Sahota v. Sahota, 2016 ONSC 314

CITATION: Sahota v. Sahota, 2016 ONSC 314

DIVISIONAL COURT FILE NO.: 80/15 DATE: 2016/01/28

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

AITKEN, SWINTON AND C. HORKINS JJ.

BETWEEN:

RAVINDER SAHOTA and HARJIT SAHOTA Plaintiffs

– and –

MANJIT SAHOTA, PARMJEET SAHOTA, HARVEER SAHOTA and GARY ROY GELLER Defendants

Unrepresented

Kenneth E. Wise for the Defendants, Manjit Sahota and Parmjeet Sahota (Respondents on the Appeal)

Defendant, Harveer Sahota, unrepresented

Terrence Liu and Daniel Bernstein for the Defendant, Gary Geller (Appellant)

HEARD at Toronto: January 12, 2016

AITKEN J.

History of Proceedings

1On October 4, 2012, Ravinder Sahota and Harjit Sahota (the “Plaintiffs”) sued Manjit Sahota and Parmjeet Sahota (the “Respondents”) and their son, Harveer Sahota, for the fraudulent removal of their names from title to a number of residential properties which the two couples co-owned. The Appellant, Gary Geller (“Geller”), was added as a defendant because he was the lawyer who registered the transfer documents. At all material times, the Plaintiffs were represented by Amandeep Dhillon (“Dhillon”), the Respondents were represented by Amandeep Walia (“Walia”), and the Appellant, Geller, was represented by Daniel Bernstein (“Bernstein”).

2During 2013, the Plaintiffs and the Respondents had on-going discussions to resolve the litigation. In October 2013, they reached a tentative agreement. Geller was not a party to these negotiations.

3On January 15, 2014, Dhillon opened further discussions between all of the parties to finalize the terms of settlement. Between January 15, 2014 and January 31, 2014, there were communications between Bernstein, Dhillon, and Walia regarding a resolution of the action against Geller. It is the position of Geller that those communications resulted in a final settlement of the action against him whereby the Respondents would pay him $15,000 and both the Plaintiffs and the Respondents would provide him with a full and final release. The Plaintiffs were prepared to proceed with the settlement, but the Respondents refused to do so. On March 20, 2014, the Plaintiffs and the Defendants (other than Geller) signed Minutes of Settlement.

4On August 15, 2014, Geller brought a motion under r. 49.04(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 against the Plaintiffs and the other Defendants, seeking to enforce the settlement agreement which he claimed was binding against all of the parties as of January 31, 2014. Prior to the motion being argued, the Plaintiffs signed Minutes of Settlement with Geller, paid him $15,000, and provided him with a release.

5The motion was heard by Matlow J. on December 2, 2014. A handwritten endorsement was released on February 2, 2015 which read, in its entirety:

I am not persuaded that there is any agreement to which the moving party, the defendant, Geller, is a party and by which the action has been settled as against him. Geller is still at liberty to raise the alleged settlement at trial in a proper pleading.

The parties may make written submissions regarding costs by exchanging them and delivering copies to me no later than on March 3, 2015.

6On April 24, 2015, Molloy J. granted leave to appeal to the Divisional Court on the basis that there was reason to doubt the correctness of the order and the proposed appeal involved matters of such importance that leave to appeal should be granted (r. 62.02(4)(b)).

7Geller now asks the Divisional Court to grant the appeal from the order of Matlow J. due to an error in law arising from the absence of sufficient reasons, and to substitute its decision for his. For the reasons that follow, both requests are granted.

Adequacy of Reasons

8As stated by Binnie, J. in R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, at para. 24, and reiterated by Weiler J.A. in Diamond Auto Collision Inc. v. Economical Insurance Group, 2007 ONCA 487, 227 O.A.C. 51, at paras. 10-12, reasons for judgment at the trial level are meant to serve three functions: (1) to explain to the losing party why he or she lost; (2) to enable informed consideration as to whether to appeal; and (3) to enable interested members of the public to see whether justice has been done. The reasons must permit meaningful appellate review in the particular context in which they are given, one consideration being whether the reasons for the judge’s conclusion are obvious on the record: “[s]tanding alone, conclusory and generic reasons … do not permit appellate review. In order for the [appellate] court to determine whether there has been a proper application of legal principles, the pathway to the result is necessary …” (Diamond, at para. 12).

