Ontario Superior Court of Justice

Court File No.: CV-19-2991 (Stratford)
Date: 2025-05-30

Parties

Between:
Trevor Royce Riehl, Kelly Lynn Herlick Riehl (also known as Kelly Lynn Herlick-Riehl), Adam Gerald Mohr, Hayley Rose Mohr, and Nickolas Milton David Lindner, Applicants

and

Municipality of Perth East, 2598944 Ontario Inc., Gabriel Frederick De Martines, Ingrid Johanna De Martines, 2334272 Ontario Ltd., 2334274 Ontario Ltd., Patrick James O’Neill, 4052595 Canada Inc., Dawne Elizabeth Boersen, Jeremy Ivan Roobroeck, Lisa Jo-Ann Roobroeck, Clarence Austin Herlick, Jan Geert Van Aarsen, Jetske Van Aarsen, Respondents

And Between:
Patrick James O’Neill and O’Shamrock Farms Inc., Applicants (by way of Counter-Application)

and

Trevor Royce Riehl, Kelly Lynn Herlick Riehl (also known as Kelly Lynn Herlick-Riehl), Adam Gerald Mohr, Hayley Rose Mohr, Nickolas Milton David Lindner, 2334272 Ontario Ltd., 2334274 Ontario Ltd., 4052595 Canada Inc., Jeremy Ivan Roobroeck, Lisa Jo-Ann Roobroeck, Clarence Austin Herlick, Jan Geert Van Aarsen, and Jetske Van Aarsen, Respondents (by way of Counter-Application)

Appearances:
Izaak de Rijcke, for the Applicants
Trenton D. Johnson, for the Respondent, Municipality of Perth East
Sean Dewart, Agent for Langlois Law Professional Corporation, lawyers for the respondents Patrick James O’Neill and O’Shamrock Farms Inc.

Heard: 2025-01-21

Reasons for Decision

Helen A. Rady

Introduction

[1] The applicants bring a motion for judgment in accordance with the essential terms of a settlement agreed upon at the end of a one-day long judicial settlement conference conducted by Justice Garson on February 27, 2024, in Stratford.

Background

[2] The underlying application was started in May 2019. The applicants requested a determination of ownership or use respecting a 66 foot wide strip of land that had been laid out as a public road by the Township of Ellice by bylaw in May 1871. The Municipality of Perth East is the successor to the Township of Ellice.

[3] The 66 foot wide strip, sometimes referred to as the Blind Line, straddles the line between Concessions 6 and 7, and across Lots 6 to 10 in Ellice. The strip has been used by the applicants to access the rear of their farm properties. It was partially gravelled and was passable by farm machinery, horseback and on foot. The use of the 66 foot strip was at the heart of the dispute between the parties. The applicants say it was laid out and continues to exist as a public highway or, in the alternative, it has been used by the applicants as an easement.

[4] The dispute arose following the respondent Patrick O’Neill’s purchase of two parcels of farmland to the south of Lots 6 and 7, Concession 7 in 2016 and 2018. Mr. O’Neill blocked access to the strip of land described above. He cultivated it and filled drainage ditches. This application resulted.

[5] The applicants sought several heads of relief in their application including:

a. an Order declaring that a By-law passed by the former Township of Ellice on May 6, 1871 and registered in the Land Registry Office for the County of Perth as Instrument Number 2005 on September 27, 1871 (herein, “By-law 2005”) has not been repealed by said Town or its successor, being the Respondent, the Municipality of Perth East;

b. an Order declaring that By-law 2005 laid out, as a public highway, a road centred along the “blind line” between concessions seven (7) and eight (8) across the rear of Lots six (6), seven (7), eight (8), nine (9) and ten (10) and having a width of four (4) rods (66 feet);

c. an Order declaring that the road laid out as a public highway by By-law 2005 continues to exist as a public highway to this day and the title to which is vested to this day in the ownership and name of the Municipality of Perth East as a public highway;

d. a Vesting Order for the By-law 2005 road and public highway in the name of the said Respondent, Municipality of Perth East, on the basis of those parts on a draft reference plan of survey to be prepared prior to the hearing of this application as separate PINs to be split from the several PINs listed in Schedule “A” to this Notice of Application and which identify lands owned severally by the various Applicants and Respondents in this application.

[6] Other relief was requested in the alternative and in particular that the land was used by the applicants, Mr. O’Neill and their predecessors in title giving rise to a “prescriptive claim to a private easement in the nature of a right of way”.

