Bercovitch v. Resnick, 2011 ONSC 6410

harvison young j. (ORALLY)

1The applicants seek leave to appeal from a decision of Campbell J. which dismissed their appeal from Master Short’s dismissal of their motion to strike a paragraph of the plaintiff’s reply.

2The defendants are guarantors on two promissory notes, now in default. The notes were both provided by a financial corporation to the plaintiff in return for his investment of funds. The impugned paragraph of the reply pleadings states essentially that the defendants “solicited the settlement” of two promissory notes by offering to purchase the notes “at a discount” and that in this “solicitation” the defendants “acknowledged the enforceability” of the notes “and their obligations as guarantors”.

3The defendants argued, both before Campbell J. and Master Short that this aspect of the pleadings was prejudicial as it refers to a without prejudice settlement offer made by the defendants, which is privileged and inadmissible.

4The plaintiff contends that the settlement offer in question was not a privileged and inadmissible communication, but rather, was simply a unilateral offer to buy out the defaulted notes at a discount price that contained an important acknowledgement of the defendants of their obligations as payors of the promissory notes.

5The defendants/applicants submit that the motions judge erred in applying a three part test rather than a two part test in effectively requiring that the settlement be the dominant purpose rather than simply a factor in the proposal, and further, that he erred in requiring that the settlement proposal had been in the contemplation of both parties rather than only one of them.

6Having reviewed the materials filed and heard the submissions of the parties, I conclude that the motion ought to be dismissed. The motion judge carefully considered the legal principles surrounding the settlement offers and the litigation privilege, as well as the policy underlying the principle. In addition, he carefully applied these principles to the evidence before him, as Master Short had also done.

7The defendants/applicants argue that there are conflicting decisions as to whether the test is a one or two part test and that this is a matter of importance warranting the attention of this Court. I disagree. In the circumstances of this case, and given the careful analysis of the motions judge, the test would clearly have been met whether under a two part or three part test.

8I am also satisfied that the evidentiary record before the motions judge supported his conclusions. The motions judge carefully considered the policy of the new rule and applied the proper considerations to the facts before him concluding that, first of all, the plaintiff had not been contemplating litigation when the proposal was made. Second, he concluded that the fact that the documents were not delivered or marked on a “without prejudice” basis was a factor to be taken into account. The genuine purpose of the proposal was not settlement of litigation and in addition, he noted that this proposal was not even made by the defendants, but rather, by Mr. Whiting. Finally, he carefully applied the tests to the facts before him.

9In the result, the motions judge correctly articulated the law and applied the law and there is no reason to doubt the correctness of his decision, nor does the case raise matters of public importance that warrant the attention of this Court.

10Accordingly, the application is dismissed.

COSTS

11Costs ordered payable by the applicants/defendants to the plaintiff/respondent in the amount of $3,000.00.