CITATION: Brenner v. Saks, 2016 ONSC 2054

COURT FILE NO.: CV-15-10949-00CL

DATE: 20160324

SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: David Brenner, Applicant

AND:

Jeremy Saks and 523910 Ontario LIMITED, Respondents

BEFORE: Hainey J.

COUNSEL: Gideon C. Forrest, for the Applicant (Responding Party), David Brenner

Irving Marks and Dominique Michaud, for the Respondent (Moving Party), Jeremy Saks

HEARD: March 22, 2016

ENDORSEMENT

Background

[1] This is a motion by the respondent, Jeremy Saks (“Jeremy”), for an order varying the Judgment of Pattillo J. dated October 26, 2015 (“Judgment”), to permit Uri Saks (“Uri”), on behalf of 523910 Ontario Limited (“Company”), to accept or make a counter-offer in respect of an offer to purchase 434 Steeles Avenue West, Vaughan (“Property”), for a gross purchase price of $14,600,000 (“New Offer”). The New Offer is dated February 1, 2016 and was submitted to Uri by 2064472 Ontario Inc. in trust on February 3, 2016.

[2] Jeremy owns 50% of the Company in trust for his father, Uri. David Brenner (“David”) owns the other 50% of the Company. David, Jeremy and Uri are deadlocked. There is a complete lack of trust between them.

[3] The Company owns the Property which is leased to a tenant that carries on business as a car dealership (“Tenant”).

[4] The Tenant has made a number of offers to purchase the Property. In April 2015, the Tenant offered to purchase the Property for $12,000,000 (“April Offer”). David wanted to accept the April Offer but Jeremy and Uri refused to accept it. As a result, David brought an application in which he sought an order to wind up the Company and for the sale of the Property to the Tenant pursuant to the April Offer.

[5] Pattillo J. heard the application. In his Judgment he ordered the Company wound up. He also ordered that Uri could purchase David’s interest in the Property for $6,000,000. If this sale was not completed Pattillo J. ordered that David could approach the Tenant to revive the April Offer and sell the Property to the Tenant on the same terms and conditions as contained in the April Offer.

[6] Jeremy appealed the Judgment and applied unsuccessfully to stay it. The appeal was resolved at a judicial settlement conference by minutes of settlement signed by all of the parties and their legal counsel on January 26, 2016 (“Minutes of Settlement”). The Minutes of Settlement provide that the Judgment is to apply and that the Property is to be sold to the Tenant on the same terms as contained in the April Offer. There was a three-day “cooling off” period during which the parties could withdraw from the settlement.

[7] None of the parties withdrew from the settlement. It therefore became binding on January 29, 2016. David then contacted the Tenant to ask it to revive the April Offer. David obtained a revived offer from the Tenant on essentially the same terms as the April Offer (“Revived Offer”). Uri and Jeremy have not accepted the Revived Offer from the Tenant.

[8] Jeremy seeks a variation of the Judgment to allow the Company to sell the Property pursuant to the terms of the New Offer.

Issue

[9] Should the Judgment be varied to permit the sale of the Property pursuant to the New Offer?

Analysis

[10] Mr. Marks, on behalf of Jeremy, submits that I should vary the Judgment pursuant to Rule 59.06 (2) (a) of the Rules of Civil Procedure which provides that an order may be set aside or varied “on the ground of fraud or of facts arising or discovered after it was made”. He submits that the New Offer constitutes new evidence that “might probably” have altered the Judgment.

[11] I disagree with this submission. The New Offer does not constitute “facts arising or discovered after” the Judgment was made.

[12] Uri contacted a real estate agent about the New Offer in January 2016 when the Minutes of Settlement were negotiated. The New Offer was solicited by Uri in January 2016 and is dated February 1, 2016, three days after the Minutes of Settlement became binding. Under these circumstances, I do not consider the New Offer to be “facts arising or discovered after” the Judgment was settled by the parties and they specifically agreed that the Property would be sold pursuant to the terms of the April Offer if it was revived by the Tenant.

