Court File and Parties

Court File No.: CV-13-37, CV-13-043-ES Date: 2023-07-14 Superior Court of Justice – Ontario

Between: CV-13-37 DERRICK LAMARCHE as the ESTATE TRUSTEE OF THE ESTATE OF BEATRICE JEAN LABRASH, Plaintiffs

• and - GRANT HENRY JAMES LABRASH, Defendant

CV-13-043-ES GRANT HENRY JAMES LABRASH, Plaintiff

• and - DERRICK LAMARCHE as the ESTATE TRUSTEE OF THE ESTATE OF BEATRICE JEAN LABRASH, Defendants

Before: Madam Justice T. J. Nieckarz

Counsel: N. Wainwright, for Derrick Lamarche as the Estate Trustee of the Estate of Beatrice Jean Labrash (Plaintiffs in CV-13-37, Defendants in CV-13-043-ES) R. Lepere, for Grant Henry James Labrash (Defendant in CV-13-37, Plaintiff in CV-13-043-ES) S. Lucenti, for the Interested Party, Bradley Allen Smith

Heard: April 5, 2023, via ZOOM at Kenora, Ontario

Motion for Judgment

Overview

[1] This is a motion for judgment in accordance with the terms of settlement alleged to have been agreed to between the parties.

[2] Grant Labrash (“Grant”) is the only child of the deceased, Beatrice Labrash (“Beatrice”).

[3] Beatrice had a Last Will and Testament dated June 3, 2010 (the “2010 Will”), in which she appointed her sister, Hellan Lamarche (“Hellan”) as her Estate Trustee and sole beneficiary of her estate.

[4] The 2010 Will changed the terms of a Will dated April 28, 2009 (the “2009 Will”), in which Beatrice appointed Grant as her Estate Trustee and sole beneficiary of her estate.

[5] Beatrice passed away on January 21, 2013. Hellan died in January 2018. Derrick Lamarche (“Derrick”) is Hellan’s son and succeeded her as the Estate Trustee of Beatrice’s estate (the “Estate”).

[6] There are two actions. The first action (CV-13-0037) was commenced by the Estate to recover real property that was transferred to Grant by right of survivorship after the death of Beatrice. The Estate position is that the property belongs to the Estate.

[7] The second action (CV-13-0043-ES) is a challenge to the validity of the 2010 Will by Grant (the “Will Challenge”). Grant alleges that Beatrice did not have capacity when she executed the Will and/or was unduly influenced to do so.

[8] Grant alleges that both actions have been settled pursuant to an agreement reached between counsel for the parties, with said terms being confirmed in a written Memorandum of Settlement and Release. He argues that the settlement was concluded on or before March 18, 2022.

[9] Derrick takes the position that there was no settlement reached. He argues that he instructed his lawyer to explore the prospect of settlement, but that any agreement was subject to signature and also the agreement of two other signatories, namely Bradley Lamarche (“Brad”) and Annette Fishwick (“Annette”) who are non-parties. Derrick, Brad and Annette are the three beneficiaries of Hellan’s estate and Estate Trustees.

[10] For the reasons that follow, the motion is denied without prejudice to Grant’s right to return it with further submissions as set out below. I find that while there was a settlement as against Derrick in his personal capacity and as Estate Trustee of Beatrice’s Estate that I would otherwise be willing to enforce, I cannot find that there was an agreement reached with Brad and Annette.

Facts

[11] As this is a case that turns on the facts, it is important to set them out in some detail.

Litigation Background

[12] It was agreed by the parties that the Will Challenge action would be tried first, given that the action against Grant would be unnecessary if the 2010 Will was set aside in favour of the 2009 Will.

[13] The Will Challenge action was scheduled for trial in October 2017. The trial had to be adjourned. The Estate’s lawyer got off the record and then Hellan passed away. Mr. Smith was retained by the Estate in approximately June 2019.

[14] Grant alleges that since Hellan’s death he was required to bring several motions to move the litigation forward. He further alleges that the Estate has failed to comply with some of those Orders. In particular, a motion was heard in December 2021, resulting in Derrick being ordered to pass his accounts for the period of January 21, 2013, to December 2, 2021 (the “Accounting Order”). He was ordered to do this by February 4, 2022. This did not occur.

[15] The Will Challenge was scheduled for trial commencing May 24, 2022. The court was notified that the matter had settled and was not proceeding. It is unclear to me from the evidence which lawyer notified the court or when.

Settlement Discussions

[16] Shortly after the Accounting Order was made, the parties engaged in settlement discussions through their lawyers.

[17] Mr. Smith alleges that on December 7, 2021, Derrick represented to him that he had full authority to settle the matter on behalf of himself and his siblings, Brad and Annette. There is no evidence from Brad and Annette as to whether they did in fact give Derrick authority to settle. There is no indication in the CaseLines file that Brad and Annette were served with this motion.

[18] Mr. Smith says that on December 7, 2021, he caused to be served on Grant’s lawyer, Ms. Lepere, an Acceptance of Offer with respect to a February 2019 offer to settle from Grant.

[19] On January 27, 2022, there was a conversation between Ms. Lepere and Mr. Smith to discuss the terms of settlement. There were some items not addressed by the offer to settle, including preparation of Estate taxes and payment of same. Mr. Smith attests that:

“Ms. Lepere and I continued to discuss the form of settlement until a final version was ultimately agreed upon.”

[20] January 31, 2022, following a phone call between Ms. Lepere and Mr. Smith, Ms. Lepere emailed Mr. Smith a draft version of a Memorandum of Settlement and Release.

