SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-13-495161

DATE: 2014-07-22

RE: Willy Ruder, Plaintiff, Moving Party

AND:

1049077 Ontario Limited o/a Crowntech Aluminum & Glass, Defendant, Responding Party

BEFORE: R. F. Goldstein J.

HEARD: July 21, 2014

APPEARANCE:
Marty Rabinovitch, for the Plaintiff, Moving Party
Nicholas C. Bader, for the Defendant, Responding Party

ENDORSEMENT

[1] The Plaintiff, Mr. Ruder, worked for the Defendant, Crowntech as an estimator. Crowntech is in the glass business. Barry Zigelstein, the president of Crowntech, fired Mr. Ruder for poor work performance. Mr. Ruder sued Crowntech for wrongful dismissal. Mr. Ruder sought $138,000.00, including pay in lieu of notice and damages. They agreed to settle for $22,500.00. Minutes of settlement were signed. Some of the monies were forwarded to Mr. Ruder’s counsel.

[2] Shortly after the minutes of settlement were signed, Mr. Zigelstein discovered that Mr. Ruder had been doing some work on the side for a competitor and some clients. Indeed, it appeared that Mr. Ruder had been doing this work on Crowntech time, while using his Crowntech computer. Mr. Zigelstein retained the services of a forensic computer analyst. The analyst discovered that Mr. Ruder had done work on his computer and then attempted to delete the files. He apparently used bootleg computer assisted design software licenced to “Adolf Hitler”.

[3] Mr. Zigelstein, through his counsel, repudiated the settlement and indicated that no more settlement funds would be forthcoming. Crowntech has subsequently issued a statement of claim against Mr. Ruder for damages.

[4] Mr. Ruder now moves to enforce the minutes of settlement. The court must deal with two issues: First, was there a settlement? And second, if there was, should the court exercise its discretion to enforce the settlement? See: Milios v. Zagas (1998), 1998 7119 (ON CA), 38 O.R. (3d) 218 (C.A.); Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc. (2007), 2007 ONCA 497, 87 O.R. (3d) 443 (C.A.).

[5] Both counsel agree that there was a settlement. They obviously disagree on whether I should exercise my discretion to enforce it. The relevant facts that I must take into account include the following:

• The evidence of mistake;

• The reasonableness of the agreement;

• The prejudice to the party seeking to uphold the settlement if it is not enforced;

• The prejudice to the party seeking to set aside the settlement if is enforced in relation to the prejudice to the party who seeks to uphold the settlement if it is not enforced; and

• The effect on third parties if it is not enforced.

See: Richard v. Worth (2004), 2004 34517 (ON SC), 73 O.R. (3d) 154 (Sup.Ct.).

[6] As a matter of public policy, a settlement ought to be enforced unless enforcement would create a real risk of clear injustice: Brzozowski v. O’Leary, [2004] O.J. No. 3230 (Sup.Ct.).

[7] In this case, I am satisfied that none of the reasons set out in Richard v. Worth militate in favour of setting aside the settlement. In other words, there was no evidence of mistake, the settlement was reasonable, and the question of prejudice cuts equally both ways.

[8] The real question is whether there is a real risk of clear injustice. In my view there is, for the following reasons:

• Mr. Zigelstein would undoubtedly never have entered into the minutes of settlement if he had known about Mr. Ruder’s business dealings with competitors and customers;

• Mr. Zigelstein learned of those business dealings almost immediately after signing the minutes of settlement;

• The evidence of Mr. Ruder’s business dealings was not easily discoverable prior to signing the minutes of settlement because a company “whistleblower” told Mr. Zigelstein about it;

• The computer files created by Mr. Ruder had been mostly deleted. A routine inspection of the computer would not have revealed any basis for concern. Mr. Zigelstein had to arrange for a forensic examination of the computer.

[9] In other words, there are grounds to believe that Mr. Ruder did business on the side when he should have been devoting himself to his Crowntech duties, using Crowntech resources, and then sued Crowntech for wrongful dismissal after covering his tracks. That certainly creates a real risk of injustice to the Plaintiff.

[10] I appreciate that there may well be another side to the story, as pointed out by Mr. Rabinovitch. That said, I am not required to make a definitive finding of fact, but rather to determine whether there is a real risk of injustice. There is nothing to contradict the evidence of Mr. Zigelstein.

[11] Accordingly, the motion is dismissed.

COSTS

[12] I have received the costs outlines of the parties. Both parties agree that partial indemnity costs are appropriate. I agree. Mr. Bader, for the Defendant, submitted a Costs Outline seeking partial indemnity costs of $2,862.86, inclusive of HST and disbursements. Considering that Mr. Rabinovitch, for the Plaintiff, submitted a costs outline with a much higher amount, the amount sought by Mr. Bader is very reasonable. The amount of time spent on the motion can hardly be described as excessive. An amount of $2862.86 in costs is awarded to the Defendant.

Goldstein J.

Date: July 22, 2014