COURT FILE NO.: CV-09-373268

DATE: 20150923

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Michelle Alice Tondera and Maryon Tondera, Plaintiffs

AND:

Veselin Vukadinovic, Mihajlo (Mike) Milicevic and Dorothy Ellyn Fox,

BEFORE: Mr. Justice Graeme Mew

COUNSEL: Robert L. Love and Scott Jones, for the Defendant Dorothy Ellyn Fox

Vesna Vojvodic, for the Plaintiff/Respondent

HEARD: 17 September 2015, at Toronto

ENDORSEMENT

(Rule 49.09(a) motion for judgment)

[1] The defendants Mihajlo (Mike) Milicevic and Dorothy Ellyn Fox ask the court to enforce the terms of a settlement.

[2] The plaintiffs’ alleged offer to settle and its acceptance by the settling defendants were communicated orally.

[3] A settlement proposal is said to have been verbally communicated by the plaintiffs’ lawyer during a pre-trial conference on 5 May 2015.

[4] The evidence of three lawyers in attendance, representing two of the defendants and the third parties Zagorka Kalezic and Milosava Vukadinovic, attests to the fact that the plaintiffs’ lawyer confirmed at the time of conveying the offer that she had firm instructions from her clients to agree to an order dismissing the action without costs against the defendants Milicevic and Fox.

[5] The pre-trial judge adjourned the pre-trial to 20 May 2015 for the express purpose of enabling instructions to be taken. The affidavits of the lawyers indicate that the settling defendants needed to time to ensure that their clients would not be exposed to the costs of the third parties.

[6] When, on 20 May 2015, the lawyers for the parties returned to court for the resumption of the pre-trial, the lawyers for the defendants Milicevic and Fox each say that they told the plaintiffs’ lawyer that their respective clients accepted the plaintiffs’ offer to consent to a dismissal of the action against him on a without costs basis.

[7] According to the affidavits of the three lawyers, the lawyer for the plaintiffs, in response, initially indicated that the offer had not been made to the defendant Milicevic at all, but only to the defendant Fox. She then withdrew from that position and indicated that she had never made an offer at all on behalf of her clients.

[8] The pre-trial judge was informed of the developments and gave the plaintiffs’ lawyer until 25 May 2015 to advise whether her clients were prepared to accept that a settlement had been reached.

[9] The plaintiffs’ lawyer did not confirm that settlement had occurred by the deadline and, accordingly, the pre-trial judge (who has assumed case management responsibilities) set a date for the hearing of this motion pursuant to rule 49.09 to determine (a) whether settlement negotiations (offer and acceptance) said to have taken place at a pre-trial conference can be relied on to prove the existence of a settlement agreement; (b) if so, whether a settlement agreement was made; and (c) whether, pursuant to rule 49.09(a) of the Rules of Civil Procedure, judgment enforcing the settlement between the parties should be granted.

[10] The evidence of the three lawyers representing the defendants Milicevic, Fox and the third parties is not contradicted by evidence from the plaintiffs or their lawyer. Indeed, there is no affidavit from the plaintiffs’ lawyer as to what occurred during the pre-trial conferences was tendered. An affidavit from the plaintiff, Michelle Tondera attaches a background chronology of the proceedings from 24 September 2013 until 16 June 2015, a collection of orders and endorsements, and a record of correspondence between lawyers from April 2015 to 10 September 2015.

Analysis

[11] Rule 50.09 provides:

No communication shall be made to the judge or officer presiding at the hearing of the proceeding or a motion or reference in the proceeding with respect to any statement made at a pre-trial conference, except as disclosed in an order under rule 50.07 or in a pre-trial conference report under rule 50.08.

[12] This rule has been described as a codification of one facet of common law settlement privilege: Puri Consulting Ltd. v. Kim Orr Barristers PC 2015 ONSC 577 at para. 17.

