COURT FILE NO.: CV-12-463452
DATE: 20211117
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: ANTONIO SWAMINATHAN and MEENA RATHIRANI SWAMINATHAN Plaintiffs
AND:
MICHAELLA DEGNALL, JOHN DOE and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Defendants
BEFORE: Mr. Justice Chalmers
COUNSEL: K. Holder, for the Plaintiffs
S. Smith, for the Defendants
HEARD: November 17, 2021 by Videoconference
ENDORSEMENT
Overview
[1] This action arises out of a motor vehicle accident that occurred on September 20, 2010. The Plaintiffs allege that Antonio Swaminathan sustained personal injuries as a result of the accident.
[2] There are two motions before me today. Antonio Swaminathan is an undischarged bankrupt. The Plaintiffs bring a motion pursuant to Rule 11.02 for an order to continue. The Defendants bring a motion to enforce the settlement of the action. For the reasons set out below, I grant both the Plaintiffs’ motion for the order to continue, and the Defendants’ motion to enforce the settlement.
Order to Continue
[3] Mr. Swaminathan was declared a bankrupt in 2012. He remains undischarged. Counsel for the Plaintiffs advised that she has spoken with the Trustee in Bankruptcy. The Trustee is aware of the litigation and has disclaimed his interest. The Trustee takes no position with respect to the motion for the order to continue. The Defendant also takes no position with respect to the motion for the order to continue.
[4] I am satisfied that the order to continue ought to be granted.
Enforcement of the Settlement
Background
[5] The mediation in the action took place on December 18, 2017. The action did not settle. Following the failed mediation, the Defendants served a formal Offer to Settle dated January 9, 2018. The Defendants offered to settle on the following basis:
i) The Defendants will pay to the Plaintiff, Antonio Swaminathan the sum of $15,500, inclusive of pre-judgment interest;
ii) The Defendants will pay to the Plaintiff, Meena Rathirani Swaminathan the sum of $1, inclusive of pre-judgment interest; and,
iii) The Defendants will pay to the Plaintiffs their costs and disbursements to the date of the offer in an amount agreed upon or assessed.
[6] The Plaintiffs set the action down for trial. The pre-trial conference was scheduled for June 2020, and the trial was scheduled to proceed in the fall of 2020. Due to technical difficulties, the pre-trial did not proceed on June 9, 2020 and was rescheduled for August 31, 2020. I presided over the pre-trial. The matter did not settle. I scheduled the continuation of the pre-trial conference for September 28, 2020.
[7] On September 27, 2020, an e-mail was sent from Plaintiffs’ counsel to the Defendants’ counsel accepting the Defendants’ Offer to Settle dated January 9, 2018. I reproduce the e-mail in its entirety:
Sandi, I now have instructions to settle this matter by accepting your Offer of January 9, 2019, Accordingly, please forward funds of $15,501 to my attention along with your Release. We intend to assess costs, so I will forward a Bill of Costs to you for your consideration and perhaps we can agree and if not, then we will file for an Assessment. The Release can be a dismissal with costs payable to the Plaintiff as agreed or assessed, and after costs are dealt with and paid, I can provide a Satisfaction Piece if required by you. I will e-mail the Court accordingly as I assume we no longer need the further Pre-Trial on Monday. Michael
[8] Michael Henry, counsel for the Plaintiffs provided an affidavit sworn July 19, 2021. He deposes that when the offer was accepted, he had spoken with Mr. Swaminathan and his wife. He states that he explained that the offer was very old but based on his calculations they could recoup all of the disbursements and any amount left over for fees would come from the amount offered for the claim such that Mr. Swaminathan would receive an amount to settle.
[9] Mr. Swaminathan provided an affidavit sworn on July 12, 2021. He deposes as follows:
There was a verbal agreement with my counsel, however within 24 hours I was grappling with the agreement and I emailed my counsel within 48 hours to rescind the agreement.
[10] Mr. Swaminathan alleges in his affidavit that he believes counsel for the Defendant and his lawyer conspired and that the settlement was in bad faith. There is no evidence to support this allegation.
[11] Mr. Henry contacted counsel for the Defendant and rescinded the offer. He then brought a motion to be removed as counsel of record. The motion to remove Mr. Henry as counsel of record proceeded on consent. I granted the order on August 23, 2021.
The Parties’ Positions
[12] The Defendants argue that the Offer to Settle dated January 9, 2018 complied with the technical requirements of a Rule 49 offer. The offer was in writing, it remained open for acceptance and contained clear and certain terms. The Defendants also argue that there was acceptance of the offer in writing, and therefore there is an enforceable agreement to settle the action.
[13] The Plaintiffs do not dispute that the Defendants’ offer was technically valid, or that counsel for the Plaintiffs accepted the offer in writing. The Plaintiffs ask that the court exercise its discretion to not enforce the settlement. The Plaintiffs provide two reasons to support their request:
There was a very short time from the date of acceptance to the date of rescission and the Defendants are not prejudiced if the settlement is not enforced; and
The Plaintiff made a mistake in accepting the offer because he did so before calculating what he would receive from the settlement after payment of his lawyer’s fee.
Analysis
[14] There is no significant dispute between the parties as to the governing legal principles.
