31 Kingsbury Inc. v. Delta Elevator Company Limited, 2019 ONSC 3619

COURT FILE NO.: CV-18-00608160 DATE: 20190610 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

31 KINGSBURY INC. Plaintiff – and – DELTA ELEVATOR COMPANY LIMITED Defendant

Counsel: James Wortzman & John Paul Ventrella, for the Plaintiff Charles M. Gastle, for the Defendant

HEARD: May 7, 2019

FAIETA, j

Reasons for Decision

Introduction

[1] The Delta Elevator Company Limited brings this motion for the enforcement of a settlement agreement pursuant to Rule 49.09 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. For the reasons described below, I have granted Delta’s motion.

Background

[2] 31 Kingsbury Inc. owns a property in Kitchener, Ontario. Through a related company it commenced the construction of a five-storey medical office and retail building on the property. Gordon Schembri’s evidence is that he is the directing mind of both companies.

[3] By agreement dated December 21, 2015, the parties agreed that Delta would supply and install two elevators in the medical building for a price of $313,000.00 plus taxes (the “Sales Agreement”).

[4] The Sales Agreement provides for the following payment schedule:

Payment 1 Drawings Complete $15,500.00

Payment 2 Rails and Bracket Shipped $40,500.00

Payment 2 Rails Installed $15,500.00

Payment 3 Machine Shipped $62,000.00

Payment 3 Machine Installed $6,200.00

Payment 4 Running Car Shipped $77,500.00

Payment 4 Running Car Installed $31,000.00

Payment 5 Entrances Installed $12,500.00

Payment 6 Cab & Remaining Materials Shipped $31,000.00

Payment 6 Wiring and Remaining Installation Completed $12,500.00

Payment 7 Adjusted $8,800.00

Total $313,000.00

[5] Delta issued the following invoices and Kingsbury made the following payments:

Date Invoice No. Description Invoice Amount (with tax after holdback) Payment Holdback

03/31/2016 9133990 For drawings complete and inserts available. $15,763.50 $15,763.50 $1,550.00

03/20/2107 9156475 For machine shipped and installed $69,359.40 $69,359.40 $6,820.00

04/27/2017 9157904 For rails & brackets shipped and rails installed $56,952.00 $56,952.00 $5,600.00

06/24/2017 9162314 For running car shipped, running car installed and entrance installed $123,057.00 $123,057.00 $12,100.00

Sub-Total $265,131.90 $26,070.00

09/15/2017 9165159 For cab & remaining materials shipped and wiring remaining installation complete $44,239.00

10/18/2017 9166597 For job complete $8,949.60

10/18/2017 9166598 For amount due for holdback $35,369.00

Sub-Total $88,581.00

[6] Brian Elliott, a licensed elevator mechanic for Delta, states that the Sales Agreement required that the installation of the elevator begin on June 15, 2016, when the construction of the building was to have reached a watertight status. The elevator was to have been completed by July 31, 2016. The building did not receive watertight status until July 31, 2017. Elliott states that the installation of the elevators was completed by September 15, 2017 once the elevators were adjusted to operate within the building.

[7] Delta states that the word “adjusted” means that once the installation of an elevator is complete, a series of adjustments are made to establish the parameters by which the elevator will operate within the building itself. Elliott states that the adjustments occurred and were completed in September, 2017 with weights placed in the elevator cab simulating the estimated weight of the flooring at the time testing was done.

[8] Kingsbury commenced this action on November 2, 2018. It filed a Statement of Claim on November 14, 2018. It sought a mandatory order compelling Delta to complete all work and testing necessary to ensure that the elevators were operational. It also sought damages of $1 million for breach of contract and negligence. Amongst other things, Kingsbury alleges that Delta refused to schedule inspections by the TSSA until it is fully paid under the Sales Agreement.

[9] Kingsbury was apparently unaware that Delta was not permitted by s. 25(1) of O. Reg. 209/01 under the Technical Standards and Safety Act, 2000, S.O. 2000, c. 16, to schedule the initial inspection of the elevators by the TSSA until it had conducted a preliminary examination and certified that, amongst other things, that the installation complied with the applicable regulatory requirements.

