COURT FILE NO.: CV-19-00631170-0000

DATE: 2021-02-12

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

IDEA NOTION DEVELOPMENT INC. Plaintiff

– and –

CTO BOOST INC., GURMINDER KANDOLA and GURSHARNJIT KANDOLA Defendants

Counsel: Tony N. Nguyen and Aaron H. Boghossian for the Plaintiff James R. Smith for the Defendants

HEARD: January 14, 2021

Papageorgiou J.

[1] This is a motion brought by the plaintiff, Idea Notion Development Inc. (“Idea Notion”), to enforce the terms of a settlement allegedly reached by Idea Notion and the defendant CTO Boost Inc. (“CTO”) with respect to the payment of outstanding invoices.

Background

[2] CTO retained Idea Notion as a subcontractor to provide software development services (the “Work”) in respect of four projects which CTO had been retained to do by third parties including Longos Fruit Markets Inc. (“Longos”), Royal Bank of Canada (“RBC”) and Consumer 360.

[3] Idea Notion began the Work on or around August 8, 2018 and completed it in or around June 7, 2019.

[4] As of June 7, 2019, Idea Notion rendered five invoices for the Work (dated March 7, 2019; March 14, 2019; March 17, 2019; May 15, 2019; and June 6, 2019) (the “Invoices”). The Invoices totaled $218,948.80.

[5] There is no evidence that CTO requested any further information, disputed the Invoices when they were rendered, or had concerns about the Work.

[6] CTO sent Idea Notion cheques for partial payment of these invoices. However, the majority of these cheques were returned because there were insufficient funds. The evidence on the quantum of cheques written by CTO in partial payment was unclear, but there is an email in the materials in which Idea Notion advised CTO that it attempted to deposit cheques in the amount of $35,000 and $57,675.20, but the bank would not accept them. It appears from the correspondence that the only amount which cleared from the cheques was $18,893.60, leaving a balance of $200,055.20.

[7] Idea Notion retained Aaron H. Boghossian of Nguyen Law (“Idea Notion’s Counsel”) to represent it in pursuing its claim against CTO.

[8] CTO retained Mr. James Smith of RZCD Law Firm to act for it (“CTO’s Counsel”). Mr. Gurminder Kandola, (“Mr. Kandola”), one of the principals of CTO, provided instructions to CTO’s counsel.

[9] Thereafter, the parties engaged in negotiations over a period of four months through their counsel, ultimately reaching an agreement on October 22, 2019 as a result of an offer made by CTO on October 17, 2019 (the “October 17, 2019 Offer”), which was accepted on October 22, 2019.

Privileged documents

[10] CTO has taken the position that all settlement communications prior to the October 17, 2019 Offer are privileged and should not be considered by this Court.

[11] In my view such documents are not privileged. In Union Carbide Canada Inc. v. Bombardier Inc., 2014 SCC 35, [2014] 1 S.C.R. 800, at para. 35, the Court stated:

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.

[12] As will be seen, the communications prior to October 17, 2019 are part of the negotiations which led to the ultimate settlement alleged by Idea Notion and are necessary to consider the existence and scope of the alleged settlement. Accordingly, they are not privileged.

[13] As will become apparent, the reason why CTO does not want these prior communications considered is that they contain admissions by CTO that undermine its asserted defence to the enforcement of the settlement. These communications confirm that prior to making the October 17, 2019 Offer, CTO had received and reviewed the Invoices, and had also expressed concerns about the total amount billed in these Invoices. Notwithstanding these concerns, CTO wished to proceed with a settlement in any event.

[14] I note, that even if I had not taken into account these documents over which privilege is claimed, I would have arrived at the same conclusion in this matter because of the breadth of the evidence supporting Idea Notion’s position.

The July 25, 2019 Offer

[15] In an email dated July 25, 2019, CTO made an offer to settle on the basis of 75% of outstanding invoices, or $160,000.

[16] The email advised that CTO was experiencing financial difficulties and offered to settle at 75% of the claimed amount only due to CTO’s expressed concerns about invoiced amount.

[17] Idea Notion did not accept this offer and negotiations continued.

