Small Claims Court

How does a written offer to settle change the costs in Small Claims Court?

Last updated October 7, 2026.

Under rule 14.07 of the Rules of the Small Claims Court, a written offer to settle served at least seven days before trial, and still open when the trial starts, can raise the costs the other side pays. If they reject it and the judgment is as good as or better than your offer, the court may award up to twice the usual costs.

A self-represented party may also receive up to $1,500 for inconvenience and expense (rule 14.07(3)). An offer to settle is one of the few tools in Small Claims Court that puts pressure on the other side without a hearing. It tells them: accept this, or risk paying more if the judge agrees with me. Our page on help with Small Claims Court cases explains how Carson Frankum, a licensed paralegal in Hamilton, can draft and time an offer as part of a wider strategy.

How does an offer to settle work, step by step?

Offers are governed by Rule 14 of the Rules of the Small Claims Court (O. Reg. 258/98), which was amended on June 1, 2025 by O. Reg. 3/25. The Ministry of the Attorney General's guide "Getting ready for court" explains the same steps in plain terms.

Write it down. An offer, an acceptance and a withdrawal must all be in writing (rule 14.01.1). You may use the Offer to Settle (Form 14A), or a letter setting out the terms. Any party can make an offer on any claim in the case, including a defendant's claim (rule 14.01).
Say exactly what you will accept or pay. State the amount, when it is to be paid, and what happens to costs and interest. If an accepted offer says nothing about costs, the plaintiff is entitled only to disbursements up to a set date (rule 14.05(4)), which may be less than you expected.
Decide whether it stays open. You can set a date after which it is no longer available. If it is not accepted by then, it is deemed withdrawn the day after that date (rule 14.03(2)). As explained below, an offer that expires before trial loses its costs consequences.
Serve it on the other party. An offer may be made at any time (rule 14.02(1)), but the costs consequences apply only if it is served at least seven days before the trial starts (rule 14.02(2)). Keep proof of how and when you served it.
Do not file it with the court. The guide says an unaccepted offer cannot be filed at the court office, and rule 14.04 bars telling the trial judge about it, or any related negotiations, until all questions of liability and relief other than costs are decided.
The other side accepts, or does not. Acceptance is made by serving a written acceptance (Form 14B is available) on the party who made the offer, any time before it is withdrawn or before the court disposes of the claim (rule 14.05(1)). Once accepted, the guide notes, the settlement binds both sides. You may record the deal in Terms of Settlement (Form 14D).
If not accepted, you go to trial. After the judge decides the case, you show the judge your offer and ask for costs under rule 14.07. Our page on what happens at a Small Claims trial covers the hearing itself.

The costs consequences of an offer that is not accepted (rule 14.07)
Who made the offer	Result at trial	What the court may award
Plaintiff	Plaintiff's judgment is as favourable as, or more favourable than, the offer	Up to twice the costs of the action, other than disbursements, to the plaintiff (14.07(1))
Defendant	Plaintiff's judgment is as favourable as, or less favourable than, the offer	Up to twice the costs awardable to a successful party, other than disbursements, to the defendant, from the date the offer was served (14.07(2))
Either side, if self-represented	An award is made under 14.07(1) or (2)	Also up to $1,500 for inconvenience and expense (14.07(3))
Either side	Offer served fewer than 7 days before trial, or withdrawn, or expired before trial	No rule 14.07 consequences (14.02(2), 14.07)
Either side	Offer accepted, but silent on costs	Plaintiff gets disbursements to the date of service of the defendant's offer, or of the acceptance of the plaintiff's offer (14.05(4))

How much can the costs actually be?

"Twice the costs" sounds large, but Small Claims costs start small. Section 29 of the Courts of Justice Act says an award of costs in the Small Claims Court, other than disbursements, cannot exceed 15% of the amount claimed or of the value of property claimed, unless the court considers it necessary to penalize a party or representative for unreasonable behaviour. Because the section applies to every costs award in the court, the doubling under rule 14.07 works within that ceiling unless the penalty exception applies. Our page on getting your costs back if you win explains what goes into "costs" and "disbursements."

For a claim of $10,000, for example, the 15% ceiling on costs other than disbursements is $1,500. A party who was not represented normally can recover at most $500 for inconvenience and expense under rule 19.05; rule 14.07(3), added on June 1, 2025, lets the court, despite that limit, award up to $1,500 where the offer rule is triggered. That makes a well-timed offer worth more to people who run their own case than it used to be.

Disbursements, the out-of-pocket expenses such as filing and service fees, are dealt with separately and are not part of the doubling. If you are tallying the filing and trial fees you have paid, see our page on Small Claims Court fees.

What changes the answer?