[7] The application proceeded through the exchange of pleadings, cross-examinations, and a mediation, culminating in two judicial pre-trials. Two land surveyors were engaged during the course of the lawsuit and they prepared surveys, referred to as the Culbert Survey and the McNeil Survey. One showed the road strip; the other did not. However, both surveys showed the passable gravelled road or path.

[8] A judicial pre-trial was conducted on February 27, 2024 and the moving parties believed a settlement had been reached by its conclusion. The respondents deny there was a resolution because there was no agreement about the essential terms and in particular the location of a fence to be erected by the applicants as part of the settlement. The applicants say the fence is to be built on a line 33 feet south of the “Culbert Line”. The respondent says that the fence was to be erected where an existing fence was located, which was the northern boundary of his property, along what he believed to be the Culbert Line. This dispute forms the basis for the motion.

The Pre-Trial

[9] As noted, the parties participated in a mediation style pre-trial with Justice Garson on February 27, 2024. It was attended by the parties and their lawyers. Mr. Langlois, who was Mr. O’Neill’s lawyer, delivered a Rule 49 Offer dated February 27, 2024. It was prepared in advance of the pre-trial. The offer presumably captures the basis on which Mr. O’Neill was prepared to settle at that time. It provides as follows:

1. The Applicants will allow the services of Steve Smith Construction to construct the laneway on the north side of the property line fence from Road 122, being on the property of the Applicants, Riehl, Mohr and Linder, for 1,500 feet and will pay the full contracted price of $22,000.00 plus HST, as attached;
2. Mr. O’Neill, at his own cost, will have a new page wire line fence built on the precise demarcation of the current line fence as confirmed by the remaining steel posts, from Road 122 to the Nowak Drain, with no access gates or openings;
3. All parties shall assume their respective legal costs;
4. The Applicants and the Respondents shall permanently discontinue their Applications and Counter Applications as against all parties;
5. All parties represented by Andrew Phillips and Timothy Stock-Bateman must also agree to the settlement;
6. This offer is open for acceptance until ___________, 2024, after which time, it will be withdrawn. Any and all prior offers to settle are effectively withdrawn.

[10] Justice Garson separated the parties and met with each side and their lawyers separately. Negotiations were undertaken, with Justice Garson facilitating the communications between them.

[11] Mr. O’Neill’s Rule 49 offer appears to have formed the basis of the negotiations. It was modified over the course of the day, resulting in a document bearing certain handwriting and Justice Garson’s initials. The applicants say this document memorializes the settlement reached. It is referred to as the Settlement Document in these Reasons.

[12] A copy of the Offer to Settle with the handwritten changes is reproduced here:

[13] A transcription of the alleged terms of Settlement reads as follows:

1. Mr. O’Neill will pay to counsel for the Applicants in trust the sum of $150,000.00 and will not seek costs against them if this matter settles today;
2. The Applicants, at their own cost, will have a new page wire line fence built by a fencing contractor from Road 122 to the Nowak Drain with no access gates or openings as per the line on Culbert Survey at point by the Nowak Drain, joined in a straight line to a point 33 feet south of the Culbert line where it touches Road 122;
3. All parties shall assume their respective legal costs;
4. The Applicants and the Respondents shall permanently discontinue their Applications and Counter Applications as against all parties. All parties to sign Full and Final Release; and,
5. Settlement is conditional on approval by Town Council of Perth East and remaining respondents.
6. This offer is open for acceptance until February 27, 2024, after which time, it will be withdrawn. Any and all prior offers are effectively withdrawn.

[14] A drawing of the area was attached and labelled Exhibit, a copy of which is reproduced immediately below:

[15] The handwritten portion reads: "BOLD LINE FROM A-B DENOTES LINE BETWEEN CONCESSIONS 7 & 8 ON MCNEIL SURVEY." The words “BETWEEN CONCESSIONS 7 & 8 ON MCNEIL SURVEY” are stroked out and replaced with "REFERRED TO IN EXHIBIT A."

[16] The issue raised on this motion centres on paragraph 2 of the Settlement Document, which was amended several times during the course of negotiations. The wording is reproduced again for ease of comparison.

[17] The original wording of the O’Neill offer to settle is set out below:

2. Mr. O’Neill, at his own cost, will have a new page wire line fence built on the precise demarcation of the current line fence as confirmed by the remaining steel posts, from Road 122 to the Nowak Drain, with no access gates or openings;

[18] The wording was amended as follows:

2. The Applicants at their own cost, will have a new page wire fence built by a fencing contractor from Road 122 to the Nowak Drain with no access gates or openings as per the Culbert survey subject to further reestablishment of location of survey stake @ Road by Culbert.

