ONTARIO SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 07-CV-40173 A1

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

GILLES DUBE INVESTMENTS INC.

Plaintiff

– and –

SALAH SHOOMAN, ELI KHALIFE and DIMITRI KHALIFE together operating as FAST LUBE

Defendants

Thomas P. Connolly, for the Plaintiff

– and –

CANGO INC.

Third Party

Tamara Farber, for the Third Party, Cango Inc.

HEARD: June 21, 2013

REASONS FOR JUDGMENT

Métivier j.

[1] The plaintiff accepted a settlement offer from the third party defendant Cango Inc. (Cango) on January 25, 2013, in the face of a 10-day trial scheduled to start on February 4, 2013.

[2] The parties settled for $30.000 although the claim against the defendants was for $350,000. The third party’s maximum exposure might have been $235,000 – the costs of remediation.

[3] Since the settlement, the parties have not been able to agree on:

(1) the wording of the Release:

(i) the inclusion of a confidential clause;

(ii) the inclusion of a provision spelling out the enforcement of indemnification from derivative claims; and,

(2) Costs:

(a) quantum at a partial indemnity rate;

(b)pre-judgment interest.

Release Clause

(i) Confidentiality

[4] No such term of non-disclosure was mentioned in the offer.

[5] While that offer was made on the basis that Cango accepted no liability, the plaintiff has expressed his view that Cango is responsible for the damage. The defendant objects to this categorization by the plaintiff.

[6] Counsel also submits that a confidential term is “standard” and fair and reasonable.

[7] The offer stated:

The parties will execute a mutual release to be agreed upon releasing each other from damages or losses arising out of the Environmental Claim.

[8] The third party submits that since the parties cannot agree on this term, the matter should be placed back on the trial list. Counsel buttresses her position by pointing out that the service station industry is small and such a term is particularly important.

[9] With respect, I do not agree with this submission, given the facts of this case. The amount paid is so modest that it will have little precedential value. Further, the plaintiff has already shared his views and I find he had the right to do so in the absence of any mention of a confidentiality requirement.

[10] I agree with the reasoning in Abouchar v. Conseil scolaire de langue francaise d’Ottawa-Carleton 1995 CarswellOnt 4182; (2002) 58 O.R. (3d). As in that case, the parties here never discussed a non-disclosure clause before the offer to settle was accepted. There was no breach or repudiation of either the spirit of the terms of the concluded settlement. See also Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., [1995] O.J. No. 721.

[11] In the text The Law of Releases in Canada, Fred D. Cass, Canada Law Book, page 65, the author notes:

…the prudent course for a party seeking confidentiality is to bargain for it as part of the process of reaching an agreement.

[12] No confidentiality clause is implied and the release shall omit same.

Derivative Claims

(ii) The parties have agreed to the usual and standard term:

AND FOR THE SAID CONSIDERATION, the parties mutually agree not to make any claim or take any proceedings against any person or corporation who might claim contribution or indemnity under the provision of any statute and amendments thereto, or in law or in equity, or otherwise from the person, persons or corporation discharged by this Mutual Release…

[13] However, Cango wishes to add a clause which it claims is “a standard enforcement corollary to the first sentence”:

…In the event that either party takes any steps or initiates proceedings (the “initiator”) against any person, partner or corporation which claims contribution or indemnity or other relief over as against the other party, the Initiator agrees to indemnify and hold harmless the other party in respect of any claim directly or indirectly advanced against such party to this release including any pre and post-judgment interest on the claim and costs on a solicitor and client scale.

[14] This is opposed by the plaintiff.

[15] Given the relative size and strength of each party that additional provision should have been clearly set out in the offer as well.

[16] The derivative clause shall not include the further enforcement clause and the release of other claims shall be limited to the one sentence.

Costs

(a) Quantum

[17] The plaintiff seeks partial indemnity costs of $56,646.84. Cango objects to this amount, submitting that it is excessive given the amount of the settlement and the fact that only the Environmental Claim was settled.

[18] Counsel for the plaintiff claims a rate of $396.13 per hour, based on his 38 years at the Bar – a rate to which I find he is entitled and which reflects an inflationary factor added to the usual $350.00 per hour.

[19] However, in fixing costs, the focus of the court is not on a mere mathematical calculation of hours multiplied by rates, but rather on what is fair and reasonable in the circumstances. (See Dinsmore v. Southwood Lakes Holdings Ltd [2007] O.J. No. 263.

[20] Cango submits that various discounts should be applied to the amount claimed and that the plaintiff’s total costs should be fixed at $15,000 to be commensurate with the amount for which the claim was settled.

[21] While proportionality is a guiding factor in fixing costs, in this case the settlement amount does not bear a direct relationship to the costs incurred.

[22] The plaintiff has deposed that one of the factors in his decision to accept the offer was that his wife was very ill and not expected to live. Mr. Dube who was 82 years old also suffered from ill health at the time of settlement.

[23] Decisions to settle are usually multi-faceted and the costs should not flow uniquely from the settlement amount.

[24] I reject the submission that there should be a discount for expenses on the basis that this action should have proceeded as a Simplified Procedure. Similarly, there will be no discount for costs thrown away for a motion abandoned after acceptance of the offer.

[25] Taking all the circumstances here present into account and considering what is fair and reasonable, I fix the partial indemnity costs at $38,000. I find all costs claimed were for the Environmental Claim and decline to hypothesize as to what portions of which costs may not have been wholly or entirely related to that issue. The plaintiff’s counsel stated repeatedly that his costs were restricted to the Environmental Claim and I accept those statements.

(b) Pre-Judgment Interest

[26] The offer clearly states that costs will be applicable “from the date of service of the third party claim.” The pre-judgment interest should be calculated as of December 7, 2009 to December 20, 2012 and I fix it at a rate of 0.5%, which gives a total of $576.25.

[27] In summary, there will be judgment entered in terms of the settlement with the Release as set out in Appendix A of the Plaintiff’s Motion Record.

[28] Costs are fixed at $38,000, with pre-judgment interest at the amount listed above.

Madam Justice Monique Métivier

Released: June 28, 2013

COURT FILE NO.: 07-CV-40173 A1

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

GILLES DUBE INVESTMENTS INC.

Plaintiff

– and –

SALAH SHOOMAN, ELI KHALIFE and DIMITRI KHALIFE together operating as FAST LUBE

Defendants

– and –

CANGO INC.

Third Party

REASONS FOR JUDGMENT

Métivier J.

Released: June 28, 2013