Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20231003 DOCKET: COA-22-CV-0332 & COA-22-CV-0364

Gillese, Benotto and Copeland JJ.A.

DOCKET: COA-22-CV-0332

BETWEEN

Scott Lozon Plaintiff (Appellant)

and

Gerald Joseph Lozon, Patrick Phillip Lozon, Bryan T. Lozon and Arlene Lozon Defendants (Respondents)

DOCKET: COA-22-CV-0364

AND BETWEEN

Scott Fitzgerald Lozon Plaintiff (Appellant)

and

Gerald Lozon and Arline Lozon, aka Arlene Lozon Defendants (Respondents)

AND BETWEEN

1061154 Ontario Inc. Plaintiff by Counterclaim (Respondents)

and

Scott Fitzgerald Lozon Defendant by Counterclaim (Appellant)

Counsel: Catherine Patterson, for the appellant Philip S. Chandler, for the respondents (COA-22-CV-0332) David Kirwin, for the respondents (COA-22-CV-0364)

Heard: September 7, 2023

On appeal from the orders of Justice John A. Desotti of the Superior Court of Justice, dated October 28, 2022.

Reasons for Decision

[1] Scott Lozon, the appellant, is the son of the respondents Gerald and Arlene Lozon and the brother of respondent Bryan Lozon. The respondent Patrick Lozon is Gerald’s brother. The issue in this appeal is the enforceability of the Minutes of Settlement the family members and the corporation signed to settle three lawsuits.

[2] The first lawsuit was brought by 1061154 Ontario Inc., a company owned by Gerald and Arlene, to obtain possession of a log cabin in which Scott and his spouse were residing. This action also involved Scott’s claim that his father was holding shares in the company in trust for him. In 2017, Scott, Gerald, and Arlene attended a mediation to resolve the action (the “2017 Mediation”). During the mediation, a document was prepared listing certain equipment. It bore the title “Lozon Mediation – January 31, 2017” (the “2017 Mediation List”). This mediation was not successful.

[3] The other two lawsuits are for damages for personal injury sustained in a physical altercation. Scott sued Gerald, Bryan, Arlene, and Patrick for damages he alleges he sustained when Patrick and Bryan beat him while Gerald held him down. Bryan and Gerald sued Scott for damages that they allege they sustained in the same event.

[4] In 2022, the parties to all three actions attended another mediation, which resulted in Minutes of Settlement (the “2022 Minutes”) being prepared. The Minutes provided that:

1. Cash payments totalling $1.12 million were to be paid by Gerald and Arlene to Scott in two installments;
2. A cash payment of $70,000 was to be paid by Scott to Bryan;
3. Scott and his spouse were to vacate the log cabin; and
4. Scott would receive certain equipment, as identified in the 2017 Mediation List.

[5] The 2022 Minutes were prepared and circulated to all counsel who approved them as drafted. Scott and his spouse vacated the log cabin. The money owed to Scott was initially placed in trust. However, the parties got into a dispute about the equipment that Scott was to receive pursuant to the 2022 Minutes, so the funds were returned to the respondents. [1]

[6] The dispute over the equipment, which is the focus of this appeal, relates to a tractor and various snowmobiles. The 2022 Minutes provide:

Scott Lozon shall receive or retain the following property, as identified by line item in the attached 4 page schedule titled “Lozon Mediation – January 31, 2017”: 5 (International – DSI), 8, 15 (International Tractor – not enclosed, red – 2-wheel drive-1496), 17, 20, 26 (snowmobiles only, less the El Tigre previously owned by Scott and Bryan Lozon’s mother), 27, 29, 30, 33 and 35.

[7] The tractor was identified as item 15 on the 2017 Mediation List. It was described as “International 1466” on the list. But the 2022 Minutes reference item 15 as “1496” instead of “1466.” There is no tractor known as 1496 in the respondents’ possession. The respondents say that this created confusion, which means there was no agreement.

[8] The snowmobiles are referenced in item 26 of the 2017 Mediation List, which describes five snowmobiles and a trailer. The 2022 Minutes exclude the “El Tigre” owned by Scott’s mother. Scott submits that the 2022 Minutes include snowmobiles owned by Bryan. Bryan submits that he was not a party to the 2017 Mediation, so the 2017 Mediation List could not apply to his property.

[9] Since the parties were at an impasse over the tractor and the snowmobiles, Scott brought two motions seeking to have the 2022 Minutes enforced: one in the corporate action and the other in the personal injury actions.

[10] The motion judge heard and dismissed the motions by two orders, each dated October 28, 2023 (the “Orders”). In a brief endorsement, he relied on the evidence of Gerald and Bryan to find that there was a misunderstanding concerning what items are included in the 2022 Minutes. He referred to Scott’s position and concluded:

[10] I disagree. I cannot conclude that "the tractor" nor "snowmobiles" in question were intended to be covered by these minutes of settlement.

