CITATION: Sri Guru Nanak Sikh Centre Brampton v. Rexdale Singh Sabha Religious Centre, 2017 ONSC 6252

COURT FILE NO.: CV-12-5425-00

DATE: 20171020

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Sri Guru Nanak Sikh Centre Brampton Plaintiff

– and –

Rexdale Singh Sabha Religious Centre, aka Rexdale Singh Sabbha; Sikh Spiritual Centre Toronto aka Sikh Spiritual Religious Centre, Defendants

COUNSEL:

Pathik Baxi and Amrita Mann, for the Plaintiff

Jordan Nussbaum, for Rexdale Singh Sabha Religious Centre, Defendant

Mark Wiffen, for the Respondent, Sikh Spiritual Centre Toronto, Defendant

HEARD: August 2, 2017

REASONS FOR JUDGMENT

PETERSEN J.

Overview

[1] This is a Motion brought by the Defendant Sikh Spiritual Centre Toronto (“SSCT”) to set aside a consent Order of Justice Edwards dated February 4, 2016. The Order implemented terms of settlement that resolved an Action commenced by Sri Guru Nanak Sikh Centre Brampton (“SGN”) for repayment of $360,000 loaned to SSCT and the co-Defendant Rexdale Singh Sabha Religious Centre (“Rexdale”). The terms of settlement included payment of $350,000 by SSCT and withdrawal of all claims against Rexdale.

[2] SSCT’s primary submission is that there is no settlement. In the alternative, if I find that there is a settlement, SSCT submits that I ought to exercise my discretion not to enforce it. SSCT claims that the purported settlement was executed by a “rogue director” who had a conflict of interest and who acted without the authorization of SSCT’s Board. The name of the director in question is Amarjit Deol. SSCT claims that SGN knew or ought to have known that Mr. Deol lacked authorization to execute the settlement. It also claims that its own lawyer consented to the disputed Order despite contrary instructions. SSCT submits that the settlement is improvident and argues that, for all of the above reasons, the court ought to set aside the Order that enforced the settlement.

[3] SGN and Rexdale oppose the Motion. They assert that a valid settlement was reached. They dispute the suggestion that the settlement is improvident and invoke the principle of finality. SGN further argues that, if the settlement and/or the consent Order were not properly authorized by SSCT, then SGN should not bear the burden of that unauthorized activity because it acted in good faith, without actual or constructive knowledge of the deficient authorization. SGN relies on the indoor management rule, arguing that it was entitled to assume that Mr. Deol was properly authorized to execute the settlement in accordance with SSCT’s internal procedures. It asserts that it was also entitled to assume that SSCT’s lawyer was acting on proper instructions when he consented to the impugned Order.

The Parties

[4] All three parties to this proceeding are not-for-profit charitable corporations that operate Sikh Gurdwaras in the Greater Toronto Area. The parties have had significant corporate governance issues arising from internal power struggles between factions of directors seeking to control their respective Boards.

[5] Although they were once operated in consort, the two Defendants now have a history of conflict, which is relevant to the context in which this Motion is brought before the court. Rexdale was founded in 1993 and incorporated in 1995. It owns a property on Baywood Road in Etobicoke (“the Baywood property”), which it has operated as a Gurdwara since before Rexdale’s incorporation. By the late 1990s, the congregation had outgrown the Baywood property temple, so a search for larger premises with greater parking space was undertaken. A former Canadian Tire store on Carrier Drive in Etobicoke was identified as a suitable property (“the Carrier property”). SSCT was incorporated in May 2001 to purchase and hold title to the Carrier property.

[6] The former Canadian Tire store building was renovated and converted to a Gurdwara. Rexdale’s congregation was relocated from the Baywood property temple to the Carrier property temple in April 2002. The Defendants’ shared plan, at that time, was to construct a Sikh funeral home on the Baywood property, which Rexdale continued to own. A third corporation, Akal Funeral Home (“Akal”), was incorporated in February 2002 to operate the funeral home once it opened. Akal is not a party to this proceeding.

[7] A single joint committee of directors from both corporations was tasked with renovating the Canadian Tire building on Carrier Drive and converting the Baywood property into a Sikh funeral home. Successful fundraising was undertaken and extensive renovations were completed at the Baywood property, but after several years, the Akal funeral home was still not operational.

[8] In 2005, disagreement arose among directors over who was entitled to make managerial decisions regarding the corporations. Litigation ensued. On November 23, 2006, the Court of Appeal fixed the corporations’ membership and directors with a declaration that resulted in different groups of people having control over the two Boards. See Rexdale Singh Sabha Religious Centre and Akal v. Chatta, et al., 2006 2189 (ON S.C.), rev’d 2006 39456 (ON C.A.). This led to a split between Rexdale and SSCT.

[9] After the split, Rexdale’s Board decided not to proceed with the funeral home. In early 2007, SSCT and Akal brought an Application for an injunction to restrain Rexdale from altering any part of the premises on the Baywood property. (Rexdale had expressed an intention to install a kitchen, which would have necessitated removal of the embalming room.) The Application was dismissed. See Akal Funeral Home and Sikh Spiritual Centre Toronto v. Rexdale Singh Sabha Religious Centre, Court file no. 07-CV-328779 PD3 (decision of Justice Maureen Forestell dated April 17, 2017).

[10] The SSCT Board then descended into years of internal strife and conflict over financial management and governance disputes. The Board was divided into opposing factions of directors who were hostile to and distrustful of each other. This factionalism triggered further litigation, resulting in another court declaration in 2013 fixing the membership and directors of the corporation. See Singh et al. v. Sandhu, et al., 2013 ONSC 3230.

[11] In or about 2014, Rexdale sued SSCT, Akal and two individual directors, including Mr. Deol, for the value of a mortgage placed on the Baywood property and for repayment of approximately $400,000 in funds raised by Rexdale to permit SSCT to commence operation of a Gurdwara on the Carrier property. Rexdale alleged that the two named directors breached their fiduciary duty by misappropriating funds from Rexdale and giving the money to SSCT for the purchase and improvement of the Carrier property. The action was dismissed. Justice Dow concluded that both the congregants and directors of Rexdale supported the move from the Baywood property to the Carrier property and were aware that Rexdale’s name, reputation and credibility in the Sikh community were being used to raise funds for the move. He found that the “creation of a second, not for profit corporation [i.e., SSCT] was merely part of the transition process” and he noted that the “new corporate entity was not specifically made known to the congregation.” Rexdale Singh Sabha Religious Centre v. Singh et. al., 2015 ONSC 1807, at para.41.

[12] The case before Justice Dow included a counterclaim by SSCT against Rexdale, seeking to have returned to it the value of improvements made to the Baywood property while attempting to convert it to a funeral home, or alternatively a declaration that SSCT holds an equitable interest in the Baywood property by way of constructive trust. The counterclaim was also dismissed.

