IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20111128

Docket: M110185

Registry:
New Westminster

Between:

Yuk Ng

Plaintiff

And

Douglas Schell, VW
Credit Canada, Inc., Credit VW Canada, Inc.

Defendants

Before:
The Honourable Madam Justice Maisonville

Reasons for Judgment

[1]            
 

Introduction

[1]      This is an application brought by the defendants
Douglas Schell and Credit Canada VW Inc. for a declaration that a settlement
agreement between the plaintiff and the defendants is valid and enforceable,
and that the personal injury proceeding, accordingly, be stayed.

Defendants’ position

[2]            
The defendants assert that a settlement was achieved in this motor
vehicle accident litigation between the plaintiff’s previous solicitor and the
ICBC adjuster.  They argue that there was obvious apparent authority to settle
on behalf of the plaintiff by the plaintiff’s previous solicitor, and that this
authority was evident in part in a series of emails.  Ultimately, it is
submitted that the case was settled for the sum of $95,000 plus $16,915.56 in
what was referred to as Taxable Costs and Disbursements (“TCD”).

Basis for the Application

[3]            
The application is based on s. 8 and s. 10 of the Law and Equity Act,
R.S.B.C. 1996, c. 253. Sections 8 (3) and 10 provide:

8 (3) Any person, whether or not a party to a
cause or matter pending before the court, who would have been entitled, but for
this Act, to apply to the court to restrain the prosecution of it, or who may
be entitled to enforce, by attachment or otherwise, any judgment, decree, rule
or order, contrary to which all or any part of the proceedings in the cause or
matter may have been taken, may apply to the court, by motion in a summary way,
for a stay of proceedings in the cause or matter, either generally or so far as
may be necessary for the purposes of justice and the court must make any order
that is just.

10  In the
exercise of its jurisdiction in a cause or matter before it, the court must
grant, either absolutely or on reasonable conditions that to it seem just, all
remedies that any of the parties may appear to be entitled to in respect of any
legal or equitable claim properly brought forward by them in the cause or
matter so that, as far as possible, all matters in controversy between the
parties may be completely and finally determined and all multiplicity of legal
proceedings concerning any of those matters may be avoided.

Plaintiff’s position

[4]            
In direct opposition, the plaintiff (respondent) argues there was no
settlement and that the lawyer was clearly acting under a misapprehension.  The
defendants argue that this case falls squarely into the exceptions to
settlement set out in Hawitt v. Campbell, [1983] B.C.J. No. 2065 (C.A.)
[Hawitt], whereby a court may refuse to grant a stay if “there was a
misapprehension by the solicitor making the settlement of the instructions of
the client or of the facts of a type that would result in injustice or make it
unreasonable or unfair to enforce the settlement.” (Hawitt at para. 20) 
It is argued on behalf of the plaintiff on this basis that the trial should
proceed directly to determine damages without further consideration of whether
a settlement was effected.

[5]            
For the reasons that follow I am denying the defendants’ application and
am ruling that there be a trial, limited at this stage to the issue of whether
there was a valid and enforceable settlement agreement and, if so, whether the
proceedings can consequently be stayed.  It follows that I am not acceding to
the plaintiff’s request that the matter proceed to trial directly on the issue
of damages.

Background Facts

[6]            
On January 25, 2007, the plaintiff, Mrs. Ng, was the passenger
in her husband’s vehicle.  She was involved in a motor vehicle accident and
sustained injuries.  The original trial date was set for March 25, 2010, but
a second trial date was taken out for May 21, 2011 following an
adjournment of the original trial.  On January 26, 2011, a notice to
mediate was sent and on February 1, 2011, a case planning conference was
held, which was attended by counsel for the defendants and the plaintiff’s previous
counsel.  The plaintiff and her daughter were at the case planning conference
as well.

[7]            
The plaintiff’s mother tongue is Cantonese and her use and understanding
of English is limited; this fact is not in dispute.  The plaintiff’s daughter,
Elaine Kam, acted as translator for her.  While the plaintiff’s previous
counsel was conversant in Cantonese, the language used in dealing with the
legal matters by the plaintiff with her lawyer was usually English and was translated
by the plaintiff’s daughter.  It is not alleged, in any event, that the use of
the Cantonese or English languages was the source of any confusion that
resulted in the settling of this matter.  Rather, the plaintiff asserts that
her previous counsel was operating under a misapprehension of facts and, in
particular, misapprehended her economic claim.

