COURT FILE NO.: CV-21-00654716-0000
DATE: 2021/11/25
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
GMBR CAPITAL CORP.
Plaintiff
- and -
DEAN PARMAR, LAWRENCE GUY, SHANT POLADIAN, GOPI PILLAI a.k.a. GOPIKANNAN PILLAI, and SRI CHANDRA
Defendants
Christopher J. Somerville for the Plaintiff
Eric Morgan for the Defendant Sri Chandra
Jeffrey Haylock for the Defendants Dean Parmar, Shant Poladian, and Gopi Pillai
HEARD: November 22, 2021
PERELL, J.
REASONS FOR DECISION
A. Introduction
[1] This is a motion to enforce a settlement pursuant to Rule 49 of the Rules of Civil Procedure. As will appear from the discussion below, this particular Rule 49 motion is a unicorn, rare and peculiar in a nice way.
[2] In this action, which was commenced on January 13, 2021, the Plaintiff GMBR Capital Corp. sues five defendants, Dean Parmar, Lawrence Guy, Shant Poladian, Gopi Pillai, and Sri Chandra with respect to a $500,000 investment in an Alberta investment trust known as RealCanna Investment Trust.
[3] On April 26, 2021, after the defendants delivered their statements of defence and counterclaims, one of the defendants, Sri Chandra, made an offer to settle the litigation in which GMBR Capital would recover its $500,000 investment plus $15,000 in costs. GMBR Capital accepted the settlement offer, which would see it made whole. The settlement was not a compromise, it was a total success.
[4] The settlement, however, involved payment of the $515,000 in installments, and although Mr. Chandra paid the first installment of $115,000, he did not meet the timetable for the subsequent installments, and in these circumstances, GMBR Capital moves to enforce the settlement.
[5] What is unusual is that Mr. Chandra admits that he is in breach of the settlement and that he has no defence to the enforcement of the agreement. And, what is also unusual is that Mr. Chandra wants the settlement to be enforced. Nevertheless, Mr. Chandra asks the court to exercise its discretion not to enforce the settlement. Mr. Chandra asks the court to give him thirty more days to raise the money to perform the settlement and not to enter any judgment in the meantime.
[6] I do not agree, however, that the court should wait to enforce the settlement. Rather, in my view, the settlement should be enforced in accordance with its terms. Therefore, for the reasons that follow:
a. I order Mr. Chandra to pay to GMBR Capital Corp., the sum of $400,000.00, plus the sum of $731.51 for prejudgment interest calculated at 0.5 percent to November 22, 2021.
b. I order GMBR Capital Corp. upon payment from Mr. Chandra of $400,731.51 plus postjudgment interest at the rate of 2 percent per year commencing from November 22, 2021:
i. to transfer its units of the RealCanna Investment Trust to Mr. Chandra, at Mr. Chandra’s sole expense; and
ii. to execute a satisfaction piece and a consent to the dismissal of this action and the companion action without costs.
B. Facts
1. The Background to the Settlement and the Settlement
[7] On July 29, 2019, GMBR Capital subscribed for $500,000 in units in the RealCanna Investment Trust.
[8] After subscribing, GMBR Capital discovered that RealCanna Investment Trust, Canna 8 Investment Trust, and Real Industrial Investment Trust made unauthorized transfers of property to Real Industrial Investment Trust.
[9] RealCanna Investment Trust offered to repay GMBR Capital’s $500,000 investment by the end of July 2020. GMBR Capital accepted the offer; however, RealCanna failed to repay any of GMBR Capital’s investment.
[10] On November 2, 2020, GMBR Capital commenced an action against RealCanna Investment Trust, Canna 8 Investment Trust, and Real Industrial Investment Trust (Court File No. CV-20-00650624-000) to recoup its investment. The defendants delivered defences and counterclaims.
[11] Subsequently, on January 13, 2021, GMBR Capital commenced the action now before the court. GMBR Capital sued for the return of its investment from the individual directors, officers, and other representatives of RealCanna Investment Trust on the basis of conversion, breach of trust, knowing assistance in breach of trust, and inducing breach of contract. The Defendants delivered defences in April 2021.
[12] On April 26, 2021, GMBR Capital and Mr. Chandra agreed to settle this action and the companion action on the following terms:
a. Mr. Chandra would consent to judgment in favour of GMBR Capital in the sum of $515,000, including $15,000 for costs, to be held in escrow by GMBR Capital’s counsel, pending payment of the installment payments.
b. Mr. Chandra would make four payments to GMBR Capital, by wire transfer: (1) $115,000 by May 4, 2021, including the $15,000 for costs; (2) $100,000 by June 1, 2021; (3) $100,000 by July 5, 2021; and (4) $200,000 by August 4, 2021.
c. Once the payments were complete, a mutual release would be exchanged.
d. Once payment was complete GMBR Capital would transfer its units of the RealCanna Investment Trust to Mr. Chandra at his sole expense.
e. This action and the companion action would be dismissed, on consent.
f. If, however, the installment payments were not made on time, GMBR Capital could enter the consent judgment and continue its proceedings against all other defendants, subject to the judgment entered against Mr. Chandra.