[13] Uri had no right to solicit another offer to purchase the Property. The sale of the Property was governed by the Judgment and the Minutes of Settlement. Rule 59.06 (2) (a) does not apply in this case.

[14] The Minutes of Settlement are clear. The parties and their legal counsel specifically agreed that the Property would be sold to the Tenant upon the same terms as contained in the April Offer if the offer could be revived. The April Offer has been revived by the Tenant. In my view, the parties are bound by the Judgment and the Minutes of Settlement to accept the Revived Offer and to sell the Property to the Tenant.

[15] The Ontario Court of Appeal stressed the importance of the “finality principle” in the case of Mohammed v. York Fire and Casualty Insurance Company, 2006 CanLII 3954 (ON CA), [2006] O.J. No. 547. Lang J.A. summarized this principle as follows at paragraphs 34-36:

Minutes of settlement are a contract. A consent judgment is binding. Both are final, subject to reasons to set them aside. Finality is important in litigation. This is so for the sake of the parties who reached their bargain on the premise of an allocation of risk, and with an implicit understanding that they will accept the consequences of their settlement. Finality is also important for society at large, which recognizes the need to limit the burdens placed on justice resources by re-litigation, a limitation reflected in the doctrine of res judicata …

For these reasons, the avenues to set aside a settlement and consent dismissal are restricted. Rule 59.06 sets out the procedure for setting aside such an order. It provides that a party may bring a motion in the original proceeding to ‘have an order set aside or varied on the ground of fraud or of facts arising or discovered after it was made’.

However, this court has said that the rule, while providing an expeditious procedure to determine whether an order should be set aside, does not prescribe or delineate a particular test. … Rather, to succeed, ‘the appellant must demonstrate circumstances which warrant deviation from the fundamental principle that a final judgment, unless appealed, marks the end of the litigation line’.

[16] I find that the end of the “litigation line” in this case was January 29, 2016 when the Minutes of Settlement became binding upon the parties.

[17] In Davis v. Cooper, [2010] O.J. No. 3309, B.A. Allen J. referred to the fundamental principle of contract law that parties must be held to their freely negotiated bargains. At paragraphs 10-11and 33 she stated as follows:

There are several grounds on which a contract can be set inside including misrepresentation, fraud, duress, mistake of fact, lack of capacity, or unconscionability.

In deference to the long-held principle of contract law that parties must be held to their bargains freely negotiated, the courts have developed strict rules to govern when exceptions can be allowed and a contract invalidated.

The principles that govern whether a consent order can be set aside are those that govern whether a contract can be set aside. A consent order is a contract and …

can only be set aside or varied by subsequent consent, or upon the grounds of common mistake, misrepresentation or fraud, or on any other ground which would invalidate a contract. …

[18] There is no basis to vary the Judgment or the Minutes of Settlement on the basis of the foregoing principles. There is no evidence of misrepresentation, fraud, duress, mistake of fact, lack of capacity or unconscionability in this case. The parties must be held to the bargain they made when they agreed to the Minutes of Settlement.

[19] For the reasons outlined above the Judgment should not be varied.

Conclusion

[20] The motion is dismissed.

Costs

[21] David is entitled to his costs of responding to the motion on a partial indemnity basis. His counsel seeks partial indemnity costs inclusive of disbursements and HST of $41,031.22. In my view costs in this amount are excessive. This was not a complicated motion. Costs in this amount could not have been within Jeremy’s reasonable expectation. Jeremy’s partial indemnity costs inclusive of disbursements and HST are approximately $10,000. I find that all inclusive costs in the amount of $20,000 are fair and reasonable under the circumstances.

[22] David is awarded costs in the amount of $20,000 inclusive of disbursements and HST payable by Jeremy within 30 days.

HAINEY J.

Date: March 24, 2016