In any personal injury action, your lawyer makes strategic decisions about negotiating possible settlement offers with the other side. Over the course of a lawsuit, there may be several offers to settle exchanged, as the evidence is disclosed and each party develops their case. There are a number of factors that might inform your lawyer’s decision-making and strategy, but one of the biggest things on their mind is how an offer to settle might have an impact on costs awarded at trial.
When are legal costs awarded at trial?
In a civil trial, the successful litigant is often awarded an amount for their legal costs. These may include lawyers’ fees, expert and witness fees, travel expenses, and administrative costs. Although courts have discretion to award any amount in costs, the costs award is usually calculated on a “partial indemnity” basis, which works out to less than 50% of the actual amount spent.
Rule 49 offers to settle can impact costs awarded
In a civil action in Ontario, a formal offer to settle made under Rule 49 of the Rules of Civil Procedure can trigger costs consequences on a substantial indemnity basis, which is a much higher amount than partial indemnity. This is best explained by way of an example:
- Party A makes a Rule 49 offer to settle with Party B for $50,000.00 on January 1
- Party B rejects the offer and proceeds to trial
- At trial, Party A wins, and is awarded $55,000.00, which is $5,000 more than their offer to settle
- Party B is ordered to pay costs to Party A. All costs before January 1 are paid on a partial indemnity scale. All costs incurred by Party A after the Rule 49 offer on January 1, including the costs of trial, are to be paid on a substantial indemnity basis.
This system is intended to encourage parties to accept reasonable offers to settle instead of proceeding through an expensive trial.
Strategic and experienced Toronto litigators for accident victims
At Jasmine Daya & Co., our personal injury lawyers have successfully litigated hundreds of claims on behalf of accident victims. We rely on decades of cumulative experience to inform our strategic decisions at every stage of your claim, including whether to make or accept a Rule 49 offer to settle.
We give free consultations to new clients.If you have been seriously injured in an accident, speak to one of our knowledgeable lawyers before deciding whether or not to pursue a legal claim. To make an appointment, contact us online, or by calling 416-967-9100.