At issue in Puri Consulting Limited v. Kim Orr Barristers PC, 2015 ONCA 727 was the interpretation of an accepted offer to settle. The appellant, Puri, was retained by the respondent law firm to provide an expert opinion. When Puri’s account for services remained outstanding after repeated demands for payment, it brought an action seeking damages in the amount of the account, plus, among other things, costs.

Puri served an offer to settle under Rule 49 of the Rules of Civil Procedure, proposing that the proceeding be settled on the following terms:

  1. payment by the respondent to Puri in the amount of $50,000, plus HST, in full and complete satisfaction of Puri’s claim; and
  2. that the offer would remain open for acceptance until one minute after the beginning of the trial of the action.

Shortly before the trial commenced, the respondent accepted the offer and subsequently paid $50,000 plus HST. Puri asserted that it was additionally entitled to costs of its action and brought a motion to enforce the settlement.

The motions judge found that the offer was unambiguous and that the words “full and complete satisfaction” meant that the offer was inclusive of costs. The Court of Appeal overturned this decision, finding that the motions judge first made an error focusing only on the words “in full and complete satisfaction” and second, in failing to consider the factual matrix surrounding the offer, namely the timing of the offer and its acceptance in the litigation, and the fact that the parties were lawyers and represented by counsel.

Key Takeaways

Long story short, when drafting an offer to settle, make sure it clearly states whether or not costs are included as part of the proposed resolution. The meaning of a written agreement is derived from both the words used and from the circumstances in which the words are used.  In a day and age in which litigation often ends in settlement, both parties and their counsel ought to be careful when drafting and accepting Rule 49 offers and mindful of the consequences of the language used. This will especially be the case where parties are sophisticated and represented by counsel, allowing them to be aware of the implications of a Rule 49 offer.