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Settlements - Effect of Offer on Costs

. 2651171 Ontario Inc. v. Brey

In 2651171 Ontario Inc. v. Brey (Ont CA, 2022) the Court of Appeal considered the impact of unaccepted offers to settle made at trial:
[6] First, there is no question that the appellant’s offer was made more than seven days before the hearing of the motions, not accepted by the respondent Brey, had not expired, and the result obtained by the appellant as a result of this appeal is more favourable than its offer to settle. As a result, the appellant is prima facie entitled to its costs on a partial indemnity basis to the date the offer was served and substantial indemnity costs from that date, “unless the court orders otherwise”: r. 49.10(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[7] While a court retains the discretion to “order otherwise” under r. 49.10(1), this discretion has been very narrowly construed. As this court cautioned in Niagara Structural Steel (St. Catharines) Ltd. v. W.D. Laflamme Ltd. (1987), 1987 CanLII 4149 (ON CA), 58 O.R. (2d) 773 (C.A.), at para. 12, “resort should only be had to the exception where, after giving proper weight to the policy of the general rule, and the importance of reasonable predictability and the even application of the rule, the interests of justice require a departure.” We do not see any circumstances here that would justify a departure from the general cost consequences stipulated under r. 49.10(1). Accordingly, the appellant is entitled to costs on a substantial indemnity basis.


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