ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO: CV-99-169440
DATE: 20121115
B E T W E E N:
Dofasco Inc. Plaintiff/Moving Party - and - National Steel Car Limited Defendant/Responding Party
Gail Goodman , for the Plaintiff/Moving Party
Louis A. Frapporti, for the Defendant/Responding Party
HEARD : November 6, 2012
GOLDSTEIN J.:
[ 1 ] Dofasco Inc. (“Dofasco”) brings a motion for judgment in accordance with the terms of a settlement offer that was made by National Steel Car Limited (“Steel Car”). In my view, there was no meeting of the minds. The settlement is a nullity. The motion is dismissed.
BACKGROUND:
[ 2 ] In early1999 in action number 99-CV-169440 (“Action 440”), Dofasco sued Steel Car over some land in the City of Hamilton. The parties colloquially referred to this action as “the easement action” as it concerned, among other things, the question of an easement over adjoining property that the two corporations owned.
[ 3 ] Later in 1999, Steel Car sued Dofasco in action number 99-CV-172526 (“Action 526”). The parties have colloquially referred to this action as “the water action” as it concerned, among other things, payment for water allegedly supplied to Dofasco by National Steel Car and not paid for.
[ 4 ] The two actions litigated many of the same issues. As a result, in 2011 counsel for Dofasco brought a motion in writing and on consent to have the two actions “consolidated and heard together.” Master Haberman granted the order but amended it on her own motion but striking the reference to “and tried together”. By the terms of the order the consolidated action was given the court file number in Action 440. The parties have explained to me that the motion was brought “over the counter” without an appearance and no counsel were present to advise and make submissions to Master Haberman.
[ 5 ] No doubt Master Haberman made the amendment because Rule 6.01(d) contemplates three distinct types of orders where separate proceedings are brought together. The proceedings can either be consolidated, tried together, or heard immediately one after the other.
[ 6 ] After Master Haberman’s order the parties took no steps to truly consolidate the actions. There were no fresh pleadings, there were no new affidavits of documents, there were no new discoveries.
[ 7 ] On March 20, 2012, Mr. Frapporti, counsel for Dofasco, wrote to Ms. Goodman, counsel for Steel Car, offering to settle the “water” action. His letter referred to Action 526. The style of cause of the Offer to Settle referred to Action 526. Ms. Goodman accepted the offer by email on behalf of her client. There was no reference in any of the documents to Action 440, the consolidated action. At the time, Action 526 did not, of course, exist due to Master Haberman’s consolidation order.
[ 8 ] The parties are now in a dispute about what was settled and the terms of the settlement. A motion before Wilson J. regarding costs did not, in my view, determine the issue. Dofasco now brings this motion for judgment in accordance with the proposed minutes of settlement.
ANALYSIS:
[ 9 ] Rule 49.09 of the Rules of Civil Procedure state:
49.09 Where a party to an accepted offer to settle fails to comply with the terms of the offer, the other party may,
(a) make a motion to a judge for judgment in the terms of the accepted offer, and the judge may grant judgment accordingly; or
(b) continue the proceeding as if there had been no accepted offer to settle.
[ 10 ] Settlement of an action is a form of contract, and the rules of contractual interpretation will be applied by a Court: Great Sandhills Terminal Marketing Centre Ltd. v. J-Sons Inc., 2008 SKCA 16.
[ 11 ] When interpreting contracts the Court should give effect to the intention of the parties as expressed in their written agreement: KPMG Inc. v. Canadian Imperial Bank of Commerce, 1998 1908 (ON CA), [1998] O.J. No. 4746 (C.A.).
[ 12 ] It is unnecessary for a court to consider extrinsic evidence in order to interpret the terms of a contract where that contract is clear and unambiguous on its face: Dunn v. Chubb Insurance Co. of Canada, 2009 ONCA 538, 97 O.R. (3d) 701 at paras. 32-33. Where a contractual provision is capable of more than one meaning extrinsic or parol evidence may be admitted to assist in resolving the ambiguity: Dunn v. Chubb Insurance Co. of Canada, supra, at para. 34.
[ 13 ] In my view, the Offer to Settle is ambiguous and capable of more than one meaning. The Offer to Settle refers to Action 526, also known as the water action. There was, however, no Action 526 at the time the offer was made and accepted. Action 526 was subsumed in Action 440 when Master Haberman ordered the actions consolidated. The Offer to Settle referred to an action that was a nullity. Accordingly, extrinsic evidence may be used to interpret the intentions of the parties.
[ 14 ] Ms. Goodman, for Dofasco, argues that since there is only one action, the Offer to Settle must have referred to everything, including the costs incurred in both actions. She says that it was the intention of the parties and the Court should give effect to those intentions.
