ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 08-0523
DATE: 2013/08/21
BETWEEN:
JBN MEDICAL DIAGNOSTIC SERVICES INC., JOJAZ HOLDINGS INC and WILLIAM NISKER HOLDINGS INC.
Plaintiffs
– and –
1527877 ONTARIO INC., 1449312 ONTARIO INC., FAUSTO CARNICELLI, WERNER DINGFELD, HALTON FAMILY HEALTH CENTRE INC and STRESA GRUPPO INC.
Defendants
Stuart M. Law, solicitor for the Plaintiffs/Defendants by Counterclaim
Howard W. Reininger, solicitor for the Defendants/Plaintiffs by Counterclaim
– and between–
1449312 ONTARIO INC. FAUSTCO CARNICELLI, WERNER DINGFELD, HALTON FAMILY HEALTH CENTER INC and STRESA GRUPPO INC.
Plaintiffs by Counterclaim
– and –
JBN MEDICAL DIAGNOSTIC SERVICES INC., JOJAZ HOLDINGS INC., WILLIAM NISKER HOLDINGS INC., JOSEPH BERLINGIERI and WILLIAM NISKER
Defendants by Counterclaim
HEARD: July 18, 2013
The HONOURABLE MR. JUSTICE R. J. NIGHTINGALE
REASONS FOR JUDGMENT
[1] The Plaintiffs bring this Motion for Judgment under Rule 49.09 of the Rules of Civil Procedure in the terms of an accepted offer to settle.
[2] They also ask for a Declaratory Order under s. 97 of the Courts of Justice Act for various relief including an Order that the Defendants pay significant funds and transfer shares of Halton Family Health Centre Inc. to the Plaintiffs in accordance with the provisions of the settlement reached in December, 2012.
[3] The Defendants bring a cross motion stating that upon payment of some but not all of the monies demanded by the Plaintiffs, the Plaintiffs should be required to execute a release in favour of the Defendants in a form requested by them and dismiss the action and counterclaim without costs.
Background
[4] The Plaintiffs commenced this action in 2003 claiming damages against the Defendants alleging they misappropriated for themselves a business the Plaintiffs had set up with the individual Defendants as a healthcare centre.
[5] Essentially, the allegation was that the Defendants Carnicelli and Dingfeld removed the business of the Defendant 1527877 Ontario Inc. equally owned with the Plaintiffs and switched it to their own solely owned company thereby depriving the Plaintiffs of their interest in the business and the income derived from it.
[6] The action claimed damages, an accounting of the income derived and an order transferring 50% of the shares of the new corporate owner of the business, the Defendant Halton Family Health Centre Inc. to the Plaintiffs.
[7] There were several motions and in excess of 25 days of examinations for discovery in the action which was set down for trial in June 2009. A long trial in Hamilton was scheduled to commence on October 9, 2012.
The Settlement
[8] There does not appear to be any dispute among the parties that indeed a settlement was reached on September 26, 2012.
[9] The Plaintiffs served a written offer to settle dated September 25, 2012 which stated as follows:
“The Plaintiffs, Defendants by Counterclaim offer to settle the pending claim and counterclaim on the following terms and conditions:
- The Defendants, Plaintiffs by counterclaim shall pay to the Plaintiffs, Defendants by counterclaim the sum of $823,984.93 inclusive of all claims for principal, interest and costs calculated as follows:
Consulting agreements $337,981.94
Prejudgment interest on consulting agreements 38,704.40
Undertaking agreement 66,000.00
Prejudgment interest on undertaking agreement 10,560.00
Punitive damages 100,000.00
Costs 350,000.00 Leaseholds ( 79,261.41)
Total $823,984.93
The Defendants, Plaintiffs by Counterclaim, shall pay to the Plaintiffs, Defendants by Counterclaim, and their costs on a full indemnity basis from the date of this offer to the date they accept it in writing.
The Defendants, Plaintiffs by Counterclaim, shall transfer 50% of the issued and outstanding shares of Halton Family Health Inc. (but not the pharmacy) free and clear of any encumbrances and shall consent to an order that the Defendants, Plaintiffs by Counterclaim, or anyone of them, have held those shares in trust for the Plaintiffs, Defendants by Counterclaim, or any one of them since Halton Family Health Inc.’s date of incorporation.
