The Appellant, Singh, appealed a Decision by an Assessment Officer pursuant to Rule 10.44(2). The Assessment Officer had awarded double Costs based on Column 2 of Schedule C of the Rules for steps taken after a formal offer to discontinue the Action without Costs was made concurrently with the Defendants’ Statement of Defence. The Costs were awarded after Singh’s claim was summarily dismissed pursuant to Rule 7.3. Singh argued that the Assessment Officer did not have jurisdiction to award double Costs as a result of the formal offer being made when the issue was not determined by a Master or Judge. He also argued that the offer of discontinuance on a without Costs basis was not a genuine offer, and so should not have attracted enhanced Costs.

In reviewing the Assessment Officer’s Decision, Justice Feehan first noted that Courts may order that an Assessment Officer perform an assessment of Costs, and may give directions to that Assessment Officer, under Rule 10.34(1). Thereafter, the Assessment Officer may assess Costs in accordance with Rule 10.36(1) and (2), and Rule 10.41. Pursuant to Rule 10.41, the Assessment Officer may determine whether Costs incurred by a party are “reasonable and proper”, and may decide whether an item on a Bill of Costs was “reasonably and properly incurred”. Although the Assessment Officer may allow or disallow an item in a Bill of Costs, he or she is not entitled to reduce an amount provided for in Schedule C, unless the Schedule allows such a reduction or “exceptional circumstances” exist. Importantly, pursuant to Rule 10.41(3)(d), an Assessment Officer may not determine a lawyer’s fees at more than the amount specified in Schedule C, unless expressly permitted by the Rules or by agreement.

Justice Feehan held that the Assessment Officer had the jurisdiction to award double Costs in the circumstances, pursuant to Rule 4.29. Rule 4.29 expressly permits double Costs being awarded if the Action that is the subject of a formal offer to settle is dismissed, unless an award is made on an indemnity basis or as a lump sum (pursuant to Rules 4.29(4)(a) and (e), and Rule 10.31(1)(b)).

However, Justice Feehan held that the Defendant’s offer of discontinuance without Costs was not a genuine offer which should attract a double Costs award. His Lordship noted that offers must be genuine in accordance with the purpose of Rule 4.29, which is to encourage fair and reasonable compromise and settlement before Trial, and to prevent needless litigation. Justice Feehan also referred to five principles which may impact the genuineness of an offer: (1) whether the offer was reasonable in the circumstances; (2) whether it includes an element of compromise; (3) whether it reasonably reflects the relative merits of the parties’ positions; (4) whether it is made with a reasonable expectation of acceptance (rather than as a litigation tactic); and (5) if it is examined subjectively and objectively in the context of the surrounding circumstances. Some factors to consider, along with the above listed principles, include whether litigation activity occurred during the acceptance period, whether a limitations defence exists, and the existing evidence which would lead the offeror to conclude that there was no cause of action against it.

Justice Feehan also noted that several authorities have recognized that an offer to discontinue without Costs may be a genuine offer, even if the offer is made early on in the Action. However, His Lordship also noted that intuitively, a formal offer of discontinuance “served simultaneously with a Statement of Defence should not generally be found to be genuine”, as by that date, it is usually difficult to assess litigation risks.

Justice Feehan therefore exercised authority pursuant to Rule 10.45 to vary part of the Decision of the Assessment Officer. His Lordship upheld the Assessment Officer’s findings as to jurisdiction, but varied the Assessment Officer’s determination on double Costs, and held that that double Costs should not have been awarded for steps taken after the expiry of the offer, as it was not a genuine offer of compromise.