Lofthaug v. Canadian Immigration Specialists Ltd., 2011 ABQB 609

Court of Queen ’ s Bench of Alberta Citation: Lofthaug v. Canadian Immigration Specialists Ltd., 2011 ABQB 609 Date: 20111003 Docket: 0603 15036 Registry: Edmonton Between: David Geoffrey Lofthaug and 1226905 Alberta Ltd. Plaintiffs/Respondents - and - Canadian Immigration Specialists Ltd., Christopher Sellathamby and Maduni Sellathamby Defendants/Applicants _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice J.J. Gill _______________________________________________________ I. Introduction [ 1 ] This decision addresses the question of setting aside a consent judgement.

II. Background [ 2 ] A consent judgment on liability (the Consent Judgment) was granted on behalf of the corporate and individual defendants by the Defendants’ lawyer on September 2, 2008. The Defendant, Christopher Sellathamby, deposes that he only learned of the Consent Judgment on October 19, 2010, and that he did not instruct their lawyer to admit liability.

On March 11, 2011, the Defendants, having retained a different lawyer, brought an application to, among other things, remove the two individual Defendants and open the Consent Judgment. [ 3 ] The individual defendants, Christopher and Maduni Sellathamby, incorporated Canadian Immigration Specialists Ltd (CIS), with Maduni as the sole shareholder and both Christopher and Maduni acting as the Directors of CIS. CIS entered into a Consulting Agreement and a Share Option Purchase Agreement with the Plaintiffs, David Lofthaug and 1226905 Alberta Ltd.

Under the Consulting Agreement, Lofthaug was to be paid 50% of the fees charged by CIS for consulting services provided by Lofthaug.

Under the Share Option Purchase Agreement, Lofthaug was given the option to purchase 50% of the outstanding shares of CIS for $50.00, to be exercised by December 31, 2004, and an option to purchase an additional 25% fo the CIS shares at fair market value on or before December 31, 2005. [ 4 ] In December 2004, Lofthaug deposes that he attempted to exercise his option to purchase the 50% of the outstanding shares of CIS, but the Defendants, Christopher and Maduni, did not complete the transaction on behalf of the Defendant company.

He also advised the Defendants that he intended to exercise the other option to purchase the 25% of the CIS shares at fair market value. He deposes that no shares have been transferred to him to date. He sued the Defendants for the commission he alleges are unpaid and for breach of the Share Option Purchase Agreement. [ 5 ] Christopher Sellathamby deposes in his December 3, 2010 affidavit that by the summer of 2006, the parties were unable to agree on the terms of separation, and Lofthaug stopped providing immigration services to CIS.

Lofthaug left CIS with a number of CIS clients and CIS agreed to provide him with a number of the employers with whom CIS had contracts. Litigation History [ 6 ] The Plaintiffs filed the Statement of Claim on November 30, 2006. According to Mr. Sellathamby’s affidavit, he retained the law firm of Tarrabain & Co. to defend the action, and Mr. Moughel of that firm was assigned conduct of the file.

He deposes that he provided his law firm with a narrative of the relationship between the Plaintiff and Defendants (over which he refuses to waive privilege) and a copy of the Consulting Agreement. [ 7 ] In August 2008, Mr. Sellathamby deposes that in the process of re-financing their home, he learned that a Writ had been filed against their home. He contacted Mr. Moughel who told him it was in relation to costs awarded against them for late filing of documents. Mr. Sellathamby deposes that he left the conduct of the file to his lawyer, but always responded promptly to requests for information.

He further deposes that he was not informed of the costs awards at the time they were ordered. [ 8 ] The Writ was discharged, but an Attachment Order on the property was obtained on August 20, 2008. Mr. Moughel sent Mr. Sellathamby an email in which Plaintiff’s counsel suggested that the Attachment Order could be removed to enable the filing of the new mortgage and then placed back on the property, if there was an admission of liability relating to Commissions owing to the Plaintiff and payment of $15,000.00 by the Defendants to the Plaintiff. [ 9 ] Mr.