[19] The wording was further modified as follows:

2. The Applicants at their own cost will have a new page wire fence built by a fencing contractor from Road 122 to the Nowak Drain with no access gates or openings, see Exhibit A as per the line labelled “line between concessions 7 & 8” on Trevor McNeil survey [underlined portion original to Exhibit A].

[20] The final form of wording is as follows:

2. The Applicants, at their own cost, will have a new page wire fence built by a fencing contractor from Road 122 to the Nowak Drain with no access gates or openings, see Exhibit A as per the line on Culbert Survey at point by the Nowak Drain, joined in a straight line to a point 33 feet south of the Culbert line where it touches Road 122.

[21] The drawing shown in paragraph 14 reflects the change in wording between the penultimate and final drafts of the Settlement Document (i.e. reference to McNeil and Culbert surveys respectively).

[22] At the conclusion of the Pre-Trial, Justice Garson prepared a brief endorsement noting that the case was settled. The parties were all given copies of the Settlement Document before they left the Courthouse that day.

Events Post Pre-Trial

[23] Following the pre-trial, the parties exchanged correspondence which is excerpted and sometimes paraphrased below:

February 28, 2024 – Correspondence Langlois to de Rijcke:
Further to the settlement yesterday, I am proposing that I hold $25,000 in my trust account pending completion of the line fence…

March 7, 2024 – Johnson to Langlois and de Rijcke:
Township will agree to discontinuance of the application on a without costs basis.

March 7, 2024 – Langlois to de Rijcke:
Advise about holdback and any information re fencing contractor and expected timing of installation.

March 11, 2024 – de Rijcke to Langlois:
I have now sought instructions and I am directed to reply that despite the fact that there was no discussion of a holdback of any of the monies payable, this request comes as somewhat of a surprise to my clients. Nonetheless, as a gesture of goodwill, they are prepared to agree to a holdback of $25,000 of the settlement funds being held in my trust account (not yours) and to be released upon completion of the page post wire fence as contemplated in the settlement …

To be clear, we expect to receive the settlement funds payable to IDR Law Professional Corporation in trust forthwith. I will thereafter attend to the preparation of a draft formal Minutes of Settlement for everyone’s further consideration and to implement the settlement and dismiss the applications. I look forward to hearing from you.

March 18, 2024 – Langlois to de Rijcke:
Further to the negotiated settlement please find my firm trust cheque in the amount of $125,000. In terms of the holdback of $25,000 I do not have authorization from my client to forward same to you from my trust account at this time … I will promptly release same upon completion of the fence, as proposed.

March 19, 2024 – Langlois to de Rijcke and Johnson:
Further to instructions received from my client today, I have instructed my bank to stop payment on my firm trust cheque, which we had mailed to you yesterday. Pending further instructions from my client, I will reissue the cheque in due course.

My client is concerned as to whether there has been any engagement with respect to the construction of the fence. Judge Garson included in his direction that the fence is to be built “forthwith”. This means without delay, or within a reasonable time under the circumstances. As well, Mr. O’Neill is very protective of his wheat crop and would like assurance that it will not be damaged in any way in the construction of the fence.

I believe that it would be prudent to advance the draft Minutes of Settlement as a first step in completing this matter. My client is quite right that funds should not be disbursed prior to this process.

March 19, 2024 – de Rijcke to Langlois:
A “stop payment on your trust cheque”?

We have engaged our clients [sic] surveyor for the staking of the settlement line on the ground for fencing purposes. A fencing contractor hired to build the page post wire fence will want this … We trust your client will not be planting onto our property – but this was the exact reason for a farm fence to be built in the first place.

March 20, 2024 – Langlois to de Rijcke:
Please understand that I must take and follow instructions of my client.

March 26, 2024 – de Rijcke to Langlois:
After setting out a chronology of events until that date, Mr. de Rijcke writes:

As you know, a page post wire farm fence to be built by a fencing contractor, requires the marking on the ground of the endpoints of the fence line and typically, painted wood stakes every several hundred feet in order to guide the fence construction process. In fact, I have reached out to Mr. Trevor McNeil, OLS to confirm his availability and willingness to do this, based on the specific language set out in the signed settlement document with which we all left the courthouse in Stratford. He confirmed that he could and would.