The August 1, 2019 Offer

[18] On August 1, 2019, CTO made a further offer to settle in the amount of $200,000 payable by way of a $30,000 immediate payment and 36 monthly payments of $4,722.22. Idea Notion was agreeable to the total amount but not the timeline for payments and advised CTO of this.

The October 17, 2019 Offer

[19] On October 17, 2019, CTO made a further offer to settle, on the following basis:

a. Immediate payment of $85,000;

b. Payment of $115,000 over 12 monthly installments; and

c. Idea Notion to issue a claim and CTO to provide a Consent to Judgment for any amounts not paid in this settlement.

The Acceptance

[20] In an email dated October 22, 2019, Idea Notion’s Counsel accepted the October 17, 2019 Offer and advised that he would begin drafting settlement documents (the “October 22, 2019 Settlement”).

[21] On October 25, 2019, Idea Notion’s Counsel provided CTO with draft Minutes of Settlement and a Consent to Judgment for review and execution, and requested that the executed documents and payments be delivered the following week.

[22] On October 29, 2019, CTO’s Counsel advised that he would review the Minutes of Settlement the next day. There was no indication that CTO would not proceed with the Settlement.

[23] Idea Notion did not receive a subsequent response and followed up by email.

[24] On October 31, 2019, CTO’s Counsel again advised Idea Notion’s counsel that he would be reviewing the Minutes of Settlement and getting back to him.

[25] On November 5, 2019, CTO’s Counsel telephoned Idea Notion’s Counsel and advised that CTO would not be proceeding with the settlement on the basis that the Invoices were fraudulent and inflated. During that call, CTO’s Counsel attempted to re-negotiate the settlement. Apparently, CTO’s Counsel followed up with an email on the same date but it was sent to the wrong email address and not received by Idea Notion’s Counsel.

[26] In a letter dated November 7, 2019, Idea Notion’s Counsel wrote advising of its position that the settlement was final and binding and that CTO’s conduct in engaging in protracted negotiations and ultimately resiling from the Settlement had been prejudicial to Idea Notion:

As you are aware, our client has been prepared to file the claim and bring the motion for injunctive relief for over 4 months now. Despite this, your client has repeatedly requested that our client delay any formal court proceedings to allow your client the opportunity to make additional offers to settle in good faith.

Contrary to the settlement between the parties, you advised in our telephone discussion that your client is now disavowing the agreement and is attempting to renegotiate. Both my client and I consider this highly inappropriate and done in bad faith.

[27] On November 15, 2019, Idea Notion issued a claim in respect of the original debt, which was then amended on June 5, 2020 to include a claim for enforcement of the October 22, 2019 Settlement.

Analysis

What is the test on a summary judgment motion?

[28] Where a settlement is reached outside the scope of r. 49 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), it may be enforced by a motion for judgment pursuant to r. 20. Rule 49 only applies to settlements achieved after proceedings are commenced: Perrin v. Cara Operations Ltd., [2004] O.J. No. 1582 (Ont. S.C.), at para. 1 (“Perrin”); Chan v. Lam, 2002 CanLII 44912 (ON CA), [2002] O.J. 1096 (Ont. C.A.), at para. 23, leave to appeal dismissed, [2002] S.C.C.A. No. 245 (“Chan”).

[29] In accordance with r. 20.04(2), the Court shall grant summary judgment if:

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or

(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.

[30] In determining whether there is a genuine issue requiring a trial, the Court shall consider the evidence submitted by the parties. A judge may exercise any of the following powers under r. 20.04(2.1): (1) weighing the evidence; (2) evaluating the credibility of a deponent; and (3) drawing any reasonable inference from the evidence.

[31] The Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49 (“Hryniak”), succinctly explained when there will be no genuine issue for trial:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process: (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[32] In order to defeat a motion for summary judgment, the responding party must put forward some evidence to show that there is a genuine issue requiring a trial. A responding party on a summary judgment motion cannot rest solely on allegations in a pleading. Each side must “put their best foot forward” with respect to the existence or non-existence of material issues to be tried: Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753, at para. 9.