[10] Kingsbury allowed Delta to conduct the required preliminary inspection on December 3-5, 2018. Delta provided this service at no cost to Kingsbury. Delta advised Kingsbury that it had to fix tripping hazards at various floors where the hallway floor had not been laid, install insulation at the corrugated steel at the top of the hoist way, and install door closers on the control space doors. Delta could not schedule a TSSA inspection until this work had been completed. At the same time, Delta conducted a full load test which required that 3,000 pounds of weights be placed on the elevator. Delta left the weights on site in the expectation that the TSSA inspection would occur within a week. On December 18, 2018, Kingsbury refused to allow Delta to retrieve the weights.

[11] Shortly after it commenced this action, Kingsbury delivered a Notice of Motion, which was ultimately heard on February 11, 2019, for an order to compel Delta to schedule the TSSA inspection of the elevators forthwith so that elevators could be put in service.

[12] In the interim, the parties attempted to settle the motion as Kingsbury was anxious to have its elevators available for public use and Delta was anxious to be fully paid under the Sales Agreement.

Settlement Discussions

[13] Counsel for Delta sent the following letter dated December 14, 2018 to counsel for Kingsbury. The letter complains about Kingsbury’s failure to pay the amounts owed under the Sales Agreement and offers to arrange for the requested TSSA inspection on certain terms. The letter states:

This is further to your letter of December 13th, 2018.

Delta Elevator Co Ltd (“Delta”) completed its work pursuant to the contract between our clients in September 2017, when it finished the installation of the elevators. There was significant delay by your client in completing construction of the building thereafter (which, apparently, is still on-going). Delta Elevator attempted to collect the outstanding invoices and at no time was given any explanation for the non-payment.

On October 29, 2018, over a year after the completion of the work, you notified us that your client would not make payment of the outstanding accounts until the “elevators is in working order and the TSSA has issued the required approval”.

On December 3, 2018, Delta returned to 31 Kingsbury to test and assess the elevators in the light of the delay, after your client initially refused to allow Delta to do so. Delta offered to have your client’s representative attend the assessment, subject to the provisions of the B44 Code. Your client could have had its elevator representative attend the assessment but either failed or refused to participate in the assessment of the elevator.

The elevators were operated on an automatic setting and went to the various floors; they performed in an optimal manner. Your client has previously suggested that Delta had failed to perform its duties under the contract in 2017. Delta’s ability to operate the elevators on December 3, 2018, confirms that the installation was complete in September 2017.

Your client has claimed that it has had no opportunity to confirm that the elevators are in operating order, despite having received our correspondence of December 7, 2018. Delta offered in the past to meet your client at the building and let its representative assess the elevators. Delta is prepared to give your client’s representative the opportunity to do so prior to the TSSA inspection.

With respect to public use of the elevators, the TSSA inspection cannot be scheduled because your client has not completed its work pursuant to the contract. Our letter of December 7, 2018, describes the remaining general contractor’s work which has yet to be completed. This includes repairing all tripping hazards at the various floors where the flooring has not been laid, installing insulation at the corrugated steel at the top of the hoistway, and installing door closers on the control space doors. Delta must attend the premises and confirm the work has been completed before the TSSA inspection may be scheduled.

Our client is entitled to be paid according to the milestones in the contract prior to a TSSA inspection being completed. Payment cannot be withheld pending the TSSA inspection, particularly given the delay that was caused by your client. Delta is also entitled to the holdback given the contract was completed in September 2017. It is the completion of the contract that triggers payment of the holdback, and not the additional documentation that your client claims must be delivered.

