Court File and Parties
Court File No.: CV-19-00619688-0000 Date: 2025-08-12 Ontario Superior Court of Justice
Re: Nabeel Abdullah, Rajaa Hassan, and Salam Badir, Plaintiffs
-and-
Fathi Mohammed Mursal, Demetre Apostolou, and Donkey Kone Inc., Defendants
Before: Shin Doi, J.
Counsel:
- Corey J. Sax, for the Plaintiffs
- Joseph Grossman and David O'Brien, for the Defendants Demetre Apostolou and Donkey Kone Inc.
- Heather Vaughan, for the Defendant Fathi Mohammed Mursal
- David Himelfarb and Alex Kluchuk, for the moving party Fathi Mohammed Mursal
- Tony Antoniou for LawPro and Jason Goodman (former lawyer for the Defendant Fathi Mursal)
Heard: May 14, and August 8, 2025
Endorsement
I. OVERVIEW
[1] The plaintiff Nabeel Abdullah ("Abdullah") and the defendant Fathi Mohammed Mursal ("Mursal") were in a car accident. Mursal was t-boned by an ice cream truck as he was making a left turn. Abdullah was a passenger in Mursal's car. The defendant Donkey Kone Inc. ("Donkey Kone") owned the ice cream truck which was operated by the defendant Demetre Apostolou ("Apostolou"). Mursal and Abdullah sustained serious injuries from the accident.
[2] Three actions were started: (a) Abdullah and his parents sued Mursal, Donkey Kone, and Apostolou; (b) Mursal sued Donkey Kone and Apostolou; and (c) Donkey Kone and Apostolou sued Mursal. The parties settled the action commenced by Abdullah and his parents. A consent judgment was issued setting out the amounts to be paid by the defendants to Abdullah and his parents; that Abdullah and his parents will discontinue the action; and that the crossclaims between the defendants will continue. Mursal brings a motion to set aside the consent judgment because the action was settled by his insurer's appointed defence lawyer without the involvement of Mursal's personal lawyer. Mursal argues that he is now exposed to liability which is greater than the amount for which he was insured because the crossclaims survived.
[3] The issues to be determined are: (a) Did the defence lawyer appointed by the insurer have the authority to settle the Abdullah action on behalf of Mursal? (b) Was the settlement within the scope of the defence lawyer's authority?; and (c) Should the consent judgment be set aside?
[4] I dismiss Mursal's motion to set aside the consent judgment because Mursal's defence lawyer appointed by his insurer had the authority to settle the action on behalf of Mursal and the settlement was within the defence lawyer's authority. Mursal does not satisfy the test to set aside the consent judgment under the Rules of Civil Procedure. Mursal's defence lawyer consented to the settlement on behalf of Mursal. It would not be in the interests of justice to set aside the consent judgment.
II. BACKGROUND FACTS
[5] On September 7, 2017, Mursal was driving a red 2015 Toyota Corolla in Scarborough, Ontario, with his friend, Abdullah, who was a passenger in the car. Mursal was t-boned by an ice cream truck as he was making a left turn. The ice cream truck was owned by Donkey Kone and operated by Apostolou. Mursal and his passenger, Abdullah, sustained catastrophic injuries in the accident.
[6] Mursal was charged under section 142(1) of the Highway Traffic Act for not making a left turn safely. Mursal pleaded guilty to the charge and paid the fine. Mursal alleges that Apostolou was driving negligently at the time of the accident. Donkey Kone and Apostolou argue that Apostolou had the undisputed right of way at the time of the accident.
[7] Three actions were commenced. Abdullah and his parents commenced this action, claiming $4,000,000.00 plus interest and costs. Mursal commenced an action against Donkey Kone and Apostolou, claiming $5,000,000.00 plus interest and costs. Donkey Kone and Apostolou commenced an action against Mursal, claiming $1,500,000.00 plus interest and costs.
