Court File and Parties

CITATION: Girgis-Boktor v. Reddy, 2017 ONSC 5867

COURT FILE NO.: CV-12-452220

DATE: 20171003

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: AMIR GIRGIS-BOKTOR, Plaintiff

AND:

RONALD REDDY, GREG CHEW, NEXUS HEALTH MANAGEMENT LTD. and PGR HEALTH AND WELLNESS LTD., Defendants

AND RE: RONALD REDDY, GREG CHEW, NEXUS HEALTH MANAGEMENT LTD. and PGR HEALTH AND WELLNESS LTD., Plaintiffs by Counterclaim

AND: AMIR GIRGIS-BOKTOR and MANAHREE INC., Defendants to the Counterclaim

BEFORE: Stinson J.

COUNSEL: Derrick M. Fulton, for the Plaintiff

Ronald Reddy, appearing in person and on behalf of Nexus Health Management Ltd. and PGR Health and Wellness Ltd.

David House, for Greg Chew

HEARD at Toronto: September 26, 2017

ENDORSEMENT

[1] This decision concerns a motion for production. In a nutshell, the defendants Ronald Reddy, Nexus Health Management Ltd. and PGR Health and Wellness Ltd. ("the Reddy defendants") claim that this lawsuit was settled more than two years ago. They have brought a motion to enforce that settlement. The plaintiff and the defendant Chew deny the existence of any agreement to settle.

[2] This case involves a claim for repayment of $250,000 advanced by the plaintiff to the defendants (or some of them) in relation to a business venture that did not materialize. Despite being more than 5 years old, the case has not proceeded past the exchange of pleadings.

[3] I have been case managing this litigation since early 2014. It has a lengthy history, much of which does not bear on the issue on this motion. At a point early in the proceedings, all defendants brought an unsuccessful motion to remove plaintiff's counsel (not Mr. Fulton) from the record. I dismissed that motion on July 23, 2014 and ordered the defendants to pay $50,000 in costs, an award that I subsequently confirmed was intended to be payable by all defendants, jointly and severally. So far, the defendant Chew has paid $12,500, but the Reddy defendants have paid nothing. The Reddy defendants have asserted a right to set off against the July 23, 2014 order a yet-to-be-determined (or awarded) sum for costs they claim should be paid to them, arising out of a summary judgment motion commenced by the plaintiff but never argued.

[4] Despite various timetables, this case has dragged on for a variety of reasons, including sporadic settlement discussions. Some of those discussions involved all parties, while others took place between the plaintiff and the defendant Chew (or their counsel) only. More recently, from late 2016 until May 2017, lawyers for those two parties engaged in lengthy negotiations that ultimately were unsuccessful.

[5] In a case conference on June 14, 2017, counsel for the plaintiff and for Chew informed me that their clients had been unable to reach settlement. Counsel for the plaintiff advised that he intended to move for an order to strike out the defendants' statement of defence for nonpayment of the outstanding costs award. Reddy advised that he intended to proceed with a motion to enforce the terms of a settlement that he asserts was reached among all parties on July 30, 2015. The plaintiff and Chew deny this alleged settlement.

[6] I directed the Reddy defendants to bring their motion to enforce the alleged settlement and the plaintiff to bring his motion to strike by way of cross-motion so that they might be based on the same materials and heard at the same time.

[7] Thereafter, the Reddy defendants and the plaintiff exchanged motion materials, supported by an affidavit sworn by Reddy and an affidavit sworn by the plaintiff. At a case conference held on July 18, 2017. Reddy advised that he was seeking production of documents from the other parties relating to settlement negotiations. I directed that he deliver a formal written request, including detailed reasons for his request by July 21, 2017. I further directed counsel for the other parties to respond by July 28, 2017. I also directed that if the request for production was refused, the issue would be addressed at the outset of the argument of the motions, scheduled to take place on September 26. Finally, I gave directions concerning the examination or cross-examination of witnesses during the weeks of August 14 and August 21.

[8] On July 21, 2017, Reddy served a detailed request for production seeking (a) all documentation, correspondence and other materials relevant to the alleged settlement agreement between the plaintiff and Chew, and (b) all documentation, correspondence and other materials relevant to the settlement agreement alleged to have been made among all parties on July 30, 2015. On July 28, 2017, counsel for the plaintiff and for Chew informed Reddy they would not be providing the requested material on the ground that it was comprised of communications surrounding attempted settlement that were not producible as they were protected under the law of privilege.

[9] In response to the position taken by counsel for the plaintiff and for Chew, Reddy refused to participate in the witness examination process. Despite being served with a notice of examination, Reddy failed to attend for cross-examination.

