Marshall Estate v. Legge & Legge, 2015 ONSC 3028
COURT FILE NO.: CV-12-00468914-0000
DATE: 20150601
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ESTATE OF ROBERT Marshall
Applicant/Responding Party
- and -
Legge & Legge
Respondent/Moving Party
BEFORE: C. J. Brown J.
COUNSEL: Sid Silverman, for the Applicant/Responding Party
Pia Hundal, for the Respondent/Moving Party
HEARD: April 23, 2015
ENDORSEMENT
[1] The moving party/respondent, Legge & Legge (“the respondent”), seeks an order enforcing the settlement arrived at by the parties to these proceedings and dismissing the assessment proceedings brought by the responding party/applicant, the Estate of Robert Marshall (“the applicant”).
[2] The respondent law firm acted as solicitors for the applicant in the estate matter, following which an assessment of costs was sought by the applicant. On February 20, 2013, Gerald Sternberg, counsel for the applicant, provided a written offer to settle the assessment proceedings on the basis of a reduction of the respondent’s fees by $6,000 together with the appropriate HST, which was to be treated “as a formal offer under the Rules.” That offer was accepted by letter from the respondent dated September 15, 2014. In the interim, other offers and counter-offers had been made but not accepted. Counter-offers of the respondent made in September and November 2013 were in writing, but were not made pursuant to Rule 49 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“the Rules”). These counter-offers were not accepted. Other offers and counter-offers were made verbally, but not reduced to writing. In the interim, the parties adjourned the assessment proceedings. Following the respondent’s acceptance of the applicant’s initial offer in writing on September 15, 2014, the applicant took the position that the offer had been withdrawn by virtue of the other subsequent offers made by the respondent in the interim.
[3] On September 11, 2014, the respondent offered to settle the assessment with a reduction of $6,500, plus HST. This offer was in writing, delivered by fax and made pursuant to Rule 49. It was not accepted by the applicant. Thereafter, on September 15, 2014, the respondent accepted the applicant’s original Rule 49 offer, dated February 20, 2013. The respondent sent its cheque to the applicant to settle the assessment.
[4] Following acceptance of the offer in writing on September 15, 2014, the applicant, by correspondence dated September 18, took the position that the applicant’s offer had been implicitly withdrawn by virtue of the other offers made by the respondent in the interim.
[5] It is the position of the respondent that the various written and verbal offers and counter-offers to settle and the continued negotiations do not constitute a withdrawal of an offer made pursuant to Rule 49. Consequently, the offer of February 20, 2013, made pursuant to the Rules, was never withdrawn. The respondent relies on rule 49.04(1), which states that an 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. It further relies on rule 49.07(2), which states that where a party to whom an offer to settle is made rejects the offer and responds with a counter-offer that is not accepted, the party may thereafter accept the original offer to settle, unless it has been withdrawn or the court has disposed of the claim in respect of which it was made.
[6] The respondent argues that, in this case, the original written offer was never withdrawn. It takes the position that an offer to settle made pursuant to Rule 49 cannot be withdrawn by subsequent oral communications, but must be withdrawn in writing, pursuant to the Rules. In this respect, the respondent relies on Diefenbacher v. Young (1995), 1995 2481 (ON CA), 22 O.R. (3d) 641 (C.A.), 80 O.A.C. 216; OPB Realty Inc. v. Canada International Medical Suppliers Co., 2014 ONSC 6578, [2014] O.J. No. 5387; and Smith v. Robinson (1992), 1992 7504 (ON SC), 7 O.R. (3d) 550 (Gen. Div.), [1992] O.J. No. 36. It takes the position that an offer to settle will only be deemed withdrawn when a subsequent offer, more favorable to the opposing party, is made in writing by the same party who made the initial offer. In this case, the Rule 49 offer was made by the Estate Trustee and was never withdrawn in writing. The respondent takes the position that only the Estate Trustee can, explicitly or implicitly, by subsequent orders, withdraw its own offer to settle, which in this case the Estate Trustee did not do.
