Court of Appeal for Ontario

Citation: Srebot v. Srebot Farms Ltd., 2013 ONCA 84

Date: 2013-02-11

Docket: C54246

Before: Cronk, LaForme and Hoy JJ.A.

Between:

Michael John Srebot Plaintiff (Respondent)

and

Srebot Farms Ltd., Joseph Edward Srebot, CCNE Investments Inc., and Steven M. Mucha Defendants (Appellants)

Counsel: David Rubin, for the appellants Orie H. Niedzviecki and Evelyn Perez-Youssoufian, for the respondent

Heard: February 5, 2013

On appeal from the judgment of Justice Sandra Chapnik of the Superior Court of Justice, dated July 26, 2011.

Endorsement

[1] The trial of various issues in this matter was directed by Grace J. of the Superior Court of Justice by order dated May 14, 2010. Following the trial of those issues, the trial judge, in the exercise of her discretion under rule 49.09 of the Rules of Civil Procedure, declined to enforce the terms of a settlement concluded by the parties at a mediation session, instead directing that the lawsuit between the parties continue as if there had been no settlement.

[2] In our view, it is unnecessary for the disposition of this appeal to address all the appellants’ complaints regarding the trial judge’s decision. During oral argument, the focus of the appellants’ challenge of the trial judge’s ruling was narrowed significantly. As argued, the appellants essentially allege that the trial judge erred: (1) by making numerous factual errors occasioned by her misapprehension of the evidence, her failure to consider relevant evidence and her uncritical acceptance of evidence favourable to the respondent, to the exclusion of that favourable to the appellants; and (2) by finding that the settlement was unreasonable and that its enforcement would result in a real injustice to the respondent. In the particular circumstances of this case, we would not give effect to these arguments.

[3] The trial judge’s reasons indicate that she properly understood and correctly applied the governing principles guiding the exercise of her discretion under Rule 49.09. She reviewed the evidence in detail, finding that a settlement agreement had been reached at the mediation, the terms of which were “clear, specific and unequivocal”.

[4] However, the trial judge also evaluated the evidence concerning the respondent’s state of mind and condition at the time of the settlement, the truncated and brief nature of the mediation and the respondent’s alleged lack of understanding of what was agreed upon at the mediation, as well as the consequences of the settlement.

[5] The trial judge’s appreciation of the evidence and her related factual findings attract great deference from this court. In our view, contrary to the appellants’ submission, any misapprehension of the evidence by the trial judge does not reach the level of palpable and overriding error and, hence, does not taint the exercise of her discretion to decline to enforce the settlement. Evidentiary support exists for the trial judge’s critical factual findings. For example, the respondent provided evidence in his testimony sufficient to ground the trial judge’s impugned finding that he was both stressed and emotional at the time of the mediation. While there was also evidence to the contrary on this issue, it was for the trial judge to determine which evidence to credit.

[6] The discretionary decision not to enforce a concluded settlement, especially where the settlement has been partially or fully performed, should be reserved for those rare cases where compelling circumstances establish that the enforcement of the settlement is not in the interests of justice. The trial judge’s reasons indicate that she was alive to this issue. On the facts as she found them, the trial judge concluded that this is one of those rare cases. We see no basis for appellate interference with this conclusion.

[7] Importantly, we note that the appellants led no evidence of any particular prejudice arising from their acts of performance under the settlement. On the contrary, they candidly acknowledged before this court that they suffered no financial prejudice from implementation of the settlement.

[8] Further, in our opinion, the appellants’ post-settlement adjustment of the characterization, for tax purposes, of the nature of the underlying share transaction at issue does not prevent the appellants from fully defending the allegations in the respondent’s statement of claim.

[9] Nor do we accept that the steps taken by the parties after the settlement had the effect of granting the respondent the substance of the relief sought by him in his pleading. While resolution of the contested tax issue, pleaded as alternative relief in the respondent’s statement of claim, was in fact resolved by the post-settlement actions of the parties, this does not respond to the respondent’s additional damages claims as detailed in his pleading.

[10] At the end of the day, the critical issue in this case was whether, on consideration of all the relevant factors disclosed by the evidence, the enforcement of the settlement would lead to clear injustice: see for example, Royal Bank v. Central Canadian Industrial Inc., 2003 41411 (ON CA), 2003 CarswellOnt. 5214 (Ont. C.A.); Milios v. Zagas (1998), 1998 7119 (ON CA), 38 O.R. (3d) 218 (C.A.). The trial judge concluded that in the circumstances of this emotionally-charged case, arising from the unfortunate estrangement of two brothers following a dispute concerning their respective interests in the family farming business, the interests of justice demanded that the settlement not be enforced and that the respondent’s action continue. This was her call to make.

[11] Accordingly, the appeal is dismissed. The respondent is entitled to his costs of the appeal, fixed in the amount of $12,500, inclusive of disbursements and all applicable taxes.

“E.A. Cronk J.A.”

“H.S. LaForme J.A.”

“Alexandra Hoy J.A.”