Date: 19980505
Docket: T-1712-97
BETWEEN:
AIC LIMITED
Plaintiff
- and -
INFINITY INVESTMENT COUNSEL LTD.,
INFINITY FUNDS MANAGEMENT INC.,
RICHARD CHARLTON, DAVID SINGH,
JEFFREY LIPTON and GRANT JUNG
Defendants
REASONS FOR JUDGMENT
ROTHSTEIN J.:
ISSUE
[1] This is a motion for judgment based on an alleged settlement agreement between the parties. The issue is whether the parties had agreed to settle.
FACTS
[2] AIC Limited ("AIC") operates a group of mutual funds. Infinity Investment Counsel Ltd. owns Infinity Funds Management Inc. (collectively "Infinity") which also operates mutual funds.
[3] On August 11, 1997 the plaintiff commenced this action against the defendants for passing off, trade-mark infringement, breach of the Competition Act, R.S.C. 1985, c. C-34, and copyright infringement. By August 25, 1997, the parties had begun settlement discussions. At that time Michael Lee-Chin, Chairman and Chief Investment Officer of the plaintiff identified a number of issues that needed to be addressed to settle the litigation:
| a) references to AIC in Infinity's marketing materials and Infinity's plagiarism of AIC's marketing materials must cease; |
| b) restrictions must be placed upon Richard Charlton, Chairman of Infinity's Investment Committee and formerly and AIC employee, from referring to AIC; |
| c) Charlton's unauthorized involvement in the portfolio selection of the Infinity Funds must cease; |
| d) disparagement of AIC must cease; and |
| e) there must be a limit on the percentage of the overlap between AIC's portfolio and Infinity's portfolio. |
In addition, the plaintiff demanded payment of liquidated damages of $2,000,000 and legal costs.
[4] Negotiations continued not only between counsel for the parties, but between the principals of the parties, namely, Lee-Chin for the plaintiff and David Singh, Chairman and Director of Infinity, on behalf of the defendants.
[5] After a number of meetings and exchanges of correspondence, on October 9, 1997, defendants' counsel wrote to plaintiff's counsel setting forth a settlement proposal covering the first four items referred to in paragraph 3 above. On October 14, 1997, plaintiff's counsel wrote to defendants' counsel sending him a revised settlement proposal. On October 22, 1997, Singh called Lee-Chin and said the defendants would agree to everything the plaintiff was asking for with respect to the first four items.
[6] However, the defendants would not agree to pay liquidated damages or the plaintiff's legal costs. Also, the defendants had not, to this point, agreed to any restriction on the Infinity portfolio of stocks. Apparently one stumbling block was the fact that there would have to be public disclosure of such restriction, which Infinity found unacceptable. On October 23, 1997, Singh called Lee-Chin and agreed to pay the plaintiff's legal costs. Lee-Chin agreed that the defendants would not have to pay any amount to AIC for damages. The only matter left outstanding was the restriction, if any, on Infinity's portfolio.
[7] A key telephone conversation took place between Singh and Lee-Chin on October 28, 1997. In this call Lee-Chin had with him Kris Astaphan, Senior Vice-President of Berkshire Securities Inc. a company related to AIC Limited and general counsel to AIC.1 Also present was Diana Colalillo, an assistant to Lee-Chin, who made some notes of the call. The presence of Astaphan and Colalillo was not disclosed to Singh during the call. Astaphan silently, and in writing, provided advice to Lee-Chin during the call.
[8] The plaintiff says that a binding settlement agreement was reached between the parties in this call. The defendants take the opposite position, saying that the discussions in this call involved agreeing on business principles which would then be worked on by the solicitors for the parties.
[9] There was no written exchange following the telephone call of October 28. However, immediately after the call, Astaphan called the plaintiff's outside counsel and Singh called the defendants' counsel. From the telephone notes of plaintiff's outside counsel, it appears that Astaphan took the position that a settlement had been reached. From the notes of defendants' counsel, it is not clear whether Singh was of the same mind. Defendants' counsel's notes state "contact Zimmerman work to agreement for Wednesday". These words are ambiguous because they could mean that an agreement had been reached and counsel was only being asked to document the agreement or alternatively, that agreement was to be discussed at the Wednesday meeting.
