COURT FILE NO.: CV-12-451439

DATE: 20120712

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CabCom Network Inc., Applicant

AND

Strategic Media Outdoor Inc., Respondent

BEFORE: Madam Justice Darla A. Wilson

COUNSEL: Matthew Morden, Counsel for the Applicant

Gillian Dinning, Counsel for the Respondent

HEARD: July 5, 2012

ENDORSEMENT

[ 1 ] This is an application brought to enforce a settlement agreement allegedly reached between the parties on March 16, 2012. The Respondent, Strategic Media Outdoor Inc. (“Strategic”) disputes that there was a binding settlement of all matters between the parties.

Background

[ 2 ] The Applicant, CabCom Network Inc. (“CabCom”) is a media company which provides an advertising network using taxicabs. The Respondent is an advertising corporation specializing in outdoor advertising.

[ 3 ] The parties entered into an agreement dated March 8, 2011 whereby the Applicant granted the Respondent the exclusive rights to provide sales representation for the Applicant’s rooftop taxicab advertising network in Canada. The relationship between the parties deteriorated rapidly after execution of the agreement. Both sides retained counsel, although the evidence is that the principals of the companies continued to engage in discussions about the terms of resolution of the agreement.

[ 4 ] It is not disputed that there were settlement discussions and offers exchanged between the parties. The Applicant through its solicitor Reginald Watson (“Watson”) conveyed by letter dated March 16, 2012 that it was prepared to settle based on a number of terms, one of which was payment of the sum of $25,000 by CabCom to Strategic. According to Watson’s affidavit, later that day he was instructed by his client to increase the monetary payment to $50,000. He therefore spoke to Brian Noble (“Noble”), counsel for the Respondent, that same day and advised him that all the other terms of CabCom’s offer remained the same but the offer was a payment of $50,000 as opposed to the $25,000 that was in Watson’s letter.

[ 5 ] In his affidavit sworn May 10, 2012, Noble disputes that it was Watson who advised him that the sum had been increased from $25,000 to $50,000. Rather, he deposes that it was his client, Mr. Pitoscia, who advised that he “had discussed a payment by CabCom to Strategic in the amount of $50,000 plus 25% on all Agency Proposals for 2012.” [para. 13]. Noble deposes that it was this conversation that prompted his e-mail to Watson of March 16, 2012 in which he advised “…my client has confirmed that it has agreed to settle for $50,000 plus 25% of all sales finalized by Strategic for CabCom on 2012 revenues…”

[ 6 ] Following receipt of this e-mail on March 19, 2012, Watson had another solicitor in the office send draft Minutes of Settlement and a Release to Noble for execution by his clients.

[ 7 ] The following day, March 20, 2012, Noble returned the drafts with a few minor amendments. Later that day, counsel for the Applicant confirmed that CabCom was content with the requested amendments.

[ 8 ] On March 27, 2012, Watson wrote to Noble confirming settlement. There was no reply to this letter and Watson wrote again on March 30, 2012.

[ 9 ] On March 30, 2012, Noble wrote back advising there was no binding agreement reached between the parties. It was suggested that the Applicant could proceed with litigation to resolve the issue of the alleged settlement. The within application was issued April 17, 2012.

The Positions of the Parties

The Applicant

[ 10 ] It is the position of CabCom that there was no limitation on the authority of solicitor Noble so Watson was entitled to rely on his e-mail confirming settlement between the parties. The terms of the settlement were set out in Watson’s letter of March 16, 2012 and the only change was the increase in CabCom’s payment from $25,000 to $50,000. It is submitted the terms of the settlement were clear and the Respondent cannot now say that it only agreed to two of the terms and was unaware of the others such as the non-compete clause. When the totality of the evidence is reviewed, it is clear that there was a settlement and the conduct of the parties is consistent with this.

The Respondent

[ 11 ] Counsel submits that there was no binding agreement to settle because the Minutes of Settlement were never executed. Furthermore, while the Respondent concedes it agreed with the $50,000 payment and the 25% of all agency proposals, it disputes that it agreed with any other terms of the alleged settlement, specifically the non-compete clause and the timing of the lump sum payments. As well, there were on-going discussions of settlement between the principals of the parties and further offers were made. It is submitted this behaviour is inconsistent with the conclusion that there was a full and final settlement of all issues between the parties.