[7] It is the position of the applicant that the Rule 49 offer for reduction in the amount of the solicitors’ account of $6,500, served by the respondent on September 11, 2014, implicitly withdrew the applicant’s Rule 49 offer of February 20, 2013. The applicant seeks a ruling that a subsequent offer by the respondent implicitly withdrew the applicant’s Rule 49 offer. It wishes to proceed to an assessment of the costs. As regards the implicit withdrawal of the offer, the applicant relies on numerous cases, including Diefenbacher v. Young, supra; Mills v. Raymond (1997), 1997 16258 (ON SC), 36 O.R. (3d) 62 (Div. Ct.), 104 O.A.C. 142; Fox Estate v. Stelmaszyk (2003), 2003 36922 (ON CA), 65 O.R. (3d) 846 (C.A.), 173 O.A.C. 378; Desforge v. E. D. Roofing, [2008] O.J. No. 4250 (S.C.); and Empire Life Insurance Co. v. Krystal Holdings Inc., [2009] O.J. No. 1095 (S.C.).
[8] Relying on Diefenbacher v. Young, supra, the applicant submits that, notwithstanding the language of Rule 49, a subsequent offer may be taken as a withdrawal of a prior offer by implication. It submits that the normal understanding of the litigant should be adopted and that natural, common and logical inferences are to be applied in determining whether an offer should be implicitly regarded as withdrawn. In any event, the applicant states that the necessary inference arising out of the respondent’s offer, made September 11, 2014, was that the applicant’s offer was no longer open for acceptance. In oral submissions, the applicant indicated that the respondent’s offer could have also been made by inadvertence on the part of the respondent as regards the amount of the applicant’s offer outstanding.
[9] It is the position of the respondent that the cases relied on by the applicant as regards implicit withdrawal involved subsequent offers made by the same party and not offers made by an opposing party which, as argued by the applicant, serve to implicitly withdraw the offering party’s Rule 49 offer.
The Law and Analysis
[10] A Rule 49 offer may provide for its own expiry, or it may be withdrawn at any time by serving written notice of withdrawal, which may be in the prescribed form: rr. 49.04(1)-(2). Where an offer to settle specifies the time within which it may be accepted and is not accepted or withdrawn within that time, it shall be deemed to have been withdrawn when the time expires: r. 49.04(3). That is not the case here, as there was no time limit specified in the Rule 49 offer. Furthermore, an offer to settle under the Rules cannot be withdrawn orally: North York Condominium Corp. No. 5 v. Van Horne Clipper Properties Ltd. (1989), 1989 4375 (ON CA), 70 O.R. (2d) 317 (C.A.), [1989] O.J. No. 1728; Smith v. Robinson, supra.
[11] An offer to settle is not terminated by a counter-offer or rejection. Where a party to whom an offer to settle is made rejects the offer or responds with a counter-offer which is not accepted, the party may thereafter accept the original offer to settle, unless it has been withdrawn or the court has disposed of the claim in respect of which it is made: r. 49.07(2). Oral discussions do not displace written offers made pursuant to Rule 49. A written settlement offer can only be withdrawn in writing, and it cannot be implicitly withdrawn by a subsequent oral offer: Empire Life Insurance Co. v. Krystal Holdings Inc., supra. In some cases, however, a subsequent offer may, by necessary implication, constitute the withdrawal of a previous offer. This can occur, for example, where the subsequent offer is less generous than the previous offer. The conflicting state of the law on this issue was squarely addressed by Gray J. in Desforge v. E.D. Roofing Ltd., supra, at paras. 27-28:
It is true that in Mortimer v. Cameron, supra, the Court of Appeal held that the making of a second offer by a plaintiff that is more favourable to the defendant than the first offer does not implicitly withdraw the first offer. However, in the subsequent case of Diefenbacher v. Young (1995), 1995 2481 (ON CA), 22 O.R. (3d) 641 (C.A.), the Court of Appeal held that the making of a second offer that is more favourable to the defendant implicitly acts as a withdrawal of the first offer. No mention was made in Diefenbacher of the earlier Mortimer decision. In Mills v. Raymond (1997), 1997 16258 (ON SC), 36 O.R. (3d) 62 (Div.Ct.), the Divisional Court came to the same conclusion as did the Court of Appeal in Diefenbacher, but the Divisional Court made no reference to either Diefenbacher or Mortimer.
