DATE: 20060523

DOCKET: C44354

COURT OF APPEAL FOR ONTARIO

RE:

KRISTO ZHUPPA and MARIANNA ZHUPPA (Plaintiffs/Appellants) – and – ROBERTO PORPORINO (Defendant/Respondent)

BEFORE:

McMURTRY C.J.O., WEILER and BLAIR JJ.A.

COUNSEL:

Bruce A. Thomas, Q.C. and Catherine P. Clark

for the appellants

Ester M. Cantor

for the respondent

HEARD & RELEASED ORALLY:

May 16, 2006

On appeal from the judgment of Justice Geoffrey B. Morawetz of the Superior Court of Justice dated September 19, 2005.

E N D O R S E M E N T

[1] This is an appeal from the order of the motions judge declaring that the action between the appellants and the respondent had been settled on the terms set out in an alleged settlement agreement.

[2] The Zhuppas are Albanian refugees who sought asylum in Canada in December 1997.

[3] The action which forms the basis of the disputed settlement agreement arose out of a motor vehicle accident that occurred on November 23, 2000, in which the appellant Kristo Zhuppa was injured and his wife Mrs. Zhuppa advanced a claim under s. 61 of the Family Law Act.

[4] In the autumn of 2003, the Zhuppas retained Mr. Harvey Lewin as their solicitor. Mr. Lewin asked Mr. Zhuppa to attend a meeting at Mr. Lewin’s office on April 14, 2005. Both Mr. and Mrs. Zhuppa have a limited ability to communicate verbally in English and neither is capable of reading or writing in English.

[5] With the assistance of his seventeen-year-old son Pirro (whose first language is Greek), Mr. Zhuppa informed Mr. Lewin that he wished to have a professional interpreter with him that day, but Mr. Lewin told Pirro that his assistance would be sufficient. Mrs. Zhuppa was not asked to attend.

[6] Mr. Zhuppa and Pirro attended at Mr. Lewin’s office. Also present were Ms. Pamela Blaikie on behalf of the respondent, a representative from the respondent’s insurance company and representatives of Mr. Zhuppa’s accident benefits insurer. During the settlement meeting, the respondent submits that a settlement was ultimately reached.

[7] The appellants submit that Pirro told Mr. Lewin that although Mr. Zhuppa signed a release, he was to retain the release until Mr. Zhuppa consulted Mrs. Zhuppa. The evidence is that Pirro now believes he may not have adequately conveyed his father’s instructions to Mr. Lewin. The release contained a line for the signature of Mrs. Zhuppa but at no time did she sign the release. Upon returning home and discussing the meeting and the settlement offer with Mrs. Zhuppa, Mr. Zhuppa asked his son to write to Mr. Lewin on his behalf instructing Mr. Lewin to refuse the settlement and repeated his instruction not to forward the release. Those instructions were emailed to Mr. Lewin at 2:40 p.m. approximately one hour after the settlement meeting.

[8] In the meantime, Mr. Lewin had provided the release signed by Mr. Zhuppa to Ms. Blaikie.

[9] The respondent brought a motion pursuant to rule 49.09 to enforce the settlement. In support of the motion, the respondent’s counsel deposed that prior to the settlement meeting getting underway, Mr. Lewin advised everyone present that Mr. Zhuppa had a basic understanding of English but that his son would act as a translator as necessary. Mr. Zhuppa confirmed that he had a basic understanding of English. Ms. Blaikie also deposed that she had no doubt that either Pirro or Mr. Zhuppa understood what was occurring at the meeting and had no reason to believe that either of them did not understand the consequences of their actions. In addition, the respondent relied on the affidavit of Mr. Lewin, filed in support of his application to remove himself as solicitor of record, which Mr. Lewin had provided to the respondent. That affidavit states that the Zhuppas “changed their mind” about a settlement.

[10] The motions judge was satisfied that Mr. Zhuppa knew the purpose of the settlement meeting. He was also satisfied that Mr. Zhuppa understood the process, that he had a basic understanding of the English language and that his son was providing translation assistance to him. The motion judge held that there was indeed an accepted offer to settle, which was enforceable pursuant to this court’s decision in Scherer v. Paletta, [1966] 2 O.R. 524 (C.A.). That case holds that any limitation on the authority of a solicitor does not affect the opposite party with whom a settlement has been reached unless that limitation of authority is communicated to the opposite party. The motion judge noted that there was nothing in the evidentiary record to suggest that Mr. Lewin did not have the authority to conduct the settlement meeting and to negotiate on the appellants’ behalf. Further, the motion judge stated that there was nothing on the record that would cause the respondent’s counsel to question the apparent authority of Mr. Lewin. The motion judge concluded that if the appellants had a problem with the terms of the settlement, their problem lay with their own lawyer. He found that the Zhuppas changed their mind as to the settlement.

[11] In our opinion the motion judge erred in failing to consider the uncontradicted evidence before him that Mrs. Zhuppa never agreed to the settlement terms and therefore could not have “ changed her mind”.

[12] In addition, the motion judge failed to consider that the principle in Scherer v. Paletta, supra, is subject to two important qualifications stated at p. 527. The first is that the principle is, “ subject always to the discretionary power of the Court, if its intervention by the making of an order is required, to inquire into the circumstances and grant or withhold its intervention if it sees fit.” The second is the disability of the client.

[13] An application of the first qualification, or exception to the principle, is found in the decision in Melios v. Zagas (1998), 38O.R. (3d) 218 (Ont.C.A.). That case concerned the rare situation where the settlement was entered into on the basis of a mistake concerning the settlement instructions, no order giving effect to the settlement had been taken out, there was no prejudice to the defendant apart from losing the benefit of the settlement, and no third parties would be affected if the settlement were not enforced.

[14] Similarly, in this case, the evidence of mistake concerning the instructions as to the granting of the release, the clear instructions rejecting the settlement given within a very short time prior to any order giving effect to the settlement being taken out, and the lack of prejudice to the defendant apart from losing the benefit of the settlement as well as the absence of any affected third parties, were factors that called for further examination as in Melios. Respectfully, the motion judge failed to undertake such an examination.

[15] Having regard to the similarity of these factors to Melios, supra, we order that the judgment be set aside and that the respondent’s motion for judgment declaring that the action has been settled be dismissed. We further order that the respondent pay the appellants’ costs of the motion fixed at $6500 all inclusive as well as the costs of the appeal fixed at $10,000 all inclusive on a partial indemnity basis.

“R. Roy McMurtry C.J.O.”

“K. M. Weiler J.A.”

“R. A. Blair J.A.”