[15] The purpose of Rule 49 is to promote the settlement of legal proceedings. Pursuant to R. 49.02, a party to a proceeding may serve on any other party an Offer to Settle any one or more of the claims in the proceedings. To comply with the technical requirements of Rule 49, the offer must be in writing. Once a valid offer has been accepted, the Court will typically enforce the settlement. agreement.
[16] In determining whether to enforce a settlement, the court is to apply a two-step analysis. First the court must determine whether an agreement to settle was reached. Once an agreement is found to exist, the second step is to consider, on all the evidence, whether the Court should exercise its discretion to grant judgment in accordance with the accepted offer: R. 49.09.
[17] I am satisfied on the evidence that there was a valid agreement to settle. The offer was made in writing on January 9, 2018 and remained open for acceptance. The terms of the offer are clear. The offer was accepted in writing by counsel for the Plaintiffs on September 27, 2020. There is no suggestion that there was a limitation on counsel’s authority to accept the offer. Based on the affidavit evidence of Mr. Henry and Mr. Swaminathan, they had discussed the offer and there was a verbal agreement between them to accept the offer. Mr Swaminathan does not state in his affidavit that Mr. Henry did not have instructions to accept the offer.
[18] Counsel for the Plaintiffs argue that Mr. Swaminathan made a mistake in providing his instructions to his lawyer to accept the offer because he had not calculated the amount he would receive after payment of his lawyer’s account. I am not satisfied that this constitutes a mistake with respect to the acceptance of the settlement offer. This is not a case where the accepting party knowingly took advantage of a mistake made by the offering party: Fox Estate v. Stelmaszyk, 2003 CanLII 36922 (ON CA), 65 O.R. (3d) 846 (CA). Also, this is not a case where there was a mistake with respect to the instructions provided to counsel: Milos v. Zagas, 1998 CanLII 7119 (ON CA), 38 O.R. (3d) 218 (CA). Both Mr. Henry and Mr. Swaminathan state in their affidavits that they discussed the offer before acceptance and there was a verbal agreement between them. Mr. Swaminathan does not state in his affidavit that Mr. Henry misconstrued his instructions.
[19] Having found there was a valid settlement agreement, I must consider whether I ought to exercise my discretion to enforce the agreement.
[20] Counsel for the Plaintiffs argue that there was a short period of time between acceptance and rescission and the Defendant is not prejudiced if the settlement is set aside. Based on Mr. Swaminathan’s affidavit, he changed his mind with respect to the settlement and provided instructions to rescind within 48 hours of his instructions to accept the offer.
[21] In Peirce v. Belows, 2020 ONCA 41, the appellant argued that the motions court judge erred in exercising his discretion to enforce the settlement. The appellant summitted that several factors support not enforcing settlement including the short time- “mere hours”- that elapsed between the acceptance of the offer and the repudiation of the acceptance. The appellant also argued that there was no prejudice to the respondent if the settlement is not enforced. This argument was rejected by the Court of Appeal. The Court stated as follows:
Although this court retains discretion not to enforce a settlement, the facts of this case do not compel that result. The appellant’s former counsel was retained, had authority to – and was instructed to – engage in settlement negotiations. No limitation on his authority was communicated to the respondent. Declining enforcement in the circumstances of this case could undermine the certainty that is essential to encouraging meaningful settlement negotiations between counsel: at para. 9.
[22] I am of the view that the fact there was a brief period of time between acceptance and repudiation, is not, in and of itself, a sufficient reason for the exercise of my discretion to not enforce the settlement. Here, there is no evidence of mistake or limitation of authority. Mr. Swaminathan simply changed his mind about the settlement. I decline to exercise my discretion to set aside an accepted settlement offer on the basis that Mr. Swaminathan had a “change of heart”.
[23] I am also of the view that if the settlement is set aside, the Defendants will suffer prejudice beyond losing the benefit of the settlement. This action arises out of a motor vehicle accident that occurred over 11 years ago on September 20, 2010. The Defendants made the offer almost four years ago on January 9, 2018. The offer was accepted by Plaintiffs’ counsel on the eve of trial over a year ago. There has been considerable delay in moving this matter forward to date. If the settlement is set aside there will be a further delay before a trial will be scheduled by the court. I am satisfied that there is a risk that the memory of witnesses will erode over time, and the defence expert reports may no longer be viable.
[24] In the circumstances of this case, I decline to exercise my discretion to not enforce the settlement agreement.
Disposition
[25] I grant the Plaintiffs’ motion for an Order to Continue.
[26] I grant the Defendants’ motion to enforce the agreement to settle this action. Settlement is on the following basis:
i) The Defendants shall pay to the Plaintiff, Antonio Swaminathan the sum of $15,500, inclusive of pre-judgment interest;
ii) The Defendants shall pay to the Plaintiff, Meena Rathirani Swaminathan the sum of $1, inclusive of pre-judgment interest; and
iii) The Defendants shall pay the Plaintiffs’ costs and disbursements to the date of the offer in an amount agreed upon or assessed.
[27] If the parties are unable to agree on the amount of the Plaintiffs’ costs to the date of the offer, I direct the parties to proceed to an assessment of the Plaintiffs’ costs pursuant to Rule. 58.
[28] I award costs of the motion to enforce the settlement to the Defendants fixed in the amount of $2,500, inclusive of counsel fee, H.S.T. and disbursements. The Plaintiffs are ordered to pay the costs within 30 days of the date of this endorsement.
DATE: November 17, 2021