Reasons for Judgment

COURT FILE NO.: CV-18-5056-ES DATE: 20190521 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

JOHN LOUIS COX Applicant (Responding Party)

– and –

BRETT BAKER, personally and in his capacity as the Trustee of THE PITCHER FAMILY TRUST, BRENT BAKER and MARNIE HUTCHINSON Respondents (Moving Parties)

Counsel: Raj Napal, for the Applicant (Responding Party) Angela Casey and Adam Giancola, for the Respondents/Moving Parties

HEARD: May 6, 2019

DIETRICH J.

Overview

[1] At the time of her death on February 9, 2017, Donna Cox (“Donna”) and her husband John Louis Cox (“Mr. Cox”) were residing in a residence at 19 Ball Avenue East in Beaverton, Ontario (the “Property”). The Property was owned by The Pitcher Family Trust (the “Trust”).

[2] In addition to her husband, Donna was survived by her children Brett Baker (“Brett”) and Brent Baker (“Brent”).

[3] In November 2017, Mr. Cox moved out of the Property. Brett, Brent and Donna’s niece Marnie Hutchinson (“Marnie”), as the beneficiaries of the Trust, then decided to renovate the Property, which had fallen into disrepair.

[4] In March of 2018, Mr. Cox brought the within application against Brett, as Trustee of the Trust, and the three beneficiaries personally. In his application, among other things, Mr. Cox seeks an interest in the Property by way of resulting and/or constructive trust.

[5] In May 2018, Mr. Cox and Brett had a chance meeting at Donna’s gravesite. Brett, Brent and Marnie allege that at that meeting Mr. Cox agreed to abandon his application and, on July 6, 2018, they entered into a binding agreement with Mr. Cox to permit him to do so, without costs, provided he sign a release, which he agreed to do. Mr. Cox alleges that, for a number of reasons, there never was a binding settlement agreement.

[6] Brett, Brent and Marnie bring this motion pursuant to Rule 49.09 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), to enforce the settlement agreement.

[7] For the reasons that follow, I find that an agreement to settle was reached between the parties. Based on all of the evidence before the court, that agreement should be enforced.

Factual Background

[8] The Trust was established by Thelma Pitcher in 1993 as a legacy trust for the benefit of her daughters and subsequent generations.

[9] Mrs. Pitcher’s daughters, being the late Donna and the late Dianne McQuhae (“Dianne”), were named as the Trustees of the Trust. Brett was named to replace either or both of Donna and Dianne should they become unwilling or unable to act as Trustees.

[10] Dianne predeceased Donna, and Brett became a co-Trustee of the Trust with his mother Donna. On Donna’s death, Brett became the sole Trustee. The beneficiaries of the Trust were then Donna’s children Brett and Brent, and Dianne’s daughter Marnie.

[11] Brett, Brent and Marnie agreed to a vesting of the Property in Brett so that the Property could be mortgaged to finance the renovations. The vesting was ordered by this court in January 2018 and the beneficiaries mortgaged the Property.

[12] Mr. Cox brought his application following the re-financing. Brett, Brent and Marnie retained counsel to respond to the application. However, once Brett and Mr. Cox discussed settlement at Donna’s gravesite in May 2018, counsel for both parties focused on documenting the settlement. The settlement negotiations between Angela Casey, representing Brett, Brent and Marnie, and Pia Hundal, representing Mr. Cox, took place via email.

[13] Finalization of the documentation evidencing the settlement came to a halt when Mr. Cox instructed his counsel that he would not sign a mutual release.

[14] Brett and Mr. Cox are on common ground insofar as they had a chance meeting at Donna’s gravesite on May 13, 2018; they discussed Mr. Cox’s application; Mr. Cox said that he would call his lawyer and withdraw his application; they shook hands; and Mr. Cox waved at Brett as Brett left the cemetery in his truck.

[15] Following that meeting, Brett advised Ms. Casey of Mr. Cox’s intention to withdraw his application. Ms. Casey sought confirmation of this advice from Ms. Hundal via email. On May 28, 2018, Ms. Hundal replied by email stating: “I can confirm that we have instructions to abandon the application. Will your clients consent to an order dismissing our client’s application as abandoned on a without costs basis?” Mr. Cox admitted under cross-examination that when he instructed Ms. Hundal of his decision to withdraw his application she cautioned him that it was a final decision and advised him to think about it for a week.