Anticipating the receipt of payment of settlement funds from your office, I advised Mr. McNeil to not proceed until in fact I was in funds. That is where it stood until receiving your word late last week that your March 18, 2024 trust cheque for only $125,000.00 has been subjected to a stop payment request made by you to your bank.

I will certainly prepare formal Minutes of Settlement which includes and contemplates the implementation of the settlement as concluded before Justice Garson at the courthouse in Stratford. I must say however, that the stop payment placed on the cheque and the instructions received from your client was most disappointing to my clients. To change the concluded settlement does not bode well.

Likewise, a suggestion that “protecting the wheat crop” as a concern of your client, when he should know full well that a surveyor will need to stake the line, and that the fencing contractor uses tractors, machinery, and supplies to actually build the fence makes no sense. Some of your client’s winter wheat lies north of the Settlement Line. There is nothing in the signed settlement document that delays its implementation or defers fence construction until after wheat has vested. [Query been harvested?]

This means that your client should refrain from crossing north of the agreed upon Settlement Line. Please provide me with assurance that your client will not cross over the line and, recognizing that the fence needs to be built, it will be undertaken as soon as possible as the settlement funds are received.

April 9, 2024 – Langlois to de Rijcke:
Firstly, it is clear that there is no signed agreement of settlement from the pretrial on February 27, 2024. Appendix “A” was, at no time, presented to us by Judge Garson. However, my client advises that if the Applicants confirm agreement with our proposed offer of that day that the fence be placed on the precise location of the original fence line where the steel stakes remain to this day, from the point at the Nowak Drain in the Culbert survey, he will pay the $150,000 and your clients must forthwith have the fence built. There is adequate working space on the Applicants [sic] side of the line fence that Mr. O’Neill’s wheat crop need not be damaged.

[24] Arrangements were made to return before Justice Garson on April 18, 2024. At the conclusion of the meeting, Justice Garson prepared an endorsement that read in part “This matter was brought back before me as it appears the parties are no longer in agreement …”

Mr. Langlois’ Evidence

[25] Mr. Langlois affirmed an affidavit dated June 17, 2024. He deposes that he and his client understood that the Culbert survey was consistent with the historic and existing fence line and that the fence line marked the boundary of Mr. O’Neill’s property.

[26] The applicants had commissioned a survey as well, referred to as the McNeil survey. Mr. Langlois continues:

15. Mr. O'Neill's consistent position was that as part of any settlement, he wished to build a new fence on the line of the posts from the original fence. I was clear with His Honour that Mr. O'Neill would only settle on the basis that a new fence go exactly where the old fence had been.

16. Although Mr. O'Neill did not concede liability during the mediation, he indicated that he would be willing to pay $150,000 to the applicants to resolve the litigation provided the fence was erected on the original fence line, and this was communicated to Justice Garson.

17. Towards the end of the day, Justice Garson came into our room and advised that the applicants would agree to the Culbert survey.

18. I replied that "if they will agree to the Culbert survey, that's fine." I believed that I was agreeing that the fence would go on the original fence line, as indicated in the initial Rule 49 offer.

19. Justice Garson advised that the parties agreed on the Culbert survey and a settlement had been reached.

20. I understood that my client's Rule 49 offer had been accepted with the addition of a term that my client would pay the applicants $150,000. I was unaware that there had been any additional handwritten changes to my client's offer.

21. After the pretrial was finished and I was packing up to leave, the judge's Deputy or the Registrar gave me a copy of documents that I understood memorialized the parties' settlement. The documents consisted of my client's Rule 49 offer, with handwritten changes made by His Honour and two additional pages. A copy of the offer with Justice Garson's handwriting and the additional pages is marked as Exhibit "D" to this affidavit.

22. My client and I had not seen either the final handwritten changes at paragraph 2 of the Rule 49 offer or the additional handwritten page identified as Exhibit A during the mediation session.

23. The revised offer contained the following terms:

a. Mr. O'Neill will pay to counsel for Applicants in trust the sum of $150,000 and will not seek costs against them if this matter settles today;

b. The Applicants at their own cost, will have a new page wire line fence built by a fencing contractor from Road 122 to the Nowak Drain, with no access gates or openings (See Exhibit A);

c. All parties shall assume their respective legal costs;

d. The Applicants and the Respondents shall permanently discontinue their Applications and Counter Applications as against all parties;

e. All parties to sign full and final release;

f. Settlement is conditional on approval by Town Council of Perth East and remaining respondents;

g. This offer is open for acceptance until February 27, 2024, after which time, it will be withdrawn. Any and all prior offers to settle are effectively withdrawn.