[13] Today, Rexdale and SSCT are governed independently (though it is unclear from the record whether they have any directors in common). The Baywood property is still owned by Rexdale, which operates a small Gurdwara and rents out the premises for private functions. SSCT continues to own the Carrier property, where it operates a large Gurdwara. Akal funeral home is not operating and has never operated.

The Loans at Issue

[14] The underlying Action in this proceeding arose because of an alleged default in repayment of monies loaned by SGN to SSCT and Rexdale. SGN claims that loans were provided to the Defendants over a period of approximately five years, during the time when the two Defendants were being operated in consort. SGN states that the purpose of the loans was to assist in financing the construction of the Akal funeral home.

[15] SSCT disputes “the nature of the loans, including who the loans were made to and what the terms were for repayment”. In some of SSCT’s materials, SGN’s payments to SSCT are characterized as “donations” toward the construction of the Akal funeral home.

[16] The merits of SGN’s claim for repayment of $360,000 is not an issue before me in this Motion. However, the alleged improvidence of the disputed settlement can only be determined in the context of an understanding of the basis for SGN’s Action against the Defendants. It is therefore necessary to review the facts giving rise to SGN’s claim.

[17] There is no dispute that SGN advanced monies to both Defendants. Three payments were made by cheque to Rexdale in 2001 and 2002, totalling $125,000. There is no contemporaneous documentation regarding the terms of these payments. However, one of SGN’s officers, Harvinder Dhaliwal, deposed that the payments to Rexdale were made as an interest free loan that was repayable on demand. His evidence was corroborated by Sarwan Gill, a founding director and the current President of SGN, who testified that the three cheques paid to Rexdale were loans to build a funeral home. Davinder Chhokar, a founding member, past President and director of SGN, further corroborated that the payments to Rexdale were loans for the development of a funeral home. Based on these witnesses’ consistent recollections, I conclude that the payments to Rexdale were loans made for the purpose of financing the construction of a Sikh funeral home.

[18] Mr. Dhaliwal deposed that an additional $50,000 in cash was advanced to Rexdale on October 5, 2001, as part of SGN’s loans to finance the funeral home. Mr. Dhaliwal’s affidavit was sworn on December 24, 2015 in support of SGN’s motion for consent judgment against SSCT. It was filed (without exhibits, including a receipt for the cash payment) as part of SGN’s responding record in the Motion before me. Mr. Dhaliwal’s affidavit is the only evidence regarding the $50,000 cash loan. He was not examined. Other witnesses, including Mr. Gill, deposed and were cross-examined only about the payments to Rexdale made by cheque. Based on Mr. Dhaliwal’s uncontradicted evidence, I find that a $50,000 cash loan was made.

[19] There were no further payments from SGN to Rexdale after February 2002. There is no record of any request by SGN for repayment of the funds at that time.

[20] Mr. Dhaliwal deposed that, in or about January 2005, SSCT took up the cause of developing the funeral home and approached SGN for loans to finance the completion of the project. A Letter of Intent was issued by SGN to both SSCT and Akal on January 5, 2005, setting out the terms of an interest free loan of $200,000 from SGN to SSCT “for the purpose of providing financial assistance to Akal”. The Letter of Intent states that “SSCT shall commence repayment upon the commencement of operations by Akal”, subject to SGN’s “right to demand partial repayment from SSCT from time to time.” Mr. Chhokar, who signed the Letter of Intent on behalf of SGN, confirmed during his examination that the money was loaned by SGN to SSCT for the purpose of building the Akal funeral home. Four payments of $50,000 were made by cheque from SGN to SSCT in 2005, totalling $200,000.

[21] It was around that time that SSCT’s and Rexdale’s Boards began to experience internal conflict. Their corporate governance issues resulted in further court proceedings. Of particular relevance to this Motion is a decision dated June 3, 2013, in which Justice Brown described SSCT as being in a “state of corporate governance chaos”. Justice Brown made numerous orders, including the appointment of a Monitor to oversee SSCT’s implementation of proper accounting books, records and procedures. Singh v. Sandhu, supra.

[22] At that time, Mr. Deol was the President of SSCT. He was the leader of one of the factions in the divided SSCT Board. Major Singh, the primary deponent in support of SSCT’s Motion, was the leader of a different faction. Mr. Singh is currently still a director of SSCT. Mr. Deol and other former directors were removed from SSCT’s Board at a special membership meeting held on September 14, 2014. Mr. Singh is the individual who proposed the resolution that they be removed.

[23] Prior to his removal, while he was Chairman of the Board of SSCT, Mr. Deol (and two other individuals) executed a Promissory Note dated January 1, 2010, binding SSCT to a promise to pay SGN the sum of $375,000. Repayment was to begin immediately with twelve monthly $3,000 installments, followed by the entire balance becoming due and payable on January 1, 2011. SGN and Rexdale rely on this Promissory Note as evidence of SSCT’s agreement to assume liability for the entire debt accrued by both Rexdale and SSCT in connection with the funeral home project.

[24] SSCT challenges the authenticity of the Promissory Note, arguing that it is unclear why the Note was issued, why the amount owing by SSCT had increased from $200,000 to $375,000, and why Rexdale and Akal were not mentioned in the Note. SSCT relies on the fact that there are no Board minutes documenting discussion or approval of the Note. SSCT also relies on the affidavit of Mr. Singh, who deposed, “I was a director [of SSCT] at the time of the purported Promissory Note, and do not believe that the Board authorized these individuals to enter into a Promissory Note on behalf of the SSCT.”

[25] SSCT submits that there is no explanation for the increase in SSCT’s debt from $200,000 (in 2005) to $375,000 (in 2010). During cross examination of Mr. Gill (SGN’s current President), Mr. Wiffen asked, “We looked at the cheques. Even if we include the Rexdale ones, it only comes to $325,000. Why are they [SSCT] now agreeing to pay you [SGN] $375,000?” Mr. Gill responded, “I don’t know.” Later, in response to a similar question, Mr. Gill testified, “I don’t know why they say. They have all written. They sign it. They know how much money they borrow.”

[26] Mr. Wiffen places much emphasis on the discrepancy between the total of the cheques written by SGN ($325,000) and the $375,000 figure in the 2010 Promissory Note, which he submits “comes out of nowhere”. This submission ignores the evidence of Mr. Dhaliwal, who deposed that an additional $50,000 in cash was loaned to Rexdale in October 2001. When that cash payment is factored into the calculation, the total sum of money advanced by SGN to the two Defendants equals $375,000. There is therefore no discrepancy between the amount of monies loaned by SGN and the amount that SSCT promised to repay.

