COURT FILE NO.: CV-12-459765
DATE: 20210419
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1504641 Ontario Inc. and Faisal Malik
Plaintiffs/Moving Parties
– and –
2225902 Ontario Inc., 22259009 Ontario Inc., 228-5754 Ontario Inc., 149-2612 Ontario Inc., Azhar Hussain also known as Azher Hussain, Sajjad Sadiq, and Sobia Sadiq, Atiz Ahmed, Naseer Malik, Irfan Ahmed Memon, and Kashlaw Professional Corporation and Khalid Sheikh
Defendants/Responding Parties
Gwendolyn L. Adrian, for the Plaintiffs/Moving Parties
Ravinder Sawhney, for the Defendants/Responding Parties, 2225902 Ontario Inc., 2285754 Ontario Inc., Azhar Hussain, Sajjad Sadiq and Sobia Sadiq
HEARD: IN WRITING
VELLA, J.
REASONS FOR DECISION
[1] This is a motion for judgment arising from a breach of a settlement agreement brought by the plaintiffs, 1504641 Ontario Inc. and Faisal Malik (the moving parties) against 2225902 Ontario Inc., 2285754 Ontario Inc., Azhar Hussain also known as Azher Hussain, Sajjad Sadiq and Sobia Sadiq (the responding parties).
[2] This motion was originally to be heard orally. However, due to an administrative error, I was not provided with the responding motion materials. The parties urged me to proceed to hear the motion in writing. Given the nature of the dispute, and the uncontested material facts, I agreed this procedure was appropriate.
[3] This motion was brought under r. 49.09.
[4] While none of the parties raised this issue, it is apparent on the caselaw that r. 49.09 is not available in these circumstances where what is being asked is judgment on minutes of settlement. R. 49.09 only applies to accepted offers to settle.
[5] Rather, this motion should have been brought under r. 20.
[6] However, given that no material facts are in dispute, and full arguments respecting the issue of whether or not judgment should be granted on the basis of the minutes of settlement were made in the respective facta, there is no prejudice to my proceeding with this matter under r. 20. Indeed, the parties urge that there is a binding settlement that ought to be enforced. There is no genuine issue for trial. Accordingly, I have decided to proceed with a ruling as this process will result in a fair determination of the matter on the merits, without the need or expense of proceeding to a trial.
Background
[7] At a pretrial before Leiper J., The parties reached a settlement of this action as reflected tin minutes of settlement signed by the lawyers for the respective parties (the "Minutes of Settlement" or "Minutes").
[8] The Minutes of Settlement provided, in material part, that the responding parties pay to the plaintiffs the sum of $40,000 by way of four monthly instalments on the second of each month from March to June 2020. The Minutes also provided that the responding parties would "forthwith" provide a consent to judgment in the sum of $120,000 to be held in escrow pending payment of the four monthly instalments (by way of security).
[9] In addition, the Minutes of Settlement provided that the responding parties, together with the moving parties, would provide a consent to an order dismissing the action without costs to be held in escrow by counsel for the defendants, Kashlaw Professional Corporation and Khalid Sheikh (the "other settling defendants").
[10] Affidavits were filed on behalf of the moving parties by their solicitor, Micheal Simaan, and by Mr. Hussein on behalf of the responding parties. An objection was made by the responding parties with respect to the solicitor's affidavit as being allegedly filed to be "unethical" and in breach of the rules of professional misconduct. I reject this submission. Mr. Simaan's affidavit provided the details of the Minutes of Settlement together with communications following the settlement that transpired between himself and the lawyers for the responding parties including extensive email correspondence. There is nothing improper about the filing of Mr. Simaan's affidavit and the evidence reflected in it is admissible. Another lawyer from Mr. Simaan's law firm, Gwendolyn Adrian, appeared for the moving parties on this motion.
[11] The other settling defendants discharged their obligations under the Minutes of Settlement. However, the responding parties refused to sign the consent to judgment and the consent to a dismissal order contrary to the terms of the Minutes of Settlement. Furthermore, the responding parties, after having made the first three instalments due under the Minutes of Settlement on a timely basis, put a stop payment on the cheque reflecting the fourth instalment.
[12] As at the time of the filing of the motion materials, the responding parties have not cured any of the defaults under the Minutes of Settlement.
[13] The responding parties justify their defaults on various grounds all centered around their principal position that there was no breach of any "essential term" of the Minutes of Settlement, and their view that they were justified in altering the terms in light of the COVID-19 pandemic. In their view, the moving parties have no right to insist on enforcement of the term that provides that in the event of default, the responding parties must pay $120,000 less any installments paid. The responding parties rely on the principle of good faith in contract law and commercial "common sense".
[14] The responding parties argue that the requirement to sign a consent to a dismissal order was not an essential term of the Minutes of Settlement because ultimately, after the settlement and the defaults occurred, the other settling defendants agreed to accept a consent order from the moving parties dismissing the action as against the other settling defendants alone. However, the consent to a dismissal order was a requirement for the benefit of the other settling defendants. It was within their right to waive or modify this term in order to affect a practical solution to the refusal of the responding parties to sign a consent to a dismissal of the action. This waiver by the other settling defendants did not relieve the responding parties from their contractual obligation, and it was still an essential term of the settlement agreement.
