



COURT OF APPEAL FOR ONTARIO

CITATION: Idea Notion Development Inc. v.
    CTO Boost Inc., 2022 ONCA 14

DATE: 20220113

DOCKET: C69205

Doherty, Tulloch and Thorburn
    JJ.A.

BETWEEN

Idea Notion Development Inc.

Plaintiff (Respondent)

and

CTO Boost Inc., Gurminder
    Kandola and Gursharnjit Kandola

Defendants (Appellant)

James R. Smith for the appellant, CTO
    Boost Inc.

Aaron Boghossian, for the respondent

Heard: January 4, 2022 by
    video conference

On appeal from the order of Justice
    Papageorgiou of the Superior Court of Justice, dated February 12, 2021 and
    reported at 2021 ONSC 289.

REASONS FOR DECISION

[1]

The appellant (CTO) hired the respondent
    (Idea Notion) to provide software development services on various projects.
    The work began in August 2018 and was completed about 10 months later. Idea Notion
    submitted five invoices to CTO totalling about $219,000. CTO made no complaint
    about the quality of the work, or the invoice amounts.

[2]

CTO provided Idea Notion with cheques for their
    services, however, many of those cheques were returned NSF. As of June 2019, there
    remained about $200,000 owing to Idea Notion, based on the invoices submitted
    by it to CTO.

[3]

Negotiations in respect of the payment of the
    outstanding invoices ensued over several months. CTO made two offers to settle.
    Both were rejected by Idea Notion. On October 17, 2018, CTO made a third offer
    to settle based on a lump sum payment of $85,000 by CTO, followed by 12 equal monthly
    payments totalling $115,000, for a total payment of $200,000. On October 22,
    2018, Idea Notion, through counsel, accepted CTOs October 17, 2018 offer.

[4]

Three days after accepting the offer, counsel
    for Idea Notion provided CTO with draft Minutes of Settlement. Discussions
    concerning those draft minutes occurred between October 25 and November 5,
    2018. On November 5, 2018, CTO advised Idea Notion that CTO would not proceed
    with the settlement, claiming the invoices were fraudulent and inflated.

[5]

On November 19, 2018, Idea Notion sued CTO on
    the original contract. Idea Notion later amended its claim to include a claim
    for enforcement of the settlement entered into in October 2018.

[6]

Idea Notion successfully moved for summary
    judgment on the claim to enforce the settlement. CTO appeals from that judgment
    and renews many of the arguments unsuccessfully advanced on the summary
    judgment motion.

[7]

We are satisfied this appeal must fail. As we
    are in substantial agreement with the motion judge, we need not repeat her
    careful analysis and need only deal briefly with the grounds of appeal.

Ground #1: Did the motion judge err in
    allowing Idea Notion to tender without prejudice documents relating to the
    two rejected Offers to Settle made by CTO prior to October 2019?

[8]

Normally, without prejudice communications
    made in the course of settlement discussions are inadmissible. They are,
    however, admissible if disclosure is necessary to prove the existence or scope
    of the settlement:
Union Carbide Inc. v. Bombardier Inc.
, 2014 SCC
    35, at para. 35.

[9]

CTO denied that it entered into an enforceable
    agreement to settle (Statement of Defence, at para. 35). Mr. Kandola, the
    directing mind of CTO, repeated that assertion in his examination.

[10]

It was incumbent on Idea Notion to demonstrate
    the existence of the agreement to settle. To do so, Idea Notion had to refute
    CTOs claim that there was no agreement to settle because CTOs offer was conditional
    upon CTO being satisfied that the amounts invoiced were correct. Idea Notion
    also had to refute CTOs argument that there was no settlement because the
    October offer did not deal with all of the terms essential to a settlement,
    including the potential ongoing liability of the personal defendants.

