Overview

[1] The plaintiff moves to enforce a settlement agreement that was purportedly reached via email correspondence between counsel following a full day mediation on February 23, 2021. The respondent denies that a settlement was reached, and requests that this wrongful dismissal action be continued.

[2] On the day of the hearing, I granted the plaintiff's motion with written reasons to follow. These are those reasons.

Facts

[3] The plaintiff was terminated from his position as President and CFO of the defendant, a gold exploration company, on or around August 26, 2020. The parties were unable to resolve their differences and the plaintiff commenced an action on December 2, 2020.

[4] On February 23, 2021, Michael Horan, an experienced mediator conducted a full-day virtual mediation. The plaintiff and his counsel were present, and three representatives of the defendant and its counsel were present. The three defendant representative were: Gary O'Connor, the CEO and Chief Geologist; Alex Henry, the Chair of the Board; and Mark Ashcroft, an independent member of the Board. The three defendant representatives do not constitute a majority of the defendant corporation's Board of directors.

[5] At 5:36 p.m. on February 23, Mr. Horan, the mediator presented a defendant offer to the plaintiff. The plaintiff claims that this was an offer he was prepared to accept, and what followed, was the lawyers writing up the agreement.

[6] Between 5:55 p.m. and 6:24 p.m. on February 23, counsel exchanged further emails. The plaintiff submits that defendant counsel's email to him at 6:09 p.m., where she provided her substantive agreement to his earlier 5:55 p.m. email, constitutes the concluded settlement between the parties. A copy of the 6:09 p.m. email is appended as Schedule "A" to these Reasons. The parties agree that an earlier draft Minutes of Settlement provides context, but is not the purported settlement at issue.

[7] Out of the five numbered points in the 6:09 p.m. email, the parties focused on point #2:

700,000 options are being granted in reasonable short order at a current exercise price and with an expiry date of November 10, 2023. AGREED, SUBJECT TO BOARD APPROVAL ACTING REASONABLY.

[8] The first sentence is what plaintiff's counsel wrote in his earlier 5:55 p.m. email. The second sentence in ALL CAPS is what defendant's counsel replied at 6:09 p.m., and what I refer to as "the words in question".

[9] At 6:13 p.m. defendant counsel sent plaintiff counsel an email stating "Also, my team is signing off so if you need me please email or give me a ring at [..].

[10] At 6:18 p.m. plaintiff counsel replied, "Overall we have captured the deal via email, and there are just some tweaks to the Minutes to capture things. I will be in and out of mediation tomorrow but can look at your next draft and will move things along quickly".

[11] At 6:24 p.m. defendant counsel replied, "Sounds good. Will get you a draft tomorrow."

[12] It is common ground that defendant's counsel did not provide a draft the next day and that, on March 9, 2021, the defendant's counsel advised opposing counsel that "[t]he settlement did not receive board approval".

[13] The plaintiff now moves to enforce the purported settlement.

Analysis

[14] The issues before the court are:

(a) Did the parties enter into an agreement?

(b) If so, what are the agreement's essential terms?

(d) If enforced, what remedy should the court order?

[15] The plaintiff submits that:

(a) The parties entered into an agreement on February 23, 2021 via an exchange of emails between counsel following an all-day mediation.

(b) The defendant's acceptance of the plaintiff's offer is contained in the 6:09 p.m. email from defendant's counsel.

(d) The agreement's essential terms are contained in the 6:09 p.m. email.

(e) The purported agreement should be enforced as the one term in contention, point #2 "AGREED, SUBJECT TO BOARD APPROVAL ACTING REASONABLY", did not authorize the defendant's Board to approve or reject the entire settlement agreement with the defendant.

(f) Instead, point #2 directed the Board to approve the grant of 700,000 options to the plaintiff reasonably soon at a current exercise price, unless the Board could demonstrate that, acting reasonably, it was entitled not to do so.

(g) The defendant has not provided evidence that its Board had a reasonable basis to decline to grant the 700,000 options to the plaintiff.

(h) The defendant breached the settlement agreement and the court should now order that it be enforced.

