Nieman v Ellsworth, 2021 ABQB 660

Court of Queen’s Bench of Alberta Citation: Nieman v Ellsworth, 2021 ABQB 660 Date: 20210818 Docket: 1001 03299 Registry: Calgary Between: Blair Nieman Plaintiff - and - Cody Daniel Ellsworth Defendant - and - The Dominion of Canada General Insurance Company Third Party by Order _______________________________________________________ Memorandum of Decision

of the Honourable Madam Justice B.E. Romaine _______________________________________________________ I. Introduction [ 1 ] The plaintiff in a trial that was terminated because settlement had been reached applies to reopen the trial, on the basis that the settlement and trial termination was contrary to his express instructions to counsel.

However, the plaintiff was present in court when the alleged settlement was communicated by his counsel and did not object. [ 2 ] The defendant and third party apply to enforce the settlement, to be allowed to pay funds into court and for a declaration that the claims against them be dismissed. [ 3 ] I dismiss the plaintiff's application to reopen the trial. If the plaintiff's counsel acted contrary to express instructions or without authority, the appropriate remedy is an action by the plaintiff against his counsel.

The facts of this case do not support an exception to the general rule that solicitors acting within the scope of their apparent authority bind their clients. II. Facts [ 4 ] This personal injury action was scheduled to be heard before me from October 19, 2020 to November 6, 2020. The plaintiff Mr. Nieman testified and was cross-examined during the first few days, as did one medical expert for the plaintiff. [ 5 ] On the morning of October 22, 2020, the fourth day of trial, Mr. Neiman's counsel, Mr. Ross, advised the Court in the presence of Mr. Nieman and Mr. Pick, counsel for the defendant Mr.

Ellsworth, that the parties had reached a settlement. Mr. Ross asked that in the circumstances the trial be ended. I spoke directly to Mr. Nieman, wishing him a more successful recovery and luck in the future. He thanked me. I terminated the trial. [ 6 ] I now understand from affidavit evidence that earlier that morning, Mr. Ross advised Mr. Pick and Ms.

Crosley, counsel for The Dominion of Canada General Insurance Company, by email that he had instructions to make a settlement offer accepting payment of a certain sum plus taxable costs and disbursements to the date of a previous offer on the basis that there would not be a claim for costs by the defendant or third party insurer. The claims representative for the insurer deposes that, having been advised that the defendant was agreeable, she instructed Ms. Crosley to tell Mr. Pick and Mr. Ross that the insurer agreed to accept the offer. [ 7 ] According to email evidence, Ms. Crosley and Mr.

Ross came to an agreement on the terms of a release to be executed by Mr. Nieman on October 28, 2020 in relation to the claims against Dominion. On the same day, Ms. Crosley sent draft discontinuances of claim to Mr. Ross. Mr. Pick and Mr. Ross exchanged emails with respect to costs, and on December 14, 2020, Mr. Pick provided Mr. Ross with a proposed final release and indemnity. [ 8 ] On January 4, 2021, Mr. Pick provided Mr.

Ross with the settlement funds and an executed final release and indemnity on the condition that the funds and release be held in trust pending the return of a filed discontinuance of claim. [ 9 ] On February 23, 2021, Mr. Ross returned the trust documents and funds to Mr. Pick, advising that he was unable to obtain Mr. Nieman's signature on the release. On the same day, he served Mr. Pick with a Notice of Withdrawal as counsel to Mr. Nieman. In April 2021, Dominion filed an application to dismiss Mr.

Nieman's claim pursuant to the terms of a settlement agreement reached on October 22, 2020. [ 10 ] In May of 2021, Mr. Pick filed an application to enforce settlement. These applications were adjourned on two occasions to allow Mr. Nieman to obtain counsel. [ 11 ] On July 7, 2021, Mr. Nieman through his new counsel Mr. Minuk filed an application to reopen the trial, or in the alternative, if Dominion and Mr. Ellsworth's' applications were successful, to stay the matter pending appeal. [ 12 ] Two affidavits have been filed in support of Mr. Neiman's application to reopen the trial. [ 13 ] Mr.

