CITATION: Heffernan v. The Knights of Columbus et al., 2016 ONSC 8072

BARRIE COURT FILE NO.: 15-0872

DATE: 20161221

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Daniel Gerard Heffernan, Plaintiff (Respondent)

AND:

The Knights of Columbus, Kevin Daudlin, William Country, Charles Maurer, Peter Lemon, Joe Salini and The Ontario Knights of Columbus Corporation, Defendants (Moving Parties)

BEFORE: THE HON. MR. JUSTICE G.M. MULLIGAN

COUNSEL: Philip H. Horgan, Counsel for the Plaintiff (Respondent)

Julia Lefebvre, Counsel for the Defendants (Moving Parties) Kevin Daudlin, William Country, Peter Lemon, Joe Salini and The Ontario Knights of Columbus Corporation

HEARD: November 9, 2016

ENDORSEMENT

[1] The plaintiff Daniel Gerard Heffernan (Heffernan) commenced an action against The Knights of Columbus and various named individuals connected with that organization. The Knights of Columbus is a charitable fraternal benefits society with its headquarters in New Haven, Connecticut, U.S.A. It offers life insurance and other benefits to its members and their families residing in the United States and Canada.

[2] The defendant Charles Maurer was the Director and Supreme Secretary of The Knights of Columbus. Hereinafter these defendants are known as the U.S. defendants. The remaining defendants as named in the Statement of Claim are The Ontario Knights of Columbus Corporation, Kevin Daudlin, William Country, Peter Lemon and Joe Salini hereinafter referred to as the Ontario defendants

Background

[3] Heffernan had been suspended as a member of The Knights of Columbus. On July 24, 2015 he issued a Statement of Claim against the U.S. defendants and the Ontario defendants. In his claim Heffernan sought various head of relief including a declaration that all disciplinary actions against him were to be rescinded together with damages for libel, injurious and malicious falsehood and slander.

[4] The U.S. defendants were represented by counsel and filed a Statement of Defence. The Ontario defendants had separate counsel and also filed a Statement of Defence. All three parties entered into negotiations in an attempt to reach a settlement.

[5] The U.S. defendants arrived at a settlement with the plaintiff. The Ontario defendants submit that they too arrived at a settlement and now move for an order seeking to enforce the settlement. Heffernan opposes the relief sought on the basis that the “previous settlement arrived at was “withdrawn”, rescinded and/or nullified outright”.

The Ontario Convention

[6] The organization of the Knights of Columbus is structured through subordinate state councils. The Ontario Council planned its convention for April 22, 2016. All three parties negotiated extensively leading up to that date. It is clear from Mr. Heffernan’s Affidavit that he wished to have all these matters resolved so that he could be reinstated and fully participate at the Ontario convention.

The Settlements

[7] The parties proceeded to negotiate settlements with a view to obtaining a mutual release which would serve to dismiss the claim and reinstate Mr. Heffernan. He would also receive apologies, a contribution to his legal costs and other forms of relief. However, as the convention was looming all matters had not been resolved. The Plaintiff then unilaterally arrived at a settlement with the U.S. defendants on essentially the same terms and conditions that had been negotiated and repudiated the settlement with the Ontario defendants just before the convention.

[8] Prior to April 22, 2016, counsel for Mr. Heffernan proceeded to negotiate settlements with both sets of defendants with a view to a mutual release. A full and final release, although never executed by all three parties, was circulated April 18, 2016. The U.S. defendants proposed that they would pass a resolution removing Mr. Heffernan’s suspension and reprimand from his record. The U.S. defendants undertook to pay $60,000.00 toward costs and disbursements of Mr. Heffernan plus HST. The U.S. defendants also undertook to pay certain charitable donations to charitable organizations.

Settlement with the Ontario defendants

[9] The proposed settlement stipulated that the Ontario defendants would contribute $15,000.00 towards Mr. Heffernan’s costs together with the certain letters of welcome from the Ontario Council and from the Ontario defendants Kevin Daudlin, Joe Salini, Peter Lemon and William Country.

Settlement Negotiations between the plaintiff and the Ontario defendants

[10] After several months of negotiations Mr. Thomson, counsel for the Ontario defendants submitted a Rule 49 Offer to the Plaintiff on April 1, 2016. The emailed offer provided as follows:

(1) My clients [the Ontario defendants] will agree to contribute the sum of $15,000.00 towards your legal fees and disbursements.

(2) The Ontario State Deputy will issue the letter which is attached hereto.

(3) Kevin Daudlin, William Country, Peter Lemon and Joe Salini will issue the letter which is attached hereto.