[16] The defendant disagrees and submits that:

(a) There was no unequivocal offer and acceptance. At best, the emails exchanged in the evening of February 23, 2021 represent an "agreement to agree" which, at law, is no agreement at all.

(b) The approval of the Additional Option Grant (i.e. the 700,000 options) was an essential pillar of the overall purported settlement agreement, and there was no certainty about this term or its approval by the defendant's Board.

(c) The defendant made it clear that, since the defendant's offer at the conclusion of the mediation exceeded the settlement authority of the Board, the overall settlement was conditional upon the Board's approval of the settlement.

(d) The Board acted reasonably by: (a) meeting within a reasonable period of time; (b) engaging in a reasonable business discussion; and (c) making a reasonable business decision not to consummate the "agreement to agree" or issue the Additional Option Grant.

(e) Since a major pillar of the purported settlement agreement failed, the entire agreement failed and the wrongful dismissal action should continue.

(a) Did the parties enter into an agreement?

[17] I note that, in plaintiff counsel's 5:55 p.m. email, he wrote "I appreciate that there is a lot more to add to a full set of Minutes. This is an agreement to agree subject to Minutes and Release that are acceptable to both parties". Still, when I carefully examine defendant counsel's 6:09 p.m. email, I find little merit in the defendant's argument that there was no "meeting of the minds" on many of the essential terms. Instead, I find that the parties agreed on the essential terms, but some further work was required in terms of writing up the details.

[18] A few examples will suffice. Where plaintiff's counsel stated in his 5:55 p.m. email "I want to make clear that we will be asking for a breakdown and best efforts to pay this in as tax beneficial manner as possible" and went on to suggest three ways to do that, and where defendant's counsel replied "FINE, SUBJECT TO DIRECTION OR AMOUNTS TO POPULATE IN MOS", this cannot be objectively construed as a disagreement about "the taxation / structuring of the settlement proceeds". Further, the words "THE MOS AND RELEASE WILL INCLUDE CONFIDENTIALITY, NON-DISPARAGEMENT, A FULL AND FINAL RELEASE IN FAVOUR OF MONETA AND A REPRESENTATION THAT HE HAS NOT YET ACCEPTED ALTERNATE EMPLOYMENT", cannot, in my view, be relied upon to suggest that "the existence, and breadth, of any additional essential provisions (such as indemnification, confidentiality and non-disparagement covenants in favour of Moneta), were essential terms that had not been decided upon”.

[19] The defendant relies upon Bawitko, a case in which the appeal court refused to enforce a purported agreement between commercial parties, finding that the essential terms of a franchise agreement were not determined: Bawitko Investments Ltd. v. Kernels Popcorn Ltd., 1991 CanLII 2734 (ON CA).

[20] The appeal court held:

In my view, the terms of the franchise beyond those agreed to cannot be regarded as mere formalities or routine language. This is not a conventional document that requires only the filling in of blank spaces or the completion of minor details which the parties can impliedly be taken to have agreed upon. The terms of the draft clearly include material conditions essential to this kind of specialized contract. The very nature of the franchisor-franchisee relationship mandates that there be express agreement on the detailed provisions set up to regulate the business relationship of the parties. Here, taking the respondent's evidence at its highest, there was no meeting of the minds necessary for a completed contract. (page 16)

[21] I find that Bawitko is entirely distinguishable from the case at bar. In Bawitko, the putative franchisee was seeking to enforce an oral agreement about a future franchise relationship which was to be governed by a yet to be signed comprehensive written agreement. Here, the plaintiff Mr. Peres is seeking to enforce a purported written settlement agreement reached between counsel in an employment context following a full day mediation. The essential terms are clear, albeit requiring embodiment in formal legal language to be drafted by counsel.

(b) What are the agreement's essential terms?

[22] I find that the agreement's essential terms are contained in the 6:09 p.m. email from defendant's counsel responding to and accepting the terms set out in plaintiff counsel's 5:55 p.m. email (i.e. Appendix A to these Reasons).

(c) Should the agreement be enforced?