[15] The responding parties also claimed that as they had intended to make all of the instalments under the Minutes of Settlement payable to the moving parties, and had "substantially complied" with this requirement, that was good enough to deprive the moving parties of the requested judgment. In their submissions, the responding parties claim that the consent to judgment for $120,000 in the event of default was only to be available if a "real default arose" (responding parties' factum, para. 38). The responding parties submit that they were justified in not paying the final installment because the moving parties were being unreasonable in refusing to waive the requirement for a consent to judgment (for $120,000 to be relied upon in the event of their default) and dismissal orders, required under the Minutes, in light of the pandemic.
[16] The responding parties say that, in any event, the courts would have been unable to hear an enforcement matter on an urgent basis due to the pandemic. Therefore, the term requiring they sign a consent to judgment for $120,000 was practically unenforceable in any event. In their factum, the responding parties acknowledged that the consent judgment was to be security for their promise to pay the monthly installments on time, but that due to COVID-19 they did not wish to sign it. They acknowledged in their factum that this "amounted to a shift in the wording of the Minutes" but reason that at the time of signing the Minutes, they had not contemplated the possibility of a pandemic occurring.
[17] I reject the responding parties' respective arguments. The principle of good faith performance has no application to this straightforward motion for damages arising out of breach of the Minutes of Settlement. There is no evidence of bad faith on the part of the moving parties to taint the Minutes of Settlement, including the terms they requested to ensure compliance with those terms.
[18] Furthermore, no evidence was adduced by the responding parties to suggest that due to the pandemic they were unable to pay the remaining $10,000 instalment in a timely way or otherwise comply with the Minutes of Settlement. Rather, the responding parties appeared to take the position that they were entitled to alter the Minutes of Settlement due to the COVID 19 pandemic.
[19] As the Chief Justice of the Ontario Superior Court of Justice has advised the legal profession, the Superior Court of Justice has never been "closed" during this pandemic. In any event, the possibility that the courts may not have been able to accommodate an urgent hearing is entirely speculative and is not an excuse relieving a party from complying with their contractual obligations under minutes of settlement. Furthermore, the COVID 19 pandemic, in the absence of any evidence of actual prejudice that may justify relief, does not relieve parties from complying with their contractual obligations.
[20] The responding parties were represented by a lawyer at the time the Minutes of Settlement was negotiated and entered into. The responding parties are bound to the agreement they entered into and have not offered any valid reason for non-compliance.
[21] The terms of the Minutes of Settlement are clear and unambiguous.
[22] The responding parties admit they did not pay the fourth installment of $10,000, sign the escrow consent to judgment for $120,000 or sign the consent to dismissal without costs order, and thus admit they are in breach of the settlement.
[23] The responding parties admit that they attempted unilaterally to alter the terms of the Minutes of Settlement under the guise of the pandemic. Yet they have not advanced any grounds, much less evidence, that supports a rational link between the pandemic and their failure to comply with the terms of the Minutes of Settlement.
[24] Accordingly, the plaintiffs are entitled to judgment in the sum of $120,000 less the paid installments of $30,000.
[25] Judgment is therefore granted. The responding parties shall pay liquidated damages in the amount of $90,000 plus prejudgment and postjudgment interest, in accordance with the terms of the Minutes of Settlement.
[26] The parties have submitted cost outlines.
[27] Both the moving parties and responding parties have requested costs on a substantial indemnity basis.
[28] The amounts requested by each side is virtually identical. In fact, the responding parties' request for costs exceeds that of the successful moving parties' request.
[29] Furthermore, the moving parties made a r. 49 offer to settle this motion, that has been exceeded by the result.
[30] In light of the factors under r. 57, including the reasonable expectations of the responding parties and the meritless allegations of professional misconduct made by the responding parties against the lawyer for the plaintiffs, this matter warrants an award of substantial indemnity costs.
[31] I am fixing costs on a substantial indemnity basis in the amount of $11,469.65 fixed and payable forthwith by the responding parties.
[32] Judgment is effective immediately upon signing, without the need to have it entered and issued.
Justice Vella
Date: April 19, 2021
COURT FILE NO.: CV-12-459765
DATE: 20210419
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1504641 Ontario Inc. and Faisal Malik
Plaintiffs/Moving Parties
– and –
2225902 Ontario Inc., 22259009 Ontario Inc., 228-5754 Ontario Inc., 149-2612 Ontario Inc., Azhar Hussain also known as Azher Hussain, Sajjad Sadiq, and Sobia Sadiq, Atiz Ahmed, Naseer Malik, Irfan Ahmed Memon, and Kashlaw Professional Corporation and Khalid Sheikh
Defendants/Responding Parties
REASONS FOR JUDGMENT
Justice S. Vella
Released: April 19, 2021