ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN: )
Celine Bouzanis ) Ronald Caza, for the Responding Party
Responding Party )
-and- )
GORDON B. GREENWOOD and )
MACLAREN CORLETT LLP ) Stephen Cavanagh, for the Moving Party
Moving Party )
) HEARD: August 18, 2022
REASONS FOR DECISION
HOOPER J.
Overview
Overview
1The defendants brought this motion to enforce a settlement under Rule 49.09 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
2The facts leading up to the alleged settlement are not in dispute:
a. The plaintiff sued the defendant lawyer and law firm for professional negligence with respect to the restructuring of the ownership of shares in two numbered companies owned by the plaintiff and her ex-husband. It was alleged that, due to the defendants’ negligence, the plaintiff experienced adverse tax consequences following the restructuring.
b. The plaintiff also commenced proceedings in Family Court against her ex-husband. That claim involved each spouse’s interest in the two numbered companies.
c. The within litigation against Mr. Greenwood and his firm did not progress past the pleadings stage, with the statement of defence delivered on August 16, 2019. No further steps were taken.
d. On August 3, 2021, at 8:16 a.m., Alyssa Tomkins, the plaintiff’s lawyer at the time, sent an email to Stephen Cavanagh, lawyer for the defendants, advising him that the Family Court litigation had settled. In that email, Ms. Tomkins wrote:
Ms. Bouzanis is offering to settle the litigation against Mr. Greenwood on the basis of a dismissal without costs.
e. At 9:12 a.m. that same morning, Stephen Cavanagh replied to Ms. Tomkins as follows:
I do now have instructions to consent to a dismissal without costs of the action against Mr. Greenwood, provided that Ms. Bouzanis executes a full and final release in LawPRO’s form, a copy of which I will send to you shortly.
f. Minutes later, Mr. Cavanagh sent an email to Ms. Tomkins attaching the full and final release.
g. The LawPRO full and final release was, for the most part, standard; however, it contained the following additional confidentiality clause:
AND IT IS FURTHER UNDERSTOOD AND AGREED that the fact of and the terms of this Full and Final Release and the settlement underlying it will be held in confidence and will receive no publication either oral or in writing, directly or indirectly, by the Releasors, unless deemed essential on auditors’ or accountants’ written advice, for financial statement or income tax purposes, or for the purpose of any judicial proceeding, in which event the fact that the settlement agreement is made without any admission of liability will receive the same publication contemporaneously. The Releasors will not publish any particulars, press releases, or make any public statements about the matters released herein.
h. Ms. Tomkins did not reply to either the email sent by Mr. Cavanagh at 9:12 a.m., or to the subsequent email enclosing the release. She left on maternity leave as of August 12, 2021.
i. On August 24, 2021, Ronald Caza, the plaintiff’s current lawyer, sent an email to Mr. Cavanagh. In it, he said:
[M]y client is not willing to sign the release provided.
Mr. Caza went on to state:
The words ‘provided that Ms. Bouzanis executes a full and final release in LawPRO’s form’ in your email… are clearly adding another condition to our offer to have the claim dismissed without costs. By adding this condition, you have therefore refused our offer and made a counteroffer which was never accepted by our client.
j. On September 16, 2021, Mr. Caza formally withdrew his client’s offer to settle on a without cost basis.
Issue
Issue
3The issue raised on this motion is whether there was a settlement of this matter on a without cost basis, or whether the moving parties’ use of the phrase “provided that Ms. Bouzanis executes a full and final release in LawPRO’s form” constituted a new term and was, therefore, a counteroffer.
Law and Analysis
Law and Analysis
4This motion was brought pursuant to Rule 49.09 of the Rules of Civil Procedure:
Where a party to an accepted offer to settle fails to comply with the terms of the offer, the other party may… make a motion to a judge for judgment in the terms of the accepted offer, and the judge may grant judgment accordingly.
5A settlement agreement is a contract. It is governed by the law of contract regarding offer and acceptance (see Copperthwaite v. Reed, 2016 ONSC 1824, 57 B.L.R. (5th) 161, at para. 11). In deciding this matter, I must first determine the terms of the settlement agreement, whether those terms were accepted, and then interpret those terms considering the words of the contract, the contract as a whole, the factual matrix, and sound commercial principles: Ventas Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205, 85 O.R. (3d) 254, at para. 24.
6In Ventas, the Ontario Court of Appeal instructed, at para. 24, that a commercial contract must be interpreted:
(a) as a whole, in a manner that gives meaning to all of its terms and avoids an interpretation that would render one or more of its terms ineffective;
(b) by determining the intention of the parties in accordance with the language they have used in the written document and based upon the cardinal presumption that they intended what they have said;
(c) with regard to the objective evidence of the factual matrix underlining the negotiation of the contract but without reference to the subjective intention of the parties; and
(d) in a fashion that accords with sound commercial principles and good business sense that avoids a commercial absurdity.