Without prejudice to this position, our client is prepared to arrange the TSSA inspection on the following terms:

(a) Your client completes its outstanding work pursuant to the contract and allows Delta access to inspect the site and confirm the work has been completed;

(b) The sum of $88,558.10 (the “trust funds”) shall be paid into Teplitsky Colson’s trust account prior to the TSSA inspection subject to the following terms:

i. the sum of $53,189.10 shall be paid from the trust funds to Delta within three days of the issuance of a license for both elevators by the TSSA;

ii. the sum of $35,369.00 representing the holdback shall paid to Delta with forty-eight days of the issuance of a license for both elevators by the TSSA, unless a court order requires, or the parties subsequently agree, that the funds should be held for a longer period of time; and

(c) Delta shall honour its warranty and maintenance obligations during the twelve months following the TSSA License being issued. To date, no deficiencies are known by Delta. Delta will investigate any deficiencies alleged by 31 Kingsbury Inc. and Delta’s EDM-A mechanics will rectify any deficiencies on a timely basis that they find to be valid.

Whether or not this offer is accepted, Delta will attend the building and provide a demonstration of the operation of the elevators if your client wishes Delta to do so. Your client’s representative is invited to attend the demonstration and to assess the operation of the elevators at that time.

This letter will be referred to at any motion that your client may bring. Please note, I am out of the country from December 28th, 2018 until January 16th, 2019 and not available for a motion during that period of time.

[14] By letter dated December 20, 2018, counsel for Kingsbury refuted the assertion that monies were owed under the Sales Agreement as it states that Delta did not complete its work at no fault of Kingsbury. The letter further states:

Notwithstanding the above, our client continues to be open to a resolution of this matter. In an effort to resolve this matter, and to mitigate the significant damages and irreparable harm that our client is facing, our client is prepared to resolve this matter on the following basis:

1. Our client will place $88,558.10 (the “Funds”) into the trust account of Teplitsky, Colson LLP, immediately upon acceptance of this Offer;

2. Upon our confirmation that Funds have been deposited …, Delta will schedule a TSSA inspection of the Elevators ... for the first date available … so that the Elevators can be inspected and approved;

3. The parties will agree upon an independent third party consultant to attend at 31 Kingsbury to test the performance of the Elevators …;

4. The Third Party Consultant shall attend as soon as practically possible following the TSSA inspection and approval to test the performance of the Elevators at 31 Kingsbury;

5. The parties agree to accept and be bound by the findings of the Third Party Consultant. In this regard:

a. If the Third Party Consultant determines that the elevators were constructed in accordance with the agreement then we will:

i. Immediately release $52,189.10 of the Funds (being the total balance for Invoice Nos. 9165159 and 9166597) from our trust account to Delta; and

ii. Release the remaining Funds in the total amount of $35,369.00 (being the holdback set out in Invoice No. 9166598) on the 45th day after Delta provides to our client:

1. The required Statutory Declarations and Form 5’s requesting holdback release; and

2. The equipment and/or software required to have third party elevator contractor service and maintain the elevators at 31 Kingsbury (if any);

b. If the Third Party Consultant finds that the elevators at 31 Kingsbury are not operating in accordance with the agreement, Delta will immediately take any steps required to rectify the issues and satisfy the Third Party Consultant with respect to compliance. Once the Third Party Consultant approves Delta’s work, the Funds will be released as set out in paragraphs 5(a)(i) and (ii). If Delta does not immediately rectify such issues then our client can retain a company to do so and deduct the cost from the Funds;

6. If the elevators are found to be operating in accordance with the Agreement, then the costs of the Third Party Consultant shall be borne by our client. If the elevators are found not to be in compliance with the Agreement, and further steps need be taken by Delta to ensure compliance, then the cost of the Third Party Consultant shall be borne by Delta.

Please treat the above as a formal Offer to settle the pending motion. Acceptance of the said Offer can only be made in writing.

[15] On January 14, 2019, counsel for Kingsbury sent the following letter with a further proposal:

Further to our telephone discussion of this afternoon, I confirm that you are seeking instructions from your client as to whether or not they are prepared to resolve this matter on the following terms:

1. 31 Kingsbury Inc. completes its outstanding work pursuant to the contract and allows Delta access to inspect the site and confirm the work has been completed;

