Court of Appeal for Ontario

CITATION: Chatsikiriakos v. Kilislian, 2020 ONCA 378

DATE: 20200612

DOCKET: C67935

Doherty, Hourigan and Fairburn JJ.A.

BETWEEN

Kathy Chatsikiriakos

Plaintiff (Respondent/Appellant by Cross-Appeal)

and

Rita Kilislian and Rita Kilislian Dentistry Professional Corporation, C.O.B. as Downtown Dental Associates

Defendants (Appellants/Respondents by Cross-Appeal)

Counsel:

Mark H. Arnold, for the respondent (plaintiff)

Avrum D. Slodovnick, for the appellants (defendants)

Heard: In-writing

On appeal from the judgment of Justice Cavanagh of the Superior Court of Justice, dated December 23, 2019

REASONS FOR DECISION

[1] The appellants (“Kilislian”) were defendants in a wrongful dismissal action brought by the respondent (“Chatsikiriakos”). It appeared the parties had settled the action on the eve of trial. When the settlement funds were not forthcoming, the respondent brought a motion under r. 49.04 of the Rules of Civil Procedure for judgment in the terms of the settlement. The motion judge granted judgment. The appellants appeal from that judgment.

[2] The motion judge also fixed the costs of the action on a partial indemnity basis in favour of the respondent in the amount of $51,557.12. The respondent seeks leave and, if leave is granted, appeals from that costs order.

[3] For the reasons that follow, the appeal is dismissed, and the motion for leave to appeal costs is dismissed.

[4] The appellants operated a dental practice. The respondent worked at the practice as a dental hygienist. The respondent claimed in about April 2017, the appellants proposed to unilaterally and fundamentally alter the terms of her employment, including her compensation. She eventually commenced a lawsuit, alleging constructive wrongful dismissal.

[5] The appellants defended on various grounds. They alleged there had been no material change in the respondent’s working conditions, and the respondent had indicated she was anxious to continue her employment.

[6] The respondent served two Offers to Settle on the appellants, one in April 2018 and the second in May 2018. In May 2019, right before the trial was scheduled to begin, the appellants accepted the second offer made a year earlier. That offer had two terms:

• payment to the plaintiff of $75,000 (emphasis in the original); and
• costs to the plaintiff in an amount to be agreed upon by counsel or following an assessment.

[7] The appellants, through counsel, unequivocally accepted the offer. In accepting the offer, counsel for the appellants indicated, “we consider the case settled”.

[8] The parties advised the trial court the matter had been settled and made arrangements to speak to costs. In June 2019, about one month after the appellant’s had accepted the settlement offer, counsel for the appellant advised the trial court the settlement was in place and he expected to be in funds that day. The funds were not paid to the respondent.

[9] On the motion, the appellants argued that judgment should not issue in the terms of the settlement agreement for two reasons. First, the terms of the purported settlement were uncertain and did not contain terms essential to the settlement. The appellants submitted, in the settlement of wrongful dismissal claims, the classification under various heads of damages of the amount paid in the settlement is an essential element of the settlement agreement. Without that classification, the agreement to pay $75,000 to settle the claim, did not constitute a settlement agreement.

[10] Second, the appellants argued, if there was a settlement agreement, the motion judge should exercise his discretion and decline to enforce the agreement on public policy grounds. The appellants submitted, among other things, the manner in which the respondent litigated the claim, in particular the use of threats and misrepresentations to intimidate and defame Mr. Curnew, the husband of Rita Kilislian, required the court to reject the settlement which was the product of those tactics.

[11] The motion judge considered and rejected the arguments. The same arguments are renewed on appeal. We, too, reject them.

Did the agreement contain the essential terms of the settlement?

[12] It cannot be argued the classification of the amount of a settlement into various heads of damages is always an essential element of any agreement to settle a wrongful dismissal claim. This court has held the exact opposite: Perri v. Concordian Chesterfield, 2003 CarswellOnt 6240, aff’ 2004 2904.

[13] A settlement is an agreement. The categorization of the parts of the settlement under various heads of damage may or may not be an essential term of any particular settlement agreement. In the present case, there was nothing in the language of the Offer to Settle, or in the terms of the appellants’ acceptance of the offer to suggest the characterization of the amounts of the settlement under various damage heads was essential to, or played any part in, the agreement. Nor do any of the communications by the parties with the trial court, immediately after the settlement, lend any credence to the appellants’ assertion they regarded the characterization of the amounts of the settlement under various heads of damage as essential to the existence of the agreement they had entered into on the advice of counsel.

[14] The two emails relied on by the appellants do not assist their argument. The first, dated May 19, 2019, specifically acknowledges the “$75,000 settlement” and goes on to propose a variation of that settlement. The variation in the settlement agreement proposed by the appellants addresses various concerns, including costs of the action, and the allocation of the settlement amounts as aggravated and moral damages.

[15] The June 21, 2019 email also offers no support for the position there was no settlement agreement. Instead, in that email, counsel for the appellants suggests certain advantages to both parties in characterizing the amount agreed upon in the settlement in the manner suggested by counsel for the appellants.

[16] There was nothing vague or uncertain about the terms of the settlement agreement. The appellants agreed to pay the respondent $75,000. The tax or other regulatory consequences of that payment, if any, to either party, were not any part of the negotiations leading up to the agreement. The absence of terms designating the settlement amount under various heads of damage had no impact on the existence or enforceability of the settlement agreement.

Should the motion judge have refused to enforce the settlement on public policy grounds?