[8] Mursal was insured under a standard policy of automobile insurance issued by Intact insurance company ("Intact"). Mursal's third party liability limit under the Intact policy was $1,000,000.00. Donkey Kone and Apostolou were insured under a policy of automobile insurance with Definity (formerly Economical). The third party liability limit under that policy was $5,000,000.00.
[9] On December 18, 2019, Intact appointed a defence lawyer for Mursal. The defence lawyer advised Mursal that he may wish to hire his own personal lawyer to protect himself against the additional risk because the Abdullah, Donkey Kone, and Apostolou's claims exceeded his Intact policy limit of $1,000,000.00. Mursal hired his own personal lawyer.
[10] In December 2020, Mursal settled his Accident Benefits claim for $745,000.00 with Belair, an auto insurer that responded to the Accident Benefits claim.
[11] On January 11, 2021, Mursal was assessed as legally capable to manage property and personal care, and able to advise his legal counsel in the Accident Benefits claim, benefits, potential settlement, and related legal matters.
[12] On January 11, 2022, the court ordered that the three actions be tried together or immediately one after another.
[13] On November 23, 2022, the court ordered that the parties continue mediation. On April 10, 2023, the parties participated in mediation. Mursal's personal lawyer represented Mursal in the mediation of the action commenced by Mursal. Mursal's personal lawyer says that he was "kept in the dark" about the settlement discussions in the Abdullah and Apostolou actions.
[14] On or about April 14, 2023, Mursal's personal lawyer received an email from Donkey Kone and Apostolou's lawyer and Mursal's defence lawyer appointed by the insurer that the Abdullah action was settled for $2,400,000.00. The settlement provided that Abdullah and his parents would be paid $2,400,000.00 consisting of $940,000.00 from Mursal and $1,460,000.00 from Donkey Kone and Apostolou. Even though Donkey Kone and Apostolou denied liability, they had much higher insurance liability limits than Mursal, which resulted in them having to pay a much higher sum than what they believed was their proportionate share of liability. A specific term of the settlement of the Abdullah action was that Donkey Kone and Apostolou would have the right to continue their crossclaim against Mursal, under the Abdullah action.
[15] The action commenced by Donkey Kone and Apostolou was also settled for the sum of $215,000.00 paid by Intact, Mursal's insurer. The amount of $60,000.00 from Mursal's policy limit was paid by Intact as part of the $215,000.00 settlement.
[16] Donkey Kone and Apostolou also offered to settle the Mursal action with a dismissal without costs.
[17] On April 18, 2023, Mursal's personal lawyer advised the parties that the settlements were reached without Mursal's authority and consent. On April 27, 2023, Mursal's personal lawyer advised Donkey Kone and Apostolou's lawyer that Mursal did not agree to the proposed settlement. Donkey Kone and Apostolou's lawyer replied that Mursal was represented by the defence lawyer appointed by Intact.
[18] By letter dated May 17, 2023, Mursal's defence lawyer who was appointed by Intact informed him about the settlement of the Abdullah and Donkey Kone and Apostolou actions for the sum of $1,000,000.00 ($940,000.00 for the Abdullah action and $60,000.00 for the Donkey Kone and Apostolou action). Mursal's defence lawyer also advised him that there was a crossclaim against him by Donkey Kone and Apostolou which had not settled and that he was potentially personally exposed to pay any amounts which may be up to $1,460,000.00 which was the sum paid by Donkey Kone and Apostolou to Abdullah.
[19] On July 5, 2023, Donkey Kone and Apostolou brought a motion in writing for consent judgment on the settlement. On July 7, 2023, Mursal's personal lawyer requested that he be allowed to make submissions at their motion for consent judgment. Donkey Kone and Apostolou's lawyer took the position that Mursal's personal lawyer did not have any standing in the motion for consent judgment.
[20] On July 25, 2023, the court issued a consent judgment ordering that Abdullah and his parents will receive the sum of $2,400,000.00 inclusive of costs, consisting of $940,000.00 from Mursal and $1,460,000.00 from Donkey Kone and Apostolou; Abdullah and his parents will serve and file a notice of discontinuance; and the crossclaims between the defendants will continue.
