



COURT OF APPEAL FOR ONTARIO

CITATION: 1504641 Ontario Inc. v. 2225902
    Ontario Inc., 2022 ONCA 175

DATE: 20220228

DOCKET: C69487

Simmons,
    Harvison Young and Zarnett JJ.A.

BETWEEN

1504641
    Ontario Inc. and Faisal Malik

Plaintiffs (Respondents)

and

2225902
    Ontario Inc., 2225909 Ontario Inc., 2285754 Ontario Inc., 1492612 Ontario Inc.,
    Azhar Hussain also known as Azher Hussain, Sajjad Sadiq, and Sobia Sadiq, Atiq
    Ahmed, Naseer Malik, Irfan Ahmed Memon, and
Kashlaw Professional Corporation
    and Khalid Sheikh

Defendants (Appellants)

Ravinder Sawhney, for the appellants

Gwendolyn L. Adrian, for the respondent
    1504641 Ontario Inc.

Heard: February 22, 2022 by video conference

On
    appeal from the judgment of Justice Susan Vella of the Superior Court of
    Justice, dated April 19, 2021.

REASONS FOR DECISION

[1]

Following the oral hearing, we dismissed this
    appeal for reasons to follow. These are our reasons.

[2]

In February 2020, shortly before the onset of
    the Covid-19 pandemic, the parties entered into Minutes of Settlement
    requiring, among other things, that:

-the appellants pay to the
    respondents $40,000 in four monthly instalments of $10,000 each between March 2
    and June 2, 2020;

-the appellants deliver a consent to
    judgment in the amount of $120,000 to be held in escrow pending completion of
    their instalment payments at which time the consent would be returned to their
    counsel;

-the appellants deliver a consent to
    the dismissal of the action without costs to be held in escrow by counsel for
    two other defendants (the "other settling parties") pending the
    appellants paying their instalment payments; and

-the parties exchange releases.

[3]

The appellants failed to deliver the required
    consents and stopped payment on their last $10,000 instalment. The appellants
    failure to deliver the consents led to a delay in payment of a lump sum required
    to be paid by the other settling parties to the respondents under the Minutes
    of Settlement. Following that payment, the respondents and the other settling
    parties arranged separately for the dismissal of the action against the other
    settling parties.

[4]

On a motion brought by the respondents against
    the appellants pursuant to rule 49.09 to enforce the Minutes of Settlement, the
    motion judge converted the motion to a rule 20 motion and granted judgment to
    the respondents for $90,000 (being the $120,000 amount referred to in the
    Minutes of Settlement less the three instalments paid). The motion judge
    rejected the appellants claims that the pandemic, or the respondents
    arrangements with the other settling parties, should in any way alter the
    appellants' obligations under the Minutes of Settlement.

[5]

We reject the appellant's arguments that the
    motion judge made any error in dealing with the respondents' motion as an
    in-writing motion; in converting it to a summary judgment motion; or in
    granting summary judgment to the respondents for $90,000.

[6]

The parties requested the motion judge to deal
    with the motion as an in‑writing motion. She was entitled to treat the
    motion as a motion for judgment as both parties had fully addressed in their
    material the enforceability of the Minutes of Settlement: rule 37.13(2).

[7]

We agree with the motion judge's conclusions
    that neither the pandemic nor the appellants arrangements with the other
    settling parties altered the appellants' obligations under the Minutes of
    Settlement.

[8]

As the motion judge observed, the appellants
    were represented by counsel when the Minutes of Settlement were entered into
    and failed to offer any valid reason for non-compliance. In particular, the
    appellants did not "advanc[e] any grounds, much less evidence, [to
    support] a rational link between the pandemic and their failure to comply with
    the terms of the Minutes of Settlement."

[9]

The respondents were obliged to make other
    arrangements to dismiss the action against the other settling defendants
    because of the appellants' failure to deliver the consent to the dismissal of
    the action as required under the Minutes of Settlement. The respondents cannot
    rely on their own default to establish non‑compliance or waiver by the
    respondents.

[10]

The appellants submit that they were entitled to
    withhold payment of their final $10,000 instalment because the respondents were
    threatening to continue the action against them even if the final instalment owing
    under the Minutes of Settlement was paid.

[11]

We do not accept that submission. The Minutes of
    Settlement required that the consent to judgment be returned to appellants
    counsel once the appellants had paid the required instalments. The appellants
    were not at risk of having a judgment for $90,000 entered against them provided
    they paid their final instalment. It was the appellants' failure to deliver the
    required consents that led to the possibility of the respondents seeking some
    additional form of relief. The appellants were not entitled to rely on their
    own default to justify withholding the final instalment.

[12]

The appellants also argue that the $90,000 award
    amounts to a penalty. We do not accept that argument. The parties entered into
    Minutes of Settlement as a compromise to avoid a trial. As part of that
    compromise, the respondents agreed to reduce their claim to finally resolve the
    matter without additional costs if the reduced amount was paid in a timely way.
    In these circumstances, the amount required to be paid under the consent to
    judgment in the event that all of the instalment payments were not made is not
    a penalty.

[13]

Based on the foregoing reasons, the appeal is
    dismissed with costs payable to the respondents on a partial indemnity scale
    fixed in the agreed upon amount of $10,000 inclusive of disbursements and
    applicable taxes.

Janet Simmons J.A.

Harvison Young J.A.

B. Zarnett J.A.


