Court File and Parties

Milton Court File No.: 365/12 Date: 2017-03-14 Superior Court of Justice - Ontario

Re: 1198601 Ontario Limited operating as Patra Ironworks & Railings, Plaintiff v. 152610 Canada Inc. operating as Laurin General Contractor and Laurin & Company, Defendants

Before: Daley RSJ.

Counsel: Ann A. Hatsios, for the Plaintiff Charles Simco, for the Defendants

Heard: December 15, 2016

Endorsement

Background and Evidentiary Record:

[1] This action was brought to enforce a construction lien for materials and services supplied by the plaintiff in respect of a municipal project in Burlington, Ontario.

[2] The trial of this action was set to proceed in April 2014 at the trial sittings at Milton; however, the parties came to an agreement to settle the action on the eve of trial. Minutes of settlement were finalized as between the parties.

[3] The defendants brought a motion to enforce the terms of the minutes of settlement.

[4] The motion proceeded before Murray J. on October 23, 2014 and he released an Endorsement on October 27, 2014. In that endorsement, the motion judge made determinations which can be summarized as follows:

(1) that the settlement agreement between the parties was valid and enforceable;

(2) that the defendants were responsible for the cost of non-destructive testing;

(3) that the defendants were not responsible for the cost of destructive testing or remediation; and

(4) that no costs were payable on the motion.

[5] At the conclusion of his Endorsement, in view of the plaintiff’s counsel’s change in position during the argument of the motion, Murray J. directed that a conference call be scheduled to “determine what, if anything remains for the court to decide”.

[6] At the conclusion of the attendance on the return date of the motion, this conference call was scheduled to proceed on October 30, 2014. After this conference call was scheduled during the attendance on October 23, 2014, the transcript of the proceeding on that date includes an exchange between the judge and counsel for the defendant where the judge inquired of counsel as follows: “Is there anything else for today then?” Counsel responded: “I don’t believe so, Your Honour.”

[7] It is common ground that the conference call did occur with Murray J., as scheduled. However, counsel advised him that, in light of the determinations made by the court in the Endorsement of October 27, 2014, the parties were engaged in settlement discussions.

[8] Murray J. had informed counsel that he was retiring from the court in December 2014. At no time prior to his retirement did counsel have further communication with the motion judge or the court regarding the decision outlined in the Endorsement. No Order was signed, issued and entered in respect of the Endorsement of Murray J. and no appeal was ever brought from it.

[9] This action was brought back before the court by way of a motion on behalf of the defendant returnable on November 15, 2016 for:

(1) an order directing a rehearing of the motion commenced by the defendant before Murray J. due to his retirement before the hearing was completed; and

(2) in the alternative, an order setting aside the endorsement of Murray J. of October 27, 2014 and re-listing this action for trial.

[10] The plaintiff also brought a cross-motion returnable on the same date seeking:

(1) an order carrying the endorsement of Murray J., of October 27, 2014, into operation;

(2) an order requiring the defendant to comply with the settlement agreement of April 25, 2014 in accordance with the endorsement of Murray J.; and

(3) in the alternative, a declaration that the defendant has made further performance under the settlement agreement impossible and an order that the settlement funds held in trust by counsel for the defendant be released to the plaintiff.

Positions of the Parties

The Defendant’s Position:

[11] It is the position of the defendant that the motion that proceeded before Murray J. should be reheard on the basis that:

(a) no decision was made within the meaning of section 123 of the Courts of Justice Act; and

(b) in the alternative, if a decision was made, it may be varied and reconsidered as no formal order has been issued and on the further basis that the motion judge misapprehended the evidence and there had been a denial of natural justice.

The Plaintiff’s Position:

[12] It is the position of the plaintiff that the provisions of s. 123 of the Courts of Justice Act are not engaged such that an order granting a rehearing of the matter before Murray J. should be made. It is submitted that s. 123(4) has no application in that Murray J.’s endorsement is a “decision” within the meaning of that subrule and as such no rehearing of the matter should be ordered.

[13] It is further submitted on behalf of the plaintiff that the endorsement of Murray J. should be declared as in effect and enforceable and that there are no remaining issues to be determined.

Legal Framework:

[14] The defendant’s motion seeking a rehearing of the motion argued before Murray J., having been brought under s. 123 of the Courts of Justice Act, R.S.O. 1990, c. C.43, must be determined by the “chief judge” as defined in section 123(1) as: “a person having authority to assign duties to the judge”, which is in this case the Regional Senior Judge.

[15] A rehearing of a proceeding within the terms of s. 123 is open for consideration by the court where no decision has been given by the judge in question.

