455 Gordon Baker Holdings Limited et al. v. Toronto Transit Commission, 2018 ONSC 5989

Court File No.: CV-13-487733 Date: 20181011 Superior Court of Justice - Ontario

Re: 455 GORDON BAKER HOLDINGS LIMITED and LOUTAN LIMITED, Plaintiffs And: TORONTO TRANSIT COMMISSION, Defendant

Before: Koehnen J.

Counsel: Michael Kestenberg, for the Plaintiffs Stuart Svonkin, for the Defendant

Heard: August 20, 2018

Endorsement

I. Overview

[1] The plaintiffs are collectively the landlord of a property at 455 Gordon Baker Rd. in Toronto that the defendant Toronto Transit Commission (“TTC”) rented from them.

[2] After a dispute arose between them, the parties attended two mediations. Immediately following the mediations counsel for both parties exchanged emails which the TTC says amount to a binding settlement. The TTC brings this motion to enforce the alleged settlement.

[3] The plaintiffs disagree. They deny that the parties reached a binding settlement and, in the alternative, submit that if the parties did reach a settlement, I should exercise my discretion not to enforce it.

[4] The fact in dispute is whether HST is included in the settlement amount or whether HST is payable in addition to the settlement amount.

[5] Resolution of that issue turns on the law of offer and acceptance and the legal characterization I ascribe to the emails counsel exchanged immediately after the second mediation.

[6] My reading of the emails and the affidavits before me leads me to conclude that the parties did reach a settlement based on an amount that included HST.

[7] I also find that the settlement should be enforced because the record before me does not disclose any evidence that would put this case into the category of cases in which courts have declined to enforce settlements. There is no evidence of mistake or any other explanation that might incline me not to enforce the settlement.

II. Factual Background

[8] After the dispute arose between them, the parties conducted two mediations before George Adams which did not resolve the matter. However, immediately after the second mediation on November 30, 2017, plaintiffs’ counsel sent an email to defendant’s counsel at 1:43 PM saying:

“Will call you shortly….got our guys to go to X … hope that works.”

The reference to X reflects a settlement amount that was redacted in the materials available to me.

[9] Defence counsel replied as follows at 3:01 PM:

“TTC agrees. Terms are as follows:

1. subject to TTC Board approval, TTC will pay the plaintiffs the sum of $ X inclusive of all costs, interest, taxes, etc.;

2. dismissal of the claim and counterclaim on consent on a without costs basis;

3. mutual full and final releases to be exchanged in a form acceptable to counsel;

4. TTC General Counsel will recommend settlement of the action to the TTC Board on the above basis, and the offer will be presented for Board approval at either the December 11, 2017 Board meeting or a Board meeting in January 2018.

5. Terms of settlement to be confidential as between the parties.

Please confirm. Thanks”

[10] Plaintiffs’ counsel responded at 3:56 PM saying:

“Thanks Pat we confirm we are settled as per below…”

The reference to “as per below” in the email of 3:56 PM referred to the terms that were set out in the emails of 3:01 and 1:43.

[11] On the face of these emails, the business concept appears to have envisaged that the settlement amount include HST. By December 5, 2017, however, plaintiffs’ counsel appears to have become aware of an issue concerning the settlement. Late that day he emailed defence counsel asking whether they could discuss the settlement the following day.

[12] Counsel spoke on December 6, 2017. Their recollections of the conversation are substantially similar. During the course of that conversation, plaintiffs’ counsel advised that “it was the Plaintiffs’ understanding and position that the settlement sum” did not include HST. The plaintiffs have not explained how they came to that “understanding and position” in light of the emails between counsel.

III. Analysis

A. Was There a Binding Settlement?

[13] The existence of a binding settlement turns on whether the email from defence counsel at 3:01 PM amounted an acceptance of the plaintiffs’ offer of 1:43 PM subject to approval of the TTC board or whether it amounted to a new offer.

[14] If the email of 3:01 PM is a conditional acceptance of the plaintiffs’ offer of 1:43 PM, then it was open to the plaintiffs to change their offer and demand that HST be paid in addition to the settlement amount. This is so because a conditional acceptance of an offer does not create an agreement binding on the offeror: York Condominium Corporation No. 469 v. Universal Workers Union at paras. 41-47; Smith v. Peel Regional Police Services Board, 2010 HRTO 905 at paras. 30-35, 40-42; Lethal Energy Inc. v. Kingsland Energy Corp., 2014 SKQB 10 at paras. 50-66.

[15] If, however, the email from defence counsel at 3:01 PM amounted to a new offer, then the email from plaintiffs’ counsel at 3:56 PM amounted to an unconditional acceptance of the defendant’s new offer of 3:01 PM. This is so because an unconditional acceptance by an offeree of a conditional offer does create an agreement binding on the offeree.

[16] In my view, the email from defence counsel at 3:01 PM on November 30, 2017, constituted a new offer, not a conditional acceptance of the plaintiffs’ offer.

[17] I come to that view based both on the texts of the emails and the affidavits before me.

[18] With respect to the texts of emails, the plaintiffs’ email of 1:43 PM contains only an amount. It refers to no other terms. Defence counsel’s email of 3:56 PM contains several new terms. It specifies that the amount at issue is inclusive of costs, interest and taxes. It calls for dismissal of the claim and counterclaim without costs, calls for mutual releases and calls for confidentiality.

[19] The law allows me to infer certain types of uncontentious terms into a settlement such as releases, the manner of payment and the timing of payment: Allergan Inc. v. Apotex Inc., [2016] F.C.J. No. 538 (FCA) at para. 33. However, terms like a dismissal without costs or confidentiality requirements go beyond what could be described as uncontentious. In certain settlements terms of that nature may be uncontentious. In others, they may be hotly contested. Neither party has given me any context that would permit me to assess whether such terms were contentious or not.

