COURT FILE NO.: CV-08-00360930

DATE: 20121023

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Afsheen Naz and Asad Imam, Plaintiffs

AND:
Joann M. Marks and Toyota Credit Canada Inc., Defendants

BEFORE: Madam Justice Darla A. Wilson

COUNSEL:
Richard A. Levin & Nersi Makki, Counsel for the Plaintiffs

Todd J. McCarthy, Counsel for the Defendants

HEARD: October 19, 2012

ENDORSEMENT

[ 1 ] This action is a claim for damages for personal injuries allegedly sustained by the Plaintiff Afsheen Naz (“Ms. Naz”) arising from a motor vehicle accident which occurred on July 22, 2007. Liability was admitted by the Defendants Joann M. Marks (“Marks”) and Toyota Credit Canada Inc. (“Toyota”) and the remaining Defendants were released from the action. The trial was set to commence October 16, 2012 as an assessment of damages. A jury was selected and after the opening remarks of the solicitor for the Plaintiffs, I was advised that counsel had agreed to a resolution of the action which required a judicial determination of an offer to settle delivered by the solicitor for the Defendants. Counsel incorporated the terms of resolution into a letter dated October 18, 2012. I agreed to hear the submissions of counsel on the outstanding issue.

Background

[ 2 ] Initially, the drivers of the other vehicles who were involved in a collision before striking the Plaintiff’s vehicle were both named as Defendants in this action. Each Defendant made an offer to settle prior to trial which was originally fixed for October 1, 2012. The Defendant Marks made an offer to settle dated September 11, 2012 which contained the following paragraph:

The defendants, Joann M. Marks and Toyota Credit Canada Inc., shall pay to the plaintiffs the sum of $300,000.00 for all damages net of all deductibles and net of all collateral benefits received or available plus interest on said sum of $300,000.00, under the Courts of Justice Act , plus costs, GST/HST and assessable disbursements to be agreed upon or assessed.

[ 3 ] The Co-Defendant Latif made an offer to settle in the same form which contained the sum of $131,250.00 for damages plus interest on that sum plus costs.

[ 4 ] On October 10, 2012, the solicitor for the Defendant Marks delivered a document entitled “Revised Offer to Settle/Offer to Contribute” and it contained the following paragraph:

The Defendants’, Joann M. Marks and Toyota Credit Canada Inc., offer to settle/offer to contribute dated September 11, 2012 is hereby revised as follows:

1. (a) General Damages--$100,000.00

(b) Family Law Act net--$5,000.00

(c) Prejudgment Interest--$26,775.00 from August 29, 2007-October 1, 2012

(d) Future damages--$195,000.00

(e) Costs, GST/HST and assessable disbursements to be agreed upon or assessed.

[ 5 ] There was an exchange of e-mail correspondence between counsel on October 10 and on October 11, 2012. Mr. Levin, the solicitor for the Plaintiffs, delivered an acceptance of the offer to settle made by the Defendants Marks and Toyota dated September 11, 2012.

[ 6 ] The terms of resolution of the action between counsel included a provision that I determine whether the offer to settle of September 11, 2012 was open for acceptance in its unrevised state when it was accepted by the Plaintiffs. The difference between the original offer and the revision is $60,000. I agreed to hear submissions from counsel and deliver a decision which counsel agreed was binding on them without right of appeal. On this basis the jury was discharged.

Positions of the Parties

[ 7 ] Mr. Levin submits that the original offer of the Defendant was clear and unambiguous and offered the sum of $300,000 for all damages plus interest on that sum at 5%. It was never withdrawn and therefore open for acceptance by the Plaintiffs.

[ 8 ] Mr. McCarthy concurs that the first offer was never withdrawn but submits that the clarification was to provide a breakdown of the different damages and to calculate the prejudgment interest so that the exact amount of the offer could be ascertained. The Plaintiff was on notice of the amount of the interest so she could not accept the offer and calculate interest at a higher amount, that is, on the entire $300,000.00.

Analysis

[ 9 ] Most of the cases submitted by counsel deal with fact situations different than the one I am asked to rule on. Disputes often arise concerning offers to settle and whether the cost consequences set out in Rule 49.10 of the Rules of Civil Procedure , R.R.O. 1990, Reg. 194 are triggered. That is not the point that I am asked to determine.