[21] The more significant terms of the Memorandum of Settlement provided:

• Grant shall retain ownership of the property transferred to him by right of survivorship;
• A property located at 20 Park Crescent, Dryden, ON, that had been owned by Beatrice at the time of her death as her home, was to be sold and Grant was to receive the sale proceeds. This property had been transferred to Hellan as Estate Trustee for Beatrice, following which Hellan transferred it to herself personally. The property then was transferred to Derrick, Annette and Brad as Hellan’s Estate Trustees.
• Grant was to receive an accounting of, and the net proceeds of rental income from the Park Crescent Property only from December 2021 to date.
• Provisions were made for the completion of income tax returns and payment of “any income taxes owing by the Estate paid from the Park Crescent Property sale proceeds”.
• The residue of Beatrice’s estate was to be paid to Grant.
• There was a question in the draft as to what to do about the Estate’s legal fees.
• Derrick was relieved of his obligation to pass accounts on behalf of the Estate.
• Comprehensive releases were included.
• Both actions were to be dismissed.

[22] Correspondence was subsequently exchanged between the lawyers by email with their revisions to the draft documents and discussion as to some of the details required to give effect to the settlement.

[23] On February 22, 2022, Mr. Smith emailed Ms. Lepere noting that he had not yet had a response from Derrick with respect to the draft settlement documents. Mr. Smith set out certain questions and suggestions he had with respect to the process necessary to give effect to the terms of the settlement, and with respect to the issue of the Estate’s legal fees.

[24] On February 25, 2022, Ms. Lepere responded. On the same day Mr. Smith responded further by email, explaining details as to the ownership of the Park Crescent property and its sale. He stated in part:

“It is more complicated because Derrick and his siblings, as Hellan’s Trustees, have to list and sell the home and hence also execute the Minutes of Settlement in their capacity as Hellan’s Trustees. I spoke to Derrick and he does not object, but I have not spoken to Brad Lamarche or Annette Fishwick. I provide the Minutes of Settlement without prejudice so that we can work on the form of the Minutes of Settlement before providing to Hellan’s Trustees.”

[25] On February 28, 2022, by email, Ms. Lepere advised Mr. Smith that she had not yet sent the settlement documents to Grant and wanted to know if they are “close to a final draft at least between the two of us” before she sought Grant’s instructions.

[26] On March 1, 2022, Ms. Lepere sent a further email to Mr. Smith, with a revised draft of the Memorandum of Settlement, confirming “it appears we are close”.

[27] On March 3, 2022, Ms. Lepere emailed another revised draft of the Memorandum of Settlement, incorporating changes suggested by Mr. Smith. On March 3, 2022, Mr. Smith had asked that the settlement documents be amended so that Derrick was not signing in his personal, but representative capacity “whether Trustee for Beatrice’s Estate or Hellan’s Estate”. Mr. Smith also stated that:

“The agent told Derrick to list for $219,000. The agent also indicated it is a good time to sell and the house will likely sell for more than asking. So the list price and sale price as contemplated in the Minutes of Settlement can be $219,000.”

[28] Prior to Mr. Smith’s first March 3rd email, Ms. Lepere had sent another draft of the Memorandum of Settlement that dealt with the question about legal fees. In her email, Ms. Lepere stated, “…here is the finalized draft of the Minutes that we can take to our clients and get approval on…” She indicated she would be in contact further with Mr. Smith after she had received Grant’s approval of the Memorandum of Settlement.

[29] On March 3, 2022, Mr. Smith also indicated by email to Ms. Lepere:

“I will forward to Derrick for his review and approval. I will ask him to review with Annette Fenwick and Brad Lamarche…Let me know as soon as an agreement in principle, even if it takes some time to get the Minutes of Settlement executed by everybody. Apparently the agent thinks it is a good time to sell and wants to list the property. So if Grant is at least okay with the list/sell price, the home can be listed.” [sic]

[30] There was further email correspondence between counsel dealing with executor compensation and clarification of various expenses paid by the Estate.

[31] On March 11, 2022, Ms. Lepere received email correspondence from Mr. Smith requesting an amendment to the Memorandum of Settlement to correct a typographical error, following which he indicated he would have the Memorandum of Settlement circulated to Derrick and his siblings to sign. Mr. Smith also spoke of the realtor wanting to get the Park Crescent Property listed for sale and asking if the home could be listed now. This was a term of the Memorandum of Settlement.

[32] On March 17, 2022, Ms. Lepere emailed Mr. Smith confirming that Grant was “good with the settlement documents with the exception that he would like the List Price for the property to be $229,000…If your clients are content with that I will send you the revised documents and we can get the documents signed…”.

[33] On March 18, 2022, Mr. Smith confirmed by email that the change to the list price was acceptable and requested that the final form of the settlement documentation be forwarded for signature.

[34] The final version of the Memorandum of Settlement and Release was sent to Mr. Smith, by Ms. Lepere on March 18, 2022.

[35] Mr. Smith responded by email on the same date, stating “I will forward the Minutes of Settlement for execution. I will advise Derrick to list the house as soon as the 3 trustees have signed.”

[36] On March 23, 2022, Mr. Smith noted a further typographical error to Ms. Fishwick’s name. Ms. Clinker advised him to have the change handwritten and initialled. She also provided the word version of the Memorandum of Settlement and Release.

[37] Grant signed the Memorandum of Settlement and Release. A copy of the documents with Grant’s signature was provided to Mr. Smith on March 25, 2022. There were signature lines for Derrick, Brad and Annette. Brad and Annette’s signatures were required as the Park Crescent Property had been transferred into the joint names of all three of Hellan’s children in 2019.