[27] The 2010 Promissory Note was prepared and signed by Mr. Gill on behalf of SGN. During Mr. Gill’s cross-examination, Mr. Wiffen pointed out that the 2005 Letter of Intent stipulated that repayment of SGN’s $200,000 loan to SSCT would only commence once the Akal funeral home started operations. Mr. Gill stated that the 2010 Promissory Note was created because years had passed, the Akal funeral home was not operational and SGN wanted to ensure it would get its money back. When asked questions to the effect of whether the Promissory Note was intended to bind only SSCT and not Rexdale, he responded “They were running by the same people. What’s the difference?” Mr. Wiffen put to him that the Defendants had “split” by the time the Promissory Note was signed. Mr. Gill could not recall when that had happened. The evidence shows that it occurred in or about 2007, after the Court of Appeal decision in Rexdale v. Chatta, supra.

[28] Despite the conflict that existed between the Defendants in 2007, I find that the most probable explanation for the increase in SSCT’s debt to SGN (from $200,000 to $375,000) is that SSCT agreed to assume liability for repayment of Rexdale’s debts in January 2010. There is no evidence regarding the state of the relationship or degree of conflict (if any) between the Defendants at that particular point in time.

[29] SSCT argues that it is not plausible that its Board would have agreed to repay loans incurred by Rexdale for the construction of a funeral home owned by Rexdale and operated by Akal. Considering that SSCT was originally incorporated as a successor to Rexdale and that the two corporations were operating in consort when most[^1] of the loan payments were made, the prospect of SSCT assuming liability for Rexdale’s debt is not implausible. Moreover, it is consistent with SSCT’s counter-claim against Rexdale in the 2014-2015 litigation before Justice Dow. In that action, SSCT claimed that it had funded substantial improvements to the Baywood property for the construction of a funeral home and that Rexdale had thereby been unjustly enriched. Rexdale v. Singh, supra.

[30] In any event, the reason why SSCT decided to assume responsibility to repay Rexdale’s debt is irrelevant. The Promissory Note was signed. The fact that there are no minutes of a Board meeting in which its content was discussed and approved is not fatal to a finding of its authenticity. SSCT has had a history of less than ideal record-keeping practices and there is other reliable evidence that the Promissory Note was approved by the Board.

[31] The Promissory Note was signed not only by Mr. Deol, who was then the Chairman of SSCT’s Board, but also by Gurinder Khehra, the then President of SSCT, and Sadhu Brar, the then Treasurer. Their signatures are affixed to a stamp bearing the title “Sikh Spiritual Centre Toronto” and underscored by the statement, “We have the authority to bind the Corporation.” SSCT does not dispute that these three individuals signed the Promissory Note and that they occupied the positions of responsibility listed on the Note at the time. Mr. Singh’s simple “belief” that all three of them acted without Board authorization is insufficient to cast doubt on the authenticity of the Note.

[32] Moreover, immediately after the Promissory Note was executed in January 2010, SSCT made five consecutive $3,000 monthly payments to SGN. This is evidence that the Board was aware of and was complying with the terms of repayment. When asked about the Promissory Note during his cross-examination, Mr. Deol testified:

We had promised Guru Nanak Sikh Centre that we will give you your money. We cannot give you the total amount at once. We will give you $3,000.00 on a monthly basis. For a few months, we did do that, we did give them the money. Then after that, it stopped.

[33] Mr. Gill and Mr. Dhaliwal have similar recollections. They both deposed that five $3,000 cheques were issued by SSCT pursuant to the Promissory Note but that the loan repayments were stopped thereafter.

[34] SSCT disputes that the $3,000 installments paid to SGN in 2010 represented partial repayment of its debt pursuant to the terms of the Promissory Note. During his cross-examination, Mr. Singh testified, “that was for separate thing”. He stated that SGN “bought a piece of land in Brampton at Fernforest and Sandalwood to do a joint project with Malton, us and them.” He said that the $15,000 (paid in five $3,000 monthly instalments) was “to go towards the mortgage payment” for that land. Later during his cross-examination, he was less definitive in his statements. He testified, “$15,000 payment has been made to Guru Nanak Sikh Centre. Whether it was for this [loan] or other [joint venture] has to be find out. That has to be more detailed investigation on that.” He also suggested that the $15,000 may have been applied by SGN to retire a portion of the $375,000 debt, even though it was paid by SSCT for a different purpose.

[35] I do not find Mr. Singh’s evidence on this point to be credible. There is no evidence corroborating the existence of a joint venture between SSCT, SGN and a Malton temple. There is no documentary evidence of the mortgage to which the $3,000 “joint venture” payments were purportedly made. The joint venture is not mentioned in the September 30, 2013 Monitor’s report on the financial position of SSCT.

[36] Based on the consistent evidence of Mr. Deol, Mr. Dhaliwal, and Mr. Gill, as well as the timing of the $3,000 payments, which coincides with the timetable set out in the Promissory Note, I find that the payments were made pursuant to the Promissory Note. These payments are inconsistent with SSCT’s position that the Promissory Note lacks authenticity and was never authorized by the Board.

Commencement of the Proceeding

[37] Mr. Dhaliwal deposed that, after SSCT stopped making the $3,000 monthly payments, SGN made demands for repayment of the outstanding balance of the loan. This is corroborated by the following entry in the minutes of a July 24, 2012[^2] SSCT Board meeting: “A.S. Deol present the letter issued by Guru Nanak Sikh Brampton. It was agreed Loan will be paid soon.” This entry suggests that SGN had written to SSCT to demand repayment of the loan. The demand for repayment is also corroborated by the Monitor’s report dated September 30, 2013, which states that “a demand [was] issued for the balance of the loan” after the first $15,000 was paid.

[38] No further payments were made by SSCT. SGN commenced its action on December 31, 2012. It issued a Statement of Claim against both SSCT and Rexdale on January 22, 2013, seeking recovery of $360,000 (i.e., the original $375,000 loaned minus the $15,000 repaid).

Rexdale filed a Statement of Defence and brought a cross-claim against SSCT. SSCT did not file a Statement of Defence, but its counsel, Mark Wiffen, served a Notice of Intent to Defend, a Demand for Particulars and a Request to Inspect Documents on July 16, 2013. SGN’s counsel, Maninder Sidhu, responded on July 22, 2013, furnishing the requested particulars and copies of the requisite documents.

Impugned Settlement and Consent Order

[39] In or about September 2013, SSCT changed its counsel and retained a different lawyer named Antal Bakaity to defend the action brought by SGN.

[40] Mr. Bakaity communicated with Mr. Sidhu in the fall of 2013. In December 2013, SGN made an Offer to Settle. The terms of the Offer were revised pursuant to SSCT’s request (communicated to Mr. Sidhu by Mr. Bakaity) in March 2014. Acceptance of the revised Offer was then executed by Mr. Deol on SSCT’s behalf.

[41] In November 2015, Mr. Sidhu obtained Mr. Bakaity’s approval as to the form and content of a draft Order to implement the settlement. SGN obtained a consent Order from Justice Edwards on February 4, 2016. SSCT now moves to have that Order (and the settlement underlying it) set aside.

Law

[42] The Court has discretion to set aside a settlement where, in the totality of the circumstances, it would not be appropriate to enforce the parties’ agreement. However, as a matter of public policy, a settlement ought to be enforced by the court unless enforcement would create a real risk of clear injustice. Ruder v. 1049077 Ontario Ltd., [2014] O.J. No. 3595 (S.C.J.) at para.6.

