363066 Ontario Ltd. v. Gullo et al. [Indexed as: 363066 Ontario Ltd. v. Gullo]
88 O.R. (3d) 170
Court of Appeal for Ontario,
Cronk, Gillese and Armstrong JJ.A.
November 16, 2007
Civil procedure -- Offer to settle -- Rule 49.04(1) of Rules of Civil Procedure not subject to irrevocability provision in offer to settle -- Offer to settle may be withdrawn at any time before acceptance notwithstanding statement in offer that it remained irrevocable until one minute after commencement of trial -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 49.04(1).
The appellants made an offer to settle in 2004 which stated that it would remain "irrevocable" until one minute after the commencement of the action. When the respondent made some inquiries about the offer in 2006, the appellants revoked the 2004 offer and made a new, less favourable, offer to settle which expressly revoked the 2004 offer. The respondent brought a motion to enforce the 2004 offer. The motion judge concluded that rule 49.04(1) of the Rules of Civil Procedure should be interpreted as being subject to an irrevocability provision in an offer and granted the motion. The appellants appealed.
Held, the appeal should be allowed.
Rule 49 of the Rules of Civil Procedure is a self-contained scheme that deals with the manner in which offers are made, accepted and withdrawn. Rule 49.04(1) expressly provides that an offer to settle may be withdrawn at any time before it is accepted. As the 2004 offer had not been accepted at the time that the 2006 offer was made and the 2006 offer complied with the requirements of rule 49.04(1), the appellants were entitled to withdraw the 2004 offer despite the fact that it was stated to be irrevocable.
APPEAL from the order of Spence J. of the Superior Court of Justice, dated February 5, 2007, granting a motion to enforce an offer to settle. [page171]
Cases referred to Milios v. Zagas (1998), 1998 7119 (ON CA), 38 O.R. (3d) 218, [1998] O.J. No. 812, 18 C.P.C. (4th) 13 (C.A.) Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 1.04 [as am.], 49 [as am.], 49.04, 49.09
Michael R. Kestenberg, for appellants Anna Gullo, Tony Gullo, Gullo Enterprises Limited and 1211555 Ontario Ltd. Stephen R. Barbier, for respondent.
The judgment of the court was delivered by
[1] GILLESE J.A.: -- These parties have been involved in lengthy litigation over a partnership among family members to develop a property in York Region. The appellants are some but not all of the defendants in this action.
[2] The appellants made a number of offers to settle, none of which were accepted by the respondent. In September of 2004, the appellants made a further offer to settle the action (the "2004 offer"). They offered the respondent a 20 per cent interest in the property in return for his consent to the dismissal of the action as against them.
[3] The 2004 offer stated that it would "remain irrevocable until one minute after the commencement of the trial of this action".
[4] In January 2006, the respondent made some inquiries about the 2004 offer. Shortly thereafter, the appellants instructed their lawyer to revoke the 2004 offer and make a new, less favourable offer to settle. The 2006 offer expressly revoked the 2004 offer. The respondent replied that the 2004 offer could not be revoked and that the 2004 offer was accepted. The respondent then brought a motion under rule 49.09 [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] to enforce the 2004 offer.
[5] The motions judge held that the settlement should be enforced. He stated that a restrictive reading of rule 49.04(1) -- which provides that "[a]n offer to settle may be withdrawn at any time before it is accepted by serving written notice of withdrawal of the offer . . ." -- would permit withdrawal of the 2004 offer at any time before acceptance. However, based on rule 1.04 and policy considerations, he rejected that interpretation.
[6] Rule 1.04 provides that the Rules of Civil Procedure should be "liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits". Rule 1.04, coupled with the policy of the court to encourage settlements, led the motions judge to conclude that rule 49.04(1) should be interpreted as being subject to an irrevocability provision in an offer.
[7] The motions judge also found that the respondent had taken steps towards accepting the 2004 offer before the appellants tried to revoke it. As a result, he found that the respondent could not be said to be "snapping up" a revoked offer. [page172]
[8] In my view, the motion judge erred in his interpretation of rule 49.04(1).
[9] Rule 49 of the Rules of Civil Procedure is a self- contained scheme that deals with the manner in which offers are made, accepted and withdrawn. In light of the clear language of rule 49.04(1), I see no need to resort to rule 1.04 when interpreting it. Rule 49.04(1) expressly provides that "[a]n offer to settle" may be withdrawn at any time before it is accepted by serving written notice of withdrawal of the offer on the party to whom the offer was made. The 2004 offer was an offer to settle. As the 2004 offer had not been accepted at the time that the 2006 offer was made and the 2006 offer complied with the requirements of rule 49.04(1), the appellants were entitled to withdraw the 2004 offer despite the fact that it was stated to be irrevocable.
[10] It is worth noting the practical implications that follow if rule 49.04(1) is not afforded its plain meaning. For example, as counsel for the respondent concedes, had the 2004 offer been stated to have been "open" -- rather than "irrevocable" -- until one minute after the commencement of trial, the appellants would have been entitled to withdraw the 2004 offer pursuant to rule 49.04(1). There is little difference between an offer that is to remain open until one minute after trial commences versus one that is to be irrevocable until one minute after trial commences. In both cases, the intention is that the offer is to remain open until one minute after the trial commences. I do not favour an interpretation of rule 49.04(1) which permits the withdrawal of the offer in the former situation but precludes withdrawal of the offer in the latter. Giving rule 49.04(1) its plain meaning, namely, that an offer to settle may be withdrawn at any time before acceptance provided that written notice of the withdrawal is served, precludes such inconsistency.
[11] Having concluded that pursuant to rule 49.04(1) the appellants were entitled to revoke the 2004 offer, there is no need to address the alternative arguments raised on this appeal, namely, that the motions judge erred in the exercise of his discretion to enforce the settlement (see Milios v. Zagas (1998), 1998 7119 (ON CA), 38 O.R. (3d) 218, [1998] O.J. No. 812 (C.A.)) or in his determination that the respondent had not "snapped up" the offer.
[12] Accordingly, I would allow the appeal, set aside the order below and allow the action to continue. The appellants are entitled to costs of the motion and the appeal, fixed at $11,500 and $7,500, respectively. These costs are inclusive of disbursements and GST.
Appeal allowed. [page173]