Court File and Parties

COURT FILE NO.: CV-15-539635 DATE: 20221205 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: iPRO REALTY LTD., Plaintiff AND: GEORGE SOKKAR, WAGIH ATTALLA, ST. MINA INC., 2276457 ONTARIO INC., REVEL DEVELOPMENT INC., MINA GEORGE SUKAR, ROYAL LEPAGE FLOWERS CITY REALTY, FLOWERS CITY REALTY INC. and ANDREW TEEPLE, Defendants/Responding Party

BEFORE: Koehnen J.

COUNSEL: Sean Dewart, Brett Hughes, and Megan Phyper, for the Plaintiff Arnie Herschorn, for the Defendants, George Sokkar, Wagih Attalla, St. Mina Inc., Mina George Sukar, Royal LePage Flowers City Realty, and Flowers City Realty Inc.

HEARD: November 25, 2022

ENDORSEMENT

[1] The defendants George Sokkar, Wagih Attalla, St. Mina Inc., Mina George Sukar, Royal Lepage Flowers City Realty and Flowers City Realty Inc. move to dismiss the action as against them or, in the alternative, to permanently stay the action as against them on the basis of the principles set out in Aecon Buildings v Stephenson Engineering Ltd.[^1] and Handley Estate v DTE Industries Limited.[^2]

[2] On December 15, 2021 the plaintiff reached a settlement agreement with the defendant Andrew Teeple. Teeple was released from the action without costs in exchange for a payment of $15,000.

[3] The settlement was not disclosed to the remaining defendants until March 31, 2022. The moving parties say the plaintiff had an obligation to disclose that settlement immediately and that the three-month delay in disclosure warrants a dismissal or stay of the action.

[4] For the reasons set out below, I dismiss the motion. In my view this was not the sort of settlement that calls for immediate disclosure to other parties because it did not change the litigation landscape to the extent required by cases like Aecon and its progeny.

Analysis

[5] It is important to note at the outset that not all settlements must be immediately disclosed to other parties. It is only cases that “entirely” or “fundamentally” change the litigation landscape that must be disclosed immediately.[^3] Settlements entirely or fundamentally changed the litigation landscape if they change "the adversarial position of the parties set out in their pleadings into a co-operative one" or involve “a party switching sides from its pleaded position".[^4]

[6] Justice Ferrier explaining the need for immediate disclosure as follows in Pettey v. Avis Car Inc.:

[…] The agreement must be disclosed to the parties and to the court as soon as the agreement is made. The non-contracting [non-settling] defendants must be advised immediately because the agreement may well have an impact on the strategy and line of cross-examination to be pursued and evidence to be led by them. The non-contracting parties must also be aware of the agreement so that they can properly assess the steps being taken from that point forward by the plaintiff and the contracting [settling] defendants. In short, procedural fairness requires immediate disclosure. Most importantly, the court must be informed immediately so that it can properly fulfil its role in controlling its process in the interests of fairness and justice to all parties.[^5]

[7] Immediate disclosure may not be required for simple settlement agreements where the plaintiff releases one of several defendants from the action. Whether that is the case will, will depend on the facts of the case.[^6]

[8] The moving parties submit that the litigation landscape changed fundamentally because they are, by virtue of the settlement, precluded from extracting contribution and indemnity from the settling party under s. 1 of the Negligence Act.[^7] That section requires the court to determine the degree in which each of multiple defendants is at fault. Although, each such defendant will be jointly and severally liable to the plaintiff for the plaintiff’s entire loss, the defendants are able to seek contribution and indemnify from each other in the degree in which they are respectively found to be at fault or negligent.

[9] The moving party submits that before the settlement, s. 1 of the Negligence Act requires the court to apportion liability between the moving parties and the settling parties. Now that the settling parties are removed from the litigation, no apportionment will be attributed to them.