[20] Shortly after plaintiffs’ counsel sent the email of 1:43 PM, the two lawyers spoke. Both counsel described the conversation in affidavits filed on this motion. Defence counsel says that during the conversation he “outlined the terms of an offer that [he] would seek instructions from the TTC to make” and that once he had such instructions, he would confirm the offer in an email to plaintiffs’ counsel.

[21] Plaintiffs’ counsel does not contest this description. His account is similar and notes that the email from defence counsel at 3:01 PM included as “additional terms” a dismissal without costs, mutual releases and a confidentiality obligation.

[22] The descriptions of the conversation from both lawyers suggest that defence counsel would send a new offer rather than accept the plaintiffs’ offer.

[23] In those circumstances I find that the email from defence counsel at 3:01 PM constituted a new offer which offer was conditional upon the approval of the TTC Board. Plaintiffs’ counsel accepted that offer unconditionally at 3:56 PM by saying “we are settled as per below”.

B. Should the Settlement Agreement be Enforced?

[24] The fact that the parties reached a settlement agreement does not end the matter. I must still consider whether, on all the evidence, the agreement should be enforced: Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc., [2007] O.J. No. 3618 (Div. Ct.) at paras. 9-10.

[25] Two Court of Appeal decisions that deal with the discretion not to enforce a settlement agreement were brought to my attention: Srebot v. Srebot Farms Ltd., 2013 ONCA 84, [2013] O.J. No. 584 (C.A.) and Milios v. Zagas, [1998] O.J. No. 812.

[26] In Srebot the Court of Appeal declined to enforce a settlement holding that the discretion not to enforce is reserved for cases where there are compelling circumstances and where enforcement would lead to a clear injustice. The Court noted that this was especially so where the settlement has been partially or fully performed: at paras. 6 and 10. The plaintiffs underscore that the settlement before me was never partially or fully performed.

[27] In Srebot, however, the refusal to enforce appears to have been based on:

“…the evidence concerning the respondent’s state of mind and condition at the time of the settlement, the truncated and brief nature of the mediation and the respondent’s alleged lack of understanding about what was agreed upon at the mediation, as well as the consequences of the settlement” (at para. 4).

[28] I have no evidence of that sort about the plaintiffs.

[29] In Milios v. Zagas, [1998] O.J. No. 812 at para. 21 the Court of Appeal required lower courts to consider all of the circumstances of the case when determining whether to enforce a settlement and, in particular:

(a) Whether an order giving effect to the settlement had been taken out or whether the parties' pre-settlement positions remained intact;

(b) Prejudice to the party promoting the settlement if it is not enforced, apart from losing the benefit of the settlement;

(c) The degree to which each party is prejudiced by an order enforcing or not enforcing the settlement; and

(d) Whether any third parties would be affected if the settlement is not enforced.

[30] The plaintiffs underscore that applying these four factors to the motion before me favours an order not to enforce the settlement. There has been no order giving effect to the settlement. The parties’ pre-settlement positions appear to remain intact. There is no evidence that the TTC would suffer prejudice apart from losing the benefit of the settlement. There is no evidence that either party would suffer prejudice from an order enforcing or declining to enforce the settlement. No third parties are affected if the settlement is not enforced.

[31] In Milios, however, the Court of Appeal declined to enforce the settlement because there was uncontradicted evidence that the plaintiff was fundamentally mistaken about the settlement terms that he had agreed to. Evidence of the mistaken belief and how it came about was set out in considerable detail.

[32] In the case before me there is no evidence to explain how the plaintiffs came to the “understanding and position” that the settlement amount excluded HST.

[33] The email exchanges between counsel are clear: the settlement amount included HST. If a party seeks to avoid a clear settlement of this sort, it is incumbent on them to explain with, why the settlement should not be enforced. Srebot requires “compelling circumstances”. Compelling circumstances require evidence. A bald statement that a party has the “understanding and position” that the settlement differs from the plain words of the agreement should not suffice.

[34] There may be many good reasons for declining to enforce: the client may have genuinely misunderstood; the client may have been under duress; the lawyer who agreed to the settlement may have exceeded his or her authority. [^1] There are no doubt more reasons than these.

[35] On the record before me I cannot determine whether the plaintiffs’ current position on the settlement came about because of compelling circumstances that would lead to an injustice or whether the plaintiffs simply had a change of mind after initially agreeing to the settlement. The phenomenon of buyer’s remorse is well known; that of settler’s remorse is no different.

[36] Courts have a justified policy of encouraging settlement by enforcing settlement agreements: Olivieri v. Sherman, 2007 ONCA 491, [2007] O.J. No. 2598 (C. A.) at para. 50.

[37] Failing to require detailed evidence from a party seeking to avoid a settlement agreement creates a dangerous precedent. It would allow everyone with settler’s remorse to avoid a deal they freely agreed to. Moreover, it would allow a party to resile from a settlement after it has been agreed to, allow the resiling party to propose a new settlement more favourable to itself and potentially keep repeating the process until the opposing party refuses to move any further. That would be inconsistent with the policy of encouraging settlement and inconsistent with the policy of enforcing bargains.

Disposition

[38] For the reasons set out above I grant the defendant’s motion, order that the terms of the settlement agreement be enforced and dismiss the action including claims and counterclaims without costs.

[39] The parties have agreed that the successful party should have its costs fixed at $12,000 inclusive of HST and disbursements. The plaintiffs shall therefore pay the defendant sum of $12,000 within 30 days of the release of these reasons.

Koehnen J. Date: October 11, 2018

[^1]: Although as a general rule parties are entitled to rely on the authority of counsel: Eouanzoui et al. v. Lycée Française de Toronto et al., 2014 ONSC 7508 at para. 10-12.