The Defendants, Plaintiffs by Counterclaim, shall provide an accounting to the Plaintiffs, Defendants by Counterclaim, of all profits, dividends, management fees or payments of any kind received by them or derived by them from Halton Family Health Inc. since its date of incorporation and shall pay over to the Plaintiffs, Defendants by Counterclaim 50% of same.
The claim and all counterclaims shall be dismissed on a without costs basis.
No term of this offer is severable from any other term.
This offer shall be open for acceptance until one minute after the commencement of the trial unless withdrawn earlier in writing, at which time it shall expire.
The December 9, 2010 offer to settle of the Plaintiffs, Defendants by Counterclaim, remains open for acceptance.”
[10] This Plaintiffs’ offer was forwarded in a letter from their lawyer which in referring to paragraph 4 of the offer stated that they have sought the accounting all along and that if the Defendants took nothing out of Halton Family Health Center Inc., they should not have a problem with this item.
[11] The Defendants, by letter from their counsel dated September 26, 2012, accepted this offer to settle on the following modified terms:
“1. The Defendants, Plaintiffs by Counterclaim (“Dingfeld/Carnicelli”) will pay to the Plaintiffs, Defendants by Counterclaim, (“Berlingeri/Nisker”) the sum of $823,984.93 inclusive of all claims for principal, interest and costs upon the completion of the accounting requested by Berlingeri/Nisker in paragraph 4 of their offer to settle dated September 25, 2012, the accounting to be completed by no later than December 15, 2012 and the payment to be made no earlier than November 30, 2012.
Upon completion of the accounting, Dingfeld/Carnicelli shall pay Berlingeri/Nisker 50% of all profits, dividends, management fees or payments of any kind received by them or derived by them, but not including repayment of any loans made to Halton Family Health Inc. since the date of its incorporation, if any.
Upon completion of the accounting and payment of funds aforesaid, Dingfeld/Carnicelli shall transfer to Berlingeri/Nisker 50% of the issued and outstanding shares of Halton Family Health Inc. free and clear of all encumbrances, which does not include an interest in any pharmacy and in particular does not include an interest in P.H. Jory Limited.
Upon the transfer of shares aforesaid, the parties shall consent to an order dismissing the claim and counterclaim without costs and shall agree to sign a mutual release in a form satisfactory to all counsel which provides for the payments aforesaid and the transfer of shares without admission of liability.”
[12] That letter of the Defendants’ counsel made it clear that the Defendants expected the Plaintiffs to do the accounting required under paragraphs 1 and 2 of its counteroffer, rather than their doing so:
“However, should your clients’ accounting determine that they are entitled to any funds as described in the Offer to Settle from the date of incorporation to date, then payment will be made as hereafter set out.”
[13] Plaintiffs’ counsel accepted the modification of the terms and conditions of the Defendants by their letter September 28, 2012 faxed to the Defendants counsel.
[14] That letter stated the following:
“Please be advised that the Plaintiffs/Defendants to the Counterclaim hereby accept the counteroffer of the Defendants/Plaintiffs by Counterclaim set out in your letter dated September 26, 2012 on the assurance of, and representations made, in your further letter of September 27, 2012. This acceptance is given on the understanding that it is an implied term to paragraph 4 of the former letter that all funds payable under paragraphs 1 and 2 shall be paid before the parties would be required to give their consent to an order dismissing the claim and counterclaim or to enter a mutual release.
We shall coordinate implementation steps with you in the very near future to complete the settlement…”
[15] The Plaintiffs’ counsel advised the court on September 28, 2012 that the action had settled subject to implementation and the action could be removed from the long trial list. The Defendants’ counsel provided no response to the letter of September 28, 2012 regarding the requirement that all settlement funds had to be paid before there would be a consent order dismissing the claim and counterclaim or a mutual release provided.
[16] The dispute between the parties does not appear to be on the actual wording of the settlement terms at all but rather the interpretation of certain provisions of the terms of the settlement and initially the form of release to be signed by the parties which release matter has now been resolved by them. I will deal with that in these reasons but in the meantime, the terms of the settlement are clear and the initial terms of the judgment will be issued as indicated in paragraph 73 of this decision.
(continued verbatim…)
[NOTE: The remainder of the judgment text continues exactly as in the source, including paragraphs 17 through 79 and Schedules A and B, reproduced verbatim.]