ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 06-28661
DATE: 2012-06-04
B E T W E E N:
WHITEHALL HOMES & CONSTRUCTION LTD.
Jon-David Giacomelli and Raong Phalavong, for the Plaintiff
Plaintiff
- and -
BRIAN HANSON AND ELAINE HANSON
Brian Campbell, for the Defendants
Defendants
HEARD: January 12 and 13, 2012
The Honourable Madam Justice J. A. Milanetti
BACKGROUND
[1] The defendants Hanson bring this motion to amend their statement of defence and cross-claim.
[2] The plaintiffs Whitehall bring a cross-motion to enforce a settlement entered into by the parties on June 13 th , 2008. Whitehall seeks Judgment in accordance with the Minutes of Settlement pursuant to Rule 20, saying that there is no genuine issue requiring a trial. If Whitehall is unsuccessful on this cross-motion, they consent to the amendments being sought by the defendant Hanson’s.
[3] Voluminous materials were filed before me including the motions, transcripts of cross-examinations, and very lengthy factums/books of authorities.
[4] I had virtually a full day’s argument from the plaintiff moving party on the cross-motion. They spent considerable time going over the contract between the parties – a contract deriving from the Minutes of Settlement signed by each of the parties to the action and the Tarion Warranty Corporation on June 13 th , 2008.
FACTS
[5] The background to this action is quite straightforward. Whitehall was engaged to build a high end luxury home for the Hanson’s for $1.425 million dollars. The Hanson’s claimed significant deficiencies in the construction and thus held back $200,000; making complaint to the builder and to Tarion.
[6] Whitehall launched this action seeking payment of the $200,000 hold back money. The Hansons, who moved into the house on April 26 th , 2006, defended and advanced a cross-claim.
[7] A settlement meeting/mediation was arranged by Tarion between the parties and was held May 12 th , 2008. The meeting/mediation was unsuccessful. Neither of the parties had lawyers with them at the mediation.
[8] Discussions between the parties continued after the failed mediation; ultimately minutes of settlement were signed by all on June 13 th , 2008.
[9] The final paragraph of the minutes (at paragraph 15) states that:
“The parties acknowledge having had the opportunity to seek legal advice and acknowledge that these are a binding agreement on them freely entered into.”
[10] The agreement is broken down by heading. These are: Preamble; Homeowners Agreement to Settle; Builders Agreement to Settle; Releases and Discontinuance of Litigation; and Tarion’s Agreement to Settle.
[11] While the agreement references the exchange of mutual releases (in respect of the discontinuance of the civil action), and obtaining of orders reflective of that discontinuance (on a without costs basis), such steps were never completed.
[12] I learned that Whitehall’s solicitor had drafted a release and forwarded it to the Hanson’s solicitor. Hanson’s solicitor said he was seeking instructions but had some concerns about the wording. He provided no alternate version. The release was never signed by the defendants Hanson.
POSITIONS OF THE PARTIES
[13] The plaintiffs argue that the signed minutes represent a contract between the parties; a contract this court should enforce.
[14] While the documentation presented on these motions is extensive, and the argument long, the plaintiff suggests that the case is quite simple – should the three page Minutes of Settlement signed by the parties be seen as an enforceable agreement/contract between them thereby terminating this litigation. They further suggest that the defendants Hanson changed their mind after the fact and now raise a number of issues, all irrelevant and mainly red herrings to make the matter seem more complicated than it is.
[15] The Hansons say there was no enforceable settlement as:
No release was provided;
The agreement was signed when the defendants were under duress/being pressured to do so;
The plaintiff and Tarion had held back the key Thermal Imaging Report outlining numerous significant flaws in construction (the report was dated June 11 th , 2008 and the agreement was signed June 13 th , 2008). Both Tarion and the plaintiff denied that they had the report before signing the settlement document;
The plaintiff did not fulfill his end of the agreement thereby vitiating it, i.e. they did not provide the defendant the manufacturers warranties referenced in paragraph 11 of the agreement;
Tarion was in a conflict of interest.
The agreement was ambiguous, incomplete, and unenforceable.
[16] It is important to note that each of the parties was represented by counsel throughout – and certainly at the time the minutes were signed. As such, I accept that while counsel were not invited to the Mediation itself (May 12, 2008), counsel were available to the parties before and after it (although I did understand the defence counsel for the Hansons was away on vacation for some of the period between the settlement meeting and the actual signing of the minutes on June 13,2008). A notice of change of solicitor was filed by the defendants in May 2009.