[38] On March 25, 2022, Derrick signed the Memorandum of Settlement, but it does not appear to have been sent to Ms. Lepere, awaiting the signature of Brad and Annette. On March 28, 2022, Mr. Smith emailed Ms. Lepere indicating he made the change to the “typo”. He further indicated that Derrick expected to have the home listed “this week”.

[39] After he signed the Memorandum of Settlement, Derrick spoke with Brad and Annette. There was a concern about capital gains taxes being realized by the three upon the sale of the Park Crescent property. As Grant was to receive the sale proceeds, this would have meant that Derrick, Brad and Annette were out of pocket for the taxes. They felt collectively that this was not a fair result.

[40] Between March 29, 2022, and March 30, 2022, there was email correspondence between Mr. Smith and Ms. Lepere with respect to the income tax issue. Ms. Lepere confirmed Grant’s position that the house never should have been transferred to Hellan in her personal capacity, and therefore to her Estate Trustees. She confirmed that had the property remained in the name of the Estate, nominal taxes would be payable given it was Beatrice’s principal residence. Grant’s position was that if there are capital gains taxes payable by Hellan’s estate or her three trustees personally as a result of the transfer to them, they would need to be responsible for payment of those taxes.

[41] Brad and Annette did not sign the Memorandum of Settlement. Derrick’s signed copy of the Memorandum of Settlement was not provided to Ms. Lepere.

[42] On April 19, 2022, Ms. Lepere inquired of Mr. Smith whether the Park Crescent Property had been listed. Mr. Smith advised on April 20th that due to the income tax issue, the Park Crescent Property had not been listed. Ms. Lepere demanded receipt of the signed settlement documentation and confirmation that the property had been listed no later than April 25, 2022.

[43] There was no further response from Mr. Smith. Derrick did not comply with the Accounting Order. The trial did not proceed as the court was advised that the Actions had settled.

Lamarche / Smith Retainer

[44] Mr. Smith was not retained by Brad or Annette, or Hellan’s Estate. There is no suggestion that he took instructions from either of them with respect to the settlement. He dealt only with Derrick. He went on record in the court proceeding as the lawyer for Beatrice’s Estate.

[45] Mr. Smith states that on March 11, 2022, he spoke with Derrick who advised him that he had not heard back from Brad and Annette with respect to the draft Memorandum of Settlement. Mr. Smith says that his response was that their “silence is their agreement”. Derrick instructed Mr. Smith to proceed with finalizing the Memorandum of Settlement. Mr. Smith told Derrick he would contact Ms. Lepere and proceed accordingly.

[46] On March 28, 2022, Mr. Smith received a telephone call from Brad expressing concern about capital gains taxes arising out of the disposition of the Park Crescent Property. Otherwise, Mr. Smith did not deal directly with Brad or Annette. Mr. Smith advised that his understanding of the terms of settlement was that the capital gains were to be paid from the sale proceeds of the Park Crescent Property.

[47] On May 13, 2022, Mr. Smith’s retainer on behalf of the Estate was terminated.

[48] Mr. Smith takes the position that at all times he acted with Derrick’s express authority and instructions. His position is that Derrick instructed him to settle, and then signed the Memorandum of Settlement with full knowledge of the terms and conditions.

The Issues

[49] The primary issue to be determined is whether there was a binding settlement reached between the parties that should be enforced.

[50] Derrick has also raised the following issues as preliminary evidentiary issues:

a. Whether I should give any weight to the evidence of Mr. Smith given lawyer/client privilege concerns; b. What weight should be attributed to the affidavits of Michelle Roberts (assistant to Ms. Lepere) given alleged deficiencies with those affidavits; and c. Is this properly a Rule 49.09 motion?

Analysis

Evidence of Smith – Is there a waiver of privilege?

[51] On August 18, 2022, Fregeau J., considered the question as to whether the Affidavit of Bradley Allen Smith, sworn August 18, 2022, should be admitted into evidence. Mr. Smith is not a party to this proceeding. His counsel sought leave to intervene as a friend of the court by filing evidence. Not only was Mr. Smith’s professional competence placed at issue by Derrick, but Mr. Smith felt that Derrick’s initial affidavit in which he indicated he refused to sign the Memorandum of Settlement was misleading to the court.

[52] After reviewing the Affidavit of Mr. Smith in chambers, Fregeau J., concluded that it contained relevant and material information, and it is to be filed as part of the record on this motion. Despite this, Fregeau J., indicated that LawPro counsel for Mr. Smith was to file a factum addressing the issue of privilege raised by new counsel for Derrick. Fregeau J., recused himself from hearing the motion to enforce the settlement.

[53] Mr. Smith and Derrick’s counsel have each filed factums and provided caselaw on this issue. On January 23, 2023, RSJ Warkentin (as she then was) held a case conference to address the issue of the evidence to be presented at the return of the motion to enforce a settlement. The motion was originally to have been argued before Warkentin J., on March 3, 2023.

[54] In her Endorsement dated January 23, 2023, Justice Warkentin stated:

“[3]…I found that the only information required by this court on this motion is evidence related to the issue of whether Mr. Lamarche, in his role as Estate Trustee, agreed to the resolution of this action on the terms that are before the court.

[4] The issues between Mr. Lamarche and Mr. Smith regarding Mr. Smith’s representation of the estate are not part of this proceeding. The only evidence that should be before me is with respect to the narrow issue of whether a settlement was reached or not.

