According to Rule 49.09 of the Rules of Civil Procedure, a party may bring a motion for judgment in accordance with the terms of an accepted offer and the judge may grant judgment with respect to same or continue the proceeding as if there had been no accepted offer to settle.
In a recent Court of Appeal decision (Hashemi-Sabet Estate v Oak Ridges Pharmasave Inc. 2018 ONCA 839) the Court had to determine whether the motion judge erred in giving judgment in accordance with a Rule 49 offer to settle because said offer was revoked before it was accepted.
The Respondent (the Estate), sued the Appellant for damages for breach of contract, oppression and various other causes of action relating to the opening and operation of a pharmacy.
On June 8, 2015, the Appellant served the Respondent with a written Rule 49 offer to settle the action. In accordance with Rule 49, the offer provided that it would be open until the trial of the action.
In April, 2016, the Appellant retained new counsel, and a Notice of Change of Lawyer was served in accordance with the Rules of Civil Procedure.
On September 20, 2016, the parties attended a pre-trial conference. The Appellant maintains that the June 8, 2015 offer to settle was rescinded orally at the pre-trial conference and that the offer to settle served on September 19, 2016 revoked the June 8, 2015 offer, in any event.
The Respondent on the other hand, maintained that when counsel returned to their office following the pre-trial conference, a written acceptance of the June 8, 2015 offer to settle was sent by fax at 1:27 p.m. on the same day. According to further evidence tendered by the Respondent, opposing counsel’s office called and requested a copy of the June 8, 2015 offer to settle following the pre-trial conference on September 20, 2016 and that a copy was sent to opposing counsel via email at 2:34 p.m. that day (arguably after acceptance of same was sent via fax).
The Respondent acknowledged receipt of the second offer to settle but maintained that it was not served until 5:23 p.m. on September 20, 2016 (hours after the June 8, 2015 offer was accepted).
The Respondent brought a motion for judgment in accordance with the June 8, 2015 offer to settle and the motion judge granted same. The Appellant appealed the decision to the Court of Appeal.
Court of Appeal Decision
The Court agreed with the motion judge. The Court found that the revocation of the June 8, 2015 offer to settle did not comply with Rule 49.02(1) which requires that the revocation be made in writing. As such, the timing of service of the second offer to settle would be determinative of the motion.
The Court held that in determining whether to enforce a Rule 49 offer to settle, a two-step approach is to be undertaken, similar to the pre-Hryniak v Mauldin 2014 Supreme Court of Canada decision Rule 20 summary judgment analysis.
As such, the Court agreed with the motion judge’s analysis in accordance with the above-noted framework was appropriate as follows:
- Whether an agreement to settle had been reached;
- Whether, on all the evidence, the agreement should be enforced.
The Court agreed that the motion judge had to make credibility findings and held that the Respondent’s position was more credible such that the June 8, 2015 was accepted and that judgment in accordance with the said offer should be enforced. In particular, the Court had trouble with the fact that the Appellant had known for over a year that the Respondent took the position that their counsel was not served with the second offer to settle until 5:23 p.m. on September 20, 2016, but did not submit an Affidavit of Service from the process server.
In light of this decision, it is particularly important to be mindful of the particular rules related to Rule 49 offers to settle, both in making an offer to settle and considering to revoke same. Particularly in relation to service of an offer to settle, it may a good idea to serve it in such a manner as to be able to confirm receipt of same by the other side, such as via facsimile. It is important to remember that service via email will not qualify as proper service, particularly if the opposing side maintains the email was never received.
Thanks for reading!
Find this blog interesting? Please consider these other related posts:
Whether as a result of the increased prevalence of mediation and alternative dispute resolution in the legal profession today, or as a result of the ever increasing costs of litigation, more cases seem to settle today than ever before. With settlement often comes Minutes of Settlement, and if all goes to plan, a relatively peaceful conclusion to the legal process. But what happens if subsequent to signing Minutes of Settlement one of the parties refuses to abide by the agreement? What options are available to an aggrieved party to ensure that what they agreed to actually comes to fruition?
Rule 49.09 of the Rules of Civil Procedure provides that where a party to an accepted offer fails to comply with the terms of the offer, the other party may make a motion to a judge for judgment in the terms of the accepted offer. The effect of turning the settlement into a judgment of the court is to gain access to the enforcement mechanisms available pursuant to the Rules of Civil Procedure. These include Writs of Seizure and Sale for monetary awards, and contempt orders should the party in breach continue to refuse to abide by the settlement.
Turning the settlement into an order of the court is not the only mechanism available to enforce the Minutes of Settlement against a party in breach.Olivieri v. Sherman, a 2007 decision of the Ontario Court of Appeal, provides that a settlement agreement is a contract, and as such is subject to the general laws of contract. So long as the court is satisfied that at the time the settlement was entered into the parties (a) had a mutual intention to create a legally binding contract; and (b) reached agreement on all of the essential terms of the settlement, the court will find that a valid contract exists between the parties. As a valid contract exists between the parties, the general remedies available for a breach of contract are available in the event that one of the parties refuses to abide by the settlement. These remedies include damages in the event that the settlement concerned a monetary award, or specific performance in the event that the settlement concerned specific actions such as the return of property.