[10] Later on October 28, defendants' counsel called plaintiff's counsel to suggest a meeting of counsel "to finalize a settlement proposal for presentation to their respective clients" with a view to a meeting of the parties and counsel on November 5. Plaintiff's counsel responded by saying that his instructions were to prepare draft Minutes of Settlement which would then be delivered to defendants' counsel. On November 6, 1997, the Minutes of Settlement were sent by plaintiff's counsel to defendants' counsel. On November 11, 1997, defendants' counsel called plaintiff's counsel to say that the Minutes of Settlement were unacceptable and that the settlement was off.
[11] On November 13, 1997, counsel for the plaintiff called counsel for the defendants to say that if there could not be agreement on the specific wording of the Minutes of Settlement, he had received instructions "to bring a motion for judgment pursuant to the settlement agreement". On November 21, 1997, defendants' counsel wrote to plaintiff's counsel advising that because of the lack of "confidence that good faith negotiations were possible" there would be no purpose in a further exchange of settlement material.
THE SETTLEMENT AGREEMENT
[12] In the course of argument, in response to questions from the Court, counsel for the plaintiff took the position that the settlement agreement was not what was set out in the Minutes of Settlement. Rather, he submitted that the settlement agreement consisted of:
| a) the October 14 draft terms of settlement (see paragraph 5); |
| b) the agreement reached on October 23 that the defendants would pay the plaintiff's legal costs, and the plaintiff would not require that liquidated damages be paid for past breaches (see paragraph 6); |
| c) the matters agreed to in the October 28, 1997 telephone conversation between Lee-Chin and Singh (see paragraphs 7 and 8); |
| d) a confirmation on November 2, 1997 by Charlton to Jonathan Wellum, President of AIC, that the matter had been settled (this was required because in the October 28 call an obligation on behalf of Charlton was discussed and required his agreement). |
These agreements will be referred to as the "original settlement agreement".
[13] Plaintiff's counsel concedes that the Minutes of Settlement contain some terms additional to, and omit other terms of, the original settlement agreement. Nonetheless, he argues that those differences are details and that the Minutes of Settlement were not being imposed on the defendants but were forwarded to defendants' counsel for comments on the "details".
[14] However, Lee-Chin's evidence is that the Minutes of Settlement set out the terms of settlement to which he and Singh had agreed. To the extent that the Minutes of Settlement are more detailed than the original settlement agreement with Singh, Lee-Chin states that the Minutes "simply included additional minor provisions to make the agreement which had been reached 'workable'", that it was "simply meant to ensure that all of the 'i's were dotted and t's were crossed' so that there would be no confusion between the parties in the future". He also says that "[i]n any event, the Minutes were sent to the defendants' solicitors in draft for their comments". However, in his cross-examination on his affidavits, Lee-Chin says that the Minutes of Settlement represented the agreement that was reached.
[15] The Minutes of Settlement will hereinafter be referred to as the "Minutes of Settlement" or the "final settlement agreement"
ANALYSIS
Whether the parties reached an agreement
[16] At the outset on this point, I would observe that the evidence is quite unsatisfactory. For example, in his affidavit, Astaphan makes reference to Charlton pledging his shares as security for the obligations of the defendants under the agreement. Astaphan states:
| At no time did Mr. Singh ever suggest that Mr. Charlton needed to agree to that term or that he needed separate legal counsel. It was never discussed. |
However, in the notes of the October 28 telephone discussion prepared by Lee-Chin's assistant, which both Lee-Chin and Astaphan say "are accurate" there appears the following:
| DS [David Singh]: If Infinity goes public, what will happen to his shares of Infinity? I must ensure that I protect myself. I will ask RC to get his own lawyer (*Frustrated). |
Clearly, Charlton getting his own lawyer was discussed and Astaphan's recollection was inaccurate.
