Court File and Parties
COURT FILE NO.: 2810-10 DATE: 2017/01/17 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Raymond Smith, Plaintiff AND: Coca-Cola Bottling Company and Sun Life Assurance Company of Canada, Defendants
BEFORE: Madam Justice H. A. Rady
COUNSEL: Dallas Lee, Counsel for the Plaintiff Lara Jackson, Counsel for the Defendant Coca-Cola Bottling Company
HEARD: December 19, 2016
Endorsement
Introduction
[1] The plaintiff moves for judgment in accordance with a settlement he concluded with the defendant Coca-Cola Bottling Company. Coca-Cola agreed to pay $15,000 in settlement of the plaintiff’s claim. The terms of a release required by Coca-Cola are the subject matter of the dispute that has arisen and this motion.
[2] At issue is whether Mr. Smith agreed to settle his claim to short term disability benefits only or whether he released all future benefits, including group health and pension benefits.
Background
[3] Mr. Smith was injured in a car accident on June 8, 2010. Three separate claims were made as a result – one against the tortfeasor, another against his accident benefits insurer, and the last against the short and long term disability benefit carriers.
[4] Mr. Smith was (and remains) an employee of Coca-Cola and was insured under a group disability plan issued by Coca-Cola and Sun Life Assurance Company of Canada. The short term disability benefits were paid by Coca-Cola but administered by Sun Life. Long term disability benefits were both administered and paid by Sun Life.
[5] Ultimately, the plaintiff and defendants were able to negotiate a resolution of all three actions. Coca-Cola forwarded draft Minutes of Settlement to plaintiff’s counsel, Mr. Beckett, for execution. It contains the terms of the disputed release, excerpted here:
The Plaintiff acknowledges that he ceased to accrue pension service under Coca-Cola’s employee pension plan as of July 30, 2010, and that Coca-Cola terminated the Plaintiff’s coverage under any and all group benefit plans as of December 31, 2015.
The Plaintiff shall provide Sun Life and Coca-Cola with separate respective executed full and final releases, in favour of and in forms prepared by and acceptable to Sun Life and Coca-Cola, releasing all claims in this Action, and all past, present and future claims relating to or arising from any and all Coca-Cola employee benefits of any kind or the termination of such benefits, including but not limited to pension benefits (except for pension benefits that were vested as of July 30, 2010), any group benefits administered under Administrative Services Only Plan Number 25610 between Coca-Cola and Sun Life, and any benefits under Group Policy/Contract #83122 issued by Sun Life to Coca-Cola. Said releases to also include confidentiality clauses. Said releases shall not include any pension benefits that were vested as of July 30, 2010.
The Parties’ Positions
[6] The parties’ positions can be briefly stated. The plaintiff says he agreed to settle his short term disability claim only. Coca-Cola says that the settlement with it was part of a global settlement, entitling it to the broader release it seeks because the plaintiff received compensation for future employment benefits in the context of the tort claim.
The Law
[7] 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 has been no accepted offer to settle.
[8] An accepted offer to settle is a contract. The plaintiff bears the onus to prove:
(a) that there was a mutual intention by the parties to create a legally binding agreement; and
(b) that there was agreement between the parties on all of the essential terms of the settlement.
[9] See, for example, Sivakolunthhu v. Royal Bank of Canada, [2001] O.J. No. 131 (S.C.J.).
[10] In M.(G.) v. Alter, 2006 CarswellOnt 4190 (S.C.J.) the court noted that: “[a]n agreement to settle a claim is a contract. Once accepted, an offer to settle is enforceable and binding upon the parties. The terms of an offer to settle are to be given their plain and ordinary meaning.” Justice Sanderson cited a number of supporting authorities, including Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., [1995] O.J. No. 721 (Gen. Div.) as well as a leading textbook, Chitty on Contracts.
