Oct 20, 2020

COURT OF APPEAL SUMMARIES (October 13 – October 16, 2020)

Huma v. Mississauga Hospital, 2020 ONCA 644 (CanLII)

[Rouleau, Miller and Zarnett JJ.A.]

COUNSEL:

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

FACTS:

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.

ISSUES:

(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?

HOLDING:

Motion dismissed.

REASONING:

(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.