Court File and Parties

Court File No.: CV-12-470358 Date: 2017-05-10 Ontario Superior Court of Justice

Between:

ALEXANDRA BAJENARU a minor under the age of 18 years by her litigation guardian BOGDAN BAJENARU, GABRIELA BAJENARU and BODGAN BAJENARU personally Plaintiffs/Moving Parties

– and –

ANTHONY MARCHIE, DAVID HIRANO, SERGEY NOVOSHINOV, STANLEY LEON HERMAN, IRENE BERGADO and RUFINO TRINIDAD, and YORK CENTRAL HOPSITAL Defendants/Responding Party

Counsel: Alan L. Rachlin, for the Plaintiffs/Moving Parties Andrew Kalamut, for the Defendants/Responding Parties Drs. Marchie, Hirano, Novoshinov and Herman

Heard: February 22, 2017

Before: M. D. Faieta J.

Reasons for Decision

Introduction

[1] The plaintiffs bring this motion to enforce a settlement.

[2] This action was commenced on December 18, 2012 for damages as a result of injuries sustained by the minor plaintiff, Alexandra Bajenaru, during an operation performed by the defendant Dr. Anthony Marchie at the defendant York Central Hospital (now Mackenzie Health). The plaintiffs Bogdan Bajenaru and Gabriela Bajenaru are Alexandra’s parents. They bring a claim for loss of care, guidance and companionship.

[3] Mr. Kalamut sent the following email to Mr. Rachlin by email dated October 21, 2016:

The defendants, Dr. Marchie and Mackenzie Health, accept the plaintiffs’ settlement offer of the all-inclusive amount of [ ], in exchange for the dismissal of the action as against all defendants on a without costs basis. The acceptance of the offer is conditional on the defendants obtaining releases from the plaintiff in a form acceptable to the defendants. [Emphasis added.]

[4] Mr. Rachlin responded by email on the same date:

Thanks for going the extra mile. I’ll work on draft materials for court approval next week. Please forward the forms of releases that you want executed. [Emphasis added.]

[5] Mr. Kalamut responded by email dated October 23, 2016:

Thanks, Alan. Here is the release in favour of Dr. Marchie.

[6] The “Full and Final Release” delivered by Mr. Kalamut to Mr. Rachlin on October 26, 2016 states:

IN CONSIDERATION of the consent dismissal of the plaintiffs’ claim … ALEXANDRA BAJENARU, a minor under the age of 18 years, by her Litigation Guardian, Bogdan Bajenaru, GABRIELA BAJENARU, and BOGDAN BAJENARU, in his personal capacity, on their own behalf and on behalf of their heirs … (hereinafter referred to as the “Releasors”), hereby release and forever discharge DR. ANTHONY MARCHIE and his heirs … (hereinafter referred to as the “Releasee”) from any and all actions, causes of action, suits, debts, dues, accounts, bonds, covenants, contracts, complaints, claims and demands whatsoever which the Releasors ever had, now has or may hereinafter have against the Releasee, and without limiting the generality of the foregoing, all matters in dispute between the Releasors and the Releasee in the Action.

THE RELEASORS AGREE AND UNDERTAKE:

(a) That if they makes any claim, demand or complaint or takes any action or proceeding against the Releasee arising out of the matters described in the first paragraph of this Release that this Release shall be deemed to be a complete defence and bar to any such claim, demand, complaint, action or proceeding;

(b) Not to make any claim or take any proceeding against any other person or entity which might result in a claim for contribution or indemnity being made against the Releasee;

(c) To indemnify and save harmless the Releasee from any costs, expenses, losses or damages whatsoever incurred by the Releasee in connection with or in any way related to defending or responding to any action or other proceeding brought by any other person against the Releasee for contribution or indemnity or any other claim over as a result of any action or other proceeding brought by the Releasors arising out of the matters described in the first paragraph of this Release;

(d) To indemnify and save harmless the Releasee against and from any and all other actions, causes of action, suits, claims and demands whatsoever which have been, are being or may be made or asserted by or on behalf of the Releasors or any person entitled to claim under the Family Law Act or similar legislation, arising out of the matters referred to in the first paragraph of this Release… [Emphasis in original.]

[7] Mr. Rachlin responded by email dated November 14, 2016:

Please see attached with suggested revisions. I have deleted Alexandra’s claim from the release because it is being dealt with by way of judgment….

