Offers to settle: looking beyond subrule 18(14) of the Family Law Rules

• by Christina Hinds

Originally published in the OFLM 2024-04 edition

Overview

When bringing a motion for interim relief, serving an offer to settle is an important step. An offer to settle should not be an afterthought served in the days leading up to a motion and after significant costs have already been incurred in drafting and research.

Shirley v. Wellington (2024 ONCJ 128) is a recent cost decision of Justice Sherr following the mother’s successful motion for temporary decision-making responsibility and child support. The mother sought her full recovery costs of $5,763. Justice Sherr considered subrule 18(14) of the Family Law Rules and the court’s discretion in awarding costs. Justice Sherr ultimately awarded the mother costs in the amount of $4,400.

The mother’s offers to settle

In Shirley v. Wellington, the mother served two offers to settle prior to the motion. The first was a severable offer to settle and required the terms to be accepted on a final basis. It was served several months before the motion date.

The mother’s second offer to settle was severable and required acceptance of its terms on a temporary basis. It was served the day before the motion.

Legal Considerations

After discussing the fundamental purposes of costs set out by the Court of Appeal in Mattina v. Mattina (2018 ONCA 867) and the principles of reasonableness and proportionality in determining costs set out in Beaver v. Hill (2018 ONCA 840), Justice Sherr considered the mother’s offers to settle with reference to subrule 18(14) of the Family Law Rules.

Justice Sherr first considered whether the mother’s offers to settle were within the scope of the motion. While the mother argued that her first offer attracted the costs consequences set out in subrule 18(14) of the Rules, Justice Sherr disagreed. As the offer required acceptance of its terms on a final basis, the offer extended beyond the scope of the motion (at paras. 13 and 14).

At paragraph 15, Justice Sherr referred to his earlier comments in Swaby v. Foreshaw (2024 ONCJ 111) on the same issue:

The mother’s offer to settle did not attract the costs consequences set out in subrule 18(14). It contained terms that extended beyond the scope of this motion and required acceptance of its terms on a final basis. The mother should have made an offer to settle the discrete issue on this motion.

Subrule 18(14) of the Family Law Rules

The cost consequences of a party’s failure to accept an offer to settle are set out at subrule 18(14) of the Family Law Rules:

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.
  3. The offer does not expire and is not withdrawn before the hearing starts.
  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.

The mother’s second offer to settle met the preconditions of subrule 18(14).At paragraph 20, Justice Sherr noted that, “even if all the preconditions set out in subrule 18(14) are met the court has the discretion not to apply the costs consequences set out — to order otherwise.”

Serving an offer to settle on a self-represented party

The father was self-represented. In determining costs, Justice Sherr considered the importance of timely service on a self-represented party with reference to the primary objective of the Family Law Rules to deal with cases justly (citing Abrahiumkhill v. Khaled).

In Abrahiumkhill v. Khaled (2022 ONCJ 324), the court wrote at paragraphs 20 and 21 that:

In determining what constitutes a reasonable period of time, counsel should also expect that courts will require offers upon self-represented litigants to be served earlier than the minimum times set out in subrule 18 (14). Rule 2 provides that courts have an obligation to ensure that self-represented litigants are dealt with justly. Counsel are also required to help the court promote this objective. See: subrule 2 (4). Dealing with a case justly includes ensuring that the procedure is fair to all parties. See: clause 2 (3) (a).

Making an offer to settle to a self-represented litigant that permits only one day for acceptance before costs activate may have some value as a litigation tactic, but it has little probative value for this court when determining whether to apply subrule 18 (14). The respondent was not given sufficient time to consider the offer or to obtain advice. The offer did not meet the primary objective to deal with cases justly set out in rule 2. (emphasis added)

Complexity of the motion

Even if both parties are represented by counsel and the preconditions of subrule 18(4) are met, the court may still exercise its discretion and refuse to apply the cost consequences of subrule 18(14) of the Family Law Rules.

Regardless of the timelines provided in subrule 18(14), offers should be served a reasonable period of time before the motion. What constitutes a reasonable period of time will depend on the complexity of the case. Counsel must keep in mind that a party requires sufficient time to process an offer to settle and make an informed decision (at para. 23).

In E.H. v. O.K. (2018 ONCJ 578), both parties were represented by counsel and the offer to settle met all the preconditions of subrule 18(4). The court held that:

Parties require a reasonable period of time to process and make an informed decision about whether to accept an offer. See: Oduwole v. Moses, 2016 ONCJ 653. What constitutes a reasonable period of time will depend on the complexity of the case.

These were complex motions. The mother's offer to settle should have been served much earlier (closer to the 7 day time requirement for a trial) — particularly since the hearing of the motions had been scheduled in January, 2018.

Rule 2 (dealing with cases justly) applies when a court is determining whether to "order otherwise" with respect to a subrule 18 (14) offer. Making an offer to settle that is only open for one day before a complex motion is to be heard may have some value for parties as a litigation tactic, but will have little probative value for this court when determining whether to apply subrule 18 (14). The court finds that it would not be just for it to fully apply the costs consequences of subrule 18 (14) in these circumstances. (at paras. 26 – 28)

The date that the motion was scheduled is also a relevant consideration. In E.H. v. O.K., the motions to change were scheduled in January 2018 and heard over four half-days between April and June 2018. The court explained that given the complexity of the issues, the offer should have been served much earlier and “particularly since the hearing of the motions had been scheduled in January, 2018.”

Decision

While the issues were important to the parties, the issues to be determined were not complex or difficult (at para. 33). However, the father was self-represented and needed more time to process the mother’s offer to settle and make an informed decision (at para. 25).

Otherwise, the mother’s behaviour was reasonable, and the fees claimed by her lawyer were reasonable. Justice Sherr found that father’s behaviour was unreasonable – he took unreasonable positions on the motion, including requesting to pay less child support than provided for by the Child Support Guidelines. At paragraph 38, His Honour noted that “It is important to send the message to the father that litigation is expensive. If he takes unreasonable positions he will have to bear the cost.”

Justice Sherr ultimately awarded the mother her costs in the amount of $4,400 with reference to subrule 24(12) of the Family Law Rules.

Conclusion

Motions can require significant preparation. When preparing motion materials, an offer to settle should not be an afterthought. While a reasonable offer to settle may avoid the need for a motion altogether, including the cost and time of preparing of motion materials, it also serves to protect litigants from cost consequences.

Lawyers must turn their mind to settlement as early as possible – an offer to settle an interim motion should not be considered only after the motion materials have been prepared and the motion date is approaching.

Lawyers must look beyond subrule 18(14) of the Family Law Rules to ensure that they are adequately protecting their clients. As highlighted by Justice Sherr, timing of service should be considered with reference to the complexity of the issues and the opposing party.