



COURT OF APPEAL FOR ONTARIO

CITATION: Hashemi-Sabet Estate v. Oak Ridges Pharmasave Inc.,
    2018 ONCA 839

DATE: 20181022

DOCKET: C64604

Pepall, Lauwers and Paciocco JJ.A.

BETWEEN

The
    Estate of Abdolrahim Hashemi-Sabet

By his Estate Trustee and Executrix
    Savitri Maharaj

Plaintiff/Respondent

and

Oak
    Ridges Pharmasave Inc., Yousef Kolahdouzan

and
    Hamidreza Zarrinkalalm

Defendants/Appellants

John Dent, for the appellants

Mark Johnston, for the respondent

Heard: May 4, 2018

On appeal from the judgment of Justice Bird of the
    Superior Court of Justice, dated October 18, 2017.

Pepall J.A.:

[1]

This appeal addresses the principles relating to enforcement of a Rule
    49 offer to settle. Rule 49.09 of the
Rules of Civil Procedure
provides that a party may bring a motion for judgment in the terms of an
    accepted offer and the judge may grant judgment accordingly or continue the
    proceeding as if there had been no accepted offer to settle. The appellants
    claim that the motion judge erred in giving judgment in the terms of a Rule 49
    offer they had made because their offer was revoked before it was accepted. The
    respondents contend that the offer had not been effectively revoked and that,
    since they accepted the offer, the motion judge did not err. I agree with
    respondents and would dismiss the appeal.

Background Facts

[2]

The respondent, the Estate of Abdolrahim Hashemi-Sabet by his Estate
    Trustee and Executrix Savitri Maharaj, sued the appellants, Oak Ridges Pharmasave
    Inc., Yousef Kolahdouzan and Hamidreza Zarrinkalam, for damages for breach of contract,
    oppression, and various other causes of action relating to the opening and
    operation of a pharmacy. He claimed damages of in excess of $1,000,000.

[3]

On June 8, 2015, the appellants served the respondent with a written
    Rule 49 offer to settle the action for $55,555.55. The offer provided that it
    would remain open until the trial of the action.

[4]

In April, 2016, Elena Mazinani, the appellants new counsel, served a
    Notice of Change of Lawyer.

[5]

On September 20, 2016, counsel for both parties attended at the pretrial
    of the action. What happened next is disputed.

[6]

The appellants took the position that their first offer had been
    rescinded orally at the pretrial, and in any event, on September 19, 2016, they
    served by process server a second written Rule 49 offer to settle the action
    for $17,333; the second offer expressly revoked the June 8, 2015 offer.

[7]

The respondent took the position that his counsel, Alfred Schorr,
    returned to his office following the pretrial and sent Ms. Mazinani a written
    acceptance of the appellants June 8, 2015 offer by fax at 1:27 pm, September
    20, 2016.

[8]

Karen Bandura, a law clerk at the offices of Mr. Schorr, had a
    discussion with Mr. Schorr immediately after the pretrial in which he told her
    the appellants offer was still open for acceptance and he instructed her to
    prepare and serve an acceptance of the first offer, which she did. Shortly
    afterwards, she received a phone call from Ms. Mazinanis law clerk, Delia La
    Madrid, asking for a copy of the June 8, 2015 offer. Ms. Bandura stated that
    she sent this to Ms. La Madrid by email at 2:34 pm on September 20, 2016.

[9]

The respondent acknowledged receipt of the second offer to settle but
    maintained that it was not served until 5:23 pm, September 20, 2016, several
    hours after Mr. Schorr had already accepted the first offer. On receipt of the
    second offer, Mr. Schorr wrote the date and time he was served on the cover
    letter from Ms. Mazinani that enclosed the second offer. He confirmed with Riaz
    Ahmed, a lawyer with whom he shared office space, that at no time on September
    19, 2016 from 4:30pm, when Mr. Schorr left, until after 7pm, did anyone attend
    at the office to serve any documents. Mr. Schorr also wrote to Ms. Mazinani on
    September 21, 2016, advising that he received her second offer on September 20
    at 5:23 pm, after he had already accepted the first offer.

Motion for Judgment

[10]

The
    respondent brought a motion for judgment in the amount of $55,555.55 in
    accordance with the terms of the accepted offer to settle pursuant to Rule
    49.09.

[11]

The
    motion judge granted the respondents motion for judgment.

[12]

In
    her reasons for decision, the motion judge noted that the parties agreed that
    the June 8, 2015 offer was made in accordance with Rule 49.02(1). As such, she
    concluded that the revocation of that offer had to comply with Rule 49.04(1),
    which states that any withdrawal is to be in writing. She noted that the
    governing jurisprudence and the provisions of Rule 49.04(1) supported this
    conclusion. This effectively answered the appellants argument that the first
    offer could not be accepted because it had been orally withdrawn at the
    pretrial.