[11]

In the course of considering and rejecting these
    arguments, the motion judge took into account some of the without prejudice
    communications between counsel for CTO and counsel for Idea Notion (e.g. see
    Reasons, at paras. 46-49, 53-58). The motion judge was entitled to consider the
    without prejudice documents to the extent those documents were relevant to the
    existence of the alleged agreement to settle. CTOs arguments that the October
    offer was conditional, and that it did not contain all essential terms, both
    went to the existence of an agreement to settle. The contents of the without
    prejudice documents, even though they related to prior offers, were also
    relevant to whether the parties had reached an agreement in October.
    Consequently, the without prejudice communications fell squarely within the
    exception to the exclusionary rule described in
Union Carbide
. The
    motion judge correctly held the documents to be admissible.

[12]

In a related argument, CTO submitted that the
    without prejudice documents were submitted by way of an affidavit that was
    filed in contravention of r. 39.02 of the
Rules of Civil Procedure
.
    Even if there was non-compliance with r. 39.02, CTO was not prejudiced, given
    our finding that the without prejudice documentation was admissible. There is
    no suggestion that CTO was, in any way, taken by surprise by the documentation,
    or unable to address the significance, if any, of the documents on the motion.
    The real complaint is that the documents were inadmissible. We have held the
    motion judge correctly determined they were admissible.

Ground #2: Did the motion judge err in her
    analysis of the evidence presented on the summary judgment motion?

[13]

The motion judge was entitled to weigh the
    evidence offered by the parties and make assessments of the credibility and
    reliability of various aspects of that evidence. She gave several reasons for
    giving little credence to CTOs evidence in respect of the
bona fides
of the invoices provided by Idea Notion. She also gave reasons for giving
    little weight to the analysis of those invoices allegedly done by Mr. Kandolas
    brother (Reasons, at paras. 68-82).

[14]

The motion judges observations with respect to
    that evidence were available on the record. She was entitled to make those
    assessments and we defer to her credibility and reliability findings. Based on
    her assessment of the evidence, this was an appropriate case for summary
    judgment.

Ground #3: Was there any basis upon which to
    give effect to CTOs fraudulent misrepresentation defence?

[15]

The motion judge properly identified the
    elements of the defence (Reasons, at para. 67). In concluding that the defence
    provided no reason not to grant summary judgment, the motion judge said:

The most significant problem with CTOs
    argument [i.e. that the settlement was procured by fraudulent misrepresentation],
    however, is that even if the invoices contained errors or misrepresentations,
    fraudulent or otherwise, Mr. Kandola admits that CTO believed there were
    discrepancies, had access to all the information needed to audit them, and then
    decided to proceed with settlement negotiations in any event.
CTO cannot show that any alleged misrepresentation in the
    invoices caused it to enter into the settlement. It did so with its eyes wide
    open as to the possibility of discrepancies for its own business reasons
.
    [Emphasis added.]

[16]

The observations of the motion judge are
    supported by the record. We are also satisfied that the without prejudice
    documentation was admissible on the question of whether any misrepresentation
    by Idea Notion with respect to the
bona fides
of the invoices
    allegedly made during the negotiations had any impact on CTOs decision to make
    the offer to settle in October 2018.

Ground #4: Should the motion judge have
    exercised her discretion and declined to enforce the settlement by way of
    summary judgment?

[17]

There is a discretion to decline to enforce
    settlement agreements by way of summary judgment motions. This discretion is
    guided by administration of justice concerns. If the enforcement of the agreement
    would be unreasonable, result in an injustice, or for some other good reason,
    not be in the interests of justice, the motion judge can decline to grant
    summary judgment on the agreement, even though on the evidence an agreement was
    reached.

[18]

The motion judge considered and rejected the arguments
    that the interests of justice required that she not exercise her discretion in
    favour of enforcing the agreement on a summary judgment motion (Reasons, at
    paras. 84-94). As this involves an exercise of discretion, we must defer to the
    motion judge, absent a determination that the motion judges decision is
    unreasonable or tainted by legal error. In our view, the motion judges finding
    is neither unreasonable, nor based on any legal error.

Conclusion

[19]

The appeal is dismissed. Idea Notion is entitled
    to its costs against CTO, the only defendant involved in the summary judgment
    motion. We fix those costs at $8,000, inclusive of disbursements and relevant
    taxes.

Doherty
    J.A.

M.
    Tulloch J.A.

J.A.
    Thorburn J.A.