[16] Ms. Casey replied on May 29, 2018 with confirmation that her clients would consent to a dismissal without costs, provided that Mr. Cox sign a release (the form of which was attached to the email message).

[17] After a few follow-up email messages from Ms. Casey, Ms. Hundal sent an email on July 5, 2018 stating: “Our client advises me that his understanding from his discussion with Brett was that they would all sign a mutual release. … If your clients are agreeable to same, I am happy to tweak the language of your draft to make it a mutual release.”

[18] Ms. Casey responded the next day, via email, with: “Our clients are agreeable to signing a mutual release.”

Positions of the parties

[19] Brett, Brent and Marnie take the position that an agreement was made between them and Mr. Cox on July 6, 2018. The agreement was that Mr. Cox’s application would be dismissed without costs and all parties would sign a mutual release, as evidenced in the email exchanges between their respective counsel. They assert that the result is a binding and enforceable settlement in writing.

[20] Mr. Cox takes the position that the parties do not have an enforceable settlement. He asserts that because the parties had not agreed on the specific terms of the mutual release, an essential term was missing from the settlement and, therefore, it is not binding.

[21] Mr. Cox further asserts that he entered into the agreement with Brett at a time when he was under duress and he was coerced into it. Therefore, he argues, it was not a valid agreement and cannot be enforced.

[22] In his motion materials, Mr. Cox also asserted that, in fact, he had terminated his retainer with Ms. Hundal and that she had no authority to engage with Ms. Casey in settlement discussions. On the motion, Mr. Cox conceded that there was insufficient evidence to show that he had terminated his retainer with Ms. Hundal and he did not pursue that argument.

Analysis

[23] Rule 49.09 of the Rules provides that:

Where a party to an accepted offer to settle fails to comply with the terms of the offer, the other party may,

(a) make a motion to a judge for judgment in the terms of the accepted offer, and the judge may grant judgment accordingly; or

(b) continue the proceeding as if there had been no accepted offer to settle.

[24] In Bank of Montreal v. Ismail, 2012 ONCA 129, at para. 5, the Court of Appeal applied the following “undisputed” test on a motion brought under rule 49.09:

1. Was an agreement to settle reached; and
2. If so, should it be enforced on all of the evidence?

1. Was an agreement to settle reached?

[25] At the preliminary stage, in determining whether a settlement has been reached, ordinary contract law principles relating to offer and acceptance apply to determine whether: i) the parties had a mutual intention to create a legally binding contract objectively; and ii) the parties reached an agreement on all essential terms of the settlement: Olivieri v. Sherman, 2007 ONCA 491, at paras. 41 and 44, and Smith v. Coca Cola Bottling Co., 2017 ONSC 396, at para. 8.

i. Evidence of mutual intention

[26] The email exchanges between Ms. Hundal for Mr. Cox, and Ms. Casey for Brett, Brent and Marnie, plainly evidence a mutual intention to create a legally binding agreement. On May 14, 2018, the day following his meeting with Brett in the cemetery, Mr. Cox sent an email message to Ms. Hundal regarding the application stating: “May this serve as your authorization and direction to immediately cease any and all action relating to the above matter and to prepare my final statement of account. My decision is based upon information provided during a chance meeting with Brett Baker during my visit with Donna yesterday afternoon at the cemetery.” Mr. Cox initially attempted to argue that in this correspondence to Ms. Hundal, he was not giving her instructions with respect to the application, but, rather, was terminating his retainer with her. He abandoned this argument on the motion. I find that the evidence, including several subsequent email exchanges with Ms. Hundal, in which he provides further instructions relating to the settlement, including his request for a mutual release, does not support this argument in any event.

[27] According to the record, on May 16, 2018, Ms. Casey sought confirmation from Ms. Hundal of Mr. Cox’s agreement to abandon his application; and on May 18, 2018, Ms. Hundal spoke to Mr. Cox over the phone and suggested that he take a week to think about his decision.