[13]

The
    motion judge went on to reason that the timing of service of the second offer
    on Mr. Schorr would be determinative of the motion. However, she concluded that
    it was impossible to reconcile the positions of the parties on the timing of
    the service of the second offer to settle. She was of the view that this was
    not a case of honest mistake. She stated that she had come to the unfortunate
    conclusion that a decision on this motion requires me to make credibility
    findings that must include a determination that one side has deliberately
    submitted inaccurate information in support of its clients position.

[14]

She
    determined that the second offer to settle purporting to revoke the first offer
    was served on Mr. Schorr at 5:23 pm on September 20, 2016, after the respondent
    had already accepted the first offer. She relied on six factors in reaching her
    decision.

[15]

First,
    the accounts of Mr. Schorr and Ms. Bandera were detailed and consistent. She
    also noted Mr. Schorrs September 21, 2016 letter to Ms. Mazinani and his
    handwritten note of the date and time of receipt on her letter enclosing the
    second offer as being confirmatory of his position.

[16]

Second,
    Ms. Mazinani and Mr. Schorr agreed that during the September 20 pretrial, Ms.
    Mazinani told the presiding judge that her clients were not prepared to pay any
    money to the respondent. This was inconsistent with service of an offer to
    settle the action for $17,333 delivered less than 24 hours prior to the
    pretrial.

[17]

Third,
    Rule 16.05(1)(d) authorizes service of a document on the solicitor of record by
    fax. A resulting fax record is then created that shows the date and time the
    document is sent. It does not make any sense that Ms. Mazinani would pay a
    process server $90 to hand deliver a two-page document that could have been
    sent by fax.

[18]

Fourth,
    the wording and format of the first and second offers were virtually
    identical. Ms. La Madrid asked Ms. Bandura to send her a copy of the first
    offer after receiving notification of its acceptance on September 20, 2016. If
    Ms. La Madrid already had a copy of the first offer, there would have been no
    need to request a copy of Ms. Bandura. The motion judge was inescapably led to
    the conclusion that Ms. Mazinani did not prepare the second offer to settle
    until after she received the acceptance of the first offer.

[19]

Fifth,
    although the appellants produced affidavits of service for other documents
    served on Mr. Schorr during the progress of the action, the appellants failed
    to file an affidavit of service from the process server attesting to service of
    the second offer. The motion judge drew an adverse inference from this failure.

[20]

Sixth,
    each of the affidavits of Ms. La Madrid and Ms. Mazinani attached as an exhibit
    a copy of an invoice from the process server, Shahnaz from ASEAA Process
    Servers. No surname for Shahnaz was noted. Problematically, the invoices were
    not identical. The version identified by Ms. La Madrid was also attached as a
    schedule to the appellants factum which was signed by Ms. Mazinani. In the
    notes section at the bottom of this invoice, were typed the words: Dead-line
    September 19, 2016 and under those words was the hand-written word: done. No
    date or time was noted. In contrast, the invoice attached to Ms. Mazinanis
    affidavit included the added words: Shahnaz on 19,09,2016 in the afternoon. The
    motion judge concluded that those additional words were added to the original
    invoice at some point after the invoice was attached to Ms. La Madrids
    affidavit and the appellants factum. Ms. Mazinani signed the factum with one
    version of the invoice and swore her affidavit with the altered version. The
    motion judge found that the invoice was intentionally altered. She could not
    say by whom but did conclude that Ms. Mazinani was aware of the difference
    between the two documents.

[21]

The
    motion judge raised the discrepancy during oral argument and counsel then
    sought an adjournment. This was the fourth time the motion had been up for
    argument. There had been non-compliance with an earlier production order and
    the respondent wished to proceed. The motion judge declined the adjournment
    request. However in the end result, the motion judge stated that she placed no
    weight on either version of the invoice.

[22]

The
    motion judge was satisfied that the respondent accepted the first offer before
    it had been revoked. Accordingly, she granted judgment in favour of the
    respondent as requested. She also awarded costs of $14,992.89 on a full
    indemnity basis given the appellants conduct.

Appeal

[23]

The
    appellants appeal from that judgment and also seek leave to admit fresh
    evidence.

(a)

Grounds of Appeal

[24]

Initially,
    the appellants took the position on appeal that the motion judge had misinterpreted
    Rule 49. They stated that even if the respondent had not received the second
    offer before he accepted the first offer, the third offer to settle allegedly
    made at the September 20 pretrial had already operated to revoke the first
    offer. At the commencement of oral submissions, the appellants withdrew this
    ground of appeal.

