Charter Building Co. v. 1540957 Ontario Inc. et al., (2011) 282 O.A.C. 126 (CA)

• Judge: Armstrong, Epstein and Karakatsanis, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: January 24, 2011
• Jurisdiction: Ontario
• Citations: (2011), 282 O.A.C. 126 (CA);2011 ONCA 487

Charter Building Co. v. 1540957 Ont. (2011), 282 O.A.C. 126 (CA)

MLB headnote and full text

Temp. Cite: [2011] O.A.C. TBEd. JL.012

Charter Building Company a division of Ladson Properties Limited (plaintiff/respondent) v. 1540957 Ontario Inc. c.o.b. as Mademoiselle Women's Fitness & Day Spa, 1540958 Ontario Inc. c.o.b. as Mademoiselle Women's Fitness & Day Spa, 1540959 Ontario Inc. c.o.b. as Mademoiselle Women's Fitness & Day Spa and Neil Proctor (defendants/appellants)

(C52439; 2011 ONCA 487)

Indexed As: Charter Building Co. v. 1540957 Ontario Inc. et al.

Ontario Court of Appeal

Armstrong, Epstein and Karakatsanis, JJ.A.

July 4, 2011.

Summary:

The plaintiff sued the defendants over a promissory note and unpaid invoices. A negotiated settlement was reached. When the defendants failed to comply with the terms of the settlement agreement, the plaintiff obtained default judgment. At the time of the default judgment, a waiver of defence was in place. As a result, the judgment was irregularly obtained and, on consent, was set aside. The plaintiff returned to the settlement agreement and sought an order for its enforcement. The motions judge agreed with the plaintiff's position that a settlement had been reached and granted the order. The defendants appealed, claiming that having proceeded with the action, the plaintiff was barred from seeking enforcement of the settlement agreement.

The Ontario Court of Appeal allowed the appeal on the basis that the plaintiff, by electing to pursue its rights under the action, was precluded from pursuing its rights under the settlement agreement (i.e., the common law doctrine of election applied).

Contracts - Topic 4008

Remedies for breach - General - Common law doctrine of election - The Ontario Court of Appeal discussed the doctrine of election - The court distinguished between the common law doctrine of election and the equitable doctrine of election - See paragraphs 16 to 30.

Contracts - Topic 4008

Remedies for breach - General - Common law doctrine of election - The plaintiff sued the defendants over a promissory note and unpaid invoices - A settlement was reached - When the defendants failed to comply with the settlement agreement, the plaintiff obtained default judgment - At the time of the default judgment, a waiver of defence was in place; therefore, the judgment was irregularly obtained and, on consent, was set aside - Thereafter the plaintiff sought to enforce the settlement agreement - The motions judge granted the enforcement order - The defendants appealed - The Ontario Court of Appeal allowed the appeal, holding that the plaintiff, by electing to pursue its rights under the action (default judgment), was precluded from pursuing its rights under the settlement agreement (i.e., the common law doctrine of election applied) - The court stated that the law was clear: "Once a party accepts repudiation of a contract [in this case the settlement agreement] by pursuing a course of action that is inconsistent with the existence of the contract, that party is no longer entitled to assert its rights under the contract. The court has no discretion to rule otherwise".

Equity - Topic 4601

Election - General - [See first Contracts - Topic 4008 ].

Cases Noticed:

United Australia Ltd. v. Barclays Bank Ltd., [1941] A.C. 1 (H.L.), refd to. [para. 16].

Findlay v. Findlay, [1952] 1 S.C.R. 96, refd to. [para. 17].

Australia (Commonwealth) v. Verwayen (1990), 170 C.L.R. 394 (Aust. H.C.), refd to. [para. 19].

Granot v. Hersen et al. (1999), 120 O.A.C. 320; 43 O.R.(3d) 421 (C.A.), refd to. [para. 20].

Banner Industrial and Commercial Properties Ltd. v. Clark Paterson Ltd., [1990] 2 E.G.L.R. 139, refd to. [para. 21].

Ship Kanchenjunga, Re - see Motor Oil (Hellas) Corinth Refineries S.A. v. Shipping Corp. of India.

Motor Oil (Hellas) Corinth Refineries S.A. v. Shipping Corp. of India, [1990] 1 Lloyd's Rep. 391; 108 N.R. 280 (H.L.), refd to. [para. 25].

Morrison-Knudsen Co. et al. v. British Columbia Hydro and Power Authority (1978), 85 D.L.R.(3d) 186 (B.C.C.A.), refd to. [para. 27].

Ashworth (Oliver) Ltd. v. Ballard Ltd., [2000] Ch. 12 (C.A.), refd to. [para. 28].

Tang Man Sit v. Capacious Investments Ltd. - see Capacious Investments Ltd. v. Tang.

Capacious Investments Ltd. v. Tang, [1996] 1 A.C. 514; 192 N.R. 138 (P.C.), refd to. [para. 28].

Johnson v. Agnew, [1980] A.C. 367 (H.L.), refd to. [para. 29].

James v. Klaus (1987), 40 D.L.R.(4th) 763 (B.C.C.A.), refd to. [para. 29].

Authors and Works Noticed:

Feltham, Piers, Hochberg, Daniel, and Leech, Tom, The Law Relating to Estoppel by Representation (4th Ed. 2004), pp. 361, 362 [para. 20].

Counsel:

F. Scott Turton, for the appellants;

Harry Korosis and Mark Labenski, for the respondent.

This appeal was heard on January 24, 2011, by Armstrong, Epstein and Karakatsanis, JJ.A., of the Ontario Court of Appeal. Epstein, J.A., delivered the following reasons for judgment for the court on July 4, 2011.