24. Justice Garson had also added a page marked as Exhibit "A" as follows:

As per the line on Culbert survey at Point by The Nowak Drain, joined in a straight line to a point 33 feet south of the Culbert line where it touches Road 122.

25. I do not believe I reviewed the Rule 49 offer with the handwritten changes and the additional pages until March 19, 2024, which was the day after I had forwarded settlement funds to the applicants' counsel. I became concerned that this document did not reflect the parties' agreement.

26. I thereafter contacted Mr. Culbert for an electronic copy of his survey to investigate the apparent discrepancy between the Exhibit A to the settlement documents referred to above and my understanding of what his survey showed. Mr. Culbert then provided me for the first time with an electronic copy of the originally ledger-sized survey.

27. Mr. Culbert hand drew a line in red ink on the relevant part of his survey which suggests that the boundary of my client's property does not correspond to the remains of the posts from the fence that had been removed. A copy of this portion of the survey is marked as Exhibit "E" to this affidavit. This version of Mr. Culbert's survey does not include the notes referred to above about the fence posts and remains of fence posts.

The Parties’ Positions

[27] The applicants submit that there was a clear agreement between the parties that Mr. O’Neill would pay $150,000 and a new fence would be built along the boundary shown on the Culbert survey as 33 feet south of the Culbert line, the Culbert line being the northern boundary of Mr. O’Neill’s property.

[28] In contrast, Mr. O’Neill submits that the only basis on which he was prepared to settle was if the fence would be built on the original fence line corresponding to what he believed was shown on the Culbert survey and which matched the concession line, the best evidence of which was a row of 100 year old fence posts.

The Law

[29] A preliminary issue about whether the motion was procedurally sound was raised by Mr. Dewart on behalf of the respondent. He submits that because this is not a case of an accepted offer to settle under Rule 49, Rule 49.10 does not apply. He suggests that the appropriate procedure is a motion for summary judgment. See Bross v. Bross, 2023 ONSC 2104, para 11; and Kalinitchenko v. Allure at the Gates of Aurora Inc., 2021 ONSC 438, paras 18-21. In the latter case, the Court discussed the distinction between motions under Rule 49.09 and motions for judgment:

[18] … Rule 49.09 applies when a party to an accepted offer to settle fails to comply with the terms of the offer. However, in this case, the Minutes of Settlement arose, not out of an accepted offer to settle, but out of negotiations that took place the day of the motion for summary judgment.

[19] As stated by Sproat J. in Vanderkop v. Manufacturers Life Insurance Company, paras 14-15:

This motion was framed as a Rule 49 motion. Rule 49 encourages parties to settle by imposing cost consequences.

A case settled by offer and acceptance under Rule 49 is treated somewhat differently than Minutes of Settlement. Rule 49.09 provides if there is a failure to comply with the terms of settlement a party may move for judgment and the judge may grant judgment or the party may continue the action.

In contrast, a party to Minutes of Settlement (which may precede any action) who simply agrees to settle for $50,000 only has the option of moving for judgment in that amount. That is why parties will often stipulate that in default of payment judgment will be in a higher amount or that the action will proceed.

[20] Woollcombe J. came to the same conclusion in Exponents Canada Inc. v. Sharma, 2015 ONSC 2940, paras 6-7:

Both counsel proceeded under Rule 49 on the basis that what was before me was "an accepted offer to settle", as contemplated by Rule 49.09. The difficulty with this position is that there is a difference between "an accepted offer to settle" under Rule 49, and a negotiated settlement agreement. The evidence before me, including Justice Emery's endorsement and the "Minutes of Settlement", makes clear that what happened here was that a settlement agreement was reached, rather than "an accepted offer to settle".

Since there was no "accepted offer to settle", I do not have jurisdiction, under Rule 49.09(b), to set aside the agreement on the basis advanced by the plaintiffs…

[30] In this case, the motion has been framed as a motion for judgment with Rule 49.09 cited in support. The applicants interpret the respondents’ position to be that the Court lacks jurisdiction to entertain the motion under Rule 49.09. They point out that the same issue was considered by Justice Daley in Falcone et al. v. Kapeleris, 2023 ONSC 99. He quoted from Donaghy v. Scotia Capital Inc., 2009 ONCA 40, paras 11-13 as follows:

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. 1990, 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.