Nieman submits that the trial was "unilaterally and abruptly ended by Mr. Ross, contrary to my express instructions". He says in his affidavit that he was pressured into stopping the trial, although he specifically instructed Mr. Ross to continue. He says that Mr. Ross prevented him from speaking to his parents, although he was aware that Mr. Nieman did not make any major decisions without them. Mr. Nieman is not a minor, but he submits that injuries suffered as a result of the motor vehicle accident that was the subject of the claim mean that he does not make any major decisions without his parents.

However, at no time during the trial, including during his testimony, was Mr. Nieman's capacity to act raised. Mr. Nieman says that, when Mr. Ross advised the Court that the matter had come to a successful conclusion, he "was in utter shock", he "froze and [his] mind just shut down". Mr. Nieman attaches to his affidavit an unsworn letter dated June 30, 2021 from a psychologist who provided therapy to Mr. Nieman from 2013 to 2017, and then again on February 25, 2021. This therapist suggests that decision making becomes difficult for Mr.

Nieman in times of stress, and "(a)s the details of the court proceedings have been described to me", he believes that Mr. Nieman would not be capable of making a difficult decision in a short time without considerable help from his support system. [ 14 ] Mr. Nieman deposes that he wasn't advised of the monetary amount of the settlement until February 16, 2021. In a hand-

written fax to Mr. Ross dated February 17, 2021, Mr. Nieman complains that he does not understand the releases sent to him, that he wanted a printed copy of all of the releases, the settlement offer, a breakdown of financial amounts and "the actual letters with detailed information from BOTH the Defence counsel and SEF44." He says that he brought up the impact of the Brown economic reports with Mr. Ross in a telephone conversation the day before but Mr. Ross did not respond. He says that he said "I am simply expected to live on $14,000/year the rest of my life" and that Mr.

Ross was rude in response, that he showed a lack of understanding of Mr. Nieman's "Life- Altering, Life-Long Complex Health Problems/Conditions." [ 15 ] Mr. Nieman then asserts that Mr. Ross continues with "MORE threats and MORE PRESSURE" which started at the courthouse, and that nothing had been presented to him in writing. [ 16 ] Mr. Nieman's mother deposes that Mr. Ross used harsh threatening language when talking to her and Mr. Nieman on the morning of October 22, 2020, and that she had heard Mr. Nieman tell Mr. Ross that he wanted the trial to continue.

She too submits that she did not become aware of the settlement amount until February 16, 2021. III. Analysis [ 17 ] The issue before me is not whether Mr. Nieman or his mother are credible with respect to their complaints about Mr.

Ross, who presented no evidence at these applications, but whether the trial should be reopened, or the alleged settlement enforced with the settlement funds paid into court and the defendant and third party released from liability. [ 18 ] The general rule is that solicitors acting within the scope of their apparent authority bind their clients: Correia v Danyluk , 2001 ABCA 148 at para 11 , leave to appeal dismissed [2001] SCCA No. 481. The normal rules of agency provide that a lawyer has ostensible authority to compromise a lawsuit: Correia at para 12 .

As noted by the Court in Correia , "[i]f 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." [ 19 ] As was the case in Correia , there was nothing in this case that would have alerted or suggested to the defendant or the third party that Mr. Nieman's counsel did not have authority. Any lack of capacity was not raised during the trial or during Mr. Nieman's testimony, and in fact, Mr.

Nieman was present and addressed by the Court at the time his counsel announced the settlement, and did not object. Even if Mr. Nieman suffers a lack of capacity, and I do not make any finding of that on the basis of the evidence before me, a principal's lack of capacity, unknown to a third party, will still bind the principal as against the third party: Correia at para 8 . [ 20 ] Mr. Nieman relies on W.C. v D.C. , 1986 ABCA 116 , which involved an appeal from an order granting

summary judgment with respect to a property settlement in a matrimonial dispute. [ 21 ] The Court in a short endorsement found that there was no dispute that the appellant's counsel had acted in defiance of express instructions. The Court noted that "[w]hile it is true that in many situations agreements for settlement made by solicitors on behalf of their clients will be enforced notwithstanding that the solicitors may have exceeded their authority...[t]his, however, is not an invariable rule": para 5. The Court set aside the order for

summary judgment. [ 22 ] In Correia v Danyluk , 2001 ABCA 148 , the Court of Appeal referred to the W.C. decision. The issue in that case was whether a settlement agreement was valid and binding. The appellant submitted that he had not given permission to settle for the amount in question and felt coerced into accepting the proposed settlement.

