



COURT OF APPEAL FOR ONTARIO

CITATION: Single Source Contracting Services Inc. v. Valiant

Machine & Tool Inc., 2017 ONCA 925

DATE: 20171130

DOCKET: C63584

Sharpe, Epstein and van Rensburg JJ.A.

BETWEEN

Single Source Contracting Services Inc.

Plaintiff (Appellant)

and

Valiant Machine & Tool Inc.

Defendant (Respondent)

Gino Morga, Q.C., for the appellant

Thomas McRae, for the respondent

Heard: November 24, 2017

On appeal from the order of Justice Steven Rogin of the Superior
    Court of Justice, dated March 3, 2017.

REASONS FOR DECISION

[1]

The appellant Single Source and the respondent
    Valiant were parties to litigation commenced in April 2007. They believed they
    had reached a settlement at a pre-trial conference, and the actions were marked
    settled by the pre-trial judge, and removed from the trial list. The parties
    then disagreed about the terms of the settlement. Single Source sought to
    restore the action to the trial list and Valiant moved to enforce the
    settlement. By the time the motion judge heard Valiants motion, the dispute
    was about the terms of the settlement, and not whether any settlement had been
    reached.

[2]

The motion judge examined the draft settlement agreements
    exchanged between the parties and the affidavit evidence they filed. He found
    that there was agreement on the material terms, and that the settlement
    required (i) a payment of the inclusive amount of $850,000 from Valiant to
    Single Source; (ii) Single Source to initiate a proposal to creditors under the
Bankruptcy and Insolvency Act
, R.S.C. 1985, c.
    B-3 that Valiant would support, and from which Valiant would not be entitled to
    any proceeds; (iii) the dismissal without costs of the actions and
    counterclaim, and exchange of mutual releases; (iv) that the settlement would
    be without admission of liability; and (v) that the settlement would remain
    confidential. The motion judge also ordered that Valiant was entitled to pay
    the settlement funds into court, or, if the parties agreed, to pay the
    settlement funds in accordance with a direction signed by Single Source.

[3]

Single Source contends that the motion judge
    erred in including as a term of the settlement the obligation that it file a
    proposal to creditors. It also objects to money being paid into court and asserts
    that it should be able to direct the settlement funds as it sees fit.

[4]

The motion judges interpretation of the
    parties agreement, based on his review of the evidence, is entitled to deference,
    absent an extricable error of law. The appellant asserts that there were a
    number of such errors in this case.

[5]

First, Single Source says that the motion judge
    erred in failing to address and give effect to the evidence of Matthew Todd,
    its former lawyer, which it says supports the contention that its proposal to
    creditors was not a term of the settlement.

[6]

We disagree. The motion judge considered the
    draft minutes of settlement exchanged between the parties, which were attached
    to Mr. Todds affidavit. Although Mr. Todd stated that it was never a term of
    the settlement, nor a requirement that Single Source make a proposal in
    bankruptcy in order to give effect to the settlement, the drafts that were
    attached to his affidavit, including a draft of the minutes of settlement that
    he prepared, and a term sheet on which he inserted handwritten comments,
    contradicted this assertion. All of the draft settlement documents exchanged
    between counsel contemplated that Single Source would file a proposal to creditors.

[7]

Second, Single Source argues that the motion
    judge ought to have drawn an adverse inference from Valiants failure to
    provide an affidavit from its former lawyer, Bryce Chandler, who had left the
    practice of law.

[8]

There is no merit to this submission. Valiants
    position was put forward in the affidavit of David Mueller, its director of
    Corporate Development and General Counsel, who attended the pre-trial
    conference and was directly involved in the settlement. His evidence was that,
    not only was the filing of a proposal a term of the agreement, but also that
    the settlement was delayed while Single Source negotiated with its creditors in
    advance of the filing. Mr. Chandlers letters and drafts were attached to Mr.
    Muellers affidavit. There is nothing that an affidavit from Mr. Chandler could
    have added to the evidence, nor was there anything in Mr. Todds affidavit that
    required a response from Mr. Chandler.

[9]

Third, Single Source asserts that the order
    ought not to have included a term requiring it to file a bankruptcy proposal
    without evidence that it qualified to make a proposal. There is no merit to
    this argument. This was a term to which the parties agreed, and was not an
    additional term imposed by the court. No evidence of whether Single Source was
    in fact qualified to make a proposal was required in order to enforce the
    agreement the parties had reached. In any event, Single Source offered no
    evidence to the motion judge or to this court of its inability to make a
    proposal to its creditors.

[10]

Fourth, Single Source argues that the motion
    judge erred in not considering an Assignment Agreement dated June 24, 2014
    purporting to assign its claims against Valiant to a third party, Sterling
    Ridge Investments Inc. Single Source argues that the effect of the Assignment
    Agreement is that the assignee is entitled to the settlement funds.

[11]

There is no merit to this submission. The
    assignment was raised, after the fact, in Mr. Todds affidavit. He stated that
    he was informed of the assignment and its registration under the
Personal
    Property Security Act
, R.S.O. 1990, c. P.10 by Single
    Sources new lawyer. Mr. Mueller deposed that Valiant had no knowledge of the
    assignment until the appellant retained its present counsel. As such, the
    assignment was not referred to in the parties negotiation of their settlement,
    and could not have affected its terms.

[12]

Finally, Single Source objects to the motion
    judges order that monies be paid into court as it contends there is no
    mechanism for payment out of court. This is incorrect. The parties would have
    resort to rule 72.03 of the Rules of Civil Procedure for both the payment into
    court and payment out  whether on consent or by order of the court.

[13]

The appeal therefore is dismissed. Costs to the
    respondent fixed at $15,000, inclusive of HST and disbursements.

Robert
    J. Sharpe J.A.

Gloria
    Epstein J.A.

K.
    van Rensburg J.A.