[7] Unless Ms. Lucenti requires additional paragraphs included in the Smith affidavit, the affidavit as proposed by Ms. Lepere shall be the information provided to me on this hearing. As part of his submissions in the motion proper, Mr. Wainwright may argue whether any of the remaining Smith affidavit should be admitted and if not, the basis for excluding the affidavit in part or its entirety.”

[55] Mr. Wainwright argues that not only does Mr. Smith not have standing in this proceeding, no part of the Smith affidavit should be relied upon by me in making my decision as it is all subject to lawyer/client privilege that has not been waived.

[56] Counsel for Grant argues that Justice Fregeau determined the admissibility of the Affidavit of Smith, while Justice Warkentin determined that the court required the Smith evidence related to the issue of whether Derrick agreed to the resolution of the action on the terms that are before the court. She argues that these judges have determined that this evidence is admissible and is to be considered by me.

[57] Counsel for Mr. Smith argues that:

a. The communications pertaining to settlement instructions between Derrick and Mr. Smith are not in fact privileged. b. If they are, Derrick has impliedly waived privilege over any communications concerning instructions given to Mr. Smith about settling the actions by virtue of the allegations contained in his affidavits. Derrick takes the position that Mr. Smith acted without his instructions in accepting the Memorandum of Settlement on his behalf and on behalf of the Estate. Mr. Smith has relevant evidence to the contrary.

[58] The allegations made by Derrick are as follow:

a. August 10th, 2022, affidavit of Derrick: * He did not provide Smith with instructions to settle on any particular terms, only to investigate the possibility of settlement and present him with an offer. Nothing was to be accepted without his review and approval. * He rejected the Memorandum of Settlement in March/April 2022 and refused to sign it as he thought it unfair. * After he rejected the settlement offer he decided to terminate the retainer with Smith. b. In the August 12, 2022, affidavit of Derrick: * He admits he was “initially agreeable” to the Memorandum of Settlement and signed it. * After speaking with his siblings, who refused to sign it because of the tax consequences of selling the Park Crescent property, he agreed with his siblings that the settlement was “not in our interest”.

[59] Justice Fregeau determined the admissibility of the Smith affidavit (the standing issue raised by Derrick). I read his decision as leaving it open to the judge hearing the motion to make any necessary rulings with respect to privilege. I do not accept counsel for Derrick’s submission that Justice Fregeau’s decision is nullified by him recusing himself from further proceedings.

[60] If it is, this issue was also subsequently dealt with by Justice Warkentin when she determined that evidence related to the issue of whether Derrick agreed to the settlement was to be put before the court, with submissions to be made later as to whether any other evidence of Mr. Smith should be admitted in part or its entirety. Justice Warkentin did not make specific findings with respect to the privilege issue. Given Derrick’s argument that Justice Fregeau’s order was nullified by his recusal, Justice Warkentin was merely deciding and confirming what Justice Fregeau had previously decided.

[61] This leaves the issue of privilege remaining for determination by me. As the evidence is before me and all parties, the question comes down to what use I may make of any privileged evidence of Mr. Smith.

[62] I find that the evidence of Mr. Smith as to the specifics of the settlement discussions with Ms. Lepere that comes from email or telephone communication between counsel is not privileged communication.

[63] Derrick argues that there was no settlement agreement concluded between counsel, merely a tentative agreement that was subject to approval by signature of the parties to the agreement. Alternatively, if there was an agreement, he argues it should not be enforced because Mr. Smith had no instructions to conclude a settlement on behalf of him or his siblings.

[64] As there is no suggestion that Brad and Annette personally, or as Estate Trustees of Hellan’s Estate were clients of Mr. Smith, no privilege attaches to Mr. Smith’s conversation with Brad or his evidence in this regard.

[65] Similarly, the discussions between Mr. Smith and Derrick with respect to Brad and Annette are not privileged. They are not confidential communications made during the course of seeking or giving legal advice that were of a confidential nature.

[66] I find that the evidence of Mr. Smith as to the conversations and communications he had with Derrick that caused him to believe he had instructions to settle the actions are privileged solicitor/client communications. They are discussions between Derrick and Mr. Smith directly related to the giving and receiving of legal advice, and during which Derrick confided in his counsel his motives for settling. To be relied on by me, I must find that Derrick’s evidence and/or position on this motion constitutes an implied waiver of this privilege.

[67] Based on my findings as set out below, the evidence of Mr. Smith as to privileged communications with Derrick is not required for my finding that a settlement between Grant and the Estate was concluded. This can be ascertained from the correspondence between counsel and the non-privileged evidence of Mr. Smith.

[68] The evidence of Mr. Smith as to what the discussions were with respect to his conversations with Derrick about Brad and Annette are relevant to Mr. Lepere’s arguments with respect to Mr. Smith’s authority to settle the Park Crescent property issue on their behalf. There is no other evidence before the court. If I am incorrect given the mixed nature of these communications (advice given and discussions about Brad and Annette) and these are privileged communications, then I would find that this is a limited use of these privileged communications.

[69] As explained in greater detail below, I would not have required the evidence of Mr. Smith’s conversations with Derrick to find that the settlement is enforceable as against Derrick and the Estate. I would have been content to rely on the ostensible authority of counsel and would have found it not necessary to have Mr. Smith’s evidence.

[70] If I am incorrect with respect to my conclusions pertaining to ostensible authority and a deeper analysis of Derrick’s instructions to Mr. Smith was required to deal with Derrick’s argument that Mr. Smith did not have instruction, then Mr. Smith’s evidence in this regard is highly relevant and I find an implied waiver of privilege with respect to discussions surrounding Derrick’s instructions to settle. In raising this issue, Derrick has placed Mr. Smith’s authority and conduct directly in issue, and Mr. Smith’s evidence bears directly on this question.

