ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-13-0867-00
DATE: 2013-12-20

B E T W E E N:

MARIA LARIZZA

Kenneth W. Watts, for the Applicant

Applicant

• and -

NATALINA SCRIVO

Sonja Turajlich, for the Respondent

Respondent

HEARD: December 18, 2013,
at Brampton, Ontario

Price J.

Reasons For Order

NATURE OF THE MOTIONS

1Maria Larizza and her aunt, Natalina Scrivo, are owners, as Tenants in Common, of property at 4538 Castlemore Road in Brampton (“the Property”). On May 15, 2013, they signed an Agreement of Purchase and Sale by which Ms. Larizza agreed to sell her interest in the Property to Ms. Scrivo for $1,010,000.00 on July 15, 2013 (“the Agreement”).

2Ms. Scrivo was unable to secure the necessary financing to close the Agreement by July 15, and obtained a short extension of the agreement to July 19, 2013. When Ms. Scrivo was still unable to secure the necessary financing by that date, Prabhojot Dhanoa made an offer dated July 26, 2013, to purchase the Property for $2,550,000.00 (“the Dhanoa Offer”), which Ms. Larizza now wishes to accept.

3Ms. Scrivo refuses to accept the Dhanoa Offer. Ms. Larizza therefore moves for an Order dispensing with Ms. Scrivo’s participation in the sale, and directing that Ms. Larizza’s acceptance of the Dhanoa Offer bind both her and Ms. Scrivo. Ms. Scrivo brings a cross-motion for specific performance of the (Scrivo/Larizza) Agreement, for which she now says she has secured the necessary financing.

4Ms. Scrivo’s motion is based, in part, on her complaint that her then lawyer, Derek Ball, negligently failed to request a further extension of the Agreement, which Ms. Larizza would have agreed to had she been asked. Ms. Scrivo asserts that:

a) she believed that Mr. Ball had requested, and Ms. Larizza had agreed to, a further extension of the Agreement.

b) Ms. Larizza acknowledges that the July 19, 2013, the closing date was not of great importance to her. The only reason she gives for not having agreed to a further extension was that she was not asked.

c) Mr. Ball, acting without his client’s instructions, consented to a judgment that allowed the Property to be listed for sale to another and provided for the percentage of the sale price to be required as a deposit and the percentage to be paid as a broker’s commission.

d) Ms. Larizza’s lawyer, Kenneth Watts, acted prematurely on the consent that Mr. Ball signed, obtaining a judgment even before the extended closing date of July 19, 2013, had passed.

Issues to be Determined

5The Court must determine:

(a) whether the Agreement is still binding;

(b) whether the consent to the judgment permitting the sale of the Property to another is valid and whether it should be enforced;

(c) whether the Dhanoa Offer should be accepted.

ANALYSIS AND EVIDENCE

Is the Agreement binding?

6For the reasons that follow, I find that the Agreement lapsed on July 19, 2013, when Ms. Scrivo failed to tender payment on that date.

7The Agreement provided, in part:

20. TIME LIMITS: Time shall in all respects be of the essence hereof, provided that the time for doing or completing of any matter provided for herein may be extended or abridged by an agreement in writing signed by Seller and Buyer or by their respective lawyers who may be specifically authorized in that regard.

8There is no dispute that the Agreement was extended from July 15 to July 19, 2013.

9Ms. Scrivo has not offered any evidence that she or her lawyer requested a further extension of the Agreement or that Ms. Larizza agreed to one. I find that no such request was made or agreed to.

10That “time is of the essence” may be implied from the circumstances. Where, as here, time is of the essence in an agreement, and there is an extension of time to a specified date, the effect of the extension on the essentiality of time can be determined from the context and circumstances of the case.[1]

11In Domicile Developments Inc. v. MacTavish, (1999), the Court of Appeal for Ontario stated: “To be effective the new closing date must be reasonable. And, although a provision making time of the essence may be implied from the surrounding circumstances or from the conduct of the parties, to avoid any dispute the notice should state that time is of the essence for this new date.”[2]

12Ms. Scrivo and Ms. Larizza made only one extension of the closing date, and it was of short duration, from July 15 to July 19, 2013. These circumstances are readily distinguishable from those in 2029131 Ontario Inc. v. Carlyle Development Corp., (2013), where the parties amended the closing date five different times, specifying in the first four that time remained of the essence, even when the closing date changed, but making no such stipulation in the last.[3] In that case, Swinton J. found that the parties had waived the provision that time was of the essence.

13Ms. Scrivo and Ms. Larizzaa, after first entering into the Agreement, consented to a judgment that Ms. Larizza could take out if the Agreement did not close, which permitted Ms. Larizza to list the Property for sale to another. In agreeing to the extension, the parties did not restrict Ms. Larizza’s authority to enforce the judgment after the new closing date. In these circumstances, it can be implied that time remained of the essence.

14For the foregoing reasons, I find that the Agreement lapsed on July 19, 2013, when Ms. Scrivo did not tender payment as required.

Is the Consent to Judgment Valid and Should it be Enforced?

15I find that, for the reasons that follow, the parties’ Consent to Judgment was valid and should be enforced.

16The court must initially make a finding as to whether the parties reached an agreement, as reflected in the Consent. If it finds that they did so, it must decide whether to exercise its discretion to enforce that Consent and the judgment that implemented it.

17The determination as to whether the parties reached agreement involves a finding of fact that must be made on a “case by case basis.” This was noted by the Newfoundland Unified Family Court in Freake v. Freake, (2007).[4] If an agreement was reached, it is enforceable even if it has not been executed.[5]

18The Court of Appeal stated in Zhuppa v. Porporino, (2006): “In our opinion, the motion judge erred in failing to consider the uncontradicted evidence before him that Mrs. Zhuppa never agreed to the settlement terms and therefore could not have ‘changed her mind’.”[6]

19There is no dispute that Ms. Scrivo retained Mr. Ball to negotiate on her behalf with Ms. Larizzo with a view to resolving Ms. Larizza’s application to have the Property sold. There is no evidence that Ms. Scrivo or her son communicated any restriction of Mr. Ball’s authority in that regard to Ms. Larizza or Mr. Watts.

20It is not disputed that Mr. Ball signed a consent to judgment dated May 24, 2013, on the following terms:

1. THIS COURT ORDERS AND ADJUDGES that under section 2 of the Partition Act, R.S.O. 1990, Chap. P-4, the following lands shall be sold:

PT LT 11, CONC 10 N.D. (TOR.GORE0 DES PT 39, 432493 S&e PTS 3,4 & 5, EXPROP. PL. PR893236, S & E PTS 1-3, EXPROP PLL PR1711626; CITY OF BRAMPTON

Property Identification Number 14214-0141 (LT), municipally know (sic) as 4538 Castlemore Road, R.R. #9, Brampton, Ontario, L6T 3Z8 (hereinafter the “Property”).

2. THIS COURT ORDERS AND ADJUDGES that pursuant to rule 55.06(1) of the Rules of Civil Procedure, the sale shall be effected by “private contract” by a listing given to a realtor licenced to sell real estate in Ontario.

3. THIS COURT ORDERS AND ADJUDGES that any Agreement of Purchase and Sale shall provide for the purchase price to be paid in cash, certified cheque or bank draft with a minimum deposit of ten percent (10%) to be paid in cash, certified cheque or bank draft on signing, payable to the Applicant’s lawyer, O’Connor MacLeod Hanna In Trust, or as the Applicant and Respondent agree in writing, and that a closing date be no more than 60 days after the Agreement of Purchase and Sale is signed.

4. THIS COURT ORDERS AND ADJUDGES that the broker’s commission rate shall be no more than five percent (5%), to be payable only if a sale is completed, to be payable out of the sale proceeds.

5. THIS COURT ORDERS AND ADJUDGES that the net sale proceeds of the sale shall be paid into the trust account of O’Connor MacLeod Hanna LLP, or as the Applicant and Respondent may agree in writing.

6. THIS COURT ORDERS AND ADJUDGES THAT THE Applicant and Respondent shall equally share the legal costs, disbursements, and applicable taxes of the lawyer completing the sale transaction.

7. THIS COURT FURTHER ORDERS that the Applicant shall have her costs fixed by the court, failing agreement of the parties.

THIS JUDGMENT shall bear interest at the rate of three percent (3%) per annum from its date.

21Ms. Scrivo asserts that she did not authorize Mr. Ball to consent to a judgment on these terms. It is not disputed that Ms. Scrivo does not have a strong command of the English language and authorized her son, Brian Scrivo, to act on her behalf. While it was not disputed that, during the course of the negotiations, Mr. Ball walked away from Mr. Watts to speak to Brian Scrivo, there is no evidence that he communicated to Mr. Watts that he required specific authorization from either Brian or his mother before making a commitment on their behalf.

22This is not a case like Srajeldin v. Ramsumeer, (2013), where acceptance of the Offer without the client’s express instructions did not fall within the apparent scope of the lawyer’s authority. In that case, based on the lawyer’s previous e-mails, the insurance adjuster had knowledge that the plaintiff motorist’s lawyer required his client’s instructions before accepting an Offer. I stated in that case:

…In circumstances where counsel have communicated, explicitly or implicitly, that they require their client’s instructions before entering into an agreement, their correspondence aimed at achieving a settlement must be worded in such a way as to make it clear that it is the client who is making or accepting the Offer.[7]

23In the present case, Mr. Ball did not communicate, explicitly or implicitly, that he required his client’s specific instructions before signing a Consent on her behalf. Evans J.A., speaking for the Court of Appeal in Scherer v. Paletta, (1966), spoke of the limits of an agent’s implied authority to bind his or her client:

Where a principal gives an agent general authority to conduct any business on his behalf, he is bound as regards third persons by every act done by the agent which is incidental to the ordinary course of such business or which falls within the apparent scope of the agent’s authority. As between principal and agent, the authority may be limited by agreement or special instructions but as regards third parties, the authority which the agent has is that which he is reasonably believed to have, having regard to all the circumstances, and which is reasonably to be gathered from the nature of his employment and duties….

A solicitor whose retainer is established in the particular proceedings may bind his client by a compromise of these proceedings unless his client has limited his authority and the opposing side has knowledge of the limitation, subject always to the discretionary power of the Court, if its intervention by the making of an order is required, to inquire into the circumstances and grant or withhold its intervention if it sees fit; and, subject also to the disability of the client.[8] [Emphasis added]

24Based on the foregoing considerations, I find that Ms. Scrivo and Ms. Larizza, through their solicitors, reached an agreement as reflected in their Consent to Judgment. I will next consider whether that agreement should be enforced.

25I have considered the fairness of enforcing the parties’ Consent with reference to the 10 factors that the Ontario Court (General Division), in Nigris v. Nigris, (1993)[9] held that the court should consider when exercising its discretion as to whether to enforce an agreement:

1. The terms of the Consent were not improvident or unconscionable. It permitted Ms. Larizza, if the (Scrivo/Larizza) Agreement did not close, to list the Property for sale to another, which resulted in the delivery of the Dhanoa Offer to purchase the Property for $500,000 more than the value attributed to it in the Scrivo/Larizza Agreement. If there was an improvident agreement, it was the Scrivo/Larizza Agreement.

2. There was no inequality of bargaining power. Both Ms. Scrivo and Ms. Larizza were represented by competent counsel and Ms. Scrivo was additionally assisted by her son, Brian, a realtor with 25 years of experience.

3. Neither party acted in bad faith.

4. Ms. Scrivo and her son assert that Mr. Ball acted without their authority. There is no evidence from Mr. Ball in that regard.

5. The terms of the Consent are sufficiently clear as to avoid further litigation.

6. The terms deal with the issues that were in dispute arising from Ms. Larizza’s application to have the Property sold.

7. The parties’ lawyers did not negotiate the terms of the Consent in their clients’ physical presence, but they negotiated in close proximity to Brian Scrivo, who was available to be consulted if Mr. Ball felt the need to clarify Ms. Scrivo’s instructions.

8. Ms. Scrivo states that she became aware of the Judgment and the listing of the Property on July 26, 2013. She did not immediately repudiate the Consent. Rather, Mr. Ball wrote on that date, complaining only that the Judgment had been taken out before July 19, 2013, when the (Scrivo/Larizza) Agreement was to have closed. I will address this concern below.

26In a case where one litigant seeks to enforce a settlement and the other seeks to set it aside, the court seeks to balance the prejudice that would result to each party either from enforcing or not enforcing the settlement. In Milios v. Zagas, (1998)[10] the Court of Appeal for Ontario allowed an appeal from an application judge who had enforced a settlement that appeared to have been reached through a misunderstanding between a litigant and his solicitor. The Court held that the discretion which a judge derives from Rule 49.09, not to enforce a settlement, is consistent with Evans J.A.'s pre-Rule 49.09 comments in Scherer v. Paletta, (1966), where he stated:

A solicitor whose retainer is established in the particular proceedings may bind his client by a compromise of these proceedings unless his client has limited his authority and the opposing side has knowledge of the limitation, subject always to the discretionary power of the Court, if its intervention by the making of an order is required, to inquire into the circumstances and grant or withhold its intervention if it sees fit ...[11] [Emphasis added.]

27Osborne J.A., speaking for the Court of Appeal in Millios v. Zagas, stated:

In addition to over-emphasizing the fact that the plaintiff's acceptance was clear and under-emphasizing the evidence of mistake, I think that the motions judge erred by not taking into account manifestly important factors, including:

since no order giving effect to the settlement had been taken out, the parties' pre-settlement positions remained intact;

apart from losing the benefit of the impugned settlement, the defendant will not be prejudiced if the settlement is not enforced;

the degree to which the plaintiff would be prejudiced if judgment is granted in relation to the prejudice that the defendant would suffer if the settlement is not enforced;

the fact that no third parties were, or would be, affected if the settlement is not enforced.[12]

28In the present case, unlike Millios v. Zagas, a Judgment giving effect to the Consent was taken out, the parties’ pre-settlement positions have changed, materially affected by the Dhanoa Offer, and while Ms. Scrivo will be prejudiced if the Consent is enforced, Ms. Larizza will be equally prejudiced if it is not, since she would, in that event, lose the benefit of the Dhanoa Offer. Additionally, Mr. Dhanoa will be adversely affected if the Consent to Judgment is not enforced, and Ms. Scrivo chooses not to accept his Offer.

29Enforcing the Consent to Judgment in the present case will not result in injustice to Ms. Scrivo, who seeks to benefit from the undervaluation of the Property that underlies the Scrivo/Larizza Agreement. Enforcing the Consent, on the other hand, will permit Ms. Scrivo and Ms. Larizza to benefit equally from it.

30A settlement will generally be enforced unless it will result in a real risk of injustice, but one should not be enforced where injustice is likely to ensue.[13] In Brzozowski v. O’Leary, (2004), Misener J., after reviewing the jurisprudence, stated:

Those judgments emphasize the judicial obligation to consider all of the circumstances of the case at hand, and to then decide whether it is fair to enforce the settlement. Although I risk unduly limiting my discretion by saying so, I think the right approach is to consider that a settlement effected pursuant to Rule 49 ought to be enforced, and so judgment ought to be granted, unless the offeror satisfies the judge that, in all the circumstances, enforcement would create a real risk of a clear injustice. It seems to me that that approach is required because it is good public policy to encourage settlement, and it would be quite inconsistent with that policy to decline enforcement unless a good reason for doing so is shown.[14] [Emphasis added]

31The discretion that a court exercises in deciding whether to enforce a settlement is not dictated exclusively by the need for certainty in negotiations and clarity in the content of an offer or settlement.[15] It is guided, in part, by the court’s objective of encouraging settlement. Enforcing the Consent in the present case holds the parties to their bargain, and gives them an equal benefit from the Dhanoa Offer, rather than allowing Ms. Scrivo to derive twice the benefit from the Dhanoa Offer, if she chose to accept it, and depriving her niece of any benefit from the Offer at all.

32On June 10, 2013, Ms. Larizza’s lawyer obtained a judgment from Ricchetti J. in the terms of the consent. Ms. Scrivo asserts that the parties’ lawyers had agreed that the Judgment would not be taken out unless and until the Scrivo/Larizza Agreement did not close and that it was, in fact, taken out before then, and was sent to Ms. Scrivo’s lawyer at 11:42 a.m. on July 19, 2013, when the Agreement cannot be said not to have closed until the close of business that day.

33Having the Judgment signed and entered before the date scheduled for closing had no practical effect other than to put Ms. Larizza in the position to act on it promptly if and when the Agreement did not close. There is no suggestion that the Judgment was acted upon or enforced before the Agreement failed to close.

34In these circumstances, I find that Ms. Scrivo and Ms. Larizza entered into a binding Consent to Judgment, which should be enforced to permit Ms. Larizza to list the Property and entertain Mr. Dhanoa’s Offer.

Should the Dhanoa Offer be accepted?

35The Dhanoa Offer is substantially in accordance with the judgment of Ricchetti J. to which the parties consented and appears to be beneficial to both parties. The Judgment, which I have found should be enforced, permitted Ms. Larizza to list the property for sale. Ms. Larizza has applied for leave to accept that Offer. While I find that she should be granted that leave, this should not be construed as a judicial decision that binds the parties in relation to the Dhanoa Offer. It is still open to Ms. Scrivo to make an Offer that Ms. Larizza may find more beneficial than the Dhanoa Offer, and it is open to Ms. Larizza, until she accepts the Dhanoa Offer, to accept such an Offer. Ms. Larizza will therefore be granted leave to accept the Dhanoa Offer on behalf of both herself and Ms. Scrivo and if she accepts it, it shall be binding on them both.

CONCLUSION AND ORDER

36For the foregoing reasons, it is ordered that:

1. Natalina Scrivo’s execution of acceptance of the Agreement of Purchase and Sale dated July 26, 2013, from Prabhjot Dhanoa relating to the property known municipally as 4538 Castlemore Road, Brampton, Ontario is dispensed with.

2. The said Agreement of Purchase and Sale, if executed by Ms. Larizza, shall be as binding as if executed by Ms. Scrivo.

3. In the event that Ms. Larizza executes the said Agreement of Purchase and Sale, the Property shall be sold in accordance with section 3(1) of the Partition Act, R.S.O. 1990, Chap. P.4, as amended, and the net proceeds of sale shall be paid into Court to the credit of this proceeding, to await further direction of the Court or as the parties direct otherwise, and no monies shall be distributed unless by Order of this Court.

4. In the event the parties are unable to agree on the costs of this motion, they may make written submissions, not to exceed four pages, plus a Costs Outline, by January 15, 2014.

Price J.