COURT FILE NO.: CV-20-00637449-0000
DATE: 20240524
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: AMIR TAJBAKHSH, 2635063 ONTARIO LTD., DAVID HAY LTD. and 1472259 ONTARIO LIMITED, Plaintiffs
– and –
ROBERT PORTER and LUIGI ROTONDO, Defendants
– and –
FIX AUTO CANADA INC., ROBERT MINOTTI, MICHAEL MINOTTI, 2741162 ONTARIO INC. and 2762423 ONTARIO LIMITED o/a FIX AUTO OAK RIDGES, Third Parties
BEFORE: Justice E.M. Morgan
COUNSEL: Matthew Kersten, for the Defendants Robert Cohen, for the Third Parties Oleg Roslak, for Himelfarb Proszanski
HEARD: May 21, 2024
ENFORCEMENT OF SETTLEMENT
[1] The Defendants move under Rule 49.09 to enforce what they say is a firm settlement agreement that they reached with the Plaintiff and with the Third Parties.
[2] As Defendants’ counsel describes it, the Third Parties and the Plaintiff were supposed to pay the Defendants $250,000 and $100,000, respectively, as part of a deal in which the Third Parties would purchase all of the assets of a franchise business – Fix Auto Richmond Hill (“FA-RH”) – from the Plaintiff. In return, the Defendants were to release a security interest which they held over the assets of FA-RH. According to Defendants’ counsel, the settlement had been percolating in various exchanges between the parties for a number of months, but was firmly concluded in a telephone conversation on July 23, 2020 between a lawyer for the Plaintiff – Peter Proszanski – and a lawyer for the Defendants – Jonathan Frustaglio.
[3] As another aspect of the settlement, the Third Parties were to purchase the FA-RH assets from the Plaintiff. That franchise, with all of its assets, had previously been acquired by the Plaintiff from the Defendant. Disputes flowing from that purchase form the broader context of the present action. Everyone agrees that the Fix Auto franchisor would be required to approve the terms of any sale of a franchise.
[4] As yet another aspect of the settlement, the Plaintiffs were to earn the $100,000 payable to the Defendants by selling their interest in another franchise business – Fix Auto Oak Ridge (“FA-OR”) to an unrelated buyer. The proceeds of sale of that transaction were to be paid by the buyer to the Plaintiff’s lawyers, in trust, and $100,000 would then be further disbursed to the Defendants.
[5] I should indicate that several months prior to the motion before me, Plaintiffs’ counsel removed themselves from the record. Consequently, they did not attend at the motion to argue the Plaintiffs’ case. Another member of Mr. Proszanski’s firm, Oleg Roslak, did appear at the hearing, but his role was, at my insistence, confined to defending his law firm’s conduct and its dealing with trust funds, as further discussed below. He did not engage in a fulsome presentation of the Plaintiffs’ position. That said, the record does contain the materials the law firm filed while they were still on record for the Plaintiffs, including their factum and Mr. Proszanski’s affidavit and cross-examination.
[6] The essential terms discussed between Mr. Proszanski and Mr. Frustaglio were reiterated in an email sent by Mr. Frustaglio to Mr. Proszanski the same day:
Hi Peter,
Further to our call this afternoon, I confirm that your clients agree to the following:
(1) $350k (as outlined in subparagraph (a) and (b) below) to Bob Porter and Lou Rotondo (unencumbered) with a target closing date in the first week of August 2020;
a. $100k from Taj and/or related companies from a sale of business that is scheduled to close by the end of this month/beginning of August, which will be held in trust by your office; and
b. $250k from Minotti (Minotti to confirm that funds are available);
(2) Upon Sutherland Law’s receipt of $350k from your office and our confirmation that same has cleared bank accounts, out clients will proceed to release the security; and
(3) The above noted settlement is without prejudice to Taj and/or related companies and/or Bob Porter and/or Lou Rotondo advancing any claims or defences they would be entitled to advance regarding any and all matters related to the sale of business between Taj and/or related companies and Bob Porter and/or Lou Rotondo.
Further to the above, Minutes of Settlement are to be drafted and executed (the terms of settlement above-enumerated are collectively referred to as the “Settlement”).
