Court File and Parties

COURT FILE NO.: CV-19-00002360 DATE: 2024/07/24

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Tina Louise Kimberley, Nathan Keith Raaymkers, Ethan David Keith Raaymakers and Owen Christopher Raaymakers a minor by his Litigation Guardian, Tina Louise Kimberley, Plaintiffs – and – Daniel Carlo Riggi, Mary-Ann G. Riggi and Tony Riggi, Defendants Fahrin Jaffer and Barapp Law Firm Professional Corporation, Defendants

COUNSEL: M. Bent, for the Plaintiffs T. Bond, for the Defendants M. McGee, for the Defendants

HEARD: June 10, 2024

Reasons for Decision

E. ten Cate, J.

Introduction and Background

[1] This motion arises out of a motor vehicle accident on December 7, 2017, in Plympton-Wyoming, Ontario.

[2] Tina Louise Kimberley was the operator of one of the motor vehicles involved in the accident. The other vehicle was operated by the defendant, Daniel Carlo Riggi and owned by Mary-Ann G. Riggi and Tony Riggi.

[3] Prior to the issuance of a statement of claim, the plaintiff allegedly settled her claims for $20,000 “all-inclusive”. The settlement was negotiated between the plaintiff’s former lawyer, Fahrin Jaffer of Barapp Law Firm Professional Corporation, and Mr. Michael Ross, a claims examiner at Allstate Insurance Company, the defendants’ automobile insurer.

[4] The plaintiff did not sign the proposed release.

[5] Ms. Jaffer and Barapp Law Firm were added as defendants in respect of professional negligence claims arising from the settlement after the plaintiff retained new counsel. They take no position on this motion and made no submissions.

[6] The Riggi defendants bring this motion seeking a declaration that the settlement was valid and enforceable and for summary judgment pursuant to Rule 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[7] The plaintiff opposes the motion on the basis that there was no settlement, and, if there was, such settlement was unconscionable, unfair, and would result in injustice. She also opposes the confidentiality clause sought by the Riggi defendants in the proposed release as being outside of the terms negotiated.

Disposition

[8] For reasons that follow, I find that the settlement with all plaintiffs was valid and enforceable and thereby grant summary judgment in terms of the settlement agreed upon by the parties.

Facts

[9] On January 18, 2018, the plaintiff retained Ms. Jaffer and Barapp Law Firm, to represent her with respect to injuries she suffered in the accident.

[10] On April 26, 2018, Barapp Law Firm notified the Riggi defendants of the plaintiff’s intention to sue. They passed the notice to their automobile insurer, Allstate Insurance Company, which assigned Mr. Ross.

[11] On January 22, 2019, the plaintiff, through her counsel’s assistant, contacted Allstate to determine whether they were in a position to discuss possible resolution of the claim.

[12] On January 25, 2019, Mr. Ross advised that he had taken carriage of the claim and requested a copy of the plaintiff’s accident benefits claim file, her tax returns, and other relevant documents.

[13] The requested documentation was forwarded on February 7, 2019. Plaintiff counsel’s assistant again asked whether Allstate was in a position to resolve the claim.

[14] Further documentation was forwarded and received by Allstate on March 1, 2019.

[15] On April 3, 2019, in response to the request to commence settlement discussions, Mr. Ross suggested a meeting in August or September 2019 on the condition that updated records would be provided at least one week in advance. On the same day, a teleconference was scheduled for September 17, 2019.

[16] The meeting was postponed for two days, to September 19, 2019. On that date, Ms. Jaffer suggested an assessment of $50,000 net of the statutory deductible, future income of $63,000 and $25,000 for medical care. She then invited Mr. Ross to make an offer. He advised he would consider the additional records provided before responding.

[17] On September 23, 2019, Ms. Jaffer followed up via email for a counteroffer. Mr. Ross replied on the same day as follows:

“We are prepared to offer $20K, all-inclusive to resolve this matter. This offer is open for 90-days, after which it is revoked in its entirety.

Your client was already off work, and in the process of returning, at the time of the accident. For reasons we discussed, we do not see a future loss of income exposure as she has access to generous benefits. Given her work history and prior injuries we do not see a LOCA. She still has access to AB for another 3 plus years for any necessary medical treatment.”

[18] On the same day, in response to Allstate’s counteroffer, Ms. Jaffer offered $45,000 all-inclusive.

[19] On September 26, 2019, at 11:50 a.m., Mr. Ross responded, advising Ms. Jaffer that he declined to make a further offer. He also offered to review further records to re-assess Allstate’s position, and to discuss the plaintiff’s claim further with Ms. Jaffer.