[43] The fact that a settlement has been implemented by a consent order does not preclude the court from exercising its discretion with respect to the enforcement of the settlement. Rule 59.06(2) of the Rules of Civil Procedure permits a party to bring a motion to have a court order set aside on the grounds of fraud or of facts arising or discovered after it was made, or to have the operation of an order suspended and/or to obtain different relief than that which was originally ordered.

[44] The Rules do not prescribe specific criteria for when an order may be set aside. However, the jurisprudence establishes that attempts to reopen matters that are the subject of a final judgment must be carefully scrutinized. The moving party must demonstrate circumstances that warrant deviation from the fundamental principle that a final judgment, unless appealed, marks the end of litigation. Tsaoussis (Litigation Guardian of) v. Baetz, 1998 5454 (ON CA), 165 D.L.R. (4th) 268 (Ont. C.A.), at para.20 and Catalyst Fund General Partner Inc. v. Hollinger Inc., 2006 23918, at para. 17.

[45] A consent order may be set aside on any ground that invalidates the underlying settlement agreement or on a material change in circumstance after the order was made. Joshi v. Joshi, 2014 ONSC 4677.

[46] Even where a material change in circumstance is established, the Court retains discretion to refuse to set aside the impugned order based on such factors as prejudice to the other parties or unreasonable delay in bringing the motion. Hodge v. Toronto Police Service, 2015 ONSC 5508.

[47] In all cases, the onus is on the moving party to show that circumstances warrant making an exception to the fundamental rule that final judgements are, in fact, final.

Issues and Analysis

[48] The Motion raises five issues: (1) whether there was a settlement, (2) whether SGN is entitled to rely on the indoor management rule, (3) whether there are grounds to invalidate the settlement, (4) whether there was a material change in circumstances after the consent Order was made, and (5) whether the court should exercise its discretion not to enforce the settlement and set aside the Order.

1) Was there a Settlement?

[49] SSCT argues that there was no settlement because acceptance of SGN’s Offer to Settle was not approved by SSCT’s Board of Directors. For the reasons set out below, I find that this argument is not supported by the evidence.

[50] There is no dispute that Mr. Deol was a properly appointed director in March 2014, when he accepted SGN’s Offer to Settle on behalf of SSCT. He was not removed from the Board until six months later in September 2014. However, Mr. Deol did not, simply by virtue of his position as a director, have unilateral authority to give instructions in the litigation or to bind SSCT to the terms of settlement without the Board’s prior authorization to do so.

[51] SSCT argues that Mr. Deol was a “rogue” director, who was acting without approval of the Board when he purported to accept SGN’s Offer to Settle. SSCT relies on the absence of a Board Resolution or of minutes of a Board meeting recording approval of the settlement. The lack of documentary evidence is a relevant factor but in my view, it is not dispositive of this issue.

[52] SSCT also relies on the affidavit of Mr. Singh. He deposed that, although he was a director of SSCT throughout 2013 and 2014, he “was not aware of and did not authorize the acceptance of this offer to settle”. He states, “I do not believe that Deol had proper authority to accept the offer to settle”, “I had no knowledge of the fact that Deol had purportedly agreed to settle this proceeding on behalf of SSCT” and “I believe the same to be true with respect to the other current directors of the SSCT.”

[53] Notably, no other (past or current) SSCT directors were summonsed to give evidence regarding their knowledge of the Offer to Settle.

[54] Mr. Singh’s unsupported belief that Mr. Deol acted without proper authority is contradicted by other credible evidence.

[55] Mr. Singh testified that Mr. Bakaity’s retainer by Mr. Deol was not approved by the SSCT Board of Directors. This evidence is contradicted by Mr. Deol’s testimony that, during a Board meeting in 2013, he was appointed to find and retain a lawyer (i.e., a different lawyer than Mr. Wiffen) to defend SSCT in the action brought by SGN. He recalled meeting with Mr. Bakaity thereafter and paying him a retainer on behalf of SSCT.

[56] Mr. Deol’s recollection is corroborated by documentary evidence in the form of Minutes of a Board meeting dated September 22, 2013. Those minutes indicate that Mr. Deol and another director named Gurinder Khera were asked to provide details of the loan from the “Brampton Temple”[^3] and “explain any conflict of interest as raised by Major Singh.” (Mr. Singh did not attend that meeting but had raised his concerns about conflict of interest in an email to the Board). The minutes reflect that Mr. Deol asserted, “there is conflict of interest between any Director and loan payable to Brampton Temple.” According to the minutes, Mr. Deol explained,

The loan was from Guru Nanak Sikh Centre to Sikh Spiritual Centre Toronto which was greatly needed and appreciate by our Temple. It was moved that Brampton loan issue discussed many time in our board meetings and it was agreed to pay it back.

[57] The minutes then state, “There is no conflict of interest found by board”.

[58] The minutes also record a resolution adopted by the Board that “Mr. Khera, Brar, Charnjit Singh Nijjar negotiate to get concessionary terms with Brampton Temple.”

[59] Finally, the minutes record that “Amarjit Singh Deol told the directors lawers (sic) Tony and Antal Bakaity is hire this purpose.”

[60] These minutes are consistent with Mr. Deol’s testimony that he had earlier been appointed by the Board to retain counsel to represent SSCT in connection with SGN’s action. At this meeting, he was reporting back to the Board and advising of Mr. Bakaity’s retainer. I therefore find that Mr. Bakaity was properly retained to represent SSCT.

[61] After he was retained, Mr. Bakaity exchanged correspondence with Mr. Sidhu regarding the litigation. On December 11, 2013, Mr. Sidhu, sent a draft Offer to Settle to Mr. Bakaity, with copies to Rexdale’s lawyer and to the court-appointed Monitor. The draft Offer proposed that SSCT pay SGN the sum of $350,000 (in installments), in exchange for which SGN would settle all claims against both SSCT and Rexdale without costs or interest charges.

[62] Mr. Bakaity responded immediately, advising Mr. Sidhu that he had forwarded the draft Offer to his client and expected to meet with his client the following week to discuss it. He anticipated providing a response to the draft Offer by the end of the following week.

[63] During his examination, Mr. Deol stated that he recalled receiving a copy of SGN’s December 11, 2013 draft Offer from Mr. Bakaity. He testified, “I told the Board of Directors about this. I discussed it with them.” There are no Board minutes recording this discussion, but I accept Mr. Deol’s recollection that it occurred. As mentioned previously, SSCT has an unfortunate history of poor recording-keeping practices, so the absence of board Minutes is not dispositive of the issue. It is merely one factor for my consideration.

