Madam Justice Jane Ferguson has released a decision that will be of interest to civil litigation practitioners. Her reasons in Hayden v. Stevenson deal with a defendant’s offer to settle in a motor vehicle case, but the principles that she discusses have application to other types of cases.
The facts are somewhat complicated but need not be summarized here, for purposes of our discussion of Justice Ferguson’s approach to costs.
One of the defendants in the case made a lump sum offer of $260,000 to settle the claims of two groups of plaintiffs (one group of plaintiffs also included defendants in the other plaintiffs’ action). The offer also contained a provision whereby, after 30 days, it would be reduced by the amount of that defendant’s partial indemnity costs.
Following the trial, the defendant argued that it had beaten its offer. The two groups of plaintiffs contended that the lump sum offer and the diminishing amount of it made the offer too uncertain to qualify as a Rule 49 offer to settle, that would give rise to costs consequences.
Justice Ferguson accepted the first argument and rejected the second. She held that because the offer had been made to both sets of plaintiffs, “it was not possible to ascertain the offer being made to each party”. She referred to jurisprudence that had established that “especially in cases where there are multiple claimants, to be effective Rule 49 offers must be crystal clear”. Therefore, the offer did not qualify as one made under Rule 49. (It is not clear whether Her Honour’s decision would have been the same if the offer had been made to a single group, made of up several individuals.)
Justice Ferguson went on to consider the “diminishing offer” argument. She concluded that there are two streams of authority. One espouses the view that an escalating or diminishing offer made it difficult or impossible for an opposing party to evaluate the amount of the offer at a given point and so, are not valid offers under Rule 49.
The second line of cases says that escalating or diminishing offers are not, ipso facto ineligible from consideration under R. 49. Justice Ferguson chose to follow this body of authority. In other words, had she not already found that making a lump sum offer to multiple plaintiffs disqualified the offer from consideration under R. 49, the fact that the offer diminished over time would not have prevented it from being a R. 49 offer.