[17] In the case of the defendants, in his affidavit, Singh states that he made it clear to Lee-Chin that any restriction on Infinity's portfolio could not be material from a securities law point of view since a material restriction would require disclosure. However, in the October 28 telephone call, a maximum of 40% overlap of Infinity's portfolio with AIC's stock appears to have been agreed upon and the necessity for disclosure was acknowledged by Singh:
| DS: If we agree with 35% [later 40%] we will therefore have to disclose it in our prospectus (*frustrated). |
Singh says that he was advised by his solicitors that the maximum 40% overlap would clearly be material and would require disclosure. Significantly, he does not say when he received that advice. Singh contacted his counsel following the October 28 telephone call with Lee-Chin. In notes made by defendants' counsel on October 27 (or perhaps October 28)2 disclosure of a portfolio restriction is mentioned but there is no indication that any required disclosure would be unacceptable to the defendants. In defendants' counsel's notes of a discussion with Singh following the October 28 telephone conversation between Singh and Lee-Chin, there is no mention of disclosure.
[18] Although Singh maintains that disclosure of a portfolio restriction would be unacceptable to the defendants, I do not believe that non-disclosure was made a condition of the October 28 agreement. Clearly, Singh would have preferred not to have to disclose. However, the evidence is that he was prepared, for the purposes of an over-all settlement, to agree to a portfolio restriction even if that required disclosure.
[19] I cite these two examples from the evidence of Astaphan and Singh to demonstrate that, on both sides, there is an effort to revise what was discussed in the October 28 telephone call between Singh and Lee-Chin. In part, this probably reflects faulty memory. It is also indicative of the complexity of the transaction. However, it also reflects some self-serving revisionism by both sides.
[20] The complexity is partly what prevented the parties themselves or their counsel from exchanging a simple memorandum or letter following the October 28 call setting out the agreement, if indeed one was reached. The fact that it took plaintiff's counsel over a week to prepare the Minutes of Settlement also reflects this complexity (although this delay was also due to the plaintiff changing, adding or deleting terms discussed and perhaps agreed upon in the October 28 call). Clearly, the deponents cannot remember a number of matters discussed during the October 28 telephone call.
[21] Having regard to the complexity of the transaction, and the unsatisfactory nature of the evidence, it is very difficult for the Court to discern exactly what was agreed to on October 28. I am satisfied that the parties wanted to arrive at a settlement. The plaintiff's deponents say that they had a settlement on October 28. Defendants' counsel's notes of a call with Singh on October 27 (or perhaps October 28), prior to the October 28 Singh - Lee-Chin call, state "likely to settle today". However, given the complexity of the agreement, the question is whether what was agreed to on October 28 covered all essential provisions intended to govern the settlement or whether what was agreed to was too general and uncertain to constitute a valid and binding settlement and that what was required was the making of a formal settlement agreement.
[22] I accept the submissions of plaintiff's counsel that when Singh and Lee-Chin spoke on October 28 it was implicit that the matters agreed upon up to that time had been settled. These matters were covered by the October 14 draft Terms of Settlement, the agreement of the defendants to pay the plaintiff's legal costs and the agreement of the plaintiff not to ask for damages for any past breaches.
[23] I also accept the submission of plaintiff's counsel that although Singh appeared to have been mistaken about some aspects of the October 28 agreement, his apparent misunderstandings do not derogate from the points he indeed agreed to. According to the notes of the October 28 telephone call, one provision of the agreement was to be that in the event of a breach (of at least some terms) of the agreement "AIC will obtain $2 million or the value of Richard Charlton's shares (the greater of the two) [emphasis added]". When Singh spoke to his counsel after the October 28 call, he told his counsel that the obligation was $2,000,000 or the value of Charlton's shares whichever was the lesser. Whether he forgot what was said in his call with Lee-Chin or whether he deliberately revised what was agreed to, I cannot tell. However, in the case of inconsistency, I prefer to accept the notes of the October 28 call made contemporaneously to the conversation. On this basis, Singh agreed that the obligation was $2,000,000 or Charlton's shares whichever was greater.
