Court of Appeal for Ontario
Before: Cronk, LaForme and Hoy JJ.A.
Between:
Steven Bellissimo Applicant (Respondent)
and
Ultimino Alfano, Italo Alfano and Invar Building Corporation Respondents (Appellants)
Counsel:
James F. Diamond, for the appellant
John Pirie and Ahmed H. Shafey, for the respondents
Heard: February 5, 2013
On appeal from the order of Justice B. P. O’Marra of the Superior Court of Justice, dated August 22, 2012, with reasons reported at 2012 ONSC 4575.
ENDORSEMENT
1The respondent’s exposure in this matter to a third party’s litigation was approximately $2,250,000, plus interest and costs. His rule 49 offer to settle with the third party for $100,000 was accepted and LawPro paid the settlement amount. The respondent received a full and final release and sought to enforce indemnity agreements he had with the appellants.
2The application judge allowed the respondent’s application to enforce the agreements. The appellants resisted the application on two grounds: (i) the agreements were unenforceable for lack of consideration, and (ii) the settlement entered into by the respondent was unreasonable. The appellants appeal the decision and repeat those submissions on appeal.
(1) Lack of Consideration
3The appellants’ materials on the application state that they “do not challenge the terms of the Indemnity Agreements”. Indeed, the validity of the agreements had been conceded by them from the outset and was never in dispute. They nevertheless raised “lack of consideration” as an issue on the eve of the application hearing. The respondent objected on procedural fairness and prejudice grounds. Although arguments in this regard were made on the application, there is no reference to this issue in the application judge’s reasons.
4It is apparent to us that the application judge was not prepared to entertain the last minute reversal of position by the appellants on this fundamental issue. While it would have been preferable had the motion judge dealt with this issue in his reasons, it is clear from the record that he must have concluded that the sole issue for him to decide was whether the settlement was reasonable.
5In any event, the appellants' concession of the validity of the agreements from the outset informed the parties’ conduct of the litigation. The respondent’s actions, in response to the litigation, were conducted with this knowledge. Had the appellants, in a timely way, taken the position that the agreement lacked consideration it is quite possible that the respondent would have proceeded differently.
6Furthermore, the explanation given for the last minute change of position from that in their factum and throughout was that appellants’ counsel “just thought of another legal argument”. Given that throughout the litigation, the appellants had essentially conceded the validity of the indemnity agreements, this is not a reasonable justification for the change.
7To allow this issue to be raised at this stage would be unfair to the respondent. Accordingly, the appellants’ argument that the agreements were unenforceable for lack of consideration is rejected.
(2) Reasonableness of Settlement
8Regarding this issue, we would not interfere with the application judge’s exercise of discretion, which is to be accorded a high degree of deference on appeal. The circumstances that existed prior to the acceptance of the respondent’s rule 49 offer to settle do not give rise to the settlement being unreasonable. Success on the respondent’s rule 21 motion against the third party was not assured and there was a risk that if the motion was unsuccessful, the respondent would be required to defend the complex litigation commenced by the third party, thereby incurring significant legal costs.
9In addition, the third party had made it clear that if the rule 21 motion was successful, it intended to appeal. This too would have exposed the respondent to additional legal costs.
10These factors, taken together, would likely exceed the amount for which the action was settled. The settlement amount was a fraction of the respondent’s total exposure in the law suit, and less than his foreseeable legal fees. Furthermore, the offer was made with the advice of counsel for LawPro who no doubt considered these cost implications.
11In all the circumstances it was open to the application judge to conclude that the settlement was reasonable. We agree with his comment that “the notion that the settlement was unreasonable is premised on the 20/20 vision of hindsight”. This ground also fails.
12For these reasons, the appeal is dismissed. The appeal was neither complex nor lengthy and costs, therefore, are awarded to the respondent in the amount of $10,000 inclusive of disbursements and applicable taxes.
“E.A. Cronk J.A.”
“H.S. LaForme J.A.”
“Alexandra Hoy J.A.”
