The Rule 49 Offer That Expired by Ambiguity
Your client, a commercial tenant, was sued in Ontario Superior Court for $180,000 in unpaid rent and repairs. Six weeks before trial, the landlord's counsel served a Rule 49 offer to settle for $95,000, 'open for acceptance until 5:00 p.m. on the tenth business day following service.' The offer was served by email on a Thursday. On the eleventh business day, your client emailed acceptance and tendered a certified cheque for $95,000. The landlord now says the offer lapsed, refuses the cheque, and has served a fresh offer at $150,000. Your client insists there was a binding settlement. The pre-trial judge made no comment on the offer. Trial is in three weeks; the plaintiff's evidence includes a rent ledger with two unexplained credit entries and no signed lease for the final year. Your client wants to know whether to bring a motion to enforce the settlement, and what costs exposure follows if you are wrong.
1. Advise whether a binding settlement exists. Identify the doctrinal framework and the practical risk in relying on it.
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The starting point is that a Rule 49 offer, once accepted, forms a binding contract and the court may enforce it summarily; the offer is governed by ordinary contract law as to formation, not by the trial judge's discretion. But formation turns on whether acceptance occurred within the time stipulated.
The offer fixes a clear terminus: 5:00 p.m. on the tenth business day after service. Computing business days from the Thursday of service, the tenth business day falls two weeks later on a Thursday (excluding weekends and any Rule 3.01 holidays). Acceptance on the eleventh business day is therefore late on its face. Your client's argument must be that the offer was ambiguous, because 'following service' does not specify whether the day of service counts, and the ambiguity should be construed against the drafter (the landlord). That argument is weak where the gap is a full day and the offeror's meaning is objectively ascertainable.
A stronger, but still uncertain, route is to argue that the landlord's conduct - retaining the cheque, corresponding after the deadline, or any statement suggesting willingness to accept - amounted to a counter-offer or waiver. That requires documentary proof, not recollection.
Practical risk: bringing a motion to enforce that fails exposes your client to costs on a substantial indemnity basis and may be seen as an attempt to litigate a settlement that never crystallized. Advise the client of the low probability before filing.
2. Assume no binding settlement. How does the lapsed $95,000 offer affect costs and trial strategy, and what should you do with it now?
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A lapsed offer does not simply vanish. Under Rule 49.10, a plaintiff who fails to beat its own offer at trial obtains partial indemnity costs to the date of the offer and substantial indemnity costs thereafter; a defendant who beats a plaintiff's offer obtains the same protection in reverse. The critical question is whose offer it was and whether the judgment beats it.
Here the offer came from the plaintiff (landlord). If your client is ultimately ordered to pay less than $95,000, the landlord faces the reverse-costs consequence. That is a meaningful lever: the ledger has two unexplained credits and no signed lease for the final year, so a judgment below $95,000 is realistic. Preserve the offer in evidence and plead the Rule 49.10 consequence in your costs submissions.
Strategy: the $150,000 fresh offer should be treated as an invitation, not a threat. Respond with a calibrated counter that sits below the original $95,000, framed by the evidentiary gaps. Do not accept the fresh offer without quantifying the costs already incurred, because a Rule 49 offer is silent on costs unless it says otherwise, and the default is that costs follow the event unless the offer provides otherwise.
Finally, diary the offer's expiry precisely and confirm acceptance in writing with a read receipt; the failure here was procedural, not substantive.