[28] On cross-examination, Mr. Cox admitted that on May 28, 2018, he received an email from Ms. Hundal confirming his instructions to her. It read: “I just wanted to confirm that I received your instructions to withdraw the application, and I will be emailing counsel for the other side regarding same this morning.” Later that day, Ms. Hundal confirmed to Ms. Casey that Mr. Cox would abandon his application and she sought agreement from Ms. Casey’s clients to an order dismissing the application on a without costs basis. On May 29, 2018, Ms. Casey confirmed her clients’ agreement to the dismissal without costs, provided Mr. Cox agree to sign a release in the form attached to the email. Ms. Hundal responded by email on July 5, 2018, requesting, on behalf of Mr. Cox, that the release be a mutual release, which she offered to draft. On July 6, 2018, Ms. Casey confirmed that her clients would sign a mutual release.

[29] The record shows that on June 4, 2018, prior to Ms. Hundal requesting a mutual release, she sent an email to Mr. Cox regarding the proposed release, which included this warning: “what you need to understand is that this bars you from ever making any claim whatsoever against the estate or the Pitcher Family Trust. I appreciate that over our recent calls and emails that this is what you want, but I just want you to know that cannot change your mind at a later date.”

[30] On July 10, 2018, Ms. Hundal wrote to Mr. Cox regarding his decision to withdraw his application as follows: “To summarize our conversation, I advised you that I believe you have a binding agreement to withdraw your application (with prejudice) and the other side agreed to sign a mutual release. When we first discussed your decision, I explained to you that it was a final decision.”

[31] Based on the email exchanges between counsel and the communications between Ms. Hundal and Mr. Cox, I find that a mutual intention between the parties to create a legally binding contract has been objectively established.

ii. Agreement on all essential terms of the settlement

[32] Mr. Cox asserts that there was no enforceable settlement because the agreement lacked an essential term, being the specific terms of the mutual release.

[33] The agreement between the parties had been reduced to writing through the email exchanges between counsel by July 6, 2018. Subsequently, Mr. Cox refused to sign the mutual release, which he specifically requested and which his counsel had agreed to draft. He asserts that the terms of the mutual release are essential terms of the agreement and, without agreement on those terms, there can be no enforceable settlement.

[34] Mr. Cox relies on the case of Chittle v. Estate of Chittle, 2018 CarswellOnt 12048, 2018 ONSC 4139, in support of his assertion. However, unlike in the case at bar, in the Chittle case, the court found that there was no evidence on an objective basis of a consensus ad idem between the parties and no evidence of an unqualified acceptance by the plaintiffs of the defendant’s offer to settle. Accordingly, the motion judge ordered a mini-trial to evaluate the credibility of the parties to assist in determining whether a binding settlement had been reached. In the case at bar, the email exchanges between counsel evidence both the offer by Mr. Cox to withdraw his application and the unqualified acceptance of the offer by Brett, Brent and Marnie, provided that Mr. Cox sign a release. Mr. Cox agreed to sign a release.

[35] Further, the jurisprudence on whether the form of release constitutes a material term does not assist Mr. Cox. In Bogue v. Bogue (1999), 46 O.R. (3d) 1 (C.A.), [1999] O.J. No. 4310, the Court of Appeal held that even if an agreement still needs to be reduced to writing and the precise wording of a release still needs to be negotiated, these matters do not preclude a court from enforcing a settlement where the essential terms of the agreement have been negotiated. I find the case at bar to be the very case in which the wording of the release needed to be finalized, but this did not preclude a settlement on the essential terms that had been negotiated and agreed. Specifically, Mr. Cox had agreed that he would abandon his application, on a without costs basis, and he would sign a release. Mr. Cox then negotiated for a mutual release to which the other parties agreed. That the terms of the mutual release were not finalized, as a consequence of Mr. Cox’s unwillingness to instruct his counsel in that regard, does not stand in the way of the settlement on the material terms.

[36] The issue is whether the material terms were agreed, whether or not in writing or fully documented: Sahota v. Sahota, 2016 ONSC 314 (Div. Ct.), at para. 16. Further, at para. 32 of Sahota, citing Olivieri, the court states: “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.” In the case at bar, I find that the parties’ settlement was not conditional on further agreement on the specific wording of the mutual release.

