
the amendment be made within twenty days.
R.N. did not take steps to amend the pleading, and the
respondent was never added to the action as a defendant. This was
the first in a long series of failures on the part of R.N. to
advance the action. A status notice was issued in May, 2007, and
the action was dismissed by the Registrar's order on August 21,
2007.
The appellants eventually terminated their difficult
relationship with R.N., retaining A.M. as counsel, but A.M. also
failed them, focusing on R.N.'s negligence instead of moving to
set aside the administrative dismissal.
As the solicitor's negligence fight between R.N. and A.M.
raged on, the hapless appellants finally secured counsel who, in
April, 2014, brought a motion to set aside the administrative
dismissal and to amend the pleading to add the respondent as a
defendant. The motion was heard in early 2015 and dismissed.
With a delay of more than five years from the date the
appellants became aware of the dismissal, the motion to set aside
was clearly not brought promptly. The motion judge held that this
delay gave rise to a presumption of prejudice which the appellants
failed to rebut. Further, he found that there was evidence of
actual prejudice, as numerous records relevant to Chrisjohn's
pre- and post-accident medical condition and liability were not
available and the investigating officer had suffered a stroke. The
motion judge also emphasized the "compelling
consideration" of finality. Between the administrative
dismissal and communications from A.M. to its counsel, the
respondent had assumed for almost three years that the case was
over. Ultimately, the motion judge held that the interest in
finality outweighed the appellants' right to an
indulgence.
The appellants submitted before the Court of Appeal that the
motion judge erred in his consideration of the explanation for the
litigation delay by ignoring, or failing to give proper weight to,
the uncontroverted evidence that they always intended to proceed
with the personal injury action. Writing for the Court, van
Rensburg J.A. rejected this submission, noting that the motion
judge was well aware that it was the conduct and inaction of the
appellants' counsel, and not of the appellants themselves, that
led to the administrative dismissal and the failure to move to set
aside the dismissal promptly. The motion judge considered the
evidence in the appellants' two affidavits that made it clear
that they relied on their lawyer's assurances that the action
would continue after the administrative dismissal occurred and that
it was always their intention to pursue their claim for
compensation. Justice van Rensburg held that while the
appellants' consistent intention to pursue their claims weighed
in favour of setting aside the dismissal, it was not sufficient.
The rights of all the parties must be considered to determine
ultimately whether it would be fair and just to set aside the
dismissal and to allow the action to proceed.
Justice van Rensburg similarly rejected the appellants'
submission that the motion judge erred in refusing to consider as
relevant the prospect that, if the action were not restored, they
may be without any real remedy in respect of the serious injuries
suffered by Deborah Chrisjohn. She observed that the motion judge
did not fail to appreciate the potential consequences to the
appellants, but in fact explicitly stated that he declined to take
into account whether the appellants had another remedy against
either of their former counsel for negligence. In doing so, the
motion judge followed the principle established by the Court in
Finlay v. Paassen, 2010 ONCA 204, in which Laskin J.A.
cautioned against weighing as a factor in such motions the
plaintiff's ability to sue her former counsel. The lack of a
guaranteed alternative recovery cannot be determinative. The motion
judge's decision instead turned on the question of prejudice,
or whether the respondent, after such a significant delay and after
being under the impression that the action was at an end, would be
able to defend the appellants' claims if the action were
restored.
Justice van Rensburg further rejected the appellants'
assertion that the motion judge erred in his assessment of
prejudice. As the Court explained in
Hamilton (City) v. Svedas
Koyanagi Architects Inc., 2010 ONCA 887 and in
MDM
Plastics Ltd. v Vincor International Inc., 2015 ONCA 28, on a
motion to set aside a dismissal for delay, the question of
prejudice is invariably a key, if not the key consideration, and
the relevant prejudice is to the defendant's ability to defend
the action that would arise from steps taken following dismissal or
which would result from the restoration of the action. The onus is
not on the respondent to demonstrate "significant and
actual" prejudice, but on the appellants to rebut the
inference of prejudice relating to the respondent's ability to
defend the action. Justice van Rensburg found that the motion judge
correctly concluded that the onus was not met in this case and that
actual prejudice relevant to the ability to defend the action on
damages and liability had been established. He relied on the
extensive evidence put forward by the respondent of actual
prejudice to its ability to defend the action. Although the
appellants' counsel attempted to address the question of
prejudice, the motion judge noted that there were important gaps in
the available medical evidence as a result of the passage of
time.
5. Puri Consulting Limited v Kim Orr Barristers
PC, 2015 ONCA 727 (Gillese, van Rensburg and Miller
JJ.A.), October 29, 2015
This appeal, which turned on the interpretation of an offer to
settle, arose from a dispute over an account for services.
The respondent law firm retained Professor Poonam Puri though
her company, the appellant Puri Consulting Limited, to provide an
expert opinion in a class proceeding. Professor Puri delivered her
opinion, which was filed in court, and in July, 2012, the appellant
rendered an account totalling $53,807.83. When the account remained
outstanding after demands for payment, the appellant brought an
action for damages. The respondent claimed that the invoiced amount
was unreasonable and excessive.
