Court of Appeal for Ontario

Date: June 13, 2017 Docket: C63210 Judges: MacPherson, Blair and MacFarland JJ.A.

Between

1220510 Ontario Inc. Applicant/Respondent by Counter-Application (Respondent)

and

Radium-O Developments Ltd. Respondent/Counter-Applicant (Appellant)

Counsel

Gregory Gryguc, for the appellant

Leonardo Mongillo and Sim Chahal, for the respondent

Heard: June 12, 2017

On appeal from the judgment of Justice Ruth E. Mesbur of the Superior Court of Justice, dated December 15, 2016.

Reasons for Decision

[1] The appellant Radium-O Developments Ltd. appeals from the judgment of Mesbur J. of the Superior Court of Justice dated December 15, 2016. In her judgment, the motion judge enforced a settlement between the parties.

[2] The respondent 1220510 Ontario Inc. lent $6,000,000 to the appellant in a vendor take back mortgage. The mortgage matured on May 7, 2016. The appellant had not paid the principal owing and was in default as of that date. The respondent started an application for the appointment of a receiver.

[3] After some negotiations, the respondent made a settlement offer for a total amount of $6,162,950.45. This amount included principal, interest, three months' interest compensation, receivership and legal fees, other fees and taxes. The payment had to be made in full by July 8, 2016. The offer contained this condition:

[I]f there are any reservations, conditions, qualifications or protests attached to the Total Amount Due the payment shall be rejected and returned. Payment unreservedly of the Total Amount Due (above) by your and acceptance by my client, shall constitute a full and final consensual waiver by your client of your client's rights thereafter, if any, to make any re-imbursement claim, litigation related or otherwise, for the Total Amount Due (above), or any part, portion or fractional amount thereof, to be returned, recovered, repaid, assessed, reconsidered or in any way whatsoever recouped in favour of your client the defaulting mortgagor.

[4] On July 8, 2016, the appellant paid the full amount and asked for a discharge. The respondent discharged the mortgage.

[5] On July 11, the appellant disputed the amount charged, specifically the legal fees and discharge costs. On August 8, the appellant delivered a costs assessment notice. On August 12, the appellant commenced a counter-application seeking to be relieved of paying the three months' interest compensation and receivership costs.

[6] The respondent moved to enforce the settlement. The motion judge granted the motion. With respect to the appellant's position, she said:

The respondent cannot now keep the benefit of the discharge and protest, after the fact how much was paid. The terms of the offer were clear. The respondent accepted them, delivered the funds without condition or protest, and took the benefit of the discharge.

[7] The appellant appeals on two grounds.

[8] First, the appellant asserts that the motion judge erred in finding that there was a settlement because the transaction was unconscionable; the appellant had no choice but to pay and the respondent used its position to charge for extra fees and costs.

[9] We do not accept this submission. An agreement to settle an action is a contract. Here there was offer and explicit acceptance. Moreover, the appellant received the consideration it bargained for – a discharge of the mortgage.

[10] Second, the appellant contends that the motion judge erred by approving the costs and fees relating to the respondent's steps in pursuit of the appointment of a receiver. These costs and fees, say the appellant, are in the nature of a penalty and violated s. 8 of the Interest Act, R.S.C. 1985, c. I-15.

[11] Again, we are not persuaded by this submission. The steps taken to potentially appoint a receiver were entirely reasonable in light of the appellant's default. And the three month's interest compensation did not violate s. 8 of the Interest Act: see Mastercraft Properties Ltd. v. EL EF Investments Inc. (1993), 14 O.R. (3d) 519 (C.A.) and Irwin Mintz, In Trust v. Mademont Yonge Inc. and Paul Montgomery, 2010 ONSC 116.

[12] The appeal is dismissed. The respondent is entitled to its costs of the appeal fixed at $20,000, inclusive of disbursements and HST.

[13] For the sake of completeness, and in accordance with the agreement of the parties, we confirm that the costs assessment in the Superior Court of Justice is now moot.

"J.C. MacPherson J.A."

"R.A. Blair J.A."

"J. MacFarland J.A."