COURT FILE NO.: CV-14-126-00
DATE: 20210910
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JOSEPH TORRES and KEITH SMALBILL
Plaintiffs
-and-
MGL PROPERTIES LTD., (FORMERLY, MR. GAS LIMITED/MR. GAS LIMITEE), BCP IV SERVICE STATION LP, AND BCP IV SERVICE STATION LIMITED
Defendants
-and-
W.L. PETERS HOLDINGS LTD. and
SEA WAY RESTAURANT (PRESCOTT) LIMITED
Third parties
Matthew Benson, for the Plaintiffs
Michael Hebert and Cheryl Gerhardt-McLuckie, for the Defendants
Jaye Hooper, for the Third Parties
HEARD at Kingston: 10 September 2021
Mew J. (ORALLY)
REASONS FOR decision
(Motion to Enforce Settlement)
[1] A dispute has arisen concerning responsibility for the contamination of a property which, at all material times, was owned by the plaintiffs. Mr. Gas Limited (now the defendant MGL Properties Ltd.) owned a neighbouring gas station which is alleged to be the source of the contamination.
[2] A full day motion had been scheduled today in which the plaintiffs sought various orders including an order pursuant to section 248 of the Business Corporations Act, R.S.O. 1990, c. B.16 requiring the defendant to pay into court $8 million by way of security for the plaintiffs’ claim.
[3] In anticipation of the motion, significant materials have been filed with the court. The plaintiffs’ motion record alone consists of some 12 volumes and 1590 pages.
[4] A few weeks ago, there were a number of exchanges, both in writing and verbally, between the lawyers for the parties, concerning the possible resolution of the motion scheduled for today. Three formal offers to settle were exchanged. Two of them were made by the plaintiffs and one by the defendant.
[5] What would appear to have been the most significant element of all of the offers, namely the amount to be paid by the defendant by way of security, was not in issue. All of the offers included the identical amount for that element.
[6] Each of the offers contained different provisions relating to the costs of the motion. The first offer made by the plaintiffs on 9 August 2021 provided as follows:
Upon MGL Properties Ltd.’s acceptance of this offer and satisfaction of the terms of paragraph 1 [which addresses the security to be provided], above, the Plaintiffs’ motion for oppression remedies and injunctive relief shall be dismissed, with costs (relating to the motion only) payable by MGL Properties Ltd. to the Plaintiffs, on a partial indemnity basis, plus disbursements, and inclusive of HST, as agreed or as assessed.
Notwithstanding paragraph 2, above, provided that MGL Properties Ltd. accepts this offer on or before August 16, 2021 and satisfies the terms of paragraph 1, above, the parties shall agree to dismiss the Plaintiffs’ motion for oppression remedies and injunctive relief, on consent, with costs of the motion to be in the discretion of the trial judge or as agreed upon by the parties.
[7] The effect of this offer was that, if accepted and implemented by the defendant by 16 August 2021, the costs of the motion would be in the discretion of the trial judge or as agreed upon by the parties. If the offer was accepted after that date, then the plaintiffs expected their costs of the motion to be fixed at an interlocutory stage.
[8] The defendant then made an offer of its own on 17 August 2021 which, on the subject of costs, provided for the plaintiffs to pay the defendants’ costs of the motion, to be assessed if not agreed.
[9] On 20 August 2021, the plaintiffs made a further offer. Somewhat unusually, this second offer by the plaintiffs expressly did not rescind or withdraw the first offer. On the issue of costs, it provided:
- Upon MGL Properties Ltd.’s acceptance of this offer and satisfaction of the terms of paragraph 1, above, the Plaintiffs’ motion for oppression remedies and injunctive relief shall be dismissed on consent, with costs of the motion to be in the discretion of the trial judge or as agreed upon by the parties.
[10] The defendant says that it accepted that offer and, as a consequence, the motion scheduled for today was settled. However, it is common ground that there remained a difference of views between the parties as to when the issue of costs of the motion would be determined. The defendant took the position that costs of the motion should be dealt with now. In other words, the questions of by whom costs should be paid, how much those costs should be and when they should be paid, would be dealt with at this stage of the litigation. The plaintiffs, consistent with their second offer (and, indeed, with their first offer, if that offer had been accepted before 16 August 2021), took the position that these costs issues should be dealt with at the end of the case and fixed by the court if not agreed between the parties.
