Offer to Settle in Ontario Small Claims Court (Rule 14)

You've filed your Defence, the settlement conference is approaching, and you're wondering whether to make a formal offer to settle. Under Rule 14, the party whose offer was rejected and whose trial result is at least as favourable as the offer may be awarded increased costs, subject to the rule's timing and other conditions.

What Rule 14 Actually Does

Rule 14 of the Rules of the Small Claims Court (O. Reg. 258/98) lets either party serve a written offer to settle at any time. The offer itself stays confidential from the trial judge until after the issues of liability and relief are determined, but the court may consider qualifying offers when deciding costs.

For the cost consequences, the offer must be served at least seven days before trial and remain unwithdrawn and unexpired through trial. If a party rejected a qualifying offer and then did worse at trial than the offer proposed, the court may award increased costs.

Cost Consequences for Defendants

Here's where it matters for you as a defendant. Under Rule 14.07:

• You reject the plaintiff's offer, and the judgment is as favourable to the plaintiff as or more favourable than the offer: The court may award the plaintiff up to twice the costs of the action.
• You make an offer the plaintiff rejects, and the judgment is as favourable to the plaintiff as or less favourable than your offer: The court may award you up to twice the costs awardable to a successful party from the date you served the offer, subject to Section 29 of the Courts of Justice Act and its exceptions.

The usual 15% cap on representation costs applies to the amount claimed, not the amount awarded, subject to statutory exceptions. For a $30,000 claim, the ordinary cap is $4,500 in costs — a meaningful number that can shift the calculus of whether to settle.

When Defendants Should Consider Making an Offer

Making a Rule 14 offer is a tactical step that costs nothing to serve (no court fee). It works best when:

• You believe the plaintiff's claim is partially valid but inflated
• You have a strong defence and want cost protection if you win at trial
• Settlement conference didn't resolve the dispute and trial is approaching

The offer must be in writing and served on the other party. Form 14A is available, but not required; a letter setting out the terms of the offer may also be used.

Self-Represented Litigants and the $1,500 Allowance

If you're representing yourself, you can't claim traditional representation costs. Rule 14.07(3) allows the court to add up to $1,500 for inconvenience and expense when it awards you Rule 14 costs after the other side rejects a qualifying offer. Separately, Rule 19.05 allows the court to award a successful self-represented party up to $500 for inconvenience and expense where the amount claimed exceeds $500, exclusive of interest and costs.

The separate $1,500 amount applies when the court makes a Rule 14 costs award to the self-represented party; it is not a general allowance for winning at trial. It gives defendants a concrete reason to put a settlement number on paper rather than just showing up to trial hoping for the best.

Timing and Strategy

An offer can be served at any time, including before or after the settlement conference. To qualify for Rule 14.07 cost consequences, it must be served at least seven days before trial.

Unless it sets an expiry date or is withdrawn in writing, an offer may be accepted until the court disposes of the claim. For Rule 14.07 cost consequences, it must remain unwithdrawn and unexpired through trial. If you change your position, you can serve a revised offer.

How This Connects to Settlement Conferences

The mandatory settlement conference under Rule 13 is the natural moment to discuss settlement, and the conference judge may encourage both parties to formalize offers. But a settlement conference discussion and a Rule 14 offer are different animals — the conference is confidential and off the record, while a Rule 14 offer creates enforceable cost consequences.

You can make a verbal offer at the settlement conference and then follow up with a formal Rule 14 written offer. The written version is what triggers the cost mechanism.

Our Defending a Claim in Ontario Small Claims Court guide walks through Rule 14 offers alongside the full settlement and trial preparation process — so you know exactly when and how to put a number on paper.

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