[33] Furthermore, “the motion judge is entitled to presume that the evidentiary record is complete and there will be nothing further if the issue were to go to trial”: Tim Ludwig Professional Corporation v. BDO Canada LLP, 2017 ONCA 292, 137 O.R. (3d) 570, at para. 54. Parties must present sufficiently precise evidence to show there is a genuine issue for trial: “A summary judgment motion cannot be defeated by vague references as to what may be adduced if the matter is allowed to proceed to trial”: Diao v. Zhao, 2017 ONSC 5511, at para. 18.

[34] I have determined that there is no genuine issue requiring a trial based on the evidence filed on the motion. I have a full appreciation of the evidence and I have determined that there is sufficient evidence to fairly and justly adjudicate the issues in dispute, and a summary judgment motion is an affordable and proportionate procedure.

General Principles on Enforcement of Settlement Agreements.

[35] A settlement agreement is like any other contract. The parties’ expression of agreement must demonstrate a mutual intention to create a legally binding relationship. If there is agreement on all essential terms, the settlement is binding. The test as to whether the parties have reached agreement on all essential terms is objective. No consideration should be given to the subjective intentions of the parties: Olivieri v. Sherman, 2007 ONCA 491, 284 D.L.R. (4th) 516, at paras. 41-44 (“Olivieri”); Chan, at para. 19; Bogue v. Bogue, 1999 CanLII 3284 (ON CA), [1999] 46 O.R. (3d) 1 (Ont. C.A.) (“Bogue”); Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., [1995] O.J. No. 721 (Ct. J. (Gen. Div.), aff’d [1995] O.J. No. 3773 (Ont. C.A.) (“Cellular”).

[36] A determination as to whether a concluded agreement exists does not depend upon an inquiry into the actual state of mind of one of the parties or on the parol evidence of any party’s subjective intention. Where the agreement is in writing, it is to be measured by an objective reading of the language chosen by the parties to reflect their agreement. If the words or acts, judged by a reasonable standard, manifest an intention to agree in regard to the manner in question, then an agreement is established: Olivieri, at para. 44.

[37] Further, the policy of the court is to encourage settlement of litigation, and therefore, the courts should refrain from an overly restrictive consideration of the essential terms of the agreement: Olivieri, at para 50. In Atkins v. Holubeshen, [1984] O.J. No. 309 (H. Ct. J.) (“Atkins”), at para. 13 stated that “solicitors and counsel must be entitled to rely upon the ostensible authority that each has in order to conclude litigation by a final compromise of the action.”

[38] CTO’s Counsel relies upon various allegations of fraud and duress as well as the Court’s discretion to refuse to enforce settlements summarily. He referred to the following comments made by Justices Perell and Morden The Law of Civil Procedure in Ontario, 4th ed. (Markham, Ont.: LexisNexis Canada, 2020) as the controlling principals:

61.29. The court has the discretion to refuse to enforce the settlement agreement summarily. In exercising its discretion, the court may have regard to such factors as the presence of mistake by a lawyer about his or her instructions to accept the settlement, the prejudice to the parties of enforcing or not enforcing the settlement; and the effect on third parties. The discretionary decision not to enforce a concluded settlement, especially where the settlement has been partially or fully performed, is reserved for those rare cases where compelling circumstances establish the enforcement is not in the interests of justice. The court may set aside a settlement if the court finds that there were material misrepresentations. Circumstances where the court might exercise its discretion not to enforce a settlement include: (a) where it considers the settlement to be unreasonable; (b) where the settlement would result in an injustice; or (c) where there is another good reason not to enforce the settlement.

61.30. The court, however, does not have jurisdiction to refuse to enforce a settlement based on a party’s misapprehension of the facts underlying the settlement. If a party has simply changed his mind about the merits of the settlement, the court will not exercise its discretion to refuse to enforce a settlement.

[39] In these reasons, first I evaluate Idea Notion’s claim that a valid settlement agreement was entered into, and then I assess the reasons why CTO says the settlement is invalid or should nevertheless not be enforced in the exercise of the Court’s discretion.