[17] A court has a discretion to decline to enforce a settlement agreement on public policy grounds. That discretion is exercised sparingly. The moving party must demonstrate sufficiently compelling circumstances to justify the inevitable negative impact non-enforcement of an agreement will have on both the finality principle and the reasonable expectations of litigants who enter into settlement agreements.

[18] As with the exercise of any discretionary power, this court will defer to the motion judge’s exercise of his discretion, absent demonstration of:

• a clearly unreasonable result;
• a material misapprehension of the evidence, or a failure to consider material evidence; and
• a failure to correctly apply the controlling legal principles.

[19] The motion judge addressed the arguments put forward by the appellants for non-enforcement, some of which are renewed in this court (reasons, paras. 10-15). He concisely and clearly rejected each. In doing so, he made his reasons for rejecting the arguments clear. For example, in addressing the argument the respondent had threatened “prosecution” of the appellants and Mr. Curnew, the motion judge observed the so-called threat consisted of one word in a lawyer’s letter sent long before the respondent made any settlement offer, and more than two years before the appellants accepted the settlement offer.

[20] The motion judge also noted the absence of any evidence from Mr. Curnew on the motion. Mr. Curnew did not provide evidence that he was intimidated or coerced by the respondent’s litigation tactics, or that those tactics motivated him to encourage or advise the appellants to accept the settlement offer.

[21] The appellants have not convinced us we should override the motion judge’s exercise of his discretion. In seeking to avoid the consequences of their settlement agreement, the appellants focused on the respondent’s litigation tactics. The respondent pointed the finger right back at the appellants and their litigation tactics. This litigation was personal and quickly became nasty. There is plenty of blame to go around on both sides for this unfortunate development. However, the tone of the litigation, the product of conduct on both sides, offers no reason to permit the appellants to walk away from their agreement to settle the claim and thereby deny the respondent the benefit of that agreement negotiated by the parties and their lawyers.

The motion for leave to appeal costs

[22] The respondent seeks leave to appeal the costs order made in respect of the settled action. There is no appeal from the costs order on the r. 49 motion.

[23] This court grants leave to appeal costs sparingly. The respondent advances two submissions in support of the leave application. The respondent submits the motion judge erred in law by effectively refusing to consider whether the respondent was entitled to costs on a substantial indemnity basis. The respondent further submits, even if the motion judge properly held costs should be on a partial indemnity basis, he erred in awarding an amount substantially less than the amount claimed by the respondent without providing adequate reasons for doing so.

[24] The motion judge did not refuse to consider the respondent’s claim for costs on a substantial indemnity basis. He acknowledged the respondent sought costs on that scale (reasons, para. 20). In refusing costs on a substantial indemnity basis, the motion judge noted the action was settled, obviously an important consideration in fixing costs of the action. The motion judge also determined he could not, on the record before him, make the kind of detailed credibility-based factual findings necessary to warrant costs on a substantial indemnity basis. In short, the record produced by the respondent and the forum chosen by the respondent to litigate costs did not lend themselves to the kind of analysis and fact-finding required to justify costs on a substantial indemnity basis.

[25] Contrary to the respondent’s submission, the motion judge did consider whether he should order costs on a substantial indemnity basis. The reasons he gave for declining to do so were relevant to that determination, and supported by the evidence. It was for the motion judge to decide how much weight to give to those factors. We see no reason to grant leave on this issue.

[26] The other argument advanced by the respondent addresses the quantum of the partial indemnity costs order made by the motion judge. The respondent contends the motion judge substantially reduced the quantum without providing any reasons.

[27] The motion judge offered the following reasons for the quantum fixed in his costs order:

• the action was settled (para. 22);
• the action was brought under the simplified rules. The factual and legal issues were not complex (para. 27);
• the manner in which the litigation was conducted contributed to the amount of time expended by counsel for the plaintiff (para. 27); and
• the time claimed by counsel for the plaintiff was “far higher than is reasonable and proportionate having regard to the factors in r. 57.01” (para. 27).

[28] The respondent suggests the motion judge’s reference to the manner in which the litigation was conducted referred only to the manner in which the appellants conducted the litigation. That is incorrect. The motion judge’s reference to the time claimed by plaintiff’s counsel as being “far higher than is reasonable and proportionate” follows directly after his reference to the manner in which the litigation was conducted. Clearly, the motion judge was referring to both sides when he alluded to the conduct of the litigation.

[29] In fixing costs, the motion judge correctly identified the objective as an amount “that is fair and reasonable for the unsuccessful party to pay in the particular proceedings” (reasons, para. 26). The factors identified by the motion judge in fixing that reasonable amount provided a firm basis upon which to move significantly downward from the amount claimed by the respondent on a partial indemnity basis. We see no reason to interfere with his assessment. We will not grant leave to appeal costs on this issue.

[30] Leave to appeal costs is refused.

Costs of the appeals

[31] The respondent was successful on the main appeal. The appellants were successful on the cross-appeal on costs. Both successful parties are entitled to their costs on a partial indemnity basis.

[32] A review of the material indicates that the materials and issues relevant to the main appeal were somewhat more involved than those relating to the cross-appeal on costs. We will make an order as to costs on the main appeal that takes into account the appellants’ entitlement to costs on the cross-appeal.

[33] The respondent shall have her costs on the main appeal in the amount of $7,000, inclusive of taxes and disbursements. There shall be no order as to costs on the cross-appeal.

“Doherty J.A.”

“C.W. Hourigan J.A.”

“Fairburn J.A.”