[24] Another provision of the agreement concerned limiting Infinity's portfolio to a 40% overlap with AIC's stocks. Singh says in his affidavit that the 40% limitation was applicable only to the top ten Infinity stocks. According to the notes of the October 28 call, there is no doubt that there was discussion about Infinity's top ten stocks. However, when the parties agreed to a 40% limitation, there is no indication that the limitation was only referable to the top ten stocks:
| DS: What does 35% mean? |
| MLC [Michael Lee-Chin]: If you are managing $100 million of that $100 million you can not have more than $35 million the same as AIC. |
| What are you paying portfolio managers to do? |
| DS: You did the same initially! |
| Can we meet halfway, 45%? |
| The others will not accept this. |
| MLC: 35%. |
| DS: Your demands are increasing! Let's meet halfway. |
| 45%. |
| MLC: 40% |
| 40% agreed. |
| DS: Is this specifically for the Canadian fund? |
| MLC: This is for all securities. They must not exceed 40% of what AIC owns! |
When Singh spoke to his counsel immediately after the October 28 call with Lee-Chin, he seems to have told his counsel that the restriction would apply only to the top ten stocks. However, he agreed to a 40% restriction "for all securities" without any other limitation. That he was mistaken when he spoke to his own lawyers does not change the fact that there was consensus between the parties on this point and that the agreement did not restrict the limitation to the top ten stocks.
[25] I also agree with the plaintiff that the defendants cannot rely on the fact that Charlton was to be told to seek legal advice as pledging his shares as security had not been personally agreed to by him at that time. I accept the evidence of Wellum that on November 2 Charlton told him that there was now some finality to this lawsuit and that he would be putting his shares of Infinity in escrow. There is no contradictory evidence and I infer that Charlton confirmed that he understood an agreement had been reached and that, for his part, he accepted it.
[26] However, even accepting the plaintiff's position on these points, there are still questions of uncertainty to be addressed.
[27] First, the plaintiff says that the agreement made on October 28 was that in each separate Infinity fund there would be a 40% limitation on overlap of stocks owned by AIC. The Minutes of Settlement are drafted in that manner. However, the notes made contemporaneous with the October 28, 1997 telephone call do not reflect the plaintiff's understanding. The relevant portion of the notes provide:
| MLC: 40% |
| 40% agreed. |
| DS: Is this specifically for the Canadian Fund? |
| MLC: This is for all securities. They must not exceed 40% of what AIC owns! |
[28] Plaintiff's counsel suggests that the reference to securities means each individual Infinity fund and that "all" means "each". In other words he says that the 40% restriction applied to each individual Infinity fund. However, in his affidavit, Astaphan states:
| During the conversation, Mr. Lee-Chin and Mr. Singh agreed that there would be no more than a 40% overlap in the portfolios. At no time was it ever discussed or even suggested that the "percentages were referable to the top ten stocks" as Mr. Singh now suggests. At all times it was perfectly clear and certain that we were discussing percentages of overlap of the entire portfolios. I do not believe for an instant that Mr. Singh thought that they were discussing percentages of overlap of only the top ten stocks. |
| [emphasis added] |
Perhaps if the overlap restriction had been referable only to the top ten stocks, this might imply that the restriction was for the top ten stocks in each Infinity fund. However, as Astaphan says, the discussion involved "percentages of overlap of the entire portfolios [emphasis added]".
[29] In this respect, plaintiff's counsel submits that if the 40% restriction were only in the aggregate, an individual Infinity fund may overlap with AIC's stocks virtually to 100%, provided this is offset by a very low percentage of overlap in other Infinity funds. That may be so, and indeed, it may well have been Lee-Chin's intention that each Infinity fund be limited to 40% of a comparable AIC fund. This restriction was a matter of considerable controversy between the parties, and Singh was resisting it. This clearly was an essential term of the agreement. I cannot tell from the notes of the October 28 telephone call whether Singh was of the same understanding as Lee-Chin on this point and indeed what the resolution of the issue was, if any resolution was arrived at.