2. The Breach of the Settlement Agreement and the Motion to Enforce the Settlement
[13] When Mr. Chandra did not make the first payment of $115,000 on time, on May 6, 2021, GMBR Capital brought a motion to have the consent judgment issued and entered.
[14] After 5:00 p.m. on May 6, 2021, GMBR Capital received the first payment of $115,000.
[15] Meanwhile, in response to the Plaintiff’s motion, Mr. Chandra filed an affidavit dated May 12, 2021 withdrawing his consent to judgment. In his affidavit, he admitted that a settlement had, in fact, been reached on April 26, 2021.
[16] Due to Mr. Chandra’s withdrawal of his consent to judgment, GMBR Capital’s original motion was not scheduled by the Court.
[17] The second installment of $100,000 was due on June 1, 2021. This payment was not made.
[18] When the second installment was not received, on June 16, 2021, GMBR Capital served motion materials for judgment by way of an opposed motion in writing. On June 25, 2021, Mr. Chandra’s counsel served a Notice of Objection. Due to filing irregularities, GMBR Capital’s motion materials were rejected by the court on July 2, 2021.
[19] The third installment of $100,000 was due on July 5, 2021. This payment was not made.
[20] GMBR Capital brought the motion now before the court. It seeks judgment against Mr. Chandra in accordance with the terms of the settlement.
3. Mr. Chandra’s Plight
[21] Mr. Chandra was not cross-examined, and he deposes that he wishes to perform the settlement. He deposes that he is in the process of liquidating his equity holdings in several closely-held corporations. He says that he is attempting to do so in a way that minimizes selling assets at an undervalue, which he says would harm himself and other investors in the closely-held corporations.
[22] Mr. Chandra submits that he should be given additional time to perform the settlement. He says that if he is successful in raising the necessary funds, then GMBR Capital will be fully restored and the parties and the court will be spared from using scare resources for two actions that will be costly to litigate.
[23] In his oral submissions, in addition to submitting that the court should not grant judgment at this time, Mr. Chandra asked that the court adjourn GMBR Capital’s motion for thirty days, which would provide him with the opportunity to complete the settlement, failing which the motion could be brought on and granted.
[24] In the alternative, he submitted that the motion should be granted in a way that would provide him with an opportunity to complete the settlement before judgment was executed.
C. Discussion and Analysis
[25] A settlement agreement is a contract[^1] that the court has jurisdiction at common law[^2] and under rule 49.09 to enforce. At common law, where an action has been settled by agreement, a party may enforce the settlement agreement by action or by a motion for judgment in the action.[^3]
[26] A motion to enforce a settlement involves two elements. The first element is whether or not there is any genuine issue about the existence of an agreement to settle, and the second is whether there is any reason not to enforce the settlement.[^4] In Bayerische Landesbank Girozentrale v. R.S.W.H. Vegetable Farmers Inc.,[^5] the Court held that judgment may be granted on a motion to enforce a settlement only if there are no genuine factual disputes that require a trial for their resolution.
[27] The court has a discretion to refuse to enforce the settlement agreement summarily.[^6] In exercising its discretion, the court may have regard to such factors as the presence of a 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.[^7]
[28] The discretion 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 that the enforcement of the settlement is not in the interests of justice.[^8] 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.[^9]
[29] In the immediate case, with respect to the first element, there is no genuine issue about the existence of the agreement to settle the case now before the court, and there is no genuine issue about the potential settlement or the intent to settle the companion action, which is not before the court.
[30] In the immediate case, with respect to the second element, at first blush, it would appear that there is no reason not to enforce the settlement. The peculiarity of the immediate case is that Mr. Chandra actually wants the settlement to be enforced. His concern is only about the timing of the enforcement of the settlement, which he asks be delayed to provide him with the opportunity to complete the settlement.
[31] This peculiarity of the immediate case, however, requires a closer than a first blush analysis because it obscures what is the genuine problem about enforcing the settlement in the immediate case. The genuine problem is not the timing. The genuine problem is that GMBR Capital is seeking is a monetary judgment for $400,000 plus prejudgment and postjudgment interest for breach of the settlement agreement and this begs the question about what happens to the units that are the subject matter of the litigation.
[32] What GMBR Capital is seeking is damages for breach of the settlement agreement, which would entail that it would be discharged of its own obligation to transfer its units of the RealCanna Investment Trust to Mr. Chandra at his sole expense. In accordance with the principles of contract law, when a contract is fundamentally breached and the innocent party elects to bring it to an end and claim damages, then the innocent party is discharged from its own performance obligations, which in the immediate case would be to deliver the units in return for the payment of the $400,000.
[33] The peculiarity in the immediate case does not typically arise in settlement agreements which typically only involve the delivery of releases not a transfer of units as in the case at bar.
[34] During oral argument, I asked GMBR Capital’s counsel what would happen if I granted judgment to GMBR Capital and Mr. Chandra paid before the sheriff was sent in to levy execution. He said that he would have to get instructions, but he acknowledged that it would be reasonable for GMBR Capital to transfer the units in those circumstances at Mr. Chandra’s sole expense provided that Mr. Chandra also paid any costs associated with the dismissal of the action and the companion action.
