2011 ONSC 6881, 2011 ONSC 6881

Hodaie v. RBC Dominion Securities et al. [Indexed as: Hodaie v. RBC Dominion Securities] 108 O.R. (3d) 140 2011 ONSC 6881 Ontario Superior Court of Justice, Dambrot J.

November 22, 2011 Actions -- Bars -- Settlement -- Unrepresented plaintiff agreeing to verbal offer to settle and being advised that release would be sent tohim for execution -- Release going beyond what was necessary but plaintiff not advising defendant that he was dissatisfied with terms --Plaintiff failing to execute release and instead commencing action -- Settlement having been concluded -- Fact that plaintiff wasunrepresented not preventing settlement from binding on him.

Limitations -- Suspension of limitation period -- Parties who agree to independent third-party resolution efforts not permitted to contractout of suspension of limitation period under s. 11(1) of Limitations Act -- Limitations Act, 2002, S.O. 2002, c. 24, Sch. B., s. 11(1). The plaintiff had a margin trading account with the defendant RBC. He claimed that RBC erroneously calculated the margin in hisaccount. He and the defendants made efforts to resolve the dispute. He rejected an offer to settle and complained to the RBCombudsman. The ombudsman concluded that the original offer was reasonable and re-extended it.

The plaintiff did not accept it andadvanced his claim to the ombudsman for banking services and investments. Again, the offer was re-extended. On both occasions, theplaintiff signed an agreement acknowledging that the applicable limitation period was not stayed. Ultimately, the plaintiff accepted averbal offer to settle and was sent a release to sign. He did not indicate that he was dissatisfied with the terms of the release, but did notsign it, and instead commenced an action against the defendants. The defendants brought a motion for

summary judgment dismissing theaction on the grounds that the complaint was settled and that the limitation period had expired. Held, the motion should be granted. The fact that the plaintiff was unrepresented by counsel at the time of the settlement did not prevent the settlement from being bindingon him. While the release that was sent to him went beyond what was necessary, that did not entitle him to avoid the agreement. Heought to have expressed any dissatisfaction he had with it and demanded a revised release. He did not do so.

The complaint that formedthe basis for the claim was settled. [page141] While it was unnecessary to decide this issue, the action was not statute-barred. Section 11(1) of the Limitations Act, 2002, whichsuspends the limitation period in s. 4 while independent third-party resolution is being attempted on agreement, applied. The suspensionof the limitation period in s. 11 cannot be contracted out of. MOTION for

summary judgment dismissing an action. Cases referred toBawitko Investments Ltd. v. Kernels Popcorn Ltd., (ON CA), [1991] O.J. No. 495, 79 D.L.R. (4th)97, 53 O.A.C. 314, 26 A.C.W.S. (3d) 350 (C.A.); Canada Square Corp. v. VS Services Ltd. (1981), (ON CA), 34 O.R.(2d) 250, [1981] O.J. No. 3125, 130 D.L.R. (3d) 205, 15 B.L.R. 89, 11 A.C.W.S. (2d) 443 (C.A.); Cellular Rental Systems Inc. v. BellMobility Cellular Inc., [1995] O.J. No. 3773, 59 A.C.W.S. (3d) 401, 1995 CarswellOnt 4172 (C.A.), affg [1995] O.J. No. 721, 53A.C.W.S. (3d) 1183, 1995 CarswellOnt 4182 (Gen. Div.); Ferron v. Avotus Corp., [2007] O.J.

No. 353, 2007 ONCA 73, 55 C.C.E.L.(3d) 177, 37 C.P.C. (6th) 284, 154 A.C.W.S. (3d) 1063, affg (ON SC), [2005] O.J. No. 3511, [2005] O.T.C. 732, 45C.C.E.L. (3d) 226, 19 C.P.C. (6th) 75, 141 A.C.W.S. (3d) 935 (S.C.J.); Fieguth v. Acklands Ltd., (BC CA), [1989]B.C.J. No. 857, 59 D.L.R. (4th) 114, 37 B.C.L.R. (2d) 62, 15 A.C.W.S. (3d) 324 (C.A.) Statutes referred to Limitations Act, 2002, S.O.2002, c. 24, Sch. B [as am.], ss. 4, 11 [as am.],

