It is safe to assume that many litigators understand the common law of offer and acceptance. Specifically, if Party A makes an offer to Party B and Party B rejects that offer, or makes a counteroffer, the original offer is no longer open for acceptance.
What most litigators might not realize, however, is that by virtue of Rule 49 of the Rules of Civil Procedure, an offer made during litigation (that meets the requirements of Rule 49) remains open for acceptance indefinitely, even if rejected, unless the offer is withdrawn or expired – even if it is not called a Rule 49 Offer.
Magnotta et al v Yu et al, 2020 ONSC 1049, provides a reminder to all litigators about the importance of understanding the implications of making an offer to settle in the course of existing litigation.
The Offer
In March 2017, the Defendants agreed to purchase a property from the Plaintiffs. Ultimately, the sale did not close, and the Plaintiffs sued.
On May 29, 2019, as part of a series of back and forth offers during the course of the litigation, the Defendants emailed an offer to Plaintiffs’ counsel. The offer made no reference to Rule 49. The Plaintiffs rejected that offer. Soon after that, new Defence counsel was appointed. The Plaintiffs then made an offer to the Defendants’ new counsel, expressly stating that it was a Rule 49 Offer.
A month later, the Defendants served expert opinion evidence that provided a strong defence to the action. Upon receipt of the Defendants’ expert report, the Plaintiffs’ counsel purported to accept the May 29th offer.
The Defendants’ counsel stated that the offer was no longer open for acceptance because it was rejected by the Plaintiffs and the Plaintiffs had made a counteroffer. Moreover, the Plaintiffs argued that the offer was not made pursuant to Rule 49. The Plaintiffs brought a motion to enforce acceptance of the offer.
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