[30] A second difficulty arises with respect to the transitional period during which Infinity would reduce its ownership to 40% (whether in aggregate or by individual fund). The time and method to comply with the ownership limitation was a matter of concern to Singh. The October 28 telephone notes provide:
| DS: What is the time frame if we agree? |
| How long will we have to get organized? |
| MLC: With a strong philosophy and sales force, overtime your mutual find company will Grow. With time success will occur because you have a strong infrastructure. You do not require this type of crossover. |
| DS: Time is required! |
| MLC: If stop 90% crossover you must not put anymore cash into these entities |
| And purchase other entities. We will buy entities from you. |
| You have photocopied AIC's top ten. |
The notes do not indicate that the time for Infinity to comply was resolved. Nor is it apparent whether Infinity was to be required to divest in order to comply or whether it would be able to "grow" its way toward compliance by investing new monies in non-overlapping stocks.
[31] The time and method to achieve the required restriction are obviously intertwined and a matter of concern to both AIC and Infinity. The more time available to comply, the less likely it would be for Infinity to have to divest. However, if the Court were to enforce an agreement as to time and method of compliance, the Court would not know what to enforce. The plaintiff says that "commercially reasonable terms" should be imposed. However, it is not for the Court to write the parties' agreement. This is especially the case here where the Court has no evidence of what constitutes reasonable commercial terms.
[32] A third difficulty involves identifying the parties to the settlement agreement and the breaches for which they each could be held liable. The October 14, 1997 draft terms of settlement placed obligations on Infinity and Singh. For example paragraph 5 states:
| David Singh will use reasonable efforts to ensure that all persons reporting to him, directly or indirectly, provide a balanced presentation if and when they make reference to AIC or the AIC funds and that they do not single them out for information or disparaging comments. |
There are no direct obligations to the plaintiff placed on any other of the individual defendants.
[33] In the notes of the October 28, call between Singh and Lee-Chin, the notes commence:
| Firstly: Confirmed that agreement involves anyone associated with Infinity including officers and consultants. |
| Anything said against AIC, the funds or management constitutes a breach. |
| If a breach occurs before the agreed time frame, AIC will obtain $2 million or the value of Richard Charlton's shares. (The greater of the two.) |
The plaintiff says these references are reflected at paragraph 14 of the Minutes of Settlement which provides:
| 14. In the event that the defendants or any one of them are in breach of any one or more of the terms of this agreement and settlement within the Compliance Period, the defendants shall pay to AIC liquidated damages fixed in the amount of $2,000,000 or the value of Charlton's Infinity Shares at the time of said breach, whichever is greater. AIC shall have the right to require Infinity to pay said amount in full and to require Infinity to look to the other defendants for re-payment. |
[34] Paragraph 14 does not restrict the parties to Singh and Infinity. It makes all the defendants in this action liable for breach of any one or more terms of the agreement for the sum of $2,000,000 or the value of Charlton's shares whichever is the greater. Making all defendants liable to AIC for $2,000,000 is quite different from making AIC and Singh liable to AIC, which was the structure of the original settlement agreement.
[35] The reference in the telephone notes to confirmation that the agreement involves anyone associated with Infinity, including officers and consultants, does not necessarily imply that all the defendants are to be made liable to the plaintiff for breach of the agreement. I infer that what was intended was that if anyone associated with Infinity, whether a named defendant or not, disparaged AIC, only Infinity, and Singh and Charlton by reason of his pledge of shares, would be liable to AIC for breach, but not the other individual defendants.
[36] Further, the reference to those associated with Infinity is clearly in the context of AIC's concern about disparaging remarks. The 40% limitation on Infinity's portfolio overlapping with AIC's stocks was not even discussed at this point in the conversation. Yet, AIC takes the position that it has been agreed that all defendants are liable for up to $2,000,000 for a breach of the 40% limitation provision of the agreement. In this respect, I do not accept Astaphan's evidence that he recommended (in writing) to Lee-Chin that he ask Singh for a pledge of Charlton's shares when Lee-Chin and Singh were discussing the 40% limitation on ownership in Infinity's portfolio. The October 28 notes indicate that the pledge of shares was raised at the opening of the telephone call when the subject of disparaging remarks against AIC was being discussed and before the overlap issue came up. Clearly, any personal obligation on the part of Charlton was discussed in the context of disparaging remarks and not the overlap of portfolios.