(1) Michael Meredith, for plaintiff. Marc Kestenberg, for defendants. [1] DAMBROT J.: -- This is a motion for

summary judgment brought by the defendants. They argue (1) that the complaint that formsthe basis for this claim was settled before the action was commenced; and (2) the limitation period expired more than three monthsbefore the action was commenced. The Facts [2] The plaintiff had a margin trading account with the defendant RBC Dominion Securities ("RBC"), which is a brokerage firm andinvestment dealer. The defendant Henry is a branch manager for RBC, and the defendant Skeat is an investment advisor employed byRBC. The claim relates to a reverse stock split of shares owned by the plaintiff.

The plaintiff alleges that RBC erroneously calculated themargin in his account. [3] Between December 2007 and April 2008, the plaintiff and the defendants tried to resolve the complaint. On March 6, 2008, AnneMcConnell, the regional compliance manager at RBC, wrote to the plaintiff and offered to settle his complaint for $35,000 in exchangefor a full and final release. No settlement was reached. Instead, the plaintiff advanced his complaint to the RBC ombudsman.

In order todo so, the plaintiff signed a letter [page142] agreement in which he acknowledged that the ombudsman service does not stay anylimitation period applicable to his dispute. In addition, despite a recommendation that he seek independent legal advice, the plaintiff didnot do so.

[4] The ombudsman concluded that the original offer to settle was a reasonable one, and re-extended it to the plaintiff. Once again, theplaintiff did not accept the offer. Instead, he advanced his claim to the ombudsman for banking services and investments ("OBSI"). Onceagain, the plaintiff signed a letter agreement in which he acknowledged that the ombudsman service does not stay any limitation periodapplicable to his dispute. [5] On May 1, 2009, RBC, through OBSI, again extended its previous offer to the plaintiff in writing.

OBSI's letter advised the plaintiffthat if he wished to accept the offer, he should contact McConnell within 30 days, and that RBC may require him to sign a full and finalrelease to evidence the resolution of this matter. [6] McConnell has testified that on May 6, 2009, she received a telephone call from the plaintiff. He told her that he accepted the offer.McConnell told him that she would send him a letter confirming his acceptance and enclose a standard release for his execution, and thatonce she received the signed release, she would process the payment.

The plaintiff made no comment regarding the release and did notsay that his agreement was contingent on a review of the release. [7] Immediately after this discussion, McConnell sent an e- mail to Henry and to RBC's legal counsel confirming that she had received acall from the plaintiff, that he had verbally accepted the offer to settle for $35,000 and that he wanted her to send him a release for hisexecution. [8] The plaintiff testified that he had no recollection of speaking with McConnell, but he did not deny speaking to her. He did recallleaving a voice message for her requesting "settlement documents".

In his first affidavit, he said that the message was left on or aboutMay 7, 2009. Two days before his cross-examination, he swore another affidavit in which he said that he had recently come across a notein his 2009 day calendar dated May 6, 2009, which stated, "RBC DS: called and left a message for Annie to mail me the releasedocuments." [9] Counsel for the defendants requested that the plaintiff bring his calendar to his cross-examination.

A review of the calendar disclosedthat there was an entry in his calendar dated May 7, 2009 which stated, "RBC DS: call Annie and left a message asking her to mail me acopy of the release letter." This [page143] entry was crossed out. The plaintiff had not mentioned or explained this entry in his latestaffidavit. [10] On May 14, 2009, McConnell sent a letter to the plaintiff confirming the settlement and enclosing a release for the plaintiff'sexecution. Her letter was unequivocal and unambiguous.

In the letter, she suggested, as she did routinely with unrepresented clients, thatthe plaintiff review the release carefully, with the assistance of counsel if he wished. On that same day, she e-mailed a copy of this letterto Henry, to her regional manager and to the RBC ombudsman. The subject line of her e-mail read, "Client Settlement." In the body ofthe e-mail message, she stated, "Have been in conversations with Mr.

Hodaie and here is the final letter/release that was sent to himtoday for your files." In evidence, she clarified that there had been only one conversation. [11] Although he received this letter, the plaintiff did not follow up. On August 28, 2009, approximately three months later, counsel forthe plaintiff wrote to Henry repeating the plaintiff's complaints, but making no reference to McConnell's letter. On September 11, 2009,RBC counsel replied to the plaintiff's counsel stating that the complaint had been settled.

