Understand the cost consequences of Rule 49 Offer to Settle under Ontario’s Rules of Civil Procedure. This tool is for educational purposes only, and the information provided is not legal advice.
1
What’s your role in this case?
Rule 49 has different consequences depending on who made the offer. In this tool, plaintiff includes an applicant, and defendant includes a respondent (Rule 49.01).
This tool assumes there is only one defendant in the lawsuit. Different rules apply where there are multiple defendants (Rule 49.11).
2
Who made the offer to settle?
Rule 49 offers are formal settlement proposals. When you make an offer and the other side rejects it, there can be cost consequences relating to your legal fees if you do better at trial than your offer.
3
When was the offer made?
The date the offer to settle was served on the other party.
Warning: If service occurred after 16:00 or on a holiday, then the law treats service to have happened on the next day that is not holiday (Rule 3.01(1)(d)). If you’re not sure, use our Deadlines Calculator to figure out whether the offer was served before the required deadline.
3.5
Was the offer withdrawn or did it expire before the hearing started?
Under Rule 49.04, an offer can be withdrawn at any time before acceptance, and offers can expire if they specify a time limit. However, for Rule 49.10 cost consequences to apply, the offer must still be “alive” (not withdrawn and not expired) when the hearing commences.
If an offer was withdrawn or expired before the hearing started, it cannot trigger Rule 49.10 cost consequences, even if it was properly made and served.
⚠️
Offer Withdrawn or Expired: Since the offer was withdrawn or expired before the hearing commenced, it cannot trigger the cost consequences under Rule 49.10. Rules 49.10(1)(b) and (2)(b) require that the offer “is not withdrawn and does not expire before the commencement of the hearing.”
4
Was the offer made less than 7 days before the hearing started?
IMPORTANT: The offer must be made at least 7 days before the hearing starts to trigger the special cost consequences under Rule 49. If you’re not sure, use our Deadlines Calculator to figure out whether the offer was made at least seven days before the hearing started.
⚠️
Warning: Because the offer was made less than 7 days before the hearing, the cost consequences in Rule 49.10 won’t apply (see Rules 49.10(1)(a) and (2)(a)). The court can still consider the offer when deciding costs (Rule 49.13), but the automatic cost rules don’t kick in.
5
What was offered?
This is the total dollar amount that was proposed to settle the case.
6
What judgment did the court actually award?
Now we’ll compare what the Court actually awarded versus what was offered. This determines the cost consequences.
Your Results
⚖️
Important: Costs Are Always Discretionary
The cost consequences shown below are the default rules under Rule 49.10, but the court always has discretion to order otherwise. The court considers many factors when awarding costs under Rule 57.01, including the reasonableness of the offer, the conduct of the parties, and the principle of proportionality. These results show what could potentially happen, not what is guaranteed.
Case Starts
Proceedings begin
Partial Indemnity Costs
Offer Made
COST SHIFT HERE
Substantial Indemnity Costs
Judgment
End of case
You Offered
You Received
Default Cost Consequences:
📚 What are these cost types?
▼
Partial Indemnity Costs: Usually about 55% to 60% of your actual legal costs (see legal authority). However, courts have the discretion to award less. This is the standard level of costs recovery in Ontario courts.
Substantial Indemnity Costs: Usually about 80% of your actual legal costs (see legal authority). However, courts have the discretion to award less. This is a higher level of recovery and is one of the benefits of making a Rule 49 offer that the other side rejects.
Why it matters: The difference between 55% and 80% recovery can be meaningful. Rule 49 is designed to encourage settlements by making it risky to reject reasonable offers.
⚖️ What does “as favourable as” mean?
▼
For monetary judgments, the comparison is straightforward:
If you’re the plaintiff and offered $50,000, getting exactly $50,000 counts as “as favourable”
Getting $50,001 or more is “more favourable”
Getting $49,999 is “less favourable”
For non-monetary cases, the judge decides if what you got is equal to or better than what you offered. This is more subjective and depends on the specific relief granted.
Important: A tie (exactly equal to the offer) is treated as favourable to the person who made the offer. This encourages realistic offers.
⚠️ Important warnings
▼
The judge has discretion: Even when the automatic cost consequences apply, the court can “order otherwise” if there are good reasons. The court considers factors like the reasonableness of the offer and the conduct of the parties (see Rule 49.13).
Burden of proof: You have the burden of proving your judgment was as good as or better than your offer (or that you met or beat the other side’s offer). Keep good records of your offer and when it was served (see Rule 49.10(3)).
Seven-day requirement: These automatic cost rules only apply if the offer was made at least 7 days before the hearing started (see Rules 49.10(1)(a) and (2)(a)). Late offers can still be considered by the judge, but don’t trigger the automatic consequences.
Multiple defendants: Special rules apply when there are multiple defendants who may be jointly liable (see Rule 49.11). The offer typically needs to be made to all defendants to get the cost benefits.
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Courtready’s Rule 49 Offer to Settle Simulator (Ontario)
This tool helps you understand the cost consequences of a Rule 49 Offer to Settle Under Ontario’s Rules of Civil Procedure. Use this free tool to assess whether your Rule 49 Offer to Settle (or the other side’s) may trigger cost penalties or benefits.
A Rule 49 Offer to Settle is a formal settlement proposal under Ontario’s Rules of Civil Procedure. Either party can make one at any time. A Rule 49 Offer can carry serious cost consequences. If a party rejects a reasonable offer and then does worse at trial, the court may order that party to pay some of the other side’s legal costs.
Our goal is to empower Canadians with the right tools and knowledge to navigate our justice system with confidence. Check out our other tools above!
You can also learn about how to navigate Ontario’s Small Claims Court and your rights as a consumer in Ontario with Courtready Academy!
Frequently Asked Questions
What does the Rule 49 Offer to Settle Simulator do?
The simulator shows you the cost consequences of accepting or rejecting a Rule 49 offer by comparing the offer amount to the final judgment and explaining when partial indemnity and substantial indemnity costs apply.
When do substantial indemnity costs apply under Rule 49?
If the offeror is the plaintiff, substantial indemnity costs may apply when (i) they beat their own offer at trial, (ii) they made the offer at least 7 days before the hearing, (iii) the offer was open to acceptance until the hearing, and (iv) the other side did not accept the offer.
What happens if you withdraw an offer or allow it to expire?
If you withdraw an offer or allow it to expire before the hearing begins, Rule 49.10 cost consequences do not apply. Instead, the court assesses costs under Rule 57.01 and exercises full discretion.
What if I reject the other side’s offer and get a worse result at trial?
If you reject the other side’s offer and obtain a worse result at trial, you may face significant cost consequences, including an obligation to pay the other party’s legal costs after the offer date.
Does the simulator account for judicial discretion on costs?
Yes. The simulator recognizes that although Rule 49 sets default cost consequences, the court always retains discretion under Rule 57.01 and may order a different costs outcome.
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