[64] Mr. Bakaity did not write to Mr. Sidhu again until March 19, 2014. At that time, he apologized for the delay in responding to SGN’s December 11, 2013 Offer and explained that, “I have only recently had an opportunity to meet with my clients and obtain their instructions with respect to this matter.” The use of the plural “clients” in this letter suggests that Mr. Bakaity met with more than one individual from SSCT to obtain instructions, which is consistent with the September 22, 2013 Board resolution to appoint three directors to negotiate “concessionary terms” with SGN. In correspondence written by Mr. Whiffen on June 28, 2016, SSCT acknowledged that Mr. Deol had also “been granted authority to negotiate” with SGN (while denying that he had authority to settle).

[65] Mr. Deol testified that he recalled meeting with Mr. Bakaity to discuss the December 11, 2013 draft Offer. He was not asked whether he attended that meeting alone or with other directors. He could not clearly remember what instructions were provided to Mr. Bakaity with respect to the proposed settlement. He testified that any instructions he provided to Mr. Bakaity would have been received from the Board of Directors. He stated, “Any letters that I received from the lawyer, they were discussed with the Board of Directors. Whatever decisions we made, then I would relay them to the lawyer.”

[66] In his March 19, 2014 letter to Mr. Sidhu, Mr. Bakaity stated that his clients were generally in agreement with the terms and conditions set out in the Offer to Settle, but requested a revision to the proposed timetable for the installment payments. He added:

Further, if your clients are agreeable to these terms and conditions, we are agreeable to entering into a Consent Judgment which can be held by your firm, in escrow, in the event of a default by my clients, in which case you will be able to enter the default Judgment with all of the terms and conditions with respect to penalty.

In this way, your clients will have the satisfaction of knowing that the Judgement is ready to go in terms of any potential default of payment. As well, this can be of comfort to the Defendants knowing that there is no Judgement registered against them but knowing full well that if they fail to comply with the payment schedule that there will be consequences in such a case.

In any event, if this is acceptable to you and your client, please advise.

[67] A “c.c.” to SSCT appears beneath Mr. Bakaity’s signature on the March 19, 2014 letter.

[68] On March 20, 2014, Mr. Sidhu faxed to Mr. Bakaity a revised Offer to Settle, incorporating SSCT’s proposed changes to the repayment timetable. He copied Rexdale’s lawyer and the court-appointed Monitor. The revised Offer contemplated that SSCT would make instalment payments to SGN totalling $350,000 over a period of approximately 17 months, SGN would forego any interest (provided that the payments were made regularly and on time), SGN would withdraw all claims against Rexdale, the parties would each bear their own costs of the proceeding, and “The terms of settlement shall form part of the final court Order disposing off (sic) this Litigation.”

[69] At or about this time, SGN changed counsel and retained Sukwinder Samra.

[70] On March 21, 2014, Mr. Deol signed an Acceptance of the Offer to Settle on behalf of SSCT. Mr. Bakaity forwarded the executed Acceptance to Mr. Samra that same day.

[71] During his examination, Mr. Deol was asked whether he consulted with the court-appointed Monitor for SSCT before accepting the Offer to Settle. He responded, “I don’t remember clearly if I did. I don’t remember. But I do remember speaking with the Board of Directors. I know one thing, BDO [the Monitor] did not allow us to make any decisions until we discussed it with them. I knew that much. They wouldn’t allow it.” In the context of Mr. Deol’s full answer to the question asked, it is clear that the word “them” refers to SSCT’s Board of Directors, not to the Monitor. The gist of his testimony is that the Monitor would not permit him to make any unilateral decisions on behalf of SSCT without first obtaining the Board’s approval. This is consistent with the Monitor’s mandate. There is no evidence suggesting that SSCT was required to obtain the Monitor’s approval of any transactions.

[72] SGN argues that Mr. Deol is not a credible witness. It asks me to reject his testimony in part because of adverse findings made about him by Justice Brown in Singh v. Sandhu, supra, at paras.61, 85-87. I note, however, that Justice Brown also expressed “strong reservations about the credibility of both Mr. Deol and Mr. Major Singh.” Singh v. Sandhu, supra, at para.49.

[73] Mr. Wiffen challenges the plausibility of Mr. Deol’s assertion that he consulted the Board before executing the settlement. Noting that the revised Offer to Settle was faxed to Mr. Bakaity at 7:24 PM on March 20, 2014 and was accepted by Mr. Deol the next day, Mr. Wiffen submits that it is simply not believable that Mr. Deol had time to get the revised Offer reviewed and approved by the Board of Directors in less than 24 hours.

[74] This submission ignores the earlier December 11, 2013 Offer and Mr. Bakaity’s correspondence dated March 19, 2014, in which he confirmed his instructions from SSCT as to the acceptability of that Offer. The revised Offer faxed on March 20, 2014 reflected changes requested by Mr. Bakaity based on instructions he received from SSCT. Mr. Deol’s consultation with the Board of Directors therefore would have occurred between December 11, 2013 (when the first Offer was made) and March 19, 2014, when Mr. Bakaity confirmed his instructions to SGN’s lawyer. Further consultation with the Board after the revised Offer was received on March 20, 2014 was not required because the Board had already agreed to SGN’s proposed terms of settlement, provided that the timetable was revisited.

[75] Considering SSCT’s history of deficient record-keeping practices, I find that the absence of a written Board resolution accepting SGN’s Offer to Settle is not fatal to Mr. Deol’s authority, nor to the validity of the settlement. I accept Mr. Deol’s testimony that he consulted with the Board and obtained its approval prior to accepting the Offer on behalf of SSCT, in accordance with the practice dictated by the court-appointed Monitor at the time.

[76] I therefore conclude that there was a settlement between SSCT, Rexdale and SGN.

2) Does the Indoor Management Rule Apply?

[77] The parties made detailed written and oral submissions about the application of the indoor management rule in the particular circumstances of this case. In light of my finding that Mr. Deol was authorized to accept SGN’s Offer to Settle on behalf of SSCT, it is unnecessary for me to determine whether SGN would have been entitled to rely on the indoor management rule to enforce an unauthorized settlement.

3) Was the Settlement Valid?

[78] There is no evidence of unconscionability, fraud, misrepresentation, misapprehension of material fact, or any other ground that would invalidate the settlement agreement. Perrin v. Cara Operations Ltd., 2004 8625 (ON SC), at para.15.

4) Was there a Material Change in Circumstance?

[79] Pursuant to Rule 59.06(2)(a), SSCT can move to have the consent Order set aside on the basis that there was a material change in circumstance after the Order was made. See Joshi v. Joshi, 2014 ONSC 4677 at para. 6. In this case, the Order was made by Justice Edwards on February 4, 2016.

[80] Mr. Singh alleges that, on February 3, 2016, Mr. Bakaity misled SSCT to believe that a consent order had already been made, when in fact the order was made the next day. Mr. Singh claims that the directors of SSCT only later discovered that Mr. Bakaity had been discussing the form and content of the Order with Mr. Samra on February 3, 2016 and that the Order was not made until February 4, 2016. SSCT argues that this is a material fact that only came to SSCT’s attention after the order was made, when Mr. Bakaity provided SSCT with a copy of the final Order on March 1, 2016.