Preliminary objection to enforcement

[40] As a preliminary objection, CTO says that Idea Notion may not sue to enforce any settlement because its initial Statement of Claim only pleaded to the underlying merits of the claim as opposed to the Settlement. I disagree.

[41] The case referred to by CTO was a situation where a plaintiff had obtained default judgment on the underlying claim. The defendant brought a motion to set aside the default judgment, and in response, the plaintiff brought a cross-motion to enforce a previous settlement. The Court of Appeal held that by electing to pursue its rights under the action, the plaintiff was precluded from pursuing its rights under the settlement agreement: Charter Building Co. v. 1540957 Ontario Inc., 2011 ONCA 487, 107 O.R. (3d) 133 (“Charter”). The Court of Appeal relied on the doctrine of election, namely that “a person is precluded from exercising a right that is inconsistent with another right if he has consciously and unequivocally exercised the latter”: Charter, at para. 15.

[42] The Court of Appeal in Charter, at para. 26, emphasized that it was the proceeding to default judgment which constituted the unequivocal election: “Here, in choosing to proceed with the action through obtaining default judgment, the respondent unequivocally treated the settlement as at an end.”

[43] No substantive steps were taken by Idea Notion in respect of the underlying claim other than the initial Statement of Claim, and it certainly did not obtain judgment. Idea Notion was entitled to amend its pleading as of right since pleadings were not closed, and it did so, adding the claim for breach of the Settlement. In my view, the mere commencement of a proceeding which Idea Notion was entitled to amend as of right did not objectively constitute an unequivocal election.

Did CTO’s Counsel have authority to make the offers at issue?

[44] There is no issue as CTO Counsel’s authority as Mr. Kandola admits that he intended to settle the dispute and gave CTO Counsel authority to make the offers which led to the settlement.

Was there offer and acceptance?

[45] CTO’s Counsel made a clear offer to settle on October 17, 2019, which was accepted by Idea Notion’s Counsel on October 22, 2019.

Did the alleged settlement set out all the essential terms?

[46] CTO argues that the draft Minutes of Settlement contained a term not referenced in the October 17, 2019 Offer, namely, that Idea Notion reserved its rights to continue an action against Mr. and Mrs. Kandola. CTO Counsel says that was not part of the deal.

[47] This issue does not defeat the settlement, which is not based on the unexecuted Minutes of Settlement but rather on the accepted October 17, 2019 Offer: Lewicki Estate v. Nytschyk Estate, 2016 ONSC 7459, at para. 37.

[48] Reviewing all of the communications, it is clear that the offers to settle were made on behalf of CTO, not on behalf of the personal defendants, and did not address in any respect the potential liability of the personal defendants for claims of breach of trust. CTO’s Counsel was aware that Idea Notion was both claiming recovery from CTO as well as alleging a breach of trust by the personal defendants (see letter of June 27, 2019 from Idea Notion’s Counsel). CTO’s Counsel made all the offers in writing and nowhere in them does it indicate that the proposed settlements involved a release of the personal defendants. Accordingly, even if the term Mr. Kandola objected to had not been contained in the Minutes of Settlement, Idea Notion could still have brought its breach of trust claim against the personal defendants if CTO failed to comply with the settlement.

[49] Frankly, CTO’s position in this regard is inconsistent with CTO’s Counsel’s statements (which CTO sought to exclude as privileged) in the following two emails which form part of the chain of negotiations:

July 25, 2019

The attached proposal is the most expeditious manner for your client to get paid, and if there is a breach, your client will get judgment and if you think there should be personal liability, then you have the right of action in that regard.

August 1, 2019

The attached proposal is the most expeditious manner for your client to get paid, and if there is a breach, your client will get judgment and if you think there should be personal liability, then you have the right of action in that regard. There is absolutely no prejudice to your clients to accept this proposal for repayment of immediate money as above..