[23] The defendant argues that if I find that the parties reached an agreement via email on February 23, it should not be enforced by the court because the defendant's Board never approved point #2 dealing with the additional grant of 700,000 options to the plaintiff, an element defendant counsel describes as an "essential pillar" of the overall agreement.

[24] I find that the agreement should be enforced because there was no reasonable basis for the defendant's Board to decline the Additional Options Grant. That being the only real issue in contention, the settlement agreement is capable of enforcement and should be enforced.

[25] With respect to the additional options, the parties agree that their provision in lieu of monetary damages represented a breakthrough of sorts at the mediation, since the parties were too far apart in terms of damages. Second, the parties agree that the employer's initial offer at mediation was 350,000 options but, by the end of the mediation, it had increased to 700,000. Third, the parties agree that, as a publicly traded corporation, the defendant representatives at the mediation could not themselves authorize the grant of 700,000 options to the plaintiff, as this required the approval of the defendant's Board upon recommendation by the Board's Compensation and Nomination Committee.

[26] While I agree with the plaintiff that the words in question "AGREED, SUBJECT TO BOARD APPROVAL, ACTING REASONABLY" only relate to point #2 (the Additional Options Grant), and not points #1, #3, #4 and #5, I also agree with the defendant's description of the Additional Options Grant as an essential pillar of the overall agreement. I find that, had there been no agreement on point #2, the entire agreement would fall apart. But that simply takes us back to the question of whether Board acted reasonably in refusing to grant the 700,000 options.

[27] I find that it did not.

[28] The defendant calls for an interpretation of the words in question that strains commercial and practical sense; namely, that following the February 23 mediation and exchange of emails, the Board could conduct a re-do on whether it wished to approve the grant of 700,000 options and, so long as it went through the motions of meeting and considering the issue, whatever decision it arrived at must be seen as acting reasonably. The law and the facts do not permit the defendant such latitude.

[29] In Olivieri v. Sherman, 2007 ONCA 491, the Court of Appeal for Ontario held:

[44] A determination as to whether a concluded agreement exists does not depend on an inquiry into the actual state of mind of one of the parties or on the parole evidence of one party's subjective intention. See Lindsey v. Heron & Co., 1921 CanLII 538 (ON CA), [1921] O.J. No. 75, 64 D.L.R. 92 (S.C. (App. Div.)). Where, as here, 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.

[50] The policy of the courts is to encourage the settlement of litigation: Stonehocker v. King, [1993] O.J. No. 2653, 43 A.C.W.S. (3d) 735 (Gen. Div.). The courts "should not be too astute to hold" that there is not the requisite degree of certainty in any of an agreement's essential terms: Canada Square Corp. v. Versafood Services Ltd. (1982), 1981 CanLII 1893 (ON CA), 34 O.R. (2d) 250, [1981] O.J. No. 3125 (C.A.).

[30] The evidence is that, in the course of the mediation, the employer offered to grant additional options rather than damages, and increased the offer from a grant of 350,000 to 700,000 options. Three defendant representatives attended at mediation, assisted by counsel. The parties’ counsel exchanged emails at the conclusion of the mediation.

[31] The parties agree that, with respect to the additional options, there were four aspects at issue:

(1) The number of additional options being granted. The parties agree that the number was 700,000.

(2) The question of when the option vest. The parties agree that historically, the options vested immediately.

(3) The exercise price. The parties agree that the practice was for the Board to set the price by using the 5-day Volume Weighted Average.

(4) The expiry date. The parties agree that the expiry date was November 10, 2023.

[32] Accordingly, there was effectively nothing left to decide about the additional options. Indeed, the defendant conceded that a dispute about these were four aspects was not the basis upon which the Board disapproved of the grant of additional options. Instead, the best evidence of why the Board did not approve the grant of additional options is found in the affidavit of Gary O'Connor, the defendant's CEO, where he stated that the Board met on March 5, 2021 at which time "after significant deliberation, Moneta made the decision that it was not in Moneta's best interest to accept and approve the Agreement to Agree. Moneta felt that acceptance and approval of the Agreement to Agree that had been reached with [the plaintiff] would not represent a reasonable compromise and would not be in keeping with our fiduciary duties as Directors of Moneta."