[25]

Having
    acknowledged that the first offer was made in accordance with Rule 49.02(1),
    the motion judge correctly concluded that any revocation of that offer had to
    comply with Rule 49.04(1). That subsection provides that an offer to settle may
    be withdrawn at any time before it is accepted by serving written notice of
    withdrawal. This court has determined that the common law principles of
    contract law relating to offer and acceptance do not apply to Rule 49. That
    Rule requires that a Rule 49 written offer to settle may only be withdrawn in
    writing:
York North Condominium Corp. No. 5 v. Van Horne Clipper Properties
    Ltd.
(1989), 70 O.R. (2d) 317.  Moreover, there was no evidence of any
    third offer before the motion judge. She did not err in rejecting the
    appellants argument on this issue and the appellants properly withdrew this
    ground of appeal.

[26]

The
    focus of the appeal is the appellants submission that the motion judge failed
    to recognize and apply the two-step analysis required on a motion to enforce
    the acceptance of a Rule 49 offer. They argue that she erred in not hearing
    viva voce evidence and in failing to make credibility findings in the face of
    genuine, disputed issues of credibility.

[27]

In
Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc.
(2007)
    87 O.R. (3d) 464 at paras. 9-10, Carnwath J., sitting in Divisional Court,
    described the two step analysis to be followed when considering a request to
    enforce a Rule 49 offer. The first step is to consider whether an agreement to
    settle has been reached. In doing so, the motion should be treated as a Rule 20
    summary judgment motion. The second step is to consider whether, on all the
    evidence, the agreement should be enforced. See also
Olivieri v. Sherman
,
    2009 ONCA 772 at para. 27.

[28]

Although
Capital Gains
was decided before the Supreme Courts decision in
Hryniak
    v. Mauldin
, 2014 SCC 7, [2014] 1 S.C.R. 87, which altered the framework
    for granting summary judgment, the two-step approach applied to the enforcement
    of a Rule 49 offer remains unaltered.

[29]

Neither
    counsel raised the approach described in
Capital Gains
with the motion
    judge. However, even though she did not expressly advert to that method, she
    nonetheless applied it. She recognized that her task was to determine three
    things: (i) whether the first offer was revoked at the pretrial; (ii) the
    timing of service of the second offer, and (iii) whether the settlement should
    be enforced.

[30]

With
    respect to the first question, as already discussed, as a matter of law, the
    Rule 49 offer had to be revoked in writing. It is uncontested that it was not. In
    addition, as a matter of fact, there was no evidence before the motion judge
    that the first offer had been revoked at the pretrial.

[31]

With respect to the second question, t
he
    arguments against the appellants version of events were many. Indeed, the
    motion judge gave six reasons for rejecting the appellants position. The
    appellants take issue with each of them.

[32]

However, in my view, one factor in particular
    was fatal to the appellants case. The motion judge noted that the appellants
    had known for over a year that the respondent was taking the position that
    their counsel was not served with the second offer until 5:23 pm on September
    20, 2016. Yet, the appellants never provided an affidavit of service from the
    process server. This, in spite of the fact that they had produced affidavits of
    service for other documents served on the respondent, including two from the
    same process server who allegedly served the second offer on the respondent.
    This absence of an affidavit of service weighs heavily in the respondents
    favour. The case turned on the timing of service of the second offer. In the
    absence of such critical evidence, it was reasonable for the motion judge to
    find against the appellants.

[33]

While it was open to the motion judge to hear
    viva voce evidence, this was unnecessary. The motion judge had affidavits from Mr.
    Schorr and Ms. Bandera that supported the respondents position on the timing
    of the second offer. As has been repeatedly stated in the jurisprudence, on a
    summary judgment motion, the motion judge is entitled to assume that the record
    contains all the evidence which the parties will present if there is a trial:
Dawson
    v. Rexcraft Storage & Warehouse Inc.
, (1998), 111
    O.A.C. 201 at para. 17; and
Chao v. Chao
, 2017 ONCA 701 at para. 24. The
    same is true on a motion to enforce a Rule 49 offer; a party must put its best
    foot forward:
Martin v. St. Thomas -- Elgin General Hospital
, 2018 ONSC 799 at para. 49.

[34]

It was incumbent on the appellants to answer the
    respondents version of events. However, they did not file an affidavit of
    service from the process server to establish the date and time of service. They
    never proposed that the process server be called as a witness, nor did they
    provide an explanation for the absence of an affidavit of service. Indeed, when
    the motion judge sought an explanation at the hearing before her, none could be
    given.

[35]

Furthermore, the appellants opted not to
    cross-examine on any of the affidavits filed by the respondent. They had ample
    time to do so; indeed, the motion had been adjourned on three prior occasions. Based
    on the record before her, it was open to the motion judge to conclude as she
    did. At its core, this was not a case of a conflict in the evidence, but a case
    of lack of evidence.

