Fridays with Rogers Partners
At our weekly meeting, Nathan Ching discussed the recent decision of the Ontario Superior Court of Justice in Johnson v. Rajanna et al, 2026 ONSC 4875. In this recent decision, the court affirmed various principles of Rule 49 settlement offers, including when an opposing party can rely on the apparent authority of counsel to accept settlement.
Facts
The Plaintiff alleged professional negligence arising from the Defendant dentists’ treatment of her abscessed tooth. This case concerns a motion to enforce settlement as outlined in the Plaintiff’s Rule 49 offer to settle. The plaintiff’s limited retainer lawyer, Mr. John Legge, served a Rule 49 offer on October 6, 2025. The Defendants made a counteroffer. Mr. Legge emailed the Defendants saying that the Plaintiff had rejected the offer and had terminated his retainer. The Defendants accepted the plaintiff’s Rule 49 offer on December 2, 2025. To the Defendants’ surprise, the Plaintiff later stated that she had never retained Mr. Legge, and asked the court to set aside the Rule 49 offer served by Mr. Legge.
Apparent Authority to Settle
The court decided that the Defendants could rely on Mr. Legge’s apparent authority to represent the Plaintiff. A lawyer’s authority arises from their retainer, and any limitations in that retainer does not affect the opposing party unless communicated.[1] The legal principle is based on the need for legal certainty, where litigants must be bound by settlements made on their behalf by their lawyers acting within the scope of their sapparent authority.[2]
Rule 49 Offers Open Until Withdrawn
Rule 49.07 specifically recognizes that even if the offer is rejected, it will remain open for acceptance in accordance with its terms unless it is withdrawn.[3] In this case, the offer was silent on an expiry date, and the subsequent offers discussed between counsel did not mean the Rule 49 offer was withdrawn.
The Interests of Justice and the Heart of Rule 49
The court also took the opportunity to discuss why the Plaintiff’s behaviour raises the very concern that Rule 49 is intended to guard against. First, the Judge outlined that the discretion under Rule 49.09 is reserved only for rare cases where enforcement would be contrary to the interests of justice.[4] Here, there is no evidence of any mistake, unfairness, unconscionability, or behaviour to conclude that the settlement is not in the interests of justice.[5]
Second, the Defendants’ candidness led the Judge to find that there was insufficient unfairness or unconscionable behaviour to set aside the offer. Finally, the court sternly condemned the Plaintiff, saying that the Plaintiff’s desire to set aside this offer in hopes of a slightly better deal was an inappropriate use of the court’s discretion.
The Defendants’ acceptance of the Plaintiff’s Rule 49 offer was valid and ought to be enforced. In addition to affirming that parties can rely on apparent settlement authority, this case also serves as a good reminder that Rule 49 offers remain open unless withdrawn, and that requests to exercise Rule 49.09 discretion to set aside settlements should be made sparingly.
[1] Johnson v. Rajanna et al, 2026 ONSC 4875 (CanLII) [Johnson] at para 35.
[3] Under Rule 49.07 of the Rules of Civil Procedure.
[4] Johnson at para 54 citing Srebot v. Srebot Farms Ltd, 2013 ONCA 84 at para 6
[5] Johnson at para 55, as discussed in Srebot v. Srebot Farms Ltd., 2011 ONSC 4512 at para 75