COURT FILE NO.: DC-08-0092-00

DATE: 20090325

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: Gorush Inc. v. Direcpay Merchant Services Inc. et al.

BEFORE: Ricchetti, J.

COUNSEL: C. Wetmore, for the Plaintiff V. Opara, for the Defendants

ENDORSEMENT

1This is a motion by the Plaintiff for the enforcement of an alleged settlement entered into between counsel for the parties.

2The Plaintiff brought a claim in Small Claims Court against the Defendants.

3The action was heard by Justice Bobesich on November 19, 2008.

4The endorsement of Justice Bobesich states that the Plaintiff was awarded “nil” plus $2,610 in costs against the Defendant Direcpay. Costs to the Defendant Kanu were fixed at $100. There is a dispute between the parties as to whether this was intended or Justice Bobesich simply made a typographical error as to who was to pay costs. However, the endorsement has not been varied or amended. Fortunately, I do not have to decide the issue.

5On December 17, 2008 the Plaintiff served a Notice of Appeal.

6On the same day, Mr. Valitutti counsel for the Plaintiff wrote to Mr. Zavet offering to settle the appeal on the basis that the parties “walk away” from all claims against each other including costs. A response was requested before January 9, 2009 at which time the Plaintiff would order the transcripts of the trial and thereby incur further costs.

7Mr. Valitutti followed up with Mr. Zavet on January 14, 2009. There was no agreement as Mr. Zavet did not have instructions as his clients were out of town. Mr. Zavet was pessimistic his clients would agree to the proposed agreement but Mr. Zavet would speak with his clients.

8Mr. Valitutti proceeded to order the transcripts on January 22, 2009. Later on the same day, Mr. Valitutti followed up with Mr. Zavet on the proposed offer.

The Plaintiff’s Position

9Mr. Valitutti states in his affidavit that Mr. Zavet advised his clients were prepared to “walk away” given the minimal amount involved, $2710. Mr. Valitutti advised Mr. Zavet that he needed to obtain instructions since the transcripts had already been ordered.

10Mr. Zavet advised that if the Plaintiff was agreeable to the terms, Mr. Valitutti was to prepare and forward to Mr. Zavet draft Minutes of Settlement. Mr. Valitutti proceeded to cancel the ordered transcripts.

11Mr. Valitutti obtained the instructions and confirmed the settlement to Mr. Zavet in an email dated January 23, 2009 which states in its entirety:

“Further to our conversation yesterday afternoon, I confirm that the parties have agreed to settle the matter on a “walk away” basis. I am in the midst of preparing Minutes of Settlement and will provide a copy to your for your review and comment shortly.”

12No response was immediately received to this email from Mr. Zavet.

13On January 27, 2009 Mr. Valitutti sent to Mr. Zavet draft Minutes of Settlement which are consistent with a “walk away” by the parties of all claims and costs.

14By the morning of February 10, 2009 there was still no response by Mr. Zavet to the January 23, 2009 email or the January 27, 2009 draft Minutes of Settlement.

15On February 10, 2009 Mr. Opara (also from Mr. Zavet’s firm) contacted Mr. Valitutti regarding payment of costs under the Endorsement. Mr. Valitutti advised Mr. Opara of the settlement he had reached with Mr. Valitutti. Mr. Valitutti confirmed this conversation by letter dated February 10, 2009.

16Mr. Opara first writes to Mr. Valitutti on February 19, 2009 advising that he has spoken to Mr. Zavet who advised that no settlement was ever reached. Mr. Opara advised that their “records did not indicate” Mr. Zavet had gotten back to Mr. Valitutti. There was no mention of the January 23, 2009 email or January 27, 2009 draft Minutes of Settlement.

The Defendant’s Position

17Mr. Zavet states that he advised Mr. Valitutti on January 22, 2009 that his clients were not interested in settling on the basis of the terms of the Offer to Settle sent in December 2008.

18However, Mr. Zavet indicated his client would settle but wanted payment of some reasonable amount of the costs ordered. In other words, according to Mr. Zavet he wanted some portion of the $2,710 costs be paid.

19Mr. Zavet states Mr. Valitutti advised he would speak to his client to determine if they would make a reasonable amendment to the offer (i.e. pay something towards the cost award). Mr. Zavet indicated his clients would consider draft Minutes of Settlement if a reasonable offer on account of costs were made.

20Mr. Zavet states he received the January 23, 2009 email. However, Mr. Zavet states under oath that he thought it was the Minutes of Settlement. He took this from the “Re: line”. This is hard to believe as there was no attachment of Minutes of Settlement to the email. This would have been obvious to Mr. Zavet immediately. It is hard to believe counsel would stop reading at the “Re: line” in an email this short.

21Mr. Zavet states he didn’t read the January 23, 2009 email. Again, this is hard to believe as the email is only two and a half lines. It would have taken just a couple of seconds. Even on a cursory review, it clearly states it is confirming a settlement agreement. Mr. Zavet should have reacted immediately if there was no settlement reached.

22Mr. Zavet’s counsel explains this away on the basis Mr. Zavet was busy due to a RBC Radio interview he was requested to participate in. I do not accept this as a satisfactory or even plausible explanation.

23Mr. Zavet admits he received the January 27, 2009 letter with the attached draft Minutes of Settlement from Mr. Valitutti. A review of the draft Minutes of Settlement would have shown to Mr. Zavet it was the “walk away” settlement.

