IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Darwish v. Advancedio Systems Inc., |
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2017 BCSC 2456 |
Date: 20171222
Docket: S166791
Registry: Vancouver
Between:
Mohammad Darwish and Darwish Investments Corporation
Plaintiffs
And
Advancedio Systems
Inc., Andreas Grooters, Nabih Ahmad Faris,
and New Wave Design And Verification, LLC
Defendants
Before: The Honourable Mr. Justice Macintosh
Oral Reasons for Judgment
In Chambers
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Appearing for Plaintiffs: |
Greg J. Allen |
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Counsel for Defendant Nabih Ahmad Faris: |
Ravi R. Hira, Q.C. |
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Counsel for Defendant Advancedio Systems Inc. and Andreas Grooters: |
John Zeljkovich |
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Place and Date of Hearing: |
Vancouver, B.C. December 8, 2017 |
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Place and Date of Judgment: |
Vancouver, B.C. December 22, 2017 |
[1] The Defendant, Faris, seeks an order that the claims against him be struck, and alternatively stayed, because the Plaintiffs agreed to drop the case against him. He also submits that the claim is misconceived because it amounts to a derivative action which he says can be brought only by a petition, and it was not.
[2] The Defendant, Grooters, based on different evidence but the same legal analysis Mr. Faris employs, seeks an order that the claims against him be struck because the Plaintiffs agreed to withdraw the claims against him.
[3] Before I set out the facts, I note that the Plaintiffs' present counsel did not participate in the events relevant to the applications. He and his firm were retained at a later stage.
[4] Turning to the facts underlying the Faris application, on October 20, 2016, counsel for Faris wrote to Plaintiffs' counsel and included the following in his letter:
I encourage you to discontinue proceedings pursuant to the Claim. If you fail to do so, we will bring an application to strike the Claim, and seek costs.
[5] Counsel for Faris sent an email to Plaintiffs' counsel on October 31, 2016, saying in part:
As we discussed on the phone the other day, if your client is going to proceed with the action, we have instructions to bring a strike application. If we go down that road we will have to seek security for costs.
[6] In my view, the October 20 letter contained an offer. Faris offered that if the Plaintiffs discontinued against him, that would be the end of the matter. The offer said that Faris would seek costs if the Plaintiffs did not discontinue. The offer contained an implied term that if the Plaintiffs did discontinue, Faris would not seek costs. Accordingly, if the Plaintiffs had discontinued, and Faris had then sought the costs to that point, he would have been barred from obtaining them.
[7] The October 31 email did not rescind the offer made on October 20, but it did add that if the Plaintiffs did not discontinue, they would also be facing a security for costs application.
[8] On November 8, 2016, Plaintiffs' counsel emailed counsel for Faris saying:
I have received instructions from my client to amend the pleadings and withdraw his claims as against Mr. Faris.
[9] In my view, that was an acceptance of the October 20 offer.
[10] In the result, the parties reached a settlement agreement. There was present an offer, an acceptance and consideration.
[11] The consideration was that Faris gave up the right to seek costs for the steps to and including the discontinuance. Such costs would not have amounted to very much, but the law is well-settled that a court will not inquire into the adequacy of consideration.
[12] Furmston, M.P., Cheshire, Fifoot & Furmston's Law of Contract, Thirteenth Edition, (London Butterworth 1996) says this at page 84:
It has been settled for well over 300 years that the court will not inquire into the "adequacy of consideration." By this is meant that they will not seek to measure the comparative value of the defendant's promise and of the act or promise given by the plaintiff in exchange for it, nor will they denounce an agreement merely because it seems to be unfair. The promise must, indeed, have been procured by the offer of some return capable of expression in terms of value. ... The parties are presumed to be capable of appreciating their own interests and of reaching their own equilibrium. In 1587 it was said that, "When a thing is said to be done by the plaintiff, be it ever so small, this is a sufficient consideration to ground an action," and this rejection of a quantitative test has been constantly reiterated.
See also Cadinha v. Chemar Corp. Inc., [1995] B.C.J. No. 755 (S.C.), para. 14.
[13] Given the Plaintiffs' agreement to end the case against Mr. Faris, I order the proceedings against him stayed. Authority for that order is found in ss. 8 and 10 of the Law and Equity Act, R.S.B.C. 1996, c. 253; and in Sekhon v. Khangura, 2009 BCSC 670, para. 119.
[14] If the agreement had not been reached based on the legal analysis of offer, acceptance and consideration, policy considerations could not fill the gaps, and thereby create an agreement where none existed at law. In this case, however, where an enforceable agreement was formed, I add an observation grounded in policy which is consistent with the legal conclusion I have reached. Lawyers acting for parties in litigation must be given room to form agreements promptly, informally and simply. The agreement reached between Faris and the Plaintiffs was the cyberspace equivalent of a settlement in the halls of the courthouse. If more detailed and documented exchanges between lawyers were required, in order for settlement agreements to be reached on behalf of their clients, the complexities and expenses of modern civil litigation would only expand, to the benefit of no one.
[15] The facts are similar in Mr. Gooters' application. On October 28, 2016, his counsel wrote to counsel for the Plaintiffs saying, in part:
Given these and other issues with the Claim, we request that your clients file and deliver a notice of discontinuance by 4:00 P.M. Wednesday, November 2, 2016.
If your clients do not discontinue this action by the above date, we will make an application to strike the Claim, or alternatively, to have your clients post security for costs, we will seek costs payable forthwith and will bring this letter to the Court.
[16] Emails then passed between counsel, in which Mr. Grooters' counsel asked what the Plaintiffs' position was. On November 9, 2016, the Plaintiffs' counsel emailed:
I have received instructions from my clients to amend the pleadings to withdraw his claims as against Mr. Grooters personally as well as any claims for oppression remedies.
[17] My reasoning in the Grooters application is essentially the same as it was in the Faris application. For Mr. Grooters, his counsel's email of October 28, 2016 was an offer, accepted on November 9. The consideration, once again, was that Mr. Grooters could not have claimed any costs to that stage had the Plaintiffs discontinued. There was an implied term against him doing so. I grant the same relief I granted for Mr. Faris, ordering a stay as against Mr. Grooters.
An order granting the plaintiff DIC leave to commence a derivative action on behalf of the Company against Faris and Grooters pursuant to section 232 of the Business Corporations Act, and that Faris and Grooters be ordered to pay such reasonable costs as are incurred by counsel to commence the derivative action on behalf of the shareholders of the Company.
[19] Supreme Court Rule 22-7(3) provides that the Court must not wholly set aside a proceeding on the ground that the proceeding was required to be started by an originating pleading other than the one employed.
[20] Of the numerous cases cited on the application, the one I consider most applicable is Gittings v. Caneco Audio-Publishers Inc. (B.C.C.A.), [1998] B.C.J. No. 532, where Justice Esson wrote for himself, Carrothers J.A. and McLachlin J.A., as she was then. The reasoning in Gittings tells us there is broad procedural latitude to permit a derivative claim to be reformulated in the pleadings as necessary, so as to avoid a claim having to be struck based on its arguably defective beginnings.
[22] In summary, I stay the claims against Mr. Faris and against Mr. Grooters, as they were pleaded up to November 9, 2016, on the ground that the claims were settled. However, I dismiss the second part of the Faris application, as addressed above at paras. [18]–[21].
[23] Subject to hearing from counsel on the matter of costs, I would order one set of costs for Mr. Faris and one set of costs for Mr. Grooters, both at Scale B.
"MACINTOSH J."