Is a defendant entitled to substantial indemnity costs for making an offer to pay in exchange for a release of all claims?

The defendant submits that it is entitled to substantial indemnity costs because it made an offer, prior to the commencement of this action, to pay in exchange for a release of all claims. Specifically, by letter dated December 10, 2015, the defendant offered the plaintiff an additional three weeks’ pay in lieu of notice. This offer remained open for one day. The offer was not accepted and this action was commenced. In the circumstances, substantial indemnity costs are not warranted. The defendant has not explained on what basis substantial indemnity costs should be awarded given this offer. First, the offer does not comply with Rule 49. The offer was made prior to the commencement of litigation. Further, it did not remain open for acceptance until trial. Finally, even if the offer had been complaint with the requirements of Rule 49, the award of substantial indemnity costs to a defendant is not provided for by Rule 49.10(2). In addition, the plaintiff’s conduct been reprehensible, scandalous or outrageous even though this action did not have merit: Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3, at para. 251.