[71] In making these findings I have considered the following legal principles:

• Solicitor-client privilege is a fundamental right, but not an absolute one: Laurent v. Laurent, 2019 ONSC 3535, paras. 35-36.
• Privilege may be waived expressly or impliedly by the client.
• The law governing waiver of privilege by implication focuses on (1) implied intention and (2) fairness and consistency: Lawless v. Anderson, at para. 10.
• Intention is determined objectively, including when a party has taken a position that would make it inconsistent to maintain the privilege: Lawless v. Anderson, at para. 10; Froates v. Spears, [1999] O.J. No. 77, 1999 CarswellOnt 60 (Gen. Div.), at para. 12.
• Implied waiver has been found in circumstances where the relevance in question is high and the principles of fairness and consistency require disclosure to permit a party to defend itself or in the interests of justice, when the client puts the advice and conduct of the lawyer in issue, and when a party pleads reliance on legal advice for justify actions taken: Mathews, Dinsdale & Clark LLP v. 1772887 Ontario Limited et al., 2021 ONSC 2563, paras. 30 and 31, citing Martin v. GiesbreschtGriffin, 2018 ONSC 7794; Dramel Limited v. Multani, 2020 ONSC 4440, at para. 60; Laurent v. Laurent, at para. 37.
• Implied waiver has been found when a client alleges that his or her counsel did not have instructions to proceed with a course of action or accept terms of settlement. Denying that instructions were given to settle a matter puts that question into issue, thereby waiving privilege over communications related to any such instructions. Therefore, where a lawyer communicates an agreement to settle to the other side and his client subsequently denies giving instructions to his lawyer to settle, the party seeking to enforce the settlement may examine the lawyer as to whether he had received instructions to settle the matter: Tsakiris v. Tsakiris, at paras. 21-22; Bentley v. Stone, at paras. 4-12; Laurent v. Laurent, at para. 38, citing Benson v. Kitt, 2018 ONSC 7552 at para. 16.

Evidence of Roberts – Are the deficiencies fatal?

[72] Derrick argues that the Affidavit of Michelle Roberts sworn May 6, 2022, should not be relied on by this court to decide this motion. He takes particular exception to paragraph 7 of the affidavit that reads in part:

“The parties agreed to terms of settlement with respect to the within action and CV-13-037 in or about the end of January 2022 further to a phone discussion between Ms. Lepere (formerly Ms. Clinker), Grant’s lawyer and Mr. Smith, the Estate’s lawyer. It was agreed that Ms. Lepere would prepare an initial draft of the settlement documentation and same would be provided to Mr. Smith for review. The initial draft of the Memorandum and Release was provided to Mr. Smith on January 31, 2022.”

[73] Derrick argues:

• “The parties agreed to terms of settlement…further to a phone discussion between…” is a conclusory statement. Ms. Roberts was not a participant in the telephone conversation. She does not specify the source of her information, and whether she believes the information to be true, or the factual basis to support her conclusion.
• Even though it is evident that Ms. Lepere was the source of the information, and even if Ms. Roberts had stated she verily believes the information Ms. Lepere provided her with is true, whether the terms of settlement have been reached is not evidence but a conclusion with respect to a legal issue that this court must determine.
• Ms. Roberts does not make factual statements about what was said between Ms. Lepere and Mr. Smith during the conversation or about what terms were agreed upon, she simply concludes the parties agreed to terms of settlement without stating the factual basis for such a conclusion.
• First-hand evidence about what occurred during the phone call is available from Ms. Lepere. The moving party elected not to place it before the court and does so at his own peril.

[74] The balance of the Roberts affidavit sets out the content of communications between counsel, or other non-controversial matters such as the history of the litigation and background information.

[75] I agree with counsel for Derrick, for the reasons argued by him, that the conclusory statement in paragraph 7 that “The parties agreed to terms of settlement with respect to the within action…” shall be struck and not considered by me. Otherwise, the balance of the Roberts affidavit shall remain in evidence and may be relied on by me in making this decision.

Is there a binding / enforceable settlement?

Is this a Rule 49.09 motion? Do I have jurisdiction to hear it?

[76] The motion was originally framed as a motion under Rule 49.09 of the Rules of Civil Procedure. This rule gives the court discretion to grant judgment in accordance with the terms of an accepted offer to settle when there is non-compliance with those terms by one party or allow the action to continue.

[77] Derrick argues that Rule 49.09 does not apply and there is no jurisdiction to hear this motion under this rule. He argues that the Minutes of Settlement arose, not out of an accepted offer to settle, but out of negotiations that took place between counsel. I gather, although it is not clear, that the argument is that I do not have jurisdiction to hear the motion if it does not fall within Rule 49.09.

[78] Ms. Lepere, on behalf of Grant, argues that there was acceptance by Derrick of the February 20, 2019, offer. While the offer dealt with how the Estate was to be divided, there were various issues it did not deal with and had to be negotiated further. Having acknowledged that the terms of the Memorandum of Settlement differ somewhat from the accepted offer, and that the relief sought is judgment in accordance with the terms of the Memorandum of Settlement, she argues that unlike many cases dealing with Rule 49.09 this issue is somewhat irrelevant, as her client seeks not to continue with the action, but to enforce the settlement agreement. She states that her argument may be based on contractual principles of offer and acceptance, a meeting of the minds on the essential terms.