Sellathamby refused the proposal and attended Chambers on August 29, 2009, but before the hearing an agreement was reached, apparently between the two lawyers, to remove the Order. Mr. Sellathamby deposes that Mr. Moughel told him that in order to have the Order removed, the Defendants would pay $20,000 in trust to the Plaintiff’s lawyer. Mr. Sellathamby paid the $20,000.00. Mr. Sellathamby’s present lawyer has told him that the $20,000.00 was not being held in trust. [ 10 ] The Attachment Order was discharged pursuant to a consent order dated September 2, 2008, filed at the same time as the Consent Judgment.

That Consent Judgment provides:

1. The Plaintiffs’ claim as to liability against all of the Defendants is established as it relates to all causes of action including both commission and stock option claims; 2. The Defendants will make an offer to the Plaintiffs as to quantum within two weeks of receiving a valuation in this regard from the Plaintiffs; 3. The Defendants will pay a non-refundable deposit of $20,000.00 to solicitors for the Plaintiffs by September 19, 2008, which will count against the ultimate quantum settled upon or awarded. [ 11 ] On August 30, 2010 Mr. Moughel served a Notice of Ceasing to Act because, according to Mr.

Sellathamby, the matter was proceeding to trial and Mr. Moughel indicated that he did not have the litigation background to conduct a trial. However Mr. Moughel continued to appear on behalf of the Defendants because they had not yet retained a lawyer, attending a case management meeting in September, attempting to attend Examination for Discoveries in October, and appearing in Chambers in November. [ 12 ] Mr. Sellathamby met with a new lawyer, Mr. Attia, on October 7, 2010, who then met with the lawyer for the Plaintiffs. Following that meeting, on October 19, 2010, Mr. Attia informed Mr.

Sellathamby that a Consent Judgment admitting liability was entered on September 2, 2008. Mr. Sellathamby deposes that this was the first he learned of the Consent Judgment and that he did not provide instructions to Mr. Moughel to admit liability. Mr. Sellathamby deposes that Mr. Attia spoke to Mr. Moughel who indicated that the instructions to admit liability were reflected in Mr. Moughel’s notes. At the same meeting, Mr. Attia advised Mr. Sellathamby that as a result of a conflict, he would be unable to continue to act for the Defendants. [ 13 ] On November 9, 2010 Mr. Sellathamby attended Chambers with Mr.

Moughel for an application by the Plaintiffs to set down a hearing for assessment of damages. Verville J. set the assessment to be heard on January 11, 2011, with dates for various steps including filing affidavits. [ 14 ] Mr. Sellathamby met with Ms. Rattan on November 11, 2011 to discuss the case and she assumed conduct of the file. An affidavit was filed on behalf of Mr. Sellathamby on December 3rd,2010.When examined on that affidavit on August 17 th ,2011 Mr. Sellathamby agreed that the sole reason he was applying to open up the consent judgement was that his lawyer, Mr.

Moughel, did not have authority to enter into it. Mrs. Sellathamby has not filed an affidavit in relation to this application. III. Issues [ 15 ] The following issues are raised in this application: A. Should the Consent Judgment be set aside? B. Should the action against the individual Defendants be dismissed? C. Should this matter proceed to

Summary Judgement under Rule 7.3(1)? IV. Analysis [ 16 ] The Plaintiffs argue, correctly I conclude, that the second issue must be addressed before the first. It makes no sense to address whether the claim against the individual defendants should be dismissed when judgment has already been filed against them. The question to be addressed first is whether the Consent Judgment can be set aside.

A. Should the Consent Judgment be set aside? Submissions [ 17 ] The Defendants argue that Mr. Sellathamby has always denied liability and did not instruct his counsel to admit liability, and further that he was not aware that liability had been admitted until informed by Mr. Attia in October 2010. [ 18 ] The Defendants concede that the general rule is that a solicitor has ostensible authority to settle a claim, and that the client is bound by the settlement.