[20] At 4:27 p.m. that same day, Ms. Jaffer emailed the plaintiff as follows:

“This confirms our conversation that the tort is willing to resolve at this time for $20,000 all inclusive. They do not believe they have exposure on the income as you have an LTD claim and benefits through your accident benefit carrier.

I recommend that we close the tort vs. moving into litigation which could take years and given the deductible continues to increase, there is no guarantee that this money will be available down the line.

Please let me know what you would like us to do.”

[21] On September 26, 2019, at 10:04 p.m. the plaintiff responded to Ms. Jaffer in an email as follows:

“If you truly think that it is better to close the tort claim with that offer lets [sic] go ahead. I truly do not want to drag this out for however many more years and the stress along with it…”

[22] Ms. Jaffer responded as follows:

“I do Tina. I know it seems discouraging but it’s better to close it now vs. dragging it out in court when the outcome will likely not be favourable…”

[23] On September 26, 2019, at 10:11 p.m., Ms. Jaffer responded to Mr. Ross as follows:

“I have verbal instructions to accept $20,000.00 to resolve this claim at this time. Can you please flip over the release tomorrow.”

[24] On September 27, 2019, plaintiff counsel’s assistant sent an email to Mr. Ross as follows:

“Kindly forward the release so we may have our client execute same”.

[25] On October 3, 2019, Mr. Ross responded as follows:

“Please find enclosed a copy of the Full and Final Release for this matter. Please review with your client, have her sign and return to my attention. An electronic copy is sufficient.”

[26] The release forwarded contained the following confidentiality clause:

“AND IT IS FURTHER AGREED AND UNDERSTOOD that the parties will keep the terms of this Release and this settlement confidential and not disclose the contents or substance of same to any person other than their legal counsel except with the consent of the other party or as may be required by law.”

[27] The release was never signed.

[28] In October of 2019 the plaintiff retained her present counsel.

[29] On December 2, 2019, the plaintiff issued a statement of claim against the Riggi defendants. The claim includes general and special damages, and damages pursuant to the Family Law Act, R.S.O. 1990, c. F.3 for her now former spouse, Nathan Keith Raaymakers and her two sons, Ethan David Keith Raaymakers and Owen Christopher Raaymakers.

[30] No discoveries have taken place pending the outcome of this motion.

Issues

[31] The issues I must decide are as follows:

1. Was a settlement reached between the Riggi defendants and the plaintiff?
2. Was a settlement reached between the Riggi defendants and the Family Law Act plaintiffs?
3. If settlement was reached with either or both plaintiffs, should it be enforced?

Analysis

Issue #1: Was a settlement reached between the Riggi defendants and the plaintiff?

[32] The answer to this question is “yes”.

[33] The test for granting judgment pursuant to a previously reached settlement agreement was set out by the Court of Appeal in Olivieri v. Sherman, 2007 ONCA 491. It contains a two-pronged test as to whether an agreement to settle was reached, and whether the agreement should be enforced.

[34] Gillese, J., for the majority, stated:

A settlement agreement is a contract. Thus, it is subject to the general law of contract regarding offer and acceptance. For a concluded contract to exist, the court must find that the parties (1) had a mutual intention to create a legally binding contract; and (2) reached agreement on all of the essential terms of the settlement. (Olivieri v. Sherman, 2007 ONCA 491, at para. 41, citing Bawicko Investments Ltd. v. Kernels Popcorn Ltd.)

[35] The Court of Appeal has directed courts to promote settlement as a matter of public policy; the discretion to refuse to enforce a settlement should be exercised rarely. (Catanzaro v. Kellogg’s Canada Inc., 2015 ONCA 779, at para. 9 and Deschenes v. Lalonde, 2020 ONCA 304, at para. 27)

[36] A determination as to whether a concluded agreement exists does not depend on an inquiry into the actual state of mind of one of the parties or on the parole evidence of one party’s subjective intention. (Olivieri v. Sherman, 2007 ONCA 491, at para. 44)

[37] In this case, the plaintiff retained her former counsel on January 18, 2018, roughly one-month post-accident. Almost exactly one year later, on January 22, 2019, the plaintiff (through her counsel) initiated settlement discussions directly with the insurer. There is no dispute that Ms. Jaffer was retained by the plaintiff to represent her. Barapp Law Firm sent the notice letter and initiated settlement discussions. They sent medical and other documentation. They set up and conducted a settlement meeting. Mr. Ross had no reason to “look behind” the acceptance of the counteroffer, especially given counsel’s email which said, “I have verbal instructions to accept…”.