[13] In Sopinka, Lederman & Bryant, The Law of Evidence in Canada (4th ed.) (Markham: LexisNexis, 2014) at para. 14.336, the authors note that the existence of a privilege covering communications in the furtherance of settlement is a public policy to encourage settlement and, accordingly, it follows that the privilege should extend to subsequent proceedings not related to the dispute which the parties attempted to settle (emphasis added). The learned authors continue, at para. 14.347:

If [settlement] negotiations are successful and result in a consensual agreement, then the communications may be tendered in proof of the settlement where the existence or interpretation of the agreement is itself an issue. Such communications form the offer and acceptance of a binding contract, and may thus be given in evidence to establish the existence of a settlement agreement.

[14] To the extent that rule 50.09 places limitations on the communication to a judge presiding on a motion in the proceeding with respect to any statement made at a pre-trial conference, it bears noting that rule 2.03 provides that:

The court may, only where and as necessary in the interest of justice, dispense with compliance with any rule at any time.

[15] I concur with the observation of McLellan J. in Morvik v. Goohsen, 2003 SKQB 117, a case involving the application of s. 28.1 of The Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01, which generally corresponds with rule 50.09 that:

If a party to an action is unable to enforce a concluded settlement agreement reached during a pre-trial conference such a result would render the settlement pre-trial process meaningless. The legislation never intended such a result. Section 28.1 was enacted to provide litigants entering into a pre-trial conference with the security of knowing that all discussions, admissions, concessions and negotiations that take place during a pre-trial conference are accorded complete confidentiality unless and until the parties reach an agreement.

[16] It is worth adding that it is now well established that a communication at a mediation that leads to a settlement will cease to be privileged if disclosing it is necessary in order to prove the existence or the scope of the settlement: Union Carbide Canada Inc. v. Bombardier Inc. 2014 SCC 35, 2014 S.C.C. 35 at para. 35.

[17] I conclude that it is in the interests of justice to permit evidence of communications relating to the making or acceptance of a settlement proposal, even if made at a pre-trial conference, to be given in evidence to establish the existence of a settlement agreement. Accordingly, I have considered as part of the evidence of whether or not a settlement agreement was reached, the affidavits of the three lawyers who have provided accounts of what occurred at the pre-trial conferences on 5 and 20 May 2015.

[18] In order to establish the existence of a settlement it is necessary for the party seeking to do so to show the following:

(a) A mutual intention to create a legally binding relationship; and

(b) An agreement on all of the essential terms of the settlement.

Olivieri v. Sherman, 2007 ONCA 291 at para. 41.

[19] I agree with and adopt the following paragraphs from the factum of the defendant Fox:

48. The principles applicable to a motion brought pursuant to Rule 49.09 are the same as those that apply to a motion for summary judgment under Rule 20. As such, the Court must determine whether there is a genuine issue requiring a trial with respect to whether the parties intended to reach a settlement and agreed on all essential terms.

Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc. 2007, 39604 (ON SCDC), at para. 9.

49. Once the existence of settlement is established the Court must determine whether it will exercise its discretion to enforce the settlement and grant judgment. In doing so, the Court must consider:

whether or not the offer was clear and unequivocal, whether or not a mistake was made, the reasonableness of the settlement, the degree of prejudice to either party if the settlement is not given effect and the effect of the settlement on third parties if the settlement is not enforced.

Galevski Estate, Re, 2012 ONSC 3460 at paras. 15-16.

[20] The uncontradicted evidence of the lawyer deponents relating to what occurred at the pre-trial is that the plaintiffs made an offer to settle the action on the basis of a dismissal of the action without costs against the defendants, Milicevic and Fox, and that on 20 May the offer was accepted by the lawyers for the defendants, Milicevic and Fox.

[21] Despite the failure of the plaintiffs’ lawyer to confirm that a settlement had been concluded, correspondence between the lawyers for the parties after 20 May 2015 indicates that what remained outstanding were issues relating to the form and content of the releases which the settling defendants wanted the plaintiffs to execute. The correspondence discloses no rejection of the essential terms of the agreement itself.