[21] On September 20, 2023, Mursal's personal lawyer asked that the consent judgment be set aside.
[22] On November 8, 2023, LawPro counsel was appointed for Mursal's defence lawyer. There is a separate solicitor's negligence action commenced by Mursal.
[23] On April 25, 2024, the parties attended a Case Conference. The court ordered that Mursal be allowed to bring a motion to set aside the consent judgment.
[24] On June 14, 2024, Mursal served a notice of motion to set aside the consent judgment. The motion was heard on May 14, 2025.
III. ANALYSIS
1. Did the defence lawyer appointed by the insurer have the authority to settle the Abdullah action?
[25] Mursal's defence lawyer appointed by the insurer had the authority to settle the Abdullah action pursuant to the standard Ontario Automobile Policy (OAP 1 – owner's policy) which terms and conditions are in every automobile owner's policy issued in Ontario.
[26] Pursuant to the Ontario Automobile Policy, Mursal irrevocably appointed the insurer to act on his behalf and agreed not to interfere in any negotiations that the insurer conducts to settle any claim. The Ontario Automobile Policy, s. 3.3.1 provides:
3.3.1 If Someone Sues You
By accepting this policy you and other insured persons irrevocably appoint us to act on your or their behalf in any lawsuit against you or them in Canada, the United States of America or any other jurisdiction designated in the Statutory Accident Benefits Schedule arising out of the ownership, use or operation of the automobile.
If someone sues you or other insured persons insured by this Section for losses suffered in an automobile incident, we will provide a defence and cover the costs of that defence, including investigation costs. We will pay all legal costs the court assesses against you and other insured persons in the lawsuit we have defended.
If there is a judgment against you or other insured persons, we will pay any post-judgment interest owed on that part of the amount the court orders that falls within the liability limits of your policy.
We reserve the right to investigate, negotiate and settle any claim out of court if we choose.
If you are sued for more than the limits of your policy, you may wish to hire, at your cost, your own lawyer to protect yourself against the additional risk.
Section 3.4 of the Ontario Automobile Policy sets out the insured person's responsibilities which include not to assume any liability for the incident, or settle any claim, except at the insured or other insured person's own cost, and not to interfere in any legal proceeding or in any negotiations the insurer conducts to settle any claim.
[27] Pursuant to the Ontario Automobile Policy, the defence lawyer appointed by the insurer had the authority to settle the Abdullah action and Mursal had an obligation not to interfere in the settlement.
[28] Also, I note that the defence lawyer was the solicitor of record for Mursal, not Mursal's personal lawyer, in the Abdullah action. Mursal's personal lawyer was the solicitor of record for Mursal as plaintiff only in the Mursal action. On May 12, 2023, Mursal's personal lawyer specifically pointed out to Donkey Kone and Apostolou's lawyer that he was the lawyer for Mursal in the Mursal action and that Mursal was represented by the defence lawyer in the Abdullah action.
2. Was the settlement of the Abdullah action within the scope of the defence lawyer's authority?
[29] I find that the settlement of the Abdullah action was within the scope of the defence lawyer's authority because Mursal's contribution to the settlement was within his policy limit of $1,000,000.00.
[30] The defence lawyer brought the issue of whether the amount of damages would be within the policy limit to Mursal's attention. In the letter dated December 18, 2019, the defence lawyer states that the claims being made exceed Mursal's policy limit but at this point in time, the defence lawyer is not able to determine whether it is likely that a court will award the plaintiffs damages in excess of Mursal's policy limit of $1,000,000.00. The defence lawyer states that Mursal should immediately obtain legal advice and if Mursal retains his own personal solicitor, the defence lawyer will cooperate fully with him, but the defence lawyer will control the defence of the action.
[31] I note that defence lawyer's instructions to Mursal are consistent with the Ontario Automobile Policy which contemplates a situation in which a court order exceeds the liability limit in an insured's policy and the insured's responsibility for payment. The Ontario Automobile Policy, s. 3.3.2 example states:
Example
You are sued for injuries suffered by another person in an accident that you are legally responsible for. We will hire lawyers at our expense and cover all costs of your defence in court.
