Offers to Settle

Rule 18 of the Ontario Family Law Rules deals with what are known as “offers to settle.” Offers to settle have two purposes. First, an offer to settle may be directed towards negotiations leading to settlement. Second, an offer to settle is a way of protecting yourself from the high costs of divorce litigation. At the end of each step in a legal proceeding, the court has the discretion to award costs. The most common award is that the loser pays the winner approximately half of his or her total legal fees. However, if you do as well as or better than your offer to settle, then the court normally awards you two thirds to three quarters of your legal costs.

Rule 18 of the Ontario Family Law Rules provides:

(1) In this rule, “offer” means an offer to settle one or more claims in a case, motion, appeal or enforcement, and includes a counter-offer.
[This is a definition of an offer to settle. Note that you can offer to settle a motion only, rather than the entire case. You can also offer to settle just some issues of the case.]

(2) This rule applies to an offer made at any time, even before the case is started.
[This is an interesting innovation. If there have been extensive negotiations and financial disclosure prior to a case starting, if may make sense to consider this possibility.]

(3) A party may serve an offer on any other party.

(4) An offer shall be signed personally by the party making it and also by the party’s lawyer, if any.

(5) A party who made an offer may withdraw it by serving a notice of withdrawal, at any time before the offer is accepted.

(6) An offer that is not accepted within the time set out in the offer is considered to have been withdrawn.

(7) An offer may not be accepted after the court begins to give a decision that disposes of a claim dealt with in the offer.

(8) The terms of an offer,
(a) shall not be mentioned in any document filed in the continuing record; and
(b) shall not be mentioned to the judge hearing the claim dealt with in the offer, until the judge has dealt with all the issues in dispute except costs.

[In deciding the merits of your case, a judge does not look at how reasonably you’ve been in trying to resolve matters. The judge will only look at this when deciding the costs award.]

(9) The only valid way of accepting an offer is by serving an acceptance on the party who made the offer, at any time before,
(a) the offer is withdrawn; or
(b) the court begins to give a decision that disposes of a claim dealt with in the offer.

(10) A party may accept an offer in accordance with subrule (9) even if the party has previously rejected the offer or made a counter-offer.
[This is important, because at common law, making a counter-offer meant that you could no longer accept the original offer].

(11) If an accepted offer does not deal with costs, either party is entitled to ask the court for costs.
[You can request costs in your offer to settle, but aren’t required to]

(12) A special party may make, withdraw and accept an offer, but another party’s acceptance of a special party’s offer and a special party’s acceptance of another party’s offer are not binding on the special party until the court approves.

(13) If a party to an accepted offer does not carry out the terms of the offer, the other party may,
(a) make a motion to turn the parts of the offer within the court’s jurisdiction into an order; or [So, an accepted offer has the force of a court order.]
(b) continue the case as if the offer had never been accepted.

(14) A party who makes an offer is, unless the court orders otherwise, entitled to costs to the date the offer was served and full recovery of costs from that date, if the following conditions are met:
1. If the offer relates to a motion, it is made at least one day before the motion date.
2. If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date. [These deadlines are important – if you miss them, the cost consequences of the offer to settle don’t kick in]
3. The offer does not expire and is not withdrawn before the hearing starts.
[Normally, the offer will contain wording to the effect that: “Unless previously revoked by the respondent or accepted in writing by the applicant, this offer expires automatically upon the commencement of the trial (or motion) of this matter.”]
4. The offer is not accepted.
5. The party who made the offer obtains an order that is as favourable as or more favourable than the offer.
[This is the key advantage of making an offer to settle, and why it makes sense to be reasonable in your offer to settle. Legal fees are very expensive, and this is one way of protecting yourself against higher legal fees, especially when your spouse is not cooperative.]

(15) The burden of proving that the order is as favourable as or more favourable than the offer to settle is on the party who claims the benefit of subrule (14).
[You need to be careful in making your offer to settle. A family law case usually has a number of issues. If your offer is better than the final decision in some respects, but not in others, then the cost consequences of the offer to settle don’t kick in (although the offer will still be helpful in showing that you acted reasonably during the case). Also, in cases of child custody and access, it can be difficult to define what beating an offer to settle means.]

(16) When the court exercises its discretion over costs, it may take into account any written offer to settle, the date it was made and its terms, even if subrule (14) does not apply.
[Note that even if you don’t beat your offer to settle, a court will take it into consideration in determining who pays the other party’s legal fees.]

Making an offer to settle should not be seen as a sign of weakness. Rather, it is a tactical move used to recover greater legal costs at trial. As one judge said:

I am not aware that any written offers to settle, pursuant to the Rules, were ever exchanged between the parties in an attempt to settle the matter. In this regard, both parties were unreasonable. They were well aware or should have been well aware, since both were legall represented, of the importance of such offers. In my view, the presentation of reasonable offers to settle is vital, firstly, to the dynamics and psychology of alternate dispute resolution in litigation. Does the absence of such offers not signal a party’s refusal to enter into dialogue and negotiation towards settlement? Without evidence to the contrary, I think it does.

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