[8] The attachment referred in the above email from Mr. Rachlin struck out the reference to Alexandra and her Litigation Guardian as follows:

IN CONSIDERATION of the consent dismissal of our claims as against DR. ANTHONY MARCHIE … ALEXANDRA BAJENARU, a minor under the age of 18 years, by her Litigation Guardian, Bogdan Bajenaru, GABRIELA BAJENARU, and BOGDAN BAJENARU, in his personal capacity, on their own behalf and on behalf of their heirs… (hereinafter referred to as the “Releasors”), hereby release and forever discharge DR. ANTHONY MARCHIE and his heirs … (hereinafter referred to as the “Releasee”) from any and all actions, causes of action, suits, debts, dues, accounts, bonds, covenants, contracts, complaints, claims and demands whatsoever which the Releasors ever had, now has or may hereinafter have against the Releasee, and without limiting the generality of the foregoing, all matters in dispute between the Releasors and the Releasee in the Action…. [Bold and strikethrough in original.]

[9] Mr. Kalamut responded to Mr. Rachlin by email dated November 15, 2016:

We are not agreeable with the revised version of the release that you circulated. The judgment may dispose of the main plaintiff’s claim, but we still require a release in the form attached.…

[10] Mr. Rachlin responded by email dated November 15, 2016:

Then we are at an impasse. I don’t think that your client is entitled to a release in the form provided.

Give me a call to discuss; otherwise I guess the action will proceed. That seems unnecessary.

[11] Mr. Kalamut responded by email dated November 22, 2016. The email reads in part as follows:

I agree that it seems unnecessary to continue the action, though I’m still not certain what the issue is with Alexandra executing a release in favour of Dr. Marchie (that was part of the settlement agreement) when the minutes of settlement and judgment reflect the settlement. This is routinely done.

[12] Mr. Rachlin responded by email dated November 24, 2016, which reads in part as follows:

Alexandra is a minor. A release from her is ineffective at law. The judgment is effective.

[13] Mr. Kalamut then replied by email dated November 25, 2016:

On the effectiveness of the release, the release is executed by her litigation guardian and would be effective in law.…

To get to the bottom of the release issue, are you able to explain to me why Alexandra’s litigation guardian is unwilling to sign a release for Dr. Marchie when releases were signed for … the other defendant physicians?

[14] Mr. Rachlin sent the following reply by email dated November 25, 2016:

… I have never had anyone press this issue before. If the consideration for Alexandra is dealt with by way of Judgment, why do you insist on it also being dealt with in a release? How does it add any value to your client?

[15] Mr. Kalamut responded by email dated December 9, 2016:

In response to your question about the value of the release, you will see that it acts as an indemnity as well for any subsequent claims commenced by any party relating to these issues. It is also a release for any additional claims that your clients may commence relating to the issues. This where the value of the release is.

I have never had an issue in the past with plaintiffs refusing to sign a release where a settlement has been reached. I still fail to see any reason why the plaintiff would not sign a release in this instance, especially since it was a term of the settlement.

[16] Mr. Rachlin responded by email on the same date:

The adult plaintiffs have signed the release. The court will deal with the minor’s claim. If you want additional terms in the judgment, I will consider them.

[17] Shortly thereafter, on the same day, Mr. Kalamut responded by email:

Can you please explain why the litigation guardian will not sign the release on behalf of the minor plaintiff, especially since this was a term of the settlement was [ sic ] that there be a release executed on behalf of the plaintiffs. The minor plaintiff, through her litigation guardian, has already executed a release with respect to the other defendants.

[18] Mr. Rachlin replied several minutes later as follows:

I don’t agree that the litigation guardian should be required to give an indemnity with respect to things that the minor might do after the age of majority. It’s one thing to undertake to give indemnity with respect to one’s own future actions. It’s something else entirely to undertake to indemnify with respect to someone else’s future actions.

[19] The plaintiffs filed this motion on December 23, 2016 for an order, pursuant to Rule 49.09 of the *Rules of Civil Procedure*, R.R.O. 1990, Reg. 194, to enforce the settlement reached on October 21, 2016. It is their position that “[t]he defendants have received appropriate releases but refuse to execute minutes of settlement or approve a draft judgment to effect the settlement.”

Analysis

[20] Rule 49.09 of the *Rules of Civil Procedure* provides:

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 in 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.

[21] In Olivieri v. Sherman, 2009 ONCA 772, 264 O.A.C. 297, at paras. 24-28, the Ontario Court of Appeal indicated that whether a settlement agreement should be enforced requires a two-step analysis. Referring to Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc. (2007), 87 O.R. (3d) 464 (Ont. Div. Ct.), the court in Olivieri explained,

The first step is to consider whether an agreement to settle was reached. In doing so, the proper approach is to treat the motion like a Rule 20 motion for summary judgment. If there are material issues of fact or genuine issues of credibility in dispute regarding whether (i) the parties intended to create a legally-binding relation or (ii) there was an agreement on all essential terms, a court must refuse to grant judgment. [Citations omitted.]