[36]

Nor was the motion judge required to grant an
    adjournment so that Ms. Mazinani could attend to explain the discrepancies in
    the copies of the invoice. The refusal to grant an adjournment is a
    discretionary decision. The scope for appellate review is limited to whether
    the discretion is exercised judicially on proper principles, after considering
    all relevant factors:
Estrada v. Estrada
, 2016
    ONCA 697 at para. 2;
Romanko v. Aviva Canada Inc.
, 2018 ONCA 663 at para. 4. Absent any such omission, the decision
    not to grant an adjournment is entitled to deference. The motion had already
    been scheduled four times and the discrepancies ought to have been evident to
    counsel who had filed the differing versions of the invoice. In addition, and
    most importantly, the motion judge expressly placed no weight on either version
    of the invoice.

[37]

In my view, the motion judge complied with the
    substance of the first step of the two-step approach described in
Capital
    Gains
a
nd
    properly applied the analogous Rule 20 analysis.

[38]

The appellants also submit that the motion judge
    erred in failing to recognize and apply the second step in that she neglected
    to consider relevant factors and instead considered irrelevant factors on whether
    it would be unjust to enforce the settlement.

[39]

This argument is readily answered. First, counsel for the appellants
    candidly acknowledges that the motion judge was not asked to consider the
    second step. The appellants also did not communicate to her that, when
    exercising her discretion, she ought to consider certain factors. Second, the
    motion judge nonetheless did consider whether on all the evidence she should
    enforce the offer. In
Milos v. Zargas
(1998),
    38 O.R. (3d) 218 (C.A.), Osborne J.A. stated that in determining whether to
    enforce a settlement under Rule 49.09, all of the relevant factors disclosed by
    the evidence must be taken into account. Although the
Milos
decision was not brought to her attention, at para. 10 of her
    reasons, the motion judge stated:

The defendants did not ask me to exercise my
    discretion to decline to enforce the terms of the June 8, 2015 offer to settle.
    In my view, there is no basis for me to do so. The fourth paragraph of the
    offer stated that it will remain open until the trial of the action. There is no
    evidence that the defendants were misled into making the offer or did so under
    some undue pressure. The offer was prepared and served by their lawyer at the
    time. As noted by the Court in
Yonge Village Recreation Centre Limited v.
    York Condominium Corporation No. 201
, (2007) 229 O.A.C. 144 (Div. Ct), the
    discretion not to enforce an offer to settle is to be exercised on a case by
    case basis and only rarely and in the presence of compelling circumstances.
    None exist in this case.

[40]

Third, counsel was unable to point to any compelling inequity that
    arose from the enforcement of the settlement offer. It must be recalled that
    the appellants never took the position that the second offer was served twice
    or that this was a case of mistake. There was no legitimate basis on which equity
    might intervene. Enforcement of the Rule 49 offer to settle, which was stated
    to be open for acceptance until the trial, cannot be said to have been unfair.

Fresh evidence

[41]

Lastly,
    the proposed fresh evidence consists of an affidavit sworn by Ms. La Madrid, which
    is largely based on information received from Ms. Mazinani. It does not include
    any further affidavit from Ms. Mazinani herself, nor an affidavit from the
    alleged process server, Shahnaz, for whom no surname was provided. The proposed
    fresh evidence consisting of an affidavit from the appellant, Hamidreza
    Zarrinkalam, was withdrawn by counsel for the appellants at the commencement of
    the oral submissions.

[42]

The
    fresh evidence does not meet the test articulated in
R. v. Palmer
,
    [1980] 1 S.C.R. 759 and
Sengmueller v. Sengmueller
(1994), 17 O.R. (3d) 208 (C.A.) and recast in
R.
    v. Truscott
, 2007 ONCA 575, 225 c.c.c.
    (3d) 321.


[43]

Through
    the exercise of due diligence, the proposed fresh evidence could have been
    adduced prior to the return of the motion. More importantly, even if the
    evidence is reasonably capable of belief, which is questionable, it could not reasonably
    be expected to have affected the result.

[44]

The
    proposed fresh evidence addresses the wording on the invoices filed by the
    appellants. The motion judge expressly gave no weight to the invoices. As
    discussed, the affidavits of Mr. Schorr and Ms. Bandera positively identified
    the chain of events. There was no affidavit of service from the process server,
    nor any explanation for its absence. In essence, the evidence of the respondent
    went unanswered. The fresh evidence could not reasonably be expected to have altered
    the result.

Disposition

[45]

In
    conclusion, I would dismiss the appeal and the motion to admit fresh evidence. I
    would order the appellants to pay the respondent costs of $10,500 on a partial
    indemnity scale inclusive of disbursements and applicable tax.

Released: S.E.P. October 22, 2018

S.E. Pepall J.A.

I agree. P. Lauwers J.A.

I agree. David M. Paciocco
    J.A.