9In this case, the endorsement of the motions judge provided no reasons why the motion was dismissed. All that was provided was the judge’s conclusion, not the path by which he arrived at that conclusion. As well, the basis of his decision is not obvious from the materials that were before him. As will become apparent in the subsequent analysis, there were several factual and legal issues which the judge had to consider before rendering a decision. His refusal to enforce the purported settlement could have been based on his findings regarding any one of those issues. No appellate review is possible when no analysis of those issues was provided (see Vine Hotels Inc. v. Frumcor Investments Ltd., [2003] O.J. No. 4768 (S.C.), at para. 7).

10The order of the motions judge is set aside.

11Under s. 134(a) of the Courts of Justice Act, R.S.O. 1990, c. C-43: “a court to which an appeal is taken may make any order or decision that ought to or could have been made by the court … appealed from”. This court has before it, and has had to consider, all of the materials that would be placed before a motions judge if the matter were remitted to another judge to be heard afresh. In the spirit of r. 1.04, which sets out the goal of securing the “just, most expeditious and least expensive determination of every civil proceeding on its merits”, it is appropriate that this court decide Geller’s motion on its merits.

Existence of a Settlement between the Respondents and Geller

12A two-step process must be followed in determining whether a purported settlement should be enforced: (1) the court must consider whether a settlement agreement had been reached by employing the test on a motion for summary judgment under r. 20; and (2) if the court finds that an agreement was reached, it must determine, based on a broader approach, whether there is any reason why the agreement should not be enforced (Dick v. Marek (2009), 72 C.P.C. (6th) 374 (Ont. S.C.), at paras. 65-66. See also Deman Construction Corp. v. 1429036 Ontario Inc. (2007), 64 C.L.R. (3d) 82 (Ont. S.C.), at para. 22.)

13Under r. 20.04(2), the court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial because, based on the evidence available to the court at the time of the motion for summary judgment, it can reach a fair and just determination on the merits. This will be the case where: (1) the court is able to make the necessary findings of fact; (2) the court can apply the law to the facts; and (3) summary judgment is a proportionate, more expeditious, and less expensive means to achieve a just result (Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49).

14This court has the benefit of the chain of emails between the parties’ lawyers and transcripts from the cross-examinations of Dhillon and Walia. A review of that documentation does not raise controversy as to what communications occurred and when they occurred or as to the understanding of counsel when those communications were made. Thus, it cannot be said that there are material issues of fact or genuine issues of credibility in dispute.

15Also, as a matter of law, it is well settled that a party’s lawyer can bind his or her client in settlement negotiations, even if he or she does not have the client’s authority to do so, as long as the opposing party has no knowledge of the lawyer’s lack of authority. Here, the only evidence is that Walia believed that he had the authority to bind his client in settlement discussions with Dhillon and Bernstein, Walia held himself out as having such authority, and Dhillon and Bernstein had no knowledge that he did not have that authority. The issue of whether Walia actually had such authority is one between him and his client; it does not impact on the legal rights of Geller (Scherer v. Paletta, 1966 286 (ON CA), [1966] 2 O.R. 524 (C.A.), at 527; Chytros v. Standard Life Assurance Co. (2006), 2006 34419 (ON SC), 83 O.R. (3d) 237 (S.C.), at paras. 8-10; and Pukec v. Durham Regional Police Service, [2001] O.T.C. 304 (S.C.), at paras. 15-16).

Was a settlement agreement reached?

16In order to prove that a settlement had been reached, Geller must establish that: (1) there was a mutual intention on the part of himself and the other parties to create a binding contract; and (2) the parties reached an agreement on the essential terms of that contract (Olivieri v. Sherman, 2007 ONCA 491, 86 O.R. (3d) 778, at para. 41; Dick, at para. 65). It is not necessary for formal settlement documents to be executed before a settlement may exist, as long as there is evidence of the necessary mutual intention to reach a final agreement, and the essential terms of that final agreement can be identified (Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991), 1991 2734 (ON CA), 79 D.L.R. (4th) 97 (Ont. C.A.), at 103-104; and Cellular Rental Systems Inc.v. Bell Mobility Cellular Inc., 1995 CarswellOnt 4182 (Gen. Div.), at paras. 17-18). The court may consider conduct subsequent to the purported agreement to determine whether the parties had manifested the intention to enter a binding contract.

17In this case, the evidence of an agreement consists of the emails and attachments exchanged by counsel, the steps taken by counsel following the purported agreement, and transcripts of the cross-examinations of counsel.

Was there a mutual intention to create a binding contract?

18It is clear from the chain of emails between counsel from January 14, 2014 forward that the purpose of their communications was to finalize a binding agreement between the parties that would settle their outstanding litigation. It is also clear that, by January 31, 2014, counsel for all parties understood that such an agreement had been reached. This is confirmed by the evidence provided by Dhillon and Walia during their cross-examinations on the motion.

