Chan v. Chan

2024 BCSC 2407 Chan v. Chan

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Chan v. Chan, 2024 BCSC 2407 Date: 20241216 Docket: S234768 Registry: Vancouver Between: Kevin Chan and Yau Chuen Clara Chan Petitioners And Caron Jones Chan Respondent Before: The Honourable Justice Ahmad Oral Reasons for Judgment Counsel for the Petitioner: K. Ducey Counsel for the Respondent : C. Hartnett Place and Date of Hearing: Vancouver, B.C. May 17 and July 18, 2024 Place and Date of Judgment: Vancouver, B.C. December 16, 2024 [1] These reasons for judgment were delivered orally. They have been edited for distribution to the parties. I. Introduction [2] These petition proceedings, commenced in July 2023, involving a dispute among family members over property located at #20 - 8500 Bennett Road, Richmond, B.C. (the "Property"). [3] The petitioner, Kevin Chan, and the respondent, Caron Chan, are siblings. Their mother, Yau Chuen Clara Chan, who passed away after the commencement of these proceedings, is the co-petitioner. [4] The respondent is the owner of an undivided one-half interest in the Property. Prior to Ms. Chan's passing, she and Kevin Chan were the owners of the other undivided one-half interest as joint tenants. On her passing, Ms. Chan's interest in the Property was transferred to Mr. Chan as the survivor of the joint tenancy. In these reasons, I refer to the petitioners together as the "petitioner". [5] In

the petition, the petitioner sought an order under the Partition of Property Act, S.B.C. 1996 c. 347, to sell the Property and for the equal distribution of the net sales proceeds between the parties. He also sought an order for occupational rent from the respondent. [6] Almost immediately after the petition was filed, the parties entered into negotiations pursuant to which they contemplated that the respondent would purchase the petitioner's interest in the Property. After some back and forth communications between counsel, on October 23, 2023, the respondent accepted the petitioner's offer to purchase the petitioner's interest in the Property for $420,000. The parties did not discuss any other terms, including a closing date, execution of releases, or the dismissal of the petition. [7] On November 9, 2023, the respondent advised the petitioner, through counsel, that she could commit to completing the purchase by January 12, 2024, but was interested in an earlier completion date. By reply the next day, counsel for the petitioner replied: "My clients are in agreement with this timeline. I will work on drafting a settlement agreement for all parties' signatures." [8] On January 11, 2024, the parties subsequently agreed to extend the closing date to January 18, 2024. [9] By letter dated December 15, 2023, the respondent took the further position that Mr. Chan held his interest in

the Property, as well as a separate property located on Finlayson Drive in Richmond (the "Finlayson Property"), in trust for Ms. Chan's estate. She demanded that he transfer his interest in the Property and the Finlayson Property to the estate, barring which she would apply for leave to commence a derivative action on behalf of Clara's estate to compel him to do so. She filed a notice of civil claim (the "Trust Action") to that effect on the same day. The Trust Action was delivered to counsel for the petitioner on January 9, 2024. [10] By e-mail dated January 10, 2024, counsel confirmed she would accept service of the Trust Action on behalf of Mr. Chan. She also confirmed that her client remained ready, willing, and able to complete the sale of the Property for $420,000, noting "If your client fails [to complete], it is our position that she will be in breach of the agreement to purchase my client's interest in the [P]roperty." [11] Counsel for the respondent confirmed that the respondent would be completing the purchase but, for the first time, raised the issue of a release. He wrote: I note that our agreement was for more than just the purchase of legal interest - it was a purchase of any interest Clara or Kevin might have in the property. (Clara's affidavit in support of the Partition of Property petition alleged far more interest, so this was clearly part of our

discussion). As such, we will be requiring a release from Kevin and from the administrator of Clara's Estate releasing our client from any claims relating to the property. I trust that this will not be an issue. [12] On January 16, 2024, the respondent provided the petitioner with the Property transfer documents for execution and return on undertakings. Included in those documents was a form of release of claims, the terms of which provided for the petitioner's release of the respondent from all claims "relating to or arising from the [Property], including matters set out in the petition." [13] The petitioner took the position that the release should be a mutual release of all claims with respect to the Property, stating: "The settlement was meant to be of all issues related to that property, as there were claims going both ways." He did not execute the form or release that had been provided. However, on January 17, 2024, the petitioner did sign the transfer documents and returned them to the respondent's counsel on various undertakings, including that: a) Upon registration of the transfer documents and receipt of mortgage proceeds, they would provide the closing funds of $420,000 by no later than the close of business on January 18, 2024, and b) They would provide a mutual release of all claims in relation to the Property in a form to be agreed. [14] The respondent did not