Timing. Served six days before trial, the offer can still be accepted, but rule 14.07 does not apply (rule 14.02(2)). Served earlier, it has more time to work and, for a defendant's offer, the costs run from the date of service (rule 14.07(2)).
Expiry and withdrawal. The offer must not have been withdrawn and must not have expired before the trial (rule 14.07(1) and (2), condition 3). An offer that lapses a week before trial loses its costs effect. You can withdraw at any time before acceptance by serving a notice of withdrawal (Form 14C) (rule 14.03(1)).
How the judgment compares. A plaintiff's offer counts only if the judgment is at least as good for the plaintiff as the offer. A defendant's offer counts only if the plaintiff does no better than the offer. Even then, the rule says the court "may" award the higher amount; it is a discretion, not an automatic result.
Representation. The extra $1,500 under rule 14.07(3) is for self-represented parties. A party with a lawyer or paralegal may instead ask for a reasonable representation fee at trial (rule 19.04), still within the section 29 cap.
Unreasonable conduct. Separate from offers, rule 19.06 lets the court order a party or representative who unduly complicated or prolonged the case to pay a penalty under section 29, which is the one route above the 15% ceiling.
Payment into court. A plaintiff's offer can require the defendant to pay the money into court, in which case acceptance happens only by paying it in and notifying the plaintiff (rule 14.05(2)). A plaintiff can also accept a defendant's money offer on the condition that the money be paid into court (rule 14.05(3)).

A worked example: the designer's unpaid invoice

For example, imagine a Hamilton graphic designer named Marcus who sued a client for an unpaid $9,000 invoice. The client filed a defence saying the work was late and partly unusable. The settlement conference narrowed the issues but did not settle the case, and Marcus requested a trial date. (If your own claim is for an unpaid bill, see suing for an unpaid invoice in Ontario.)

Two months before trial, Marcus served a Form 14A offering to settle for $7,500 plus his disbursements, payable within 30 days. He deliberately left out an expiry date, so the offer stayed open until trial. The client answered with its own written offer of $4,000, which Marcus did not accept.

At trial, neither offer was mentioned. The judge found that part of the work had been late but usable, and gave Marcus judgment for $8,200. Only then did Marcus hand up his offer. Because the judgment was more favourable to him than his own offer, the offer was served more than seven days before trial, and it had not been withdrawn or expired, the conditions of rule 14.07(1) were met. The judge could award up to twice the costs, subject to section 29 of the Courts of Justice Act, and because Marcus represented himself, could also award up to $1,500 for inconvenience and expense. The client's $4,000 offer had no effect, since Marcus did better than it. What the judge actually awards remains a matter of discretion.

Common mistakes with offers to settle

Letting the offer expire before trial. A deadline creates pressure, but if it passes before trial the offer loses its costs consequences entirely.
Serving it too late. Fewer than seven days before trial and rule 14.07 does not apply, however reasonable the offer was.
Making the offer out loud. A number floated in a hallway or at the settlement conference is not a rule 14 offer, which must be in writing. Settlement conference discussions are also confidential (rule 13.03(4)).
Telling the judge too early. Mentioning an unaccepted offer before liability and relief are decided breaks rule 14.04. Keep it in your folder until the judge turns to costs.
Forgetting costs, interest and timing of payment. A vague offer invites argument about what was accepted, and an accepted offer that is silent on costs gives the plaintiff only disbursements to a set date.
Accepting without a plan if they do not pay. If the other party breaks an accepted offer, you can move for judgment in its terms or continue the case as if there had been no offer (rule 14.06). Decide which you would choose before you accept.

What to do this week

Write down the lowest amount you would accept, or the most you would pay, and compare it with what you realistically expect at trial.
Draft a Form 14A or a letter stating the amount, payment date, and what happens to costs, disbursements and interest.
Leave the offer open until trial, or at least until after the trial starts, so the costs consequences stay available.
Serve it, keep proof of the date and method, and calendar the seven-day mark before trial as your last chance for a fresh offer.
Do not file the offer with the court; put a copy in your trial folder for the costs stage.
If you receive an offer, calculate what a judgment at or below it would mean for costs before you decide to reject it.

Frequently asked questions

Do I have to use Form 14A?

No. Form 14A is optional; the rule requires only that the offer be in writing (rule 14.01.1). The provincial guide confirms a letter setting out the terms can be used.

Can I accept an offer after the trial has started?

Yes, as long as the offer has not been withdrawn or expired and the court has not yet disposed of the claim (rules 14.03(3) and 14.05(1)). Once the judge decides the claim, the offer can no longer be accepted.

Can I make more than one offer?

The rules allow an offer "at any time," and you can withdraw one before it is accepted by serving a notice of withdrawal (rules 14.02(1) and 14.03(1)). Remember that only an offer that was not withdrawn and did not expire before trial carries the rule 14.07 consequences.

What if the other side accepts but never pays?

Rule 14.06 lets you either make a motion for judgment in the terms of the accepted offer or carry on with the case as if there had been no offer. A judgment then opens the usual enforcement tools.

Does an accepted offer stop the clerk from dismissing my case for delay?

Yes. The clerk's two-year dismissal rule does not apply where an offer to settle has been accepted and filed (rule 11.1.01(2)(a)). Our page on dismissal for delay explains the rule.

Should an offer be lower than my claim?

An offer only creates pressure if it is realistic. If you trimmed your claim to fit the $50,000 limit, the amount you gave up cannot come back through an offer; see waiving the amount over the limit.

Is an offer to settle the same as mediation?

No. A rule 14 offer is a one-way written proposal with costs consequences, while mediation is a guided negotiation. Our existing article on alternative dispute resolution in Small Claims covers the other routes to settlement.

Sources

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This page gives general information about Ontario law, not legal advice for your situation. Cheddar Paralegal PC is a paralegal firm licensed by the Law Society of Ontario; licensed paralegals can help only with matters the Law Society allows paralegals to handle.