[11] The Cellular Rental Systems decision was also cited in Abouchar v. Conseil (Scolaire de langue française d’Ottawa-Carleton – Section publique) (2002), 58 O.R. (3d) 675 (S.C.J.). In that case, the dispute centered on the inclusion of a non disclosure clause in a release. The following discussion is instructive:
[9] There is no dispute as to the applicable law. Both parties rely on the pronouncement of Chief Justice McEachern in the case of Fieguth v. Acklands Ltd. (1989), 59 D.L.R. (4th) 114, 37 B.C.L.R. (2d) 62 (C.A.), at p. 121 D.L.R.:
The next stage is the completion of the agreement. If there are no specific terms in this connection either party is entitled to submit whatever releases or other documentation he things appropriate. Ordinary business and professional practice cannot be equated to a game of checkers where a player is conclusively presumed to have made his move the moment he removes his hand from the piece. One can tender whatever documents he thinks appropriate without rescinding the settlement agreement. If such documents are accepted and executed and returned then the contract, which has been executory, becomes executed. If the documents are not accepted then there must be further discussion but neither is released or discharged unless the other party has demonstrated an unwillingness to be bound by the agreement by insisting upon terms or conditions which have not been agreed upon or are not reasonably implied in these circumstances.
[10] This principle enunciated above was followed in a number of decisions of this very court, namely in Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., [1995] O.J. No. 721 (Gen. Div.) (Chapnik J.); Pukee v. Durham (Regional Municipality) Police Services, [2001] O.J. No. 1587 (S.C.J.) (C. Campbell J.). However, Justice Chapnik specifically observed about the role of a release:
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.
Analysis
[12] A review of the evidentiary record on this motion persuades me that the plaintiff’s claim for short term disability benefits only was settled and a release of anything else was neither demanded nor contemplated. I do not agree with Coca-Cola that the resolution of the three claims was a global settlement as the term is properly understood.
[13] First, the statement of claim seeks damages for breach of contract or an order that the defendants pay short term disability benefits (para. 1(a) and (b)). The claim refers to short term disability benefits seven times in the 18 paragraphs that follow. It is very clear that they were the sole subject of the claim.
[14] Second, and while I do not propose to review all of the correspondence passing between counsel or memoranda documenting telephone exchanges, reference to a few serves to highlight that what was contemplated by the plaintiff and Coca-Cola was a settlement of his short term disability entitlement.
[15] On April 8, 2015, counsel for Coca-Cola wrote Mr. Beckett. She noted:
As you know, CCRC [Coca-Cola] only has exposure for STD benefits in the above noted action. If Mr. Smith were to succeed at trial, he would be awarded STD benefits of $9,200 less any CPP disability benefits received for the period of November 1, 2010 to December 8, 2010 (i.e., the 26-week STD period runs from June 9, 2010 to December 8, 2010), and less required statutory deductions and withholdings.
[16] On September 10, 2015, she wrote:
I am reaching out to you to request a phone call to discuss settlement of Mr. Smith’s claim against Coca-Cola. Coca-Cola is prepared to pay the full balance of STD benefits available to Mr. Smith if he establishes eligibility/liability (i.e., $9,200), plus prejudgment interest.
In addition, Coca-Cola is prepared to reach an agreement with Mr. Smith with respect to costs, keeping in mind that Coca-Cola did not participate in the discoveries, and that none of the expert economic loss reports are necessary for purposes of the STD claim.
[17] On October 1, 2015 and one week in advance of a judicial pre-trial, counsel for Coca-Cola wrote:
To summarize Coca-Cola’s current settlement offer, Coca-Cola is offering to settle the action as against Coca-Cola for $9,200 (less statutory deductions), plus pre-judgment interest, and costs as assessed or agreed upon. In exchange, Mr. Smith would be required to execute a full and final release in favour of Coca-Cola, releasing Coca-Cola of all claims in the action.
As you know, Coca-Cola only has exposure for STD benefits in the above noted action. Coca-Cola has no liability for LTD benefits. Coca-Cola’s current offer represents the full amount of STD benefits available to Mr. Smith under the applicable STD policy, if he were to succeed at trial.
Allocation of Costs
I understand from our recent “without prejudice” phone call that the plaintiff is not prepared to enter into a settlement agreement with Coca-Cola unless the plaintiff is able to reach a settlement with the other defendants at the same time. In particular, you are concerned that if the plaintiff reaches a settlement with Coca-Cola with provides for costs in proportion to the STD claim, that Sun Life and the defendants in the tort action will take the position that costs should be allocated equally between all of the defendants in the two actions.
With all due respect, we cannot agree that this prevents the plaintiff from entering into a settlement agreement with Coca-Cola. [Emphasis added]
[18] Counsel went on to make the case for a stand alone settlement with Coca-Cola because it was willing to pay the plaintiff’s full claim and costs would relate only to the short term disability claim. Because its exposure was limited, so too had its participation been to date. Consequently, she argued that the plaintiff’s costs related to the short term disability claim were considerably less than those incurred prosecuting the other claims.
