Court File and Parties

Court File No.: CV-16-547346 and CV-16-547346-00A1 Date: 2020-07-20 Superior Court of Justice - Ontario

Re: Real One Realty Inc. and Jenee Liu, Plaintiffs And: Jing Liu, Yu De Xing and Lauren Zhan, Defendants And: Shu Feng Jiang, Third Party

Before: Pinto J.

Counsel: Zoltan M. Kaslik and Gayatri Nava, for the Plaintiffs and Third Party Dina Awad, for the Defendants Jing Liu and Yu De Xing

Heard: July 15, 2020

Endorsement

[1] Jing Liu and Yu De Xing (the "Xing defendants"), bring a motion under Rule 49.09(a) of the Rules of Civil Procedure to enforce the Third Party's Offer to Settle dated July 4, 2017 which was accepted by the Xing defendants on February 15, 2020.

[2] The main action involves a dispute over unpaid real estate commissions from a residential sale in Toronto. The plaintiff Jenee Liu is a real estate agent employed by the co-plaintiff, a real estate brokerage. The Xing defendants were the vendors of the property who sold it through a private sale, rather than through the plaintiffs. The plaintiffs sue for unpaid commissions under the Listing Agreement.

[3] The co-defendant Lauren Zhan lived in the same neighbourhood as the property and served as a "go between" from the Xing defendants to the successful purchaser of the property. The Third Party introduced the defendant Jing Liu to the plaintiff Jenee Liu.

[4] The statement of claim was issued on February 24, 2016. The defence was filed and the Third Party claim commenced on April 12, 2016. On June 17, 2016, Lauren Zhan was added as a co-defendant.

[5] The Third Party delivered a Rule 49 Offer to Settle dated July 4, 2017. If accepted, the Xing defendants would pay the Third Party $7,500 for costs, mutual releases would be exchanged, and the Third Party would be removed from the Action. The Offer to Settle was to expire 5 minutes after the commencement of trial unless withdrawn in writing.

[6] The Xing defendants accepted the Third Party's Offer to Settle through counsel on February 15, 2020.

[7] On February 22, counsel for the Xing defendants sent another email to the Third Party's counsel enclosing a draft Full and Final Release as well as a Consent to Dismissal Order for review. On February 26, counsel for the Xing defendants sent another email to the Third Party's counsel advising that the settlement funds were ready for pay out.

[8] On February 28, counsel for the Third Party advised the Xing defendants' counsel that the "July 2017 offer was withdrawn and rendered nugatory by virtue of the Plaintiffs and Third Party's global offer to settle made and delivered to all the Defendants on January 21, 2019 [ sic, should be 2020] and which, as you know, was more fully particularized by me in our telephone conversations during the week of January 20, 2019 [ sic, should be 2020] and my letters to you dated January 24 and 31, 2020".

[9] The January 2020 Offer to Settle came on the heels of the parties attending a pre-trial conference on January 8, 2020 with the trial set to commence on March 9, 2020, since postponed.

Analysis

[10] The issue to be decided is whether the Plaintiffs and Third Party's January 2020 global offer impliedly withdrew the Third Party's July 2017 Offer to Settle, rendering the latter Offer incapable of acceptance.

Rule 49.04(1) of the Rules of Civil Procedure states:

An offer to settle may be withdrawn at any time before it is accepted by serving written notice of withdrawal on the party to whom the offer was made.

[11] Here, the Third Party's 2017 Offer to Settle was never withdrawn by the Third Party serving a written notice of withdrawal. However, the plaintiffs and Third Party submit that:

(a) The January 2020 Offer was a lower offer to settle than the July 2017 Offer from the Third Party therefore the earlier offer was impliedly withdrawn: Diefenbacher v. Young, 1995 ONCA 2481; Mills v. Raymond, 1997 ONSC 16258.

(b) The court should exercise its discretion and not enforce the July 2017 Offer to Settle since the Xing defendants are taking advantage of an inadvertent error by counsel for the plaintiffs and Third Party: Fox Estate v. Stelmaszyk, 2003 ONCA 26922. The alleged error is the omission of the words "Third Party" in the recital to the January 2020 Offer to Settle; and

(c) Since the Xing defendants alleged a conspiracy by the plaintiffs and the Third Party against them, only a global offer to settle accepted by all the parties could affect a binding settlement.

[12] With respect to the first submission, I find that the July 2017 Offer to Settle and the January 2020 Offer to Settle provided fundamentally different settlement options. Accordingly, the latter Offer did not impliedly withdraw or overtake the former.

[13] The salient points of the January 2020 Offer are as follows:

(a) The cover letter did not refer to the Third Party and stated, "Enclosed please find the Plaintiff's formal Offer to Settle dated January 21, 2020 served upon you pursuant to the Rules of Civil Procedure." (emphasis added)

(b) The Re line on the cover letter referenced the court file numbers for both the main and third party claims.

(c) The recital in the formal Offer to Settle also did not refer to the Third Party and stated, "The Plaintiffs, Real One Realty Inc. and Jenee Liu (the "Plaintiffs") offer to settle this herein action against the Defendants…on the following terms." (emphasis added)

(d) The Offer required the defendants to pay the plaintiffs the amount of $200,000 plus HST all-inclusive.

(e) The Third Party is referenced but only in respect of consenting to an order for the release of settlement funds from trust, the execution and delivery of a mutual full and final release, and consenting to dismissing the action.