[7] Later that day, Adam Freedman, a business lawyer for the Third Parties (not counsel of record in this litigation), sent Defendants’ counsel an email which the Defendants say confirms the Third Parties’ agreement with the settlement: “I understand that Taj/Porter [i.e. Plaintiff/Defendant] have potentially reach some kind of resolution. Note that my client will need a signed APS to obtain the $250 from its financing source so we need to know from whom we are buying the assets.”
[8] The next day, July 24, 2020, lawyers for all of the concerned parties held a conference call. That call is described by Mr. Frustaglio in his affidavit as being arranged in order to:
…tie up any loose ends and discuss what documentation would be required…including the following:
a. the Plaintiffs and Robert Minotti [the Third Party] would execute an Agreement of Purchase and Sale;
b. the Plaintiffs would be provided with an asset list enumerating the assets that the Plaintiffs would be selling to Robert Minotti as part of the transaction; and
c. both the Plaintiffs and the Defendants would execute Releases in favour of Robert Minotti.
[9] Counsel for the Third Parties points out that his clients were not part of the settlement phone call on July 23, 2020. In fact, on August 4, 2020, counsel for the Defendants sent counsel for the Plaintiffs a draft Minutes of Settlement for their review. Those Minutes have never been signed by the parties.
[10] A perusal of the draft Minutes produced by the Defendants discloses that there is no signing line for the Third Parties. Mr. Minotti is mentioned in the one of the “Whereas” clauses, but that clause on its face is a preambular clause, not an operative clause of the Minutes. Mr. Minotti and his companies are part of the background, as it were, not the foreground of the document.
AND WHEREAS Robert Minotti and his related entities (“Minotti”) wish(es) to purchase all assets of 147 and/or Hay that are currently locate at e premises known as Fix Auto Richmond Hill, 169 Centre Street, Richmond Hill, Ontario (the “Assets”), the list of Assets (the “Asset List”) is attached hereto and marked as Schedule “___”.
[11] Counsel for the Third Parties submits that at most what Mr. Freedman’s supposed agreement with the settlement amounts to is an agreement to agree. It expresses an aspiration, not a commitment. Mr. Freedman’s email of July 23 and phone conversation of July 24 are, in my view, a confirmation of precisely what the “Whereas” clause of the draft Minutes indicates – i.e. the Third Parties’ aspiration to buy the FA-RH assets – a “wish” list, as it were – not an obligation to do so.
[12] Even if the unsigned Minutes represent a firm agreement, they could not impose a contractual obligation on the Third Parties who neither participated in the Minutes’ negotiation nor were meant to sign the Minutes as a party. The Third Parties’ tangential role in the proposed settlement – the purchase of FA-RH from the Plaintiffs – was still undocumented and was not ready to be concluded when the July 23, 2020 phone call took place or when the draft Minutes were produced.
[13] Ultimately, and despite having perhaps wished to do so, the Third Parties and the Plaintiffs never entered into or signed an Agreement of Purchase and Sale, and never concluded any purchase and sale transaction. The record indicates that the Plaintiff, Amir Tajbakhsh, refused to proceed with the APS and therefore the FA-RH assets were never sold.
[14] Accordingly, FA-RH and its assets are still owned by the Plaintiffs, and the Defendants’ security interest in those assets remains intact. Their security was never discharged and, with the exception of delay that is compensated by interest on any debt owed to them, they have lost nothing in reliance on the supposed settlement agreement. Presumably, the Defendants can enforce their security at any time if there is a default that entitles them to do so.
[15] It should be noted that neither the Plaintiffs nor their counsel responded negatively to the July 23, 2024 email from Mr. Frustaglio confirming what he said were the terms of the settlement agreement until several weeks later. On August 18, 2024, Richard Quant, another lawyer in Mr. Proszanski’s law firm, wrote to Mr. Frustaglio and said that he doesn’t think that there is a settlement agreement. Mr. Proszanski himself has provided an affidavit in this motion in which he very firmly states that there was only a framework for an agreement worked out between himself and Mr. Frustaglio, and that there never was an enforceable settlement agreement concluded at all.