[79] I note that in Chan v. Lam, 2002 CarswellOnt 901 (C.A.), at para. 23, the Court addressed a situation in which a settlement agreement did not come squarely within Rule 49 and held that the motion to enforce the settlement could still be heard as a motion for summary judgment. The Court of Appeal treated the specification of Rule 49 as an irregularity and relying on Rule 2 of the Rules of Civil Procedure, stated that the “court is entitled to grant the relief necessary to secure a just determination of the matter in dispute”.

[80] I also note that this issue was considered by Daley J., in Falcone et al. v. Kapeleris, 2023 ONSC 99. In finding that a court has the jurisdiction to hear a motion to enforce settlement that does not fall within Rule 49.09, at para. 35 Daley J., cited the following excerpts from Donaghy v. Scotia Capital Inc.,/Scotia Capitaux Inc., 2009 ONCA 40:

[35] … The authority of the court to hear a motion to enforce a settlement is beyond question. Pursuant to s. 97 of the Courts of Justice Act, R.S.O., c. C.43 “the Court of Appeal and the Superior Court of Justice…may make binding declarations of right, whether or not any consequential relief is or could be claimed.” Section 96 also preserves the common law.

A contract to enforce a settlement was enforceable at common law. Thus, the court had jurisdiction to enforce the settlement by making a declaration as to whether the settlement was binding on the appellant.

The method chosen to enforce the settlement was a motion pursuant to rule 49.09. Whether the motions judge made the correct decision in enforcing the settlement pursuant to rule 49.09 is irrelevant to the question of jurisdiction. The appellant sued in the Superior Court and the respondent brought a motion for judgment according to the terms of an agreement. The motions judge had jurisdiction to hear and decide the issue of whether or not the proposed action was in fact the subject of a binding settlement precluding further litigation, regardless of what rule the motion was brought under.

[81] In light of the foregoing, I have proceeded on the basis that I have jurisdiction. While there was a written offer to settle and acceptance of that offer, the most essential terms of the actual accepted offer (80/20 division of the Estate) changed such that the Memorandum of Settlement was the product of negotiated settlement discussions.

Was a Settlement Concluded?

[82] A settlement agreement is a contract. In determining whether a settlement has been reached, ordinary contract law principles relating to offer and acceptance apply to determine whether:

a. The parties had a mutual intention to create a legally binding contract, with intention being an objective, as opposed to subjective determination; and b. The parties reached an agreement on all essential terms of the settlement.

See: Cox v. Baker, 2019 ONSC 2859, at para. 25, citing Olivieri v. Sherman, 2007 ONCA 491, at paras. 41 and 44, and Smith v. Coca Cola Bottling Co., 2017 ONSC 396, at para. 8.

[83] A determination as to whether there is a concluded agreement does not depend on the actual state of mind of one of the parties, but rather where the agreement is in writing, it is to be measured by an objective reading of the language chosen to reflect their agreement: Olivieri v. Sherman, at para. 44.

[84] In this case, the intention of the parties is to be gleaned from the email correspondence and evidence of Mr. Smith as to the telephone discussions he had with Ms. Lepere.

[85] I find that the evidence supports Grant’s position that the parties to this litigation intended to create a legally binding contract and reached an agreement on all essential terms of the settlement. I find there was a meeting of the minds as between Grant and Derrick. The evidence does not support Derrick’s argument that (a) there was no agreement with him, or (b) if there was an agreement, it was intended to be conditional on the signatures of each of Derrick, Brad and Annette:

a. On December 7, 2021, Mr. Smith sent to Ms. Lepere an acceptance of the February 20th, 2019, offer to settle. This was the first indication of Derrick’s intention to settle and create a legally binding contract. b. The accepted offer to settle allowed Derrick to continue to be the Estate Trustee of the Estate and required the Estate to sell the property received by Grant by right of survivorship, and the Park Crescent property. The net sale proceeds were to be divided 80% to Grant and 20% to Hellan’s Estate. The Offer required Derrick to provide an accounting with respect to Estate expenses, including any expenses claimed in relation to either property. c. The Memorandum of Settlement that was drafted by Ms. Lepere and forwarded to Mr. Smith on January 31st, 2022, contained different terms, resulting in Grant receiving 100% of the net sale proceeds, and the Estate accounting requirements being significantly changed. d. There is no explanation in the affidavits before me to explain the change between the accepted offer to settle. Mr. Smith’s affidavit does assist, and specifically his file notes dated January 27, 2022, from his telephone conversation with Ms. Lepere. These notes say: “-she believes an agreement on the important issues -some details to work out BAS – farm won’t be sold; G receives the additional 20% -need to figure process to conclude as quickly and least cost R- won’t do an Estate accounting BAS – Derrick won’t pay expenses out of his pocket. e. Various versions of the Memorandum of Settlement were exchanged. On March 3rd, Mr. Smith indicated that he would forward the latest draft to Derrick “for his review and approval. I will ask him to review with Annette Fenwick and Brad Larmarche”. I find that no settlement was concluded as of yet, given clear language that that the Memorandum of Settlement needed to be approved by Derrick, Brad and Annette. f. The situation changed on March 11, 2022. At that point Mr. Smith indicated that he would have the Memorandum of Settlement signed. The various details that the parties were negotiating were agreed upon. On March 17th Grant asked for one amendment that Mr. Smith confirmed on March 18th was agreeable. All terms were agreed upon as of March 18th. This made some sense given there was no change to the essential terms. I find that as March 11th an agreement was reached between Derrick (the Estate and personally) and Grant. If I am incorrect, then I find there was agreement at least on March 18th. g. The terms of the agreement are straightforward and unconditional. It deals with the two main assets that were the subject-matter of the disputes; the property Grant had owned jointly with Beatrice and the Park Crescent Property (the only asset of value of the Estate). It deals with who is to retain the value of those assets, being Grant. The agreement deals with what Derrick was still responsible to provide an accounting of, and the legal fees of the parties. h. The language in the email communication between counsel, viewed objectively, does not suggest that the agreement is conditional upon the signature of any party. On March 18th, Mr. Smith requested the final form of the settlement documentation for signature and not approval by his client as he had done earlier on March 3rd. It is clear to me that there was agreement as to the terms, and the signatures of Grant and Derrick were merely a formality required to give effect to the agreement. The fact that Mr. Smith was anxious to proceed with the sale of Park Crescent and that the court was notified that the matter had settled and was to be removed from the trial list, is also indicative of the fact that counsel (at least) believed there to be a binding settlement that they were proceeding to execute while they awaited the necessary signatures from the parties to the agreement. Derrick and Grant both signed the Memorandum of Settlement as of March 25th.

