Court File and Parties

COURT FILE NO.: CV-16-00559843-0000 DATE: 20241211

BETWEEN:

Diesel Freight Forwarders Ltd. Plaintiff/Moving Party – and – Pradeep Sidhu and AYS Holdings Inc. Defendants/Respondent Parties

Counsel: Jean Alexandre De Bousquet and Thomas Benstead, for the Plaintiff/Moving Party Ivanna Iwasykiw, for the Defendant, Pradeep Sidhu Albert Campea, for the Defendant/Responding Party, AYS Holdings Inc.

HEARD: December 4, 2024

JOHN CALLAGHAN J.

Reasons for Judgment

[1] Diesel Freight Forwarders Ltd. (“DFF”) seeks to enforce minutes of settlement which have been breached by AYS Holdings Inc. (“AYS”). AYS accepts that it did not abide by the terms of the minutes of settlement but argues that the court ought not to enforce the strict terms of the agreement.

The Facts

[2] The facts are not in dispute. The parties entered into a settlement agreement to resolve ongoing litigation. The settlement was not pursuant to a Rule 49 offer, but an agreement reached between the parties with the assistance of counsel.

[3] The resolved litigation was one in which the plaintiff claimed $215,000. The parties settled for $100,000, of which the AYS was liable for $50,000. As set out in the executed minutes of settlement (the “Minutes of Settlement”), AYS agreed pay to an initial payment of $5,000 within 60 days of the date of signing the Minutes of Settlement and thereafter pay to DFF the sum of $45,000 over 48 months in 48 equal instalments of $937.50 each.

[4] The first monthly payment was to be made on April 15, 2024, with each subsequent payment to be made on the 15th of each month. The Minutes of Settlement provided for a 14-day cure period for any default in payment (the “cure period”).

[5] In the event of default by AYS, the Minutes of Settlement provided that DFF would be entitled to $60,000, being an additional $10,000, less any amounts paid, plus pre-judgment interest and post-judgment interest at the rates prescribed by the Courts of Justice Act, R.S.O 1990, c. C.43 (“CJA”). On default, there was an acceleration provision in the Minutes of Settlement. All amounts owing were to be paid immediately upon default.

[6] AYS failed to make the lump-sum payment of $5,000 within the 60-days of executing the Minutes of Settlement. The payment was approximately two weeks late. AYS also failed to make the monthly payments in accordance with the timeline stipulated in the Minutes of Settlement. In respect of the initial installment payment, due April 15, 2024, AYS provided a post-dated cheque dated May 5, 2024, which was not only late but beyond the cure period.

[7] Both the May and June payments were not remitted in a timely fashion. On July 27, 2024, AYS provided a cheque to cover the months of June, July, August, September and October. The cheque omitted the payment for May and no payment has been made for November.

[8] The plaintiff brought this motion for enforcement in September 2024 at which point the plaintiff had remitted the July cheque which included amounts not yet due, albeit with the curious absence of the May payment. In a brief affidavit, AYS explained its earlier failure by stating it “unexpectedly encountered cash flow issues resulting from a customer defaulting on payment” but that it intended to make all payments as required in the Minutes of Settlement.

[9] Counsel for AYS accepted that AYS had failed to meet the earlier payment dates but pointed out, that at the time that the plaintiff brought the motion, that AYS was in a surplus position, having prepaid the later months. It was noted by DFF’s counsel that prior to the motion material being exchanged there was no mention by AYS of any financial difficulty.

[10] As noted, this was not a Rule 49 offer but rather a breach of Minutes of Settlement. In such circumstances, the court may enforce the terms of a settlement, including any negotiated consequence set out in the Minutes of Settlement, as it would any contract: Haider v. Rizvi, 2023 ONCA 354; see comments in dissent of Laskin J. but not on this point in Capital Gains Income Streams Corporation v. Merrill Lynch Canada Inc., 2007 ONCA 497, at para. 62.

[11] In this case, it is accepted that there was clearly a breach of the terms of payment. The negotiated consequences involve an increased payment of $10,000 and an immediate acceleration of all remaining amounts owing.