(4) Your client will consent to dismiss the action against all defendants without costs and with prejudice, and the parties will also execute a mutual release with a confidentiality clause satisfactory to the parties in exchange for the above. Any confidentiality provision will be focused only on the terms of the settlement, and will specifically exclude reference to any letters provided by the various defendants.

(5) This offer is open for acceptance until 9:00a.m. Friday, April 1, 2016 after which time it shall be deemed to be withdrawn, unless withdrawn earlier either orally or in writing, and it is made pursuant to Rule 49 of the Rules of Civil Procedure.

[11] On April 1, 2016 counsel for the plaintiff responded requesting a minor change which was accepted by the Ontario defendants. Upon receiving that notification counsel for the plaintiff responded “I confirm that we have a deal with the anticipated delivery of the signed letters, payment of $15,000.00 to Phil Horgan In Trust [counsel for the plaintiff] and finalization of the remaining terms”.

[12] It’s significant to note that the acceptance did not stipulate any deadline for the delivery of the payment, the letters or a release, nor was it specifically tied to the settlement with the U.S. defendants.

[13] On the same date the U.S. defendants concluded their settlement with the plaintiff by email. Counsel for the plaintiff wrote to counsel for the U.S. defendants “Pat, I confirm that we have a settlement as discussed”.

[14] Thereafter counsel for the Ontario defendants began corresponding with the individual Ontario defendants to have them execute the various letters that they had agreed to sign. Counsel for the Ontario defendants also requisitioned the sum of $15,000.00 required as part of the settlement.

[15] The lawyers for all three parties agreed on a final release form on April 18, 2016 and counsel for the Ontario defendants sent it to his clients for execution. By that time counsel for the Ontario defendants had received the settlement funds in trust.

[16] By April 21, 2016 Mr. Thomson had not received the original executed documents from the Ontario defendants. He emailed to the Ontario defendants and stated “Dear all, I’m getting feedback to the fact that Supreme [The Knights of Columbus] wants all this finalized before the convention starts this weekend. Is it possible for you to scan and email or fax the settlement documents?”

[17] By April 22, 2016 counsel for the Ontario defendants had received the $15,000.00 in trust and had received a release executed by the Ontario Knights of Columbus and Mr. Daudlin. The required letters from the defendants Lemon, Salini and Country had not arrived.

The Ontario Settlement

[18] As noted previously there was no deadline set out in the settlement agreement between the plaintiff and the Ontario defendants. However, without any prior notification plaintiff’s counsel emailed to the Ontario defendant’s counsel purporting to withdraw from the settlement. As his email stated in part:

There was an acceptance in principal of the negotiated settlement with all defendants as of April 1, with expectations of certain actions and payment from the clients represented by Mr. Santini [counsel for the U.S. defendants] and the provision of expected letters from your clients and a payment from your clients, all as agreed to as of the morning of April 1, 2016.

More importantly, given the delays, your clients seem to lack any commitment to the terms of the settlement. They may be planning to abandon any settlement completely, to the further prejudice of my client’s deal with Mr. Santini’s clients.

Accordingly, please note we have revised the terms of the settlement with the clients represented by Mr. Santini [the U.S. defendants,] my client and Mr. Santini’s clients have entered into a separate settlement deal, I which terms have been accepted as between us, but with a separately negotiated Mutual Release document, and a separate order to dismiss the Heffernan action only as against the Knights of Columbus and Charles Maurer, without prejudice to the continuation of the action as against your clients.

I have received the settlement funds from Mr. Santini’s clients and we have consented to the form of the Order to be taken out.

Given the delays and non-compliance by your clients with the proposed settlement terms, and the new arrangements that have been undertaken with Mr. Santini’s clients, please note that my client’s previous settlement with your clients with withdrawn, rescinded and/or nullified outright.

[emphasis in original]

April 25, 2016

[19] Counsel for both the plaintiff and the Ontario defendants engaged in correspondence as to whether or not there still existed a settlement between the parties. Counsel for the Ontario defendants wrote “There is nothing in any of the documentation that required that my clients deliver signed settlement documents by Friday of last week and for all I know, one or more of them may not even be in the country. Any separate agreement between you and the defendants who are represented by Mr. Santini has nothing to do with my clients and cannot affect the terms of the settlement agreement with my client. I intend to pursue obtaining the signed settlement documentation as far as I’m concerned we still have a settlement.” In reply counsel for the plaintiff restated his position and said “the previous deal is off. A separate deal with the Knights and Maurer has been concluded”.

