LN Partner Paul Martin was Successful in an Appeal Enforcing Settlement in an Ontario Building Code Action

Reid v Bracebridge, 2021 ONSC 791

Loopstra Nixon was successful at the Divisional Court in overturning an order that set aside the consent order dismissing the Plaintiff's action as it pertained to the Town of Bracebridge ("Town"). Reid had commenced an action against the Town for damages arising out of flooding to his property which was subsequently settled. LN Partner Paul E.F. Martin acted for the defendant/appellant Area Municipality of the Town of Bracebridge. 

In 2015, Reid commenced another action against the Town, alleging that the storm water management system's operation built after the 2005 settlement caused structural damage to the residential building on his property. 

While the 2015 action was pending, Reid commenced a third action in 2017 against the Town. After a series of correspondence between the lawyers, the parties agreed to settle the 2017 action while allowing the 2015 action to proceed, but there was disagreement among the release's wording. 

The Town brought a Rule 49.09 motion to have the settlement enforced; Reid brought a cross-motion setting aside a consent order dismissing the Plaintiff's action as it pertains to the Town. In setting aside the release, the Motion Judge found that Reid did not agree to the terms of the release, did not give his lawyer instructions to agree to the release, and the release's execution was contingent on Reid reviewing the terms and agreeing to them. Loopstra Nixon, on behalf of the Town, submitted that the Motion Judge erred in all of these findings. 

On appeal, the Divisional Court found that the Motion Judge erred for several reasons in allowing Reid's cross-motion and effectively dismissing the Town's motion. The Court noted that disagreement over the wording of a release does not generally result in a repudiation of a settlement and that litigation counsel has implied authority to compromise a client's position based on his or her retainer. Rule 49.09 provides that where a party to an accepted offer to settle refuses to comply, the other party may make a motion for judgment in terms of the settlement; the test under Rule 49.09 is whether an agreement to settle was reached and, if so, should it be enforced based on the evidence. 

The Court found that there was uncontradicted evidence before the Motion Judge that Reid and the Town, through their counsel, agreed to settle the 2017 Action. Neither the Plaintiff nor his counsel dispute that a settlement was reached, they consented to the order dismissing the action against the Town, and Reid would be entitled to call evidence in the 2015 Action which was pleaded in the 2017 Action. Reid's position was that it was a requirement that he had to agree to the terms of the release; the Court found this entirely subjective. The Motion Judge's finding that the settlement was contingent on Reid reviewing the terms of the release and agreeing to them was a palpable and overriding error. The Court was satisfied that the wording of the October 2018 release encompassed the terms of the settlement, and the email correspondence between lawyers, Reid's lawyer indicated that Reid would sign the release. Reid's counsel never indicated a limit on its retainer or that Reid had not agreed to the release in this correspondence. 

The Divisional Court allowed the appeal to set aside the Motions Judge's Order and required Reid to execute a full and final release in the form and content submitted. The Order dismissing the 2017 Action against the Town was reinstated.