In view of the conflicting state of the jurisprudence on this issue, it seems to me that I would be free to accept whichever line of authority I consider to be more persuasive. If it were necessary for me to decide the matter, I would incline to the view expressed by Carthy J.A. in Diefenbacher that a decreasing offer by a plaintiff, without reference to the earlier offer, is by implication a withdrawal of the earlier offer.
[12] It is unnecessary for me to decide between these conflicting lines of jurisprudence as the situation before me is different. In my view, the cases relied upon by the applicant are distinguishable on the basis that each deals with the effect of a subsequent offer made by the same party who made the original offer. In this case, the subsequent offer was made by the party to whom the original offer was made. It is properly characterized as a counter-offer. The applicant asks this Court to accept that a counter-offer by one party can withdraw, by implication, an offer made by the other party. There is no support in the case law for such a proposition; indeed, this would run contrary to the express wording of r. 49.07(2).
[13] As regards enforcement of a settlement agreement, a two-step analysis is to be employed in determining whether the court should exercise its discretion to enforce the agreement between the parties. The analytical framework was set out in Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc. (2007), 2007 39604 (ON SCDC), 87 O.R. (3d) 464 (Div. Ct.) at paras. 9-10:
The first step is to consider whether an agreement to settle was reached. In doing so, the proper approach is to treat the motion like a Rule 20 motion for summary judgment. If there are material issues of fact or genuine issues of credibility in dispute regarding whether (i) the parties intended to create a legally-binding relation or (ii) there was an agreement on all essential terms, a court must refuse to grant judgment. (Bayersiche Landesbank Girozentrale v. R.S.W.H. Vegetable Farmers Inc. (2001), 2001 28050 (ON SC), 53 O.R. (3d) 374, [2001] O.J. No. 745 (S.C.J.))
The second step, once an agreement has been found to exist, is to consider whether, on all the evidence, the agreement should be enforced. In this second step, a Rule 20 approach is not applied, but rather a broader approach, taking into account evidence not relevant to a Rule 20 inquiry.
[14] Based on an objective reading of the language chosen by the parties to reflect their agreement, the parties used clear and unequivocal language in both the offer and the acceptance. The offer to settle clearly stated that it was meant to be treated as a Rule 49 offer. The acceptance letter clearly and unequivocally stated that the outstanding offer was accepted. I am satisfied that the parties intended to create a legally binding relation such that there was agreement on the essential terms of the offer and acceptance. I am satisfied that the agreement should be enforced. In this case, the Rule 49 offer was made and accepted, in writing. In the interim, several counter-offers were made by the respondent, which were all rejected by the applicant. None of these was in writing.
[15] I do not accept the applicant’s submission that, as a result of the oral counter-offers prior to acceptance of the applicant’s offer, the applicant’s offer was deemed to be withdrawn.
[16] Moreover, I do not accept the applicant’s submission that the respondent’s subsequent offer, which was $500 more generous to the applicant than the applicant’s initial offer, but was not accepted by the applicant, resulted in implicit withdrawal of the applicant’s initial offer. The applicant did nothing to take its Rule 49 offer off the table, meaning the offer remained open for acceptance by the respondent.
[17] In addition, I find, particularly in the circumstances of this case, that the result sought by the applicant would not be consistent with r. 1.04(1.1), the rule requiring proportionality in court proceedings. The two Rule 49 offers in question in this motion differed by only $500. Sending this matter on to an assessment would not be consistent with the principles of proportionality.
[18] I find that the applicant’s offer was made in writing, was not withdrawn in writing and was accepted in its entirety by the respondent on September 15, 2014. I do not find that the oral counter-offers of the respondent, which were all rejected by the applicant, resulted in the applicant’s offer being expressly or impliedly withdrawn.
[19] I order that the settlement between the parties be enforced. I further order that assessment proceedings in Court file number CV-12-00468914-0000 be dismissed.
[20] Each party has provided its bill of costs to be awarded in the event it is successful. The respondent seeks its partial indemnity costs in the amount of $9,552.62, all inclusive. The applicant seeks its partial indemnity costs in the amount of $5,339.56, all inclusive. Taking into consideration r. 57.01, the factors to be considered in the exercise of the court’s discretion in awarding costs, the reasonableness of the costs sought and the submissions of the parties, I award to the respondent its costs in the amount of $7,500, all inclusive.
C. J. Brown J.
Date: June 1, 2015