Legal Principles

[8]            
Both counsel agree that in a situation where a judgment has been
rendered, normal rules of contract and agency are applicable.  However, in an
interlocutory matter, such as here, where there is not yet a judgment, then the
situation must fall into one of the four exceptions outlined in Hawitt
for the court to have discretion to deny the application to order the
settlement valid and enforceable and stay the proceeding.  Those four notable
exceptions are set out in Hawitt at paragraph 20:

20  The judge may refuse the stay if:

1.   there was a limitation on the
instructions of the solicitor known to the opposite party;

2.   there was a misapprehension by the
solicitor making the settlement of the instructions of the client or of the
facts of a type that would result in injustice or make it unreasonable or
unfair to enforce the settlement;

3.   there was fraud or collusion;

4.   there was an issue to be tried as
to whether there was such a limitation, misapprehension, fraud or collusion in
relation to the settlement.

[9]            
The first analysis, of course, is whether the previous solicitor was
acting on instructions.  One of the leading cases in British Columbia is that
of Smoliak v. Smart (Guardian ad litem of), [1995] B.C.J. No. 1559
(S.C.) where, at para. 17, Drake J. held:

17  Solicitors, of
course, are agents of their clients in accordance with the terms of their
retainers; and when retained to conduct litigation have the authority to
compromise and settle an action brought for a client.

[10]        
It is settled law that a solicitor has authority to enter into
settlement agreements as agent for the client in such circumstances and that if
there is any restriction on that authority, notice must be given to the other
side of such a want of authority.  Otherwise, in the absence of the other side
being aware the authority was limited or restricted, the opposing side is
entitled to rely upon the authority to settle.  The only exceptions,
accordingly, in a situation where there appears to be authority to settle are
the above exceptions from Hawitt.

Do the facts in this case fall into one of the four Hawitt exceptions?

[11]        
The plaintiff asserts that the misapprehension is obvious in this case
following a close examination of the facts.

[12]        
Brian Cuthbert was the bodily injury adjuster employed with the
Insurance Corporation of British Columbia who was handling the files and was
aware of Mrs. Ng’s injuries. Those injuries were soft tissue injuries, and
injuries to the shoulder, hip, neck, and legs, including sleeplessness.  The
plaintiff had attended a number of doctors and had additionally had independent
medical examinations with two doctors at the request of the defendants.

[13]        
Following the case planning conference, there were negotiations and the
plaintiff’s previous solicitor made an initial offer to ICBC which was refused.
On February 1, 2011, at 11:37 a.m., the solicitor for the plaintiff sent
an email to Mr. Cuthbert stating, “I do have instructions to accept an
offer of $100,000 + TCDs”.  It is agreed between the parties that TCDs refer to
taxable costs and disbursements.  Shortly thereafter at 11:58 a.m.,
Mr. Cuthbert emailed the plaintiff’s solicitor with a counter offer of “$95,000
inclusive of your costs, plus your disbursements” emphasis in original.  In
response, at 12:12 p.m., plaintiff’s previous counsel emailed Mr. Cuthbert
stating as follows:

My client will agree to your offer of $95,000 but only
subject to us settling the disbursements as this will greatly effect (sic) the
amount she will get in her pocket. I have called all the experts and they have
assured me that they will have the reports to me today or tomorrow. Once I
receive the reports I will serve them on you and your counsel. I am expecting
Dr. Manchanda and Kevin Turnbull’s reports this afternoon and the
remainder tomorrow.

I will also prepare a list of disbursements once I have a
final tally.

So to be clear, we agree to the $95,000 but will have to
reached (sic) a settlement agreement until the disbursements are settled.

[14]        
Two days later, on February 3, 2011, at 2:24 p.m., Mr. Cuthbert
emailed the plaintiff’s previous solicitor:

I have received your disbursements.

Once I am provided with the records and report of
Dr. Ho, I will be able to pay $16,915.56 in disbursements.

So the total is $95,000 + disb [which
the parties agree mean disbursements] = $111,915.56.

[15]        
Counsel for the defendants argues this email correspondence reflects the
amount that was agreed to be settled upon in satisfaction of the claim.

[16]        
Counsel for the plaintiff in this application argues that the
plaintiff’s previous solicitor was operating under a misapprehension such as to
bring this settlement into the second of the four exceptions noted in Hawitt,
chiefly that it is evident given the emails and the conflicting affidavits,
particularly of Elaine Kam, the plaintiff’s daughter, and the plaintiff herself,
that she did not instruct a settlement to occur for that amount at all, and that
consequently there was a misapprehension on the part of former counsel.  The
argument of the plaintiff is that the emails disclose the former counsel did
not have all of the reports, notably, the economic loss.  Accordingly, any
settlement would be the result of a misunderstanding.

Lack of evidence of former lawyer

[17]        
The plaintiff’s previous lawyer has not deposed an affidavit despite
being requested to do so by both the plaintiff and the defence in these
proceedings.  It is apparent his evidence will only be obtained if he is
subpoenaed to give evidence in court.

