Costs Consequences of Failure to Accept an Offer to Settle
Because the costs of litigation are high and rising, and because trials are also costly to the state, the Rules of Civil Procedure and the principles of good advocacy are structured to promote settlement in legal disputes. It will generally cost the parties more in lawyers’ bills and filing fees to go to court than to try and arrive at a compromise with the other party.
It’s also not in always pragmatically advisable to leave a judge to settle a dispute. Judges are constrained to strictly apply the law. This allows them less subtlety and flexibility in their decisions. The odds of getting exactly what you want from a judge can often be less than getting what you can from a negotiated settlement, especially when legal bills are factored into the equation.
To encourage parties to arrive at a compromise settlement, judges are empowered to make costs awards unfavorable to the party who unnecessarily drags things out:
If one party makes a settlement offer that ends up being equal to or better than what a judge ultimately awards, the party who insisted on putting both the state and the opposing legal team to the expense of a full trial may be compelled by the judge to pay some of the costs of going to trial, including the other side’s legal bills.
Given that the clientele of Small Claims Court is preponderantly unrepresented and the claims are relatively mundane, there are limits on the costs that can be claimed by the other party.
Nobody is compelled to accept an offer of settlement. And each of the specified terms of an offer of settlement is negotiable. An offer of settlement can be returned with agreement on some of the terms and not others.
Neither party is allowed to disclose to the judge, prior to his or her decision on the case, the terms of a settlement offer.
The costs implications relating to Settlement Agreements are laid out at Rule 14.07 (1)(2)(3) of the Rules of Small Claims Court: