ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-12-0226
DATE: 20140117
BETWEEN:
IRENE TIMMY
Plaintiff
– and –
RONALD CAMPBELL
Defendant
M. Lemieux, for the Plaintiff
D. Dooley, for the Defendant
HEARD: January 14, 2014
HEALEY J.
Nature of the Motion
[1] This is a motion pursuant to Rule 49.09 of the Rules of Civil Procedure for judgment in the terms of an accepted Offer to Settle.
The Facts
[2] This claim arises from a motor vehicle accident. The plaintiff claims general and special damages, the latter covering losses typically alleged in a personal injury action.
[3] On September 4, 2013, defence counsel arranged for and confirmed the availability of the plaintiff for an independent medical examination (“IME”), to occur on November 28, 2013. The cancellation policy of the physician was to impose a fee in increasing amounts as the length of notice decreased. If the appointment was cancelled on or between thirteen to seven days prior, a fee of $1,400 would be charged. On the fact scenario at issue on this motion, cancellation on or between November 15 and November 21 would result in a fee of $1,400. An e-mail sent by defence counsel’s assistant to National IME Centres on November 19, 2013 asked this question: “Could you please advise what the cancellation fee would be at this point?”. This conveys that there was an understanding in defence counsel’s office that a cancellation fee would apply at some point, and that prior to November 19, defence counsel had not fully informed themselves regarding the cancellation policy. I find both facts to be important to the issue to be determined.
[4] On October 22, 2013, defence counsel sent correspondence containing an Offer to Settle this matter for the “all-inclusive sum of $80,843.12”. There is no doubt that this was a comprehensive offer to settle all of the issues raised by the litigation, confirmed by counsel’s concluding sentence “[w]e also require a Full and Final Release, which my office will draft”.
[5] On October 30, 2013, plaintiff’s counsel counter-offered at $84,000, all-inclusive.
[6] On November 4, 2013, defence counsel rejected the counter-offer and confirmed that the offer of “$80,843.12 all-in remains open for acceptance”.
[7] On November 15, 2013, the plaintiff’s office confirmed their client’s availability, with details such as the need for transportation for their client.
[8] Later on November 15, 2013, at 4:25 p.m., plaintiff’s counsel delivered correspondence announcing that his client would not be attending the IME. No explanation was given other than “she is not able to attend”.
[9] On November 18, 2013, defence counsel delivered correspondence asking plaintiff’s counsel to explain the reason why his client would not be attending.
[10] On November 19, 2013, defence counsel called plaintiff’s counsel’s office at 9:07 a.m., spoke with his associate Mr. Lemieux, asked for an explanation as to why the plaintiff would not attend the IME, and advised Mr. Lemieux that there would now be a cancellation fee. Her note indicates that Mr. Lemieux did not have the necessary information to answer her questions, and would look into the matter and call her back.
[11] As referred to earlier, later that same day defence counsel’s office made inquiries about the cost of cancelling the appointment.
[12] There is a conflict in the evidence as to whether plaintiff’s counsel attempted to contact defence counsel by telephone on November 19. This is an issue not resolvable on the motion, and in any event, for the purposes of reaching the result that I have, I find that any attempts at contact, or lack thereof, are irrelevant to whether an agreement was reached.
[13] At approximately 3:30 p.m. on November 19, plaintiff’s counsel delivered correspondence confirming that the defendant’s “all-inclusive offer of $80,843.12” was being accepted. The second paragraph in that same letter provides:
I confirm that it is a condition of settlement that our firm is not responsible for, nor will we agree to pay any cancellation fees with respect to the defence medical.
[14] On November 21, 2013 defence counsel responded by writing:
My client is prepared to revive our offer of $80,843.12 all- inclusive. However, the offer is conditional upon your office agreeing to pay Dr. Finkelstein’s $1,400 cancellation fee, which will be incurred today when the appointment is cancelled.
Our offer of $80,843.12 all-in was originally made on October 22. Had you accepted on or around that date, a cancellation fee would not have been incurred. The appointment was only scheduled after receiving confirmation from your office, twice, that Ms. Timmy would attend the assessment. In our opinion, your actions have resulted in this expense and thus your office should pay it.
[15] The position of the plaintiff is that they accepted a valid Rule 49 offer by virtue of their letter of November 19, and that the original offer was never withdrawn and did not encompass any defence medical cancellation cost.
Issue – Was a Contract Formed?
[16] The offer contained in defence counsel’s letter of October 22, 2013, confirmed on November 4, 2013 to still be open for acceptance, should be treated as a valid Rule 49 offer. Defence counsel has not argued to the contrary.
[17] The offer was clear and unambiguous. The issue raised by this motion is whether the plaintiff’s counsel’s use of the phrase “…it is condition of settlement…” prevents his purported acceptance from being characterized as a form of acceptance sufficient to form a binding contract.
The Law
[18] Settlement of an action is a form of contract, and the rules of contractual interpretation are to be applied by a court, giving effect to the intention of the parties: Thai Agri Foods Public Co. v. Choy Foong Int’l Trading Co., 2013 ONSC 883 at para. 7, citing Grant Sandhills Terminal Marketing Centre Ltd. v. J-Sons Inc., 2008 SKCA 16; KPMG v. Canadian Imperial Bank of Commerce (1988), 83 A.C.W.S. (3d) 763 (Ont. C.A.).
[19] In Olivieri v. Sherman, 2007 ONCA 491 the Court of Appeal wrote:
A settlement agreement is a contract. Thus, it is subject to the general law of contract regarding offer and acceptance. For a concluded contract to exist, the court must find that the parties: (1) had a mutual intention to create a legally binding contract; and (2) reached agreement on all of the essential terms of the settlement: Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991), 1991 2734 (ON CA), 79 DLR (4th) 97 (Ont. C.A.) at 103-4.
A determination as to whether a concluded agreement exists does not depend on an inquiry into the actual state of mind of one of the parties or on the parol evidence of one party’s subjective intention. See Lindsey v. Heron & Co. (1921), 1921 538 (ON CA), 64 D.L.R. 92 (Ont. S.C. (App. Div.)). Where, as here, the agreement is in writing, it is to be measured by an objective reading of the language chosen by the parties to reflect their agreement. As was stated by Middleton J.A. in Lindsey at 98-9, quoting Corpus Juris, vol. 13 at 265;
The apparent mutual assent of the parties essential to the formation of a contract, must be gathered from the language employed by them, and the law imputes to a person an intention corresponding to the reasonable meaning of the words and acts. It judges his intention by his outward expressions and excludes all questions in regard to his unexpressed intention. If his words or acts, judged by a reasonable standard, manifest an intention to agree in regard to the matter in question, that agreement is established, and it is immaterial what may be the real but unexpressed state of his mind on the subject.
[20] Chitty on Contracts defines “acceptance” as “a final and unqualified expression of assent to the terms of an offer” (A.G. Guest, Chitty on Contracts, 27th ed. (UK: Sweet & Maxwell Ltd., 1994), at p. 100). In the Law of Contract in Canada, the author writes: “The response of the offeree must be a clear indication that the offer has been accepted. It must be unconditional, clear and absolute” (G.H.L. Fridman, The Law of Contract in Canada, 6th ed. (Toronto: Carswell, 2011), at p. 46) (footnotes omitted). At p. 57 is the following passage:
More than once it has been said that an acceptance must correspond precisely to the terms of the offer. In Harvey v. Perry, for example, Estey, J. in the Supreme Court of Canada referred to “…that absolute and unequivocal acceptance of terms required by the authorities to conclude a contract.” There must be an acceptance simpliciter of the offer. If the acts or language of the offeree do not amount to an absolute and unqualified assent to the material terms and conditions of the offer, there is no acceptance, hence no binding contract. [footnotes omitted]
[21] In addition to the authorities cited in the passages quoted above from Chitty on Contracts and the Law of Contract in Canada, the courts have repeatedly held that any words that seek to modify or change the offer result in either a finding that there has been no acceptance, or that a counter-offer has been made: Samek v. Black Trust Energy Inc., 2000 ABQB 684, Desanto v. Cretzman (1986), 1986 2663 (ON SC), 53 O.R. (2d) 732 (District Ct.), 459853 Ontario Ltd. v. Ameristar Properties Inc. (1986), 12 C.P.C. (2d) 213 (Ont. District Ct.), Seniw v. Seniw Estate (2009), 49 E.T.R. (3d) 100 (Ont. Sup. Ct.), Catford v. Catford, 2013 ONSC 7147, Cole v. Summer (1900), 1900 87 (SCC), 30 S.C.R. 379 (S.C.C.).
[22] The rationale for this requirement is that a contract depends for its foundation on there being a full agreement between the parties, and the offeror cannot have imposed on him an offer that he never intended to make. What happens then, when the words that would otherwise negate acceptance, such as the term “conditional upon” used by plaintiff’s counsel, do not actually change the deal that was offered?
[23] There is authority for the proposition that a variation that does not adversely affect the legal position of the offeror should not stand in the way of creating a binding agreement. In Chitty on Contracts, the author states:
On the other hand, statements which are not intended to vary the terms of the offer, or to add new terms, do not vitiate the acceptance, even where they do not precisely match the words of the offer. It is, moreover, submitted that, if the new term merely makes express what would otherwise be implied, it does not destroy the effectiveness of the acceptance (A.G. Guest at p. 103). [footnotes omitted]
[24] In Ontario, the Court of Appeal applied this principle in Tollinsky v. Tollinsky, 2011 ONCA 35, to find that there was a contract where the wording of the acceptance only reiterated a major term of the settlement offer that the wife had made to the husband. The wife’s offer contained the following term: “the respondent/wife releases and forever discharges the applicant/husband from all claims with respect to net equalization of family property and/or spousal support.” The acceptance prepared by the husband’s counsel included the phrase “there are no arrears of spousal support owing.” The Court found that a contract had been formed on the basis of the offer to settle and its acceptance, despite what appeared to be an additional term. Although not expressly stated by the Court of Appeal in its endorsement, it is clear that the Court found that the wording of the original offer encompassed the term set out by the husband’s counsel in his acceptance letter.
[25] Such a principle should be applied in this case, as the words “I confirm that it is a condition of settlement that our firm is not responsible for, nor will we agree to pay any cancellation fees with respect to the defence medical” do not alter the terms of the offer. When the offer was made, and in fact, as of September 4, 2013 when the IME was confirmed, a cancellation fee was already a potential liability for the defence. By using the term “all inclusive”, that potential fee was subsumed within the defence offer. It cannot be said that defence counsel was unaware of or mistaken about a potential cancellation fee while the offer remained outstanding; the evidence is clear that her office knew that a fee would be incurred from the two-week mark and onward. Yet her Offer to Settle was not drafted so as to expire prior to the two-week deadline, or to reduce thereafter to take into account this additional disbursement. Had the plaintiff’s counsel not indicated that his client would not be attending, but instead had accepted the offer on November 19, the defendant would still be faced with a cancellation fee. In fact, had the offer been accepted anytime from November 15 onward, a cancellation fee would still have applied, potentially in an even greater amount than that incurred. The offer remained open for acceptance beyond the two-week deadline and therefore the defence obliged itself, by the “all-inclusive offer”, to payment of the cancellation fee regardless of how it arose. Accordingly, the statement by plaintiff’s counsel in his letter of November 19 is moot, as it changed nothing material about the terms of the offer made on October 22, and which remained open at the date of acceptance.
[26] In Cole v. Summer (1900), 1900 87 (SCC), 30 S.C.R. 379 (S.C.C.), Sedgewick, J. writing for the Court stated:
I am of opinion that this correspondence does not contain a complete contract. The rule of law is that:
An acceptance of a proposition must be a simple and direct affirmative in order to constitute a contract, and if the party to whom the offer of proposition is made accepts that on any condition, or with any change of its terms or provisions which is not altogether immaterial, it is no contract until the party making the offer consents to the modifications; that there can be no contract which the law will enforce unless the parties to it have agreed upon the same thing in the same sense. [footnotes omitted] [emphasis added].
[27] The “condition” inserted by plaintiff’s counsel in his acceptance letter was immaterial, for the reasons stated above.
[28] Accordingly, I conclude that a binding settlement was reached on November 19, 2013, and that the defendant has failed to comply with that settlement.
[29] Rule 49.09 gives the court discretion with respect to granting judgment in the terms of a settlement. Milios v. Zagas (1998), 1998 7119 (ON CA), 38 O.R. (3d) 218 (C.A.) sets out the factors to guide a motions judge in the exercise of her discretion with respect to whether to enforce settlement.
[30] Of the factors outlined in Milios, which are not exhaustive, that which is most compelling in these circumstances is the fact that the defendant will not be prejudiced if the settlement is enforced. For the reasons I already discussed, the defendant will now have to pay the cancellation fee, but that was implicit in his settlement offer as it stood on November 15 and onward.
[31] While there is no evidence of specific prejudice to the plaintiff if the settlement is not enforced, the court recognizes that in a personal injury action there lies the risk that further delay in the litigation may extend or exacerbate those economic, physical and/or personal losses to which the plaintiff may have been subjected since the date of injury.
[32] The argument of the defendant’s counsel raised another factor for consideration, which is whether the plaintiff’s counsel was acting in good faith by accepting a settlement offer in the knowledge that the cancellation fee had arisen as an issue between the parties. It is urged upon the court that if found to be unacceptable, such conduct should not be condoned by affirming the settlement.
[33] I agree that the cancellation fee became an issue between the parties primarily because Mr. Littlejohn’s correspondence of November 15 did not provide any sound basis for his client’s failure to attend the IME. Ms. Cain fairly questioned the reason why the cost had to be incurred, given that no reasonable explanation was provided and no settlement had been reached. Her note of her conversation with Mr. Lemieux sums up her confusion when she wrote “what’s going on?”. However, the cancellation fee should never have become an impediment to settlement because the offer as drafted, and left open for acceptance, is the responsibility of the defendant’s counsel. The plaintiff was well within her rights, and her counsel was in compliance with the rules, to accept the offer when he did.
[34] Taking into account and weighing these relevant factors, I find that acceptance of the settlement offer should be confirmed by judgment, and so order.
[35] If counsel is unable to agree upon costs they may make brief submissions in writing not exceeding two double-spaced pages, together with any cost outline or offers on which they rely. The moving party’s submissions are due January 27, 2014 and the respondent party’s submissions are due by February 3, 2014, and any reply by February 7, 2014, to be filed with my judicial assistant in Barrie. Counsel should bear in mind, when assessing the likelihood of a cost award being made, that although the motion was successful: 1) the motion raised a unique question of law on the issue of acceptance; and 2) the evidence shows that wording used by Mr. Littlejohn in his letter of November 19 clearly contributed to the legal position taken by the defendant, that a binding agreement had not been reached.
HEALEY J.
Released: January 17, 2014