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Civil Litigation - Pre-trial Conferences. Ly Innovative Group Inc. v. Facilitate Settlement Corporation
In Ly Innovative Group Inc. v. Facilitate Settlement Corporation (Ont CA, 2025) the Ontario Court of Appeal dismissed an appeal, here from "a judgment terminating a residential tenancy and awarding the respondent landlords rental arrears of over $300,000 along with $100,000 in punitive damages".
Here the court considered whether a judge should have recused themselves after being engaged in open court settlement efforts between the parties, and then - when those efforts collapsed - continuing to adjudicate the merits of the matter:(2) The motion judge was not required to recuse himself because of his awareness of the parties’ prior settlement
[37] The appellants argue that there is a long-held principle of civil practice that, where a judge has knowledge of exchanged offers to settle or proposed settlement terms, that judge ought not to thereafter decide the merits of the issues in dispute.
[38] Nevertheless, neither party raised a concern over the appropriateness of the motion judge adjudicating the matter despite his knowledge of the earlier settlement. In most cases, the failure to object at trial is fatal to a later complaint on appeal: Marshall v. Watson Wyatt & Co. (2002), 2002 CanLII 13354 (ON CA), 57 O.R. (3d) 813 (C.A.), at paras. 14-15. This is not a case in which the interests of justice require the court to relieve against the failure to object.
[39] In any event, I see no merit to the appellants’ argument that the motion judge should have recused himself. They rely on r. 50.10 of the Civil Rules, which provides that a judge who conducts a pre-trial conference shall not preside at the trial of an action or the hearing of an application, except with the written consent of all parties.
[40] In Royal Bank of Canada v. Hussain, 2016 ONCA 637, 133 O.R. (3d) 355, at para. 12, leave to appeal refused, [2018] S.C.C.A. No. 68, this court explained that the rationale for r. 50.10 is to protect the integrity and usefulness of the pre-trial conference system, in which the court attempts to actively persuade litigants to reach reasonable settlements, and litigants are encouraged to speak freely, negotiate openly, and consider recommendations from the judge without prejudice to their positions in the litigation.
[41] The motion judge in this case did not conduct a pre-trial conference. However, he was made aware of the fact that the appellants were agreeable to vacating the premises and making a payment on account of rental arrears in order to settle the dispute over the lease. The appellants argue that, in these circumstances, their position on the motion was prejudiced since they were arguing that they did not have to leave the premises and were entitled to damages, contrary to what they agreed to in the settlement agreement.
[42] While I accept that there may be circumstances in which a judge who has knowledge of a settlement ought to be precluded from subsequently adjudicating the matter, no such circumstances are present in this case.
[43] Although the motion judge was aware the appellants had been prepared to compromise the position originally set out in their defence and counterclaim, the same could be said of the respondents. The motion judge knew that the respondents had been willing to settle the matter without receiving the full amount of rental arrears, whereas they were arguing on the motion that they were entitled to the entirety of the arrears. Thus, the appellants suffered no greater prejudice than the respondents, since the motion judge was aware that both parties had been prepared to compromise their claims in order to settle the dispute.
[44] In any event, both the Civil Rules and the Law Society of Ontario’s Rules of Professional Conduct encourage parties and their counsel to compromise or settle a dispute wherever reasonably possible, in order to reduce costs and delay and facilitate the early and fair resolution of disputes: see Carinci v. Carinci-Serrao, 2024 ONSC 2955, at para. 11. It cannot be suggested that mere knowledge on the part of the motion judge that the appellants had been prepared to compromise their claim gives rise to prejudice or bias on his part.
[45] It should also be pointed out that, whereas r. 50.10 expressly prohibits a judge who has conducted a pre-trial from then presiding at the trial, no such prohibition is included in r. 49.06, which merely prohibits parties from disclosing offers to settle in advance of the determination of the issues in dispute. Rule 49.06 applies to individuals who may communicate information to the court, as opposed to establishing a prohibition on the court: Montague v. Bank of Nova Scotia (2004), 2004 CanLII 27211 (ON CA), 69 O.R. (3d) 87 (C.A.), at para. 35, leave to appeal refused, [2004] S.C.C.A. No. 79. This reflects the quite different judicial role in these different contexts.
[46] In a pre-trial conference, the judge takes an active role in attempting to foster a settlement, including making recommendations and engaging the parties in negotiations. The parties must be free to speak openly and accept or reject such recommendations, without fear that this will later compromise their position in the litigation. In contrast, the mere fact that a judge may become aware of the terms of an offer to settle does not necessarily compromise the judge’s required appearance of objectivity and impartiality and their jurisdiction to proceed to adjudicate the matter.
[47] Thus, in Richardson v. Richardson, 2019 ONCA 983, 463 D.L.R. (4th) 74, during the course of a trial the parties negotiated a settlement which, if accepted by the court, would have resolved the dispute. The trial judge refused to accept the proposed settlement and went on to complete the trial. This court found that the trial judge’s awareness of the settlement did not compromise his ability to continue with the trial, since that knowledge did not in itself compromise his ability to decide the matter impartially: at paras. 35, 43-44.[3] Likewise, in Montague, the trial judge was not precluded from changing her costs order before entering her judgment after becoming aware of the terms of a settlement agreement: at paras. 37-40.
[48] In this case, unlike in the case of a pre-trial conference, the motion judge did not participate in the settlement discussions. While the motion judge knew the proposed settlement contemplated the appellants vacating the premises, he also understood that the respondents had been prepared to accept a payment that was less than their full claim for rental arrears.[4]
[49] In short, during the argument on the merits, both parties were in the same position, in that they were both arguing for a result which differed from the compromise positions they had been prepared to accept under the settlement. It is thus hardly surprising that neither party raised any concern over the appropriateness of the motion judge adjudicating the matter.
