Formal offers to settle are an important tool that can meaningfully shift litigation risk. Each province and territory has different rules on how formal offers can impact a cost award after trial. This article gives a high-level, practical summary of how the various Canadian jurisdictions treat formal offers to settle.
Ontario
In Ontario, formal offers to settle are governed by Rule 49 of the Rules of Civil Procedure. Offers can generally be withdrawn before acceptance or drafted with an expiry date. That said, timing matters. If a Rule 49 offer is made less than seven days before the hearing or trial begins, it will not trigger the special cost consequences under Rule 49.10, even if it is otherwise valid. Furthermore, to trigger special cost consequences the offer must not be withdrawn or expire before the commencement of the hearing, it must remain open until the hearing commences.
Where a plaintiff serves an offer under Rule 49 at least seven days before the hearing, leaves it open, and ultimately obtains a judgment that is as favorable as or more favorable than the offer, significant cost consequences can follow. In that scenario, the plaintiff is typically entitled to partial indemnity costs up to the date of the offer (this ranges usually between 60% – 65 % of the total legal fees and disbursements) and substantial indemnity costs (usually around 90% of the total legal fees and reasonable disbursements) from the offer date onward, subject to the court’s discretion. In practice, this makes early, well‑calibrated offers a powerful strategic tool as they preserve settlement flexibility while shifting meaningful cost risk to the opposing party if the offer is unreasonably refused.
Manitoba
In Manitoba, formal offers to settle are governed by Rule 49 of the King’s Bench Rules (Man Reg 553/88), typically using Form 49A. An offer may be made at any time during a proceeding, and there is no minimum period that the offer must remain open. Offers can generally be withdrawn before acceptance or drafted with an expiry date. However, as in many jurisdictions, timing is critical if a party wants the offer to carry cost consequences. To trigger the Rule 49 cost regime, an offer relating to a proceeding must be served at least seven days before the hearing or trial begins (and at least three days before a motion hearing).
Where a timely Rule 49 offer is not accepted, the cost consequences in Manitoba depend on who made the offer and how the case ultimately turns out. If the plaintiff makes a Rule 49 offer at least seven days before the hearing, leaves it open, and then obtains a judgment that is as favorable as or more favorable than the offer, the plaintiff is entitled to party‑and‑party costs up to the date the offer was served and double party‑and‑party costs from that date onward, unless the court orders otherwise.
By contrast, if the defendant makes a timely Rule 49 offer that is not accepted and the plaintiff ultimately obtains a result that is as favorable as or less favorable than the offer, the plaintiff remains entitled to party‑and‑party costs only up to the offer date, while the defendant is entitled to party‑and‑party costs from the offer date forward, subject to the court’s discretion.
Québec
Au Québec, les offres formelles (appelées offres réelles) sont gouvernées par les articles 1573 et suiv. du Code civil du Québec et par les articles 215, 216 et 341 du Code de procédure civile.
Ces offres peuvent être présentées de toute manière sous réserve de la preuve qui peut en être faite. Cependant, au stade de la judiciarisation du dossier, l’institution financière qui s’engage à remettre les fonds au nom du débiteur ou celle qui les consignes doivent produire des documents attestant de certaines informations. Ce document doit ensuite être produit au dossier de la Cour. En conséquence, ces offres réelles ne sont pas confidentielles.
L’intérêt principal des offres réelles et de la consignation est double en ce qu’il met un terme aux intérêts légaux et permet au tribunal d’ordonner à la partie qui a eu gain de cause de payer les frais de justice engagés par une autre partie s’il estime qu’elle a, notamment, refusé sans motif valable d’accepter des offres réelles. Il arrive cependant que le tribunal en vienne plutôt à la conclusion que chaque partie doit assumer ses propres frais.
Au détour, pour produire ses pleins effets, une offre réelle ne peut pas être conditionnelle. C’est-à-dire qu’aucune condition ne peut y être assortie pour pouvoir encaisser le montant, comme la signature d’une transaction-quittance, par exemple. Il ne s’agira alors que d’une simple offre de règlement. Par ailleurs, l’encaissement par un créancier de l’offre réelle ne le prive pas de réclamer le surplus.
Contrairement aux autres provinces, il n’existe pas de délai formel pour présenter les offres réelles. Néanmoins, pour couper court aux intérêts, les offres réelles doivent être consignées dès que le débiteur est en demeure de payer la somme qu’elle doit. À défaut, les intérêts ne s’arrêteront qu’au moment de la consignation.