Analysis

[ 12 ] In order for the Court to find a binding contract was entered into between parties with respect to the settlement of a matter, the Court must find that the parties had a mutual intention to create a legally binding contract and reached agreement on all of the essential terms: Olivieri v. Sherman [i]

[ 13 ] As long as the parties have agreed on the essential terms of the settlement, the final documentation does not have to be executed in the form of a Release or Minutes of Settlement: Bawitko v. Kernels [ii]

[ 14 ] In my view, the letter of Watson of March 16, 2012 sets out the various terms and conditions of CabCom’s offer to settle. The monetary payment was subsequently increased from $25,000 to $50,000. The e-mail of Noble of the same date confirming Strategic was agreeable to the settlement is a clear acceptance of that offer. There were no limitations placed on his retainer and his e-mail makes it clear that he is in receipt of instructions from his client. While the affidavit of Noble sets out the communications he had with his client subsequent to March 16, 2012 in terms of the clauses in the draft Minutes of Settlement, in my view, they are irrelevant to the issue of whether the parties entered into a binding settlement on March 16, 2012. If Noble thought the draft Minutes and Release were acceptable, but had not had an opportunity to confirm that with his client, he ought to have advised Watson in his e-mail of March 16, 2012 and made it clear that the proposed settlement was subject to his receipt of instructions from his client on all of the terms and the closing documentation. His failure to do so led Watson to conclude, quite properly, that the parties had settled their issues.

[ 15 ] While Ms. Dinning argued that only two of the terms of the offer of CabCom were accepted, I do not find this argument persuasive. The evidence before me indicates that there had been negotiations between the parties and between their counsel with a view to resolving the matter. Clearly, the quantum of the cash payment was at issue as was the percentage payment of commissions on Agency Proposals. Mr. Watson’s letter with the offer clearly includes a number of other terms, such as the non-compete, the signing of a final release and Minutes of Settlement. When Noble was reading the offer of settlement, it must have been clear to him that the issue of a non-competition term was part of the settlement and so was the signing of a final Release. Certainly, Noble could not have believed that his e-mail of March 16, 2012 only constituted an agreement to two terms of the settlement offer. Watson had enclosed a Release for signature and Noble indicated that the Release had to be amended to include the $50,000 lump sum payment figure.

[ 16 ] In my view, the exchange of communication on March 16, 2012 constitutes a clear offer to settle with various terms, which was accepted by Noble’s e-mail of the same date.

[ 17 ] Ms. Dinning submitted that there can be no binding agreement between the parties because the Minutes of Settlement were never signed. I reject this submission. It is the usual practice for parties to a settlement to sign the closing documentation following the agreement to settle and the case law is clear that a binding agreement is not subject to the signing of Minutes of Settlement. In this case, draft Minutes of Settlement and a draft Release were sent to Noble on March 19, 2012 and they included the non-competition clause and the payment of the $50,000 in three installments, terms which are now disputed by the Respondent. However, after Noble reviewed the draft documents, he made some minor amendments. The Respondent now asserts that the non-competition clause and the installment payments were never discussed and never agreed to. If this was their position throughout, surely when the draft closing documents were sent to their solicitor, Noble would have immediately advised the Applicant that these terms did not form part of the settlement agreement. He did not react at all to these terms nor attempt to remove them from the draft documents. In fact, it was not until March 30, 2012 that Noble sent a letter to Watson advising that the Respondent took the position there was no settlement and this was following receipt of two letters from Watson concerning finalizing the settlement.

[ 18 ] While counsel for the Respondent argues that the only instructions he sought from Strategic were with respect to the amount of the payment and the percentage commission to be paid by CabCom, that makes little sense when the offer made by the Applicant and set out in the letter of Watson included various terms as part of the offer. Noble agreed during his cross-examination that when Watson spoke to him about the proposed settlement, the only term that was being changed was the monetary payment to be made by CabCom.

[ 19 ] The description of CabCom unilaterally making changes to the terms of the settlement as submitted by counsel for the Respondent is not borne out by the evidence before me. I do not accept that these terms came as a surprise to the Respondent; they were clearly set out in the offer to settle of March 16, 2012 and included in the Minutes of Settlement which were forwarded to Noble on March 19, 2012. No objection was taken to their inclusion until Noble’s letter of March 30, 2012.

[ 20 ] Furthermore, although counsel for the Respondent submitted that the payment of the $50,000 in installments was not agreed to and constitutes an essential term of the settlement, I do not agree. Rather, the manner in which the payment of the agreed-up settlement sum was to be made was “merely matters incidental to the essential terms of the agreement” as Justice Himel noted in Perri v. Concordian Chesterfield Co . [iii]

[ 21 ] While the solicitor for the Respondent attempts to explain the events that transpired between the principals of Strategic and Noble after March 20, 2012, in my view, they are not relevant because it is clear that Noble had the authority to act on behalf of his client in the settlement negotiations. After Noble advised Watson that the Minutes of Settlement were fine following his amendments, there was no reason for Watson to believe that Noble still had to obtain instructions from his clients on the closing documents. Noble had the clear authority to bind his client and that is confirmed on his cross-examination. The fact that he may not have provided correspondence to his client or other documents is of no concern to the Applicant or his solicitor who was negotiating on its behalf.

