Court File and Parties

CITATION: ADT Security Services Canada, Inc. v. Fluent Home Ltd., 2023 ONSC 5052

DIVISIONAL COURT FILE NO.: CV-17-00576133-0000

DATE: 20230914

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: ADT SECURITY SERVICES CANADA, INC. and ADT CANADA INC., Plaintiffs

AND: FLUENT HOME LTD. and GRAHAM WOOD, Defendants

BEFORE: D.L. Corbett J.

COUNSEL: John K. Downing, for the Plaintiffs

I. Jamie Arabi, for the Defendants

HEARD: at Toronto by ZOOM, August 29, 2023

ENDORSEMENT

D.L. Corbett J.

[1] This endorsement follows up on my endorsement of July 26, 2023, which sets out the background (2023 ONSC 4360), and my subsequent case management endorsements scheduling this motion for judgment for August 29, 2023.

[2] The plaintiffs move for judgment on a settlement allegedly agreed at a pre-trial conference before M.A. Sanderson J. on April 14, 2023. The defendants argue that no binding settlement was reached and that the "agreement in principle" reached before Justice Sanderson did not include all "essential terms" required to create a legally binding contract.

[3] The accord reached before Sanderson J. was that the defendant Fluent would pay $1.65 million in full and final satisfaction of the plaintiffs' claims. The parties confirmed these terms to Sanderson J. and expressly confirmed that this was a firm and binding agreement. On this basis, Sanderson J. vacated pending trial dates in May 2023 for an anticipated five-week trial, dates that had been scheduled the previous August.

[4] The parties were subsequently unable to agree on the date(s) by which settlement funds would to be paid and all of the terms of releases to be exchanged among the parties.

[5] The parties intended to create a firm and binding settlement agreement on April 14^th^, and both the parties and the court relied on this express intention in concluding the pre-trial conference and vacating the trial dates. The payment date(s) and the terms of the release were not contested issues during the pre-trial conference, and the parties did not treat these issues as "essential terms" prior to entering into the settlement agreement. They did not qualify their agreement as being "subject to execution of settlement documents".

[6] The law in this area is well established. There is an overriding public interest in enforcing settlements to promote the interests of the litigants (saving them the time and expense of a trial) and reducing strain on an overburdened court system. In deciding whether a settlement has been reached, the court considers whether there was a mutual intention to create a legally binding contract, and whether there was agreement on all essential terms of settlement: Sable Offshore Energy v. Ameron International Corp., 2013 SCC 37; L-Jalco Holdings Inc. v. Lawrynowicz & Associates, 2018 ONSC 4002. Where parties have settled litigation, but come to disagree on non-essential terms, the court implies reasonable terms.

[7] In this case, there was nothing said during pre-trial discussions about the timing of the payment. Nothing in the context of the discussions founds an argument that payment was anything other than an immediate obligation. It is normal to allow some short period to generate a cheque or other payment, and where there has been no express agreement on the precise deadline, the law infers a "reasonable period" for payment. In this case, the reasonable options would be, in my view, seven days, ten days or thirty days. Thirty days is what the plaintiffs proposed, and what was approved by counsel for the defendants subject to instructions. In this context, I conclude that thirty days is a "reasonable period".

[8] Parties often negotiate release terms that are broader than the effect of a simple judgment – and they are free to do so. Where the parties do not agree on the terms of a release, the court implies a simple release, consistent with ordinary practice and commercial reasonableness, given the overall context of the claim.

The Defendants' Argument

[9] The defendants rely upon the evidence of Mr Hunsaker, in-house American counsel, who was present at the pre-trial conference on behalf of the defendants. He was "the client" at the pre-trial conference. The defendants did not submit an affidavit from a representative of their litigation counsel who was present at the pre-trial and in particular, was present during the discussions among counsel and Justice Sanderson. The plaintiffs rely on the evidence of Brian Whitwham, one of ADT's counsel, who was present at the pre-trial conference, including the discussions among counsel and Justice Sanderson.

[10] Mr Whitwham's evidence sets out what was said before Justice Sanderson. This evidence establishes a settlement on the terms described above, and establishes that the parties agreed that this was a "firm deal". This evidence is not contradicted by the evidence of Mr Hunsaker – he does not contest that these things were said by counsel for the parties to Justice Sanderson or that these things said by litigation counsel were binding on their respective clients. Nor does he provide evidence that the statements made by defendants' counsel were not authorized or did not reflect the defendants' instructions.

[11] In his evidence, Mr Hunsaker does depose that the parties reached an "agreement in principle" but that there were "essential terms" that were not yet agreed. There are three ways to look at this evidence.