[31] I did not understand the respondents to suggest the Court lacked jurisdiction to hear the motion. It clearly does. The analysis that follows proceeds on the basis that it is a motion for judgment in accordance with what are in substance Minutes of Settlement, with a view to whether there are material issues of fact or genuine issues of credibility in dispute as to whether the parties intended to create a legally binding contract or if there was an agreement on all essential terms. I am not sure it much matters how one frames the motion. The approach in either case seems to me to be substantially the same.

[32] The leading case on the enforcement of settlements is Olivieri v. Sherman, 2007 ONCA 491. In that case, the plaintiff appealed an order refusing to enforce a settlement agreement because there was no sufficient meeting of the minds to give rise to an enforceable agreement.

[33] The Court noted that a settlement agreement is a contract and governed by the law of contract regarding offer and acceptance. Citing Bawitko Investments Ltd. v. Kernels Popcorn Ltd., the Court directed that a motion judge must first determine whether there was a mutual intention to create a legally binding contract, and second, whether there was an agreement on all of its essential terms. The Court continued, noting as follows:

[44] 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. See Lindsey v. Heron & Co.. Where, as here, the agreement is in writing, it is to be measured by an objective reading of the language chosen by the parties to reflect their agreement. As was stated by Middleton J.A. in Lindsey at pp. 98-9, quoting Corpus Juris, vol. 13 at 265:

The apparent mutual assent of the parties essential to the formation of a contract, must be gathered from the language employed by them, and the law imputes to a person an intention corresponding to the reasonable meaning of his words and acts. It judges his intention by his outward expressions and excludes all questions in regard to his unexpressed intention. If his words or acts, judged by a reasonable standard, manifest an intention to agree in regard to the matter in question, that agreement is established, and it is immaterial what may be the real but unexpressed state of his mind on the subject.

[34] The Court held that from an objective perspective, there was nothing in the agreement to suggest it was conditional. Accordingly, the appeal was allowed and the settlement enforced.

Analysis

[35] There is no issue about whether there was an intention to create a binding contract. Clearly, the parties all participated in the mediation with a view to resolving their differences. The next step in the analysis is to determine whether there was an agreement on the essential terms of the settlement contract.

[36] I have concluded that there was for these reasons:

• After a lengthy mediation/pre-trial in which the parties were represented by experienced counsel, a document was created that memorialized the agreement. Notwithstanding its several incarnations, the final terms were clear and unambiguous.
• Mr. Langlois advised Justice Garson that as long as the applicants were prepared to use the Culbert line as the settlement line, there was a settlement. The Culbert line was used in the Settlement Document.
• Justice Garson noted the case was settled.
• The parties were all given a copy of the Settlement Document before they left the Courthouse that day.
• The parties conducted themselves after the pre-trial in a manner consistent with a settlement having been reached. The Township agreed to a discontinuance without costs. The applicants retained a company to construct a fence on the settlement line. Mr. Langlois delivered a cheque on behalf of his client in accordance with the agreement, although there was a holdback, which had not been part of the bargain. However, the applicants acceded as a gesture of goodwill.
• Mr. Langlois deposed that he first reviewed the Settlement Document on March 19, 2024.
• However, he did not raise any issue about the settlement until after March 19, 2024. In his letter of that date, Mr. Langlois raised only one concern, namely whether a fencing contractor had been engaged because Justice Garson included in his direction that the fence was to be built “forthwith”. That language is not found in the Settlement Document but it is reasonable to assume that Justice Garson communicated that direction to the parties. In any event, Mr. Langlois raised no issue about the location where the fence was to be built or that he thought there may have been a misunderstanding.
• The first written notification of any concern about the location of the fence appears to be Mr. Langlois’ letter of April 9, 2024.
• There is no evidence that the applicants knew there was any problem with the settlement prior to that time.
• Following the further pretrial meeting, Justice Garson noted that the parties were “no longer in agreement”.
• If Mr. Langlois misunderstood what the Culbert survey showed as set out in paras. 26 and 27 of his Affidavit, there is no evidence that his (mis)understanding (if there was one) was shared by his client. Mr. O’Neill did not swear an affidavit in response to this motion.

[37] Justice Garson’s endorsements, although brief, are significant. In Sipidias v. Sipidias, 2024 ONSC 1000, para 55 the Court noted at para. 55 that “the best evidence of what happened at the January 17, 2023 Judicial Mediation comes not from the competing affidavits of [the parties], but from the various Endorsements of Sutherland J., who conducted the mediation.”

