More than nine out of every ten cases filed in the Ontario Superior Court of Justice are settled before going to trial. In these cases, the parties have decided that the risks and costs of a trial outweigh those of paying more or taking less than they want to put matters behind them.
Two questions about settlement will come to mind during litigation: “Should I make an offer to settle?” and “Should I accept an offer to settle?” There are no easy answers to these questions, but keep two points in mind.
First, neither you nor the other party are under any obligation to settle. The court cannot order you to settle. You are entitled to your day in court, but you will likely not recover all of your costs if successful at trial, and you may be paying a good part of the other party’s costs as well as your own if you are not.
Second, a settlement is intended to resolve all claims in dispute and bind the parties forever. A settlement may be turned into a court order and enforced if its terms are not fulfilled, and you can be held to what turns out to be a bad deal.
Offers to settle in actions before the Superior Court are governed by Rule 49 of the Rules of Civil Procedure. A party can serve an offer to settle on any other party at any time up until the court gives its decision at trial. While binding offers can be communicated in writing as informally as a short text message, most will be written in a court form to ensure that the terms of settlement are clear. They will also generally be made on a “without prejudice” basis, in which the party making it is not admitting any liability or withdrawing any claims or defences by making the offer. Offers to settle are confidential and cannot be referred to in any pleadings or in court until after judgment is given at trial.
An offer to settle can be open for acceptance for any time limit and can be revoked even before that time limit expires. If you reject an offer that remains open after you reject it, you can make a counteroffer or even accept the original offer later, provided it has not already been revoked.
IF AN OFFER IS ACCEPTED
Once a party accepts an offer to settle, the lawyers will often draft two documents: a Minutes of Settlement and Full and Final Mutual Release.
The Minutes of Settlement will generally be written in a format similar to a court order, making provisions for payment, transfer of property, any other obligations, and legal costs. Most parties will agree to cover their own legal costs, but one party may agree to contribute to the other’s costs.
The Full and Final Mutual Release will release both parties from all past, present and future claims arising out of the litigation, whether or not they have arisen or are known to exist at the time. This is especially important in personal injury or property damage In which it may not be known for a long time, if ever, if damages will arise because of unknown complications from injuries or defects in property. The release will also not acknowledge liability and will be a complete defence in court against any future claims arising from the same issues in the litigation.
Once all parties have signed both the Minutes and Release, the action may be dismissed on consent. If there is a confidentiality agreement in the Minutes and/or Release, the terms of the settlement will be kept confidential and not appear in the final order dismissing the action. If there is not, the terms of
settlement may be turned into an order on consent which appears in the public court record. Many settlements in cases involving sensitive financial, business or personal information will often contain a confidentiality clause.
IF AN OFFER IS REJECTED
Rejecting an offer may spur a round of offers and counteroffers leading to settlement especially as a case gets closer to trial and the parties have a good sense of the evidence, the strength and weaknesses exposed, and the legal costs and risks involved in going to trial.
If the case goes to trial, however, offers to settle will affect how the court awards costs.
A plaintiff who has made an offer to settle that has not been revoked or expired who makes an offer ($300,000, for example) equal to or better than the judgment at trial ($400,000) is entitled to partial indemnity costs (usually about 60-65%) up to the date of the offer to settle and substantiai indemnity (usually 80-85%) after that date. An offer to settle for
A defendant who has made an offer to settle that has not been revoked or expired ($300,000) and which is equal to or worse than the judgment at trial ($200,000) would be entitled to partial indemnity costs after the date of the offer.
TO SETTLE OR NOT TO SETTLE
The key to a good settlement is to leave both sides satisfied that they have gotten as much as they could get and given up as much as they could give. Many financial and personal variables go into making, accepting or rejecting an offer to settle and while previous cases can give a guideline to what a court may award at trial, no two cases are exactly alike. The lawyers at Alemi Law Group can advise you on your options and expectations for settlement or trial of your case.
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