[38] There is no question that Mr. Ross was entitled to rely upon the acceptance of the counteroffer received from Ms. Jaffer on behalf of his client. In Scherer v. Paletta, [1966] 2 O.R. 524 (C.A.) at page 527 the Court of Appeal stated:

A solicitor whose 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 the order is required, to inquire into the circumstances and grant or withhold its intervention if it seeks fit; and, subject also to the disability of the client.

[39] At no time was Mr. Ross apprised of any limitations on Ms. Jaffer’s authority to settle, nor was there any indication that her authority was at issue.

[40] Likewise, Mr. Ross was never informed of any disability affecting the plaintiff’s ability to instruct counsel or enter into a settlement agreement. He was under no obligation to make further inquiries or to embark on any such investigation; instead, he relied upon the representations made by counsel as he was entitled to do.

[41] After the initial request to commence settlement negotiations, the insurer requested additional documentation, which was provided. The plaintiff then requested a settlement meeting which ultimately took place on September 19, 2019. Further documentation was provided to the insurer in advance of the meeting.

[42] In response to the plaintiff’s initial settlement offer, a counteroffer was sent to counsel for the plaintiff. Counsel then suggested an increase to the counteroffer, which request was denied.

[43] In my view, there is no question but that the first requirement in Olivieri v. Sherman, 2007 ONCA 491 was met. I find that the counteroffer from Allstate was drafted during settlement negotiations initiated by the plaintiff through her then counsel with the clear intention to enter into a mutually binding legal agreement to resolve her potential lawsuit.

[44] Further, the email exchange between Ms. Jaffer and Mr. Ross is clear, unequivocal, and evidences a final settlement of all claims for $20,000 “all-inclusive” in exchange for an end to potential litigation. Viewing the email exchange objectively, no future negotiation was contemplated by the parties. I therefore find that all the essential elements of the settlement were agreed upon, thereby satisfying the second requirement.

[45] The plaintiff takes the position that she did not understand or appreciate that her discussions with Ms. Jaffer prior to signing any documents may constitute a binding settlement. I am urged to consider the post-settlement correspondence between the plaintiff and her counsel. While such may be evidence of confusion on the part of the plaintiff, none of that correspondence involved Mr. Ross. As far as he was aware, the matter had been finalized to the plaintiff’s satisfaction.

[46] I am also asked to consider correspondence between the plaintiff and her then counsel regarding confusion surrounding the deduction of costs from her settlement. I find that while the plaintiff may not have understood the cost breakdown to be paid from the $20,000 “all-inclusive”, that was an issue between her and her counsel which did not involve the Riggi defendants.

[47] I therefore further find that both requirements in Olivieri v. Sherman, 2007 ONCA 491 have been met and that there was a binding settlement agreement between the plaintiff and the Riggi defendants.

[48] The plaintiff takes the position that because she did not sign the release, there is no binding settlement. The email from Ms. Jaffer to Mr. Ross accepting the counteroffer says, “I have verbal instructions to accept $20,000.00 to resolve this claim at this time. Can you please flip over the release tomorrow.”

[49] The law is clear that absent a contractual stipulation to the contrary, a settlement agreement implies a promise to furnish a release. (Hodaie v. RBC Dominion Securities, 2012 ONCA 796, at para. 3) Although the release was not signed, such is not proof that a settlement was not reached; rather, a release is simply formal documentation indicating a settlement. (Kaur v. The Manufacturers Life Insurance Company, (1999) 1901 (ON CA))

[50] I therefore find that the settlement was not contingent on the signing of the release.

[51] It is uncontested that Mr. Ross and Ms. Jaffer did not discuss a confidentiality clause as a term or condition at any time prior to the settlement on September 26, 2019, and there is no evidence it was objected to when it was presented in October of 2019.

[52] In Huma v. Mississauga Hospital, 2020 ONCA 644, the Court of Appeal upheld the lower court’s enforcement of a settlement despite the inclusion of a confidentiality clause. Although the release was held to be overly broad, such did not defeat the settlement which remained binding.

[53] I therefore find that the confidentiality clause was not a condition of the settlement.

Issue #2: Was a settlement reached between the Riggi defendants and the Family Law Act plaintiffs?

[54] The answer to this question is also “yes”.

