There is no "near miss" allowed on the timing of
offers to settle under Rule 49.10 of the Rules of Civil
Procedure, but residual discretion always rests with the trial
judge in awarding costs, as the Court of Appeal confirmed in its
recent judgment in König v Hobza.
Under Rule 49.10(2) of the Rules of Civil Procedure, if
a defendant makes an offer to settle at least seven days before
trial and the plaintiff obtains a judgment as favourable as or less
favourable than the defendant's offer, the defendant may be
entitled to partial indemnity costs from the date the offer was
In this case, the plaintiff, Mr. Klaus-Peter K ö nig, was a
silent investor in the defendant company. He alleged that the
company's officers and directors over-compensated themselves
over a number of years. Four days prior to trial, the defendants
served the plaintiff with a "Rule 49" offer to settle
(the "Offer"). The plaintiff rejected the Offer. At
trial, the plaintiff was successful in respect of his claim for
oppression. The trial judge also determined that the
defendants' conduct merited an award of substantial indemnity
costs. As a result, after factoring in the substantial indemnity
costs, the judgment was more favourable than the Offer. Therefore,
the cost consequences under Rule 49.10 were not engaged.
The defendants appealed the trial result to the Ontario Court of
Appeal. The Court determined that the defendants had been
under-compensated during the company's early years and, as a
result, damages and prejudgment interest were reduced. Although the
Court upheld the decision to award costs on a substantial indemnity
scale, the case was sent back to the trial judge for
reconsideration of costs.
In reconsidering costs, the trial judge determined that the
revised judgment was less favourable than the Offer. Consequently,
the trial judge held that the cost consequences under Rule 49.10
applied and the defendants were therefore entitled to costs on a
partial indemnity scale from the date of the Offer. However, the
trial judge was still of the view that, due to the defendants'
conduct, the plaintiff should be awarded substantial indemnity
costs to the date of the Offer.
The plaintiff appealed this result to the Ontario Court of
Appeal. He claimed that the Offer did not satisfy the seven-day
timing requirement under Rule 49.10 and therefore, the Offer should
have no cost consequences at all. The Court agreed that the Offer
did not meet the timing requirements under Rule 49.10. Notably, the
Court confirmed that there is no "near miss" policy with
respect to the timing requirement of Rule 49.10 offers.
Nevertheless, the Court held that Rule 49.13 grants a judge
discretionary authority in awarding costs. This discretion requires
a "holistic" consideration of relevant factors, including
any offers to settle even if they do not meet the requirements of
Rule 49.10. The Court determined that the trial judge applied a
holistic approach in awarding costs and appropriately accounted for
various factors, including the Offer. The appeal was therefore
This case shows that parties should be cognizant of the timing
requirements under Rule 49.10. Nonetheless, even when offers to
settle do not meet these timing requirements, they may still have a
significant impact pursuant to Rule 49.13 as a judge has wide
discretion to consider any offers when determining an appropriate
It's not often that our little blog intersects with such titanic struggles as the U.S. presidential race – and by using the term "titanic" I certainly don't mean to suggest that anything disastrous is in the future.
J.J. v. C.C., is an interesting case in which the court held that an automotive garage owes a duty to minor children to secure the vehicles on the premises by locking the cars and safely storing the car keys...
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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