ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-11-1724-00
DATE: 2013-10-02

B E T W E E N:

MANAR SRAJELDIN

George F. James, for the Plaintiff, responding party

Plaintiff

• and -

YOGANANDRAM RAMSUMEER and TORONTO TRANSIT COMMISSION

Tamara Broder, for the Defendants

Defendants

HEARD: May 13, 2013
at Brampton, Ontario

Price J.

Reasons For Order

NATURE OF MOTION

[1] Manar Srajeldin retained a lawyer, Joseph Zayouna, to bring an action on her behalf against the defendants, the Toronto Transit Commission (TTC) and one of its streetcar drivers, for damages for a personal injury she had suffered in a collision with a streetcar in 2009 (“the Claim”). A year later, when a Claims Adjuster for the TTC offered to pay an amount to settle the matter, Mr. Zayouna immediately and falsely informed him that he had received instructions to settle the matter for the amount that the Adjuster had offered.

[2] Twenty-five days later, when Mr. Zayouna had not secured his client’s signature on a release that the TTC had sent to him, he informed the Adjuster that he had presented the TTC’s Offer to his client but “had not received an answer” from her. Two and a half months after that, he informed the Adjuster that he had been instructed to proceed to litigation.

[3] The TTC responded with the present motion, brought pursuant to Rules 20.04 and 49.09 of the Rules of Civil Procedure, for judgment in accordance with the settlement it claimed it had reached with Mr. Zayouna. Ms. Srajeldin opposes the motion, and her new lawyer has advised Mr. Zayouna that she seeks the costs of the motion against Mr. Zayouna personally.

BACKGROUND FACTS

[4] On November 17, 2009, Ms. Srajeldin retained Mr. Zayouna to bring the Claim on her behalf. Mr. Zayouna practices law in Toronto; Ms. Srajeldin, a student, attended university in Leicester, England.

[5] On May 5, 2011, Mr. Zayouna agreed to waive the time requirements for the TTC filing its Statement of Defence. It is a common practice for TTC adjusters to request such a waiver, so that they can try to settle an action before assigning the claim to a lawyer in their Legal Department.

[6] On September 27, 2011, Jennifer McIver, a Claims Adjuster for the TTC, sent an e-mail to Mr. Zayouna in which she offered $10,000.00 in settlement of Ms. Srajeldin’s claim. She stated that if the TTC did not hear from him by October 4, 2011, all offers to settle would be withdrawn. Mr. Zayouna replied later the same day, stating that he would let Ms. McIver know as soon as he had spoken to his client. He did not provide an answer by October 4th, however, with the result that the TTC’s offer was deemed to have been withdrawn.

[7] Ms. McIver sent a further e-mail to Mr. Zayouna on November 18, 2011. Notwithstanding her earlier correspondence stating that the TTC’s Offer would expire on October 4, she now stated: “As you know, we have been on a waiver since May 2011. We had offered your client $10,000.00 to settle her tort claim and we have not received a response. Please advise us if you have presented this offer to your client.” Mr. Zayouna replied four days later, on November 22, 2011, apologizing for not having responded earlier, and explaining that he had not been able to reach his client. He stated that he would “try her again” that week and let Ms. McIver know shortly. Again, however, he failed to respond to Ms. McIver’s Offer.

[8] On February 3, 2012, Ms. McIver spoke to Mr. Zayouna by telephone. According to the notes she took of their conversation, Mr. Zayouna advised her that he had spoken to his client and that she was willing to settle for an all-inclusive amount of $15,000.00. She offered him, instead, an all-inclusive amount of $12,500.00. At 10:38 a.m., she sent an e-mail to Mr. Zayouna, confirming this Offer. She stated, “This will confirm our firm and final offer of $12,500.00 to your client in settlement of her tort. Please get back to me today as we have been on a waiver since May 2011.”

[9] Ms. McIver received Mr. Zayona’s reply ten minutes later. His e-mail, sent at 10:48 a.m., stated: “Hi Jennifer, thanks again for all your help on this matter. I now have instruction to resolve this matter for $12,500.00 all inclusive. Please e-mail me your release and I will have my client execute it.”