The court orders you to pay $10,000 in costs and $600,000 to cover losses. Your liability limit is $500,000.
We will cover the $10,000 in costs, and $500,000 of the judgment. We will also pay any interest owed on that amount from the day of the judgment. You will be responsible for the remaining $100,000 of the judgment and any interest owed on that.
The Ontario Automobile Policy advises an insured who is sued for more than the limits of the policy to hire legal counsel to protect against the additional risk (s. 3.3.1).
[32] Mursal's interest and the insurer's interest were able to co-exist because the portion of the settlement paid by Mursal was within his policy limit of $1,000,000.00 and liability was not admitted. In Brockton (Municipality) v. Frank Cowan Co., 57 O.R. (3d) 447 (C.A.), the Court of Appeal dealt with the issue of whether the insured had the right to take over control of the defence of the civil actions from its insurer. The Court of Appeal held at para 43, "The question is whether the counsel's mandate from the insurer can reasonably be said to conflict with his mandate to defend the insured in the civil action. Until that point is reached, the insured's right to a defence and the insurer's right to control that defence can satisfactorily co-exist." Mursal's interest and insurer's interest would conflict in the defence of the crossclaims of Donkey Kone and Apostolou because the global settlement was in excess of Mursal's policy limit, Mursal's policy limit has already been reached in the payment to Abdullah and his family, and Mursal would be responsible for payment of any excess amount. On July 4, 2023, Mursal's personal lawyer wrote to the defence lawyer requesting that the insurer appoint a new counsel for Mursal to defend him in the crossclaim in the Abdullah action. Mursal's personal lawyer explains that the defence lawyer is in conflict and had allowed the crossclaim to survive the settlement, and therefore, cannot continue to defend Mursal in the crossclaim.
[33] Mursal argues that the defence lawyer should have included Mursal's personal lawyer in the settlement. LawPro's counsel asks that I do not make any finding about the defence lawyer appointed by the insurer. Accordingly, I make no finding in that regard. The fact that Mursal's defence lawyer did not involve Mursal's personal lawyer is an issue between the insurer and Mursal in the negligence action commenced by Mursal.
3. Should the consent judgment be set aside?
[34] The consent judgment should not be set aside because Mursal had notice of the motion, and Mursal's lawyer did not fail to appear on a motion through accident, mistake, or insufficient notice. The defence lawyer appointed by the insurer gave consent on behalf of Mursal. Mursal did suffer prejudice but the contribution and indemnity in the crossclaim have not yet been determined. It would be prejudicial for the plaintiffs, Mursal and his parents, and the co-defendants, Donkey Kone and Apostolou, if the consent judgment was set aside. It would not be in the interests of justice to set aside the consent judgment.
[35] Rule 37.14 of the Rules of Civil Procedure permits a party or other person to move to set aside or vary an order (which includes a judgment (Rule 1.03)).
Motion to Set Aside or Vary
37.14 (1) A party or other person who,
(a) is affected by an order obtained on motion without notice;
(b) fails to appear on a motion through accident, mistake or insufficient notice; or
(c) is affected by an order of a registrar,
may move to set aside or vary the order, by a notice of motion that is served forthwith after the order comes to the person's attention and names the first available hearing date that is at least three days after service of the notice of motion. R.R.O. 1990, Reg. 194, r. 37.14 (1) ; O. Reg. 132/04, s. 9.
(2) On a motion under subrule (1), the court may set aside or vary the order on such terms as are just. R.R.O. 1990, Reg. 194, r. 37.14 (2) .