In December, 2013, the appellant served a written offer to
settle under Rule 49 of the Rules of Civil Procedure,
R.R.O., 1990, Regulation 194, which stated:
The plaintiff, Puri Consulting
Limited, offers to settle this proceeding on the following
terms:
1. payment by the defendant to the
plaintiff in the amount of $50,000, plus HST, in full and complete
satisfaction of the plaintiff's claim; and
2. this offer will remain open for
acceptance until one minute after the beginning of the trial of
this action.
At the pre-trial conference in May, 2014, the parties
disagreed as to the meaning of the offer: while the respondent
interpreted the offer as inclusive of costs, the appellant's
counsel made it clear that acceptance of the offer would require
the respondent to pay costs. Shortly before the trial was set to
commence in September, 2014, the respondent accepted the offer and
paid $50,000 plus HST, for a total amount of $56,000. The appellant
asserted that she was entitled to costs in addition to the amount
paid by the respondent and moved under rule 49.09 to enforce the
settlement.
At issue before the motion judge was whether the offer
provided for the disposition of costs. If it did not, then Rule
49.07(5)(b) was engaged, which states:
Where an accepted offer to settle
does not provide for the disposition of costs, the plaintiff is
entitled...
(b) Where the offer was made by the
plaintiff, to the plaintiff's costs assessed to the date that
the notice of acceptance was served.
The motion judge held that the meaning of the words "in
full and complete satisfaction" in the offer were unambiguous,
and that those words provided for the disposition of costs. The
appellant sought to rely on discussions that took place at the
pre-trial conference which showed the parties' differing
positions on the matter of costs. The motion judge refused to
consider this evidence, however, holding that it was not in the
interest of justice that the Rule 50.09 prohibition against
disclosure of statements made in a pre-trial conference be
disregarded because there was no suggestion that acceptance of the
settlement was based on non-disclosure, duress, fraud or
illegality. She further noted that had she considered this
evidence, it would not have resolved any ambiguity.
The motion judge dismissed the appellant's motion.
Writing for the Court of Appeal, van Rensburg J.A. held that
the motion judge made a reversible error in taking a literal
approach to the offer, focusing only on the words "in full and
complete satisfaction" and neglecting the others. As the Court
explained in Dumbrell v. The Regional Group of Companies
Inc. (2007), 85 O.R. (3d) 616 (C.A.), even where words in a
written agreement appear to be unambiguous, the meaning of those
words can only be properly ascertained by considering the context
in which the agreement was made. In this case, despite her belief
that the words "in full and complete satisfaction" were
unambiguous, the motion judge ought to have contemplated other
words in the offer, such as "claim".
Justice van Rensburg noted that the motion judge treated
"claim" as synonymous with "action" and did not
determine what "claim" the offer intended to settle. Rule
49 provides that a party may offer to settle "any one or more
claims in a proceeding", meaning that the word
"claim" in an offer to settle cannot be synonymous with
"action" or "proceeding". In this case, the
appellant claimed damages, interest and costs as separate items.
Because the offer to settle referred to the settlement of the
appellant's "claim", there was ambiguity as to which
one the appellant meant to settle.
Justice van Rensburg found that the motion judge further erred
in failing to consider the factual matrix when interpreting the
agreement. The factual matrix in this case included the Rule 49
context in which the parties were operating, and the timing of the
offer and its acceptance in the litigation.
As the Court of Appeal held in Rooney (Litigation Guardian
of) v. Graham (2001), 53 O.R. (3d) 685, the purpose of Rule 49
is to encourage parties to make reasonable efforts to settle and to
facilitate the early settlement of litigation. Rule 49.10, which
sets out the costs consequences of a failure to accept an offer
that the offeror does better than at trial, means that continuing
litigation in the face of a reasonable offer can be risky. While a
party may specifically address costs in an offer to settle, Rule
49.07(5) suggests that offers to settle will be made that do not
provide for the disposition of costs. This Rule provides an
incentive for the defendant to accept an offer promptly, as the
later that an offer that does not provide for costs is accepted the
greater the costs that will have to be paid.
Justice van Rensburg held that the timing of the offer and its
acceptance did not favour the respondent's interpretation of
the agreement. The respondent would have known that, unless the
action settled, the trial would proceed as scheduled and the
appellant would have incurred additional legal costs to prepare. As
lawyers, they would have appreciated the implications of an offer
to settle under Rule 49, and in particular the default provision in
Rule 49.07(5).
Justice van Rensburg held that it was unnecessary to consider
the scope of the prohibition in Rule 50.09 and its application to
the case, or to determine whether what was communicated at the
pre-trial conference was part of the factual matrix to be
considered when interpreting the settlement agreement. The evidence
of what occurred at the pre-trial conference was "equivocal at
best", and the motion judge was correct in finding that had it
been considered, it would only have indicated that the parties
disagreed as to whether costs were included in the offer. It would
not have clarified the agreement.
The Court allowed the appeal, declaring that the offer did not
provide for the disposition of costs and that, pursuant to Rule
49.07(5), the appellant was entitled to costs assessed to the date
on which the respondent's acceptance of the offer was
served.
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