[10] The wording of Mr. Zayouna’s February 3rd e-mail was ambiguous and, as the evidence has disclosed, misleading. Worded in the passive voice, it does not disclose who had given Mr. Zayouna instructions. He later claimed that it was not his client, Ms. Srajeldin, but her father.

[11] In an affidavit prepared after Ms. Srajeldin terminated his retainer, Mr. Zayouna states:

4. Throughout my retainer, the Plaintiff was attending university in Leicester England and I was authorized to deal with her father, Dr. Fateh Srajeldin, and obtain instructions from him on her behalf.

5. On February 3, 2012, I met with the Plaintiff’s father to obtain instructions with respect to two offers to settle.

6. Firstly, I presented the TTC’s offer of $12,500.00 all-inclusive with respect to settlement of the Plaintiff’s personal injury claim arising out of the May 13, 2009 accident. In a subsequent telephone conversation with the Plaintiff’s father later that day, I was verbally instructed by the Plaintiff’s father to accept this offer to settle.

[12] Mr. Zayouna states that at the time of these events, he was also negotiating with Ms. Srajeldin’s accident benefit insurer with a view to settling her claim for accident benefits arising from her collision with the streetcar. He was also negotiating with another insurer in connection with her claim arising from another motor vehicle collision that had occurred a year earlier. He apparently viewed Ms. Srajeldin’s claim against the TTC as part of an overall settlement that he was hoping to achieve for her but which, in fact, never materialized.

[13] Ms. McIver, upon receiving the e-mail from Mr. Zayouna on February 3, 2012, wrote to him the same day enclosing a full and final Release in the amount of $12,500.00. She stated, “Upon receipt of the release duly executed along with the Notice of Discontinuance, filed with the court, we would be pleased to forward the settlement funds.”

[14] On February 27, 2012, Ms. McIver sent a follow-up e-mail to Mr. Zayouna, noting that she had not received the executed Release and Notice of Discontinuance from him. He responded the following day, apologizing for his delay in getting back to her. He stated, “I am still waiting on the client to get back to us with an answer. Your offer was communicated to her. Hoping to have an answer soon. Will let you know.”

[15] On March 26, 2012, Ms. McIver sent a further follow-up e-mail to Mr. Zayouna asking when she might receive the Release. Mr. Zayouna replied the following day, stating: “Hi Jennifer, having some serious issues with this client. Need another week or so. I will give you a call and will chat more next week.”

[16] Finally, on May 8, 2012, Mr. Zayouna wrote to Ms. McIver again. This time, he stated,

Again, we apologize for the delay in this matter. We did our best to conclude this matter with you; however, our instructions are to proceed to litigation. Accordingly, please forward to defence counsel to have a Statement of Defence filed immediately. As you are aware, we received a Notice from the Court that the action will be dismissed if a defence is not filed. Therefore, kindly arrange to have one filed immediately.

[17] The TTC sent its Defence on May 16, 2012. At the same time, it notified Mr. Zayouna that it had obtained dates for a motion to enforce the settlement and asked for his available dates.

[18] Ms. Srajeldin has since terminated Mr. Zayouna’s retainer and retained other counsel to represent her. Mr. Zayouna states in a factum filed on his own behalf in this motion that Ms. Srajeldin’s new lawyer has advised him of her intention to seek the costs of this motion from Mr. Zayouna personally on the basis that he failed to seek or follow her instructions.

ISSUES

[19] The court must determine whether an agreement was reached between Ms. Srajeldin and the TTC and, if so, whether it should be enforced.