[50] In my view, the references to the proposed Minutes of Settlement, which had not yet been drafted, represented a mere expression as to the manner in which the settlement, already agreed to, would be formalized and, as such, their absence is not a bar to the enforcement of the settlement. In Cellular, the plaintiff sought judgment against the defendant in terms of an accepted offer to settle. In that case, the settlement proposals were expressly made subject to finalizing mutually acceptable settlement documentation. Despite this, Chapnik J. held that the parties had concluded an agreement on all essential terms and the reference to documentation represented a mere expression as to the manner in which the settlement, already agreed to, would be formalize: Cellular, at paras. 18-22. See also Bogue, at paras. 12-15.

[51] The negotiations took place over a period of four months. The accepted offer set out all essential terms including the quantum: that $85,000 would be paid upfront and that the balance would be paid over 12 monthly installments.

[52] I am satisfied that the accepted offer contained all essential terms and that CTO’s and Idea Notion’s words and acts, judged by a reasonable standard, manifest an intention to agree in accordance with the accepted October 17, 2019 Offer.

Was the October 17, 2019 Offer conditional?

[53] Mr. Kandola admitted when cross-examined that he reviewed the Invoices and gave instructions to CTO’s Counsel to engage in settlement discussions. However, Mr. Kandola gave evidence that he thought the October 17, 2019 Offer was conditional on the Invoices being accurate and that he would still have the opportunity to review the Invoices after settlement. When cross-examined he stated:

My understanding was if—if the assumption is that these invoices are real, they’re truth—trust worthy, and these numbers are actually making sense

[54] There is nothing in the communications which objectively supports this statement.

[55] From the beginning, CTO expressed very particular concerns about the Invoices but indicated its desire to proceed with settlement negotiations in any event. The July 25, 2019 Offer (which CTO sought to exclude as privileged) stated:

WITHOUT PREJUDICE

Your clients invoices add up to about $190,000 plus HST on the fact, however, we do note that in respect of the RBC, BIG and the Longos invoices there are multiple 58 day attendances and man hours that may be duplicated. There was also an unexpectedly large amount of time and billings for the work on the CTO Boost website. This is not meant to insult your client, rather, our client wants to make this fair proposal so that all issues are resolved now and you have our clients agreement to pay the $160,000 without dispute. [Emphasis added.]

[56] Further, after CTO made the October 17, 2019 Offer, Idea Notion’s Counsel made inquiries regarding whether it could also be paid its legal costs as part of the October 17, 2019 Offer.

[57] In an email dated October 21, 2019, CTO’s Counsel clarified that costs would not be paid as part of the October 17, 2019 offer because CTO had legitimate disputes in respect of the Invoices:

…It is making a full payment of $200,000, there would be legitimate disputes on the computation of the work/hours, so getting 100 % of the Claim amount means that legals are included as part of a settlement. I will get back to you tomorrow, but before I sent the below offer I specifically asked him about legals on top of the $200 and the client said no… [Emphasis added.]

[58] Furthermore, when cross-examined, Mr. Kandola, admitted that he reviewed the Invoices as early as July 9, 2019 before any offers were made. He also gave evidence that he advised CTO’s Counsel that despite concerns he had about alleged discrepancies in the Invoices, he wanted to engage in negotiations and make offers to settle with the hopes of resolving the dispute.

[59] Clearly, the settlement was not conditional on anything related to the Invoices or subject to some further review and confirmation of the Invoices.

Was the October 17, 2019 Offer withdrawn?

[60] There is some dispute about whether Idea Notion’s Counsel received a November 5, 2019 letter from CTO’s Counsel withdrawing the offer which had been sent to the wrong email address. In any event, the October 17, 2019 Offer was accepted on October 22, 2019 and could not be withdrawn thereafter.

Was the settlement induced by duress?

[61] In his affidavit, Mr. Kandola deposes that the settlement was induced by duress as a result of a letter from Idea Notion’s Counsel dated June 27, 2019. In the letter, Idea Notion advised that until full payment, Idea Notion would continue to hold a proprietary interest in the Work and that any use, duplication or transfer would be a violation of Idea Notion’s proprietary interest. This letter advised of Idea Notion’s intention to write cease and desist letters to Longos and RBC notifying them that their use of the Work would constitute a violation of Idea Notion’s proprietary rights. The letter stated: “Our client dedicated significant time, effort, expertise and expense in completing the Work, and you will be liable for any damages arising from the wrongful use of the Work.”