Quebec
In Quebec, “formal offers” (called “tenders”) are governed by articles 1573 et seq. of the Civil Code of Québec and by articles 215, 216 and 341 of the Code of Civil Procedure.
Tenders must be filed in the court records and thus they are not confidential.
In the event a party makes a tender and that tender is not accepted, the court may order the successful party to pay the legal costs incurred by the party who made the tender if it considers that it has refused without valid reason to accept the tender. However, this is a fact-specific determination and the court may instead conclude that each party must bear its own costs.
A tender must result in fulsome settlement and cannot be conditional on any other event. That is to say, no conditions can be required to be able to collect the amount, such as the signing of a transaction-receipt for example. Otherwise, it would then be a simple settlement offer and would not result in additional costs.
Saskatchewan
In Saskatchewan, formal offers to settle are governed by Part 4, Division 5 of the King’s Bench Rules, and must be delivered using Form 4-26. The rules are more structured than in many provinces as the offer must be made within 10 days of the date the trial (or a summary judgment application) is scheduled to start, and it must remain open for acceptance for at least 30 days (or longer if the offer says so). Just as importantly, a formal offer cannot be withdrawn unless the court gives permission. If the recipient refuses the offer and the offeror ultimately obtains a judgment that is as good as or better than the offer, the offeror can ask the court for enhanced costs, regardless of whether they are the plaintiff or defendant. These costs are often framed as double costs for steps taken after the offer was served, significantly increasing the financial risk of saying no.
Alberta
In Alberta, formal offers of settlement are governed by Rules 4.24–4.29 of the Alberta Rules of Court. A party can make a formal offer any time after a claim is commenced, but to trigger the rule-based cost consequences it generally must be served at least 10 days before a trial, summary trial, or scheduled application, and it must be set out in a clear, unequivocal form that can be accepted in accordance with Rule 4.25.
In Alberta, a valid formal offer to settle remains open for acceptance unless it is withdrawn, but only until the expiry of two months after service (or any longer period specified in the offer) or the start of the trial or hearing. Therefore, the offer must remain capable of acceptance until it is accepted, withdrawn by notice, or expires under its terms. Once a settlement offer qualifies as a valid formal offer, it may not be withdrawn without leave of the Court. The stakes are in Rule 4.29 which states that if a defendant’s offer is refused and the plaintiff fails to beat it at trial, the plaintiff can be required to pay a portion of the defendant’s post-offer costs (and if the claim is dismissed, the defendant may be entitled to double costs after the offer). Conversely, if a plaintiff’s offer is refused and the plaintiff matches or exceeds it, the plaintiff may recover double costs for steps taken after the offer was made.
British Columbia
In British Columbia, formal offers to settle are governed by Rule 9-1 of the Supreme Court Civil Rules. To qualify as a Rule 9-1 offer, the offer must be made in writing, served on all parties of record, and include the rule’s required costs reservation sentence (preserving the right to bring the offer to the court’s attention on costs after judgment). Consistent with the without prejudice nature of the regime, the fact of an offer must not be disclosed to the judge or jury until all issues other than costs have been determined.
Rule 9-1 does not impose a minimum period that an offer must remain open, the offeror can specify an expiry, and can generally withdraw the offer before it is accepted. That said, while an offer need not remain open indefinitely, it should generally be left open long enough to give the offeree a reasonable opportunity to consider it. There is also no strict requirement that a Rule 9-1 offer be served a set number of days before trial, however, timeliness matters because the court’s costs analysis focuses on whether the offer ought reasonably to have been accepted when served or at a later point as circumstances evolved. Practically, BC treats formal offers a bit differently than other provinces because the costs consequences are highly discretionary. Where a party beats its offer, the court retains broad discretion over whether to award double costs or instead make a different post-offer costs order. If an offer is not accepted and the result at trial is as good as or better than the offer, the court may award double costs for some or all steps taken after service of the offer, deprive a party of post-offer costs, or in some cases even shift post-offer costs to the offeror’s opponent where the judgment is no greater than a defendant’s offer.
