Exponents Canada Inc. v. Sharma, 2015 ONSC 2940
COURT FILE NO.: CV-14-2334-00
DATE: 2015 05 05
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Exponents Canada Inc., Meravo Inc., Navdeep Sarao, Plaintiffs/ Defendants by Counterclaim
AND:
Sumit Sharma, Crivitia Inc., Exponents Inc., Defendants/ Plaintiffs by Counterclaim
BEFORE: WOOLLCOMBE J.
COUNSEL: J. Mangat, for the Plaintiffs
R. Folkes, for the Defendants
HEARD: April 24, 2015
ENDORSEMENT
[1] The plaintiffs bring a motion for an order under Rule 49.09(b), and ask me to set aside their settlement agreement, endorsed by Justice Emery on December 19, 2014, on the basis that the defendants have failed to comply with the terms of the agreement. Further, it is argued that because the defendants have not complied with three previous costs orders, I should, pursuant to my authority under Rule 20.05(6), strike out the defendants’ statement of defence and counterclaim, and then grant summary judgment against the defendants/ plaintiffs by counterclaim, and grant a writ of immediate possession for the property at issue.
[2] The extensive background between the parties was set out by Justice Price in his endorsement released on December 8, 2014 (See: Exponents Canada Inc. v. Sharma, 2014 ONSC 7097 at paragraphs 8-14). This motion does not require me to repeat that background.
[3] Following Justice Price’s decision, an interim settlement agreement was reached between the parties on December 19, 2014 and endorsed by Justice Emery. This agreement was the product of negotiation, with both sides having been represented by counsel. This settlement agreement is the subject of the motion before me.
The plaintiff’s position on the motion
[4] The plaintiffs advanced four arguments in support of the position that the defendant Mr. Sharma has not complied with the settlement agreement of December 19, 2014. They argue:
a. That while the parties had agreed “that the realtor listing the property shall be mutually agreed from a list of names submitted by each party” (according to paragraph 6 of the agreement), the defendant breached the agreement by listing the property with a realtor of his choosing;
b. That the defendant Mr. Sharma breached the agreement by unilaterally removing the listing from the market (which was not contemplated in the agreement);
c. That while the parties agreed “not to slander, defame or harass the businesses or individuals associated with the parties to this agreement” (according to paragraph H of the agreement), the defendant sent an email to a business associate and accused the plaintiff of theft; and
d. That while the parties were supposed to divide all assets of Exponents and Meravo equally, the parties cannot agree on what the assets are and that they will not be able to reach an agreement. The plaintiff Mr. Sarao says that he has provided a list of assets and that there has been no response from the defendant Mr. Sharma, and no attempt to divide assets.
The defendants’ position on the motion
[5] The defendants’ position is that they have substantially complied with the settlement agreement and that I should not exercise my discretion to set it aside.
Is Rule 49 Applicable?
[6] Both counsel proceeded under Rule 49 on the basis that what was before me was “an accepted offer to settle”, as contemplated by Rule 49.09. The difficulty with this position is that there is a difference between “an accepted offer to settle” under Rule 49, and a negotiated settlement agreement. The evidence before me, including Justice Emery’s endorsement and the “Minutes of Settlement”, makes clear that what happened here was that a settlement agreement was reached, rather than “an accepted offer to settle”.
[7] Since there was no “accepted offer to settle”, I do not have jurisdiction, under Rule 49.09(b), to set aside the agreement on the basis advanced by the plaintiffs. While the plaintiffs could have moved for relief under Rule 50.06(2) or under the law of contract, these avenues were not pursued. Accordingly, in my view, this plaintiffs’ motion must fail.
In any event, would there have been a proper basis to set aside the settlement agreement because of the defendants’ failure to comply with it?
[8] Even if there was jurisdiction to address the motion under Rule 49.09, I am not persuaded that I should set the settlement agreement aside in this case.
[9] Rule 49.09 sets out a two-part analysis:
a. The first step is to determine whether a settlement agreement has been reached on the basis of an accepted offer to settle;
b. If the court finds that a settlement agreement has been reached, the court must then decide whether the agreement should be enforced, taking into account all of the evidence.