[11] The plaintiffs do not agree that the motion has been settled. They assert that the issue of costs was an essential element of their offers and that the defendant cannot purport to have “accepted” either of the offers that were on the table by severing the issue of costs.
[12] I am now asked to determine whether the motion has been settled or not.
[13] The applicable legal principles are not really in dispute.
[14] The acceptance of an offer to settle requires the “unequivocal acceptance of all terms”: Desanto v. Cretzman, (1986) 1986 CanLII 2663 (ON SC), 53 O.R. (2d) 732 at pages 3-4. In Olivieri v. Sherman, 2007 ONCA 491, the court observed that a settlement agreement is a contract and subject to the general law of contract regarding offer and acceptance.
[15] For a concluded contract to exist, the parties must have had a mutual intention to create a legally binding contract; and reached agreement on all of the essential terms of the settlement. The Court of Appeal in Olivieri noted that “[t]he policy of the courts is to encourage the settlement of litigation”, and warned that 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.
[16] The defendant argues that the issue of costs is a collateral issue relating to the implementation of the settlement and, thus, not an “essential term” of the agreement. By way of authority, they rely on this court’s decision in Oliver v. Racette, 2011 ONSC 5870, where it was held that uncertainty over whether a settlement payout would be paid forthwith or following the sale of a matrimonial home was a provision about implementation and clarity, rather than an essential term of the settlement.
[17] A review of the three offers to settle that have been exchanged makes it clear that the parties regard the issue of costs as a significant one. According to Mr. Benson, the costs incurred to date in relation to the motion run into the tens if not the hundreds of thousands of dollars. If that is a realistic view of the sort of quantum of costs that might be involved, the issue of when and by whom such costs are paid is inevitably going to be an important one to both sides in this litigation.
[18] Viewed in context, I cannot agree with the defendant that costs are a mere collateral issue relating to implementation of the settlement. To the contrary, costs are a contentious issue and, having regard to the efforts to settle the motion, an essential element of the offers made by the plaintiffs and purportedly accepted by the defendant.
[19] During the course of argument, Mr. Hebert, behalf of the defendant, said that his client would be content for the court to make a determination as to when the issue of costs should be dealt with. In other words, as I understood him, his client was content for the agreement on the amount to be paid by way of security to remain in place and for the court to determine whether the costs of the motion should be dealt with at this interlocutory stage or left to the end of the case to be determined.
[20] The plaintiffs did not invite me to find that there was an enforceable settlement based on the terms of their 20 August 2021 offer. Rather, they asked me to find that there has been no settlement of the motion and that, both of the offers having now been withdrawn, their substantive motion should now be rescheduled. As Mr. Benson put it, the opportunity to settle the motion on the basis of having the agreed upon amount of security deposited and then having the court determine the issue of costs at the end of the case, is a ship that has sailed.
[21] The possibility of having the agreed-upon security deposited and asking the court to determine when costs should be decided was not appealing to the plaintiffs at this stage.
[22] Given the positions that have been taken, it is with some reluctance that I feel bound to rule that there has been no settlement, because the defendant has not agreed to all of the essential terms of the offer of settlement made by the plaintiffs. As a result, it will now be necessary to reschedule the plaintiffs’ motion for relief under the Business Corporations Act.
[23] I would encourage the parties to reflect upon today’s proceedings as well as the discussions and exchanges that have occurred during the past few weeks. They should carefully evaluate whether the interests of their clients are best served by going forward with the motion afresh when it would appear that there was a significant degree of agreement, albeit not on all of the essential terms that were under discussion.
Submissions on Costs
[24] The parties have agreed that the costs of today’s motions should be in the cause, on a scale and in an amount to be fixed by the trial judge, if not otherwise resolved by the parties before then.
Graeme Mew J.
Handed down (orally): 10 September 2021
Corrected, 21 December 2021
Paragraph 22
First sentence amended by changing “possessions” to “positions”.
COURT FILE NO.: CV-14-126-00
DATE: 20210910
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JOSEPH TORRES and KEITH SMALBILL
Plaintiffs
-and-
MGL PROPERTIES LTD., (FORMERLY, MR. GAS LIMITED/MR. GAS LIMITEE), BCP IV SERVICE STATION LP, AND BCP IV SERVICE STATION LIMITED
Defendants
-and-
W.L. PETERS HOLDINGS LTD. and
SEA WAY RESTAURANT (PRESCOTT) LIMITED
Third parties
REASONS FOR decision
(Motion to Enforce Settlement)
Mew J.
Handed down (orally): 10 September 2021