There was no response for over five months. [12] Finally, on February 19, 2010, counsel for the plaintiff replied, asserting for the first time that no binding settlement was everreached between the plaintiff and RBC. He said that the plaintiff did not agree to settle his dispute for $35,000 during the May 6, 2009telephone call with McConnell because he had not been provided the release. Counsel said that the plaintiff asked for the release so thathe could review it and seek legal advice about its terms.

It is plain from this letter that there was no dispute that McConnell's account ofthe telephone call was uncontested. The plaintiff's position was that there could have been no actual settlement until the plaintiff agreedto the terms of the release. [13] I find as a fact that McConnell's account of the telephone call on May 6, 2009 is truthful and accurate. It is entirely consistent withher subsequent actions, it is not denied by the plaintiff in his evidence and it was effectively acknowledged in the letter sent by theplaintiff's counsel on February 19, 2010.

I am confirmed in my view by the highly suspicious and hesitantly disclosed entries in theplaintiff's calendar.

No doubt the plaintiff did leave a message for McConnell asking for a copy of the release on May 7, 2009, andsubsequently tried to make it appear that he had not spoken to McConnell on May 6, but had only left a message for her on that date, bycrossing out the May 7 entry and adding the May 6 entry to that effect after the fact. [page144] I am further confirmed in my view by thefact that after receiving McConnell's May 14 letter confirming that a settlement had been reached, the plaintiff was silent for over threemonths, and that after his counsel was told on September 11, 2009 that there had been a settlement, the plaintiff was silent for a furtherfive months. [14] I have no doubt whatsoever that the plaintiff had finally decided to accept the settlement offered to him, and did so, on May 6, 2009,and that he subsequently regretted his decision and attempted to resile from it.

The only remaining issue with respect to the settlement isthe significance of the failure to settle the terms of a release. [15] The plaintiff commenced this action on March 11, 2010, more than two years and three months after discovering his claim. Was theComplaint that Forms the Basis for this Claim Settled? [16] The following principles of law concerning settlement are beyond dispute. [17] First, an agreement to settle a claim is a contract.

To establish the existence of a contract, the parties' expression of agreement mustdemonstrate a mutual intention to create a legally binding relationship and must contain agreement on all of its essential terms: seeCanada Square Corp. v. VS Services Ltd. (1981), (ON CA), 34 O.R. (2d) 250, [1981] O.J. No. 3125 (C.A.); BawitkoInvestments Ltd. v. Kernels Popcorn Ltd., (ON CA), [1991] O.J. No. 495, 79 D.L.R. (4th) 97 (C.A.); and CellularRental Systems Inc. v. Bell Mobility Cellular Inc., [1995] O.J. No. 721, 1995 CarswellOnt 4182 (Gen.

Div.), at para. 17, affd [1995] O.J.No. 3773, 1995 CarswellOnt 4172 (C.A.). [18] Second, the parties' agreement to the essential provisions in a settlement is not conditional upon the execution of minutes of

settlement and release. Settlement implies a promise to furnish a release unless there is a contractual agreement to the contrary: seeFieguth v. Acklands Ltd., (BC CA), [1989] B.C.J. No. 857, 59 D.L.R. (4th) 114 (C.A.), at p. 121 D.L.R.; Ferron v.Avotus Corp., (ON SC), [2005] O.J. No. 3511, 19 C.P.C. (6th) 75 (S.C.J.), at para. 28, affd [2007] O.J. No. 353,2007 ONCA 73, 37 C.P.C. (6th) 284; and Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., at para. 24 (Gen. Div.). [19] Third, no party is bound to execute a complex or unusual form of release.

Although furnishing a release is implicit in a settlement,the terms of the release must reflect the agreement reached by the parties. This principle accords with common sense and normalbusiness practice: see [page145] Fieguth v. Acklands Ltd., at p. 121 D.L.R.; and Cellular Rental Systems Inc. v. Bell Mobility CellularInc., at para. 24 (Gen.