[17] It is the position of Whitehall that between the June 2008 agreement and the May 2009 change of solicitors, the parties were acting on the agreement. The Hanson’s were handling the subtrades themselves – contractors were coming into the house, and correcting deficiencies, often without remuneration. Whitehall did nothing to recover the $200,000 it claimed to be owed in the statement of claim.
[18] As such, they argue that if the settlement is not enforced, the defendant Hansons have had a windfall. They kept the $200,000 Whitehall sought in their claim, had deficiencies corrected at no charge, and have lived in the home since 2006.
[19] Further, the plaintiff alleges prejudice. They have not had the benefit of the $200,000 they say they were owed under the contract, and are unable to effectively defend the allegations of the Hanson’s as remedial work has been undertaken over the past six years. They are thus unable to establish the state of their own work product alleged to be deficient.
[20] Whitehall also claims it destroyed some documentation as a result of the settlement arrived at in 2006.
THE LAW
[21] The recent Court of Appeal decision of Combined Air Mechanical Services v. Flesch , 2011 ONCA 764 sets out the current test for summary judgment. A motions judge must ask if:
Can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of a trial?
[22] While the record before me is most voluminous, and the arguments extensive, I find that the issue for my consideration is quite narrow. Should the settlement arrived at between the parties on June 13 th , 2008 be enforced?
[23] I read with interest and could quote extensively from the decision of Chapnik, J. in Cellular Rental Systems v. Bell Mobility Cellular [1995] O.J. No. 721 (Gen. Div.) affirmed 1995 O.J. No. 3773 (C.A.) , Justice Chapnik was faced with a motion under Rule 49.09 for a judgment based on an accepted offer to settle. She quotes Canada Square Corp. v. VS Ltd . (1981) 1981 1893 (ON CA) , 34 O.R. (2d) 250 (C.A.) and the Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991) 1991 2734 (ON CA) , 79 DLR (4 th ) 97 (Ont. C.A.) which state:
An agreement to settle a claim is a contract. To establish the existence of a contract, the parties’ expression of agreement must demonstrate a mutual intention to create a legally binding relationship and contain agreement on all its essential terms. (para. 17)
[24] I was taken carefully through the minutes by counsel. I found them to be clear and comprehensive.
[25] I have significant context from reading the materials filed, most particularly the minutes and the pleadings in the action.
[26] The statement of defence is extensive and cites numerous deficiencies and inadequacies. It states it is not limited to deficiencies then known. Paragraph 24, for instance, says the deficiencies listed “…are not intended to constitute a complete enunciation of unacceptable work or to prejudice Hanson from calling evidence as to further deficiencies”. Despite this language, both parties agreed to end the litigation between them.
[27] The context of the pleadings before me suggest that the parties contemplated litigation of all deficiencies in construction. These pleadings were in place at the time of the settlement entered into by the parties, in consultation with their respective lawyers.
[28] I am not to look beyond the plain meaning of the words used in the settlement document, understood in context, unless to do so would lead to some absurd or illegal result. I see no need to look behind the wording set out.
[29] Moreover, the parties are presumed to have intended the legal consequences of their actions. This is particularly so when both are represented by counsel throughout. The intentions of the parties seem fair to me – they are each agreeing to resolve the dispute they have with one another as a result of construction of this home.
RELEASES
[30] As is common, the minutes call for mutual exchange of releases and an order dismissing both the action and counterclaim. The defendants Hanson argue that these are essential terms of the contract; non-compliance effectively repudiates the contract. I must determine if they are essential terms.
[31] It is clear that the onus of proving repudiation is on the party claiming it. I note that it would be rare for conduct subsequent to a settlement agreement to amount to repudiation ( Fieguth v. Acklands Ltd . 1989 2744 (BC CA) .
[32] In the case before me Whitehall provided a release, the Hansons neither signed nor provided an alternate version. The obligation to exchange releases was a mutual one. It did not rest with Whitehall alone.
[33] Over and above, rather than treating the contract as at an end, I find that both parties continued to act upon the agreement struck on that day in June 2008.
[34] I find that in the context of the case before me, the agreement was complete when the settlement minutes were signed. The releases/order are merely reflections of that written settlement. The defendants should not be allowed to set aside the contract when they did not hold up their end of the mutual obligation relating to the provision of releases and the dismissal order.
[35] This is particularly so given that I have an executed document, (signed by sophisticated individuals with the benefit of legal counsel), and significant steps taken in furtherance of it. The plaintiff no longer pursued the $200,000 they say they were owed. The defendants Hanson began to deal directly with the subtrades to remedy the deficiencies (presumably utilizing these funds).