2. Delta will attend at 31 Kingsbury tomorrow to satisfy itself that the elevators are ready for TSSA Inspection;

3. The sum of $88,558.10 (the “Trust Funds”) shall be paid into Teplitsky, Colson LLP’s trust account prior to the TSSA inspection and subject to the following terms:

a. The sum of $53,189.10 shall be paid from the Trust Funds to Delta within 3 days of the issuance of a licence for both elevators by the TSSA;

b. The sum of $35,369.00 representing the holdback, shall be paid to Delta within 48 days of the issuance of a licence for both elevators by the TSSA and following 31 Kingsbury’s receipt of the required Statutory Declarations and Form 5s requesting holdback release, unless a Court order requires, or the parties subsequently agree, that the funds should be held for a longer period of time; and

4. Delta shall honour its warranty and maintenance obligations during the 12 months following the TSSA licence being issued. To-date, no deficiencies are known by Delta. Delta will investigate any deficiencies alleged by 31 Kingsbury Inc. and Delta’s EDM-A mechanics will rectify any deficiencies on a timely basis that they find to be valid.

I confirm that our client is couriering the Trust Funds to our office and that Delta will be sending representatives to 31 Kingsbury for the purposes of determining whether or not the elevators are ready for inspection tomorrow. I understand from our client that the elevators are ready for an inspection and the inspection can take place at any time.

As discussed, our client wants the elevators to be inspected as soon as possible and by no later than Friday, January 18, 2019. Accordingly, we look forward to hearing from you as soon as possible.

[16] On January 16, 2019, counsel for Delta responded:

This is further to your letter yesterday.

With respect to arranging the TSSA Inspection, we confirm that the inspection will be arranged based on the terms set out in our letter dated December 14, 2018. However, 31 Kingsbury must agree to (a), the immediate return of the weights that Delta had left on site (b), that Delta may remove the said weights at its sole discretion and (c), the motion is dismissed subject to the issue of costs.

Delta can send a mechanic on Thursday, January 17, 2019 to confirm that 31 Kingsbury has completed its outstanding work and that the TSSA Inspection can be scheduled. This is the earliest that Delta has someone available to do the visit. The TSSA Inspection can then be scheduled and it will likely occur next week over a two-day period. There will be one day of inspection for each elevator. This is the normal time required to arrange a TSSA Inspection after Delta confirms that the builder/contractor has completed its work.

We note that your letter includes the words “following 31 Kingsbury’s receipt of the required Statutory Declarations and Forms 5s requesting holdback release”. Without agreeing to this added term, please provide the forms that you are referring to so we can show them to your clients.

Your letter of January 14, 2019, refers to the “resolution of this matter” which is broader than resolving the TSSA Inspection. Our client demands its legal costs on the motion on a partial indemnity basis. It will seek this at the return of the motion currently scheduled for February 11, 2019.

[17] On January 16, 2019, counsel for Kingsbury responded:

I am writing in response to your letter dated January 16, 2019.

I confirm that our client is prepared to proceed with a resolution of the matter on the terms as set out in your letter of December 14, 2018, on the strict condition that a representative of Delta attend to ensure that the elevators are ready for inspection on Thursday, January 17, 2019 and that the TSSA Inspection is scheduled immediately.

Please advise as soon as possible as to the time that Delta representatives will attend at 31 Kingsbury tomorrow and when TSSA will attend so that our client can have representatives available.

Additionally, with respect to the release of the holdback, our client requires that Delta provide the appreciate Form 5s and Statutory Declarations. In this regard, the same Form 5s and Statutory Declarations that Delta has used with respect to their completion of services for the elevators at our client’s properties in the past are sufficient. I do not believe that this should be an issue for your client to provide.

As set out above, our client requires that the TSSA Inspection be completed and the elevators operations as soon as possible. In this regard, it is our client’s preference that the said inspection takes place on Monday and/or Tuesday of next week as its damages are increasing significantly on a daily basis. Please advise of the earliest date possible that TSSA can attend for inspection.

With respect to the costs of the motion, it is our client’s position that it ought to be entitled to its legal costs. In any event, if that issue cannot be resolved we can address same at the return of the motion on February 11, 2019. It should not stall the elevators being tested and the damages being incurred being mitigated.

Lastly, as a part of this resolution, I confirm that our client is prepared to allow Delta to remove its weights from 31 Kingsbury following successful TSSA Inspection and the elevators becoming operational.