[10] It is important to note in this regard that the moving parties did not mount any cross-claim against the settling defendant. The moving parties say this is immaterial because the court is obliged to apportion liability under s. 1 of the Negligence Act even where there are no cross-claims. The plaintiff submits that apportionment under s. 1 is available only in the presence of cross-claims. I do not need to determine which of the parties is correct on this point.

[11] Even if the court is required to apportion liability in the absence of a cross-claim, some sort of claim by one defendant against the other is still necessary in order to claim contribution for the settling party’s apportionment of liability. This is clear from s. 18 of the Limitations Act[^8] which provides that the limitation period for a cross-claim begins to run on the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought. There would be no need for that provision if one defendant could seek contribution and indemnity from another in the absence of a cross-claim. Significantly, s. 18 changes an earlier limitations principle which held that limitation periods for contribution began to run only after a court had made a finding of liability and apportionment.

[12] There would be no purpose to s. 18 of the Limitations Act if contributions for indemnity under s. 1 of the Negligence Act were available in the absence of a cross-claim or separate claim amongst defendants.

[13] In this case, there were no cross-claims between defendants and the limitation period to mount such cross-claims expired long before the settlement was entered into.

[14] On that analysis the inability of the court to apportion liability, assuming the court would have done so in this case, amounts to the loss of a purely academic exercise. It does not amount to a fundamental change in the litigation landscape. It may be that the litigation landscape would have fundamentally changed had the limitation period for cross-claims not yet expired when the settlement was concluded. In that situation immediate disclosure of any settlement may have been critical because it would be important for the non-settling defendant to initiate a third-party claim against the settling defendant as quickly as possible.

[15] In circumstances involving multiple defendants, the defendants would appear to have three choices. They could assert cross-claims against each other. They could enter into a tolling agreement between themselves which would allow them to mount a united front in the litigation but would allow for the possibility of claims for contribution and indemnity long after the limitation period would otherwise have expired. Or, they could, as they did here, do nothing.

[16] Had the moving parties wanted to protect themselves against the situation they are in now, they should either have mounted a cross-claim before the limitations period expired or they should have entered into a tolling agreement. They failed to do either. That was, however, their decision to make.

[17] In foregoing circumstances of this case, I find that the simple release of one defendant on a without cost basis, without any cooperation between the plaintiff and the settling parties was not the sort of settlement that fundamentally changed the landscape of the litigation in a way that required “immediate” disclosure.

[18] The parties have agreed that the successful party on the motion should be paid costs of $10,000. I therefore order that the moving parties pay the plaintiff its costs of $10,000 within 30 days.

Koehnen J.

Released: December 5, 2022

[^1]: Aecon Buildings v Stephenson Engineering Ltd. 2010 ONCA 898 [^2]: Handley Estate v DTE Industries Limited 2018 ONCA 324 [^3]: Poirier v Logan, 2021 ONSC 1633 at para. 60 (Ont. SC), appeal dismissed 2022 ONCA 350; Handley Estate v. DTE Industries Limited, 2018 ONCA 324 para. 37-41. [^4]: Handley Estate v DTE Industries Limited, 2018 ONCA 324 at para. 39-41; Tallman Truck Centre Limited v KSP Holdings Inc., 2021 ONSC 984 at para. 46 (Ont SC), appeal dismissed 2022 ONCA 66; Poirier v Logan, 2021 ONSC 1633 at para. 72, appeal dismissed 2022 ONCA 350. [^5]: (1993), 13 O.R. 725 (Gen. Div.). [^6]: See for example: Poirier v Logan, 2021 ONSC 1633 at para. 60 (Ont. SC), appeal dismissed 2022 ONCA 350; Dussault et al. v Tong et al., 2022 ONSC 3866 at para. 45 (Ont. SC); Performance Analytics Corporation v. McNeely, 2021 ONSC 8297 at para.11, 34, aff’d at 2022 ONCA 731. [^7]: Negligence Act, RSO 1990, c N.1. [^8]: Limitations Act, 2002, SO 2002, c 24, Sch B.