[50] Accordingly, this ground of appeal is dismissed. . Sosnov v. J&H Freiberg
In Sosnov v. J&H Freiberg (Div Ct, 2021) the Divisional Court reverses an order made in a pre-trial conference to appoint an expert for the court:11. The purpose of a pre-trial is to provide an opportunity to settle any or all issues without a trial and, with respect to any issues not settled, to provide orders or directions “to assist in the just, most expeditious and least expensive disposition of the proceeding” (rule 50.01).
12. As a result, a pre-trial judge has a broad discretion to, amongst other things, make such orders as he or she considers necessary or advisable with respect to the conduct of the proceedings (rule 50.07).
13. Rule 52.03(1) provides that a judge may, at any time, on motion by a party or on his or her own initiative, appoint one or more experts to inquire into and report “on any question of fact or opinion relevant to an issue in the action.”
14. While we recognise that not every order or direction made in a pre-trial proceeding will require reasons, in the present proceeding where the appellants were opposed to the appointment of a court expert (and the plaintiffs to having to pay for it), in our view, it was incumbent on the Pre-Trial Judge to provide reasons for the Order. She did not.
15. Further, the absence of reasons prevents meaningful appellate review: R. v. Walker, [2008] 2 S.C.R. 245, 2008 SCC 34. In the circumstances, the failure of the Pre-Trial Judge to provide reasons is an error.
16. Further, the Pre-Trial Judge erred in our view, in appointing an expert to determine the matters in issue as well as issues not raised by the parties. The role of a court appointed expert is to assist the court in understanding the evidence within their area of expertise. It is not to investigate, advance possible theories and state, as conclusions of fact, opinions based on matters not advanced in evidence: Phillips v. Ford Motor Co. of Canada, 1971 CanLII 389 (ON CA), [1971] O.J. No. 1564 (C.A.).
17.That, however, is exactly what the Order does. It requires the expert to investigate, weigh evidence and explore any other scenario which in his view would be relevant to the understanding of liability. In so doing, the Order usurps the role of the trier of fact and the parties right to present the case as they see fit. . Royal Bank of Canada v. Hussain
In Royal Bank of Canada v. Hussain (Ont CA, 2016) the Court of Appeal expounds on the meaning of Rules 50.09 and 50.10, which read as follows:NO DISCLOSURE
50.09 No communication shall be made to the judge or officer presiding at the hearing of the proceeding or a motion or reference in the proceeding with respect to any statement made at a pre-trial conference, except as disclosed in an order under rule 50.07 or in a pre-trial conference report under rule 50.08. O. Reg. 438/08, s. 47.
PRE-TRIAL JUDGE NOT TO PRESIDE AT HEARING
50.10 (1) A judge who conducts a pre-trial conference shall not preside at the trial of the action or the hearing of the application, except with the written consent of all parties. O. Reg. 438/08, s. 47.
Conference Before Trial Judge
(2) Subrule (1) does not prevent a judge before whom a proceeding has been called for hearing from holding a conference either before or during the hearing to consider any matter that may assist in the just, most expeditious and least expensive disposition of the proceeding without disqualifying himself or herself from presiding at the hearing. The context was that a judge that held a pre-trial conference also heard and ruled on the motion for the summary judgment which was being appealed. The defendant (plaintiff-by-counterclaim) was successful, the court clarifying that:[18] Rule 50.09 reflects the intention that a judge hearing a motion in a proceeding should be insulated from knowledge of statements made at a pre-trial conference. It is designed to reassure litigants that any information revealed in the pre-trial will not be used against them at a hearing, in order to encourage a full and frank exploration of settlement prospects at an early stage of the proceeding.
[19] Having regard to rule 50.10(1), absent written consent from the parties, a judge who conducts a pre-trial should not be the judge who determines the merits of the issues in a proceeding. Particularly with the expanded powers available to motion judges under the amended Rule 20, presiding on a summary judgment motion must be viewed as akin to presiding at a trial or the hearing of an application: see Hryniak v. Mauldin, 2014 SCC 7 (CanLII), [2014] 1 S.C.R. 87, at paras. 36 and 45. The rationale for prohibiting communications to a judge about statements at a pre-trial and for prohibiting a pre-trial judge from presiding at a hearing that could determine some or all of the issues in a proceeding is well-established and well-known. As explained in the Osborne Report, it is to protect settlement discussions at a pre-trial conference.
[20] And as stated by Carthy J.A. in Bell Canada v. Olympia & York Developments Ltd. (1994), 1994 CanLII 239 (ON CA), 17 O.R. (3d) 135 (C.A.), at pp. 144-45, the prohibition also protects the integrity and usefulness of the pre-trial conference system:Pre-trials were designed to provide the court with an opportunity to intervene with the experience and influence of its judges to persuade litigants to reach reasonable settlements or refine the issues. None of that would be possible without assurance to the litigants that they can speak freely, negotiate openly, and consider recommendations from a judge, all without concern that their positions in the litigation will be affected. [21] Although neither rule 50.09 nor rule 50.10 contains language expressly prohibiting a pre-trial judge from presiding on a summary judgment motion, the rules are to be “liberally construed”, and where matters are not provided for in the rules, “the practice shall be determined by analogy to them”: rules 1.04(1) and (2).
[22] Having regard to these factors, rules 50.09 and 50.10 must be read as prohibiting a judge who conducts a pre-trial conference from presiding on a summary judgment motion in the action, except with all parties’ written consent.
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