Please confirm as soon as possible that your client will proceed as set out above.

[18] Elliott, a licensed elevator mechanic for Delta, states that in reliance upon the above letter, it arranged for the TSSA inspection.

[19] The TSSA inspection occurred on January 21, 2019 and January 22, 2019 over a period of more than seven hours.

[20] On January 22, 2019, counsel for Delta advised counsel for Kingsbury that both elevators had been approved and licensed for public use by the TSSA. Delta asked that a “cab signoff” be signed by Kingsbury and that $53,189.10 be paid to Delta by January 25, 2019. The cab signoff is a one page form entitled “Elevator Acceptance” that asks Kingsbury to confirm that:

We have inspected the Elevator installed at 31 Kingsbury Drive, Kitchener, ON … and can see no obvious flaws in the design or finish at this time. Please sign below to acknowledge that you have received the following items for this Installation … Style #4001, Style #4006 Key, Style #FEOK1 Key, Cab Pads/Bags.

[21] On January 23, 2019, counsel for Kingsbury advised that it would not pay $53,189.10 from its trust account unless:

(1) Delta agreed to attend at the Life Safety Inspection on January 24, 2019 and at that time, turn and leave the elevators on in a completed working manner;

(2) Delta confirms that it would not turn off the elevators without the written permission of Kingsbury’s directing mind, Gordon Schembri, except in compliance with any legal obligation under any law, statute, regulation or any direction or order from any regulator or governmental authority.

[22] On January 24, 2019 counsel for Delta advised that:

(1) Delta would attend the Life Safety Inspection and would turn on the elevators;

(2) Delta would not shut down the elevator for a capricious reason or for an issue unrelated to some technical or legal issue for doing so.

Motion for Mandatory Order to Compel TSSA Inspection

[23] On February 11, 2019 the motion was heard by Justice Koehnen. His Endorsement states:

The substance of this motion has been resolved in that the elevators at issue have been inspected and are running.

[Delta] seeks its costs of this motion. [Delta] submits the motion was unnecessary because the elevators had been delivered some time ago but [Kingsbury] had failed to pay. The elevators had initially not been put into operation because of the construction delays and then because of [Kingsbury’s] failure to pay the balance owing for them. When [Kingsbury] brought this motion, [Delta] offered to do all that was needed provided it was paid on certain terms. [Delta] had in fact put measures in place to render the elevators operational well before [Kingsbury] brought this motion. For example, it delivered tool weights to the property on December 5, 2018. [Kingsbury] then seized the tool weights and refused to return them to [Delta]. [Kingsbury] has not offered a coherent explanation for doing so.

[Kingsbury] submits costs of this motion should be dealt with in May when a motion is scheduled to hear whether [Delta] can be paid on an alleged settlement. My difficulty is that [Kingsbury] has not given me any coherent reasons for its refusal to pay the balance owing on the elevators other than a vague allegation that elevators purchased from [Delta] for another property on a prior occasion have issues.

Without a great deal more, this does not serve as a basis for a mandatory injunction to compel [Delta] to perform its part of the bargain when [Kingsbury] has not performed its own part of the bargain.

[Delta] is entitled to costs on a substantial indemnity basis fixed at $9,366.01 including disbursements and HST. Substantial indemnity costs are appropriate here. [Kingsbury] complicated matters by seizing [Delta’s] tool weights without any right after [Delta] made efforts to complete its work. That is conduct that warrants denunciation. Parties are not entitled to seize what is clearly private property of another to seek leverage in litigation.

If all matters surrounding the claims between the parties are not resolved on the May motion this is a matter on which case management would be of help. Costs of today are included in the figure of $9,366.01 that I have awarded [Delta].

[24] On February 14, 2019 Delta brought this motion for an order enforcing the settlement of Kingsbury’s motion.

Issues

[25] Kingsbury submits that Delta’s motion to enforce a settlement agreement should be dismissed for three reasons:

(1) A settlement agreement was not reached;

(2) In any event, the settlement agreement should not be enforced;

(3) In any event, granting Judgment on the settlement agreement would be akin to granting partial summary judgment.