[20] By April 26, 2016 counsel for the Ontario defendants previously having received the funds and some signed documents received the balance of the documents required to be signed by his clients.

Analysis

[21] It is not disputed that the Ontario defendants made a Rule 49.09 offer pursuant to the Rules of Civil Procedure. That rule states “where a party to an accepted offer to settle fails to comply with the terms of the offer, the other party may

(a) Make a motion to a Judge for Judgment on the terms of the accepted offer, and the Judge may grant Judgment accordingly; or

(b) Continue the proceeding as if there had been no accepted offer to settle.

[22] Rule 20.04 provides guidance with respect to this motion.

Rule 20.04(2):

The Court shall grant Summary Judgment if,

(a) The court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or

(b) The parties agree to have all or part of the claim determined by a Summary Judgment and the court is satisfied that it is appropriate to grant Summary Judgment.

[23] In Sahota v. Sahota, 2016 ONSC 314 the Divisional Court dealt with Rule 20.04 in the context of enforcement of settlement agreements. At parag. 13:

Under r. 20.04(2), the court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial because, based on the evidence available to the court at the time of the motion for summary judgment, it can reach a fair and just determination on the merits. This will be the case where: (1) the court is able to make the necessary findings of fact; (2) the court can apply the law to the facts; and (3) summary judgment is a proportionate, more expeditious, and less expensive means to achieve a just result (Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49).

[24] With respect to settling disputes the Divisional Court in Sahota v. Sahota provided further guidance in para. 30:

The policy of the courts is to encourage litigants to settle their disputes. Therefore, the courts should not be too demanding in finding that there is not the necessary degree of certainty in any of the agreements’ essential terms.

Conclusion

[25] By April 22, 2016 the settlement agreements previously entered into had not been finalized because necessary documents had not been exchanged and funds had not been delivered to counsel for the plaintiff. This was an important date for the plaintiff because his reinstatement retroactive to April 1, 2016 was an important aspect of his participation in the Ontario Council’s convention that weekend. But the plaintiff never made a deadline an essential term of the settlement agreements nor did the plaintiff give fair warning to the Ontario defendants that a failure to deliver all documents and funds by April 22, 2016 would lead to a notification that the settlement was “withdrawn, rescinded and/or nullified outright”.

[26] On the same day the plaintiff concluded a separate agreement with the U.S. defendants essentially on the same terms previously agreed to. A Mutual Release was signed with respect to the terms as between those two parties. By way of this settlement the plaintiff achieved substantial success with respect to his lawsuit. He was reinstated to The Knights of Columbus allowing him to fully participate in the upcoming convention. His previous reprimand was removed from his permanent record. The U.S. defendants made charitable contributions as set out in the Mutual Release and contributed $60,000.00 plus HST towards his legal costs.

[27] After achieving these benefits the plaintiff repudiated his agreement with the Ontario defendants. That settlement would have provided him with a further $15,000.00 towards his costs together with letters of welcome from the Ontario Knights of Columbus and the named Ontario defendants.

[28] In my view this is an appropriate case for the court to enforce a settlement agreement entered into between the parties who had the full benefit of legal counsel. Both parties filed extensive affidavits in support of their position and cross-examination took place with respect to the deponents, the plaintiff Daniel Gerard Heffernan and James Thomson counsel for the Ontario defendants.

[29] The Ontario defendants were not subject to a deadline for delivery of documents and were in a position to deliver all documents by April 26, 2016. Although this was after the convention, the plaintiff suffered no prejudice because he was fully reinstated to The Knights of Columbus organization when he concluded the settlement agreement with the U.S. defendants on April 22, 2016. If a deadline of April 22, 2016 was to be an essential term of this settlement it should have been included in the agreement and negotiated between counsel for these parties. In my view the plaintiff’s failure to include a term which he felt was essential should not be vested on the Ontario defendants.

[30] Order to go in favour of the moving party, the Ontario defendants to enforce the settlement of this action on terms agreed to by the parties in the settlement agreement. If the parties cannot agree on the form of the order they may make submissions within 20 days of the release of this Endorsement.

Costs

[31] The moving party, the Ontario defendants, have achieved success with respect to this motion. If the parties cannot agree on costs then the moving party is invited to make brief submissions within 20 days of this Endorsement. The responding party, the plaintiff, will have 10 days to respond. I pause to note that both parties filed Bills of Costs at the conclusion of this motion. The costs that were sought by each party, in the event that they were successful, were strikingly similar, close to $31,000.00.

MULLIGAN J.

Date: December 21, 2016