Yukon
In Yukon, formal offers to settle are governed by Rule 39 of the Yukon Rules of Court and are typically made using the prescribed Form 65. As in other jurisdictions, the rule is designed to promote early compromise through cost leverage. Similar to B.C., the fact that an offer has been made is not disclosed to the court until all issues other than costs have been determined, at which point the offer may be considered on the costs application.
Rule 39 does not impose a minimum period that an offer must remain open. An offer can be withdrawn before acceptance by serving a notice of withdrawal (Form 66), and if the offer specifies an acceptance window it expires when that time runs out. Timing relative to trial, however, is more structured than in BC. An offer can be delivered any time before trial begins, but if it is delivered less than seven days before trial the rule’s formal double-costs subrules do not apply, though the court may still take the offer into account in exercising its broader costs discretion). Where the formal regime applies and the offer is not accepted, the usual leverage is post-offer costs. If a plaintiff serves an offer and then obtains a judgment as favorable as or more favorable than the offer, the plaintiff can seek double costs for steps taken after the offer was delivered. Conversely, if a defendant serves an offer that the plaintiff does not accept and the plaintiff’s judgment is less favorable than the offer, the defendant can seek double costs for post-offer steps and the plaintiff may be deprived of its post-offer costs, all subject to the rule’s conditions and the court’s discretion.
Northwest Territories
In the Northwest Territories, offers to settle are governed by Rules 193–206 of the Rules of the Supreme Court of the Northwest Territories. An offer may be served at any time before the commencement of the trial or hearing, but it must be in writing. The rules also contain specific open period mechanics, if an offer states an acceptance period, that window must run no earlier than 45 days after service and no later than the start of trial. If the offer does not specify a time limit, it remains open until withdrawn by written notice or until trial begins.
Timing drives whether the rule-based cost consequences apply. If an offer is made less than 10 days before trial, the formal costs consequences in Rule 201 generally do not apply unless the offer is accepted before the trial starts. Where an offer is made at least 14 days before the hearing, left unaccepted (and not withdrawn), Rule 201 provides an enhanced-cost regime if the offer is beaten. A plaintiff who beats its own offer can seek party-and-party costs up to the offer date and solicitor-and-client costs from the offer date forward. If the defendant’s offer is not beaten, the plaintiff is typically limited to party-and-party costs up to the offer date while the defendant can seek solicitor-and-client costs from that date. Even so, the court retains an interests to override and may depart from these consequences, so outcomes remains fact-sensitive.
Nunavut
In Nunavut, formal offers to settle are governed by Rules 193–204 of the Rules of the Nunavut Court of Justice, which adopt a similar approach to the Northwest Territories. A formal offer may be made at any time before the commencement of a trial and must be in writing. All offers under this Part are deemed to be without prejudice offers of compromise and must not be disclosed to the judge or jury until all issues of liability and quantum have been decided.
Nunavut does not impose a minimum period that a formal offer must remain open. Instead, an offer remains capable of acceptance until it is accepted, withdrawn, expires under its own terms, or the court disposes of the claim. If an offer specifies an acceptance deadline and that deadline passes without acceptance, the offer is deemed withdrawn automatically. As in other jurisdictions, timing matters, where an offer is made less than 10 days before trial or a hearing, the formal cost‑shifting rules generally do not apply unless the offer is accepted before the proceeding begins.
Where a timely offer is not accepted and the case goes to a decision, Rule 201 sets out clear and consequential cost consequences designed to encourage settlement. If a plaintiff makes an offer at least 10 days before the hearing, leaves it open, and then obtains a judgment that is as favorable as or more favorable than the offer, the plaintiff is ordinarily entitled to party‑and‑party costs up to the date the offer was served and solicitor‑and‑client costs for steps taken after that date. Conversely, if a defendant makes a qualifying offer and the plaintiff fails to do better at trial, the plaintiff’s recovery of costs is generally cut off at the offer date, and the defendant may recover solicitor‑and‑client costs from that point forward.
Take Away
Formal offers to settle can be a powerful litigation tool when used correctly. When used strategically, at the right time and with careful drafting, they can meaningfully shift cost risk and encourage earlier resolution. Since various jurisdictions differ on how formal offers are dealt with, understanding how the rules work in each jurisdiction is essential. If you have questions about using formal offers to settle, or how they may affect cost exposure in your matter, please contact us to discuss.
Written by: Jeremy Ellergodt, Nicholas Hebert-Gauthier and Jasman Mangat