[33] I have already found that the February 23 exchange of emails between counsel was an agreement and not just an "agreement to agree". Further, the evidence suggests that Board approached the exercise of whether to grant the 700,000 options in the same manner as what the Board felt was in the defendant's best interests, but this is fundamentally different than acting reasonably to give effect to an agreement: 364511 Ontario Limited v. Darena Holdings Ltd., 1999 CanLII 2422 (ON CA), at para.5.

[34] Here, the plaintiff moved under Rule 49.09(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which is treated as a summary judgment motion: Donaghy v. Scotia Capital Inc./ Scotia Capitaux Inc., 2009 ONCA 40, at para. 16. Each party was required to put its best foot forward. The defendant provided no evidence that there was a reasonable basis for declining to grant the plaintiff the additional stock options after reaching an agreement on this issue through counsel's exchange of emails on February 23, 2021. Accordingly, to the extent that the 6:09 p.m. agreement was not implemented previously - because the defendant did not believe that there was a concluded agreement - the agreement should be enforced now. For further clarity, specifically with respect to the Additional Options Grant, this means that the Board must approve the grant of 700,000 options with an expiry date of November 10, 2023. The related question of how the court, or the mediator Mr. Horan, should interpret the words "in reasonable short order at a current exercise price" takes us into the realm of remedy.

(d) What remedy should the court order?

[35] Under Rule 49.09 of the Rules of Civil Procedure:

49.09 Where a party to an accepted offer to settle fails to comply with the terms of the offer, the other party may,

(a) make a motion to a judge for judgment in the terms of the accepted offer, and the judge may grant judgment accordingly; or

(b) continue the proceeding as if there had been no accepted offer to settle.

[36] By my decision, the plaintiff has succeeded in its motion under Rule 49.09(a). I must order "judgment in the terms of the accepted offer". At the hearing of the motion, following my verbal decision that the parties had an enforceable agreement, the parties made submissions on what precisely "judgment in the terms of the accepted offer" should look like.

[37] The parties agreed that the court should order enforcement of the terms the parties agreed upon in the defendant counsel's email of 6:09 p.m. on February 23, 2021. The parties further agreed that, but for point #2, there is or ought to be no difficulty in the parties implementing the settlement. However, point #2 presents a challenge because there may be uncertainty about how to implement point #2, now that many months have passed since February 23, 2021.

[38] I direct that judgement issue in a manner that implements points #1, #3, #4, and #5, and that specific performance be ordered in respect of point #2. In the event that the parties are unable to agree about how to implement their settlement agreement, I direct that Michael Horan, the mediator, be and remain seized for interpretation and dispute resolution including by way of arbitration under the Arbitration Act, 1991, SO 1991, c. 17. For further clarity, I direct that if specific performance of point #2 is not possible, then damages should be paid to the plaintiff.

Costs

[39] Costs for the motion and the action are awarded to the plaintiff. If the parties cannot agree on costs, the parties shall provide written submissions by September 17, 2021. Such written submissions shall not exceed three double-spaced pages, exclusive of Costs Outlines, Bills of Costs, Offers to Settle and authorities, and shall be forwarded to me via my judicial assistant at Patrica.Lyon-McIndoo@ontario.ca. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves.

Pinto J.

Released: August 31, 2021

schedule “A”

Sophia Myers

From: Kathleen Chevalier KChevalier@stikeman.com

Sent: February 23, 2021 6:09 PM

To: Stephen Moreau

Cc: Michael Horan

Subject: Re: Peres matter, high level agreement to memorialize

Stephen,

My responses are below - disregard the MOS so that we can nail these points down and I can input them into the MOS later.

