G. Epstein

The respondent sought to enforce a settlement agreement against the appellants, Glen Grove and Spendthrift, who were not signatories to the agreement but were related to the signatory corporation, 129.

The trial judge found the appellants liable based on a 'privity principle' and common control.

On appeal, the Court of Appeal upheld Glen Grove's liability, finding that 129 acted as its agent in negotiating the settlement and offering security.

However, the Court allowed the appeal regarding Spendthrift, finding insufficient evidence to bind it to the settlement.

The plaintiff sued the defendants for damages arising from a shareholder dispute.

A motion judge granted partial summary judgment to the plaintiff for the defendants' breach of an interim agreement, ordering damages and costs.

When the defendants failed to pay, a second motion judge struck their statement of defence.

The defendants appealed both orders.

The Court of Appeal dismissed the appeal of the summary judgment, finding the defendants had consented to the procedure and the evidence supported the breach.

However, the Court allowed the appeal of the order striking the defence, holding that such a severe sanction was disproportionate and should not be a remedy of first resort, particularly where the defendants were misled by their former counsel.