[ 15 ] Mr. Frapporti says that the parties never intended to consolidate the actions, only that the actions be tried together. He therefore resists a global settlement and says that the parties intended only to settle Action 526, the water action.
[ 16 ] It is obvious, based on the email exchanges between the parties regarding the motion before Master Haberman, that the parties intended only that the actions be tried together and not consolidated. Although the fact that the parties took no steps to truly consolidate the actions is relevant, I have some difficulty with the notion that I should simply assume that Master Haberman’s order could somehow have been ignored because the parties took no steps to implement it. It was certainly open to the parties to go back to Master Haberman to amend the order or apply for a new order. It is not open to the parties to simply ignore it. Where actions are consolidated the parties are required to exchange fresh pleadings and conduct new discoveries: Wood v. Farr Ford Ltd., [2008] O.J. No. 4092 (Sup.Ct.). That said, however, the fact that the parties did none of these things provides me with some evidence about their intentions.
[ 17 ] It appears from a review of emails exchanged by the parties that they did not intend to truly consolidate the actions. Once the order was issued and entered it is clear that the parties did not turn their minds as to what the order meant or what effect it would have on the two actions.
[ 18 ] With those observations in mind, I turn to the question of what the parties thought they were settling.
[ 19 ] In Venture Capital USA Inc. v. Yorkton Securities Inc., 2005 15708 (ON CA), 75 O.R. (3d) 325 MacPherson J.A. set out the “cardinal rule” for the interpretation of contracts:
26 The cardinal rule of contract interpretation "is that the court should give effect to the intention of the parties as expressed in their written agreement", and where the intention of the parties "is plainly expressed in the language of the agreement, the court should not stray beyond the four corners of the agreement": KPMG Inc. v. Canadian Imperial Bank of Commerce, 1998 1908 (ON CA), [1998] O.J. No. 4746 at para. 5 (C.A.); leave to appeal refused, [1999] 2 S.C.R. vi, [1999] S.C.C.A. No. 36; Indian Molybdenum Ltd. v. The King, 1951 378 (SCC), [1951] 3 D.L.R. 497 at 502 (S.C.C.); Eli Lilly & Co. v. Novopharm Ltd., 1998 791 (SCC), [1998] 2 S.C.R. 129 at 166-168.
[ 20 ] There are at least four possible inferences that can be drawn from the exchange of emails around the Offer to Settle and the steps taken (or not taken) to consolidate the actions:
Steel Car and Dofasco both meant to settle all matters.
Steel Car and Dofasco both meant to settle only Action 526.
Steel Car meant to settle only Action 526 and Dofasco meant to settle all matters.
Steel Car meant to settle only Action 526 and Dofasco understood that, but nonetheless pressed on with the settlement believing that a judgment on all matters could be enforced against Steel Car.
[ 21 ] The first inference, which Ms. Goodman submits should be drawn by the Court, has no support in the evidence and I reject it.
[ 22 ] I also reject the second inference. It is a reasonable conclusion from the events surrounding the consolidation of the two actions as well as the email offer that Steel Car meant to settle only Action 526, the water action, notwithstanding that Action 526 no longer existed. It is unclear what Dofasco meant to settle, since the email accepting the offer simply said that the offer was accepted.
[ 23 ] The only inference that has at least some support in the evidence is the third inference. The email extending the Offer to Settle only appeared to apply to the water action, Action 526. It is not obvious, however, that Dofasco intended to limit its acceptance only to Action 526. Dofasco could be forgiven for assuming, based on the existence of Master Haberman’s order consolidating the actions, that the offer to settle referred to all outstanding matters; notwithstanding that fact, Dofasco’s email accepting the offer made no reference to any action number or any of the colloquial names for the actions.
[ 24 ] The fourth inference can be implied from the actions of the parties, but I decline to make a finding that would amount to accusing Steel Car of sharp practice since there is no evidentiary support for it, and Dofasco makes no such allegation. I make the point simply to illustrate that on any reading of the evidence, the parties were not ad idem on what was being settled.
[ 25 ] The references to an action that is a nullity, the failure of the parties to proceed with a consolidated action, and the short reply by Dofasco to the emailed offer all contribute to an air of uncertainty and a lack of clarity around the proposed settlement. I am, therefore, unable to find that the parties agreed on the substance of the settlement. There was no meeting of the minds and therefore there is no settlement to enforce.
DISPOSITION:
[ 26 ] The motion is dismissed. The parties must go back to the drawing board and re-negotiate the terms of settlement. Under the circumstances, I exercise my discretion and make no order as to costs.
GOLDSTEIN, J.
DATE: November 15, 2012
COURT FILE NO: CV-99-169440
DATE: 20121115
ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N:
Dofasco Inc. Plaintiff/Moving Party - and - National Steel Car Limited Defendant/Responding Party
JUDGMENT
GOLDSTEIN J.
Released: November 15, 2012