19On January 21, 2014, Dhillon emailed Bernstein, stating that progress was being made in settlement negotiations, and he needed Bernstein’s position on costs. Dhillon advised that, if LawPRO, who was conducting the litigation on behalf of Geller, was prepared to “walk away” on a without costs basis, then he thought a settlement could be reached. On January 22, 2014, Bernstein emailed Dhillon advising that, although his costs to date were $48,000, LawPRO was prepared to accept $15,000 “to get the deal done”. As well, LawPRO would require from all parties a full and final release in LawPRO’s standard form.

20On January 24, 2014, Dhillon emailed Walia to discuss the terms of the settlement between their respective clients, and he included the following regarding Geller’s proposed settlement:

Further, as I advised you, Mr. Bernstein’s client – Gary Roy Geller – is seeking costs of your clients’ motion and action in the amount of $15,000 as full and final settlement of the matter. I am advised by Mr. Bernstein that his client’s true costs are $48,000 and $15,000 is an offer to resolve and end the matter.

21On January 30, 2014, Walia responded to Dhillon that his clients were prepared to pay $15,000 for Geller’s costs.

22On January 31, 2014, Dhillon sent Bernstein an email, which he copied to Walia along with the full chain of emails between himself and Bernstein, stating: “The parties have agreed to a settlement. I expect the settlement documents to be executed next week. Manjit [the Respondent, and Walia’s client] has agreed to pay your legal costs in the amount of $15,000.00. The action will be dismissed against all defendants on a without cost basis and full and final releases will be executed.” Dhillon acknowledged under cross-examination that, when he sent the email, he understood that he was agreeing to the terms stipulated by Bernstein to arrive at a settlement with Geller. Walia acknowledged under cross-examination that he had read this email and that, as of January 31, 2014, the parties – including his clients – had reached an agreement pertaining to Geller.

23Counsel for the Respondents argued that no settlement agreement had been reached between the Respondents and Geller because Walia did not directly convey to Bernstein his acceptance of Bernstein’s offer, and acceptance of an offer must be conveyed to the offeror before a contract can be found to exist (Schiller v. Fisher, 1981 49 (SCC), [1981] 1 S.C.R. 593). Silence does not equal acceptance. But here, it cannot be said that there was silence on the part of Walia as to the terms of settlement proposed by Bernstein. Dhillon acted as Bernstein’s agent in explaining Geller’s settlement offer to Walia, and then he acted as Walia’s agent in conveying the Respondents’ acceptance of that offer to Bernstein. Dhillon only told Bernstein that Walia had accepted his offer after Dhillon had received such acceptance in writing. In his email of January 31, 2014 to Bernstein and Walia, Dhillon set out the essential terms of the settlement agreement that both Bernstein and Walia had confirmed to him were acceptable. Dhillon acted as the parties’ secretary, as it were, to document the settlement that the parties had achieved. In these circumstances, if Walia, who had read Dhillon’s email, had not agreed with it, it was incumbent upon him to speak up and say so. He did not do so.

24Following the January 31, 2014 email confirming the settlement agreement, all counsel embarked on the process of implementing the agreement. This involved drafting the formal Minutes of Settlement and the accompanying releases and arranging for the various properties to be sold or transferred and monies to be paid. As was highlighted in Olivieri, at paras. 45-48, there is a difference between entering a binding settlement agreement and then implementing the agreement. By the beginning of February 2014, the parties in this litigation were in the process of implementing the agreement that had been reached.

25On February 3, 2014, Bernstein emailed Dhillon, Walia, and Harveer Sahota the Full and Final Release in favour of Geller that was to be signed by all of the other parties. He also asked Walia to arrange to have $15,000 paid into Bernstein’s trust account. On February 5, 2014, Walia responded to Bernstein, requesting Geller’s consent to the sale of certain properties against which there were certificates of pending litigation registered. Walia advised that the proceeds from the sale of those properties would be used to pay Bernstein’s fees of $15,000. Under cross-examination, Walia acknowledged that he intended to signal that “the settlement is on”. He realized that Bernstein thought that a release was part of the settlement. He did not tell Bernstein that his clients would not provide the requested release. He acknowledged under cross-examination that he did not think that the release being requested by Bernstein was a problem.

26On February 5, 2014, Dhillon forwarded draft Minutes of Settlement to all the other parties. All parties to the litigation were listed as parties to the Minutes of Settlement. Bernstein requested some minor drafting changes, which were approved by Dhillon.