[62] Mr. Kandola says that one of the reasons CTO engaged in negotiations with Idea Notion was its fear that Idea Notion would send letters to CTO’s clients. He says that this would have been devastating to CTO’s business relationship with its clients.

[63] I reject this argument.

[64] First, Idea Notion was an unpaid supplier of Work which ultimately ended up in Longos’ and Royal Bank’s hands. I see nothing wrong with it asserting its proprietary interest and taking legal steps to protect this interest. Asserting one’s legal rights cannot be considered duress.

[65] In any event, Idea Notion agreed to not send any letters because CTO had expressed its interest in negotiating a settlement. As set out below, CTO ultimately engaged Mr. Kandola’s brother to conduct a review/audit of the invoices on October 31, 2019 which he concluded by November 5, 2019—thus taking only five days.

Was the settlement induced by fraudulent misrepresentation?

[66] Where a party to a contract has been induced to enter into a contract by fraud, that party may terminate the contract: Guarantee Co. of North America v. Gordon Capital Corp., 1999 CanLII 664 (SCC), [1999] 3 S.C.R. 423.

[67] The elements of fraud are:

a. A false representation;

b. Some level of knowledge of the falsehood of the representation, whether through knowledge or recklessness;

c. The false representation caused the party to act;

d. The plaintiff suffered a loss.

See Hryniak, at para. 86

[68] CTO relies primarily on an audit conducted by Mr. Kandola’s brother, Manny Kandola, between October 31, 2019 and November 5, 2019 which he says shows that the actual amount owed pursuant to the Invoices is $64,026. If this were true, the settlement amount vastly exceeds the value of the Work.

[69] However, there are significant evidentiary concerns with this evidence.

[70] Mr. Kandola’s brother is clearly not independent. He says that says that his brother has managed projects similar to the RBC and Longos engagements but otherwise does not provide any information about him. His brother has not been qualified as an expert, has not provided an affidavit or C.V. in this proceeding and there is no description of what investigations he did or what materials he reviewed to arrive at his conclusion. Mr. Kandola has simply said his brother did some unspecified analysis and then summarized the results in his affidavit by attaching a spreadsheet prepared by his brother.

[71] One of the underlying bases for Mr. Kandola’s brother’s conclusion is not presented as sworn evidence. It is set out in a letter from CTO’s Counsel dated November 5, 2019 which is appended to Mr. Kandola’s affidavit. This is essentially third hand hearsay.

[72] Even taking the information at its highest, the November 5, 2019 letter explains that CTO has an online system that is used to plan, track and manage all software development projects called “Jira”. In the letter, CTO’s Counsel states that it was the express practice of parties that all data work completed was to go through Jira, and that for hours to be approved and payable, the work hours had to be recorded in the online system. In this case, he says that the hours recorded in Jira do not correspond with the Invoices.

[73] Even if the hours were not recorded in Jira, it is not evidence that these hours were not worked. It is evidence that they were not recorded. There is insufficient relevant admissible evidence about the way Jira operated, no evidence presented that CTO trained Idea Notion on how to properly use Jira and no evidence was referred to me supporting CTO’s position that workers were told that hours not recorded on Jira would not be paid. I could not find any references to Jira in the limited contractual communications before me which related to the ongoing work and none were referred to me.

[74] Another basis for Mr. Kandola’s brother’s conclusion is his assertion that Idea Notion had entered into fixed priced contracts that require approval for anything outside scope. At its highest this is evidence of a very common contract dispute where fixed price contracts are agreed to and the contractor says they did more and bills for it. Mr. Kandola acknowledged that in his industry “a lot of things can happen” and there can be “additions” as the work progresses. CTO has not provided any admissible evidence that Mr. Kandola’s brother even looked at all relevant contract documents or communications which occurred throughout these projects. The November 5, 2019 letter appears to append only selective and early documents in respect of the projects.

[75] Furthermore, there is contemporaneous evidence which shows that CTO reviewed and approved the Invoices when they were received and even issued cheques.