[38] After the second pretrial, Justice Garson wrote that the parties were no longer in agreement, the obvious inference being that the parties were previously agreed.

[39] When viewed objectively, a reasonable observer would conclude from the parties’ words, conduct and communications that a resolution had been reached, and its terms memorialized in the Settlement Document.

[40] I have also considered whether there was a unilateral mistake such that the settlement agreement should be set aside. The decision in Kearns v. Canadian Tire Corp., 2020 ONCA 709, para 41 is instructive. Canadian Tire appealed from a ruling enforcing Minutes of Settlement in favour of the plaintiff. Canadian Tire argued that it was unaware of a payment it had made to the plaintiff before the mediation and the settlement that resulted. It sought to deduct that sum from the amount it had agreed to pay. The motion judge refused. He concluded that the Minutes of Settlement constituted a valid and binding contract. There was no ambiguity about its terms and there was no evidence that the plaintiff was aware of the defendant’s mistake when the Minutes were signed.

[41] Canadian Tire submitted that the motion judge failed to take account the subjective understanding or state of mind of its representatives at the mediation. Justice Lauwers was unpersuaded, writing:

[41] … Canadian Tire’s argument ignores a key principle of contractual interpretation. It suggests that the “context”, or factual matrix, that the motion judge failed to take into account included the subjective understandings, or state of mind, of the two Canadian Tire representatives at the time of the mediation. But, as taught by Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, para 58, the factual matrix consists only of objective evidence of the background facts at the time of the execution of the contract – that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contract: see also, Olivieri, at para. 44. Evidence of the undisclosed or uncommunicated subjective knowledge or state of mind of the two Canadian Tire representatives at the mediation does not qualify as part of the factual matrix that could assist the interpretative process.

[42] The Court dismissed the appeal. The Court’s comments are apposite in this case.

[43] The next step of the analysis involves an assessment of whether, notwithstanding the validity of the Settlement Agreement, it should be enforced. The respondents submit that I should exercise my discretion and refuse to do so.

[44] Srebot v. Srebot Farms Ltd., 2013 ONCA 84, para 6 holds that the Court’s discretion not to enforce a settlement should only be exercised in rare and exceptional circumstances where enforcement would lead to a clear injustice. There are strong policy reasons that favour the enforcement of settlements.

[45] In determining whether to enforce a settlement, a motion judge is entitled to consider the following non-exhaustive list of factors:

• Whether an order had been taken out or the parties’ pre-settlement positions remain intact;
• Whether the party who seeks to enforce the settlement would be prejudiced if the settlement was not enforced, apart from losing the benefit of the settlement;
• The degree to which the respective parties will be prejudiced; and
• Whether third parties are affected if the settlement is not enforced.

See Milios v. Zagas, paras 15-16, 19-22.

[46] There are cases that suggest that the Court may refuse to enforce a settlement if there is a genuine mistake or misunderstanding about certain fundamental facts. The respondents cite L-Jalco Holdings Inc. v. Lawrynowicz & Associates, 2018 ONSC 4002, para 38; Cox v. Baker, 2019 ONSC 2859, para 39; and Draper v. Sisson, 1991 CarswellOnt 446 (Gen Div). In Draper, the Court refused to enforce a settlement where an offer was accepted by counsel based on a misunderstanding of its terms. The Court concluded it would be inequitable to permit the applicants to take advantage of the lawyer’s mistake.

[47] The applicants rely on Thompson v. Broeze, 2018 ONSC 4268, paras 66-67 on this issue. In that case, the Court exercised its discretion and refused to enforce a settlement in circumstances where the client and his lawyer agreed to it based on factual assumptions that later proved erroneous. The applicants cite the decision not for its outcome but rather the relevant principles on which they rely:

[66] As a general rule, a person is bound by terms of settlement agreed to by their lawyer, even if they did not instruct the lawyer to settle. The public policy reasons for this rule are obvious. In the absence of an express limitation on a lawyer’s authorization to settle issues on behalf of their client, litigants and their lawyers need to be able to rely on the representations of counsel who are retained to conduct litigation on behalf of opposing parties, without questioning the lawyer’s instructions.