[37] Further, Singh could not have bound the individual defendants to a potential $2,000,000 obligation. The notes of the telephone call and the previous documents between the parties do not imply that he did. Even if I accept that Infinity and Singh bound themselves on October 28 and Charlton did so in the November 2 telephone call with Wellum, there is no evidence that the other defendants were parties to any such agreement.
[38] In this same regard, the plaintiff takes the position that there was agreement that the defendants' obligations would be incorporated in a Court order3 If there was such an agreement, however, it only concerned a Court order binding Infinity and Singh. That is what had been agreed to in the original settlement agreement. By making the other individual defendants parties to the final settlement agreement, the plaintiff seeks to make all the defendants subject to a Court order for contempt in the event of breach by any of the defendants of any terms in the final settlement agreement. Again, I do not see how Singh could have bound other individuals to such an obligation.
[39] Finally, the notes of the October 28, 1997 telephone call attribute the following comments to Singh:
| DS: I will look after plagiarism and marketing material issues. |
| A lawyer meeting must be set. |
The plaintiff says the "lawyer meeting" was only a reference to the lawyers looking after the "details" of "papering" the agreement. The defendants say that whatever was agreed to in the conference call was subject to the parties' lawyers agreeing and finalizing the settlement. The notes of the telephone call go on to indicate that the principals are to be present at the "lawyer meeting":
| Next Wednesday morning (November 05, 1997) MLC is free until 12noon or after 2pm. Gordon Zimmerman will set it up. |
On the evidence before me, I cannot be certain what the parties' intentions were with respect to the involvement of the lawyers. The evidence is clear that Singh wanted the matter settled. However, there had been several lawyers involved in this matter, and he was the one who said that a "lawyer meeting" was required. It also is clear that the parties would have been present at that meeting. If the "lawyer meeting" was only to deal with details, the parties themselves would not have to be present. I think it is also significant that, if there was a binding overall settlement at the end of the October 28 call, neither party said so. There is only a reference to a "lawyer meeting" being necessary.
[40] The inference that I take from all the evidence is that while there was an intention to settle by both parties in the October 28 call, uncertainty remained about essential provisions of a complex settlement at the end of the call. That uncertainty coupled with reference to the "lawyer meeting" and with no statement by either Singh or Lee-Chin that they had a binding settlement indicates that the parties must have contemplated a meeting with lawyers to draw up a formal document as being essential to the formation of a binding settlement. In this respect, the words of Robins J.A. in Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991), 79 D.L.R. (4th) 97 at page 104 are applicable here:
| However, when the original contract is incomplete because essential provisions intended to govern the contractual relationship have not been settled or agreed upon; or the contract is too general or uncertain to be valid in itself and is dependent on the making of a formal contract; or the understanding or intention of the parties, even if there is no uncertainty as to the terms of their agreement, is that their legal obligations are to be deferred until a formal contract has been approved and executed, the original or preliminary agreement cannot constitute an enforceable contract. In other words, in such circumstances the "contract to make a contract" is not a contract at all. The execution of the contemplated formal document is not intended only as a solemn record or memorial of an already complete and binding contract but is essential to the formation of the contract itself: see, generally, Von Hatzfeldt-Wildenburg v. Alexander (1912), 1 Ch. 284; Canada Square Corp. v. Versa Food Service Ltd. (1979), 101 D.L.R. (3d) 742, 8 B.L.R. 21, 25 O.R. (2d) 591 (H.C.J.); affm'd 130 D.L.R. (3d) 205, 15 B.L.R. 89, 34 O.R. (2d) 250 (C.A.); Bahamaconsult Ltd. v. Kellogg Salad Canada Ltd. (1975), 61 D.L.R. (3d) 398, 9 O.R. (2d) 630 (H.C.A.); rev'd 75 D.L.R. (3d) 522, 15 O.R. (2d) 276 (C.A.); Chitty on Contracts, 26 ed. 1990 at pp. 79-91; Corbin on Contracts, Vol. 1, 1963, para. 29-30 and Treitel, Law of Contracts, 7th ed. 1987 at pp. 42-7. |
I infer from the evidence that both Singh and Lee-Chin saw the lawyers' involvement as something more than "papering" of a finalized settlement or just dealing with "details". This would be consistent with the complexity of the settlement and the uncertainty on at least some essential matters in the October 28 call. Clearly, both parties saw the involvement of lawyers as being necessary before the settlement was finalized.