[76] When Mr. Kandola was cross-examined, he indicated that in general, all invoices received by CTO were deposited into a mailbox that his wife Mrs. Kandola could access. At the relevant time, she was an officer, director and shareholder of CTO and it was her job to align the invoices with the work the contractor did. Mrs. Kandola conducted a daily review of Jira and work completed, to which he was not privy.

[77] When Mr. Kandola was cross-examined, he also indicated that CTO’s standard practice was that CTO would not issue payment cheques until Mrs. Kandola had completed her review of invoices and cross-referenced them to Jira.

[78] Ms. Kandola approved the Invoices, promised to pay them and even issued cheques. On June 7, 2019 at 2:22 p.m., Mr. Xu, a Director of Idea Notion, wrote to both Mr. and Mrs. Kandola, enclosing all the invoices totaling $218,948.80. Mr. Xu’s email stated: “Please reply to acknowledge the below invoices owing from CTO Boost to Idea Notion Development Inc., and the commitment of the payment schedule that follows.”

[79] On the same date, at 2:23 p.m., Mrs. Kandola wrote: “Confirmed, Thank you.”

[80] It took Mrs. Kandola only one minute to acknowledge the Invoices and commit to pay. At no time did she raise any issues about the invoiced amounts, which I would have expected if the invoiced amount was so out of range of what she expected.

[81] To address this email, Mr. Kandola takes the contradictory position that Mrs. Kandola “would not be knowledgeable with respect to actual business arrangements or project expectations with companies like the Plaintiff, [Idea Notion]”, although he does not say why. He adds that Mrs. Kandola did not have authority to approve the Invoices but provides no explanation as to why.

[82] He also points out that in an email sent by Idea Notion to Mr. Kandola dated June 19, 2019, Mrs. Kandola had previously asked Idea Notion to exclude Mr. Kandola from email communications and that I should draw some inference from this against Idea Notion. First, Mrs. Kandola has not provided any sworn evidence in this proceeding and the mere fact that she previously asked Idea Notion to exclude Mr. Kandola from communications, in circumstances where there was an ongoing marital dispute and proceedings to prevent him from communicating with her, does not lead me to any inference against Idea Notion. Indeed, it was Idea Notion that specifically told Mr. Kandola that Mrs. Kandola had requested as much.

[83] The most significant problem with CTO’s argument, however, is that even if the Invoices contained errors or “misrepresentations”, fraudulent or otherwise, Mr. Kandola admits that CTO believed that there were discrepancies, had access to all the information needed to audit them, and then decided to proceed with settlement negotiations in any event. CTO cannot show that any alleged misrepresentations in the Invoices caused it to enter into the settlement. It did so with its eyes wide open as to the possibility of discrepancies for its own business reasons.

The Court’s discretion

[84] CTO argues that the Court should exercise its discretion to refuse to enforce the settlement summarily because it is unreasonable, would result in an injustice or for some other good reason: The Law of Civil Procedure in Ontario, pp. 600-601; see also Milios v. Zagas (1998), 1998 CanLII 7119 (ON CA), 38 O.R. (3d) 218 (Ont. C.A.) (“Milios”); and Srebot v. Srebot, 2013 ONCA 84, at para. 6 (“Srebot”).

[85] With respect to the reasonableness or alleged injustice of the settlement, see my discussion above regarding Mr. Kandola’s proffered evidence that what CTO actually owes must be less as a result of his brother’s analysis. As discussed above, this evidence is problematic and not persuasive.

[86] There was also a great deal of emphasis on Mr. Kandola’s marital situation and the stress he was under as an explanation for why he failed to conduct any analysis of the Invoices before he entered into the settlement.

[87] When cross-examined, Mr. Kandola took the position that he could not personally review the work recorded in Jira because it is written “in code”, and that that he was unable to communicate with his wife about the Invoices because he was subject to a court order. CTO was in the business of providing high-level software development services for clients like RBC and Longos. Mr. Kandola has a Master of Business Administration which is focused in computer science and he has been a Chief Technology Officer for a number of companies. It is simply not credible that he could not have figured out how to conduct this analysis or find someone who could have done so in a more timely way.