[36] I agree with Donkey Kone and Apostolou that Mursal has not satisfied the test to set aside an order under Rule 37.14 of the Rules of Civil Procedure. The motion for the consent judgment was made on notice to the parties. Notice was provided to Mursal through the defence lawyer appointed by the insurer. Mursal's personal lawyer also received notice of the pending motion on July 5, 2023. However, Mursal's personal lawyer was not served with the motion record and not granted an opportunity to file any submissions. Mursal's personal lawyer wrote to the parties on July 6 and 7, 2023 and requested that he be permitted to make submissions. Donkey Kone and Apostolou's lawyer replied that Mursal's personal lawyer did not have any standing in the motion for judgment. Mursal's personal lawyer then wrote to the defence lawyer asking that a new lawyer be appointed to defend Mursal in the crossclaim. Mursal's personal lawyer did not fail to appear through accident, mistake, or insufficient notice. The court rendered judgment on July 25, 2023, and it was not an order of a registrar under Rule 37.14.
[37] Also, Mursal does not meet the requirements in Rule 59.06 (2). Rule 59.06(2) provides:
Setting Aside or Varying
(2) A party who seeks to,
(a) have an order set aside or varied on the ground of fraud or of facts arising or discovered after it was made;
(b) suspend the operation of an order;
(c) carry an order into operation; or
(d) obtain other relief than that originally awarded,
may make a motion in the proceeding for the relief claimed. R.R.O. 1990, Reg. 194, r. 59.06 (2) .
[38] I find that there was no fraud or facts arising or discovered after the consent judgment was made which would permit Mursal to move to set aside a judgment pursuant to Rule 59.06. The facts argued by Mursal in this motion were known or discovered prior to the issuance of the consent judgment.
[39] A court may set aside a consent judgment if the underlying agreement is invalid, does not express the real intention of the parties, or it is in interests of justice to do so. In McCowan v. McCowan, 24 O.R. (3d) 707 (C.A.), the Court of Appeal addressed the issue of when a consent order can be set aside. The Court of Appeal held that "the only question is whether the agreement upon which the consent order was based can be invalidated or not." The Court of Appeal cited Huddersfield Banking Co. v. Henry Lister & Son Ltd., [1895] 2 Ch. 273 (C.A.) which held that a "consent order could be impeached on any ground (including fraud) that would invalidate the agreement giving rise to the consent order." "A consent judgment is final and binding and can only be amended when it does not express the real intention of the parties or whether there is fraud" (Monarch Construction Ltd. v. Buildevco Ltd., [1988] O.J. No. 332 (C.A.) at para. 3). The court also has discretion to set aside the consent judgment in the interests of justice (Clatney v. Quinn Thiele Mineault Grodzki LLP, 2016 ONCA 377; McKenzie v. Zhang et al., 2019 ONSC 6998).
[40] Mursal argues that the consent judgment should be set aside because he did not consent. Mursal's defence lawyer did consent on Mursal's behalf but did not include Mursal's personal lawyer in the settlement discussions. Mursal's personal lawyer advised the parties on April 18, 2023, that he was kept uninformed about the settlement discussions, not informed, alerted nor consulted in relation to those settlements, and the settlements were reached without Mursal's authority and consent. In North Toronto Chinese Alliance Church v. Byrnes, 2019 ONSC 6144, the court dealt with the issue of whether judgment should be granted in accordance with a settlement agreement entered into by the plaintiff and insurer, notwithstanding the fact that the insured did not agree to the settlement terms. The court held that the insurer was entitled to a judgment regardless of whether the insured agreed with the settlement because the insurer had the right to settle the claim under the policy.
[41] I note that while Mursal's personal lawyer was not included in the settlement discussions, Mursal's personal lawyer continued to communicate with the lawyer for the co-defendants, Donkey Kone and Apostolou, throughout the months of April and May 2023. The email exchanges covered the reasonableness of the damages in the Abdullah action and moving forward with the crossclaim. Hence, Mursal through his personal lawyer would have been informed of the proceedings following the settlement including the survival of the crossclaim. On July 4, 2023, Mursal's personal lawyer advised that he would require as part of the crossclaim that Donkey Kone and Apostolou strictly prove the plaintiffs' damages paid in the settlement of the Abdullah action. On July 6, 2023, Mursal's personal lawyer informed the parties that he had been retained by Mursal as excess claims lawyer to protect his interests and personal exposure in claims exceeding the insurer's policy limits.