[37] In Hodaie v. RBC Dominion Securities, 2011 ONSC 6881, at paras. 16-23, aff’d 2012 ONCA 796, Dambrot J. held that agreement to the essential terms is not conditional upon the execution of a release; settlement implies a promise to furnish a release unless there is an agreement to the contrary. The court further noted that no party is bound to execute a complex or unusual form of release; the release must reflect the agreement between the parties.

[38] In 1648290 Ontario Ltd. v. Bhabha, 2018 ONSC 1044, the parties agreed to a settlement, including a release, and subsequently could not agree on the form of the release. The court concluded that the language of the release was not a term of the agreement.

2. Should the settlement be enforced?

[39] The Essential Guide to Settlement in Canada, Benjamin M. Bathgate & D. Brent McPherson, eds., (Toronto: LexisNexis, 2013), at pp. 342-343, sets out the following defences that can be raised by a defaulting party under rule 49.09. These contract defences usually involve circumstances such as: i) miscommunication of a client’s instructions to its legal counsel, or genuine mistake as to the terms of the settlement; ii) misstatements or misunderstandings between the parties with respect to certain fundamental facts upon which the settlement agreement is based; iii) questions as to the competence and independence of the party entering into the settlement agreement (duress/undue influence/unconscionability); and iv) illegality of an agreement.

[40] In his responding record, Mr. Cox relies on the defences of fundamental miscommunication between his instructions and the steps taken by Ms. Hundal. Specifically, he alleges that in his email communication to Ms. Hundal dated May 14, 2018, he was actually terminating her and not instructing her. As noted, the evidence does not support this assertion, especially in light of the fact that Mr. Cox continued to instruct Ms. Hundal, at least, through to early July of 2018. Further, he refused to produce copies of invoices sent to him by Ms. Hundal during this period.

[41] Mr. Cox also relies on the defence of duress and asserts that he was coerced into agreeing to the settlement. Mr. Cox’s testimony includes allegations that he was being threatened by Brett, beginning in July, 2017, and that he had begun to fear for his safety. He alleges that the only reason he shook Brett’s hand at Donna’s gravesite was because he feared for his safety in Brett’s company. Despite these alleged threats said to have taken place in 2017, Mr. Cox makes no mention of them in the affidavit he swore in 2018 in support of his application. There is no evidence that he took steps to call the police or seek a peace bond in respect of Brett’s alleged threats and intimidation. Apart from asking Ms. Hundal to enforce a protocol that communications between Mr. Cox and Brett, Brent and Marnie take place between their respective lawyers as opposed to themselves directly, there is no evidence that he discussed his fear of Brett with Ms. Hundal. There is no evidence to suggest that Mr. Cox confided in anyone, including his counsel, that he was being coerced into agreeing to withdraw his application or that he was doing so under duress.

[42] Mr. Cox’s sworn testimony is that he offered to drop his case, he shook Brett’s hand at the end of their discussion at the cemetery and waved to Brett as Brett got into his truck to leave the cemetery. Mr. Cox’s later testimony, that he shook Brett’s hand out of relief that Brett was leaving the cemetery and that his “wave” was in the nature of a single middle finger wave, as opposed to a friendly wave, is not credible. In none of Mr. Cox’s communications with his counsel is there any suggestion that he felt threatened by Brett or that Brett coerced him into agreeing to abandon his application.

[43] At this second stage in the analysis, the determination of whether to enforce a settlement under rule 49.09, all relevant factors disclosed by the evidence must be taken into account without overemphasizing one factor over the others. There is a residual discretion in the court, to be exercised in exceptional circumstances, to refuse to enforce a settlement agreement where doing so would create a clear injustice: Brzozowski v. O’Leary, [2004] O.J. No. 3230, at para. 44, cited with approval in Hilco Industrial Acquisition Canada ULC v. Engreen Maitland Inc., 2016 ONSC 1792, at para. 61. With respect to this discretion, Justice Sheard wrote in Hilco, at para. 63: “In deciding whether or not to enforce an accepted offer, the court may consider whether the parties’ pre-settlement positions remain intact; whether there would be prejudice to the party seeking to enforce the settlement, if the settlement were not enforced; the extent of the prejudice to the party seeking to resist the settlement if the settlement was enforced; and whether third parties who were awarded [would] be affected if the settlement was not enforced (Centorame v. Centorame, 2012 ONSC 6405 at para. 65 citing Milios v. Zagas, [1998] O.J. No. 812 (Ont. C.A.) at para. 21).”