[81] SSCT further alleges that Mr. Bakaity “had knowledge that the Sikh Spiritual Centre was not in agreement with [him] consenting to the Order”. It claims that Mr. Bakaity provided consent to judgment on February 3, 2016, despite having received contrary instructions from SSCT. It further claims that Mr. Bakaity’s alleged improper conduct was only discovered after the Order had been made.

[82] It should be noted that SSCT has not commenced a claim against Mr. Bakaity, nor a complaint to the Law Society about his conduct. It is unclear whether Mr. Bakaity is even aware of SSCT’s allegations against him. He did not provide an affidavit and was not examined in this proceeding. Based on the limited evidence before me, I find that there is no support for SSCT’s allegations that he misled them or that he acted contrary to instructions.

[83] The record establishes the following facts. After the settlement was executed in March 2014, SGN took no immediate steps to enforce it. Eventually, on August 4, 2015, Mr. Samra prepared a draft Order and sent it to Mr. Bakaity for review and approval. Mr. Bakaity was not aware that Mr. Deol was no longer a director of SSCT. He wrote to Mr. Deol on September 30, 2015, asking him to schedule an appointment to meet.[^4] It appears that Mr. Bakaity did not receive a response to that letter.

[84] Mr. Bakaity approved the draft Order as to form and content on November 17, 2015. It seems that he did not communicate with any directors of SSCT prior to approving the Order, but he clearly had obtained earlier instructions, which he conveyed to Mr. Sidhu by letter dated March 19, 2014, that SSCT was “agreeable to entering into a Consent Judgment”. Moreover, the Offer accepted by Mr. Deol stipulated that the “terms of settlement shall form part of a final Court Order disposing off (sic) this litigation.” Provided that the terms of the draft Order were consistent with the terms of settlement (which, as a lawyer, Mr. Bakaity was qualified to assess), and provided that no intervening contrary instructions were given to Mr. Bakaity, it was not strictly necessary for him to confirm his earlier client instructions before approving the draft order.

[85] Mr. Bakaity wrote to Mr. Deol again on December 9, 2015, enclosing his account for services rendered, which included reference in one of his dockets to a discussion with opposing counsel about a “consent motion for judgment”. The letter was sent to SSCT’s Carrier property address.

[86] Mr. Singh testified that he and the other current directors of SSCT first became aware of the settlement upon receiving Mr. Bakaity’s December 9, 2015 invoice. He testified that one of the directors, Mr. Khaira, was “immediately” tasked with contacting Mr. Bakaity to inquire about the “consent motion for judgment” docket entry.

[87] On cross-examination, Mr. Singh was asked whether Mr. Khaira shared with him the discussions he had with Mr. Bakaity. Mr. Singh responded that Mr. Bakaity told Mr. Khaira “that he already consented with …” There is a notation on the transcript of his examination indicating that the end of that sentence was inaudible. I infer from the totality of the evidence that Mr. Singh was relaying Mr. Khaira’s account that Mr. Bakaity advised he had already consented to an order. If that information was in fact conveyed by Mr. Bakaity, it was true. The record shows that Mr. Bakaity had approved SGN’s draft Order on November 17, 2015. Given the hearsay quality of Mr. Singh’s statement, I will not admit it for the truth of its contents, but I note that it would not have proved, in any event, that Mr. Bakaity was misleading his client. Nor would it serve as evidence that SSCT’s current directors were unaware of the settlement prior to Mr. Khaira’s discussion with Mr. Bakaity. At its highest, it is evidence that the current directors of SSCT may not have been previously aware of Mr. Bakaity’s consent to a draft Order.

[88] I find it implausible that none of the current directors of SSCT was aware of the March 2014 settlement prior to December 2015. I note that Justice Dow’s July 17, 2015 decision in Rexdale v. Singh, supra, at paragraph 27(8), mentions SGN’s Action against Rexdale and SSCT for repayment of $360,000 and states that it was “apparently settled”. Mr. Wiffen was counsel for SSCT in that proceeding before Justice Dow, which ended in March 2015. Mr. Singh was on a committee of directors involved in providing instructions to Mr. Wiffen in that case. It is unlikely in these circumstances that the settlement did not come to that committee’s attention.

[89] Mr. Singh gave evidence about Mr. Deol’s reluctance to disclose or discuss the status of SGN’s Action with Mr. Wiffen during a meeting (about the other proceeding) that they both attended in August 2013. That is not surprising, considering that Mr. Deol had, at that time, just been appointed by the Board to retain another lawyer to represent SSCT. In any event, the meeting with Mr. Wiffen occurred before the settlement was executed. It therefore cannot serve as evidence to support SSCT’s contention that the Board was unaware of the existence of the settlement from the date of its execution in March 2014 until it received Mr. Bakaity’s account in December 1995.

[90] I find it most probable that SSCT’s current directors were aware of the settlement prior to receiving Mr. Bakaity’s account in December 2015, but were not aware that SGN was taking active steps to enforce the settlement through a consent Order. Had the SSCT directors not been aware of the settlement when Mr. Deol was removed from the Board in September 2014, surely they would have contacted Mr. Bakaity to inquire about the status of SGN’s proceeding. The Board was aware that Mr. Bakaity had been retained. It is implausible that the newly appointed directors would have made no effort to find out about the status of a $360,000 claim against SSCT unless they were already aware of the settlement.

[91] I accept Mr. Singh’s testimony that, prior to December 2015, the current SSCT directors were not aware that SGN’s lawyer was taking steps to obtain a consent Order to enforce the settlement. Mr. Khaira did not give evidence about the timing or content of his discussion(s) with Mr. Bakaity. Based on the record, their discussion(s) must have occurred between December 9, 2015 (the date of Mr. Bakaity’s account) and February 3, 2016, when Mr. Bakaity wrote to Mr. Khaira confirming their communications. He wrote, “I confirm that you have advised that Mr. Deol is no longer with your Centre or part of your committee and that you have replaced him in this regard as Director of the committee.”

[92] This is the only evidence relating to the substance of the discussions that took place between Mr. Khaira and Mr. Bakaity prior to February 3, 2016. There is no evidence that Mr. Khaira told Mr. Bakaity that Mr. Deol was a “rogue” director who had not been authorized by the Board to accept the Offer to Settle. There is no evidence that Mr. Khaira instructed Mr. Bakaity to revoke his consent to the draft Order or to take any steps to resist SGN’s motion for consent judgment.