Analysis

[26] Rule 49.09 (a) of the Rules of Civil Procedure provides that where a party to an accepted offer to settle fails to comply with the terms of the offer, the other party may make a motion to a judge for judgment in the terms of the accepted offer, and the judge may grant judgment accordingly.

[27] A two-step analysis is required in order to determine whether judgment should be granted on the terms of a settlement agreement. The first step is to consider whether an agreement to settle has been reached. The second step is to consider whether, on all the evidence, the agreement should be enforced: Hashemi-Sabet Estate v. Oak Ridges Pharmasave Inc., 2018 ONCA 839, para. 27.

Issue #1: Did the Parties Agree to Settle the Action?

[28] The first step is to consider whether an agreement to settle has been reached. This determination turns on whether the parties intended to create a legally binding agreement and whether there was agreement on all essential terms. To make this determination, the motion should be treated as a Rule 20 summary judgment motion: Hashemi-Sabet Estate v. Oak Ridges Pharmasave Inc., para. 27; Olivieri v. Sherman, 2009 ONCA 772, para. 27; Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc. (2007), 2007 39604 (ON SCDC), 87 O.R. (3d) 464 (Ont. Div. Ct.) para. 9.

[29] In deciding whether the parties entered a settlement agreement, the court shall consider the evidence submitted by the parties and may exercise the powers granted under Rule 20.04(2.1) to weigh evidence, evaluate credibility and draw any reasonable inference from the evidence.

Was there an intention to create a legally binding relation?

[30] The correspondence exchanged by the parties, particularly on or before January 16, 2019, provides ample objective that they intended to create a legally binding settlement of the motion to compel Delta to arrange an inspection of the elevators by the TSSA:

• Delta’s letter dated December 14, 2018;

• Kingsbury’s letter dated December 20, 2018;

• Kingsbury’s letter dated January 14, 2019 speaks, respectively, to terms of an “offer” to settle the motion and the latter offers terms to “resolve this matter”;

• Schembri’s affidavit sworn December 21, 2018 characterizes the December 14, 2018 letter from Mr. Gastle and the December 20, 2018 from Mr. Ventrella as with prejudice offers to settle Kingsbury’s motion to compel an inspection;

• Counsel for Delta’s email dated January 17, 2019 to counsel for Kingsbury reflects the belief that the parties have settled the motion. He states:

  Please also confirm whether the motion is to be dismissed with only an argument on costs proceeding on February 11th, 2019. We are required to provide materials by January 23rd, 2019 and we need to know what, if any issues we are responding to now that you have accepted our offer of December 14th, 2018. [Emphasis added]

• In responding to the above email on January 17, 2019, counsel for Kingsbury, recognized that the parties had settled the motion to compel Delta to arrange a TSSA inspection as his email dated January 17, 2019 as he states “with respect to the motion, the only issue that remains is costs. If the parties cannot come to an agreement, we can address it with the Court”. [Emphasis added]

• Counsel for Kingsbury recognized a settlement, in its letter dated January 28, 2019, with the statement that:

  It is our client’s position that the strict terms of the agreement entered into by parties to resolve the issues on the pending motion were not satisfied by Delta and accordingly, it will not release the funds which remain in the trust account of Teplitsky, Colson LLP. [Emphasis added]

Was there agreement on all essential terms?

[31] The parties exchanged several letters and emails that contain various terms following the Delta’s email dated December 14, 2018 which outlined the terms for settlement of Kingsbury’s motion. Unfortunately, they did not prepare and sign a document that contains all of the terms of settlement and, as a result, the assessment of whether the parties agreed on all essential terms is more difficult.

[32] By letter dated January 16, 2019, Kingsbury accepted, with a few additional terms, Delta’s proposal dated December 14, 2018 and January 16, 2019, for the settlement of Kingsbury’s motion to compel the TSSA inspection. Any additional terms proposed by Kingsbury by correspondence dated January 16, 2019 were addressed by a further correspondence from Delta dated January 16, 2019.