[41] I am not satisfied that the parties reached an agreement in this case. At most, what was achieved was a "preliminary agreement" or a "contract to make a contract". The evidence demonstrates that there remained considerable vagueness and uncertainty with respect to a number of essential terms and any preliminary agreement with respect to certain basic principles depended on the making of a formal contract.
Repudiation
[42] Even if I am wrong and there was a binding original settlement agreement, in the circumstances of this case, the Minutes of Settlement constituted an offer of repudiation of the original settlement agreement which the defendants were entitled to accept. See for example O. & K. Orenstein and Koppel Inc. v. Brinco Co. Corp. (17 July 1992), Vancouver C904466 (B.C.S.C.) per Spencer J. Of course, it is not every attempt to change a contract that will be characterized as repudiation. In the case of changes to an agreement already reached, it is only where one of the parties insists on the exclusion of terms agreed upon or the inclusion of terms not agreed upon that repudiation may arise.
[43] The different characterizations of the settlement by Lee Chin and counsel for the plaintiff do give rise to difficulties with the plaintiff's position. When a party comes before the Court and asks for an order to enforce a settlement agreement, its position is seriously undermined when the evidence discloses, and the plaintiff concedes, that there is more than one version of the purported agreement. Of course, if the differences are minor, and especially when it can be demonstrated that the other party is seizing upon small points to get out from under its contractual obligation, the fact there might be more than one version may not be important. If that is the case, there is no need for the party seeking to enforce the agreement to resile from the "perfected" version. However, in this case, the plaintiff does resile from the Minutes of Settlement, the implication being that the Minutes of Settlement contain changes that are not minor details.
[44] As well, having regard to the provisions of the Minutes of Settlement which the plaintiff concedes were not discussed between the parties nor agreed upon between them, I too find that a number of these provisions cannot be considered to be "details" and therefore the Minutes of Settlement are materially different from the original settlement agreement.
[45] For example, in the original settlement agreement, the plaintiff required that the defendants not use the plaintiff's name or make reference to the plaintiff in any of their marketing materials. The October 14, 1997 draft terms of settlement, which the plaintiff was "prepared to live with", provide that there was to be an exception from this restriction where directors, officers or agents of Infinity were also officers, directors or agents of Fortune Financial Management Inc. ("Fortune") and were acting in that capacity, unless they were also acting with the purpose of promoting the Infinity funds. The reason for the exception was that some of the senior officers of Infinity were also senior officers of Fortune and Fortune sold the plaintiff's products. The exception for Fortune officers, directors and agents had been the subject of discussions at the August 25 settlement meeting and in correspondence between the parties on at least three occasions. This provision was deleted in the Minutes of Settlement. Obviously, this cannot be considered a minor detail. By deleting this provision from the Minutes of Settlement, the plaintiff was deleting a material term which, according to its position before the Court, had been agreed upon.
[46] A second example is the inclusion in the Minutes of Settlement of a restriction on the defendants of not being able to purchase, for at least 12 months, any stock that appears for the first time in AIC's semi-annual listing of stocks. Again, the plaintiff concedes that this restriction was never discussed with, or agreed to, by the defendants. Restriction on the Infinity portfolio was the most controversial issue between the parties.