27On February 10, 2014, Walia emailed Bernstein advising that he anticipated the matter would be resolved shortly and that his clients had agreed to pay Geller’s costs, but only after certain properties were sold. He indicated that he would be having the certificates of pending litigation removed from some properties, the properties would be sold, and funds would be held in trust until the Minutes were finalized. Sales of the properties were pending.

28In regard to the wording of the Minutes of Settlement, Walia did not provide his comments until February 19, 2014, when he advised Dhillon that his clients were balking at some of the financial arrangements between them and the Plaintiffs. There were further communications between Dhillon and Walia, culminating in Walia advising Dhillon on February 20 that his clients would not be signing the Minutes of Settlement due to a term in the agreement relating to their financial obligations to the Plaintiffs. By March 7, 2014, Walia was advising Dhillon that his clients were no longer prepared to pay Geller’s costs of $15,000.

29The communications from Walia from February 19 forward were not part of negotiations pending conclusion of a final agreement; they were attempts to renegotiate or resile from the terms of the agreement.

Was there an agreement on the essential terms of the contract?

30The policy of the courts is to encourage litigants to settle their disputes. Therefore, the court should not be too demanding in finding that there is not the necessary degree of certainty in any of the agreement’s essential terms (Olivieri, at para. 50).

31In regard to that part of the settlement agreement relating to Geller, there were only two essential terms: (1) payment to Geller of $15,000; and (2) a full and final release in LawPRO’s standard form. As is apparent from the emails and the cross-examinations of counsel, all parties understood that these were essential terms, and all had agreed to them by January 31, 2014.

32In Bernstein’s initial email of January 22, 2014, he stipulated that the release would have to be in LawPRO’s standard form. Therefore, there was no uncertainty or confusion as to the nature of the release sought. But even had Bernstein not stipulated the exact wording of the release, this would not have meant that no settlement had been arrived at until the release had been drafted. Where a provision in a settlement agreement is that the parties will provide each other with full and final releases, further agreement on the specific wording of those releases is not required before there is a binding settlement agreement, unless there is some indication that the parties’ settlement was conditional on such further agreement (Olivieri, at paras. 45-48).

Is there any reason why the settlement should not be enforced?

33No reason has been advanced as to why, if it is found that a binding settlement agreement existed, it should not be enforced. There is no evidence that Walia misunderstood his clients’ intentions or instructions, that Walia misunderstood the terms of the proposed agreement, or that he did not express himself accurately or in accordance with his intentions when he communicated with other counsel.

34It is apparent from the emails and from the cross-examination of Walia that this was a situation where his clients agreed to a final settlement and then changed their minds and attempted to resile from that agreement.

35In his email to Dhillon on March 7, 2014, Walia said that “getting proper instructions have been equivalent of getting water out of a rock”. In a further email to Dhillon on March 10, 2014, Walia stated: “…I am not sure exactly what my clients are doing lately … Given all the flip flop by my client lately I really want to run through each line of the agreement with him, so that I’m not put into a conflicting position.”

36There is no reason why the settlement agreement arrived at by the parties should not be enforced.

Disposition

37For these reasons, the order of Matlow J. dated February 2, 2015 is set aside. Judgment is granted to Geller pursuant to the terms of settlement arrived at by the parties. Geller has already been paid $15,000 by the Plaintiffs and is not seeking a further $15,000 from the Respondents. Within 14 days, the Respondents shall deliver a full and final release to Geller in the standard form used by LawPRO, as set out in Bernstein’s February 3, 2014 email to Dhillon, Walia, and Harveer Sahota.

Costs

38Geller is seeking his costs for the motion before Matlow J., the motion for leave to appeal before Molloy J., and this appeal on a partial indemnity basis in the total amount of $25,960. The Respondents’ costs, all in, for the three matters are estimated to be $22,380.

39The motion to enforce the settlement involved several legal issues and required a review of months of emails and other communications. Cross-examinations were held. The motion for leave to appeal required a separate analysis. Although the materials on the appeal were mostly the same materials used on the original motion and on the motion for leave, nevertheless, counsel had to review all of these materials and related jurisprudence prior to the various hearings. No issue was raised with either the hourly rate or the docketed hours submitted by Geller’s counsel, and I note that the Respondents’ costs were very close to those of Geller. The Respondents did not make any settlement offer that could be considered reasonable – even at the leave stage.

40In these circumstances, it is fair and reasonable for the Respondents to pay Geller’s costs, fixed in the amount of $25,000 inclusive of disbursements and HST, and I so order.

___________________________ AITKEN J.