





CITATION:
Padda v. 2074874
          Ontario Inc., 2011 ONCA 235



DATE: 20110325



DOCKET: C52338



COURT OF APPEAL FOR ONTARIO



Armstrong, Juriansz and Watt JJ.A.



BETWEEN



Faqir Padda



Plaintiff (Respondent)



and



2074874
          Ontario Inc., 1579240 Ontario Inc.

Satnam Khakh
and
Onkar
          Taggar




Defendants (Appellants)



James S.G. Macdonald, for the appellants



William R. Gilmour, for the respondent



Heard & released orally:
March 21, 2011



On appeal from the order of Justice S.S. Seppi of the Superior
          Court of Justice dated June 7, 2010.



ENDORSEMENT



[1]

The issue raised by this appeal is whether the offer to
    settle made by the defendants remained open for acceptance after the court appointed
    a supervisor over the corporate defendants and after the transfer of the
    plaintiffs interest in a shareholder loan.

[2]

In the offer made pursuant to Rule 49, the defendants
    offered to settle the proceeding by paying $1.8 million to the plaintiff.  Other terms of the offer provided that the
    plaintiff would transfer his shares in the corporation to the defendants and that
    the parties would exchange mutual releases.  The offer did not expressly refer to the plaintiffs claim for repayment
    of the shareholder loan of some $600,000.

[3]

The supervision order had a stay provision.  Paragraph 18 of the order provided that all
    rights and remedies against the corporations or affecting the property are
    hereby stayed and suspended except with the written consent of the supervisor
    or leave of the court.  The plaintiffs
    right to accept the settlement offer was a right or remedy against the
    corporations and so, in our view, was subject to the stay provision of the
    supervision order.

[4]

In addition, fresh evidence, which we would admit,
    establishes that the plaintiff transferred his interest in the shareholder loan
    to his daughter by way of gift the day before he purported to accept the offer
    of settlement.  As he claimed repayment
    of that loan in the proceeding, Rule 11 applied to his transfer of his interest
    in that loan.  Thus, the proceeding was
    doubly stayed, at least in respect of the claim for repayment of the
    shareholder loan.  While the offer to
    settle was never withdrawn, its acceptance constituted a step in the
    proceeding.  Rule 49.07 reflects this.  For the offer to settle to be effective leave
    of the court was necessary.

[5]

Finally, the motion to enforce the settlement was
    another step in the proceeding.  It, too,
    was also taken without obtaining the leave of the court.

[6]

In the result, the appeal is allowed and the order of
    the motion judge is set aside.  The
    appellants shall have their costs of the appeal and the motion in this court fixed
    in the amount of $17,500 inclusive of disbursements and applicable taxes, as
    well as the costs of the motion below in the amount of $2,500 inclusive of
    disbursement and applicable taxes.

R.P. Armstrong J.A.

R.G. Juriansz J.A.

David Watt J.A.