[47] On the facts, I conclude that what occurred here is repudiation. First, the terms were put forward in a document entitled "Minutes of Settlement". The inference is that the "minutes" put forward by the plaintiff purported to reflect the agreement between the parties. However, they contained terms not agreed upon. Nor were they put forward as a request that the defendants consider terms different from what had been agreed upon. In plaintiff's counsel's letter to defendants' counsel of November 18, 1997 he states:
| . . . unless we are able to resolve the specific wording of the Minutes of Settlement, we are instructed to bring a motion for judgment pursuant to the settlement agreement. |
Although plaintiff's counsel now concedes that the original settlement agreement differs from the Minutes of settlement, I conclude that this reference to the "settlement agreement" by plaintiff's counsel was what was reflected in the Minutes of Settlement. I draw this inference because in the letter from plaintiff's counsel to defendant's counsel dated November 20, 1997 plaintiff's counsel states:
| As you know, we have been discussing settlement of this matter from the outset. We have had more than one settlement meeting. Separate meetings between our clients have taken place. It was the combination of those meetings which lead [sic] to the agreement between Mr. Singh and Mr. Lee-Chin. We prepared the settlement agreement on the basis of terms communicated to us by AIC. |
| [emphasis added] |
[48] The "settlement agreement" which plaintiff's counsel "prepared" could be nothing other than the Minutes of Settlement. I construe the letter of November 18, 1997 threatening to bring a motion for judgment pursuant to the "settlement agreement" as insistence by the plaintiff on the terms included in the Minutes of Settlement. Further, the reference in that letter to resolving "the specific wording of the Minutes of Settlement" implies that what the plaintiff was prepared to discuss was specific wording only and not the substance of the minutes " in other words, the plaintiff was insisting on the terms of the Minutes of Settlement which contained terms not agreed to by the defendants. This insistence is made more obvious by the bringing of the motion, the statements of Lee-Chin in his affidavits that the Minutes of Settlement set out the terms agreed upon and his answers in cross-examination that the Minutes of Settlement represented what was agreed and that the Minutes of Settlement is what he was asking the Court to enforce. For these reasons, I am satisfied the plaintiff was insisting on inclusion in the final settlement agreement of terms not previously agreed to by the defendants.
[49] It was open to the defendants to treat the plaintiff's insistence as repudiation and call the original settlement agreement (if it was a binding agreement) at an end. This is what they did, initially in the November 11 call from defendants' counsel to plaintiff's counsel, then in the letter of November 21 from defendants' counsel to plaintiff's counsel and finally with their defence to the plaintiff's motion for judgment. That the plaintiff in argument before me resiled from insistence on the terms of the Minutes of Settlement as constituting the settlement agreement is of no consequence. The plaintiff's insistence on the terms of the Minutes of Settlement were treated by the defendants as repudiation and accepted by them as such. The plaintiff's revised position before the Court could not revive the original settlement agreement.
CONCLUSION:
[50] The motion for judgment is dismissed. The plaintiff is not without recourse as this action may continue to be prosecuted or the parties may again attempt to settle the matter. Indeed, the impression I have is that had the Minutes of Settlement not strayed so far from what the parties had discussed on October 28, they may have been able to work out a settlement.
[51] The defendants are entitled to costs. In lieu of taxation, the parties shall, if they cannot agree as to the amount of costs, contact the Registrar within fourteen (14) days of the date of these reasons and a short conference call will be convened with the Court for the purpose of fixing a lump sum inclusive of disbursements.
Marshall Rothstein
J U D G E
OTTAWA, ONTARIO
MAY 5, 1998
__________________1 Apparently Astaphan had written to the Law Society of Upper Canada requesting that his practicing certificate be cancelled. Nonetheless, his evidence is that he was general counsel to AIC at the relevant time. While I think Astaphan's presence probably should have been disclosed to Singh, the fact that it was not does not have any effect on my analysis of the facts and law.
2 Counsel for the defendant took notes from two conversations with the defendant, both of which are dated October 27, 1998. However, at the hearing of this matter counsel advised the Court that the notes from the second conversation were actually taken on October 28, and that the notes from the first conversation, referred to here, may have also been taken on October 28.
3 There is ambiguity in the October 14 draft Terms of Settlement on this point because the draft terms refer both to a Court order and to the action being discontinued. However, in a letter from defendants' counsel to plaintiff's counsel on October 9, there is a reference to the defendants agreeing to a Court order along the lines of the draft Terms of Settlement and therefore I accept that a Court order was contemplated.