In this case, however, the Defendants argue that the arguments for setting aside a Consent Judgment are similar to those for setting aside a default judgment, and suggest that: 1. There has been no delay in applying to set aside the Consent Judgment; 2. There are issues of fact or law that must be determined in relation to the Plaintiffs’ claim and the counterclaim; and 3.

The Plaintiff will not be prejudiced if the Consent Judgment is set aside. [ 19 ] On the other hand, the Plaintiffs argue that there is ample authority for the proposition that the lawyers, as agents for their clients, bind their clients when they enter into agreements on their behalf, citing Braddell v. Aslin , 1999 ABQB 778 , at para. 6 : Other than in very unusual situations, such as fraud, an agent binds a principal. This general rule applies to lawyers as agents for litigants; a lawyer has the capacity to bind the litigant.

If the lawyer has no actual authority, that is a problem between the lawyer and the client. [ 20 ] Further, the Plaintiffs dispute the Defendants’ proposition that setting aside a Consent Judgment is similar to setting aside a Default Judgment, noting that the Defendants have provided no authority for the position.

In particular, the Defendants note that a Default Judgment is given without the consent of the defendants, while a Consent Judgment is granted with the consent of the defendant or its agent. [ 21 ] Moreover, the Plaintiffs assert that there has been significant delay in seeking to set aside the Consent Judgment, since it was granted more than two years ago. As to whether issues of fact or law need to be decided, the Plaintiffs assert that those issues were decided by the entering of the Consent Judgment. Either the Defendants have buyer’s remorse over the agreement to enter the Consent Judgment or Mr.

Moughel overstepped his authority, but that does not change the fact that the Consent Judgment has been entered. [ 22 ] As to prejudice, the Plaintiffs say that they would be prejudiced if the Consent Judgment is set aside.

Such prejudice includes: 1. post-judgment examinations have already taken place and strategies in that regard undertaken that cannot be reversed; 2. liability witnesses have not been tracked and may no longer be available; 3. the Attachment Order was vacated by consent on the same day as the Consent Judgment was entered; the benefits that would have flowed had the Attachment Order been continued cannot be replaced; and 4. significant time and energy have been expended pursuing a tactic based on the entry of the Consent Judgment on liability.

[23] The Plaintiffs argue that if the Defendants were mislead by their lawyer or if their lawyer acted outside of his authority, theirrecourse is against the lawyer. [24] Moreover, the Plaintiffs argue that Mr. Moughel established the indicia that allowed the Plaintiffs and Plaintiffs’ counsel torely upon him and his representations. [25] Finally, the Plaintiffs argue that it would be wrong to open up the Consent Judgment because it would exacerbate all theprevious problems of delay caused by the Defendants and/or Defendants’ counsel.

It would also send the wrong message that neither theCourt process or representations by lawyers can be relied upon. Analysis [26] The question of opening up settlements, consent orders and consent judgments has been addressed in several cases by both theCourt of Appeal and Court of Queen’s Bench. [27] Several cases have considered whether the courts should enforce settlement agreements entered into by lawyers on behalf oftheir client, and then subsequently repudiated by the client. In Poon Estate v.

Dickson (1982), 1982 ABCA 112 , 19 Alta LR(2d) 219 (CA) the action was on a settlement reached in a personal injury action against the City of Edmonton and a transit driver.Lawyers for the City accepted a settlement offer from the injured plaintiff in the personal injury action, but then the City refused to paythe settlement arguing that the settlement was made without consent of their insurer and was a mistake.

The Court cited Englishauthority (at paras. 7-10): The gist of these cases is that the court will not lend its authority to enforce a settlement that was reached through misapprehension ormistake or contrary to the specific instructions of the client and not yet effective. Lord Justice Cotton in Harvey v. Croydon Union (supra) said at p. 255: If a consent is given through error or mistake, there can be no doubt that the court will allow it to be withdrawn if the order has notbeen drawn up.

But the question is very different whether when counsel, being duly authorized, have given a consent, there being nomistake or surprise in the case, the party can arbitrarily withdraw that consent." The Earl of Halsbury in Neale v.