[11] Put it bluntly, at the end of the mediation there was a genuine misunderstanding of what items were included in those minutes and at the very least a mistake concerning what objects were to be removed from the cabin.

[12] In the result, the motion is dismissed.

[11] These reasons applied to both motions.

Analysis

[12] Since the motion judge determined that no agreement existed, the Orders are final, and this court has jurisdiction.

[13] The motion judge did not provide reasons for his conclusion that there was no intent to cover the snowmobiles and the tractor in the 2022 Minutes.

[14] While deference is generally owed to decision makers on points of contractual interpretation, extricable questions of law will be reviewed on a correctness standard: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 52-53. As the Supreme Court identified in Sattva, at para. 53, citing Housen v. Nikolaisen, 2002 SCC 33, [2002] S.C.R. 235; King v. Operating Engineers Training Institute of Manitoba Inc., 2011 MBCA 80, 270 Man. R. (2d) 63:

[I]t may be possible to identify an extricable question of law from within what was initially characterized as a question of mixed fact and law (Housen, at paras. 31 and 34-35). Legal errors made in the course of contractual interpretation include “the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor” (King, at para. 21). Moreover, there is no question that many other issues in contract law do engage substantive rules of law: the requirements for the formation of the contract, the capacity of the parties, the requirement that certain contracts be evidenced in writing, and so on.

[15] As this court confirmed, a “determination as to whether a concluded agreement exists does not depend on an inquiry into the actual state of mind of one of the parties or on the parole evidence of one party’s subjective intention” but rather on “an objective reading of the language chosen by the parties to reflect their agreement”: Olivieri v. Sherman, 2007 ONCA 491, 86 O.R. (3d) 778, at para. 44. To decide whether an agreement was reached based on the subjective intent of one side of the bargain is “an error in principle”: Olivieri, at para. 45.

[16] We have concluded that the motion judge erred in principle by basing his decision on the evidence of the subjective intentions of the respondents.

[17] In short, the law on contractual interpretation requires the court to read the contract as a whole, giving the words their ordinary and grammatical meaning consistent with the surrounding circumstances at the time the contract was formed. The court is not to consider the subjective intentions of the parties. The interpretive process should consist only of objective evidence of the background facts at the time of the execution of the contract: Sattva, at paras. 57-59.

[18] The objective evidence of the background facts at the time of drafting the 2022 Minutes is as follows. There were multiple lawsuits. All parties went to the mediation in 2022. All parties were represented. The parties chose to use the 2017 Mediation List of equipment from the 2017 Mediation. Where specificity was necessary, the 2017 Mediation List was amended, as for example, by adding the words that excluded the El Tigre snowmobile from the 2017 Mediation List. The amended 2017 Mediation List was reflected in the draft 2022 Minutes that were circulated to all parties and reviewed by counsel.

[19] With respect to the tractor, it is clear to an objective reader that there is a minor typographical error. The 2017 Mediation List refers to model 1466 – the correct model. The 2022 Minutes refer to 1496. There is no 1496. Gerald’s statement that he relied on the number 1496 makes no sense. Accepting Gerald’s statement would lead to an absurd result, and the motion judge was wrong to rely on his evidence. Scott is entitled to International Tractor model 1466.

[20] The snowmobiles were listed as a group. Scott was to have five snowmobiles. Bryan contends that, because he was not a party to the 2017 Mediation, he does not need to hand over the snowmobiles and the trailer. We do not agree. The 2022 Minutes incorporated the 2017 Mediation List by reference, and it was agreed to by all parties. Scott is entitled to choose the snowmobiles from among those owned by the respondents except for “El Tigre,” which was excluded.

[21] Scott has advised that he chooses four snowmobiles: (i) 1971 King Cat 4- cylinder snowmobile VIN 161015; (ii) 1981 El Tigre 6000 snowmobile VIN 1018836; (iii) Yamaha 4-cylinder snowmobile VIN VX800W8BU003720; and (iv) 2003 black firecat F7 snowmobile VIN 4UF03SNW33T172731. The respondents did not address the specifics of his choice. We agree with Scott that, under the circumstances, clarity is important and so order that Scott shall receive these four snowmobiles.

Disposition

[22] Accordingly, an order shall go: granting the appeals; setting aside the Orders; granting the Motions, and ordering judgment in accordance with the 2022 Minutes; and, for greater specificity, ordering that the four snowmobiles listed above be delivered to Scott forthwith. Costs are payable to the appellant by the respondents jointly and severally as follows:

(i) $17,000 inclusive of disbursements and HST for the appeal; and (ii) $12,000 inclusive of disbursements and HST for the motions below.

“E.E. Gillese J.A.” “M.L. Benotto J.A.” “J. Copeland J.A.”

[1] This point was clarified by counsel for Scott Lozon during the hearing.