[42] Questions do arise about the communications by the defence lawyer appointed by the insurer to Mursal's personal lawyer, and the steps taken by the defence lawyer. However, I accept the defence lawyer's request that no adverse findings be made with respect to his representation of Mursal on the basis that there is a separate solicitor's negligence action, and the issue of solicitor's negligence is not squarely before the court, nor is such a finding sought by the parties, nor is it required to grant or refuse the relief sought.
[43] Mursal argues that there is a serious prejudicial effect of the judgment on him personally. Mursal states that the effect of the consent judgment is such that it exposes Mursal to personally pay up to $1,460,000.00 back to Donkey Kone and Apostolou. Mursal states that the damages should be first assessed by the court and liability as between Mursal and Donkey Kone and Apostolou should be determined. I agree that there is a prejudicial effect of the consent judgment on Mursal, but the contribution and indemnity in the crossclaim have not yet been determined. Donkey Kone and Apostolou and Mursal are each free to pursue their respective claims for contribution and indemnity. Further, I agree with Donkey Kone and Apostolou that the Negligence Act, s.2 requires a defendant claiming contribution and indemnity to satisfy the court that the settlement was reasonable and if the amount was excessive, the court may fix the amount at which the claim should have been settled. There is no requirement that damages must be first assessed by the court and liability be determined.
[44] I conclude that it is not in the interests of justice that the consent judgment be set aside. If the consent judgment was set aside, the plaintiffs, Abdullah and his parents, and co-defendants, Donkey Kone and Apostolou would be prejudiced. Those parties have already agreed to a valid and authorized settlement which underlies the consent judgment and the parties' expected finality.
[45] Lastly, the consent judgment does not have to be set aside because a judge did not approve it pursuant to Rule 7.08. Rule 7.08 provides:
Settlement Requires Judge's Approval
7.08 (1) No settlement of a claim made by or against a person under disability, whether or not a proceeding has been commenced in respect of the claim, is binding on the person without the approval of a judge. R.R.O. 1990, Reg. 194, r. 7.08 (1) .
(2) Judgment may not be obtained on consent in favour of or against a party under disability without the approval of a judge. R.R.O. 1990, Reg. 194, r. 7.08 (2) .
The term "disability" means a person who is a minor or mentally incapable or an absentee (Rule 1.03). Mursal raises capacity as an issue in his notice of motion and factum. However, the record indicates that Mursal had capacity and was not mentally incapable, and therefore, Mursal was not a person under disability at the time of the settlement and consent judgment. There was an earlier capacity assessment in 2019, finding that Mursal was not able to instruct his lawyers toward the resolution of his legal claims but the most recent assessment on January 11, 2021, opined that Mursal was able to instruct his lawyers. Mursal was assessed as legally capable to manage property and personal care, and to advise his counsel. Accordingly, Mursal was not a person under disability and the settlement and consent judgment did not require a judge's approval pursuant to Rule 7.08.
IV. CONCLUSION
[46] I dismiss Mursal's motion to set aside the consent judgment. The defence lawyer appointed by the insurer had the authority to settle the Abdullah action. The settlement was within the defence lawyer's authority. Mursal does not satisfy the test to set aside the consent judgment under the Rules of Civil Procedure or under common law. The defence lawyer provided consent on behalf of Mursal. It is not in the interests of justice that the consent judgment be set aside. Mursal was not a person under disability at the time of the settlement and consent judgment, and therefore, the settlement and consent judgment did not require a judge's approval.
[47] If the parties are unable to agree on costs, the parties may make written costs submissions of up to 3 pages in length, within 30 days. The parties shall serve and file the costs submissions, upload the submissions to Case Centre, and email a copy to Gladys.gabbidon@ontario.ca.
Justice J. S. Shin Doi
Released: August 12, 2025