Affidavit evidence of Elaine Kam

[18]        
Elaine Kam deposes negotiations occurred at the courthouse in which she
acted as a translator:

On February 1, 2011, I
accompanied my mother to the New Westminster courthouse to meet [the
plaintiff’s previous counsel]. When we arrived [he] asked my mother for a
number that he could use to negotiate with defence counsel. [He] explained that
the number would only be used for discussions between himself and defence
counsel. My mother told me to tell him $500,000.  [He] left and when he
returned he told my mother and I that ICBC was only willing to pay $75,000. My
mother told [him] that she would not accept $75,000, that it wasn’t fair and
she still had important upcoming medical appointments. I also told [him] in
English that my mother would not accept $75,000. At that point, [he] asked my
mother to join him in the courtroom but told me I had to wait outside and that
I was not permitted in the courtroom.

Accordingly,
she was not present during the case planning conference.

Affidavit evidence of Yuk Ng

[19]        
The plaintiff, herself, deposes about the case planning conference that
she was invited into the courtroom by the lawyer:

[My previous lawyer] then asked
me to accompany him into the courtroom, but told my daughter, Elaine that she
was not allowed to go into the courtroom with me. When we were inside the
courtroom, [he] told me to sit in the back row of the gallery. I could not hear
or understand what was being discussed in the courtroom and there was no
translator present. After about 5 or 10 minutes the court session ended and
[he] escorted me out of the courtroom.

[20]        
The plaintiff asserts she refused the $75,000 offered by ICBC and in her
affidavit she states:

I told (my previous counsel) that
I would not agree to $75,000, that my condition was caused by the motor vehicle
accident and that ICBC’s offer wasn’t fair and that I had a lot of out of
pocket expenses. [He] said in Cantonese, “I know”, so I believed he understood
that I wouldn’t accept $75,000. [He] then escorted Elaine and I into a small
meeting room located in the courthouse.

[21]        
She continues:

During this meeting, I again told [my previous counsel] that
I would not accept $75,000. [He] once again told me that if we went to trial I
would lose for sure. At that point, [he] pulled out his iphone which he explained
displayed a few cases that he said were similar to mine where the Plaintiff
didn’t get much money. As well, he told me that there was a case involving
ringing in the ears and the court did not award any money for it. He also told
me that all of the reports were not in my favour. He said that if we went to
trial the jury would consider what I think isn’t a lot of money, to be a lot
because the jury is usually made up of people from the poorer of class. He
added that rich jurors wouldn’t come because jurors are only paid very little.
As for my business loss claim, [he] said that ICBC won’t accept claims for
small businesses, only large ones. I again told him I wouldn’t accept $75,000
because it wasn’t fair. I had expressed that I had a lot of expenses and he
said he would try to get ICBC to pay for the medical reports. I told him I
still wouldn’t agree. The meeting ended, and my daughter and I left the
courthouse.

Later that day [February 1, 2011],
[my previous lawyer] called Elaine’s cell phone. I was with her [Elaine] at the
time. I am advised by Elaine and verily believe, that [my previous lawyer] told
her that ICBC has raised their offer to $95,000. I told Elaine to refuse the
offer and hang up. She continued to talk and I continued to tell her to hand
(sic) up, and not to accept the offer. I said there was no point to continue
talking because I, as the client, was not accepting the offer.

[22]        
Accordingly, on the plaintiff’s version of events, she gave clear and
unequivocal instructions to refuse the offer.

Events following

[23]        
The plaintiff learned, approximately two weeks later, that the case had
been settled and she indicated that she was very much surprised by this.  She
felt that on February 1, 2011, she had made it clear that she would not
settle for such a low amount as $111,000, because she believed she had ongoing problems
caused by the accident and income loss.  She believed she was therefore
entitled to greater damages.

[24]        
Respecting the phone call, Elaine Kam deposed as follows:

Later that day I received a call
on my cell phone from [the previous lawyer]. He told me that ICBC was willing
to pay my mother $95,000. I told my mother, who was standing beside me at the
time. She said that she wouldn’t accept $95,000, that it was still unfair. I
told [him] this. He said, “No, I think $95,000 is a good number.” At that point
I became frustrated because he kept pushing and saying my mom would lose at
trial for sure. As well, my mother was talking to me at the same time telling me
to hang up, and that she did not want to accept the offer. [He] said that he
needed an okay from me and that he would try to get a higher number. Having
already explained that my mother would not accept the offer, I believed that
what he meant was that $95,000 was not formally an offer on the table, but that
ICBC might be starting at this number for discussions at the mediation. My
mother was still telling me to hang up while [he] was insisting on getting an
okay from me. What I told him was to go ahead to try and get a higher number or
my mother wouldn’t accept it. I believed that he would check with my mother
before accepting any settlement offer on her behalf, as he had done through me
to date.