[55] The FLA claimants take the position that Ms. Jaffer was never retained to represent their interests and that she had no authority to bind them in a settlement. Additionally, they take the position that Owen Christopher Raaymakers, who was born on January 9, 2004, was a minor at the time of the settlement and as such, no settlement of his claims against the defendants is enforceable without judicial approval.

[56] As outlined by the Court of Appeal in Malik v. Nikbakht, 2021 ONCA 176, at para. 10, the common law does not permit family members to sue for compensation for injuries to their relatives. Section 61(1) therefore “created” a statutory cause of action that did not previously exist. (Camarata v. Morgan, 2009 ONCA 38)

[57] Section 61(1) of the FLA provides:

If a person is injured or killed by the fault or neglect of another under circumstances where the person is entitled to recover damages, or would have been entitled if not killed, the spouse…children, grandchildren, parents, grandparents, brothers and sisters of the person are entitled to recover their pecuniary loss resulting from the injury or death from the person from whom the person injured or killed is entitled to recover or would have been entitled if not killed, and to maintain an action for the purpose in a court of competent jurisdiction.

[58] Section 62(1) of the FLA allows the defendant to make an offer to settle for one sum of money “as compensation for his or her fault or neglect to all plaintiffs, without specifying the shares into which it is to be divided”.

[59] Pursuant to section 62(2) of the FLA, “if the offer is accepted and the compensation has not been otherwise apportioned, the court may, on motion, apportion it among the plaintiffs”.

[60] FLA claims do not exist independently of the claims of the injured person; they do not stand alone. (Smith Estate v. College of Physicians and Surgeons of Ontario, (1998) 1523 (ON CA)) The Court of Appeal has made it clear that any claims brought by the FLA claimants are derivative of the main plaintiff’s claim and are in no better position than the claim brought by the main plaintiff. (Camarata v. Morgan, 2009 ONCA 38, at para. 9)

[61] I find that Allstate’s counteroffer on September 26, 2019, for “the tort” was an offer to settle for a global sum specifically permitted by section 62(1). It was then open to the plaintiff to bring a motion to the court to divide any global settlement amongst the FLA claimants pursuant to section 62(2) and to obtain court approval, if necessary.

[62] Since the FLA claims cannot exist in a vacuum, I find that the FLA claims, including those of the minor FLA claimant, were settled with the Plaintiff’s tort claims arising from the accident.

Issue #3: If settlement was reached with either or both plaintiffs, should it be enforced?

[63] The answer to this question is “yes”.

[64] Once the settlement agreement has been proven, the burden shifts to the party seeking to resile from it to show why the court should not enforce the terms of the agreement. (Gelber v. Gelber, 2020 ONSC 1570, at para. 35)

[65] Counsel disagreed about the analytical framework to be used when considering how and when the court should exercise its discretion to set aside a settlement agreement. Counsel for the plaintiff argues for a broader approach as per Silvera v. Taylor, 2021 ONSC 2214 and counsel for the Riggi defendants, a narrower approach as per Sossin J. in Huma v. Mississauga Hospital, 2019 ONSC 5115, appeal dismissed at 2020 ONCA 644.

[66] I prefer the approach at the lower court in Huma v. Mississauga Hospital, 2019 ONSC 5115, quoting Morant v. Sun Life Assurance Company of Canada, 2014 ONSC 2876 which was not cited in Silvera.

[67] As Daly, J. stated in Morant v. Sun Life Assurance Company of Canada, 2014 ONSC 2876, the court may choose not to enforce a settlement agreement if there is evidence of the following:

1. the resulting agreement and settlement were unconscionable, fraudulent or based upon a party’s misapprehension of a material fact which was unknown to the opposite party;
2. the solicitor representing the party was not retained or did not have authority to settle the action and this limitation was known to the opposite party; and
3. the party lacked the legal or mental capacity to enter into the settlement agreement at the material time. (Morant v. Sun Life Assurance Company of Canada, 2014 ONSC 2876, at para. 34 citing Milos v. Zagras (1998))

[68] Based upon my findings above, I find that the plaintiff has not discharged her burden with respect to the second and third criteria. Again, there is no question Ms. Jaffer, and her firm were retained, had authority to settle the action, and that no limitation on that retainer was ever communicated to Mr. Ross. While the plaintiff may have been “stressed and emotional” at the time the matter settled, counsel agreed there is no issue that the plaintiff had the capacity to instruct counsel.

