Offer to Settle was made then rejected - Barresi v. Jones Lang Lasalle Real Estate Services Inc., 2019 ONCA 884

November 15, 2019, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Offer to Settle was made then rejected - Barresi v. Jones Lang Lasalle Real Estate Services Inc., 2019 ONCA 884

COURT OF APPEAL

DATE OF DECISION: November 8, 2019
HEARD BEFORE: Feldman, Fairburn and Jamal JJ. A.

COSTS: contract, repudiation, offers to settle, anticipatory breach, civil procedure, Rules of Civil Procedure, Rule 49; substantial indemnity awarded upon successful verdict – higher level of costs than if a Rule 49 Offer to Settle had not been made

Facts:

This case represented an appeal from the trial judge’s decision that the real estate investment company, the appellant, repudiated its contract with the real estate broker and his operating company, the respondents. The respondents cross appealed with regard to costs.

Issues:

Appeal

1. Did the trial judge err in identifying and properly applying the legal test for anticipatory repudiation?

Cross-Appeal

1. Was Rule 49.10(1) applied properly by the trial judge?

Results:

1. The judge did not err in identifying and applying the legal test for anticipatory repudiation.  The trial judge was correct in identifying that contractual repudiation occurs ‘by words or conduct evincing an intention not to be bound by contract’ as cited in Guarantee Co. of North America v. Captial (1999). The trial judge’s interpretation and application of the test was set out in detail involving findings of law and fact.
   
   The court rejected the appellant’s submissions that the agreement permitted the appellant to revoke RB’s status as the ‘Practice Lead” pursuant to the Agreement and therefore there was no repudiation. The respondents did not assert this fact. The respondents asserted the appellant repudiated the Agreement by unilaterally imposing limits on the respondents’ commercial activities which then undercut the respondents’ basis for entering the Agreement. The issue of revoking the status of RB as Ottawa Practice Lead was not relevant to repudiation.
2. The trial judge erred in regard to Rule 49.10(1). Rule 49 does provide a presumption to award costs where an offer to settle is made but not accepted however the discretion to depart from the presumption must be exercised in accordance with the purpose of Rule 49. It is not an unfettered presumption.

In this case the trial judge provided his justification for the departure from Rule 49. In his decision he erred in principle. It is not correct to depart from the presumption on the basis that success at trial is divided. Doing so would allow that successful parties would obtain higher costs that those intended by Rule 49 when their successful offer to settle was exceeded greatly enough.

Ultimately such reasoning would frustrate the reasonably predictable application of Rule 49 and would result in a significant distortion of any incentives to settle before trial. The court also held that there was no litigation misconduct on the part of RB. Finally, the court determined that although late answers were provided to undertakings during the discovery phase, this in and of itself did not justify departure from the presumption in Rule 49.10(1).

The court held that the reasons provided by the trial judge for his departure from the Rule 49 presumption were erroneous in principle and that the trial judge was wrong in his decision.

On this basis the court granted leave to appeal and cross appeal.

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