Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20220228 DOCKET: C69487

Simmons, Harvison Young and Zarnett JJ.A.

BETWEEN

1504641 Ontario Inc. and Faisal Malik Plaintiffs (Respondents)

and

2225902 Ontario Inc., 2225909 Ontario Inc., 2285754 Ontario Inc., 1492612 Ontario Inc., Azhar Hussain also known as Azher Hussain, Sajjad Sadiq, and Sobia Sadiq, Atiq Ahmed, Naseer Malik, Irfan Ahmed Memon, and Kashlaw Professional Corporation and Khalid Sheikh Defendants (Appellants)

Counsel: Ravinder Sawhney, for the appellants Gwendolyn L. Adrian, for the respondent 1504641 Ontario Inc.

Heard: February 22, 2022 by video conference

On appeal from the judgment of Justice Susan Vella of the Superior Court of Justice, dated April 19, 2021.

Reasons for Decision

[1] Following the oral hearing, we dismissed this appeal for reasons to follow. These are our reasons.

[2] In February 2020, shortly before the onset of the Covid-19 pandemic, the parties entered into Minutes of Settlement requiring, among other things, that:

-the appellants pay to the respondents $40,000 in four monthly instalments of $10,000 each between March 2 and June 2, 2020; -the appellants deliver a consent to judgment in the amount of $120,000 to be held in escrow pending completion of their instalment payments at which time the consent would be returned to their counsel; -the appellants deliver a consent to the dismissal of the action without costs to be held in escrow by counsel for two other defendants (the "other settling parties") pending the appellants’ paying their instalment payments; and -the parties exchange releases.

[3] The appellants failed to deliver the required consents and stopped payment on their last $10,000 instalment. The appellants failure to deliver the consents led to a delay in payment of a lump sum required to be paid by the other settling parties to the respondents under the Minutes of Settlement. Following that payment, the respondents and the other settling parties arranged separately for the dismissal of the action against the other settling parties.

[4] On a motion brought by the respondents against the appellants pursuant to rule 49.09 to enforce the Minutes of Settlement, the motion judge converted the motion to a rule 20 motion and granted judgment to the respondents for $90,000 (being the $120,000 amount referred to in the Minutes of Settlement less the three instalments paid). The motion judge rejected the appellants’ claims that the pandemic, or the respondents’ arrangements with the other settling parties, should in any way alter the appellants' obligations under the Minutes of Settlement.

[5] We reject the appellant's arguments that the motion judge made any error in dealing with the respondents' motion as an in-writing motion; in converting it to a summary judgment motion; or in granting summary judgment to the respondents for $90,000.

[6] The parties requested the motion judge to deal with the motion as an in‑writing motion. She was entitled to treat the motion as a motion for judgment as both parties had fully addressed in their material the enforceability of the Minutes of Settlement: rule 37.13(2).

[7] We agree with the motion judge's conclusions that neither the pandemic nor the appellants arrangements with the other settling parties altered the appellants' obligations under the Minutes of Settlement.

[8] As the motion judge observed, the appellants were represented by counsel when the Minutes of Settlement were entered into and failed to offer any valid reason for non-compliance. In particular, the appellants did not "advanc[e] any grounds, much less evidence, [to support] a rational link between the pandemic and their failure to comply with the terms of the Minutes of Settlement."

[9] The respondents were obliged to make other arrangements to dismiss the action against the other settling defendants because of the appellants' failure to deliver the consent to the dismissal of the action as required under the Minutes of Settlement. The respondents cannot rely on their own default to establish non‑compliance or waiver by the respondents.

[10] The appellants submit that they were entitled to withhold payment of their final $10,000 instalment because the respondents were threatening to continue the action against them even if the final instalment owing under the Minutes of Settlement was paid.

[11] We do not accept that submission. The Minutes of Settlement required that the consent to judgment be returned to appellants’ counsel once the appellants had paid the required instalments. The appellants were not at risk of having a judgment for $90,000 entered against them provided they paid their final instalment. It was the appellants' failure to deliver the required consents that led to the possibility of the respondents seeking some additional form of relief. The appellants were not entitled to rely on their own default to justify withholding the final instalment.

[12] The appellants also argue that the $90,000 award amounts to a penalty. We do not accept that argument. The parties entered into Minutes of Settlement as a compromise to avoid a trial. As part of that compromise, the respondents agreed to reduce their claim to finally resolve the matter without additional costs if the reduced amount was paid in a timely way. In these circumstances, the amount required to be paid under the consent to judgment in the event that all of the instalment payments were not made is not a penalty.

[13] Based on the foregoing reasons, the appeal is dismissed with costs payable to the respondents on a partial indemnity scale fixed in the agreed upon amount of $10,000 inclusive of disbursements and applicable taxes.

“Janet Simmons J.A.”

“Harvison Young J.A.”

“B. Zarnett J.A.”