[10] In his motion record, filed September 7, 2017, in addition to his motion to enforce the alleged settlement, Reddy included a draft notice of motion for production. A formal, sworn version of that motion record had been served late in the week of September 18 and was filed in court on September 26, 2017.

[11] At the commencement of the hearing on September 26, I asked the parties whether they were prepared to proceed with argument of the production issue, despite late service of the sworn version of Reddy's motion record. All parties were willing to do so and all made submissions.

[12] Before proceeding with an analysis of the parties’ submissions, a brief amount of additional background is necessary. On July 15, 2015, I conducted a case conference in order to fix a new timetable for this action. At that meeting, there was some indication that it might be worthwhile for the parties to discuss settlement. I therefore directed that a settlement meeting take place no later than August 30, 2015. I further specified deadlines for preparation of a draft discovery plan, exchange of affidavit of documents, and the conduct of the discovery process.

[13] Pursuant to my directive, the parties convened a settlement meeting on July 30, 2015. Reddy's position is that on that occasion, the parties agreed to the framework of a settlement. In essence, according to Reddy, the defendants agreed to provide the plaintiff with business opportunities that would allow the plaintiff to recoup the loss that he suffered arising from the failed business transaction that formed the subject of the underlying lawsuit. In exchange for doing so, according to Reddy, the plaintiff agreed to release the claim he was advancing in the underlying lawsuit. Reddy further asserts that, in the months that followed, in performance of their obligations under the settlement, the defendants presented various business opportunities to the plaintiff, thus discharging their commitment under the deal.

[14] Subsequently, according to Reddy, the plaintiff and Chew made a private deal between themselves in which Reddy was "cut out" of the settlement. Reddy asserts that by doing so the plaintiff and Chew breached the July 30 2015 settlement agreement. He also asserts that the plaintiff and Chew have made a confidential agreement to cooperate in the litigation, to the detriment of Reddy.

[15] For their part, both the plaintiff and Chew deny that any agreement was made among all parties on July 30, 2015, to settle the litigation. In essence, while the possibility of future business arrangements that might provide a means to resolve the underlying litigation was discussed and some future opportunities were presented and explored, nothing came to fruition. As a result, the potential resolution of the litigation that was discussed at the meeting on July 30, 2015 never came to pass.

[16] As for the possible settlement between the plaintiff and Chew only, both the plaintiff and Chew – and their respective lawyers – confirm that extensive negotiations were carried out between late 2016 and May 2017. Those negotiations, according to the sworn evidence of those parties and the representations to the court by their counsel did not, however, result in a settlement. They assert that there is no settlement, cooperation agreement, or understanding between the plaintiff and Chew relating to the resolution or conduct of the underlying litigation.

[17] Reddy's request for production thus concerns two separate alleged settlements or sets of settlement negotiations. The first involves the alleged comprehensive settlement agreement made July 30, 2015 among all parties and allegedly carried out through the various activities and communications among the parties in the months that followed. The existence of this settlement is disputed by the parties to it: the plaintiff and Chew deny its existence, while the Reddy defendants assert it. In the case of the alleged settlement between the plaintiff and Chew, both of those individuals and their lawyers assert there was and is no such deal.

Positions of the parties

[18] The plaintiff and Chew resist the motion for production on the same grounds. Simply put, they rely on the principle that any discussions or communications regarding settlement are privileged and neither disclosable, nor admissible. Since neither the discussions among all parties nor the discussions between the plaintiff and Chew resulted in a settlement, any negotiations undertaken for that purpose are privileged. As a result, Reddy is not entitled to the production he seeks in relation to any such communications.

[19] Reddy submits that, since the existence of the settlement is in issue, he is entitled to production of documents that bear on the question whether there was a settlement. In other words, communications and other materials that would, among other things, reflect conduct by the parties consistent with having reached a settlement agreement would be disclosable and admissible to prove the existence of the disputed settlement agreement. On this basis, Reddy submits, communications among the other parties that bear on this issue are properly disclosable.

[20] In addition, Reddy submits, the plaintiff and Chew are obliged to disclose all communications between them or their lawyers concerning arrangements between themselves regarding the resolution or future conduct of the litigation. Those communications will, Reddy argues, further confirm the existence of the original settlement agreement. Further, the court should require the disclosure of such information, in order to ensure that the true dynamic underlying the case is properly understood: this is reflected by the requirement for disclosure of Mary Carter and Pierringer agreements. On this basis, the private negotiations and agreement between the plaintiff and Chew must also be disclosed.