[86] The difficulty is this. The settlement that was concluded was between Grant and Derrick in his personal capacity and as Estate Trustee of the Estate. These were the parties to the litigation. Derrick did also sign the Memorandum of Settlement as an Estate Trustee of Hellan’s Estate, but I have not seen Hellan’s Will and do not know if he is able to bind Hellan’s Estate himself (i.e. if Estate Trustees for Hellan’s Estate are able to act severally). I have no evidence from Brad or Annette, but also no affidavit of service to show that they were served with this motion.

[87] This becomes important because of the transfer of Park Crescent into Hellan’s name personally, and now in the name of Hellan’s Estate Trustees. Regardless of whether the transfer to Hellan was proper or not, the difficulty is that the Memorandum of Settlement purports to deal with an asset no longer owned by the Estate. In this respect, what the Estate agreed to cannot be executed without the consent of Hellan’s Estate (or other relief that sets aside the transfer to Hellan’s Estate).

[88] Ms. Lepere argues that Derrick as Estate Trustee has the authority to bind the beneficiaries of the Estate. In this case, based on the 2010 Will, Hellan (and now her estate) is the beneficiary. I would accept this argument but for the intervening transfer of the property to Hellan and her Estate.

[89] I have no hesitation concluding that there was a settlement reached between Grant and Derrick, but I am concerned that there was no settlement with Annette or Brad as the remaining Estate Trustees of Hellan’s Estate and that this is a crucial missing step. I would feel differently if the property was still in the name of the Estate. Then I would agree that Hellan’s Estate Trustees would have to accept as binding the decision of Derrick as Estate Trustee of Beatrice’s estate. Similarly, if Derrick had actual authority to bind Hellan’s Estate. Otherwise, I am uncertain as to how I can conclude that there was a meeting of the minds that binds all of Hellan’s Estate Trustees and/or that the agreement is enforceable as against them.

[90] Whether or not the transfer of Park Crescent was proper, as it stands right now the settlement agreement requires the agreement of Hellan’s Estate. I will require caselaw authority and further submissions before I can accept the proposition put forward by Ms. Lepere as applying to a settlement purporting to deal with property already transferred to a beneficiary (even if improperly). Otherwise, there is no objective evidence of any intention on the part of Hellan’s Estate to enter into a binding settlement agreement and I do not have Brad or Annette’s evidence confirming what Derrick told Mr. Smith, being that he had authority to instruct on behalf of Hellan’s Estate. Until this issue is determined, there can be no enforceable settlement as the sale of the Park Crescent property and transfer to Grant of the net sale proceeds is a crucial and fundamental term.

[91] Ms. Lepere argues that I can rely on Mr. Smith’s representations that lead her to believe he had the authority of all three of the Estate Trustee’s of Hellan’s Estate to conclude a settlement; that it is not a matter of his actual authority, but rather what he represented to opposing counsel, which was that he had agreement from all three of Derrick, Annette, and Brad.

[92] Mr. Smith did indicate on March 11th, 2022, that he would proceed to have all three trustees of Hellan’s Estate sign the settlement documents. I accept that Mr. Smith believed that he had the authority of all three individuals to settle based on Derrick’s representations to him. I accept that it was represented to Ms. Lepere that a settlement was concluded. I appreciate Ms. Lepere’s concern that she should not have to go behind the representations of a lawyer as to their authority to act, absent information to suggest she needed to.

[93] The challenge is that based on the record before me I cannot conclude that Hellan’s Estate (by her trustees, Derrick, Brad and Annette) were Mr. Smith’s client. Mr. Smith does not claim to have been retained by Hellan’s Estate.

[94] The principle of ostensible authority, as I understand it, is that a lawyer has ostensible authority to effect a binding settlement on behalf of his or her client and unless the opposing side has some knowledge of some limitation on the lawyer’s retainer, any settlement made by the lawyer will be binding on the client regardless of any dispute between the lawyer and his own client as to the scope of the lawyer’s instructions: Nithinanthan v. Thirunavukarasu, 2016 ONSC 2465, at para. 46.

