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Appeal Court Dicta

Civil Litigation - Settlements - Effect of Offer on Costs

. Haider v. Rizvi

In Haider v. Rizvi (Ont CA, 2023) the Court of Appeal found error with the lower court's conclusions regarding settlement terms, but also found that analysis to be immaterial and thus ultimately supported the lower court's conclusions - here regarding R49 ['Offer to Settle'], and especially R49.09 ['Failure to Comply with Accepted Offer']:
1. There was no reversible error caused by the procedural defect in the way the issue was brought before the court

[18] The appellant has demonstrated no reversible error in the motion judge’s conclusion that the issue could be determined on the motion before her.

[19] Rule 49 applies to offers to settle. Rule 49.09 provides that where a party to an accepted offer to settle fails to comply with the terms of the offer, the other party may (a) make a motion to a judge for judgment in the terms of the accepted offer, and the judge may grant judgment accordingly; or (b) continue the proceeding as if there had been no accepted offer to settle.

[20] In Donaghy v. Scotia Capital Inc./Scotia Capitaux Inc., 2009 ONCA 40, 93 O.R. (3d) 776, leave to appeal refused, [2009] S.C.C.A. No. 92, this court observed that the respondent’s reliance on r. 49.09 was in error because the parties’ settlement occurred outside the scope of r. 49. The settlement did not arise out of an exchange of offers made pursuant to r. 49 and it had been entered into pre-litigation: at para. 15. This error, however, did not affect the merits of the motion in the court below or the appeal. As the court noted, since settlements are enforceable as contracts at common law, the motion to enforce the settlement was in effect a motion for summary judgment to dismiss the action on the basis of the settlement: at para. 16.

[21] In the present case, although the notice of motion relied on r. 49 and the motion judge described the motion as having been brought under that rule, r. 49 was not applicable. The settlement did not arise out of an exchange of offers made under r. 49. Rule 49.09 “is a procedural rule applicable to the acceptance and subsequent non-compliance with an offer to settle:” Gianopoulos v. Olga Management Ltd. (2006), 2006 CanLII 3459 (ON CA), 207 O.A.C. 58 (C.A.), at para. 3. It does not apply to non-compliance with a settlement agreement: Vanderkop v. Manufacturers Life Insurance Company (2005), 2005 CanLII 39686 (ON SC), 78 O.R. (3d) 276 (S.C.), at paras. 14-15, aff’d (2006), 40 C.C.L.I. (4th) 180 (Ont. C.A.). See also 1504641 Ontario Inc. et al. v. 2225902 Ontario Inc. et al., 2021 ONSC 2917, at paras. 3-4, 6, aff’d 2022 ONCA 175, at para. 6, leave to appeal refused, [2023] S.C.C.A. No. 40189; Dodla v. Dodla, 2022 ONSC 5648, at paras. 14-15.

[22] However, it was appropriate for the respondent to bring the matter before the court by way of motion, when the Minutes of Settlement arose out of a settlement entered into after a pretrial conference, and the Actions had not yet been dismissed. The commencement of a fresh proceeding to enforce the settlement was unnecessary and would have been inappropriate: see e.g., Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 4th ed. (Toronto: LexisNexis, 2020), at pp. 729-730; GMBR Capital Corp. v. Parmar, 2021 ONSC 7798, at para. 25; Donaghy, at para. 11. As McEachern C.J.B.C. stated in Fieguth v. Acklands Ltd. (1989), 1989 CanLII 2744 (BC CA), 59 D.L.R. (4th) 114 (B.C.C.A.), at p. 123, when the issue is not whether the parties concluded a settlement, but some step in its execution, “subsequent disputes should be resolved by application to the court or by common sense within the framework of the settlement to which the parties have agreed”.

[23] The motion judge had jurisdiction to determine the motion and therefore did not err in hearing and deciding it. Although she stated that she was deciding the motion under r. 49.09, in essence she was deciding a motion to enforce a settlement that was reached in an action that had not yet been dismissed.

[24] Accordingly, I would reject this ground of appeal.
. Gannes v Chhabra

In Gannes v Chhabra (Div Court, 2023) the Divisional Court considered what might be called an 'exception' to CJA 133(b), the rule that requires leave to appeal where the only issue is one of costs. The appellants argued the CJA 133(b) only applied "where the appeal is only as to costs that are in the discretion of the court ...", and that 'their' costs issue involved no such discretion - it being under the R49.07(5) offer rules which provides for a (firmer) "entitlement" to a cost award (where costs are not expressly included in the offer). The case does not resolve the issues (reserving it) but it raised an interesting issue regarding the R49.07(5) cost provisions:
[5] Section 133(b) of the CJA states as follows:
No appeal lies without leave of the court to which the appeal is to be taken,


(b) where the appeal is only as to costs that are in the discretion of the court that made the order for costs[.]
[6] The Appellants take the position that s. 133(b) of the CJA does not apply to their appeal because costs were not “in the discretion of the court” below. The Appellants rely on Rule 49.07(5) of the Rules of Civil Procedure, which states as follows:
(5) Where an accepted offer to settle does not provide for the disposition of costs, the plaintiff is entitled,

(a) Where the offer was made by the defendant, to the plaintiff’s costs assessed to the date the plaintiff was served with the offer; or

(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.
[7] Sub-rule 49.02(2) states that rules 49.03 to 49.14 also apply to motions, with necessary modifications. The Appellant submits that in this case, “plaintiff” in Rule 49.07(5)(b) would be replaced with “moving party”.

[8] The Appellants made an offer to settle the motion that contained no disposition as to cost and that was accepted by the Respondents. The Appellants submit that pursuant to Rule 49.07(5)(b), they were entitled to a mandatory order for costs to the date that notice of acceptance was served. The Appellants take the position that once an offer falls under Rule 49.07(5), there is no discretion to decline to award costs and that, as a result, the motion judge lacked jurisdiction to refuse to order costs.

[9] While I am not inclined to view the issue as one of jurisdiction, there is case law that finds that, unlike Rule 49.10, which includes the words “unless the court orders otherwise,” Rule 49.07(5) leaves the court with no discretion to depart from the presumptive costs disposition specified in the rule. See, e.g.: Atlas Holdings & Investments v. Vratsidas, [2009] O.J. NO. 823 (Div. Ct.) at paras. 12-14; Ontario (Attorney General) v. $19,570.00 in Canadian Currency (in rem), 2013 ONSC 3322.
. Leaf Homes Limited v. Khan

In Leaf Homes Limited v. Khan (Ont CA, 2022) the Court of Appeal considered the normal rule around setting appeal costs, that settlement offers are disregarded:
[154] Typically, this court does not consider settlement offers when deciding costs of the appeal: see Niagara Structural Steel (St. Catharines) Ltd. v. W.D. Laflamme Ltd. (1987), 1987 CanLII 4149 (ON CA), 58 O.R. (2d) 773 (C.A.). ...
. 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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