Court File and Parties
COURT OF APPEAL FOR ONTARIO DATE: 20231003 DOCKET: COA-22-CV-0332 & COA-22-CV-0364
Gillese, Benotto and Copeland JJ.A.
BETWEEN
Scott Lozon Plaintiff (Appellant)
and
Gerald Joseph Lozon, Patrick Phillip Lozon, Bryan T. Lozon and Arlene Lozon Defendants (Respondents)
AND BETWEEN
Scott Fitzgerald Lozon Plaintiff (Appellant)
and
Gerald Lozon and Arline Lozon, aka Arlene Lozon Defendants (Respondents)
AND BETWEEN
1061154 Ontario Inc. Plaintiff by Counterclaim (Respondents)
and
Scott Fitzgerald Lozon Defendant by Counterclaim (Appellant)
Counsel: Catherine Patterson, for the appellant Philip S. Chandler, for the respondents (COA-22-CV-0332) David Kirwin, for the respondents (COA-22-CV-0364)
Heard: September 7, 2023
On appeal from the orders of Justice John A. Desotti of the Superior Court of Justice, dated October 28, 2022.
Reasons for Decision
Reasons for Decision
1Scott Lozon, the appellant, is the son of the respondents Gerald and Arlene Lozon and the brother of respondent Bryan Lozon. The respondent Patrick Lozon is Gerald’s brother. The issue in this appeal is the enforceability of the Minutes of Settlement the family members and the corporation signed to settle three lawsuits.
2The first lawsuit was brought by 1061154 Ontario Inc., a company owned by Gerald and Arlene, to obtain possession of a log cabin in which Scott and his spouse were residing. This action also involved Scott’s claim that his father was holding shares in the company in trust for him. In 2017, Scott, Gerald, and Arlene attended a mediation to resolve the action (the “2017 Mediation”). During the mediation, a document was prepared listing certain equipment. It bore the title “Lozon Mediation – January 31, 2017” (the “2017 Mediation List”). This mediation was not successful.
3The other two lawsuits are for damages for personal injury sustained in a physical altercation. Scott sued Gerald, Bryan, Arlene, and Patrick for damages he alleges he sustained when Patrick and Bryan beat him while Gerald held him down. Bryan and Gerald sued Scott for damages that they allege they sustained in the same event.
4In 2022, the parties to all three actions attended another mediation, which resulted in Minutes of Settlement (the “2022 Minutes”) being prepared. The Minutes provided that:
- Cash payments totalling $1.12 million were to be paid by Gerald and Arlene to Scott in two installments;
- A cash payment of $70,000 was to be paid by Scott to Bryan;
- Scott and his spouse were to vacate the log cabin; and
- Scott would receive certain equipment, as identified in the 2017 Mediation List.
5The 2022 Minutes were prepared and circulated to all counsel who approved them as drafted. Scott and his spouse vacated the log cabin. The money owed to Scott was initially placed in trust. However, the parties got into a dispute about the equipment that Scott was to receive pursuant to the 2022 Minutes, so the funds were returned to the respondents. [1]
6The dispute over the equipment, which is the focus of this appeal, relates to a tractor and various snowmobiles. The 2022 Minutes provide:
Scott Lozon shall receive or retain the following property, as identified by line item in the attached 4 page schedule titled “Lozon Mediation – January 31, 2017”: 5 (International – DSI), 8, 15 (International Tractor – not enclosed, red – 2-wheel drive-1496), 17, 20, 26 (snowmobiles only, less the El Tigre previously owned by Scott and Bryan Lozon’s mother), 27, 29, 30, 33 and 35.
7The tractor was identified as item 15 on the 2017 Mediation List. It was described as “International 1466” on the list. But the 2022 Minutes reference item 15 as “1496” instead of “1466.” There is no tractor known as 1496 in the respondents’ possession. The respondents say that this created confusion, which means there was no agreement.
8The snowmobiles are referenced in item 26 of the 2017 Mediation List, which describes five snowmobiles and a trailer. The 2022 Minutes exclude the “El Tigre” owned by Scott’s mother. Scott submits that the 2022 Minutes include snowmobiles owned by Bryan. Bryan submits that he was not a party to the 2017 Mediation, so the 2017 Mediation List could not apply to his property.
9Since the parties were at an impasse over the tractor and the snowmobiles, Scott brought two motions seeking to have the 2022 Minutes enforced: one in the corporate action and the other in the personal injury actions.
10The motion judge heard and dismissed the motions by two orders, each dated October 28, 2023 (the “Orders”). In a brief endorsement, he relied on the evidence of Gerald and Bryan to find that there was a misunderstanding concerning what items are included in the 2022 Minutes. He referred to Scott’s position and concluded:
10I disagree. I cannot conclude that "the tractor" nor "snowmobiles" in question were intended to be covered by these minutes of settlement.