[36] While the defendants argue that the plaintiffs failed to provide the warranties agreed to in the settlement document, I was presented no evidence that the defendants were ever thwarted in their effort to have work done by this non-production. It seems clear that Whitehall did not provide these warranties nor did the homeowner ask for them. I was presented no evidence that demonstrated that the Hanson’s had any trouble pursing these warranties.
[37] The defendants Hanson argue that the plaintiffs told the subtrades not to cooperate with them but provided no independent evidence from those subtrades to substantiate this allegation.
[38] I would have expected such evidence given the power nature of a Rule 20 motion and the requirement that a responding party “put their best foot forward/lead trump”. They did not. Moreover, the homeowner admits that he received benefits from the subtrades.
[39] At the end of the day I find that there was a contract; a valid agreement between the parties. The defendants Hanson then ask whether such a contract should be enforced.
DURESS
[40] The defendants plead duress. There is no doubt that duress can serve to make an agreement unenforceable against a party who is compelled by the duress to enter into it. The defendants Hanson argue that they were forced to settle; pressured by Tarion and Whitehall to sign by June 13 th , 2008.
[41] I heard that Whitehall threatened to “walk away” from negotiations and Tarion threatened to write a “decision letter” wherein it would deny claims and compel the Hansons to appeal all items Tarion had rejected. Such positions would require the Hansons to fight both the Whitehall litigation and an appeal before Licence Appeal Tribunal if settlement was not arrived at.
[42] As such, both Tarion (who the Hansons say were in a conflict of interest) and Whitehall exercised undue pressure on them.
[43] I must say I was unimpressed with this argument. The defendants Hanson were not unsophisticated, vulnerable (emotionally or financially) or inexperienced individuals. Rather, they were both intelligent, well to do and experienced business people. Mr. Hanson is the Vice Chairman of CIBC World Markets with an MBA from Stanford University. Ms. Hanson was President of the Canadian Institute for Sustainability and Resilience at the time of the signing of the minutes.
[44] I find it disingenuous to say that either of these individuals were under duress at the time of the signing.
[45] Moreover, I find that the Hansons availed themselves of legal advice throughout the process and before and after signing the settlement document. The “duress” was not mentioned until the defendants responded to this motion to enforce the settlement.
THERMAL IMAGING REPORT
[46] The Hansons contend that Whitehall and Tarion held back the Thermal Imaging Report dated June 11 th , 2008 until after the minutes were signed on June 13 th , 2008.
[47] They contend that this document revealed significant additional damages and deficiencies that were unknown to them at the time of signing.
[48] Whitehall denies having the report prior to the signing. Regardless, it is clear from the evidence presented that Mr. Hanson himself knew the substance of the report before he signed the minutes.
[49] His email of June 11 th , 2008 and the letter from his lawyer dated June 13 th , 2008 (before the minutes were signed) reveal that they in fact had in-depth knowledge of the content of the report before it was ever released.
[50] As such, I have not been persuaded that the allegations relating to the thermal imaging report have been proven on the evidence before me. It does indeed appear to be a ‘red herring’. Moreover, I do not accept this as a basis for failing to enforce the settlement given the defendant’s obvious familiarity with its contents before entering into the settlement.
CONCLUSION
[51] At the end of the day, I find that the Minutes of Settlement signed by the parties to this litigation constitute an enforceable contract. I was not persuaded that they should be ignored or the contract set aside.
[52] Settlement between parties should be encouraged and supported. It is contrary to public policy to merely set agreements aside because someone changes their mind; significantly after the fact. In this regard I accept the language of my colleague Justice Sproat that …
…parties should be encouraged to take settlement discussions seriously and carefully and that their motivation to settle should not be eroded by a concern that settlements will be easily avoided by litigants having second thoughts.
( Vanderkop v. Manufacturers Life Insurance Company , 2005 39686 ON S.C.)
[53] Judgment shall go in accordance with the Minutes of Settlement entered into by the parties on June 13, 2008.
[54] If the parties are unable to resolve costs they may provide 3 page written submissions within 20 days of this decision.
Released: June 5, 2012 ___________________________
MILANETTI J.
COURT FILE NO.: 06-28661
DATE: 2012-06-05
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
WHITEHALL HOMES & CONSTRUCTION Plaintiff
- and -
BRIAN HANSON AND ELAINE HANSON Defendants
REASONS FOR JUDGMENT
MILANETTI J.
JAM:mg
Released: June 5, 2012