[67] The jurisprudence is clear, however, that in exceptional circumstances, the Court may exercise judicial discretion not to enforce a settlement reached as a result of a lawyer’s lack of instructions or misapprehension of their client’s instructions where enforcement is not in the interests of justice. The Ontario Court of Appeal and the Divisional Court of the Ontario Superior Court have made numerous pronouncements on this issue. The following legal principles are set out in the jurisprudence:

a) A lawyer who is retained to conduct litigation has ostensible authority to act for their client in agreeing to a settlement, unless there is an express limitation on their authority that is communicated to the opposing party: Scherer v. Paletta, para 10; Srajeldin v. Ramsumeer, 2015 ONSC 6697, paras 21, 27.

b) The usual rule is that a settlement negotiated with the assistance of counsel ought to be enforced regardless of whether one of the lawyers was operating without instructions or under a mistaken belief as to their instructions, unless the lawyer’s lack of authorization was known to the opposing party: Scherer, para 11; Srajeldin, para 36.

c) However, in the context of enforcement of a settlement of litigation, the Court does not simply apply contract law principles in determining whether terms of settlement are binding. Given that the parties have invoked the judicial process, there is a residual judicial discretion as to whether to grant judgment in accordance with the terms of settlement. This discretion exists regardless of whether or not the settlement was reached pursuant to Rule 49 of the Rules of Civil Procedure: Scherer, para 11; Milios, para 15; Vanderkop, para 23.

d) The Court’s discretion not to enforce a settlement should only be exercised in rare and exceptional circumstances: Srebot v. Srebot Farms Ltd., 2013 ONCA 84, para 6; Srajeldin, paras 33, 42.

e) In deciding whether to exercise its discretion not to enforce a settlement, the Court must take all relevant equitable factors into consideration, including the reasonableness of the terms of settlement, the degree to which the moving party will be prejudiced if the settlement is not enforced, the degree to which the responding party will be prejudiced if the settlement is enforced, whether any third parties will be affected if the settlement is not enforced, whether the unauthorized lawyer acted out of a misapprehension of their instructions (i.e. mistake), and whether the parties’ pre-settlement positions remain intact: Milios, paras 16, 19-22; Srebot, para 10.

f) The discretionary decision not to enforce a settlement, especially where the settlement has been partially performed, should be reserved for those rare cases where compelling circumstances establish that the enforcement of the settlement is not in the interests of justice: Srajeldin, paras 33, 42; Srebot, para 6. The test is whether, on consideration of all the relevant factors disclosed by the evidence, the enforcement of the settlement would lead to clear injustice: Srebot, supra, at para.10.

[48] The respondents suggest that there are several reasons that support a refusal to enforce, namely:

• There is no change in the parties’ pre-settlement positions. The fence has not been constructed and the parties have not taken out an order dismissing the action;
• The applicants have not adduced any evidence of prejudice that they will suffer if the settlement is not enforced;
• In contrast, Mr. O’Neill would be seriously prejudiced if the settlement were enforced. He agreed to pay $150,000 on the understanding that the fence line would correspond with the remaining fence posts;
• The other respondents, including the Township, will not be affected if the settlement is not enforced. The litigation would remain ongoing;
• The offer was not clear and unequivocal. The applicants’ offer to settle based on “the Culbert survey” was capable of different meanings, as evidenced by the different versions of the Culbert survey indicating different boundary lines;
• The handwritten changes to the Rule 49 offer were not negotiated. The negotiations were verbal, through an intermediary, and plainly ended with an innocent misunderstanding on both sides about what their bargain was.

[49] I do not accept the respondents’ submission.

[50] Notwithstanding the respondents’ assertion to the contrary, there is obvious prejudice to the applicants and the Municipality if the litigation were to continue. The expense and delay are two examples. Delay is particularly problematic given that the properties are used for agricultural purposes and the impact on growing seasons is undoubtedly a concern.

[51] The costs incurred to date are significant. There is reference in the material filed that between them, the parties have incurred costs exceeding $200,000 to date.

[52] Perhaps most significantly, there is no evidence that Mr. Langlois misunderstood his instructions. He does not say that in his responding affidavit. Mr. O’Neill did not swear an affidavit. It is reasonable to assume that he does not make that allegation either. This is a case where the respondents simply changed their mind.

[53] In summary, I am not persuaded that I should refuse to enforce the settlement which I have found to have been concluded. This is not one of the rare circumstances where enforcement should be refused.

[54] The applicants’ motion is granted. The Settlement Document constitutes a valid and binding contract.

[55] I will receive brief written submissions on costs not exceeding three pages plus Bills of Costs within 45 days of the release of these reasons. There is no right of reply.

_______________________________
Helen A. Rady

Released: May 30, 2025