[12] First, the evidence can be viewed as assertions of fact, of which the deponent has personal knowledge: he was present at the pre-trial conference, he was the representative of the client, and presumably can be taken to know to what he authorized agreement. As assertions of fact, I reject them outright as false. Mr Hunsaker does not explain how they fit with the clear statement to Sanderson J. on April 14^th^ that the parties had a firm deal, and it does not explain why the form of release and date of payment were "essential terms" when they were not raised during settlement discussions prior to the commitment to the settlement before the judge. I do not even accept that in Mr Hunsaker's own mind he considered the settlement to be "in principle" only, subject to agreement on outstanding essential terms: he does not explain why, as a trained lawyer, he did not instruct counsel to specify that the settlement was not binding until other essential terms were agreed.

[13] Second, these statements could be seen as inferences drawn from the facts. Mr Hunsaker draws these inferences, not from any facts pertaining to events at the pre-trial conference, but from the subsequent dealings between the parties, in which points of disagreement arose. The time to assess whether there was a binding settlement is April 14^th^. Events after that time cannot give rise to an inference about the state of the agreement on April 14^th^. I conclude that the inference apparently drawn by Mr Hunsaker is not available on the facts as of April 14^th^.

[14] In any event, the disagreements after April 14^th^ do not transform non-essential terms to essential terms. The disagreement about the timing of payment is characterized as an essential term by Mr Hunsaker because of subsequent financial reversals that made it impossible for the defendant Fluent to meet a payment obligation within a reasonable period. These facts were neither known nor contemplated by the parties on April 14^th^. Fluent's obligation to pay the settlement funds within a reasonable period is not affected by subsequent financial events at the company.

[15] Third, these statements could be viewed as an opinion of law. If that is what they are, then I reject that opinion. The parties clearly stated their mutual intention to enter a binding settlement agreement, they declined to qualify that agreement, so advised the presiding judge. The law on these points, in Ontario, as reviewed briefly below, is settled.

[16] I prefer to characterize Mr Hunsaker's evidence as stating an incorrect inference or an erroneous legal opinion of law, rather than stating factual falsehood.

[17] The cases relied upon by the defendants do not assist them on this motion: they are clearly distinguishable. In Thai Agri Foods v. Choy Foong Trading, 2013 ONSC 883, counsel expressly – and repeatedly – made it clear that settlement had not yet been agreed and there were still outstanding issues that had to be agreed before the parties would be bound to an agreement. This contrasts with the express statement made to Sanderson J. that the parties in this case had a firm and binding deal. In Copperthwaite v. Reed, 2016 ONSC 1824, one side insisted on four "important third-party conditions" as a condition for settlement. Three were agreed; one was not, and so agreement was not reached. This contrasts with the settlement agreed before Sanderson J., in respect to which there were no issues that had been raised that had not been resolved. In both North Atlantic Marine Supplies & Services Inc. v. Hickey, 2021 NLCA and in Dewar Pacific Projects Ltd. v. Fama Woodward's Development Ltd., 2003 BCSC 53, the timing of payment was found to be an essential term, but in contexts where the timing of payment had been a contentious issue in the negotiations. This contrasts with the negotiations in this case in which the timing of payment was not raised until after settlement had been agreed. In Bank of Credit and Commerce Canada (Re Winding Up Act), 1993 2727 (BCSC), the court relieved a party of apparent acceptance of a settlement offer on the basis of an "honest misunderstanding" – effectively a mistake that led the court to conclude that there had not been, in substance, agreement on essential terms. There were no mistakes or misunderstandings respecting the terms agreed before Sanderson J.: this was a straightforward settlement agreement.

[18] As I indicated at the conclusion of the hearing, this is not a close call. The terms of settlement are simple. The manner in which the agreement was expressed conveyed the parties' commitment to the settlement, and that commitment was relied on by the parties and the court in vacating the pending trial dates. The precise wording of the release is not an essential term in the context of this settlement: 1648290 Ontario Ltd. v. Akhaven, 2018 ONSC 6122 (Div. Ct.). Likewsie, the precise timing of payment of the settlement funds is not an essential term in the context of this settlement: Canada v. Stephen Moffett Ltd., 2021 FC 1223; Hughes v. The City of Moncton, 2006 NBCA 83.

[19] At the conclusion of the hearing I granted judgment in specified terms, including agreed costs, which have since been incorporated into a formal judgment, which I have signed. The parties have subsequently advised that they have agreed on the terms of a release, after I advised the parties, at the conclusion of the hearing, of the court's general approach to settling a release with outstanding points of disagreement. Thus this matter is now concluded in this court.

D.L. Corbett J.

Released: September 14, 2023