[93] SGN brought its motion for consent judgment on December 24, 2015. Prior to the motion hearing on February 4, 2016, Mr. Samra prepared a revised draft Order and forwarded it to Mr. Bakaity for approval. Mr. Bakaity did not consent to the revised draft Order. He responded to Mr. Samra on February 3, 2016, enclosing a copy of the previously executed Acceptance of Offer to Settle. He noted two differences between the revised draft Order and the original terms of settlement, namely payment start dates commencing in 2015 rather than 2014 (which he stated did not give rise to any difficulty) and a direction to make payments to Mr. Samra’s law office, in trust, rather than to Mr. Sidhu’s law office, in trust. Mr. Bakaity wrote, “Please note that I normally do not make much of a fuss about such things but I have very little communication with my clients with respect to these issues and I am working on what was previously committed to.” Mr. Bakaity indicated that he would not approve the revised draft Order unless Mr. Samra provided him with an executed Direction from SGN reflecting their agreement to have the funds paid to Mr. Samra’s law office in trust. He suggested, alternatively, that the revised draft simply remain silent on that issue and an irrevocable Direction could be provided by SGN at a later date.

[94] Mr. Bakaity also wrote to Mr. Khaira on February 3, 2014, enclosing his correspondence of that same date to Mr. Samra. He wrote,

I can advise you that the Plaintiff’s lawyer has changed and as a result they are trying to reinvigorate this matter and finalize matters. In this regard, I attempted to contact your office to meet with you to discuss this matter because the Sikh Centre’s previous representative, Mr. Deol did bind your organization with respect to these matters. Therefore, we have only agreed to issues and terms that have already been agreed to because without any further direction or clarity all I can do in regards to this matter is say that at one point, as Defendants, the Centre agreed to accept the various terms of the Offer to Settle and that offer is now being converted into a Judgment/Court Order. In my view this is appropriate given that the Sikh Centre previously executed the consent.

Please be advised that there is a Judgment against the Sikh Centre and although there are slight changes in terms of the timing, ie: an entire additional year, this money was anticipated to begin to be paid in 2014 as opposed to 2015. However, the reality of the situation is that payments need to be made as the Order is enforceable.

[95] It is apparent from this correspondence that Mr. Bakaity, faced with difficulty in communicating with his clients, acted on the last instructions that he had received. He refused to consent to a proposed revision to the draft Order that was inconsistent with those instructions. There is no evidence that SSCT had instructed him, at any time, to withdraw the consent that he had previously provided or to take steps to oppose SGN’s motion for judgment.

[96] I do not agree with SSCT’s assertion that Mr. Bakaity “was still discussing a draft order with opposing counsel” on February 3, 2016, “despite knowing that the Sikh Spiritual Centre took issue with the settlement.” Mr. Bakaity had already consented to the draft Order in November 2015 based on the last instructions he had received. On February 3, 2016, he rejected a proposed revision to the previously-approved draft Order because he was not able to obtain instructions from SSCT relating to the proposed revision. That is not equivalent to engaging in discussions contrary to client instructions, which is what SSCT contends he did.

[97] SSCT argues that its directors were misled by Mr. Bakaity’s letter dated February 3, 2016 which stated, “there is a judgement against” SSCT. SSCT submits that it only later discovered – when Mr. Bakaity sent a copy of the final Order on March 1, 2016 -- that the Order had not been made until February 4, 2016. It submits that this represents a material change in circumstance after the Order was made.

[98] Although Mr. Bakaity’s February 3, 2016 letter to Mr. Khaira is somewhat confusing on this point, it includes the statement that “the offer is now being converted into a Judgement/Court Order” (emphasis added), accurately reporting that the Order had not yet been made. Furthermore, it encloses Mr. Bakaity’s letter to Mr. Samra that same day, which very clearly indicates that no Order had yet been made. The letter does not, however, specify that the motion date was scheduled for the next day, February 4, 2016.

[99] Based on the totality of the evidence before me, on a balance of probabilities, I have reached the following conclusions. The SSCT directors were aware of the settlement when it was executed with the Board’s approval by Mr. Deol in March 2014. The new directors who were appointed at the special membership meeting in September 2014 were either aware of the settlement when they were appointed or became aware of it during the proceeding before Justice Dow in early 2015. However, they were not aware, until December 2015, that SGN was actively taking steps to enforce the settlement by means of a consent motion for judgment. They were not aware that Mr. Bakaity had consented to the form and content of a draft Order on November 17, 2015. They only learned of SGN’s intention to bring the motion when they received Mr. Bakaity’s December 9, 2015 account.

[100] At some point thereafter but prior to February 3, 2016, Mr. Bakaity advised Mr. Khaira that he had already consented to the form and content of a draft Order based on his prior instructions and the terms of settlement. There is no evidence that either Mr. Khaira or any other director of SSCT instructed Mr. Bakaity to withdraw his consent or to take any steps to try to set aside the settlement. The SSCT Board had known about the settlement for many months and had taken no steps to challenge it. The settlement included an implementation provision agreeing to a consent order. SSCT became aware that a motion to obtain a consent order was pending in December 2015. Mr. Khaira spoke to Mr. Bakaity about it, but there is no evidence that Mr. Khaira instructed Mr. Bakaity to oppose the motion. The fact that SSCT may not have been apprised of the February 4, 2016 motion date until after the consent Order was granted does not, in this context, amount to a material change in circumstance.

5) Should the Settlement Nevertheless be Set Aside?

[101] Even though I have found that Mr. Deol was authorized by the Board to accept the Offer to Settle, that Mr. Bakaity had instructions to consent to the Order, and that there was no material change of circumstances after the consent Order was made, I am still required to assess whether it is appropriate in all of the circumstances to enforce the settlement. The existence of the consent Order is only one relevant factor in the exercise of my discretion. I am required to consider all relevant factors disclosed by the evidence. See Bank of Montreal v. Ismail, 2012 ONCA 129, at para.5, Olivieri v. Sherman, [2009] O.J. No.6235 (C.A.) at para.35, and Milios v. Zagas (1998), 1998 7119 (ON CA), 38 O.R. (3d) 218 (C.A.).

[102] Another relevant factor is that SSCT and SGN both had the assistance of counsel when they executed the settlement. Agreements that are entered into with the assistance of counsel should be upheld, except in the clearest and most exceptional cases. Donaghy v. Scotia Capital Inc., [2004] O.J. No.2157 (Ont. S.C.J.) at para.15.

[103] I have found that Mr. Bakaity was properly retained by SSCT when he consented to the form and content of the draft Order in November 2015. His actions were consistent with his last instructions. Even if I were to conclude that he did not have instructions from SSCT to approve the draft Order, there is no evidence that this was known to SGN at the time. As a lawyer, Mr. Bakaity had ostensible authority to consent to an Order on behalf of his client. Any issue that SSCT has with his lawyer’s conduct is a matter between SSCT and him, which does not impact the validity of the settlement agreement with SGN. Srajeldin v. Ramsumeer, 2015 ONSC 6697 at para.21.