[25]        
Ms. Kam states in her affidavit that she did not hear anything further
from her mother’s counsel until February 16, when he advised her that the
case had been settled.

Legal Argument

[26]        
Counsel for Ms. Ng at this application argues that the fact that
her then counsel settled the case clearly discloses that he was operating under
a misapprehension of facts.  Additionally, she notes that he had failed to
obtain certain reports one being chiefly the accountants’ report disclosing her
loss of income for her business at which she used to work sewing from which she
was now arguing she was disabled from continuing.  Her economic loss, it is
argued, is between $58,000 and $500,000.

[27]        
As noted, the plaintiff’s previous counsel has not provided an affidavit
in this matter.  However, the argument of counsel for the defendants is that in
the evidence before the court, there is nothing to show that the plaintiff’s
previous counsel had lack of authority to settle.  There is simply a lack of
evidence, however, from his perspective of what occurred.  It may be that he
was acting contrary to the plaintiff’s wishes, however, that does not necessarily
mean that there was a misapprehension of facts.  Rather, it is argued by the
defendants that the plaintiff’s claim may be against her former counsel in
negligence or another cause of action.  However, I find in this case, due to
the lack of evidence, there are many factual bases upon which he could or could
not have settled the case.  While the defendants argued they are entitled to
rely upon the apparent authority of the plaintiff’s counsel who settled the
case on February 1, 2011, here, we do not have a factual account from
former counsel and, accordingly, in all the circumstances it may be unjust to
order that there was a settlement, given the absence of a complete version of
the events which occurred.  It is not possible to make any findings respecting
credibility in circumstances where there is lack of evidence particularly on the
factors that would go to the court’s assessment of whether it would be unjust
to enforce the settlement, which would include such facts known to the former
solicitor, such as to whether the solicitor believed he had instructions to
settle.

[28]        
Counsel for Mrs. Ng (during the November 7 hearing), Ms. Clarkson,
submitted that the affidavit of Ms. Kam demonstrated some ambiguity in her
instructions.  I agree.  It appears on what Elaine Kam has deposed alone that
the instructions might have been construed in different ways.  It is still unclear,
however, whether the previous solicitor was acting under a misapprehension due to
the lack of evidence before us.

[29]        
Counsel for the plaintiff brought to the court’s attention the decision
in Prasad v. Ho, [1992] B.C.J. No. 643 [Prasad].  In Prasad,
the court considered two competing versions of events:  that of a lawyer and
that of a client in very similar circumstances.  In Prasad, there was a
trial however – the case was not determined on the basis of the affidavit
evidence of only the client.  Here, again, while the plaintiff is adamant that
she did not instruct a settlement, we do not have the evidence of her former
counsel.

[30]        
In Prasad, the court held at paras. 36-37:

36  I take from all of this that the Court has
determined that there are no principles outside the law of contract which will
permit a court to set aside settlement on the basis of a misapprehension on the
part of a solicitor as to the facts underlying a settlement.

37  The question in this case then, is whether any
principle of contract law may be invoked by the plaintiff to set aside this
settlement. In Robertson [v. Walwyn Stodgell Cochrane Murray Ltd.
(1988), 24 B.C.L.R. (2d) 385] the Court of Appeal stated at p. 387:

"We were not referred to any case and, after a thorough
search, I have not found one, where a concluded contract of settlement, that
was made with the knowledge and consent of the parties to the litigation, was
set aside or not enforced on the ground that it was unfair or unjust, or on the
ground that it was based on a unilateral misapprehension of the facts or the
law."

[31]        
In Prasad, the court first heard the matter as a trial on the
issue of whether a settlement negotiated by former counsel for Ms. Prasad was a
bar to the proceedings.  The court noted that were it to find no settlement
existed, then the quantum of damages would then be in issue.

[32]        
In the case before the court, the evidence is one-sided as the court has
not heard from the plaintiff’s previous counsel on the version of events.

[33]        
In a trial of this matter, while I am not pre-determining the issue, it
is arguable that any claim of privilege relating to the events surrounding the
settlement negotiations has been waived.  The plaintiff’s previous solicitor
could be subpoenaed to give the version of events as he recalls them.

[34]        
In all circumstances, I am denying the application for a declaration
that a settlement was effected thereby staying the proceedings.  It is for the
court to determine whether it would be unjust to stay the proceedings.  As
noted, this assessment, which includes assessing credibility, requires a much
clearer picture than can be gleaned by the affidavit evidence here.  I order a
trial at this point solely on the issue of whether there was a binding
settlement negotiated.  I leave the issue respecting whether, following that
hearing, a trial should proceed on the issue of damages for determination by
the trial court.

“Maisonville J.”

____________________________________

The Honourable Madam Justice Maisonville