7The contractual terms should be measured by an objective reading of the language chosen by the parties to reflect their agreement. In order for a contract to form, the parties must agree on all of the essential terms of the settlement: Olivieri v. Sherman, 2007 ONCA 491, 86 O.R. (3d) 778, at paras. 41 and 44. An essential term in one negotiation may not be essential in another; the court must consider the factual nexus of each negotiation: Atkinson v. Whaley Estate Litigation, 2019 ONSC 3708, at para. 58.
8The moving parties argue that the settlement occurred when the offer to settle the litigation on a without cost basis was accepted. Subsequently, all that remained was the negotiation of the terms of the release. The moving parties also argue that, had they known of the objection by the responding party to the confidentiality clause, they would have waived the need for such a provision. The court was invited to approve the settlement agreement of a dismissal of the litigation on a without cost basis and provide direction about the inclusion of a confidentiality clause in the release.
9The responding party argues that no settlement was reached because the moving parties made the execution of LawPRO’s standard form release and the confidentiality clause an essential term of the agreement; an essential term that was specifically rejected.
Was the execution of LawPRO’s standard release an essential term of the settlement?
Was the execution of LawPRO’s standard release an essential term of the settlement?
10It is well established that the delivery of a full and final release, in customary form, whose terms give effect to common sense and normal business practice, is an implied term of the settlement of an action unless the parties agree otherwise: see Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., [1995] O.J. No. 721 (Gen. Div.), at para. 24, aff’d [1995] O.J. No. 3773 (C.A.); Ferron v. Avotus Corp., 2005 CanLII 29655 (ON SC), 45 C.C.E.L. (3d) 226, (Ont. Sup. Ct.), at para. 26, aff’d 2007 ONCA 73, 55 C.C.E.L. (3d) 177; Hodaie v. RBC Dominion Securities, 2012 ONCA 796, at para. 3; Ahmed v. Shang, 2016 ONSC 4794, 58 C.C.L.I. (5th) 133, at para. 35.
11Hodaie involved an appeal from an order enforcing an oral settlement agreement. The oral settlement set out the quantum to be paid in exchange for a release, but the form of release had not been agreed upon. The appellant argued that without an agreement as to the form of the release, there could not be a settlement. The Ontario Court of Appeal rejected that argument, but in doing so, held the following:
If an exception to this rule exists, it cannot apply in this case. The form of release required was a simple release of the appellant’s claim. On the motion judge’s findings, the appellant knew he was required to supply a release.
12If the moving parties, in accepting the offer of a dismissal on a without cost basis, had been silent on the need for a release, or had furnished a release for discussion, this court would have no difficulty in finding that a settlement had been reached subject to an agreement or court direction on the terms of the release. That is not what occurred. Counsel for the moving parties accepted the offer “provided that” the LawPRO standard form release was executed.
13The ordinary meaning of “provided” as a conjunction is “on the condition or understanding that” or “as importing a limitation or qualification or restraint” (see Black’s Law Dictionary, (United States: Thompson Reuters, 2019); The Canadian Law Dictionary, (Toronto, ON: Law and Business Publications (Canada) Inc, 1980)).
14Restating Mr. Cavanagh’s email, using these alternative words, would result in the following:
I do now have instructions to consent to a dismissal without costs of the action against Mr. Greenwood, [on the condition] that Ms. Bouzanis executes a full and final release in LawPRO’s form, a copy of which I will send to you shortly.
Or
I do now have instructions to consent to a dismissal without costs of the action against Mr. Greenwood, on the qualification that Ms. Bouzanis executes a full and final release in LawPRO’s form, a copy of which I will send to you shortly.
15On the plain meaning of “provided that”, I find that the moving parties made the execution of the LawPRO standard release a condition of the settlement. It became an essential term of this agreement.
16During argument counsel for the moving parties made two additional submissions not raised in the factum. First, it was argued that, in 2022, the inclusion of a confidentiality clause could be a standard term in a release. Second, it was argued that the inclusion of the confidentiality clause in the release is of no real import because it was not complained about at the time the release was provided.
17Dealing with the first argument – whether a confidentiality clause should now be considered a standard term of settlement – the caselaw does not support this position. In Gilles Dube Investments Inc. v. Shooman (c.o.b. Fast Lube), 2013 ONSC 4348, Metivier J. was asked to determine whether a confidentiality clause was a standard term of an agreement. In rejecting this proposition, the court held at paras. 10 and 11:
I agree with the reasoning in Abouchar c. Ottawa-Carleton (Conseil scolaire de langue française section publique) (2002), 2002 CanLII 49423 (ON SC), 58 O.R. (3d) 675 (Eng.) (Ont. S.C.J.). As in that case, the parties here never discussed a non-disclosure clause before the offer to settle was accepted. There was no breach or repudiation of either the spirit of the terms of the concluded settlement. See also Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., [1995] O.J. No. 721 (Ont. Gen. Div.).