He produced unsworn evidence from a doctor suggesting that he suffered from panic attacks when he did not take his medication, but, as noted previously, the Court stated that, even if the unsworn letter established lack of capacity, a principal's lack of capacity, unknown to a third party, will still bind the principal as against a third party: para 8. [ 23 ] At para 12, the Court distinguished W.C. , commenting that the case before it involved an absence of authority rather than defiance of express instructions, and declared that a binding settlement had been reached and the consent judgment was binding. [ 24 ] Mr.

Nieman also relies on the case of Lofthaug v Canadian Immigration Specialists Ltd. 2011 ABQB 609 . The issue in Lofthaug was whether it was appropriate to set aside a consent judgment. The Court referred to both W.C. and Correia , and distinguished W.C. on the same basis as the Court did in Correia . Gill, J. noted at paragraph 39 that ...a fresh action to set aside the Consent Judgment would not be available here.

Assuming that I accept the Defendant's assertion that they did not give their lawyer instructions to settle, that is not a basis for a fresh action against the Plaintiffs to set aside the Consent Judgment.

Their recourse, as noted by the Plaintiffs, is against their lawyer. [ 25 ] The Court found that there was no evidence that the complainant's lawyer had consented to the judgment in defiance of express instructions, there was no fraud or deceit, the plaintiffs had established that they would be prejudiced by setting aside the consent judgment and an action against the lawyer who consented to the judgment was more appropriate than opening up the original proceedings: paras 47-48. The Court dismissed the application. [ 26 ] Despite the outcome of the case, Mr.

Nieman relies on dicta comment in which the Court set out examples of when a settlement agreement will be set aside, which include where there is evidence that the lawyer entered into the agreement in defiance of express and specific instructions from the client: para 34. While no authority is cited, this comment follows from a review of cases that include W.C. . [ 27 ] None of these authorities are identical with the facts of this case. The alleged settlement was brought to the attention of the Court, albeit without details, with Mr.

Nieman present while his counsel announced the settlement and asked the Court to discontinue the trial. I addressed Mr. Nieman, and he had an opportunity to object at the time. While he may have had difficulty making a decision, as suggested by the unsworn testimony of a therapist who was not treating him at the time of trial, there was no issue of capacity before the

Court in the days of the trial, and no reason for the defendant or the third party to doubt Mr. Ross's authority to settle. [ 28 ] While Mr. Nieman may have a cause of action against his lawyer alleging that he made the offer of settlement and terminated the trial in defiance of express instructions or without authority, reopening the trial is not the appropriate action. [ 29 ] Mr. Nieman submits that it would be prejudicial to him if, instead of having the trial reopened, he would only be able to take action against his lawyer, because he lacks the funds to bring such an action.

He points out that the original claim was brought on a contingency basis. However, if settlement funds are paid into court, as suggested by the defendant, future access to such funds may enable him to find counsel prepared to proceed with the action. There is no evidence that Mr. Nieman would be able to find counsel who would agree to take on a reopened trial on a contingency basis, in any event. IV. Conclusion [ 30 ] I dismiss Mr. Nieman's application to reopen the trial, and find that a valid and binding settlement was reached between the parties.

I direct that the defendant and third party pay the settlement funds into court, and that Mr. Neiman's claims against them in action number 1001-03299 be dismissed. [ 31 ] I decline to stay my decision, as I find that the balance of convenience does not rest with the plaintiff in this case, given the delay that must ensue if this decision is appealed, and that there is no prejudice to the plaintiff in allowing the payment into court.

If an appeal is successful and the trial reopened, the funds paid into Court can be refunded. [ 32 ] If the parties are unable to agree on costs, they may make further submissions in writing. [ 33 ] I direct that a copy of this decision be sent to Mr. Ross. Heard on the 9th day of July, 2021. Dated at the City of Calgary, Alberta this 18th day of August, 2021. B.E. Romaine J.C.Q.B.A. Appearances: Bradley Y. Minuk for the Plaintiff, Blair Nieman David Pick for the Defendant, Cody Daniel Ellsworth Erin Crosley For the Third Party, The Dominion of Canada General Insurance Company