Gordon Lennox (supra) said at pp. 469 and 470: My Lords, as I said, I will not go through the cases, because to my mind there is a higher and much more important principle involved.The court is asked for its assistance - and I entirely repudiate the technical distinction between what is called an application for specificperformance and an order to be made that such and such things should be done - the court is asked for its assistance when this order isasked to be made and enforced that the trial of the cause should not go on; and to suggest to me that a court of justice is so far bound bythe unauthorized act of learned counsel that it is deprived of its general authority over justice between the parties is, to my mind, themost extraordinary proposition that I ever heard.

That condition of things seems not to have been in the contemplation of the Court ofAppeal. I will only say for myself that I should absolutely repudiate any such principle. Where the contract is something which theparties are themselves by law competent to agree to, and where the contract has been made, I have nothing to say to the policy of lawwhich prevents that contract being undone: the contract is by law final and conclusive.

But when two parties seek as part of theirarrangement the intervention of a court of justice to say that something shall or shall not be done, although one of the parties to it isclearly not consenting to it, but has in the most distinct form said that the consent to refer - to take it from the jurisdiction of theordinary tribunal - shall only be on certain terms, to say that any learned counsel can so far contradict what his client has said,and act without the authority of his client as to bind the court itself, is a proposition which I certainly will never assent to." (emphasisadded) As I understand the law parties can settle any matter in any manner they choose so long as it is a matter that does not require the

intervention of the court. The court is simply not concerned. The contract is final and binding. Where the intervention of the court isrequired the second principle comes into play as is so clearly shown in the facts of Neale v. Gordon Lennox (supra). Here the parties hadthe capacity and ability to settle the matter. Intervention of the court was not required. Releases were required and indeed discussed.Perhaps the action would be discontinued as well. Clearly the transaction was within the first of the Earl of Halsbury's propositions.

Thecourt regards the said settlement as final and conclusive. (Emphasis added) [28] In my view, two relevant points are made here. First, the Court in Harvey was discussing a settlement before the Order isdrawn up; here the question arises after (two years after) an order has been signed and entered. Moreover, the point in Neale is that theCourts cannot be bound by a settlement entered into by one of the lawyers in contradiction to the authority given to the lawyer by theclient. Mr.

Sellathamby does not say in his affidavit that the Consent Judgment was contrary to his specific instructions, only that he didnot give instructions to accept liability. Mrs. Sellathamby has given no evidence as to her instructions. A similar finding was made by theCourt of Appeal in Correia v. Danyluk, 2001 ABCA 148 (discussed infra); application for leave to appeal dismissed [2001] SCCA No481. [29] In contrast, in Chomik v. Chomik (1986), 1986 ABCA 116 , 70 AR 304, 45 Alta LR (2d) 190 (CA) lawyers for adivorcing husband and wife in a matrimonial property dispute entered into a settlement agreement.

The wife refused to sign thesettlement agreement and deposed that her lawyer acted in defiance of “express instructions” when entering into the agreement. Thehusband sought and was awarded

summary judgment on the settlement. The Court of Appeal set aside the

summary judgment. It noted(at para. 5): While it is true that in many situations agreements for settlement made by solicitors on behalf of their clients will be enforcednotwithstanding that the solicitors may have exceeded their authority or have acted without first obtaining instructions. This, however, isnot an invariable rule. [30] The Court, citing Yannacopoulos et al v. Maple Leaf Milling Co.

Ltd. and O'Connor, (1963) (BC SC), 37DLR (2d) 562 (B.C.S.C.), concluded that the court should not lend its authority to impose a settlement when the evidence demonstratedthat the settlement did not reflect one of the parties’ intentions. [31] The Court of Appeal in Correia v. Danyluk distinguished the decision in Chomik on the basis that in Chomik the evidencewas that the wife’s lawyer entered into the settlement in express defiance of instructions, while in Correia, at best the evidence was theRespondent’s affidavit denying that "permission" was given to settle the claim for the amount in the agreement.

