There were only two substantive civil decisions release by the Court of Appeal for Ontario this past week. Both related to the enforcement of settlements, one of a debt, the other of a medmal claim.
Blaney McMurtry LLP
[Doherty, Hoy and Jamal JJ. A.]
M.A. Khan, for the appellants
R.H. Parker, for the respondent
Keywords: Contracts, Debtor-Creditor, Guarantees, Torts, Fraudulent Misrepresentation, Inducing Breach of Contract, Civil Procedure, Reasonable Apprehension of Bias, Costs, Courts of Justice Act, R.S.O. 1990, c. c.43, s. 131, Mariani v. Lemstra (2004), 246 D.L.R. (4th) 489 (Ont. C.A.), Drouillard v. Cogeco Cable Inc., 2007 ONCA 322, R. v. Sahdev, 2017 ONCA 900, R. v. Aird, 2013 ONCA 447, R v. Gravesande, 2015 ONCA 774, R. v. Ibrahim, 2019 ONCA 613, Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Boucher v. Public Accountants Council for Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.)
The individual appellant, a lawyer, provided a loan to a third party couple to finance the purchase of a home. When the borrowers did not make their monthly payments, the appellant issued a notice of sale and obtained an order for possession.
The respondent, a mortgage broker, became involved and tried to arrange alternative financing for the borrowers. The appellant and the borrowers later agreed to settle the debt. In a schedule to the settlement, the borrowers signed a promissory note in favour of the appellant, and the respondent signed as guarantor.
The respondent continued to seek financing for the borrowers, but in the meantime disputed his role as guarantor. He, in conjunction with the borrowers, sued the appellant for fraudulent misrepresentation. The appellant settled with the borrowers, but counterclaimed against the respondent, likewise claiming fraudulent misrepresentation, in addition to alleging that the respondent induced a breach of contract by undermining the original settlement for the debt.
The trial judge dismissed the appellant's counterclaim, and held that the appellant's settlement with the borrowers with respect to the debt released the respondent of any obligations as a guarantor. The appellant raised at least 14 issues on this appeal. The Court categorized these issues into six topics.
(1) Did the trial judge err in dismissing the claim for fraudulent misrepresentation?
(2) Did the trial judge err in dismissing the claim for inducing breach of contract?
(3) Did the trial judge err in dismissing the claim to enforce the respondent's guarantee?
(4) Did the trial judge approach the evidence unfairly by applying differential standards of scrutiny?
(5) Did the trial judge's interventions give rise to a reasonable apprehension of bias?
(6) Did the trial judge err in his costs ruling?
(1) No. The trial judge correctly summarized the elements of fraudulent misrepresentation as laid out in Mariani v. Lemstra (2004), 246 D.L.R. (4th) 489 (Ont. C.A.): (i) defendant made a false representation of fact; (ii) defendant knew the statement was false or was reckless as to its truth; (iii) defendant made the representation with the intention that it would be acted upon by the plaintiff; (iv) the plaintiff relied upon the statement; and (v) the plaintiff suffered damages as a result.
(2) No. Once again, the trial judge correctly cited the four elements of inducing breach of contract as established in Drouillard v. Cogeco Cable Inc., 2007 ONCA 322: (i) plaintiff must have a valid and enforceable contract with the defendant; (ii) defendant was aware of the existence of the contract; (iii) defendant intended to and did procure the breach of the contract; and (iv) because of the breach, the plaintiff suffered damages.
Again, the Court was very brief in its analysis, and limited its comments to finding that there was no basis to interfere with the trial judge's conclusion on this issue.
(3) No. The trial judge accepted that a lender may have separate claims against a borrower and their guarantor. However, in this case, it was not a term of the appellant's settlement with the borrowers that he could maintain his pursuit of the respondent. Instead, the settlement provided for the "payment of the debt in its entirety." Again, there was no basis to interfere with these findings.
(4) No. The Court emphasized that credibility findings are part of the bedrock of a trial judge's function, and as such, attract a very high degree of deference on appeal (R. v. Sahdev, 2017 ONCA 900; R. v. Aird, 2013 ONCA 447). To challenge these findings, the appellant "must identify something clear in the trial judge's reasons or the record indicating that a different standard of scrutiny was applied" (R v. Gravesande, 2015 ONCA 774). The Court concluded that the appellants did not meet this threshold.
(5) No. The appellant submitted that the trial judge's apparently excessive questioning during his final submissions compromised his ability to cover all the issues before the court. However, the Court found no merit to these submissions, and pointed out that the questions involved nothing more than standard discussion between the court and counsel. This fell well short of meeting the test of a reasonable apprehension of bias as assessed from the perspective of a reasonable observer present throughout the trial (R. v. Ibrahim, 2019 ONCA 613).
(6) No. The Court stated that a costs award should only be set aside on appeal if the trial judge made an error in principle, or if the award is plainly wrong (Hamilton v. Open Window Bakery Ltd., 2004 SCC 9). This is a stringent test, and once again one that the appellants had failed to meet. The trial judge was well within his rights to exercise discretion in his costs award pursuant to s. 131 of the Courts of Justice Act, provided that the amount is "fair and reasonable" (Boucher v. Public Accountants Council for Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.)). The Court found no error in this exercise of discretion, and therefore no basis to intervene.
[Rouleau, Miller and Zarnett JJ.A.]