accept those undertakings. On January 18, 2024, counsel wrote: Your undertaking proposal is unacceptable and inappropriate in the context of the settlement agreement. There is no circumstance under which your clients will receive the settlement funds undertaking free prior to the delivery of an acceptable executed release. [15] He suggested: If there is dispute as to the terms of the release (including whether the release must be mutual), such a dispute can be resolved by negotiation or by having the courts interpret the reasonably implied release which arose from the settlement agreement. There is no reason why doing this needs to hold up the subject conveyance. And it is our position that if the conveyance does not proceed due to your failure to accept reasonable undertakings, it constitutes a breach of contract by your clients. [16] Counsel for the respondent confirmed that his firm was holding sufficient funds to complete the transaction ($420,000) and that those funds would be delivered to counsel for the petitioner on their undertaking "not to make use of or share the funds" unless they had received a fully executed release in a form agreed to by the parties or pursuant to an order of the Court or as ordered by the Court. [17] The parties did not agree to a form of release, nor were the purchase funds provided to the petitioner on January 18, 2024. [18] By letter dated

April 12, 2024, counsel for the petitioner wrote to counsel for the respondent: as your client is not willing to complete the settlement on the terms agreed between the parties, my client accepts this breach as a repudiation of the settlement agreement and elects to treat it as at an end. [19] On May 2, 2024, the respondent took the position that at all material times, she was ready, willing, and able to complete the settlement agreement and that the petitioner's election amounted to a wrongful termination of the settlement agreement. In those circumstances, she purported to affirm the agreement, which she advised she would seek to have specifically performed. [20] This is her application to stay these petition proceedings for the purpose of enforcing the settlement agreement. II. Issues [21] In that context and given the position of the parties, the issues to be determined are: a) Did the terms of the agreement between the parties include the requirement to provide a release; b) If so, what is the scope of that release; and c) If a release is required, what is the implication of the parties' failure to agree on its terms? III. Discussion and Analysis A. Did the terms of the agreement include the requirement to provide a release? [22] As a starting point in this analysis, there is no dispute that a party to a proceeding may bring an application for a permanent stay of

proceedings for the purpose of enforcing a settlement agreement: Law and Equity Act, RSBC 1996, c 253, s. 8(3); Roumanis v. Hill, 2013 BCSC 104 7 at paras. 25-28; Carlton v. Carlton, 2017 BCSC 603 at paras. 20-23. [23] There is also no dispute that by their communications on October 23, 2023 and January 11, 2024, the parties expressly agreed that: a) The respondent would purchase the petitioner's interest in the property for $420,000, and b) The closing of the transaction would occur on or before January 18, 2024. [24] The question is what other terms, if any, can be applied to that agreement. Specifically, can a term be implied that would require the parties or either of them to enter into a release of claims? [25] On that analysis, the decision in Fieguth v. Acklands, 37 B.C.L.R. (2d) 62, 1989 CanLII 2744 is instructive. At para. 35 of that decision, the Court considered that same issue, concluding that, "a settlement implies a promise to furnish a release and, if there is an action, a consent dismissal unless there is a contractual agreement to the contrary". Cases that follow that decision and come to the same conclusion include Norbert v. Origin At Longwood Retirement Community Inc., 2021 BCSC 1485 at para. 9, and Re Rickards Estate v. Diebold Election Systems, 2004 BCSC 1357 at para. 23(5). [26] However, I accept, as the petitioner argues, that not all forms of dispute