POSITIONS OF THE PARTIES

[20] The TTC says that it is entitled to rely on Ms. Srajeldin’s solicitor having the requisite authority to act on her behalf unless it had been specifically advised of limitations to that authority. It says:

The key fact is that on February 3, 2012, Ms. McIver made an offer both verbally and in an e-mail to settle the whole action on an all-inclusive basis for $12,500.00 and was told by counsel for the Plaintiff, Joseph Zayouna, that he had contacted his client and had received instructions to accept the offer. [Emphasis added]

[21] Ms. Srajeldin asserts that Mr. Zayouna did not have her authority or instructions to settle and that he acted negligently and/or fraudulently and without authority in responding as he did to the Claims Adjuster’s Offer. She further submits that even if the court finds that a settlement was agreed upon, it should exercise its discretion under Rule 49.09 not to enforce it because it would be unfair and cause irreparable prejudice to her to do so. Further, she argues that It would not prejudice the defendants or affect any third party not to enforce the settlement, apart from depriving the defendants of the benefit of it.

ANALYSIS AND EVIDENCE

Findings of Fact

[22] Mr. Zayouna’s assertion that he had received instructions to accept the TTC’s Offer is belied by the timing of his e-mail exchange with Ms. McIver. Ms. McIver sent her offer to him at 10:38 a.m. and Mr. Zayouna replied ten minutes later. He states that he presented the offer to Dr. Srajeldin at a meeting that day, which I infer took place after he received Ms. McIver’s e-mail, and that he did not receive verbal instructions to accept it until he received a telephone call from Dr. Srajeldin “later that day.”

[23] Ms. Srajeldin’s father, Dr. Fateh Srajeldin, has filed an affidavit in support of his daughter’s position. He notes that he is not his daughter’s Litigation Guardian and had no Power of Attorney or other authority from her to settle her claim on her behalf. He denies that he ever gave instructions to Mr. Zayouna on her behalf concerning her claims. He states that he met with Mr. Zayouna on February 3, 2012, to obtain information that he could relay to his daughter concerning the status of the claims, but never authorized, accepted, or agreed to an all-inclusive settlement of $12,500.00 for her claims.

[24] Dr. Srajeldin states:

7. I would summarize my meeting with Mr. Zayouna on February 3, 2012, with one sentence. His eagerness to finalize the case was unprecedented, in that he led me to believe that he had exhausted all options and a take it or leave it now was the situation.

8. I informed Mr. Zayouna that I refused to give an opinion before I first spoke to my daughter. She was attending university in Leceister England but it was a simple matter to reach her by telephone or e-mail.

9. I informed Mr. Zayouna that I would let my daughter decide for herself if she would accept or reject the TTC offer of $12,500.00 all-inclusive.

10. When I spoke to my daughter after a few days following February 3, 2012, she refused the offer of $12,500.00 all-inclusive. I then informed Mr. Zayouna of my daughter’s decision to refuse the offer. At no time did I verbally instruct Mr. Zayouna to accept this offer to settle.

[25] Ms. Srajeldin, also, has filed an affidavit on her own behalf. She states:

7. I was attending University in Leceister England at that time and I had requested my father to follow-up with the status of my tort claim with Mr. Zayouna.

8. I am further advised by my father, and verily believe it to be true, that he informed Mr. Zayouna that he would communicate the offer to me, and let me decide if I would accept the offer and instruct Mr. Zayouna to settle the TTC claim for $12,500.00 or reject the offer. Within a day or two after February 3, 2012, my father communicated the offer to me. I responded back to my father by telephone to advise Mr. Zayouna of my decision that I rejected the offer to settle the TTC claim for $12,500.00 all-inclusive.

[26] I accept the evidence of Ms. Srajeldin and her father, who were not cross-examined on their affidavits. I find that Mr. Zayouna accepted the Offer that he received from the TTC on February 2, 2012 because he had failed to make timely efforts to obtain his client’s instructions regarding the TTC’s earlier Offer dated September 27, 2011, and faced embarrassment and possible liability when that Offer was withdrawn on October 4, 2011.

[27] I find that Mr. Zayouna falsely informed Ms. McIver that he had received instructions to resolve the matter for the amount of her Offer. He asked her to send him a release, believing that when he received it, he could prevail upon his client to accept the settlement and sign the release.

