Donaghy v. Scotia Capital Inc./Scotia Capitaux Inc. et al.

[Indexed as: Donaghy v. Scotia Capital Inc./Scotia Capitaux Inc.]

93 O.R. (3d) 776

Court of Appeal for Ontario,

Doherty, Weiler and MacFarland JJ.A.

January 19, 2009

Civil procedure -- Settlement -- Parties entering into settlement before plaintiff commenced wrongful dismissal proceedings -- Defendant bringing motion for summary judgment to enforce settlement pursuant to rule 49.09 -- Plaintiff not raising jurisdictional issue -- Motion granted and plaintiff's appeal dismissed -- Plaintiff moving to set aside summary judgment order on basis that rule 49.09 does not apply to pre-litigation settlements so that order and order of Court of Appeal were nullities -- Motion judge properly dismissing motion -- Original motion judge having jurisdiction to hear and decide issue of whether or not action was subject of binding settlement -- Fact that motion to enforce pre-litigation settlement should probably not have been brought under rule 49.09 not affecting motion judge's jurisdiction -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 49.09.

The plaintiff was dismissed without cause. He and the defendant entered into a written settlement. The plaintiff then commenced a wrongful dismissal action. The defendant brought a motion for summary judgment pursuant to rule 49.09 of the Rules of Civil Procedure to enforce the settlement. The motion was granted, and the plaintiff's appeal was dismissed. The plaintiff then brought a motion arguing for the first time that the order of the original motion judge and the order of the Court of Appeal were nullities as rule 49.09 does not apply to pre-litigation settlement agreements. The motion was dismissed. The plaintiff appealed.

Held, the appeal should be dismissed.

The fact that a motion under rule 49.09 was likely not the appropriate method by which to enforce a pre-litigation settlement did not affect the jurisdiction of the original motion judge to hear and decide the issue of whether or not the proposed action was, in fact, the subject of a binding settlement precluding further litigation. The decision was not void or voidable.

APPEAL from the order of B.A. Allen J., [2008] O.J. No. 1463, 167 A.C.W.S. (3d) 75 (S.C.J.) dismissing a motion to set aside summary judgment.

Statutes referred to

Canada Labour Code, R.S.C. 1985, c. L-2 Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 96 [as am.], 97 [as am.], 146

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 2, 2.01(1), 20, 37.02, 49, 49.09, 59.06

Mark Thomas Donaghy, acting in person. Paul S. Jarvis, for respondents.

[page777]

BY THE COURT: --

The Issue

[1] The issue on this appeal is whether an order made pursuant to rule 49.09 [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] enforcing a settlement agreement arrived at prior to the commencement of a proceeding is a nullity because the court lacked jurisdiction to make the order. The court dismissed the appeal at the end of argument. These are our reasons for doing so.

Facts

[2] The appellant was terminated without cause by the respondents in October 2002. He negotiated, with the assistance of counsel, a severance package with the respondents which resulted in a written settlement agreement in May 2003.

[3] In July 2003, the appellant issued a statement of claim claiming damages for wrongful dismissal and overtime pay alleged to be owing to him.

[4] In October 2003, the respondent brought a motion for summary judgment pursuant to rule 49.09 to enforce the settlement between the parties. The respondent submitted that the rule applied to settlements made both before and after the commencement of litigation. The appellant did not oppose the jurisdiction of the court on the motion.

[5] On November 3, 2003, Karakatsanis J. held that rule 49.09 was available for pre-litigation settlement agreements and granted summary judgment in accordance with the terms of the settlement.

[6] On May 3, 2004, the appellant brought a motion under rule 59.06 before Karakatsanis J. to set aside her order. He argued that the settlement was void and could not dispose of his claim for overtime pay because the defendants had failed to comply with federal and provincial labour legislation and had failed to negotiate the settlement in good faith. He did not raise the issue of whether Karakatsanis J. had jurisdiction to hear the respondent's motion under rule 49.09.

[7] In an endorsement dated May 19, 2004, Karakatsanis J. dismissed the appellant's motion. She found that, in the interest of finality, settlements entered into with the assistance of counsel should be upheld except in the clearest of cases. She found that there was no evidence of fraud, mistaken instructions or bad faith leading up to the settlement and the appellant had failed to lead evidence to show that the respondent had breached the Canada Labour Code, R.S.C. 1985, c. L-2.