I note that the same canbe said here. Mr. Sellathamby deposed that he did not give Mr. Moughel instructions to admit liability, but there is no evidence that heexpressly told him to refuse to admit liability. In Correia, the Court noted (at para. 12): There is an important distinction between absence of authority and defiance of express instructions. The normal rules of agencyprovide that a lawyer has ostensible authority to compromise a lawsuit.

If a lawyer settles a lawsuit without the actual authority to do so,his client is bound by the settlement so long as the third party was not aware of the limitation on the lawyer's authority. Scherer v.Paletta, supra. There is nothing in the evidence to suggest that the Appellants were aware of any limitation on the lawyer's authority. (Emphasis added) [32] A further decision by the Court of Appeal in Hrycoy Estate v.

Hrycoy Estate, 2004 ABCA 320, 357 AR 329 summarizedthese principles (at para. 10): There are two applicable principles concerning the issue of a solicitor's authority to enter into a binding settlement agreement on aclient's behalf. According to the first principle, it is within a solicitor's apparent authority to compromise claims. If the solicitor actswithin the scope of this apparent authority and the opposing party has no notice of any limitations imposed by the client, then the clientwill be bound by a settlement agreement the solicitor has agreed to...

The second principle states that where the court is asked to lend itsauthority to enforce a settlement and it is discovered that the solicitor agreed to a settlement on behalf of the client based on amisapprehension or mistake, the court will not enforce the agreement... Both principles have been considered by this Court in Poon v.Dickson (1982), 1982 ABCA 112 , 134 D.L.R. (3d) 559, 19 Alta. L.R. (2d) 219 (C.A.) and Correria v. Danyluk (2000), 286A.R. 117, 2001 ABCA 148. (Citations omitted)

[33] Master Hanebury in Graves v. Stonepine Inc. (c.o.b. Stonepine), 2007 ABQB 422 reviewed a number of these authorities andconcluded that with the exception of solicitors who act in defiance of their clients’ instructions, the court will not undo a settlement madeby counsel with ostensible authority to do so, unless court intervention is required to put the settlement into effect, citing as an examplewhere the settlement contemplates the execution of a consent order by the court (at para. 29).

Here, the Consent Judgment has alreadybeen entered. [34] In my view, the Court of Appeal has clearly set out the situations in which a settlement agreement will be set aside. These arewhere there is: a. mutual mistake and a fresh action could be commenced to achieve the same effect; b. misapprehension or mistake by the lawyer entering into the agreement, but only if Court intervention is necessary to give effect tothe settlement; c. lawyer settles without authority and the third party is aware of that limited authority (Alken Basin Drilling Ltd v Fraser (1994),30 CPC (3d) 250 (AB QB), Racz v.

District of Mission, (BC CA), [1988] 22 BCLR (2d) 70 (BCCA), or d. evidence that the lawyer entered into the agreement in defiance of express and specific instructions from the client. [35] Thus, settlement agreements will be set aside in very limited circumstances. Even more limited circumstances apply toconsent judgments. [36] A consent judgment has the same force and effect of a judgment rendered after trial: Wensel v.

Wensel, (ABKB), [1976] 2 WWR 267, 65 D.L.R. (3d) 327 (AB SC), aff’d [1976] AJ No. 544 1976 ALTASCAD 179 , 5 AR 379 (SC AD) in which the appellate court agreed that the judge who signed the consentjudgment was functus officio once the order was entered; Chiste v. Northern Electric Co. (1978), (AB KB), 7 Alta LR(2d) 183, 14 AR 559 (AB SC); Fisher v. Fisher, 2008 ABQB 170, 442 AR 304; varied as to costs 2009 ABCA 294, 464 AR 109. [37] In Fisher, the Court cited the Saskatchewan Court of Appeal in Bank of Montreal v.

Ostapowich (Trustee of) (1996), (SK CA), 144 Sask R 207 (CA), in which the Court noted (at paras. 11-13): The argument of the respondent appears to be predicated on the premise a consent judgment is merely a decision of the parties which isthen approved or rubber-stamped by the Court. This is simply not the case. A judgment is a final determination by the Court of the rightsand obligations of the parties. A consent judgment, even if it is in the terms consented to by the parties, is not a decision of the partiesbut is a decision of the Court.