R. P Bohm and D. S Lee, for the appellants
C.K. Hunter, for the respondent physicians
H. Ngan and B. Shakinovsky, for the respondent hospitals
Keywords: Torts, Negligence, MedMal, Contracts, Settlements, Enforcement, Implied Terms, Releases, Rules of Civil Procedure, Rule 49.09, Milios v Zagas (1998), 38 OR (3d) 218 (CA), Olivieri v Sherman, 2007 ONCA 0491, Hodai v RBC Dominion Securities, 2011 ONSC 6881, aff'd 2012 ONCA 0796, Kuo v Kuo, 2017 BBCA 245
The appeal arises from an alleged settlement in a medical malpractice case. One of the appellants alleged that the professional wrongdoing of the respondents left them injured, while the other two appellants were family members who brought claims under the Family Law Act. While the appellants had help from a lawyer drafting the statement of claim, the lawyer would not go on record, and the appellants were considered self-represented.
After almost two years had passed since the statement of claim was issued, lawyers for the respondents began making inquiries of the appellant as to their intention to pursue the claim. The appellant responded asking for further time to consider their options. The respondents' lawyer advised the appellant that they would be seeking a court ordered timetable for the action and also asked the appellants if they would consider dismissing the action on a without cost basis in exchange for a release.
Two weeks later, one of the appellants sent an email to counsel for the respondents confirming they would be dismissing the case on a without costs basis, but made no mention of a release. They asked for confirmation of acceptance from the respondents as well as a copy of the form needed to file the dismissal with the court. All three appellants signed the letter. Counsel for the respondent physicians replied the same day confirming that the respondent physicians agreed to the dismissal in exchange for a release. A few days later, counsel for the respondent hospitals confirmed that the agreement was in exchange for a release and sent along a proposed form of release. This proposed release included a waiver of independent legal advice as well as a clause requiring the appellants to keep the terms of the settlement confidential.
Ultimately, the appellants refused to proceed with the settlement. They eventually retained legal counsel and wanted to proceed with the action. The respondents moved under rule 49.09 of the Rules of Civil Procedure to have the settlement enforced. The motion judge ultimately enforced the settlement and the appellants appealed that decision.
(1) Did the motion judge err in finding an enforceable agreement to settle?
(2) Did the motion judge err by not exercising their discretion not to enforce an otherwise enforceable settlement on the grounds of unconscionability?
(1) No. The appellants submitted that the spouse thought she was only taking an exploratory step when emailing counsel saying they would dismiss the action without costs. Citing Olivieri v Sherman, the Court of Appeal held that the conduct of the parties, including the language used, is to be viewed objectively when determining whether a contract has been made. The motion judge considered the words used in the email and held the requisite intention to create a binding settlement was present when viewed objectively.
Of particular note in this case was the issue of the releases. The appellants' email did not mention releases as a term of the settlement. While the releases had been discussed initially, they were only re-introduced in the emails from the respondents' counsel when accepting the offer from the appellant to dismiss the action. The Court of Appeal held that there is an implied obligation to furnish a release as part of a settlement, and so the fact the respondents introduced the term while accepting did not render the agreement unenforceable because the terms were not inconsistent. The releases proffered by both the respondent physicians and respondent hospitals' counsel were overly broad, however. In particular, the proposed releases contained independent legal advice waivers and confidentiality clauses. These terms went beyond what was strictly necessary to enforce the intentions of the binding settlement agreement, and so they were beyond the reach of the implied obligation to furnish a release. The essential terms of the agreement, that is, to dismiss the action without costs and the implied obligation to furnish a release remained binding, however.
The appellants also submitted that the settlement was not enforceable because the spouse was acting without the authority of the other appellants when she sent the settlement email, and that the main appellant, the one who was injured, never consented or was never consulted on the settlement. The Court of Appeal accepted the motion judge's finding that this was inconsistent with all three appellants having signed the email.
(2) No. The motion judge correctly recognized their overriding discretion to refuse to enforce a settlement and correctly cited the test in Milio v Zagas. Nevertheless, the motion judge did not find the terms of the settlement to be unconscionable and so did not exercise his discretion. The Court of Appeal saw no error in the motion judge's approach and noted that he considered all the relevant factors in making his decision. This process and exercise of discretion was entitled to deference and the Court of Appeal saw no reason to intervene.
SHORT CIVIL DECISIONS
[Huscroft, Zarnett and Coroza JJ.A.]
Lee for the appellants KB and DB (Respondents/Applicants by Counter-Application)
Binavince, for the respondents CB and RB (Applicants/Respondents by Counter-Application)
Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Damages, Consequential Loss, Azzarello v. Shawqi, 2019 ONCA 820
[Juriansz, Hourigan and Thorburn JJ A]
WDM, acting in person
D. Mayer, for the respondents Her Majesty the Queen in Right of Ontario and the Public Guardian and Trustee
Keywords: Civil Procedure, Appeals, Frivolous, Vexatious, Abuse of Process, Parties Under Disability, Capacity, Rules of Civil Procedure, Rules 2.1.01(6), 2.1.01(1) & 7.04
[Fairburn ACJO, Miller and Zarnett JJ A]
A. L. Rachlin, for the appellant/respondent by way of cross-appeal
J.Y. Obagi and E. A. Quigley, for the respondents/appellants by way of cross-appeal
Keywords: Civil Procedure, Trial, Juries, Discharge of Jury, Mistrial, Evidence, Admissibility, Documents, Late Disclosure
[Hourigan, Trotter and Jamal JJ. A]
B. Marks for the appellants
C. Merovitz for the respondent
Keywords: Civil Procedure, Appeals, Evidence, Examination of Witnesses, Solicitor-Client Communications, Rules of Civil Procedure, Rules 39.02(2) & 39.03(2)
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