[ 22 ] Pitocia, a principal of Strategic, confirmed that he received Watson’s letter of March 16, 2012 with the offer on March 19, 2012 so it is difficult to conceive of how he could not have understood there were various terms included in the offer to settle. They are clearly set out in the letter.

[ 23 ] If Noble was surprised by the inclusion of additional terms to the settlement, one would have expected that he immediately would have notified Sexsmith on March 19, 2012 that these were new terms that had not been discussed and he would have to obtain instruction on them. He made no reference to them at all, even though he made some amendments and sent the documents back to Sexsmith for finalization. If that were the case, Noble ought to have advised Sexsmith that he had made some changes to the documents and was waiting for his client’s instructions before they could be finalized.

[ 24 ] When the evidence concerning the events surrounding the offer and the response to the offer is scrutinized, along with the conduct of the parties and their counsel, in my view, the only reasonable interpretation of what transpired is that CabCom made an offer to settle which was comprised of various terms, the monetary term was increased, counsel for Strategic accepted the offer and closing documentation was prepared, reviewed, amended and finalized. After this, it appears that the principals of the Respondent attempted to resile from the settlement. This was communicated to their counsel which is what prompted Noble’s letter of March 30, 2012 advising Watson for the first time that his client took the position that no settlement had been achieved.

Conclusion

[ 25 ] The Application is granted. Judgment shall issue in accordance with the settlement reached between the parties on March 16, 2012. The parties shall execute the Minutes of Settlement and Full and Final Release which was approved by the solicitor for the Respondent on March 20, 2012.

[ 26 ] With respect to the issue of costs, I urged counsel to agree on quantum and they have done so. Counsel agreed that costs on a partial indemnity scale ought to be fixed in the sum of $23,000 and at $34,500 on a substantial indemnity scale.

[ 27 ] Counsel for the Applicant requests costs on a substantial indemnity scale, arguing that it was successful on the application and that it made a Rule 49 offer (under the Rules of Civil Procedure , R.R.O. 1990, Reg. 194) in an attempt to avoid the hearing of the application. Further, it argues that the Respondent refused to attend mediation or arbitration, making the hearing of the application inevitable.

[ 28 ] Counsel for the Respondent submits that the appropriate scale of costs is partial indemnity. In the written submissions, there is no particular reason that is relied upon for this position, apart from the submission that the application dealt with a narrow point of law and there were no unusual steps that were required. It is submitted that the Respondent was unwilling to negotiate with the Applicant because of the acrimonious relationship that had developed between them.

[ 29 ] In my view, the hearing of this application ought not to have been necessary. I agree that it involved a narrow point of law: whether the parties had reached a binding settlement. It must have been obvious that one party was going to win and the other was going to lose; this was not a case where there could have been partial success.

[ 30 ] The offer to settle delivered by the Applicant was realistic with payment by CabCom to Strategic of the lump sum of $55,000 plus the other terms; the offer to settle served by the Respondent was not realistic in my opinion. The lump sum figure was $150,000.

[ 31 ] I have considered the factors enumerated under Rule 57, including the time spent, the results achieved, and the complexity of the matter, as well as the application of the principle of proportionality: Rule 1.04(1).

[ 32 ] Furthermore, I have taken into account the principles set forth by the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario [iv], specifically that the overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant.

[ 33 ] In light of the outcome of the application, and the offer to settle that was delivered, the appropriate scale of costs is that of substantial indemnity. The Respondent wished to “roll the dice” and see what happened in court. They are entitled to take that position, but must also accept the cost consequences that result. The Respondent shall pay to the Applicant it costs on a substantial indemnity scale, fixed as agreed between counsel, in the sum of $34,500 forthwith.

D.A. Wilson J.

Date: 20120712

[i] Olivieri v. Sherman 2007 ONCA 491 (Ont. C.A.)

[ii] Bawitko Investments Ltd. v. Kernels Popcorn Ltd . (1991) , 79 D.L.R.(4 th ) 97 (Ont. C.A.)

[iii] Perri v. Concordian Chesterfield Co. 2003 CarswellOnt 6240 (Ont. S.C.)

[iv] Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3 rd ) 291 (C.A.)