Legal Blog

Release (2)

Posted on August 1, 2012 | Posted in Lawyers' Issues

  

     Please release me; let me go. What happens when the releasor signs a release and then has regrets? What happens when the parties agree that there will be a release, but cannot agree on its terms? The former question is dealt with in Milano v. Alton 2011 ONSC 4505 (S.C.J.) and the latter in Hodaie v. RBC Dominion Securities (2011) 108 O.R. (3d) 140 (SCJ).

Milano

The dispute centred on a mortgage. It was a mess. The mortgage was held by a trustee in trust for several people including the plaintiff. A lawyer appeared to be responsible for all of the dealings with the mortgage, including settling a lawsuit that the mortgagors commenced.

As part of a settlement, the plaintiff signed a release in favour of the trustee. The plaintiff later regretted that he signed the release and sued the trustee, the lawyer, and others. He alleged misrepresentation. Relying on the release, the trustee brought a motion to dismiss the action against him. 

The only evidence came from the plaintiff; the trustee relied on a law clerk’s affidavit that merely introduced the release.

The facts that arose from the evidence follow:

1. The lawyer pressured the plaintiff to sign the release by representing that the lawyer would not be able to re-finance the mortgage without it. However, there was no apparent reason why the release needed to be signed to proceed with the re-financing; the mortgage was discharged 4 days before the plaintiff signed the release.

2. The release said that it was given for $2.00 and other good consideration, the receipt and sufficiency of which was acknowledged.

3. The release stated that it was signed, sealed and delivered, but, on its face, there was no indication that it was sealed.

4. The plaintiff received a couple of cheques from a third party, but the cheques were returned NSF. About 18 months after the plaintiff signed the release, the plaintiff also received a third mortgage from a third party. However, there was no evidence that it had any value.

Findings

The motions judge first dealt with the issue as to whether the release was under seal. “For the document to state that someone has affixed their seal when none is fixed does not make the document a document under seal.” After that observation, the only issue left was whether there was consideration for the release.

So is an NSF cheque from a third party good consideration? The judge said no. Is a third mortgage for an unknown amount that may be of no value, because there is no equity and no decent covenant, adequate consideration? Again, the judge said no.

In any case, there was no evidence that the trustee was responsible for the giving of the cheques (ultimately NSF) or the mortgage from third parties.

The motions judge dismissed the motion and allowed the plaintiff’s action to continue against the trustee.

Hodaie

The plaintiff complained about the manner in which RBC handled his investment account. He requested the RBC Ombudsman to investigate. The RBC Ombudsman investigated and determined that the settlement offer of $25,000 that RBC had previously offered was reasonable and re-extended the offer. The plaintiff was not satisfied and appealed to the Ombudsman for Banking Services and Investments. That Ombudsman also decided that RBC’s offer was reasonable and informed the plaintiff that RBC’s offer remained open for 30 days.

Within 5 days, the plaintiff contacted the RBC representative and told her that he accepted the offer. She told him that she would send a confirming letter and a release and, after he returned the signed release, she would process the payment. The RBC representative sent the documents to the plaintiff within a week.

Four months later, plaintiff’s counsel wrote to RBC repeating the plaintiff’s original complaints, but making no mention of the settlement dealings. RBC immediately wrote back informing counsel of the settlement. Five months later, plaintiff’s counsel wrote RBC denying that there was a settlement. One month thereafter the plaintiff commenced his action (2 years and 3 months after the plaintiff had discovered his claim).

RBC brought a motion for summary judgment.

Settled

The plaintiff argued that, since he had not signed the release, there was no settlement. The judge disagreed. The settlement occurred when the plaintiff called RBC to accept RBC’s settlement offer. The judge noted that the parties’ agreement on the essential provisions in the settlement was not conditional on the execution of minutes of settlement or a release. “Settlement implies a promise to furnish a release unless there is a contractual agreement to the contrary.” More importantly (at least for this newsletter), if one party submits a form of release that the other party does not accept, then this, in itself, does not abrogate the settlement unless one party insists on terms that have not been agreed upon or are not reasonably implied under the circumstances.

The judge held that if the release that RBC sent to the plaintiff was too wide, then he ought to have demanded a revised release. He did nothing. Accordingly, the judge found that the settlement remained effective and granted the motion.

Limitations

Just in case the judge erred on the main issue, he decided that the plaintiff’s action was not statute barred. Section 11 of the Limitations Act, 2002 allows for a tolling of a limitation period once parties agree to have an independent third party resolve the claim. That is exactly what the plaintiff and RBC did. The fact that there was an agreement with the Ombudsman stating that the process did not affect limitation rights was irrelevant. The judge stated, “There is nothing in s. 11 that suggests that the suspension of the limitation period can be contracted out of. Otherwise, small plaintiffs might be unwittingly 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.”

ODDITIES

We thought that we might alert you to a couple of the more unusual cases that jumped out at us.

The first case, Oskar United Group Inc. v. Chee 2012 ONSC 1545 dealt with a claim for damages against the defendant for breach of fiduciary duty. The judge described the defendant’s conduct in the following terms, His conduct was deceitful, capricious, arbitrary, vexatious, intentional, wilful, egregious, high-handed, reprehensible, scandalous, outrageous, shameful and shameless. It cries out for the sanction of this court.” This sentence wins the award for the most adjectives (13) in one sentence.

The second case, Jafarzadehahmadsargoorabi v. Sabet 2011 ONSC 7166 is unremarkable – except for the plaintiff’s surname. It wins the award for the most letters (25) in one surname.

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