[19] That position was reiterated in Coca-Cola’s pretrial conference memorandum.
[20] On November 17, 2015, counsel for Coca-Cola wrote saying “I am assuming that once Coca-Cola pays the short term disability claim (plus PJI) your client will have no remaining issue with Coca-Cola”.
[21] Ultimately, all three claims were resolved in December 2015, each for a separate quantum. Coca-Cola’s proposed minutes of settlement followed. Mr. Beckett objected to the terms of the release contained in the minutes. He noted that they were broader than what had been in issue in the law suit and settled. Counsel for Coca-Cola took the position that the resolution of the three actions was a global settlement, entitling her client to the release as drafted.
[22] On March 4, 2016, counsel for Coca-Cola wrote in response to Mr. Beckett’s objection to the release:
I understand your refusal to provide a release of pension claims (although your client did receive compensation for pension losses in the global settlement), and while I have yet to receive instructions, I don’t think my client will insist on a release of pension claims. However, I did want to discuss with you your refusal to release Coca-Cola of claims related to group insurance benefits given that you have agreed to release Sun Life of such claims.
Group insurance benefits are tied to STD and LTD benefits (i.e., the claim for group benefits is a derivative claim) and any release of STD and LTD benefits should include a release of group insurance benefits that the employee may have been eligible to receive while in receipt of STD and LTD benefits.
Further, I don’t understand why you would release Sun Life, but not Coca-Cola from claims related to group benefits under the group policy by Sun Life to Coca-Cola.
[23] Coca-Cola took the position that the plaintiff received compensation for any pension loss claim in the tort action and as part of a global settlement, he should therefore release Coca-Cola from such a claim in future. The plaintiff said such a release was never negotiated or contemplated. He denied that there had been a global settlement.
Disposition
[24] It is clear that the parties were focused solely on the short term disability claim. The timing of the settlement of all claims in the three actions was fortuitous and driven by the plaintiff’s legitimate concern about what position the other defendants would take on costs if the plaintiff settled with Coca-Cola independently. But there was no “global” settlement. There were three separate actions. Each settlement was negotiated separately, with a breakdown of the amounts paid by each defendant in accordance with their exposure. There were no global minutes of settlement or release.
[25] In my view, the release demanded by Coca-Cola was not contemplated or negotiated as part of the settlement. There was no consideration for such a release as between these parties.
[26] Accordingly, the plaintiff’s motion is granted and judgment will issue in accordance with the amended minutes of settlement dated April 13, 2016.
[27] I see no reason why costs should not follow the event. If the parties cannot agree on quantum, I will receive brief written submissions on costs by February 17, 2017.
“Justice H. A. Rady” Justice H. A. Rady Released: January 17, 2017
cited_cases: legislation: - title: "Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 49.09" url: "https://www.ontario.ca/laws/regulation/900194" case_law: - title: "Sivakolunthhu v. Royal Bank of Canada, [2001] O.J. No. 131 (S.C.J.)" url: "https://www.canlii.org/en/on/onsc/doc/2001/2001canlii28099/2001canlii28099.html" - title: "M.(G.) v. Alter, 2006 CarswellOnt 4190 (S.C.J.)" url: "https://www.canlii.org/en/on/onsc/doc/2006/2006canlii24000/2006canlii24000.html" - title: "Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., [1995] O.J. No. 721 (Gen. Div.)" url: "https://www.canlii.org/en/on/onsc/doc/1995/1995canlii7304/1995canlii7304.html" - title: "Abouchar v. Conseil (Scolaire de langue française d’Ottawa-Carleton – Section publique) (2002), 58 O.R. (3d) 675 (S.C.J.)" url: "https://www.canlii.org/en/on/onsc/doc/2002/2002canlii49423/2002canlii49423.html" - title: "Fieguth v. Acklands Ltd. (1989), 59 D.L.R. (4th) 114, 37 B.C.L.R. (2d) 62 (C.A.)" url: "https://www.canlii.org/en/bc/bcca/doc/1989/1989canlii2744/1989canlii2744.html" - title: "Pukee v. Durham (Regional Municipality) Police Services, [2001] O.J. No. 1587 (S.C.J.)" url: "https://www.canlii.org/en/on/onsc/doc/2001/2001canlii28098/2001canlii28098.html"