The fact the judgment was consented to makes it no less a valid and subsisting judgment. No matter from what perspective one views the application by the bank it is in substance an attack on a valid subsisting judgment of theCourt and thus the appellant is correct such judgment can only be attacked in one of the three aforementioned ways: 1. By an application to the Court to vary its judgment; 2. By appeal; 3. By separate action to set aside the judgment on the basis it was obtained by fraud. See R v Wilson, (SCC),[1984] 1 W.W.R. 481.

[38] In Morstad v. Quintal (1980), (AB KB), 14 Alta LR (2d) 369 (QB), an order nisi was granted with theconsent of the defendant’s solicitor. However, after entry and payment into Court, it was discovered that the amount was incorrectlycalculated. The Plaintiff applied to strike out its law firm’s acceptance of the amount paid into court, to have that amount be paid inpartial satisfaction of the debt and to change the amount owing in the order nisi be changed. The Master denied the application.

Onappeal, Sinclair CJQB concluded that because the order could be set aside in a fresh action between the parties based on an uncontestedmutual mistake of fact, no purpose would be served by the commencement of a fresh action. On this basis the Court concluded it hadinherent jurisdiction to grant the requested relief without having to commence a new action. [39] In my view, this decision is distinguishable from the facts here.

The basis of the decision is not that the Consent Judgmentcould be opened up because of the solicitor’s consent, but because the same result could be achieved by the commencement of a freshaction based on a mutual mistake of fact. The issue here is not one of mutual mistake. Further, a fresh action to set aside the ConsentJudgment would not be available here. Assuming that I accept the Defendants’ assertion that they did not give their lawyer instructionsto settle, that is not a basis for a fresh action against the Plaintiffs to set aside the Consent Judgment.

Their recourse, as noted by thePlaintiffs, is against their lawyer. [40] Similarly the Court of Appeal in Ensign Estate v. Hart, 1998 ABCA 13, 209 AR 392 distinguished the decision in Morstad,noting (at para. 13): In the case before us, there is no consent judgment and therefore no mutual mistake of fact on which a fresh action can be brought toremedy the error.

This is not an appropriate case to invoke the inherent jurisdiction of the court to remedy the Respondents' error. (Emphasis added) [41] McGillvray CJA in DPL v PAE (1984), 1984 ABCA 5 , 60 AR 87, 21 RFL (3d) 72 (CA) held that a consentjudgment would not be lightly set aside unless there was proof of fraud or deceit. In that case, Mr. L. consented to a judgment whichdeclared him to be the father of a child and directed him to make maintenance payments. Five years after the consent judgment, heargued that there was a new test that, if taken, could prove he was not the father.

The Court further held that there would be significantprejudice to the mother if the test proved that Mr. L was not the father as she could not, five years later, pursue a remedy against anotherperson. [42] In Neis v.

Yancey, 1999 ABCA 272, 250 AR 19, the Court of Appeal drew an analogy between setting aside a discontinuanceof an action and a consent judgment, finding again that it should not be lightly undone, and only if the plaintiff establishes that fraud ormistake induced him or her to enter into the judgment (at para. 25). [43] It is important to note that the British Columbia Supreme Court, in a decision dealing with setting aside a consent order, hasindicated that any such fraud would be fraud on the part of the party who obtained the judgment: Cotowick v.

Auramet InternationalLtd., [1988] BCJ No. 693 (BCSC), relying on Johnston v. Barkley et al. (1905), 10 OLR 724 (Ont.

HCJ, Div Ct) at 728 : It is obviously necessary in order to prevent an abuse of the right to have a judgment re-opened upon the ground of fraud, that the fraudshould be that of the party who has obtained the judgment; that it should be clearly made out; and that it should have undoubtedly beenat the foundation of the decision which has been attacked; and the attacking party must be prepared to shew this upon an application tostay his action as frivolous and vexatious. [44] The Court of Appeal, in an oral decision in Young West Oil and Gas Ltd. v.