Kathleen Chevalier

Direct: +1 416 869 6851

Email: kchevalier@stikeman.com

From: Stephen Moreau SMoreau@cavalluzzo.com

Sent: Tuesday, February 23, 2021 5:55 PM

To: Kathleen Chevalier KChevalier@stikeman.com

Subject: Peres matter, high level agreement to memorialize

Kathleen,

Without Prejudice

Given the late hour, I am writing this email to highlight the key elements of the agreement that must now be memorialized in Minutes and a Release. I have seen your prior proposed Minutes and Release and the language was generally quite good. I think we can "get this done", in short. The main elements are as follows:

Your client is paying $545,000 (LESS ROUGHLY $30K PAID IN ESA),. Iwant to make clear that we will be asking for a breakdown and best efforts to pay this in as tax beneficial manner as possible. I anticipate three ways to do that:

a. A payment to Cavalluzzo LLP without withholding/deduction on account of legal cost; FINE, SUBJECT TO DIRECTION OR AMOUNTS TO POPULATE IN MOS

b. A direct deposit to my client's RRSP account; and, FINE, SUBJECT TO DIRECTION OR AMOUNTS TO POPULATE IN MOS

c. The use of the T1198 form to qualify a portion (approximately $60,000 I estimate) as 2020 office/employment income). I have not use the T1198 approach in some time but with an early 2021 settlement and with the fact my client's income was approximately

$165,000 in 2020, it lines up to try this to recognize the gap in salary payments from 2020. FINE, SUBJECT TO INDEMNIFICATION LANGUAGE IN FAVOUR OF MONETA.

700,000 options are being granted in reasonable short order at a current exercise price and with an expiry date of November 10, 2023. AGREED, SUBJECT TO BOARD APPROVAL, ACTING REASONABLY.
Prior grants of options will continue to be exercisable until March 2022. Exact date

TBD. THATS NOT CORRECT - HERE IS THE EXERCISE SCHEDULE APPLICABLE TO THE CURRENTLY HELD OPTIONS:

NOV 14, 2021: 1.5 MILLION OPTIONS

NOV 21, 2021: 3 MILLION OPTIONS

NOV 11, 2021: 500,000 OPTIONS

NOV 10, 2022: 700,000 OPTIONS

Moneta will cover the full cost of mediation. AGREED.
My client will retire as director at the next AGM and not renew his tenure as director. AGREED.

I appreciate that there is a lot more to add to a full set of Minutes. This is an agreement to agree subject to Minutes and Release that are acceptable to both parties.

THE MOS AND RELEASE WILL INCLUDE CONFIDENTIALITY, NON-DISPARAGEMENT, A FULL AND FINAL RELEASE IN FAVOUR OF MONETA AND A REPRESENTATION THAT HE HAS NOT YET ACCEPTED ALTERNATE EMPLOYMENT.·

PROVISION THAT MICHAEL HORAN WILL REMAIN SEIZED FOR INTERPRETATION AND DISPUTE ARISING OUT OF MOS.

Please confirm I have captured the agreement. If I have misstated anything or missed anything that needs to be outlined in an email such as this, please get back to me.

Thanks for your help and hard work today. Stephen

Stephen J . Moreau

Partner

P. 416.964.5541

F. 416.964.5895

E. smoreau@cavalluzzo.com

Cavalluzzo LLP Barristers & Solicitors

474 Bathurst Street, Suite 300, Toronto, ON MST 256

T. 416.964.1115 F. 416.964.5895 cavalluzzo.com

The information contained in-this electronic message is legally privileged and confidential information that is exempt from disclosure under applicable law and is intended on)y for the use of the individual or entity to which it is addressed. If you have received this communication in error, please notify us immediately by telephoning (416) 964-5541 or by email at smoreau@cavalluzzo.com. Thank you for your co-operation .

COURT FILE NO.: CV-20-652373

DATE: 20210831

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Ian C. Peres

Plaintiff/Moving Party

– and –

Moneta Porcupine Mines Inc.

Defendant/Responding Party

REASONS FOR JUDGMENT

Pinto J.

Released: August 31, 2021

Peres v. Moneta Porcupine Mines Inc. , 2021 ONSC 5798

Case Summary

Overview

Facts

Analysis

(a) Did the parties enter into an agreement?

(b) What are the agreement's essential terms?

(c) Should the agreement be enforced?

(d) What remedy should the court order?

Costs

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 1

Legal Tests 1

Legislation 2