[ 10 ] The e-mail exchange of October 10, 2012 which is included in the motion materials, suggests that the Defendants’ offer of September 11, 2012 was not withdrawn but was open for acceptance, although Mr. McCarthy emphasized the offer should not be viewed in isolation. Mr. Levin disagreed, stating,

Your earlier offer required no clarification…The $300,000.00 was subject to pji calculated in the normal way. You can’t have it both ways. This is either a new offer (non-rule 49) which serves to withdraw the earlier offer, or the earlier offer stands to be accepted.

[ 11 ] There is nothing in the Rules which speaks to the “revision or clarification” of an offer to settle. Although the document dated October 10, 2012 is titled “Revised Offer to Settle/Offer to Contribute”, there is no such document contained in the forms that accompany Rule 49. While Mr. McCarthy argued persuasively that the second offer was merely a clarification of the first, I cannot accept this submission. Although the quantum offered for damages was identical, the second document broke the $300,000 into different heads of damages and more importantly, calculated the interest only on the general damages and Family Law Act claims totalling $105,000 and not on the entire $300,000 which the first offer did. Thus, the terms of the offers were different. In my view, the offer of October 10, 2012 must be considered a new offer to settle.

[ 12 ] The court has had the occasion to consider the effect of a party delivering two offers to settle. In Boer v. Cairns [i] , Malloy J. dealt with a situation where a Defendant made a Rule 49 offer and then subsequently, made another offer without withdrawing the first one. She noted that while the case law in the area was not entirely clear in cases with multiple offers, when a party purports to accept one of the offers, there is an implicit revocation of the earlier offer. She stated,

…this result is clearly logical. A party who makes a second offer which is less favourable to the opposing side than a previous offer is conveying the message that he is no longer prepared to settle for the sum previously offered….The same would apply to Defendants’ offers although in reverse. If a Defendant offers to pay $100,000, and then two years later makes a new offer at $50,000, the necessary implication is that the earlier offer to pay more is no longer valid.

[ 13 ] This view had been endorsed by the Divisional Court in Mills v. Raymond [ii] where the Plaintiff delivered an offer to settle for a small amount, which was not accepted by the Defendant. After changing counsel, the Plaintiff then delivered another offer which was much higher than the first offer. Not surprisingly, the Defendant accepted the first offer and the issue before the court was whether the earlier offer was still open for acceptance. In finding that the first offer was no longer open for acceptance after delivery of the second offer, the court stated,

Defence counsel herein, and any independent third party, could not in my view interpret the new offer by the Plaintiffs otherwise than as a replacement for the original offer. In the circumstances of this case, I conclude that in contract law, the new offer impliedly but effectively withdrew or cancelled the old offer and that there is nothing in the rules to prevent such withdrawal or cancellation. As a result, I would hold that the old offer was no longer available for acceptance once the new offer was served.

I agree with this analysis.

[ 14 ] In Diefenbacher v. Young [iii] , the court had to consider the effect of two outstanding offers delivered by the Plaintiff and determine from which offer the cost consequences would run after trial. In finding that the second offer by implication withdrew the first, the court ordered costs from the date of the second offer. While the second offer in Diefenbacher, supra , did not make reference to the earlier offer and that is different than the case before me, in my opinion, that point is of no significance. The analysis undertaken by the court makes it clear that one of the considerations is the “importance to a litigant of clarity and simplicity in determining whether to accept a particular offer. If there is more than one outstanding offer available, that “detracts from the simplicity of looking at a single offer and assessing a risk at a single point in time.”

[ 15 ] Thus, in my view, when Mr. McCarthy delivered the October 10, 2012 offer, that had the effect of withdrawing the earlier offer of September 11, 2012 and it was no longer available for acceptance by the Plaintiffs.

[ 16 ] If I am wrong in my analysis, I turn now to the consideration of whether, after clarifying the terms of the original offer, it was open to the Plaintiffs to accept the first offer on its clear terms. It is submitted by counsel for the Defendants that the case of Blackwell v. Dixon et al [iv] is perhaps the closest factually to the situation I am asked to decide. In that case, the Defendant intended to offer the total amount of $390,000.00 to settle the action but the offer contained an error which resulted in the amount being offered of $400,000.00. Counsel had a telephone discussion about the offer and the solicitor for the Plaintiff thought the offer was $400,000 while the solicitor for the Defendant knew it was only $390,000. Counsel for the Plaintiff accepted the offer to settle and confirmed the settlement amount was $400,000. This was disputed by the solicitor for the Defendant.