Div.). [20] Fourth, if one party submits a form of release that is not accepted by the other party, then there must be further discussion, butneither party is released from the settlement unless the other party has demonstrated an unwillingness to be bound by the agreement byinsisting upon terms or conditions which have not been agreed upon or are not reasonably implied in these circumstances: see CellularRental Systems Inc. v. Bell Mobility Cellular Inc., at para. 24 (Gen. Div.). [21] Counsel for the plaintiff takes no issue with these propositions of law.

He sought to distinguish them, however, on the basis that inthis case, unlike any of the cases I have referred to, the plaintiff was not represented by counsel. From the plaintiff's point of view, thesettlement was not routine, and as a lay person, the legal consequences would not be known to the plaintiff. As a result, he argued, Ishould find that there was no acceptance of the offer on May 6, 2009, and that there could be no settlement until the plaintiff agreed onthe terms of the release.

However, I cannot accept that argument. [22] The plain fact is that a settlement agreement -- and I am satisfied that there was an agreement in this case to the essential terms of asettlement -- is a contract, and lay people are competent to enter into contracts. In this case, the plaintiff had been advised in writingwhen offers to settle were made in March 2008, September 2008 and December 2008 that he would have to sign a release.

Once again,on May 1, 2009, the plaintiff was advised, in writing, that if he wished to accept RBC's offer, RBC might require him to sign a full andfinal release to evidence the resolution of this matter. After considering the matter, the plaintiff accepted the offer on May 6, 2009. Whenhe accepted the offer, he was told that he would receive a standard release to execute, and that once it was returned, he would receive hismoney. He did not demur.

Indeed, he followed up the next day asking for the release. [23] It is true, as the plaintiff points out, that the release sent to him went beyond what was necessary, and that he was not obliged to signit as drafted. But this did not entitle him to avoid the agreement. He ought to have expressed any dissatisfaction he had with it anddemanded a revised release. Although he consulted counsel, he still never asked that the release be revised. [24] As a result, I conclude that the complaint that forms the basis for this claim was settled before the action was commenced, and thedefendants are entitled to

summary judgment. [page146] Did the Limitation Period Expire before the Action Was Commenced? [25] In view of my decision on the first issue, it is not necessary for me to answer this second question. In deference to the argumentsmade to me on the issue, I will consider it briefly. I will begin by reproducing the relevant provisions of the Limitations Act, 2002, S.O.2002, c. 24, Sch. B. [26]

Section 4 provides: 4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the dayon which the claim was discovered. [27] Section 11(1) provides: 11(1) If a person with a claim and a person against whom the claim is made have agreed to have an independent third party resolve theclaim or assist them in resolving it, the limitation periods established by sections 4 and 15 do not run from the date the agreement ismade until, (

a) the date the claim is resolved; (

b) the date the attempted resolution process is terminated; or (

c) the date a party terminates or withdraws from the agreement. [28] It is undisputed that if the two-year period referred to in s. 4 ran without interruption, this claim was out of time when it wascommenced.

But if it was interrupted by operation of s. 11(1), then it was commenced in time. [29] The defendants argue that s. 11(1), which ordinarily suspends the limitation period in s. 4 while independent third- party resolutionis being attempted on agreement, does not apply in this case because, in order to make use of the RBC ombudsman's services, theplaintiff entered into an agreement that provided that the ombudsman service does not "provide a stay, or extension or waiver of anyformal proceedings or limitation periods . . .". [30] In my view, this argument is wholly without merit. The purpose of s. 11 is obvious.

It is intended to encourage efforts to settle byproviding that there is no limitation period penalty for plaintiffs who agree to enter into third party resolution processes. There is nothingin s. 11 that suggests that the suspension of the limitation period can be contracted out of. Otherwise, small plaintiffs might beunwittingly deprived of their actions by unscrupulous defendants.

While s. 11 only operates when the parties agree to independent third-party resolution efforts, the parties to such an agreement cannot contract out of the suspension of the limitation period. [page147] [31] I would not give effect to this argument. Disposition [32] I grant

summary judgment to the defendants and dismiss the plaintiff's action. The parties may address the issue of costs in writing.The defendants may provide me with brief written submissions within 15 days of the release of this judgment. The plaintiff may file briefwritten submissions within 15 days of receipt of the defendants' submissions.

Motion granted.