Erehwon Inc., 2001 ABCA 115, 281 AR 152,permitted the Plaintiff to file a further affidavit despite a consent order giving effect to an agreement between the parties that no newevidence would be filed. Fruman JA, in dissent, noted that consent orders dealing with procedural matters might be subject to a lessonerous test than substantive orders, and that in general, unless the parties consent, an order may only be set aside or varied for the samereasons that a contract could be set aside – for such grounds as duress, fraud, or common mistake (at para. 11).

The majority did notaddress these issues, finding simply that it would not “revers[e] or ignor[e] the discretionary directions of a chambers judge that aremade to expedite a hearing” (at para. 2). [45] In Coulter v. Dechant, 2004 ABQB 750, 134 A.C.W.S. (3d) 902 Sulatycky J refused to set aside a consent judgment,distinguishing the decision in Morstad, on the basis that a new action would be more appropriate. In particular he noted (at para. 9):

First, any mistake concerning the Settlement Agreement is hotly contested. Second, a fresh action would accomplish several purposes. It would serve to particularize the claims now raised by the Applicant and allow an opportunity for discovery. Further, the Applicant's complaint appears to only be against the Law Society and arises from post-settlement conduct. Any nexus between the other Respondents and the impugned conduct is extremely tenuous.

Opening up the original proceedings would mean that all of the Defendants in the discontinued actions, most, if not all of of whom have nothing to do with the current allegations, would be compelled to continue in this litigation. Commencing a new action will ensure that only the appropriate parties will be involved. [ 46 ] I conclude that a consent judgment, having the same force and effect as a judgment after trial, can only be set aside in exceptional circumstances, including fraud, deceit and mutual mistake.

In deciding whether to set the judgment aside, the Court should also consider prejudice to the other party and whether a fresh action would be more appropriate. Conclusion [ 47 ] In my view, setting aside a consent judgment must, at the least, meet the test for setting aside a settlement agreement referred to in paragraph 34. Here there is no mutual mistake and no mistake by the lawyer requiring court intervention. Further, the Plaintiffs have demonstrated that Mr.

Moughel provided all the indicia that he had authority to settle the matter, and the Defendants have not established that any limitation on his authority was known to the Defendants. Nor is there any evidence that Mr. Moughel consented to the judgment in defiance of express instructions. [ 48 ] Moreover, assuming that there is a more onerous test for setting aside a consent judgment, there is no evidence here of fraud or deceit. The Plaintiffs has established that it would be significantly prejudiced by setting aside the consent judgment.

Further, as suggested by the Plaintiffs a fresh action against the lawyer who allegedly consented to the Judgment without authority would be more appropriate than opening up the original proceedings. [ 49 ] Therefore, the general rule that a client is bound by a settlement agreement agreed to by its solicitor applies. The application to set aside the Consent Judgment is dismissed.. B. Should the action against the individual Defendants be dismissed? [ 50 ] In the alternative the individual defendants seek to have the action against them dismissed.

I agree with the Plaintiffs that this is an attempt to proceed “through the backdoor, when the front door is locked.” Since the Consent Judgment is not set aside, the application to remove the individual Defendants should be and is dismissed.. C. Should this matter proceed to

Summary Judgement under Rule 7.3(1)? [ 51 ] The only remaining issue appears to be assessment of damages. The Plaintiffs submit that the issue is not complicated and could be dealt with by

summary judgment application in Chambers. Based on the material that has been filed on this issue I agree and, therefore subject to any further submissions, direct this issue be set down for assessment under the

Summary Judgement Rules(Division 2). V.

Summary [ 52 ] The applications to open the Consent Judgment and to remove the individual Defendants are dismissed. The remaining issue of assessment of damages can be resolved in a

Summary Judgment application.

[ 53 ] If not otherwise resolved, costs may be spoken to within 60 days of this decision. Heard on the 6 th day of September, 2011. Dated at Edmonton, Alberta this 3 rd day of October, 2011. J.J. Gill J.C.Q.B.A. Appearances: Gary F. Zimmermann McLennan Ross LLP for the Respondents Baljindar Rattan Ares Law for the Applicants