[35] It thus emerged from the oral argument that the parties may not be that far apart in their mutual desires to have the settlement agreement enforced if the matter of the transfer of the units was resolved.
[36] The jurisprudence about Rule 49 establishes that the court has the discretion about whether to enforce the settlement agreement. In the immediate case, I shall exercise that discretion by enforcing the settlement agreement in accordance with its terms. GMBR Capital is entitled to a judgment for the breach of the settlement agreement. This judgment, however, should reflect the actual terms of the settlement agreement insofar as there should be a transfer of units if the judgment is paid.
[37] Therefore, I grant GMBR Capital’s motion with the terms as set out in paragraph 6 of these Reasons for Decision.
[38] Order accordingly.
[39] If the parties cannot agree about costs of this motion, they may make short (three-page) submissions in writing beginning with GMBR Capital’s submissions within ten days of the release of these Reasons for Decision followed by Mr. Chandra’s submissions within a further ten days.
Perell, J.
Released: November 25, 2021
COURT FILE NO.: CV-21-00654716-0000
DATE: 2021/11/25
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
GMBR CAPITAL CORP.
Plaintiff
- and -
DEAN PARMAR, LAWRENCE GUY, SHANT POLADIAN, GOPI PILLAI a.k.a. GOPIKANNAN PILLAI, and SRI CHANDRA
Defendants
REASONS FOR DECISION
PERELL J.
Released: November 25, 2021
[^1]: Donaghy v. Scotia Capital Inc./Scotia Capitaux Inc., 2009 ONCA 40, [2009] O.J. No. 178 at para. 41 (C.A.); Hodaie v. RBC Dominion Securities, 2011 ONSC 6881 at para. 17, affd [2012] O.J. No. 5428 (C.A.).
[^2]: Donaghy v. Scotia Capital Inc./Scotia Capitaux Inc., 2009 ONCA 40, [2009] O.J. No. 178 (C.A.).
[^3]: Donaghy v. Scotia Capital Inc./Scotia Capitaux Inc., 2009 ONCA 40, [2009] O.J. No. 178 (C.A.); U.S. Billiards Inc. v. Carr (1983), 1983 CanLII 1853 (ON SC), 44 O.R. (2d) 591 (Div. Ct.); Polavarapu v. North American Trust Co., [1996] O.J. No. 3223 (Gen. Div.); Chytros v. Standard Life Insurance Co. (2006), 2006 CanLII 34419 (ON SC), 83 O.R. (3d) 237 (S.C.J.); Fretz v. Roman Catholic Episcopal Corp. of Diocese of Hamilton, [1991] O.J. No. 1504 (Gen. Div.); Marlin-Watson Home Corp. v. Taylor, [1991] O.J. No. 1888 (Gen. Div.); Toronto-Dominion Bank v. Pasternak (1990), 1990 CanLII 93 (SCC), 74 O.R. (2d) 763 (H.C.J.); Lunardi v. Lunardi (1988), O.J. No. 1882, (H.C.J.); Davis v. Kalkhoust, [1986] O.J. No. 1464 (H.C.J.); Sylman v. Sylman, [1986] O.J. No. 613 (H.C.J.); Rodic v. Rodic, [1985] O.J. No. 1701 (Dist. Ct.).
[^4]: Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc. (2007), 2007 CanLII 39604 (ON SCDC), 87 O.R. (3d) 464 (Div. Ct.); Exponents Canada Inc. v. Sharma, 2015 ONSC 2940; Wilson v. Johnston, 2015 ONSC 3016 (Master).
[^5]: (2001), 2001 CanLII 28050 (ON SC), 53 O.R. (3d) 374 (S.C.J.).
[^6]: Fox Estate v. Stelmaszyk (2003), 2003 CanLII 36922 (ON CA), 65 O.R. (3d) 846 (C.A.); Milios v. Zagras (1998), 1998 CanLII 7119 (ON CA), 38 O.R. (3d) 218 (C.A.); Smith v. Robinson (1992), 1992 CanLII 7504 (ON SC), 7 O.R. (3d) 550 (Gen. Div.); Richard (Litigation Guardian of) v. Worth (2004), 2004 CanLII 34517 (ON SC), 73 O.R. (3d) 154 (S.C.J.).
[^7]: Milios v. Zagras (1998), 1998 CanLII 7119 (ON CA), 38 O.R. (3d) 218 (C.A.); Draper v. Sisson, [1991] O.J. No. 1207 (Gen. Div.); C.I.B.C. v. Weinman, [1992] O.J. No. 302 (Gen. Div.); Re Lem Estate, [1987] O.J. No. 2319 (Surr. Ct.).
[^8]: Srebot v. Srebot Farms Ltd., 2013 ONCA 84 at para. 6.
[^9]: Wilson v. Johnston, 2015 ONSC 3016 (Master); Sentry Metrics Inc. v. Ernewein, 2013 ONSC 959.