[28] The TTC states in its factum that it was told by Mr. Zayouna “that he had contacted his client and had received instructions to accept the offer.” This is not, strictly speaking, accurate. Mr. Zayouna wrote: “I now have instruction to resolve this matter for $12,500 all inclusive. Please email me your release and I will have my client execute it.” Mr. Zayouna did not explicitly state that he had consulted his client or that it was she who had given him instructions. He also did not explicitly state that she accepted the TTC’s Offer.

[29] Mr. Zayouna now states that he received instructions from Ms. Srajeldin’s father. There is no dispute that Dr. Srajeldin was not his daughter’s Litigation Guardian and did not have a Power of Attorney authorizing him to give instructions on her behalf. I find that Mr. Zayouna did not receive any such instructions, from Ms. Srajeldin or her father.

[30] I find that there was never an agreement reached between Ms. Srajeldin and the TTC. Ms. Srajeldin was never consulted, and did not give Mr. Zayouna her instructions, either directly or indirectly, to accept the Offer that the TTC had made. I find that Mr. Zayouna gave an ambiguous and misleading response to Ms. McIver’s e-mail in the hope that he might later obtain his client’s instructions to accept the Offer. In the result, he was unable to do so.

[31] I find further, for the following reasons, that it was not reasonable for Ms. McIver to have believed that:

(a) Mr. Zayouna had authority to settle his client’s claims without her explicit instructions to do so.

(b) Mr. Zahouna had, within ten minutes after she had e-mailed her confirmation of the TTC’s Offer, received his client’s instructions to accept it.

[32] It was clear from Mr. Zayouna’s earlier communications that he did not have his client’s authority to settle her claim without her explicit instructions. This was evident from:

(a) Mr. Zayouna’s e-mail on September 27, 2011, in which he replied to Ms. McIver’s Offer of $10,000.00: “I will let you know as soon as I speak to my client.”

(b) Mr. Zayouna’s e-mail on November 22, 2011, in which he stated, while apologizing for not getting back to Ms. McIver earlier: “I wasn’t able to reach my client back then. I will try her again this week.”

It was clear from these communications that Mr. Zayouna did not have his client’s authority to settle the claim without her explicit instructions.

[33] Mr. Zayouna’s e-mail to Ms. McIver on February 28, 2012, made it explicitly clear that Ms. Srajeldin had not, in fact, instructed him to accept the TTC’s Offer. His e-mail stated: “I am still waiting on the client to get back to us with an answer. Your offer was communicated to her. Hoping to have an answer soon. Will let you know.”

[34] Ms. McIver states “I found this surprising, as previously I had been advised that our offer was accepted by the client.” This assertion is not, strictly speaking, accurate. Mr. Zayouna had not explicitly stated that his client accepted the TTC’s Offer. Rather, he had stated, ambiguously: “I now have instruction to resolve this matter for $12,500.00 all inclusive.” Ms. McIver interpreted what Ms. Zayouna had written to mean that he had received instruction from Ms. Srajeldin.

[35] Mr. Zayona advised Ms. McIver on March 27th that he was having “serious issues” with his client. Yet, the TTC did not, for a further month and a half, move for judgment based on his February 3rd e-mail. They did not do so until May 16, 2012, a week after Mr. Zayouna confirmed his inability to obtain a signed release from Ms. Srajeldin. I find that the TTC held Mr. Zayona’s ambiguous e-mail in reserve, to use, if necessary, if a signed release was not forthcoming from his client.

ORDER

[48] For the foregoing reasons, the defendants’ motion is dismissed.

COSTS

[49] Rule 57.07 of the Rules of Civil Procedure states:

57.07(1) Where a lawyer for a party has caused costs to be incurred without reasonable cause, or to be wasted by undue delay, negligence, or other default, the court may make an order,

(a) disallowing costs between the lawyer and client or directing the lawyer to repay to the client money paid on account of costs;

(b) directing the lawyer to reimburse the client for any costs that the client has been ordered to pay to any other party; and

(c) requiring the lawyer personally to pay the costs of any party.