[33] The terms of the settlement agreement proposed by Delta, accepted by Kingsbury, in some cases with modification and, in turn, accepted by Delta, are as follows:

• Delta shall arrange the TSSA inspection;
  • See Delta’s letter dated December 14, 2018;
  • By letter dated January 16, 2019 Kingsbury accepted the above terms and stated that a representative from Delta had to attend to ensure that the elevators were ready for inspection on January 17, 2019 and that the TSSA inspection had to be scheduled immediately;
  • Delta’s inspection occurred on January 17, 2019;
  • TSSA inspection occurred on January 21-22, 2019;
• Kingsbury shall complete the outstanding work and allow Delta to inspect and confirm that the work has been completed;
  • See Delta’s letter dated December 14, 2018;
  • By letter dated January 16, 2019, Kingsbury accepted the above terms;
• Kingsbury shall pay $88,558.10 to Teplitsky, Colson in trust prior to the TSSA inspection;
  • See Delta’s letter dated December 14, 2018;
  • By letter dated January 16, 2019, Kingsbury accepted the above terms;
• The sum of $53,189.10 shall be paid from the trust funds within three days of the issuance of a licence by the TSSA for both elevators;
  • See Delta’s letter dated December 14, 2018;
  • By letter dated January 16, 2019, Kingsbury accepted the above terms;
• The sum of $35,369.00 shall be paid to Delta within 48 days of the issuance of the TSSA licence unless a court orders, or the parties agree, that the funds should be held for a longer period of time;
  • See Delta’s letter dated December 14, 2018;
  • By letter dated January 16, 2019 Kingsbury accepted the above terms with the proviso that such payment shall be made following Kingsbury’s receipt of a Statutory Declaration and Form 5 requesting a holdback release;
  • By email dated January 23, 2019, Delta delivered a signed Statutory Declaration of Progress Payment Distribution by Contractor and Form 5 under the Construction Act, R.S.O. 1990, c. C.30.
• Delta shall honour its warranty and maintenance obligations during the 12 months following the issuance of the TSSA licence. In that period, Delta will investigate and rectify any deficiencies reported by Kingsbury that are deemed by Delta to be valid;
  • See Delta’s letter dated December 14, 2018;
  • By letter dated January 16, 2019 Kingsbury accepted the above terms and advised that the trust funds were being couriered to Teplitsky, Colson;
• Kingsbury must permit Delta to immediately remove the weights that it had left at the construction site;
  • See Delta’s letter dated January 16, 2019;
  • By letter dated January 16, 2019, Kingsbury stated that Delta could remove the weights following a successful TSSA inspection and once the elevators became operational;
• The motion to compel Delta to schedule a TSSA inspection shall be dismissed subject to Delta seeking partial indemnity costs at the return of the motion scheduled for February 11, 2019;
  • See Delta’s letter dated January 16, 2019;
  • By letter dated January 16, 2019, Kingsbury stated that the issue of costs, whether payable to Delta or Kingsbury, would be determined by the court on February 11, 2019.

[34] I am satisfied that the parties intended to create a legally binding settlement and that they reached agreement on the essential terms of the settlement of the motion to compel Delta to arrange for the TSSA inspection of the elevators on the terms described in Delta’s letter dated December 14, 2018 with the modification that: 1) a representative from Delta would attend the construction site by January 17, 2019 to ensure that the elevators were ready for inspection; 2) Kingsbury would pay Delta $35,369.00 following its receipt of a Statutory Declaration and Form 5 from Delta; and 3) the parties could seek their costs of the abandoned motion.

Issue #2: Should the Settlement Agreement be Enforced?

[35] If a settlement is found to exist, then the second step is to determine whether the settlement should be enforced in light of all of the relevant factors disclosed by the evidence: Olivieri, para. 28. In this second step, a Rule 20 approach is not applied, but rather a broader approach, taking into account evidence not relevant to a Rule 20 inquiry: Capital Gains Income Streams Corp. para. 10.

[36] Whether a court should refuse to enforce a settlement agreement is informed by the competing objectives of promoting settlement and avoiding the enforcement of a settlement that would result in a clear risk of an injustice: Brzozowski v. O'Leary, para. 44; Srajeldin v. Ramsumeer, 2015 ONSC 6697, 343 O.A.C. 122, para. 33 (Div. Ct.). In Donaghy v. Scotia Capital Inc./Scotia Capitaux Inc., para. 15, Justice Karakatsanis, as she then was, stated:

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.