[16] There is no legal requirement that a formal order be signed, issued and entered in accordance with the decision of the court: Johnston v. Stewart (1994), 116 D.L.R. (4th) 180, at para. 22, before that decision of the court comes into full force and effect.

[17] Rule 59.06(2)(c) of the Rules of Civil Procedure allows a party to a proceeding to seek an order to carry into operation an order made by another judge. The jurisdiction conferred by this rule “permits a judge to give effect to the clear intent of another judge’s order, particularly in circumstances such as this where the parties cannot access the original judge.”: Johnson v. Ontario (Minister of Finance), 2015 ONSC 7927 (Div. Ct.), at para. 10.

[18] Rule 59.06 reads as follows:

59.06 (1) An order that contains an error arising from an accidental slip or omission or requires amendment in any particular on which the court did not adjudicate may be amended on a motion in the proceeding. R.R.O. 1990, Reg. 194, r. 59.06 (1).

Setting Aside or Varying

(2) A party who seeks to,

(a) have an order set aside or varied on the ground of fraud or of facts arising or discovered after it was made;

(b) suspend the operation of an order;

(c) carry an order into operation; or

(d) obtain other relief than that originally awarded,

may make a motion in the proceeding for the relief claimed. R.R.O. 1990, Reg. 194, r. 59.06 (2).

[19] In Huron-Perth Children’s Aid Society v. K (R. C.), 2015 ONSC 5023, Leach J. at para 56, very succinctly outlined the governing principles with respect to the application of rule 59.06:

[56] The authorities suggest a number of general principles to be borne in mind in relation to Rule 59.06(2), which include the following:

• The court has discretion to reopen a motion to prevent a miscarriage of justice, where the integrity of the process is at risk or a principle of justice is at stake that requires reconsideration of the matter. This includes, but is not limited to, preventing a fraud on the court, the deliberate misleading of the court, and/or abuse of the court’s process. [1]
• While a court therefore may re-open a motion or other matter when it is just to do so, for such reasons. However, the court should do so only “sparingly”, in “exceptional circumstances”, and “with the greatest of care”. [2]
• In exercising its discretion to re-open a motion based on ‘new’ evidence, after an order has been made, the court will ask:
  • whether the evidence probably would have changed the result had it been presented to the court at first instance; and
  • whether the evidence could have been obtained, by the exercise of reasonable diligence, before the original hearing and disposition of the motion. [3]
• It may be preferable for the judge whose order is at stake to hear a Rule 59.06(2) motion, as that judge already is familiar with all of the evidence that led to the original order, and is well-suited to expeditiously determine whether an alleged fraud or new evidence requires the original order to be set aside. However, as with motions brought pursuant to Rule 37.14(1), the law does not require motions brought pursuant to Rule 59.06(2)(a) to be brought before the judge who made the original order. Rule 37.14(4) instead similarly permits such motions to be heard by “the judge who made it, at any place”, or “to any other judge, at a place determined in accordance with Rule 37.03”. [4]

[20]

56 The authorities suggest a number of general principles to be borne in mind in relation to Rule 59.06(2), which include the following:

• The court has discretion to reopen a motion to prevent a miscarriage of justice, where the integrity of the process is at risk or a principle of justice is at stake that requires reconsideration of the matter. This includes, but is not limited to, preventing a fraud on the court, the deliberate misleading of the court, and/or abuse of the court's process.
• While a court therefore may re-open a motion or other matter when it is just to do so, for such reasons. However, the court should do so only "sparingly", in "exceptional circumstances", and "with the greatest of care".
• In exercising its discretion to re-open a motion based on "new' evidence, after an order has been made, the court will ask:
  • whether the evidence probably would have changed the result had it been presented to the court at first instance; and
  • whether the evidence could have been obtained, by the exercise of reasonable diligence, before the original hearing and disposition of the motion.
• It may be preferable for the judge whose order is at stake to hear a Rule 59.06(2) motion, as that judge already is familiar with all of the evidence that led to the original order, and is well-suited to expeditiously determine whether an alleged fraud or new evidence requires the original order to be set aside. However, as with motions brought pursuant to Rule 37.14(1), the law does not require motions brought pursuant to Rule 59.06(2)(a) to be brought before the judge who made the original order. Rule 37.14(4) instead similarly permits such motions to be heard by "the judge who made it, at any place", or "to any other judge, at a place determined in accordance with Rule 37.03". [Citations omitted.]

[21] On a motion under rule 59.06(2), the conduct of the moving party is a relevant consideration to the exercise of the discretion conferred by this rule. Unreasonable and unexplained delay in pursuing such a motion may defeat any such motion to set aside an order under this rule: Mohammed v. York Fire & Casualty Insurance Co. (2006), 79 O.R. (3d) 354 (C.A.).

