Informal Settlement Offers Revoke Prior Formal Settlement Offers
Important reasons for judgement were released today by the BC Supreme Court, Vancouver Registry, confirming that when a party who made a formal settlement offer under the Rules of Court tenders a subsequent informal settlement offer the initial offer is withdrawn.
In today’s case (Arsenvoski v. Bodin) the Defendants issued a formal settlement offer. After some counter offers the Defendants rejected the Plaintiff’s offers and responded that “my clients would, however, accept a Consent Dismissal Order in exchange for a waiver of their costs” (an offer less generous than their formal offer).
The Plaintiff then attempted to accept the formal offer. Mr. Justice Weatherill confirmed that the old offer was no longer valid finding that the common law applied. In reaching this conclusion the Court provided the following reasons:
[12] This is a case of first instance under Rule 9-1. All of the cases relied upon by plaintiff’s counsel were in the context of the Rule 37, which expressly provided for how a formal offer to settle could be withdrawn before acceptance. The one exception is the decision of Madam Justice Fitzpatrick in Janzen where she found that, although there had been a clear and unequivocal rejection by the plaintiff of the defendant’s counter-offer, there had not been a clear and unambiguous revocation by the plaintiff of her earlier formal settlement offer. In that case, the plaintiff had not made a new settlement offer.
[13] Here, the defendants’ Second Offer stated: “My clients would, however, accept a Consent Dismissal Order in exchange for a waiver of their costs”. Those words amounted to a new settlement offer. There was nothing unclear or unequivocal about them.
[14] I agree with defendants’ counsel that in the absence of language in Rule 9-1 regarding how and when a formal settlement offer is withdrawn, the common law applies.
[15] I do not accept the argument that a formal settlement offer is not revoked by an informal settlement offer. While that may have been the case under the language of former Rule 37, it is no longer the case under Rule 9-1. A settlement offer, formal or informal, is revoked upon the communication of a new settlement offer, formal or informal. I agree with the following statement of the law by Wilson J. in Sidhu v. Sekhon, [1997] B.C.J. No. 102 (S.C.) at para. 8:
I think interpretation of the rule contemplates the application of principles of contract law. And that those principles must be implemented before resort is had to policy considerations. In my view, those principles establish a number of precepts. First, an offer may be withdrawn before acceptance. It is sufficient for that purpose, if the offeree has actual knowledge that the offeror has done some act inconsistent with the continuance of the offer. Further, the addition of a new term or condition, to an earlier offer, before acceptance, is the withdrawal of the earlier offer, and the submission of a new offer, of which the new condition or term is a part. From the time the new condition is submitted, the earlier offer is withdrawn, and is no longer open to acceptance or rejection, by the party to whom it was presented. Finally, there can be only one offer outstanding at a time. A later offer to the same offeree, on the same subject matter, has the effect of cancelling the prior offer.