[37] A settlement will not be enforced where the party seeking to enforce the settlement has repudiated it: Olivieri, paras. 34-35.

[38] In assessing injustice, the court may also consider whether the parties’ pre-settlement positions remain intact as well as the degree to which the party seeking to resist the settlement would be prejudiced if judgment is granted in relation to the prejudice that the party seeking to enforce the settlement would suffer if the settlement is not enforced: Milios v. Zagas (1998), 38 O.R. (3d) 218 (C.A.), para. 21.

[39] It is manifestly unjust that Kingsbury has obtained the benefit of the settlement but Delta has not. Kingsbury received what it sought by the settlement agreement – namely, Delta arranged for the TSSA inspection. On the other hand, Delta has not been paid as Kingsbury promised.

[40] Kingsbury submits that the settlement agreement should not be enforced because Delta repudiated the settlement agreement. It submits that Delta refused to “turn over” the elevators to Kingsbury after the completion of TSSA inspections on January 22, 2019 because Delta demanded that Kingsbury sign an Elevator Acceptance Form which, as described earlier, asks Kingsbury to acknowledge that there are no obvious flaws in the design or finish of the elevator. Schembri refused to sign the form. Delta nevertheless transferred the elevators to Kingsbury on January 24, 2019 after the City of Kitchener had completed its “Life Safety Commissioning Report and Inspection”. Repudiation occurs by the words or conduct of one party to a contract that show an intention not to be bound by the contract: Remedy Drug Store Co. Inc. v. Farnham, 2015 ONCA 576, para. 42. I find that the Delta’s request for a cab signoff does not amount to a repudiation of the settlement agreement. Further, given that it has completed its part of the bargain, it would be highly prejudicial to Delta not to be granted judgment based on the terms of settlement.

Issue #3: Would Granting Judgment Based on the Settlement be Akin to Granting Partial Summary Judgment?

[41] Kingsbury submits that granting judgment based on the settlement agreement would be “akin to granting partial summary judgment” because Kingsbury alleges that the Delta has not completed its work in respect of the elevators and that Kingsbury has suffered almost $500,000 in damages as a result. It suggests that there could be inconsistent findings at trial with respect to the scope of the Sales Agreement, whether Delta completed its work in accordance with the Sales Agreement, whether or not final invoices were rendered prematurely, when the elevators could have or should have been licenced by the TSSA and turned over to Kingsbury, which party was responsible for the delay in having the elevators available for Kingsbury’s use, and the extent of damages suffered.

[42] This motion does not make findings in respect of any of the issues raised by the Statement of Claim. The focus of this motion is limited to an issue that is not raised by the Statement of Claim – namely, whether the parties agreed to settle the motion to compel Delta to arrange for the inspection of its elevators by the TSSA. I find that this decision does not amount to partial summary judgment.

Conclusions

[43] I find that the parties settled this action on January 16, 2019. I grant judgment in accordance with the settlement terms described above. Specifically, judgment in accordance with the settlement agreement between parties which I find contains the terms described in Delta’s letter dated December 14, 2018 with the modification that: 1) a representative from Delta would attend the construction site by January 17, 2019 to ensure that the elevators were ready for inspection; 2) Kingsbury would pay Delta $35,369.00 following its receipt of a Statutory Declaration and Form 5 from Delta; and 3) the parties could seek their costs of the abandoned motion.

[44] The parties have agreed that costs of $12,500.00 should be paid by whichever party lost this motion. Accordingly, I order that Kingsbury pay costs of $12,500.00 to Delta forthwith.

Mr. Justice M.D. Faieta

Released: June 10, 2019

COURT FILE NO.: CV-18-00608160 DATE: 20190610 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: 31 KINGSBURY INC. Plaintiff – and – DELTA ELEVATOR COMPANY LIMITED Defendant REASONS FOR DECISION Mr. Justice M. D. Faieta Released: June 10, 2019