[12] AYS relies on the case of Milios v. Zagas to submit that this Court has discretion not to enforce the Minutes of Settlement if it operates to prejudice AYS. In that case, the Court of Appeal was addressing a Rule 49 offer where the defendant argued that the offer was accepted by mistake. The Court of Appeal held that in considering whether to enforce the settlement, the motions judge should not only examine the law of mistake but ought to have considered any prejudice to the defendant in enforcing the settlement. In particular, the Court noted:

In addition to over-emphasizing the fact that the plaintiff's acceptance was clear and under-emphasizing the evidence of mistake, I think that the motions judge erred by not taking into account manifestly important factors, including:

-- since no order giving effect to the settlement had been taken out, the parties' pre-settlement positions remained intact; -- apart from losing the benefit of the impugned settlement, the defendant will not be prejudiced if the settlement is not enforced; -- the degree to which the plaintiff would be prejudiced if judgment is granted in relation to the prejudice that the defendant would suffer if the settlement is not enforced; -- the fact that no third parties were, or would be, affected if the settlement is not enforced.

When all of these relevant factors are taken into account and weighed, I do not think that the acceptance of the defendant's settlement offer should be enforced. I would, therefore, allow the appeal with costs, set aside the order below and dismiss the defendant's motion, in the circumstances, without costs.

[13] The facts in Milios v. Zagas are distinguishable. It addressed a motion and settlement under Rule 49. Rule 49.09(b) expressly permits a court “to conclude that despite the existence of an accepted offer to settle, the matter should proceed ‘as if there has been no accepted offer’ ": Capital Gains Income Streams Corporation v. Merrill Lynch Canada Inc., at para. 18. I do not read Milios v. Zagas as providing jurisdiction to the court to refuse to enforce an agreed upon settlement which is not subject to Rule 49, simply because the negotiated consequences may be prejudicial to the defendant. Even if Milios v. Zagas applied, AYS does not seek to terminate the Minutes of Settlement and continue the proceedings that are now settled. Rather, AYS seeks relief from the consequences of its breach but does not seek to set aside the benefit of the settlement and reinstitute the proceeding.

[14] Here, there is no question that there was a settlement by way of agreement as set out in the Minutes of Settlement. AYS does not resile from the agreement, rather as noted it seeks to be relieved from the consequence of its breach. I was directed to no authority that would permit me to do so where the settlement in not pursuant to Rule 49. To be clear, AYS did not seek relief from forfeiture under section 98 of the CJA. In my view, absent a request for relief from forfeiture, the terms of the Minutes of Settlement are enforceable.

[15] If I am wrong and prejudice to the defendant is to be considered, there is extraordinarily little evidence that would allow the court to make any determination of prejudice. It was suggested that AYS was having a difficult financial time and that the acceleration clause along with the increase of $10,000 would cause prejudice to AYS. However, the affidavit evidence does not establish any grave prejudice to AYS in abiding by the default terms of the Minutes of Settlement, rather it refers to one customer delaying payment to AYS. In my view, to establish prejudice, more would be required.

Disposition

[16] The plaintiff is entitled to judgment of $49,375, being $60,000 less the payment amounts of $10,625 plus pre and post judgment interest in accordance with CJA.

[17] On the issue of costs, the plaintiff has submitted a bill of costs of $8,102 plus $310 in disbursements. When one cuts away the legal argument, this motion involved a dispute over the sum of $11,562, being the $10,000 additional amount and the current outstanding payments for May and November. $8,102 is not proportionate to the amount in dispute and is not a reasonable amount to expect the defendant to pay for this straightforward motion where all the facts were agreed upon. By comparison, AYS submitted a bill of costs for $2,300.

[18] In the circumstances, I accept that a reasonable partial indemnity cost award is the amount in the AYS’s bill of costs plus the disbursements. I award the all-inclusive sum of $2,610. In my view, this is a proportionate amount that an opposite party should expect to pay on a motion such as this: see Boucher v. Public Accountants Council for the Province of Ontario.

[19] The plaintiff shall have judgment in the amount of $49,375 plus pre- and post-judgment interest in accordance with the CJA and costs in the amount of $2,610 plus post-judgment interest in accordance with the CJA.

John Callaghan J. Released: December 11, 2024