11Put it bluntly, at the end of the mediation there was a genuine misunderstanding of what items were included in those minutes and at the very least a mistake concerning what objects were to be removed from the cabin.
12In the result, the motion is dismissed.
11These reasons applied to both motions.
Analysis
Analysis
12Since the motion judge determined that no agreement existed, the Orders are final, and this court has jurisdiction.
13The motion judge did not provide reasons for his conclusion that there was no intent to cover the snowmobiles and the tractor in the 2022 Minutes.
14While deference is generally owed to decision makers on points of contractual interpretation, extricable questions of law will be reviewed on a correctness standard: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 52-53. As the Supreme Court identified in Sattva, at para. 53, citing Housen v. Nikolaisen, 2002 SCC 33, [2002] S.C.R. 235; King v. Operating Engineers Training Institute of Manitoba Inc., 2011 MBCA 80, 270 Man. R. (2d) 63:
[I]t may be possible to identify an extricable question of law from within what was initially characterized as a question of mixed fact and law (Housen, at paras. 31 and 34-35). Legal errors made in the course of contractual interpretation include “the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor” (King, at para. 21). Moreover, there is no question that many other issues in contract law do engage substantive rules of law: the requirements for the formation of the contract, the capacity of the parties, the requirement that certain contracts be evidenced in writing, and so on.
15As this court confirmed, a “determination as to whether a concluded agreement exists does not depend on an inquiry into the actual state of mind of one of the parties or on the parole evidence of one party’s subjective intention” but rather on “an objective reading of the language chosen by the parties to reflect their agreement”: Olivieri v. Sherman, 2007 ONCA 491, 86 O.R. (3d) 778, at para. 44. To decide whether an agreement was reached based on the subjective intent of one side of the bargain is “an error in principle”: Olivieri, at para. 45.
16We have concluded that the motion judge erred in principle by basing his decision on the evidence of the subjective intentions of the respondents.
17In short, the law on contractual interpretation requires the court to read the contract as a whole, giving the words their ordinary and grammatical meaning consistent with the surrounding circumstances at the time the contract was formed. The court is not to consider the subjective intentions of the parties. The interpretive process should consist only of objective evidence of the background facts at the time of the execution of the contract: Sattva, at paras. 57-59.
18The objective evidence of the background facts at the time of drafting the 2022 Minutes is as follows. There were multiple lawsuits. All parties went to the mediation in 2022. All parties were represented. The parties chose to use the 2017 Mediation List of equipment from the 2017 Mediation. Where specificity was necessary, the 2017 Mediation List was amended, as for example, by adding the words that excluded the El Tigre snowmobile from the 2017 Mediation List. The amended 2017 Mediation List was reflected in the draft 2022 Minutes that were circulated to all parties and reviewed by counsel.
19With respect to the tractor, it is clear to an objective reader that there is a minor typographical error. The 2017 Mediation List refers to model 1466 – the correct model. The 2022 Minutes refer to 1496. There is no 1496. Gerald’s statement that he relied on the number 1496 makes no sense. Accepting Gerald’s statement would lead to an absurd result, and the motion judge was wrong to rely on his evidence. Scott is entitled to International Tractor model 1466.
20The snowmobiles were listed as a group. Scott was to have five snowmobiles. Bryan contends that, because he was not a party to the 2017 Mediation, he does not need to hand over the snowmobiles and the trailer. We do not agree. The 2022 Minutes incorporated the 2017 Mediation List by reference, and it was agreed to by all parties. Scott is entitled to choose the snowmobiles from among those owned by the respondents except for “El Tigre,” which was excluded.
21Scott has advised that he chooses four snowmobiles: (i) 1971 King Cat 4- cylinder snowmobile VIN 161015; (ii) 1981 El Tigre 6000 snowmobile VIN 1018836; (iii) Yamaha 4-cylinder snowmobile VIN VX800W8BU003720; and (iv) 2003 black firecat F7 snowmobile VIN 4UF03SNW33T172731. The respondents did not address the specifics of his choice. We agree with Scott that, under the circumstances, clarity is important and so order that Scott shall receive these four snowmobiles.
Disposition
Disposition
22Accordingly, an order shall go: granting the appeals; setting aside the Orders; granting the Motions, and ordering judgment in accordance with the 2022 Minutes; and, for greater specificity, ordering that the four snowmobiles listed above be delivered to Scott forthwith. Costs are payable to the appellant by the respondents jointly and severally as follows:
(i) $17,000 inclusive of disbursements and HST for the appeal; and (ii) $12,000 inclusive of disbursements and HST for the motions below.
“E.E. Gillese J.A.” “M.L. Benotto J.A.” “J. Copeland J.A.”
1This point was clarified by counsel for Scott Lozon during the hearing.