For the purpose of this analysis, I will assume that a settlement agreement was reached on the basis of an accepted offer. The question then becomes whether the settlement agreement should be enforced in view of what is said by the plaintiffs to be breaches of it. While the court has the discretion to refuse to enforce a settlement, that discretion should be “rarely exercised and utmost consideration should be given to the policy of the courts to promote settlement” (See: Stoewner v. Hanneson, [1992] O.J. No. 697). In deciding whether to enforce a settlement, all relevant factors need to be taken into account (See: Milios v. Zagas, 1998 7119 (ON CA), [1998] O.J. No. 812 (C.A.); Allmore Renovations Inc. v. Belanger, 2011 ONSC 6366 at paragraphs 25-28).
[10] I have carefully reviewed the evidence before me in relation to each of the arguments advanced by the plaintiffs.
a. Listing the property without exchanging names of realtors
[11] On January 15, 2015, counsel for the plaintiffs sent to counsel for the defendants a completed listing agreement, which he asked to have executed. The agreement had incorporated the name of a proposed realtor. According to the defendants, the named individual is a relative of counsel for the plaintiff, whom the defendants were not prepared to engage as the listing realtor. They chose, instead, to list the property for sale with a different realtor and did so on January 19, 2015. While issues about the listing price were raised in the motion materials, no submissions were made about this before me and I understand the plaintiffs not to be pursuing any arguments about the listing price. The property remained listed until about February 26, 2015.
[12] The manner in which the property was listed did not follow, precisely, what appears to have been contemplated in the settlement agreement as no list of potential realtors was ever provided by either party. The plaintiffs gave one name and the defendants selected a different one. Until this motion, there is no evidence that the plaintiffs raised with the defendants any objection to the process engaged to select the realtor.
[13] It appears that the plaintiffs’ counsel telephoned counsel for the defendants on March 4, 2015 about the removal of the listing. Counsel responded by letter of March 5, 2015 and said that the property would be re-listed as soon as it was safe to do so. There is no reference to the process used to select the listing realtor.
[14] In his responding letter of March 12, 2015, counsel for the plaintiffs asked counsel for the defendants to be informed when the listing was active again. He also asked whether Mr. Sharma “would consider changing realtors” and indicated that the plaintiffs “can recommend a few realtors”. In an email to counsel on April 1, 2015, counsel for the plaintiffs asked counsel for the defendants when the property would be re-listed for sale and asked whether Mr. Sharma would consent to allowing another realtor to list the property as well. At no point did the plaintiffs provide to the defendants a list of proposed realtors. The property was re-listed with the same realtor as before on April 15, 2015.
[15] I am not prepared to find that there has been a breach of the settlement agreement on the basis that the home was listed without an exchange of the names of proposed realtors. It appears to me that the plaintiffs were well aware that the defendants had listed the property with a realtor other than the individual they had suggested, and that they were satisfied with the defendants’ choice. Their concern was always that the property be listed, and then re-listed, rather than with the process of selecting a realtor. While in the most technical sense neither party complied precisely with the agreement, both parties seemed content to proceed as they did.
b. Removal of the property from the market listing
[16] As indicated, the property was removed from the listings around February 26, 2015. In his letter to counsel for the plaintiffs of March 5, 2015, counsel for the defendants explained that this had occurred for safety reasons. The property was re-listed on April 15, 2015.
[17] The plaintiffs fairly point out that the settlement agreement did not contemplate the property listing being removed before sale. The plaintiffs are also correct that the defendants ought to have told them immediately that the listing was being temporarily removed, the reason why, and when it was anticipated that the property would be re-listed. However, I find the defendants’ conduct does not amount to a breach of the settlement agreement. It is more fairly characterized as a reasonable response to unexpected circumstances. Particularly when the property has now been re-listed, I find no breach of the settlement agreement, the intent of which was that the property be listed and sold as soon as possible.
c. The allegation of slander, defamation or harassment
[18] The plaintiffs point me to an email, sent by Mr. Sharma to property manager John Watson (of Ganz Realty Limited) on January 22, 2015, as evidence that Mr. Sharma was not prepared to comply with term “H” of the settlement agreement that the parties were “not to slander, defame or harass the businesses or individuals associated with the parties to this agreement”.