[14] While the January 2020 Offer to Settle, if accepted, would require the defendants to pay nothing to the Third Party, the defendants would still have to pay $226,000 to the plaintiffs to have the entire action dismissed, and no trial would occur. This is in contrast to the July 2017 Offer to Settle which, if accepted, would require the Xing defendants to pay $7,500 to the Third Party only, the Third Party claim would end, and the claim by the plaintiffs against the defendants would proceed to trial.

[15] While it is true that the January 2020 Offer is lower than the July 2017 Offer concerning the payment to the Third Party, a much larger amount would still have to be paid by the defendants to get out of the action altogether. This is distinguishable from the cases relied upon by the responding party where there were two consecutive offers to settle from the plaintiff, and because the second one was lower than the first, the second impliedly withdrew the first offer.

[16] Counsel for the plaintiffs and Third Party claimed that, by January 2020, he had simply forgot about the July 2017 Offer to Settle.

[17] As I find the two Offers to Settle to be distinct, I cannot say that the omission of the Third Party from critical parts of the January 2020 Offer to Settle was through mere forgetfulness or inadvertence, or that if it was, justice demands that I exercise my discretion and not enforce the July 2017 Offer. I note that, in the January 2020 Offer, the Third Party was not just omitted once, but three times (from the cover letter, the recital and the abbreviation); and this was compounded by the inclusion of the Third party in other areas of the January 2020 Offer. It is not as if the Third Party was forgotten entirely in the January 2020 Offer to Settle, but rather, just in certain critical areas.

[18] It is also noteworthy that almost two weeks passed, between the Xing defendants' acceptance of the July 2017 Offer on February 15, 2020 and February 28, 2020, when opposing counsel claimed for the first time that the acceptance was improper. In the interim, counsel for the Xing defendants sent two emails about the settlement. In oral argument, counsel for the plaintiffs and Third Party claimed that during this time he was analyzing the impact of the two Offers to determine which was enforceable. In my view, the time delay was significant and is a point in favour of the moving party defendants.

[19] I would also summarily dismiss the argument that, because the Xing defendants purportedly alleged a conspiracy by the plaintiffs and the Third Party against them, only the January 2020 global Offer to Settle could be accepted. If the responding party's position is correct, it would mean that the July 2017 Offer to Settle was unenforceable from the get-go, which would undermine the reason for its issuance in the first place. Also, I see no difficulty in the action as pleaded continuing despite the Third Party's absence from the proceeding. This case is distinguishable from Shortill v. Karmack Construction Ltd. (H.C.J.), 1989 ONSC 4096, a case where a settlement was considered not binding since, in the circumstances of that case, all of the parties on one side had to accept the settlement offer.

[20] In sum, I find that the parties created a legal binding agreement when the July 2017 Offer to Settle was accepted on February 15, 2020. There is no reason not to enforce that agreement. The Xing defendant's motion for enforcement of the July 2017 Offer to Settle is granted.

Costs

[21] The successful moving party provided a Costs Outline indicating actual, substantial and partial indemnity costs of $37,982.34, $34,216.10 and $22,917.40 respectively. Although the moving party initially made submissions requesting actual costs, I indicated that I was not prepared to grant such costs, therefore, I have approached the question of costs on the basis that the moving party is requesting substantial indemnity costs. Not surprisingly, the responding party disagrees.

[22] Costs on a substantial indemnity basis should only be awarded "where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties": Mars Canada Inc. v. Bemco Cash & Carry Inc., 2018 ONCA 239 at para.43, citing Young v. Young, 1993 SCC 34, [1993] 4 S.C.R. 3, at p. 134.

[23] The moving party submits that costs on the higher scale are justified because the motion was of critical importance to the overall claim said to be worth approximately $200,000 to the plaintiff, and the uncertainty as to the February 15, 2020 acceptance of the Third Party Offer led to the adjournment of the entire trial which was to commence on March 9. Also, counsel for the responding party delayed for almost two weeks before advising that his clients intended on resiling from the February 15 settlement agreement. Finally, the moving party was critical of the responding counsel's conduct on the motion: his making certain statements that purportedly amounted to “blatant, irresponsible falsehoods”; and counsel’s failure to respond within the court established timelines which prejudiced the moving party from fully responding to this motion.

[24] I do not condone the responding party’s dilatory conduct. But there is a difference between responding counsel having being shown to be wrong, as opposed to having been shown to have engaged in deliberate falsehoods. This is a case of the former, not the latter. I do not consider the overall circumstances as warranting an award of substantial indemnity costs. The appropriate scale remains partial indemnity costs.

[25] With respect to quantum, the responding party provided its Costs Outline indicating that, on a partial indemnity basis, its comparable figure was $6,522.36. Obviously, there is a huge discrepancy between the parties' figures. The moving party claims that it spent 90.6 hours on the motion, versus the responding party's 29.5 hours. Almost 50 of the moving party's hours were spent by a first year associate whose hours, in my view, seem excessive and cannot fairly be charged. However, on the responding side, I find its tally of hours unrealistically low.

[26] Costs are in my discretion. Pursuant to Rule 57.03 of the Rules of Civil Procedure, I find that costs in the amount of $18,000 are appropriate and are fixed and payable by the responding party to the moving party within 30 days of the release of my decision.

[27] I understand that the defendant Zhan is not seeking costs.

Pinto J. Date: July 20, 2020