[104] SSCT asks the court to consider that Mr. Deol had a conflict of interest when he accepted SGN’s Offer. In an effort to substantiate this claim, SSCT relies on Mr. Singh’s testimony that Mr. Deol was “a friend” of SGN and was “seen with” members of SGN’s Board of Directors “from time to time”. SSCT also relies on the evidence of Mr. Chokkar (a SGN director), who testified that he and Mr. Deol were “buddy buddies” and that Mr. Deol assisted SGN when it was first starting up, with “kitchen help” and by seconding a priest from the Rexdale Gurdwara when SGN was in need of a cleric. Mr. Chokkar also confirmed that Mr. Deol and Mr. Deol’s son had attended SGN’s temple as worshippers on numerous occasions.

[105] I agree that conflict of interest is a relevant factor in the exercise of my discretion, but the evidence in this case does not establish the existence of a conflict. Mr. Chokkar testified unequivocally that Mr. Deol was not involved in the management of SGN at any time. His evidence was uncontradicted on that point. There is no evidence that Mr. Deol or any of his family members were ever directors of SGN. I find that there is no basis to conclude that Mr. Deol was in a conflict of interest when he accepted the Offer to Settle on behalf of SSCT in March 2014.

[106] The final factor that SSCT asks the Court to take into consideration is its submission that the settlement is improvident, which is particularly relevant in a case involving a charitable organization. The primary argument to support this submission is that the settlement amount ($350,000) was “higher than the amount [$325,000] that was purportedly loaned on an interest free basis” to the Defendants. I have already rejected this argument earlier in my reasons for judgment. It ignores the evidence that a $50,000 cash payment was made by SGN to Rexdale in 2001.

[107] I have concluded that the total amount loaned to the Defendants was $375,000, $15,000 of which was repaid in 2010. SGN’s claim was for $360,000, the total balance outstanding. In the settlement, SGN agreed to accept $350,000, to permit SSCT to repay the loan in installments over a period of 17 months, to forego interest and to waive its claim for costs. On these facts, I cannot find that the settlement was improvident.

Conclusion

[108] For all of the above reasons, I have concluded that there is no basis to set aside the Order of Justice Edwards dated February 4, 2016.

[109] SGN’s Motion is therefore dismissed.

Costs

[110] The parties made submissions at the hearing of the Motion with respect to costs. In the event that the Motion was dismissed, Mr. Baxi submitted that SGN ought to be entitled to a costs Order against SSCT on a substantial indemnity basis, in the amount of $24,995.84 (inclusive of HST) for fees, plus $1,953.44 (inclusive of HST) for disbursements. He based this submission on paragraph 3 of Justice Edwards’s February 4, 2016 Order, which states that if SSCT failed to pay the agreed upon instalments on time, SGN would be entitled to its costs of enforcing the settlement.

[111] Mr. Whiffen submitted that, as between SGN and SSCT, costs should be awarded to the successful party on a partial indemnity basis, but that no costs should be awarded to Rexdale, regardless of the outcome, because Rexdale “added nothing other than parroting what was submitted by the Plaintiff”. He argued that Rexdale should also be denied its costs because of its conduct in the litigation. Rexdale did not file any motion materials until July 18, 2017, despite having notice of the Motion since November 2016. Rexdale served and filed an affidavit 3 days before the parties’ factums were due to be filed, effectively depriving the parties of an opportunity to cross examine the affiant.

[112] In the event that the Motion was dismissed, Rexdale requested a costs order against SSCT on a partial indemnity basis. Mr. Nussbaum submitted a Bill of Costs totaling $6,569.88, inclusive of HST, for fees, plus $30 for disbursements. He provided an explanation for the delay in filing Rexdale’s materials, namely that the motion record had been misfiled at his office and consequently did not come to his attention until after the examinations had already been completed on the Motion. I am satisfied that the delay in filing was caused by counsel’s inadvertence, not deliberate unreasonable conduct. It did not result in a delay of the proceeding. It therefore ought not to factor into any costs award.

[113] Mr. Wiffen submitted that both Mr. Baxi’s and Mr. Nussbaum’s Bills of Costs include hours in excess of what should reasonably be billed given the nature of the proceeding.

[114] Taking into consideration the parties’ submissions and the factors listed in Rule 57.01 of the Rules of Civil Procedure, I conclude that SGN is entitled to costs on a substantial indemnity basis and Rexdale is entitled to costs on a partial indemnity basis.

[115] In my view, the costs provision in paragraph 3 of Justice Edwards’s Order does not automatically entitle SGN to costs on a substantial indemnity scale. I have made that finding because of other relevant factors. In particular, I am troubled by the fact that SSCT effectively raised internal corporate governance issues within its own organization as a basis to set aside a settlement that was entered into with the assistance of counsel over three years ago, apparently because SSCT is now being governed by a different group of directors who are unhappy with the decisions made by their predecessors. Moreover, SSCT tried to cast blame on its own former lawyer without any evidence to support its serious allegations. SSCT has been unsuccessful on every issue in this Motion. In my view, the Motion lacks merit and ought not to have been brought. It resulted in unnecessary depletion of the parties’ resources, which are largely derived from community donations. It is for these reasons that I have concluded that SGN is entitled to its costs on a substantial indemnity basis.

[116] This matter was important to the parties because of the large sum of money at issue, plus the fact that the funds were raised through community charitable donations. Litigating the Motion required familiarity with the lengthy history of the parties and the complex factual matrix in which the dispute arose. That familiarity would be time consuming for counsel to acquire. There were multiple examinations of witnesses, none of which were unnecessary. I find that the hours spent by SGN’s lawyers are reasonable and the rates billed are commensurate with the lawyers’ level of experience. There is no unnecessary duplication of efforts resulting from co-counsel acting for SGN. I therefore order SSCT to pay SGN’s costs of the Motion in the amount of $25,000, inclusive of disbursements and HST.

[117] Rexdale’s contribution to the proceeding was limited and was largely duplicative of SGN’s submissions. I find that the Bill of Costs submitted by Mr. Nussbaum is excessive in the circumstances and the fees should be reduced. I therefore order SSCT to pay Rexdale’s costs of the Motion in the amount of $2,000, inclusive of disbursements and HST.

Petersen J.

Date: October 20, 2017

CITATION: Sikh Guru Nanak Sikh Centre Brampton v. Rexdale Singh Sabha Religious Centre, 2017 ONSC 6252

COURT FILE NO.: CV-12-5425-00

DATE: 2017 10 20

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Sikh Guru Nanak Sikh Centre Brampton, Plaintiff

AND:

Rexdale Singh Sabha Religious Centre, aka Rexdale Singh Sabbha; Sikh Spiritual Centre Toronto aka Sikh Spiritual Religious Centre, Defendants

REASONS FOR JUDGMENT

Petersen J.

Released: October 20, 2017

[^1]: The first payment to Rexdale was made before SSCT was incorporated. [^2]: The minutes are undated but the parties agree that they refer to a meeting held on July 24, 2012. [^3]: There is no dispute that “Brampton Temple” refers to SGN. [^4]: A copy of the September 30, 2015 letter is not in the record, but it is referenced in Mr. Bakaity’s subsequent December 9, 2015 letter to Mr. Deol, which is in the record.