24Mr. Zavet attempts to explain the failure to respond to Mr. Valitutti’s draft Minutes of Settlement on the basis that the file was being transferred to Mr. Opara. Mr. Opara is in the same firm.

25Why Mr. Zavet couldn’t simply have written to Mr. Valitutti and denied any settlement when he got the email of January 23, 2009 or the letter of January 27, 2009 has not been adequately explained.

26Even Mr. Opara could have responded to the January 23, 2009 email and the draft Minutes of Settlement of January 27, 2009 but he didn’t do this. He contacted Mr. Valitutti on February 10, 2009. When Mr. Opara wrote to Mr. Valitutti on February 19, 2009 he didn’t even address the email or draft Minutes of Settlement.

27The suggestion that Mr. Valitutti was acting improperly by writing to Mr. Zavet and Mr. Opara after Mr. Opara had advised he had carriage of the file is rejected. It is irrelevant to the issues at hand. It was reasonable for Mr. Valitutti to write to Mr. Zavet (and copy Mr. Opara) when the alleged settlement had been entered between the two of them.

28The suggestion that Mr. Valitutti was aggressively pursuing settlement is clear from the evidence. The fact that it was somehow improper or evidence that there was no settlement agreement is rejected.

Analysis

29It is unfortunate that the parties have had to go through the expense of preparing affidavits for this motion and to argue this motion over $2,710 or less.

30It is even worse when the position by both counsel on the motion suggested the other side’s deponent (both of whom were the counsel involved) were less than completely honest. I am putting it as mildly as I can.

31To determine whether there is a settlement under Rule 49.09, I must determine whether there was a legally binding agreement. This includes finding mutual intention to settle and whether there was agreement on all essential terms. Even if I were to find a settlement agreement was reached, under Rule 49.09, I have discretion pursuant to the Rule as to whether to enforce a settlement. See Finelli v. Dubas (2008) unreported decision of Justice Swinton.

32For the motion to succeed, I must be satisfied that there is no genuine issue for trial, that there was a legally binding settlement agreement. An oral agreement between counsel is sufficient for there to be a binding settlement agreement. Hall v. Smith (2007) unreported.

33In deciding whether a legally binding agreement was created between counsel I should refrain from deciding credibility issues which go to the heart of the issue. The same standard on the factual and legal issues as a Rule 20 motion is applicable. Bayerische Landesbank Girosentrale v. R.S. W. H. Vegetable Farmers Inc., 53 O.R. (3d) 374.

34There is no issue on the essential terms. “Walk away” would have and should have been known to counsel and, in any event, if there was any doubt it was clear from the December, 2008 Offer to Settle and the Draft Minutes of Settlement.

35The issue is whether there was a mutual intention or common understanding on the alleged settlement agreement.

36While I have some very serious doubts regarding the evidence of Mr. Zavet and the evidence of Mr. Valitutti appears to be more consistent with the documentation, I cannot say there isn’t a credibility issue that would need to be decided and could only be decided based on viva voce evidence.

37At the centre of this dispute is what was said between Mr. Zavet and Mr. Valitutti on January 22, 2009. Even though the documents strongly support Mr. Valitutti’s position, he might have proceeded under a misunderstanding as to what was said by Mr. Zavet.

38I cannot conclude with the certainty required that there was a valid and binding settlement agreement reached between counsel on January 22, 2009.

39As I have not found a valid and legally binding settlement agreement, I do not have to go on to consider whether I have discretion to enforce the settlement.

40Accordingly, I dismiss the Plaintiff’s motion to enforce the settlement.

41Both parties seek costs. The Plaintiff seeks costs of $2,000 all in. The Defendants seeks $3,478.05 all in. Both are on a partial indemnity basis.

42While the Defendants were successful in opposing the motion and would prima facie be entitled to some costs, there is no right to costs. Rule 57(02)

43This is an unusual situation.

44Considering the factors in Rule 57, in my view, it is appropriate in these circumstances that no costs be awarded.

45There are several reasons I have exercised my discretion in this fashion:

a) Much of the blame rests on Mr. Zavet for not responding to the January 23, 2009 email or the January 27, 2009 letter. Had Mr. Zavet responded immediately, this motion likely would not have been necessary.

b) The Plaintiff was put through the cost of preparing Draft Minutes of Settlement which could have been avoided if Mr. Zavet had responded immediately to the January 23, 2009 email.

c) The amount at issue is $2,710.

d) The matter was not complex.

e) The Defendants included significant matters in their affidavit which were irrelevant to the issue at hand, were unnecessarily pejorative of Mr. Valitutti and his conduct (requiring a responding affidavit by Mr. Valitutti) and spent a great deal of time arguing matters which were irrelevant, including the determination of Mr. Valitutti in wanting this matter settled as being improper, the suggestion Mr. Valitutti may have “choreographed” the ordering and cancelling of the transcripts simply to assist his position there was a settlement agreement, and that Mr. Valitutti acted improperly in writing to both Mr. Zavet and Mr. Opara.

46As a result, there will be no order as to costs.

Ricchetti, J.

DATE: March 25, 2009

COURT FILE NO.: DC-08-0092-00 DATE: 20090325

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Gorush Inc. v. Direcpay Merchant Services et al

BEFORE: Ricchetti J.

COUNSEL: C. Wetmore, for the Plaintiff V. Opara, for the Defendants

ENDORSEMENT

Ricchetti J.