[88] The fact that CTO could have done this review at any time, without Mrs. Kandola, is proven by the fact that after the settlement was reached, Mr. Kandola asked his brother to review and assess the Invoices.

[89] Many of the cases referred to by CTO where courts exercised their discretion to not enforce a settlement are distinguishable. Many involved miscommunications between counsel and her client and/or a misunderstanding of what was agreed to: see Milios and Srebot. There is no evidence that CTO’s Counsel misunderstood his instructions or acted without authority. Mr. Kandola reviewed the offers made by CTO’s Counsel, understood what they said and admitted that he instructed CTO’s Counsel to make them.

[90] There is no evidence that Mr. Kandola was suffering from any mental illness and throughout he was represented by competent counsel. Stress occasioned by his marital circumstances, while unfortunate, is not a legal basis to set aside a valid settlement agreement in these circumstances. In Srebot, the Court of Appeal did take into account the fact that the defendant was stressed and emotional at the time of mediation, but that was not the only factor. That case was settled quickly through a “truncated and brief nature of the mediation” and the Court of Appeal also found that the defendant did not understand what was agreed to: Srebot, at para. 4. These are not the facts here.

[91] Mr. Kandola also makes reference to learning in August 2020 that a former employee of CTO named Keith Lu was improperly giving information to Idea Notion about their project costs with Longos and RBC which caused Idea Notion to overcharge. This is hearsay and Mr. Kandola provides no information on how he learned this that could satisfy the Court that it is credible.

[92] CTO also argues that it will be more prejudiced by enforcement of the settlement than Idea Notion would be by a refusal to summarily enforce it. Given that CTO has not raised any genuine issue regarding the validity of the settlement, the only prejudice CTO will suffer is that it will have to comply with an enforceable agreement. This is not the kind of prejudice that the courts are referring to. On the other hand, Idea Notion altered its position in good faith when it engaged in a four-month negotiation. It will lose the benefit of the settlement and have the cost and expense of litigation. No third parties will be affected by the settlement: Perrin, at para. 23. It should not be delayed in enforcement any longer based on spurious allegations.

[93] As directed by the Court of Appeal in Perrin at para. 6:

The discretionary decision not to enforce a concluded settlement, especially where the settlement has been fully or partially performed, should be reserved for those rare cases where compelling circumstances establish that the enforcement is not in the interests of justice.

[94] CTO is seeking significant relief from this court and it has failed to demonstrate any compelling circumstances which establish that the enforcement is not in the interests of justice.

[95] There is a strong policy reason to hold parties to their agreements. As noted by Himel J. in Sentry Metric Inc. v. Ernewein, 2013 ONSC 959, at para. 19:

The principle of finality requires that settlements entered into with the assistance of counsel should be upheld except in clearest of cases. Good public policy dictates that settlements be encouraged. It would be inconsistent with that policy to refuse to enforce a settlement agreement unless there is good reason for doing so.

See also, Cellular, at para. 44.

[96] In my view, CTO has not raised a genuine issue requiring a trial that the settlement was induced by fraud, or duress, that it was unreasonable, would result in injustice or that it should be set aside for any other good reason. CTO has not raised any genuine issue requiring a trial as to any of the elements of contractual formation.

[97] I am satisfied that Idea Notion has established that a valid settlement was entered into, that it was repudiated by CTO and that it is entitled to damages to put it into the same position as if the contract had been performed: namely, the total amount promised to be paid in the amount of $200,000.

[98] I would ask the parties to provide submissions no longer than four pages on the issue of interest and costs as follows:

a. Idea Notion within ten days of the date of these reasons;

b. CTO within ten days of receipt of Idea Notion’s submission.

Papageorgiou J.

Released: February 12, 2021

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

IDEA NOTION DEVELOPMENT INC. Plaintiff

– and –

CTO BOOST INC., GURMINDER KANDOLA and GURSHARNJIT KANDOLA Defendants

REASONS FOR JUDGMENT

Papageorgiou J.

Released: February 12, 2021