Lawyer alone authorized to make settlement offer: Divisional Court

A Toronto lawyer says he feels vindicated by a recent Divisional Court decision that overturned a two-year-old ruling against him over a settlement agreement.

“I find that the motion judge erred in law and made factual findings unsupported by the evidence on matters of fundamental principle,” said Divisional Court Justice Anne Molloy, who penned the ruling on the court’s behalf.

In 2014, a motion judge had deemed a settlement agreement, to which lawyer Joseph Zayouna agreed, was unenforceable because Zayouna didn’t have instructions from his client to accept the deal.

In that case, Zayouna was representing a client who was hit by a TTC streetcar in 2009. The lawyer said his client had told him to “deal with her father” about her personal injury case while she was away attending school. The client later disputed Zayouna’s handling of the case and alleged the lawyer agreed to a $12,500 settlement on her behalf without her instructions.

Zayouna maintained the instructions came from her father, but were unwritten.

In a recent decision, the Divisional Court found it wasn’t up to the motion judge to decide whether instructions were properly received.

“In this case, the plaintiff was of full age and capacity and there was no doubt she had retained Mr. Zayouna to represent her. The terms of the agreement accepted by Mr. Zayouna are also clear,” wrote Molloy.

“Therefore the normal practice, as noted in Scherer v. Paletta, is that the court will not embark upon any inquiry as to the instructions passing from the client to the solicitor. It is unfortunate that the motion judge in this case did embark on the exercise of making findings of fact.”

The lower court’s findings were “particularly problematic” given they were based so on contested affidavit evidence and without the benefit of a full hearing, said the ruling.

Although Zayouna has already paid the costs ordered against him, he says he is “pleased” with the court’s decision.

“We are pleased with the decision of [the Divisional Court],” he says. “It speaks for itself.”

The Divisional Court also overturned the motion judge’s finding that the TTC’s claims adjuster should have known Zayouna was agreeing to the settlement without instructions from his client. In a sternly worded ruling, Molloy said the motion judge’s findings on that matter were entirely flawed.

“The motion judge relied upon the use of the passive voice by Mr. Zayouna and the fact that Mr. Zayouna accepted the offer within ten minutes of receiving the email as factors that should have caused the TTC claims adjuster to be concerned about whether Mr. Zayouna had authority to bind his client,” Molloy said. “In my view, neither of these factors are at all unusual and do not provide any basis for the TTC adjuster to have been concerned.”

The motion judge’s inference that the claims officer should have been concerned was “unreasonable” and “without any support in the evidence or in the established case law,” Molloy said.

“The motion judge’s ruling is also inconsistent with the manner in which lawyers in Ontario do, and should, conduct themselves in negotiating settlements of civil actions,” she said. “It sends the entirely wrong message to lawyer about their responsibilities in this situations.”

Molloy added that lawyers do not need to advise the other side that they have received instructions in order to settle for a particular amount offered.

“It is open to the lawyer to simply make an offer or accept an offer. The lawyer’s authority in that situation is understood, because the lawyer always has ostensible authority to act for his client, in the absence of some communicated limitation."

“In this case, Mr. Zayouna actually said he had instructions, which was more than he was required to say for the other side to understand that its offer had been accepted and would be binding on the plaintiff.”

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