[ 17 ] The Court exercised its discretion in Blackwell, supra, not to enforce the acceptance of the $400,000 offer as it was clearly a mistake, noting that knowledge of a mistake in an offer becomes relevant to the issue of whether it was reasonable for a party to rely on the terms of the offer.

[ 18 ] The case I am asked to determine differs from Blackwell, supra, in that it has not been suggested that there was a mistake in the first offer. I was not provided with any cases where an existing offer was “revised” or “clarified” after it was served, thus giving rise to a dispute about the terms of the offer.

[ 19 ] I agree with Mr. Levin that the September 11, 2012 offer states the sum of $300,000 is offered for damages plus interest on that sum under the Courts of Justice Act, RSO 1990, c. C.43 which, on a plain reading, would amount to interest at five per cent (5%) on the full amount for a sum of approximately $75,000. However, the $300,000 figure for damages was broken down into three different heads of damages by the revision contained in the document dated October 10, 2012. As Mr. Levin knows, only the general damages and Family Law Act damages would attract pre-judgment interest and thus, the interest calculation was reduced to $26,775 in the revision. Because $195,000 of the $300,000 damages offer was for future claims, there would be no interest on that head of damage.

[ 20 ] Thus, when he purported to accept the September 11, 2012 offer, the solicitor for the Plaintiffs was aware that the $300,000 sum was not a general damage figure, the entirety of which would be subject to interest. His e-mail correspondence makes it patently clear that he knew the terms of the offer had been revised to make the interest a lesser amount than the September 11, 2012 offer anticipated. While the first offer of the Defendants did not contain an error as in Blackwell, supra, it strikes me that the consideration of a party’s reliance on a term of an offer to settle is a relevant and important factor, as noted by the Court in Blackwell, supra .

[ 21 ] I fail to see how the Plaintiffs can argue that they were misled by the terms of the offer or that they relied on the strict terms of the offer when they provided their instructions to their counsel to accept the offer. This argument would be more persuasive if the Plaintiffs accepted the September 11, 2012 offer, calculated interest on the full $300,000 and then were met with an argument from the solicitor for the Defendants that the interest was only payable on the portion allocated to general damages and Family Law Act damages.

[ 22 ] Parties are to be encouraged when making Rule 49 offers to make the terms clearly understood so there can be no dispute about exactly what was being offered and what was being accepted. These disputes generally arise after a jury verdict when it is unclear whether the verdict is more or less favourable than a party’s offer to settle and consequently, whether the cost provisions of Rule 49 are triggered.

[ 23 ] The first offer to settle could generate uncertainty following a jury verdict where the jury was asked to assess different heads of damage, as in the case before me. That offer was subsequently clarified and there is no doubt that when the solicitor for the Plaintiffs purported to accept it, he was aware that interest would not be payable on the full $300,000 and further, he was aware of what the figure that was being offered for pre-judgment interest was: $26,775. The e-mail exchange confirms that there was no misunderstanding about what the total amount of the Defendants’ offer to settle was when the Plaintiffs sought to accept it.

[ 24 ] While Mr. Levin submitted that the first offer was clear on its face without ambiguity and therefore the Court ought not to look behind it, the Court cannot ignore the circumstances of the acceptance of the offer. The revision was delivered for a reason: to provide certainty about the terms of the offer so there would be no misunderstanding about what was being offered for what head of damage and the calculation of the interest was clear. It would have been preferable if the original offer contained the paragraph 1 as set out in the revision, but in my mind, the breakdown was to ensure that following receipt of the jury verdict, there would be no misunderstanding about the terms of the Defendants’ offer to settle and, therefore, whether any cost consequences would flow from it.

Conclusion

[ 25 ] The September 11, 2012 offer to settle, unrevised, was not open for acceptance by the Plaintiffs at the time they purported to accept it.

D.A. Wilson J.

Date: 20121023

[i] Boer v. Cairns 2003 CarswellOnt 5455 (O.S.C.)

[ii] Mills v. Raymond (1997), 1997 16258 (ON SC) , 36 O.R.(3d) 62 (Ont. Div.Ct.)

[iii] Diefenbacher v. Young, (1995), 1995 2481 (ON CA) , 22 O.R.(3d) 641 (Ont. C.A.)

[iv] Blackwell v. Dixon (2009) 37345 (O.S.C.)