The second step, once an agreement has been found to exist, is to consider whether, on all the evidence, the agreement should be enforced. In this second step, a Rule 20 approach is not applied, but rather a broader approach, taking into account evidence not relevant to a Rule 20 inquiry.

Issue #1: Did the parties agree to settle the action?

[22] There is no dispute that the parties agreed to settle this action in accordance with the terms reflected in Mr. Kalamut’s email dated October 21, 2016. There was agreement on all essential terms.

[23] It is well established that the delivery of a release, in a customary form whose terms reflect the agreement reached by the parties, is an implied term of the settlement of an action unless the parties otherwise agree: see Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., [1995] O.J. No. 721 (Gen. Div.), at para. 24, aff’d, [1995] O.J. No. 3773 (C.A.); Ferron v. Avotus Corp., [2005] O.J. No. 3511 (S.C.J.), , at para. 26, aff’d, 2007 ONCA 73; Hodaie v. RBC Dominion Securities, 2012 ONCA 796, at para. 3.

[24] However, the implied term that a settlement should be supported by a release delivered in a customary form was rebutted by the parties’ agreement that the settlement was conditional on the defendants obtaining a release in a form acceptable to them.

Issue #2: Should the settlement agreement be enforced?

[25] In Milios v. Zagas (1998), 38 O.R. (3d) 218 (C.A.), at para. 21, the Ontario Court of Appeal stated that the following matters should be considered in deciding whether to enforce a settlement:

• Has an order giving effect to the settlement has been taken out?
• Will the moving parties be prejudiced if the settlement is not enforced?
• What is the relative prejudice to the parties in the event that the settlement is enforced or not enforced?
• Would third parties be affected if the settlement was not enforced?

[26] In Srebot v. Srebot Farms Ltd., 2013 ONCA 84, at para. 6, the Ontario Court of Appeal stated:

The discretionary decision not to enforce a concluded settlement, especially where the settlement has been partially or fully performed, should be reserved for those rare cases where compelling circumstances establish that the enforcement of the settlement is not in the interests of justice.

[27] Dr. Marchie submits that there is no basis on which not to enforce the settlement: (1) the terms of the settlement are not barred by public policy; (2) the release is not complex or unusual in form; and (3) litigation guardians of minor plaintiffs routinely sign releases.

[28] The plaintiffs submit that the term of the release proposed by the defendants is contrary to public policy in that it requires a parent to indemnify a potential defendant for all subsequent claims made by his or her child.

[29] In this regard, the plaintiff relies on Stevens v. Howitt, [1969] 1 O.R. 761 (H.C.J.), , in which two infants commenced an action after their father provided the defendant’s insurance adjuster with a release for one of the infants in exchange for $50. The court refused to give effect to the release – which provided that the father would “… indemnify and save harmless and the said Releasee of and from all claims … which may be made … against the Releasee by the said above named infant … in any way arising out of the said accident …” – given the father’s relative unsophistication and inexperience with respect to insurance and indemnity law. In obiter, the court in Stevens stated:

I would also refuse to give effect to the agreement on general principles. If the document is allowed to stand then it could be argued that an infant's potential cause of action has effectively been destroyed. In most cases the parent is the next friend. There is always the possibility that facing the threat of indemnification the parent will not initiate the action, thereby precluding the infant from securing recovery for his injuries. Settlements of this type are, in my opinion, so contrary to the procedures set up in our Courts for the protection of infants that the document should be held to be unenforceable.

[30] I note that the above obiter in Stevens has not been followed by another court in Ontario. I also find that Stevens is distinguishable from the circumstances in this case given that the release in Stevens was provided before the commencement of an action by the minor plaintiffs rather than after the commencement of the action as in this case. Further, the plaintiffs in this case have had the benefit of counsel in arriving at a figure for compensation. I find that the proposed release in this case is not contrary to public policy.

[31] However, in the case before me, the considerations advanced by the parties are overshadowed by the fact that the settlement is conditional upon the plaintiffs delivering a release in a form acceptable to the defendants. Accordingly, the conditional nature of the settlement contemplates that it will be at an end in the event that the parties cannot agree on a form of release.

[32] Given the parties’ inability to agree on a form of release, as required by the offer to settle, I find that the settlement is at an end.

Conclusions

[33] I dismiss the plaintiffs’ motion.

[34] I encourage the parties to make best efforts to resolve the issue of costs. If they are unable to do so, then the defendants shall deliver their costs submissions within one week of today’s date. The plaintiffs shall deliver their costs submissions within two weeks of today’s date. Their submissions shall be no more than three pages, exclusive of their outline of costs.

Mr. Justice M. D. Faieta

Released: May 10, 2017