Analysis

[21] In Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, [2013] 2 S.C.R. 623, the Supreme Court of Canada confirmed that there is a prima facie presumption of inadmissibility concerning communications made in the course of settlement negotiations. In that case, the Court stated (at paras 12 and 13):

Settlement privilege promote settlements. As the weight of the jurisprudence confirms, it is a class privilege. As with other class privileges, while there is a prima facie presumption of inadmissibility, exceptions will be found "when the justice of the case requires it" ….

Settlement negotiations have long been protected by the common law rule that "without prejudice" communications made in the course of such negotiations are inadmissible .… The settlement privilege created by the "without prejudice" rule was based on the understanding that parties will be more likely to settle if they have confidence from the outset that their negotiations will not be disclosed. …

[22] There are, however, exceptions to this class privilege. One is the requirement of the disclosure of a settlement agreement made between the plaintiff and one of multiple defendants, whether it be a Mary Carter agreement or a Pierringer agreement. Indeed, counsel are ethically obliged to disclose the existence of such agreements and the court may give directions as to the appropriate form of disclosure and subsequent conduct of the proceedings.

[23] Another exception to settlement privilege is that protected communications may be disclosed in order to prove the existence or scope of a settlement. This was confirmed by the Supreme Court of Canada in Union Carbide Canada Inc. v. Bombardier Inc., 2014 SCC 35, [2014] 1 S.C.R. 800. In that case, the Court quoted with approval Bryant, Alan W., Sidney N. Lederman and Michelle K. Fuerst. The Law of Evidence in Canada, 3rd ed. (Markham, Ont.: LexisNexis, 2009, at paragraph 14.340, as follows (at para. 35):

If the 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 in issue. Such communications form the offer and acceptance of a binding contract, and thus may be given in evidence to establish the existence of a settlement agreement.

[24] The Court continued:

The rule is simple, and it is consistent with the goal of promoting settlements. A communication that has led 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. Once the parties have agreed on a settlement, the general interest of promoting settlements requires that they be able to prove the terms of their agreement. Far from outweighing the policy in favour of promoting settlements … the reason for the disclosure -- to prove the terms of a settlement -- tends to further it. The rule makes sense because it serves the same purpose as the privilege itself: to promote settlements.

Application of the foregoing principles to this case

[25] I will deal firstly with Reddy's request for disclosure of communications passing between the plaintiff and Chew or their respective lawyers regarding their separate settlement negotiations. Both those parties assert no settlement or other arrangement or accommodation has been reached. Their lawyers, as Officers of the Court, have confirmed this. For the lawyers to misrepresent this information would amount to serious professional misconduct for no apparent reason. Based on the sworn evidence of the parties and the representations of their lawyers that no settlement has been made between them, I accept that as fact.

[26] This is not a situation in which one party to an alleged settlement is seeking to establish its existence. Rather, this is an attempt by a third party to seek disclosure of what are plainly privileged communications between other parties. To require disclosure or permit questioning concerning those communications would violate the basic principle of without prejudice settlement.

[27] I now turn to the request by Reddy for disclosure of communications relating to the alleged July 30, 2015 settlement agreement among all parties. In my view, this is a different situation. For Reddy to prove that a settlement was reached, he must establish that there was an intention on the part of all parties to create a binding contract and that they reached an agreement on the essential terms of that contract: see Olivieri v. Sherman, 2007 ONCA 491 at para. 41. A court may consider conduct subsequent to the purported agreement to determine whether the parties had manifested the intention to enter into a binding contract: see Sahota v. Sahota, 2016 ONSC 314 (Div. Crt.) at para 16.

[28] Reddy submits that, in the weeks and months following July 30, 2015, he, Chew and the plaintiff engaged in a variety of communications with a view to implementing the July 30, 2015 settlement agreement. Whether that conduct amounts to evidence sufficient to prove the existence of the alleged settlement remains to be seen. At this stage, however, given the allegations he is making and the context in which they are made, the documents sought by Reddy purportedly relating to communications in furtherance of the implementation of the July 30, 2015 settlement appear to fall within the exception that their disclosure is necessary in order to prove the existence of the settlement. In other words, communications that bear upon that issue are properly the subject of disclosure.

Conclusion and disposition

[29] For these reasons, Reddy's motion for disclosure of communications between the plaintiff and Chew and/or their respective counsel regarding settlement negotiations between them, is dismissed. Reddy’s motion for production of communications purportedly in furtherance of the performance of the alleged July 30, 2015 settlement is concerned, whether between or among the plaintiff and or his counsel and the defendants, is granted.

[30] In view of the divided success on this motion, there will be no costs.

[31] I direct the parties to convene an early case conference by telephone with me through my assistant to arrange an orderly process for the disclosure I have directed.

Stinson J.

Date: October 3, 2017