Thankfully, in my experience, most people tend to enter into settlement agreements in good faith, and will more often than not abide by what they agreed to. Between Rule 49.09 and the general remedies for breach of contract however, should you find yourself in the situation where a party refuses to abide by a settlement agreement, there are options available to remedy it.
Ian Hull – Click here for more information on Ian Hull.
Achieving a settlement is a major success in any estates dispute, but even the most comprehensive agreement cannot address every possible post-settlement wrinkle. The recent case of Viau v. Kozicki et al, 2010 ONSC 1682 is an example of how a court will interpret Minutes of Settlement following court approval (required in this case because there were minors).
The main issue in Viau was whether legal fees associated with administration of the estate after a judgment approving the settlement had been granted. The judgment incorporating the settlement stated as follows:
"THIS COURT ORDERS AND ADJUDGES that [the estate trustee], be at liberty to pay all of the debts of the [Estate], which include:
(xiv) Any legitimate debts of the [Estate], upon notification to [named Respondent], or approval of the court."
The court found that the wording of the order was not restrictive and did not establish caps on legal fees. Further solicitor’s work to complete the estate would have been anticipated. Of course, the legitimacy of the work or amount claimed would be subject to approval by the named Respondent or the court. In coming to this conclusion, the court did not look beyond the terms of the judgment. The judgment was clear and unambiguous and there was no need to review pre-settlement correspondence.
The decision illustrates a second principle: litigants should avoid unnecessary (or less efficient) proceedings. Specifically, when the named respondent challenged the legitimacy of the additional legal fees, the estate trustee commenced a passing of accounts proceeding. The court found that the issue concerning the legal fees could have been addressed by motion to the court without a passing of accounts and therefore the costs associated with the passing of accounts were not payable from the estate.
Thanks for reading,
I recently read an article composed by The Children’s Lawyer, Debra Stephens, named Minor Settlements: How to Ensure Court Approval. I found this article to be particularly helpful as the article speaks to the role of The Children’s Lawyer in litigious matters and explains the common issues that arise during settlements involving minors.
Fundamentally, it is important to understand the role of The Children’s Lawyer with respect to their involvement in settlements concerning minors, which Ms. Stephens describes as: “The Children’s Lawyer is not a party to the proceeding and is not in an adversarial role with any of the parties. Rather, The Children’s Lawyer acts as an advisor to the court, making recommendations to assist the judge in determining whether to approve the proposed settlement”.
In her article, Ms. Stephens talks about a few issues that commonly arise during settlements involving minors. One of those issues that Ms. Stephens touches on is legal fees. Ms. Stephens states that legal fees are an important factor in determining whether to approve a settlement on behalf of a minor. Factors that are relied on when considering the reasonableness of a solicitor’s account are set out in the Court of Appeal decision Cohen v. Kealey and Blaney and include:
1. time spent;
2. legal complexity;
3. degree of responsibility assumed by the lawyers;
4. monetary value of the matter in issue;
5. the importance of the matters to the client;
6. degree of skill of the lawyers, results achieved;
7. ability of the client to pay; and
8. expectation of the client with respect to the fee.
Also, another factor not mentioned in the case above is ensuring that access to justice is obtained for parties under a disability. I found Ms. Stephens’ article to be particularly useful in my practice and I would certainly recommend it to any practitioner who ordinarily runs into issues involving The Children’s Lawyer.
Thank you for reading.
Rick Bickhram – Click here for more information on Rick Bickhram.
Listen to Passing of Accounts and a Joint Retainer
This week on Hull on Estates, Craig Vander Zee and David Smith discuss conflicts of interest during Passing of Accounts trials and rules of professional conduct.
Listen to Settlement Issues
This week on Hull on Estates, Paul Trudelle and Christopher Graham talk about settlement issues – considerations that you have to take into account and the potential implications of not settling.
Continuing with our review of the Canadian Centre for Elder Law Studies’ paper on viatical settlements, we note that the paper is broken down into 7 parts, starting with a brief introduction and an examination of typical viatical settlements. There is also a review of American academic articles and the study looked at the historical developments of viatical settlements in the U.S.
The study goes on to examine the current law in Canada and looks at leading policy arguments for and against removing the legal barriers to viatical settlements in Canada. The study also examines in detail the leading Canadian model for law reform drafted in 2001 by Ontario’s Financial Services Commission. The last two parts of the study include a review of several issues for reform and a conclusion to the study paper.
The origins of the project arose out of the Program Committee of the British Columbia Law Institute, whereby they identified examining the possibility of legalizing and regulating viatical settlements as an innovative area for legal reform.
After having reviewed the study paper on viatical settlements, it is clear that, while this is an innovative area of legal reform, certainly in the United States, the concept of viatical settlements is a growing trend and one that will no doubt be considered over the next few years as the increase in population puts pressure on the market forces.
Given that viatical settlements are rare in Canada, the study paper looked at the elements of a typical viatical settlement from the United States as providing the reference point. Again, while there are different approaches in the United States, the study notes (at page 3) that one commentator who recently reviewed the American market concluded that the typical viatical settlement contains six steps.
We will look at the six steps in our next blog.
All the best, Suzana and Ian. ——–