[69] With respect to the first criteria, the plaintiffs take the position that the settlement should be set aside as unconscionable. To be successful, they must demonstrate inequality of bargaining power, that the defendants took advantage of that inequality, and that the settlement was improvident. (Black v. Wilcox, (1976) 555 (ON CA) at page 8)

[70] I find that there is no evidence to suggest that Allstate had more bargaining power than the plaintiff, that they pressured her, or that they took advantage of her. Likewise, there is no evidence whatsoever regarding fraudulent conduct by Allstate which simply relied upon the information given to them by the plaintiff to formulate its settlement position. Arguably, the plaintiff was in a better position than Allstate to understand her medical condition and any limitations on her ability to work.

[71] The plaintiff was represented by counsel. The negotiation process began in January of 2019 and concluded at the end of September, almost three months prior to proscription date of December 7, 2019, and eight months after the initial request made by the plaintiff to enter into settlement negotiations. The counteroffer made by Allstate was left open for 90 days which gave the plaintiff three months to consider her options. Instead of waiting, she accepted the counteroffer almost immediately. Although Mr. Ross invited the plaintiff to submit additional supporting documentation for his consideration, which may have changed his position, the plaintiff elected not to do so, preferring instead to finalize potential litigation.

[72] Counsel for the plaintiff submits that an experienced claims examiner such as Mr. Ross should have known that the plaintiff’s claim was “catastrophic” and therefore improvident, and that I should exercise my discretion not to enforce it based upon the principle set out in Srebot v. Srebot Farms Ltd., 2011 ONSC 4512, appeal dismissed at 2013 ONCA 84 which grants me broad and complete discretion to set aside a settlement if it is unreasonable, clearly unfair, and leads to an “extreme injustice”.

[73] I am asked to consider evidence obtained subsequent to the settlement which proves the plaintiff sustained a serious brain injury.

[74] The law is clear that a settlement agreement will not be rescinded based on information that later comes to light to suggest it was improvident. (Deschenes v. Lalonde, 2020 ONCA 304, at para. 27)

[75] There is no evidence to suggest that at the time the settlement was made that Mr. Ross knew the plaintiff was being grossly undercompensated. According to the email from him on September 23, 2019, the counteroffer of $20,000 all-inclusive was based on three assumptions: (1) the plaintiff was already off work at the time of the accident, (2) she had prior injuries, (3) she had an inconsistent work history. As a result, Allstate’s offer did not include a “LOCA” (Shortform for “loss of competitive advantage”). Mr. Ross indicated he believed the plaintiff required no future care because the plaintiff was entitled to accident benefits for another three years for any necessary medical treatment.

[76] While his perceptions may have been incorrect, Mr. Ross received no response to his email from the plaintiff’s former counsel refuting his assumptions or providing additional documentation which may have changed his views. At the time the settlement was concluded, on September 26, 2019, plaintiff counsel still had time to obtain expert reports to support her position prior to the proscription of the limitation period in December. Alternatively, she could have issued the statement of claim to preserve the limitation period and then waived the requirement for a defence, pending receipt of expert reports.

[77] Plaintiff counsel further submits that the test is broader than that outlined in Huma v. Mississauga Hospital, 2019 ONSC 5115 and that I may rely on “any other good reason not to enforce”.

[78] As per Srajeldin v. Ramsumeer, 2015 ONSC 6697, at para. 41, there is no prejudice to the plaintiff where the only injustice to the plaintiff is that she must litigate her claim against her former solicitor rather than the original defendants for the same relief. I find there is no prejudice to the plaintiff who must prove her injuries and consequent claims in any event, whether she litigates against the Riggi defendants or her former counsel for professional negligence.

[79] I am also urged to consider that the plaintiff is currently in receipt of long-term disability payments for which there is no certainty they will continue to be paid, that the plaintiff is in a “holding pattern” and that litigation against the solicitor in negligence will take additional time.

[80] In my view, such is speculative since the plaintiff continues to receive her payments with no indication they will be terminated.

[81] While the effect of my decision is to dismiss the claims against the Riggi defendants, I am advised that counsel retained to defend the solicitor and her law firm has been involved pending the outcome of this motion after which litigation will continue as against Ms. Jaffer and her firm in the normal course.

[82] I therefore find that the plaintiff has not discharged the burden upon her to demonstrate that the settlement was unconscionable, and I decline to exercise my discretion to set it aside.

Costs

[83] After the motion, I asked counsel whether they would agree on costs, no matter the outcome. Counsel subsequently advised that costs of the motion are agreed at $2,500.

[84] I therefore order the plaintiff to pay costs of the motion to the Riggi defendants in the amount of $2,500 exclusive of HST.

Justice E. ten Cate Released: July 24, 2024