[95] In Srajeldin v. Ramsumeer, 2015 ONSC 6697, 343 O.A.C. 122, para. 33 (Div. Ct.), Malloy J., at para. 21, explained the general principle of ostensible authority, citing the following passage from the Court of Appeal in Scherer v. Paletta, [1966], 2 O.R. 524:

“A solicitor who retainer is established in the particular proceedings may bind his client by a compromise of these proceedings unless his client has limited his authority and the opposing side has knowledge of the limitation, subject always to the discretionary power of the Court, if its intervention by the making of an order is required, to inquire into the circumstances and grant or withhold its intervention if it sees fit; and, subject also to the disability of the client. It follows accordingly, that while a solicitor or counsel may have apparent authority to bind and contract his client to a particular compromise, neither solicitor nor counsel have power to bind the Court to act in a particular way, so that, if the compromise is one that involves the Court in making an order, the want of authority may be brought to the notice of the Court at any time before the grant of its intervention is perfected and the Court may refuse to permit the order to be perfected. If, however, the parties are of full age and capacity, the Court, in practice, where there is no dispute as to the fact that a retainer exists, and no dispute as to the terms agreed upon between the solicitors, does not embark upon any inquiry as to the limitation of authority imposed by the client upon the solicitor.” [emphasis mine]

[96] I also note para. 29 of Srajeldin v. Ramsumeer, in which Justice Malloy stated that lawyers and other professionals in the litigation process are entitled to rely upon the word of another lawyer without questioning the motives, or the nature of the instructions or retainer of the lawyer with whom they are dealing. I am sympathetic to Ms. Lepere’s arguments, but absent further evidence and/or submissions and caselaw, I am unable to conclude that the principle of ostensible authority can extend to non-clients of the lawyer in circumstances such as these.

Should the Negotiated Agreement be Enforced?

[97] If a settlement is found to exist, then the court must determine whether the settlement should be enforced. In 31 Kingsbury Inc. v. Delta Elevator Company Limited, 2019 ONSC 2859, Faieta J., at para. 36 stated:

“Whether a court should refuse to enforce a settlement agreement is informed by the competing objectives of promoting settlement and avoiding the enforcement of a settlement that would result in a clear risk of an injustice: Brzozowski v. O’Leary, para. 44; Srajeldin v. Ramsumeer, 2015 ONSC 6697, 343 O.A.C. 122, para. 33 (Div. Ct.). In Donaghy v. Scotia Capital Inc./Scotia Capitaux Inc., para. 15, Justice Karakatsanis, as she then was, stated:

The principle of finality is an important principle. Settlements entered into with the assistance of counsel should be upheld except in the clearest of cases and in exceptional cases.”

[98] The strong presumption in favour of finality of settlements was also recognized by our Court of Appeal in Deschesnes v. Lalonde, 2020 ONCA 304, at para. 27.

[99] If I am wrong with respect to my concern about Annette and Brad’s lack of agreement, I would have enforced the settlement.

[100] Derrick argued that the agreement should not be enforced because Mr. Smith did not have authority to conclude an agreement on his behalf.

[101] In this regard, I would accept that the principle of ostensible authority governs. There is no reason on the circumstances of this case to do otherwise.

[102] Derrick’s own evidence is that he signed the Memorandum of Settlement, even though he initially gave evidence that he refused to do so. Even without the evidence of Mr. Smith this calls into question the credibility of Derrick’s evidence that he did not agree to a resolution and that he only gave Mr. Smith authority to explore the possibility of a resolution. I find that he did agree to the terms, but later changed his mind after speaking with his siblings.

[103] If I am wrong with respect to the foregoing findings, then Mr. Smith’s evidence as to the instructions he received from Derrick becomes highly relevant. Given the potential for further proceedings between Derrick and Mr. Smith I am loathe to make further findings on this issue in the alternative, as I may otherwise do.

[104] I would also find that there is no other reason not to enforce the settlement. There is nothing to suggest that the settlement is unconscionable or improvident. There is no inequality of bargaining power or lack of good faith. No injustice would have been created by the settlement. Derrick’s primary concern with the settlement terms is that Hellan’s Estate will have to pay capital gains taxes upon the sale the Park Crescent property. If the capital gains issue cannot be avoided by a declaration that the transfer was improper, then I see no inequity in Hellan’s Estate paying the capital gains taxes on the sale. Given the issues surrounding the 2010 Will Challenge, the property should not have been transferred to Hellan while there was an ongoing dispute, other than in her capacity as Estate Trustee of Beatrice’s Estate. If Derrick alleges a resolution that did not include payment of the capital gains taxes was not as he instructed Mr. Smith, then that is an issue as between Derrick and Mr. Smith. I make no findings in this regard.

[105] I also agree with counsel for Grant that Derrick derived a considerable benefit from the settlement in that he did not have to provide an accounting of the Estate that dates back to Beatrice’s date of death. This factors into my finding that there is no injustice arising out of enforcement of the settlement.

Order

[106] In light of the foregoing the motion for judgment is denied, without prejudice to Grant’s ability to return the motion before me to deal with the issues raised in this decision pertaining to the authority of this court to bind Hellan’s Estate to the settlement. While this issue was raised by me at the motion hearing, there was not an opportunity for fulsome submissions with caselaw.

[107] In the unusual circumstances of this case, it strikes me as most equitable that each party bears their own costs. Having said this, I am not aware of offers or other communications with respect to the motion that could bear upon the question of costs, and I am otherwise open to the submissions of the parties. If a party is claiming costs:

a. The claiming party shall deliver their costs submissions, limited to 5-pages double-spaced (excluding Bill of Costs, Caselaw and relevant offers or correspondence), within 30 days of the release of this decision. b. The responding party shall deliver their costs submissions, also limited to 5-pages, within 30 days of receipt of the claiming party’s submissions. c. Any reply shall be delivered within 15 days of receipt of responding submissions, and shall be limited to 2-pages, double-spaced.

“Original signed by” The Honourable Madam Justice T.J. Nieckarz

Released: July 14, 2023