[22] In Mohammed, Lang J.A., on behalf of the court, in considering the application of Rule 59.06 and the desire for finality in litigation stated as follows at paras. 34–39:

34. Minutes of settlement are a contract. A consent judgment is binding. Both are final, subject to reasons to set them aside. Finality is important in litigation. This is so for the sake of the parties who reached their bargain on the premise of an allocation of risk, and with an implicit understanding that they will accept the consequences of their settlement. Finality is also important for society at large, which recognizes the need to limit the burdens placed on justice resources by re-litigation, a limitation reflected in the doctrine of res judicata: See Tsaoussis (Litigation Guardian of) v. Baetz (1998), 165 D.L.R. (4th) 268 (Ont. C.A.) at paras. 15, 17, 18.

35. For these reasons, the avenues to set aside a settlement and consent dismissal are restricted. Rule 59.06 sets out the procedure for setting aside such an order. It provides that a party may bring a motion in the original proceeding to “have an order set aside or varied on the ground of fraud or of facts arising or discovered after it was made”.

36. However, this court has said that the rule, while providing an expeditious procedure to determine whether an order should be set aside, does not prescribe or delineate a particular test: Tsaoussis at para. 39. Rather, to succeed, “[t]he appellant must demonstrate circumstances which warrant deviation from the fundamental principle that a final judgment, unless appealed, marks the end of the litigation line” (para.20).

37. In Tsaoussis, this court confirmed the importance of finality in litigation at para. 20:

Attempts, whatever their form, to reopen matters which are the subject of a final judgment must be carefully scrutinized. It cannot be enough in personal injury litigation to simply say that something has occurred or has been discovered after judgment became final which shows that the judgment awards too much or too little. On that approach, finality would become an illusion. The applicant must demonstrate circumstances which warrant deviation from the fundamental principle that a final judgment, unless appealed, marks the end of litigation.

39. In terms of rule 59.06(2)(a), the court in Tsaoussis stated at para. 44:

These and numerous other authorities (e.g. Whitehall Development Corp. v. Walker) recognize that the finality principle must not yield unless the moving party can show that the new evidence could not have been put forward by the exercise of reasonable diligence at the proceedings which led to the judgment the moving party seeks to set aside. If that hurdle is cleared, the court will go on to evaluate other factors such as the cogency of the new evidence, any delay in moving to set aside the previous judgment, any difficulty in re-litigating the issues and any prejudice to other parties or persons who may have acted in reliance on the judgment. The onus will be on the moving party to show that all of the circumstances are such as to justify making an exception to the fundamental rule that final judgments are exactly that, final. In a personal injury case, new evidence demonstrating that the plaintiff was inadequately compensated cannot, standing alone, meet that onus [citation omitted].

[23] As to the alleged misapprehension of the evidence by the motion judge, this motion to set aside the decision may be blocked by issue estoppel, which would bar from reconsideration legal rights or issues of fact that already been determined.

[24] Consideration of the issue estoppel involves a two-step test as follows:

(1) first, a court must determine if three threshold criteria are met:

(a) the same question has been decided in an earlier proceeding;

(b) the judicial ruling deciding it was final; and,

(c) the parties on the earlier proceeding or their privies are the same as on the current proceeding; and

(2) if these criteria are met, the court must normatively consider whether estoppel ought to be applied as a matter of discretion.

Analysis:

[25] In his endorsement, Murray J. made a determination with respect to the central issues to be decided on the motion, namely:

(1) whether the settlement agreement was valid and enforceable; and

(2), if so, whether the settlement agreement required the plaintiff or the defendant to be responsible for remedial work associated with destructive testing.

[26] The defendant’s notice of motion before Murray J. defined the issues to be determined by the court by the relief sought, namely as follows:

(a) An order that Laurin may complete Patra’s obligations under paragraph 4 of the settlement agreement and that the cost of same may be deducted from the settlement funds payable to Patra;

(b) In the alternative, an order that Patra complete its obligations under paragraph 4 of the settlement agreement by November 7, 2014, subject to the availability of the owner of the project;

(c) An order requiring Patra to complete its remaining obligations under the settlement agreement by November 14, 2014;

(d) An order that the letter of credit posted by Laurin with the Accountant of the Superior Court be delivered up for cancellation; and,

(e) An order for costs and directing that any such costs may be deducted from the settlement funds.

[27] The motion judge, in his endorsement, concluded that the plaintiff was not responsible for the cost of remedial work, effectively dealing with the relief sought in subparagraphs (a) and (b) above.

[28] With respect to subparagraphs (c) and (d) of the defendant’s motion, the uncontradicted evidence is that these items of relief were not pursued during oral submissions by counsel on behalf of the defendant.