In the text The Law of Releases in Canada, Fred D. Cass, Canada Law Book, page 65, the author notes:
...the prudent course for a party seeking confidentiality is to bargain for it as part of the process of reaching an agreement.
18More recently, Abouchar was followed in Terranata Winston Churchill Inc. v. Teti Transport Ltd., 2020 ONSC 7577, 16 C.L.R. (5th) 315. Vella J. found that a confidentiality clause did not form part of a standard general release. His reasoning is set out at paras. 31-32 and 44-46:
General Principles for Implied Release Terms
When the parties have agreed that a release will be executed, but the settlement agreement is silent as to the content of the release, the court will imply that the parties agreed to sign a standard form general release consistent with the settlement - nothing more and nothing less. The court will imply only those terms that are "standard" or "usual" as those terms have been interpreted in the jurisprudence.
As noted at para. 24 in Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc. (1995), 1995 CanLII 10638 (ON SC), 23 O.R. (3d) 766 (Ont. Div. Ct.); aff'd [1995] O.J. No. 3773 (Ont. C.A.):
It is well established that settlement implies a promise to furnish a release unless there is agreement to the contrary. On the other hand, no party is bound to execute a complex or unusual form of release: although implicit in the settlement, the terms of the release must reflect the agreement reached by the parties. This principle accords with common sense and normal business practice.
In determining what terms falls within the scope of a standard release, the jurisprudence has established that the test to be applied is objective, rather than the subjective intentions of the parties to the settlement. Two guiding principles driving this analysis are the general purpose of releases and the business efficacy of settlement agreements.
In Abouchar, the court had to determine whether a non-disclosure clause was an implied term of the standard general release that was required by the settlement and silent with respect to the required terms. There was no discussion leading to the settlement concerning inclusion of a non-disclosure clause as a term of the release. When the defendant inserted a non-disclosure clause into the draft release in its favour, the plaintiff refused to sign it.
The court rejected the proposed non-disclosure clause finding this type of clause was not standard or usual in releases. The parties bargained for a standard general release with only the usual terms. Therefore, this type of clause was not specifically agreed upon by both parties it was not an implied part of the bargained for release. At para. 11, the court ordered the plaintiff to sign the release in the form proposed by the defendant excluding the non-disclosure clause: "The gist of a "complete and final" release is for the plaintiff to discharge the defendants (and other persons referred to therein) from any action, complaint, claim, indebtedness, etc. In my opinion, the non-disclosure clause is not part and parcel of a release. If one wishes to insert one, it must be "negotiated."
Abouchar is instructive but I disagree with Terranata's application of the ratio to this case. The key finding in Abouchar was that a non-disclosure clause is not a usual term of a general release. Accordingly, the court would not imply a non-disclosure clause into this standard general release because it was not specifically agreed upon in advance of the settlement.
19Unlike in Terranata, the agreement before me was not silent on the terms of the release. The moving parties made this particular release conditional on settlement, and it contained a provision that had not been negotiated.
20The Ferron case is very similar to the one at bar, in that, amid settlement discussions, the plaintiff changed counsel. New counsel suggested a settlement had not occurred. Within her analysis, the motions judge made the following findings of fact at para. 27:
Having reviewed the e-mails and transcriptions of voicemails before me, as well as the affidavit evidence of Ms. Taylor and the plaintiff, I am satisfied that on or around December 15, 2004 the parties were ad idem on all of the essential terms, namely that the defendant would pay the plaintiff the amount of $35,000 in full satisfaction of his claim, the plaintiff would execute a Release including a confidentiality clause and the action would be dismissed without costs.
21The court in Ferron found that the release containing a confidentiality clause was an essential term and further found that the parties had specifically agreed to that provision. There is no suggestion before me that Ms. Boukanis agreed to execute a release with a confidentiality clause.
22The second submission – that the confidentiality clause should not be considered significant because it was not raised by the responding party as an issue until the delivery of his responding material to this motion – also fails. I was not provided with any caselaw to support the proposition that a party must explain why they are rejecting an essential term of a settlement offer. The responding party clearly indicated she was rejecting the LawPRO release. The moving parties had made that release an essential term. As a result, there was no meeting of the minds and there is no settlement.
Conclusion
Conclusion
22The motion is dismissed.
23If costs of this motion cannot be agreed upon, the responding party may make written submissions of no more than three pages, plus any offers or bills of costs, by September 30,2022. The moving parties may make responding submissions (with the same page restrictions) by October 14, 2022.
Justice J. Hooper
Date: September 15, 2022