[44] Brett, Brent and Marnie assert that the settlement should be enforced because they relied on Mr. Cox’s agreement and would be prejudiced if it is not enforced. If it is not enforced, they would not only lose the benefit of not having to defend Mr. Cox’s application, but the lack of enforcement could also be to their financial detriment. In Mr. Cox’s application, he claims a legal interest in the Property held by the Trust, but Brett has already incurred significant expense in repairing and renovating the Property in the firm belief that the Property is beneficially owned exclusively by Brent, Marnie and him and that there was no cloud on the title.

[45] Brett, Brent and Marnie further assert that there is less prejudice to Mr. Cox if the settlement is enforced as compared to the prejudice they will suffer if the settlement is not enforced. They assert that if the settlement is enforced, Mr. Cox will receive the benefit of a full and final release from claims against him for past conduct that caused him to request a mutual release. Further, he will have no liability for the legal costs incurred by Brett, Brent and Marnie relating to his abandoned application.

[46] The principle of finality demands that settlements entered into with the assistance of legal counsel be upheld. It is a matter of “good public policy” to encourage settlement and it would be inconsistent with that approach not to enforce a settlement unless there is good reason for doing so: Sentry Metrics Inc. v. Ernewein, 2013 ONSC 959, at para. 19.

[47] In Donaghy v. Scotia Capital Inc., [2004] O.J. No. 2157 (Sup. Ct.); aff’d 2009 ONCA 40, leave to appeal refused [2009] S.C.C.A. No. 92, Justice Karakatsanis (as she then was) wrote, at para. 15:

The principle of finality is an important principle. Settlements entered into with the assistance of counsel should be upheld except in the clearest of cases and in exceptional cases. There was no evidence of fraud or mistaken instructions. Counsel agreed on the payments and on the form of the release. There was no evidence of bad faith.

[48] I am satisfied on the evidence before the court, having taken into account all the relevant factors, that the case at bar is not an exceptional case. The settlement should be enforced; and the enforcement of the settlement will not lead to any injustice.

Disposition

[49] Judgment shall issue in accordance with the terms of the settlement agreement made on July 6, 2018, between the Applicant John Louis Cox and the Respondents Brett Baker, Brent Baker and Marnie Hutchison. The within application is dismissed.

Costs

[50] The Respondents/Moving Parties, having succeeded on their motion, are entitled to their costs. I have reviewed the Costs Outlines submitted by the parties. The Respondents seek $27,557.94, inclusive of HST and disbursements, on a partial indemnity basis (being 70% of full indemnity rates). The Applicant/Responding Party’s Costs Outline shows that, had he succeeded on the motion, he would have sought costs of $19,532.14, inclusive of HST and disbursements, on a partial indemnity basis (being 60% of full indemnity rates).

[51] The overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: Boucher v. Public Accountants Counsel for Ontario. Costs are in the discretion of the court: s. 131, Courts of Justice Act, R.S.O. 1990, c. C.43, and rule 57.01 of the Rules.

[52] Considering the factors set out in rule 57.01 of the Rules, I find that this matter, involving the enforcement of a settlement, was moderately complex, and of considerable importance to the parties. In succeeding, the Respondents have brought the litigation between themselves and the Applicant to an end.

[53] Counsel for both parties are experienced. The Respondents were represented by two lawyers on the motion, while the Applicant was represented by one lawyer, assisted by a paralegal. The combined hourly rate of counsel for the Respondents is considerably higher than the combined hourly rate of the legal representatives for the Applicant.

[54] In accordance with the aim of determining an award of costs that is fair and reasonable, having taken into account all of the relevant factors, I award the Respondents costs in the amount of $20,000, on a partial indemnity basis, inclusive of HST and disbursements, to be paid by the Applicant. On the facts of this case, I find these costs to be in the range of what the Applicant could reasonably expect to pay.

Dietrich J.

Released: May 21, 2019