[19] In the email, Mr. Sharma writes that he is concerned that Mr. Sarao has “Stolen/removed all of the assets of the corporations without my authorization” and that he is concerned about his “Custom built arbor”, which he says is worth over $60,000.00. He states:
Mr. Sarao has lately told my lawyer that the Arbor is either in your possession or thrown out by you. Could you please let me know if it’s true? It is evident that Mr. Sarao might have stolen the Arbor and is still under his possession and is not telling the truth.
[20] Mr. Sharma’s response is that Mr. Watson worked for Ganz, the former landlord of Meravo. He says that because the business has been moved by Mr. Sarao, Mr. Watson is no longer “an associate of the business” and more aptly characterized as a former landlord.
[21] I am sympathetic to the plaintiffs’ concern that the tone of Mr. Sharma’s email is accusatorial of Mr. Sarao, and certainly not in the spirit of the settlement agreement. However, I am not prepared to find, on the basis of this email, that there has been a failure to comply with the settlement agreement such that it should to be set aside.
d. The failure to divide assets
[22] Counsel for the plaintiffs argues that while the parties agreed that all assets were to be divided equally, and Mr. Sarao has provided a list of assets, counsel for Mr. Sharma has not responded. I have before me a letter of March 12, 2015 from counsel for Mr. Sarao setting out a list of assets that had been referred to by Mr. Sharma, as well as a list of assets not noted by Mr. Sharma in previous correspondence. Counsel for the plaintiffs argues that Mr. Sharma has failed to respond to this letter and that he has not moved forward to attempt to divide the assets.
[23] Counsel for the defendants is in receipt of the March 12, 2015 letter but says that in his view the list is “grossly insufficient”. He acknowledges not having responded to the letter and tells me that he has not had the opportunity to do so because he was away and was then served with the motion materials for today.
[24] There has been a lack of diligence on the part of counsel for the defendants in responding to the March 12, 2015 letter. I am unable to conclude from this that there is such an unwillingness to deal in an efficient manner with the need to divide the properties of Exponents and Meravo that I should set the settlement agreement aside.
Disposition
[25] Given my conclusions set out above, even there was jurisdiction to do so under Rule 49.09(b), I would not be prepared to exercise my discretion and set aside the settlement of December 19, 2014.
[26] The defendants ask that I make an order for the preparation and production of Financial Statements for 2014 for Exponents Canada Inc. (ECI) and Meravo. I am also asked to order a listing of all assets of ECI and Meravo as of March 24, 2014 and a location of each of these assets and/or their disposition and proceeds of disposition. I decline to make such an order. The settlement agreement makes clear that assets from ECI and Meravo are to be divided equally with a mutually agreed independent mediator, if required. I expect that the parties will take steps to ensure that this happens, and that the requisite accounting necessary to accomplish this will be done expeditiously.
Costs
[27] At the conclusion of the hearing, both parties made submissions as to costs. I have now received from Mr. Mangat a supplementary costs outline. As I have dismissed the plaintiffs’ motion, costs will be awarded to the defendants/plaintiffs by counterclaim. Counsel seeks costs of $5,977.42 on a partial indemnity basis, comprised of 20.1 hours of time, billed at a rate of $250.00 /hour, and disbursements of $299.17. I view this as reasonable and order the plaintiffs to pay costs of $5,977.42 within 30 days.
WOOLLCOMBE J.
Date: May 5, 2015
COURT FILE NO.: CV-14-2334-00
DATE: 2015 05 05
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Exponents Canada Inc., Meravo Inc., Navdeep Sarao, Plaintiffs/ Defendants by Counterclaim
Applicant
– and –
Sumit Sharma, Crivitia Inc., Exponents Inc., Defendants/ Plaintiffs by Counterclaim
Respondent
COUNSEL:
J. Mangat, for the Plaintiffs
R. Folkes, for the Defendants
REASONS FOR JUDGMENT
WOOLLCOMBE J.
Released: May 5,2015