[22] In Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., [1995] O.J. No. 721, 53 A.C.W.S. (3d) 1183 (Ont. G.D.) at para. 24, Chapnik J. stated:

It is well established that settlement implies a promise to furnish a release unless there is agreement to the contrary. On the other hand, no party is bound to execute a complex or unusual form of release: although implicit in the settlement, the terms of the release must reflect the agreement reached by the parties. This principle accords with common sense and normal business practice.

[23] In Olivieri v. Sherman, the settlement of certain defamation actions brought by the plaintiff provided for, amongst other things, the issuance of a press release, the provision of data and the execution of mutual releases. The offer was not made “subject to” agreement on the execution of any specific documents or the terms of such documents. As previously noted, the court stated that the first question to be asked when deciding whether a settlement was concluded is whether the parties reached an agreement on all essential terms. Noting, at para. 50, that “The policy of the courts is to encourage the settlement of litigation”, the Court of Appeal warned that courts “should not be too astute to hold” that there is not the requisite degree of certainty in any of an agreement’s essential terms.

[24] There is no doubt that the draft releases provided to the plaintiffs by the settling defendants were comprehensive in their terms. One of the releases was what is often referred to by Ontario litigators as a “LawPro” release. It is very much a “belt and suspenders” document which seeks to protect the releasees from any conceivable future financial liability arising from or in connection with the dispute which was settled.

[25] But the failure to conclude a mutually satisfactory release following an agreement to settle does not undermine the settlement agreement itself, provided (as is the case in the present matter) that the settlement was not expressly made subject to agreement on the form or content of the release.

[26] The essential terms of the settlement are clear and unequivocal: to take out an order dismissing the action against the defendants Milicevic and Fox on a without costs basis.

[27] I therefore conclude that a valid settlement agreement was entered into.

[28] The remaining issue is whether the court should exercise its discretion to decline to enforce the settlement.

[29] The fact that one party changes its mind after reaching an agreement to settle is not a sufficient basis on which a court should exercise its discretion to refuse to enforce settlement: Homewood v. Ahmed, 2003 19255 (ON SC) at para. 55.

[30] The plaintiffs argue that the fact that it is only by lifting the veil of confidentiality of discussions at pre-trials is itself a good reason to decline to enforce the settlement.

[31] While the court does indeed have a discretion to decline to enforce settlement, such discretion “should really be exercised and utmost consideration must be given to the policy of the courts to promote settlement…the policy of the courts is to hold parties to their bargains even in cases where second thoughts arise”: Stoewner v. Hanneson, [1992] O.J. No. 697 (Gen. Div.) at p.4.

[32] I am not persuaded that there is any basis for refusing to enforce the parties’ settlement. It would do a discredit to allow parties, through their lawyers, to make an agreement to settle a dispute, and then refuse to recognise or enforce the agreement because it was an oral agreement or because it was made at a pre-trial conference as opposed to some other forum or place. If the elements of a valid settlement agreement have been established, the circumstances in which it is not recognised and enforced should be few and far between,

Decision

[33] For the foregoing reasons, judgment shall go in favour of the defendants Milicevic and Fox in accordance with the accepted settlement offer, with the result that this action is dismissed as against the defendants, Dorothy Ellyn Fox and Mihajlo Milicevic without costs (save as to the costs of this motion – see below).

[34] I have been provided with costs outlines by the defendant Fox and the plaintiffs. I am presumptively of the view that if any costs are to be payable at all, they should be paid by the plaintiffs to the defendant Fox. I would encourage the parties to agree on costs. However, if they cannot do so, I will receive written submissions, not to exceed three pages in length, addressing:

(1) by whom costs should be payable;

(2) the scale of costs; and

(3) the amount of costs.

The plaintiffs should deliver their costs submissions to my judicial assistant by email by no later than 9 October 2015 at 4:30 p.m. The defendant Fox should deliver its costs submissions by no later than 19 October 2015 at 4:30 p.m.

Graeme Mew J.

Date: 23 September 2015