[29] At the conclusion of submissions and at the time that the telephone conference call for October 30, 2014 was being scheduled with counsel, Murray J., in an exchange with counsel, stated as follows:

I wanted the matter to be dealt with today between businesspeople who could put their minds to it with fairness and with – not a sense of “gotcha”. Which I wouldn’t want to see for a whole host of reasons including, those kind of made an innocent mistake at the time. However, let me know when you want to proceed and if you want an adjournment to complete his proceeding – his change of position and have an opportunity to have him file material on that, I’ll do anything like that.

[30] Murray J. declined to award costs to either party on the motion.

[31] Counsel for the defendant did not return to the court seeking any relief whatsoever with respect to the determinations made by Murray J. until it brought its present motion, approximately two years after the endorsement was released.

[32] With respect to the defendant’s request for a rehearing of the motion argued before Murray J., I have concluded that section 123 of the Courts of Justice Act is not engaged in that the judge did give a decision.

[33] It is notable that Murray J. provided careful and detailed reasons in his endorsement for the conclusions he reached. As noted, in his decision the motions judge made determinative findings and concluded that the settlement agreement between the parties was valid and enforceable.

[34] With respect to the determination as to the cost of remedial work necessitated by nondestructive testing, Murray J. concluded that the responsibility for the remedial work in relation to the welding rested with the plaintiff and he stated as follows in respect of the settlement agreement in the transcript of the proceedings:

….The document is – couldn’t be clearer… Pending completion of certain nondestructive testing as marked particularly set out and any necessary or remedial work in relation to the welding to be carried out by Patra. Remedial work relates to the welding. The nondestructive testing is – it’s what’s referred to…

[35] Given the foregoing, I have concluded that the defendant’s motion for a rehearing of the motion before Murray J. must be dismissed as there is no basis for such an order pursuant to section 123 of the Courts of Justice Act.

[36] As to the defendant’s alternative request that the decision be varied on the basis of the judge’s misapprehension of the evidence and the denial of natural justice during the course of the hearing of the motion, for the reasons that follow I have concluded that those aspects of the defendant’s motion must be dismissed as well.

[37] Firstly, for the reasons outlined above in the Mohammed decision, delay in moving to set aside a previous judgment is one of the significant considerations to be examined on a motion under rule 59.06(2). In this case, there was a lengthy and unexplained delay in the defendant moving, of approximately two years before the present motion was brought. Further, there is no evidence, and most importantly, no new evidence that would form a basis for granting relief under rule 59.06.

[38] Counsel were given every possible opportunity by the motion judge to make further submissions, to even provide additional evidence, if necessary, and to continue with further submissions before him if so instructed. After the conference call of October 30, 2014, counsel for the defendant took no steps to have the matter brought back before the motion judge.

[39] While counsel for the defendant argues that the motion judge misapprehended the meanings of the terms “destructive testing” and “non-destructive testing”, that position would have been more properly put forward on behalf of the defendant by way of an appeal.

[40] The defendant’s motion on this aspect of the relief sought is really in the nature of an appeal and as such it is not open for consideration by this court on this motion.

[41] As to the submission that the defendant was denied natural justice in the manner in which the hearing of the motion was conducted, there is absolutely no evidence whatsoever that that occurred. Counsel for the defendant was essentially invited to seek an adjournment by Murray J., if so instructed, during the submissions on the motion and thereafter they had the opportunity, following the conference call with the motion judge on October 30, 2014, to request that the motion be reconvened. Neither of those options were taken up by counsel for the defendant. As such there is absolutely no basis upon which I can conclude that the defendant was denied natural justice.

[42] Further, for the reasons expressed in Mohammed (at para. 38) the defendant has failed to demonstrate circumstances which would warrant deviation from the fundamental principle that a final judgment, unless appealed, marks the end of litigation.

[43] In view of my conclusions set out, there is no need to consider the Application of issue estoppel.

[44] For these reasons, I have concluded that the defendant’s motion must be dismissed in its entirety.

[45] As to the plaintiff’s motion, for these reasons I have also concluded that the plaintiff’s motion must be granted and as such an order shall issue in favour of the plaintiff in accordance with subparagraphs (a) and (b) of the plaintiff’s amended Notice of Motion. The plaintiff’s amended Notice of Motion refers to the Minutes of Settlement as dated on April 25, 2016 which is clearly in error and should read 2014.

[46] In the event counsel are unable to resolve the issue of costs, counsel for the plaintiff shall file submissions as to costs of no longer than three pages, along with a bill of costs within 15 days. Counsel for the defendant shall file similar costs submissions within 15 days thereafter. No reply submissions shall be filed without leave.

Daley RSJ. Date: March 14, 2017