(2) An order under subrule (1) may be made by the court on its own initiative or on the motion of any party to the proceeding, but no such order shall be made unless the lawyer is given a reasonable opportunity to make representations to the court.

(3) The court may direct that notice of an order against a lawyer under subrule (1) be given to the client in the manner specified in the order.

[50] Ms. Srajeldin gave notice in advance to Mr. Zayouna of her intention to seek the costs of the present motion from him personally, and Mr. Zayouna has made representations to the court on this issue.

[51] Mr. Zayouna argues, on the authority of 931473 Ontario Ltd. v. Coldwell Banker Canada Inc., (1992), and Cini v. Micallef, (1987), that an Order for payment of costs by a solicitor is not available in cases of mistake, error of judgment, or mere negligence. Rather, the conduct of the solicitor must be inexcusable and merit reproof.

[52] The weight of more recent authority is to the contrary. Haines J. declined to follow 931473 Ontario Ltd. v. Coldwell Banker Canada Inc. in the later case of Worsley v. Lichong, (1994). Additionally, as Quinn J. noted in McDonald v. Standard Life Assurance Company, (2007), Southerland J. the author of Cini, “nobly recanted that view 15 years later in Walsh v. 1124660 Ontario Ltd., [2002] O.J. No. 4069 (S.C.J.), at para. [33].”

[53] In Walsh, Lane J., after a full review of the jurisprudence, noted the change in the threshold for a solicitor’s personal liability for costs that had resulted from the Supreme Court of Canada’s decision in Young v. Young, (1993), and the subsequent enactment of Rule 57.07. He stated:

The foundation for an order that counsel pay costs personally is found historically in the inherent jurisdiction of a superior court to control abuse of process, contempt of court and the conduct of its own officers. Historically, something more than mistake, error of judgment or negligence was required. In more recent times Rule 57.07 has enlarged the ambit of such orders to include costs incurred “without reasonable cause or wasted by undue delay, negligence or other default”. However, courts must be “extremely cautious” in making such awards given the duties of the lawyer to bring forward the client’s case with courage. Hence, such orders should be made sparingly, with care and discretion, and only in clear cases.

[54] Justice Lane reconciled the terms of Rule 57.07 with the need for restraint in order not to undermine the proper role of counsel by adopting the considerations set out by Ferguson J. in Rod v. Scugog (Township), (2003).

[55] Justice Lane concluded:

Another duty of counsel is to promote the client's case through fearless advocacy and the marshalling of all the evidence which may reasonably support that case... It is only where expense has been incurred without reasonable cause, or there has been waste of costs through undue delay, negligence, or other default, that the court can intervene.

[56] I agree with Lane J.’s conclusion in Walsh, that Rule 57.07 gives a discretion to the court that does not require more than negligence, mistake, or error of judgment on the part of a solicitor but that, nevertheless, the discretion must be exercised cautiously in order not to undermine the proper role of counsel.

[57] In the present case, Mr. Zayouna’s conduct in accepting the TTC’s Offer without authority or instructions from his client in advance, and sending a misleading e-mail to the TTC’s Adjuster, knowing that it was likely to be construed as an acceptance of their Offer, went beyond mere negligence. Even according to the test that pre-dated the enactment of Rule 57.07, Mr. Zayona’s conduct was inexcusable and merits reproof. He knowingly placed his client at risk of having her claim for damages for a personal injury compromised without her consent. In doing so, he delayed the resolution of her action and caused all of the parties to incur the otherwise unnecessary costs of this motion.

[58] In McDonald v. Standard Life Assurance Company, (2007), Quinn J., after a full review of the jurisprudence, concluded:

It is not correct to argue... that, to impose liability under rule 57.07(1), the court must find something more than mistake, error of judgment or mere negligence.

[59] In the result, the costs of both parties in this motion shall be payable by Mr. Zayouna on a substantial indemnity scale. If the parties and Mr. Zayouna cannot agree on the amount, they may submit written argument, not to exceed four pages, and Costs Outlines, by October 15, 2013.

Price J.

Released: October 2, 2013