[page778]

[8] The appellant appealed both of Karakatsanis J.'s orders to this court. He moved to admit fresh evidence in support of the claim that the settlement was void since it did not comply with the Canada Labour Code. Again, he did not raise the jurisdictional issue regarding rule 49.09. This court dismissed the motion to admit fresh evidence, noting that Karakatsanis J. had properly found that the evidence was generic and did not address his claim regarding overtime pay with any specificity. The court dismissed the appeal, finding that the appellant had failed to demonstrate palpable or overriding error.

[9] The appellant then moved before Allen J., arguing for the first time, that rule 49.09 did not apply to pre-litigation settlements and that the two orders of Karakatsanis J. and the orders of this court were therefore nullities. Allen J. dismissed the appellant's motion and the appellant now appeals to us.

Analysis

[10] The issue now raised by the appellant was not raised in any prior proceedings. As we understand the appellant's argument, he contends that the original motions judge had no jurisdiction to hear the motion because the alleged settlement preceded the litigation and was therefore not a Rule 49 settlement. The appellant contends that if the original decision was made without jurisdiction, all subsequent decisions including the decision of this court are void and it is as if none are made. This argument entirely misconceives the nature of jurisdiction and ignores the essential need for finality in litigation. Jurisdiction refers to a court's authority to hear and determine a matter before the court. If a court has authority to determine a matter before it, the court does not lose jurisdiction if it makes the wrong ruling.

[11] The authority of the court to hear a motion to enforce a settlement is beyond question. Pursuant to s. 97 of the Courts of Justice Act, R.S.O. 1990, c. C.43 "the Court of Appeal and the Superior Court of Justice . . . may make binding declarations of right, whether or not any consequential relief is or could be claimed". Section 96 also preserves the common law.

[12] A contract to enforce a settlement was enforceable at common law. Thus, the court had jurisdiction to enforce the settlement by making a declaration as to whether the settlement was binding on the appellant.

[13] The method chosen to enforce the settlement was a motion pursuant to rule 49.09. Whether the motions judge made the correct decision in enforcing the settlement pursuant to rule 49.09 is irrelevant to the question of jurisdiction. The appellant sued in the Superior Court and the respondent brought a motion for

[page779]

judgment according to the terms of an agreement. The motions judge had jurisdiction to hear and decide the issue of whether or not the proposed action was in fact the subject of a binding settlement precluding further litigation, regardless of what rule the motion was brought under.

[14] The original decision of the motions judge was appealable and in fact was appealed by the appellant. The decision was also open to challenge under rule 59.06 and was challenged under that rule by the appellant. Both the appeal and the rule 59.06 motion failed. There is no basis either in policy or in any provision of the Courts of Justice Act to permit a third attempt to challenge the result arrived at on the initial motion years ago. None of the decisions were void or voidable.

[15] We will, however, comment on the method of enforcement with a view to giving some guidance for the future. We agree with the appellant that rule 49.09 was likely not the appropriate method by which to enforce the settlement. The weight of judicial authority is that rule 49.09 only applies to settlements arrived at after a proceeding, that is, an action or application, has been initiated. As we have indicated, this does not mean that the court's decision was a nullity for want of jurisdiction.

[16] The respondent's motion was brought in the context of the action commenced by the appellant for damages for wrongful dismissal. It was in effect a motion for summary judgment to dismiss the action on the basis of the settlement. Rule 37.02 says that a judge has jurisdiction to hear any motion in a proceeding.

[17] Rule 20 was available to the defendant after delivering a statement of defence. While no statement of defence had been delivered at that time, Rule 2 states that a failure to comply with the rules is an irregularity that does not render an order in a proceeding a nullity and that a court may grant such relief as is just to secure the just determination of the real matters in dispute. The court, pursuant to rule 2.01(1), could have dispensed with the requirement to observe this step and, in the circumstances, would undoubtedly have done so. What the appellant is saying ignores the provisions of Rule 2.

[18] The appellant relies on s. 146 of the Courts of Justice Act. Section 146 states:

146. Jurisdiction conferred on a court, a judge or a justice of the peace, shall in the absence of express provision for procedures for its exercise in any Act, regulation or rule, be exercised in a manner consistent with the due administration of justice.

[19] The requirements of s. 146 were met.

[20] We would point out that the self-represented appellant's delay in bringing his motion is unexplained, the jurisprudence

[page780]

upon which the appellant relies was available at the time of the original litigation and the justice of the case does not lead us to conclude that the result would have been any different had the issue been raised in the original proceedings.

[21] For these reasons, the appeal is dismissed, with costs fixed at $5,000 inclusive of disbursements and GST.

Appeal dismissed.