[16] It is, of course, curious as to why it took Plaintiffs’ counsel a number of weeks to deny having concluded an agreement on behalf of their clients. It could be, as Defendants’ counsel suggests, a case of disingenuous posturing on the part of the Plaintiff’s lawyers, or, alternatively, they could have been waiting to see if a deal would be concluded between their client and the Third Parties. Identifying a reason for this delay is inevitably speculative. However, on the record before me I cannot conclude as Defendants’ counsel urges me to do – that the delay in responding in and of itself signals agreement or acquiescence with Mr. Frustaglio’s description of a concluded agreement.
[17] On September 8, 2020, Mr. Proszanski wrote to Defendants’ counsel indicating that he had not yet reviewed the draft Minutes of Settlement, but that he would do so “once we are in a position to deal with the monetary components of the settlement.” At the hearing before me, Defendants’ counsel argued that this message is something of a smoking gun in that it on its face admits that there is a settlement. With respect, I do not read it that way. It is a quick email, not a carefully crafted piece of legal writing, and the fact that Mr. Proszanski may have left out the word “proposed” before the word “settlement” does not qualify as an admission. What Mr. Proszanski’s email says, in fact, is that a crucial aspect of any settlement – the financial aspect, or payment to be made by the Plaintiffs – was still not firm.
[18] It would appear from the record that the Plaintiffs did ultimately sell FA-OR, and that the buyer of that business paid the proceeds of sale to Plaintiff’s counsel in trust. Mr. Proszanski confirmed in his cross-examination that his firm had received the funds from the buyer on September 9, 2020 and had disbursed them to various parties. The trust ledger produced by Mr. Proszanski shows that this includes some $85,000 to Mr. Tajbakhsh and another $15,00 to Mr. Proszanski’s own firm.
[19] The Defendants seek an order compelling the Plaintiffs to comply with the terms of the alleged settlement described in the July 23, 2020 email from Mr. Frustaglio and further elaborated in the unsigned draft Minutes of Settlement. I am not convinced, on the balance of probabilities, that the parties reached an enforceable settlement at all. Mr. Proszanski’s description of a “framework” for a settlement appears more apt. The record, as counsel for the Third Parties put it, is a jigsaw puzzle with some crucial pieces missing. It seems to me that the Plaintiffs and Defendants knew what they had to accomplish in order to conclude a settlement agreement, but they never filled in the pieces needed to make it so.
[20] Defendants’ counsel further submits that the Plaintiffs, or, more specifically, Mr. Tajbakhsh, should be enjoined from dissipating any of his assets. This is based on the fact that Mr. Tajbakhsh appears to have personally received a quantity of the proceeds of sale of FA-OR, instead of forwarding those funds to the Defendants as called for in the draft Minutes of Settlement. Given that I do not find that there is an enforceable settlement agreement, there are no grounds for this injunctive relief. Mr. Tajbakhsh is under the same legal duty as all litigants not to dissipate assets so as to intentionally make himself judgment proof; but, beyond that, there are no grounds for any special order aimed at him in this way.
[21] The Defendants also seek an order that the Third Parties comply with the supposed settlement. Much as the record does not support the existence of an enforceable settlement agreement between the supposed parties thereto, it certainly does not support any avenue of enforcement against a non-party thereto. No representative of the Third Parties was on what the Defendants consider the conclusive phone call of July 23, 2020, and no signing line for the Third Parties was on the draft Minutes of Settlement produced by the Defendants. The Third Parties were simply not part of any meeting of the minds.
[22] As discussed above, the proposed Minutes expressly describe the Third Parties – i.e. Mr. Minotti – not as having a contractual obligation to purchase FA-RH from the Plaintiffs, but as having a “wish” of doing so. That is an unusual enough word in a legal document that its meaning cannot be ignored. And its legal meaning is, in essence, nothing. In the context of contracts, like the context of wills, “an expressed wish…cannot be enforced in law”: Lajhner v. Banoub, [2009] O.J. No. 1327, at para. 20 (SCJ).
[23] I do not know how fervently Mr. Minotti wished to buy the Plaintiff’s business. But even if it was “[d]evoutly to be wish’d…perchance to dream”, as the Bard says, “there’s the rub”: Hamlet, Act 3 Scene 2. A wish is just a wish; it is not binding.
[24] The Defendants’ motion is dismissed.
[25] This motion does not terminate the action. The litigation will continue, presumably to trial. Costs of the motion will be in the cause.
Date: May 24, 2024 Morgan J.