resolution imply that a release be provided. That was the case, for example, in Bradley v. Elford, [1987] BCJ No 362 in which the terms of the settlement of a debt claim contemplated the discontinuance of the claim in exchange for a waiver of costs. At trial, the judge found that a release was an implied term of the settlement. The Court of Appeal disagreed, stating at para. 13: That would probably be so if the letters had constituted a settlement of the whole of the claim as opposed to a discontinuance of the action. The letters only referred to and only offered a discontinuance. I think there to be no basis for saying that there was an agreement to release implied in that correspondence. [27] The petitioner says the reasoning in Bradley applies in this case such that there was no obligation to provide a release as an implied term of the settlement of the petition. He argues that, as reflected in the agreement, in effect the petition simply contemplates the sale of the Property and for the distribution of the sales proceeds. He argues there was no claim against the respondent to dismiss. [28] I do not accept that argument. [29] First, in Bradley, there was no intention, express or otherwise, to release the debt that was the subject matter of that action. The agreement in that case referred to and only offered a discontinuance of the claim. [30] In this case, both the timing of

the negotiations (i.e., within a week or so of the filing of the petition) and the express language used by counsel in her November 10, 2023 email (i.e. "settlement agreement") manifests the parties' intention that the transfer would settle the issues between the parties as set out in the petition. Unlike the agreement in Bradley, there is no suggestion that the petition would remain extant. [31] In other words, I am satisfied that the agreement that the petitioner would transfer his interest to the respondent for $420,000 was intended, not as a mere conveyancing transaction, but to fully resolve and conclude all matters relating to the sale of the Property as more particularly set out in the petition. [32] Second, it is not correct, as the petitioner suggests, that the petition does not set out any claims against the respondent. Rather, in addition to the orders sought with respect to the sale of the Property and the distribution of the net sales proceeds, the petition also sets out: a) At para. 8, a claim for an order for the payment of occupational rent from the respondent, and b) At para. 9, a claim for costs, to be paid from the respondent's share of the net sales proceeds. [33] I am satisfied that it was the intention that both claims be extinguished with the settlement of the petition. There is nothing to suggest otherwise. [34] I find that the settlement agreement was

intended to fully and finally resolve all matters, including the claims for occupational rent and costs, sought in the petition. That is exactly the type of settlement agreement which implies a promise to furnish a release. [35] The next question to be considered is the scope of the release. B. What is the scope of the implied release? [36] As noted, the form of release contemplated by the respondent is a one-way release in her favour from all claims relating to or arising from the Property, including matters set out in the petition. The petitioner, on the other hand, argues that if a release is implied, the release should be mutual and apply to all claims with respect to the Property, presumably including those claims made in the Trust Action. [37] I do not accept either position. [38] In considering the scope of the release, the timing of both the commencement of the negotiations and the conclusion of the agreement is important. As noted, based on timing, I am satisfied that it was the parties' intention to settle all of the issues set out in the petition. In the circumstances, it is reasonable to conclude that both parties should have the certainty that this is the case. [39] In addition, as the parties concluded the terms of the transfer prior to the commencement of the Trust Action, I am also satisfied that it cannot reasonably be said that there was any intention that the

agreement included the settlement of the Trust Action. [40] I find that the settlement agreement between the parties included an implied term that required a mutual release in respect of all issues raised in these petition proceedings. [41] However, that conclusion does not end the matter. The next issue to be determined is the parties' rights and obligations regarding the implementation of that agreement. C. What is the implication of the parties' failure to agree to the terms of a release? [42] As the court explains in Fieguth, at paras. 35 and 36. it is necessary to separate the question of the formation of a contract from its completion. In respect of the latter, the Court states: [36] if there are not specific terms in this connection [i.e., as to the form of release] either party is entitled to submit whatever releases or other documentation he thinks appropriate. ... If such documents are accepted and executed and returned then the contract, which has been executory, becomes executed. If the documents are not accepted then there must be further discussion but neither party is released or discharged unless the other party has demonstrated an unwillingness to be bound by the agreement by insisting upon terms or conditions which have not been agreed upon or are not reasonably implied in these circumstances... [Added emphasis.] [43] And further at paragraph 44: It should not

be thought that every disagreement over documentation consequent upon a settlement, even if insisted upon, amounts to a repudiation of a settlement. ... In such cases the settlement will be binding if there is agreement on the essential terms. ... Subsequent disputes should be resolved by application to the court or by common sense within the framework of the settlement to which the parties have agreed and in accordance with the common practices which prevail amongst members of the bar. It will be rare for conduct subsequent to a settlement agreement to amount to repudiation. [Added emphasis.] [44] In this case, as the parties had not come to any previous agreement regarding the language or scope of release, the respondent's January 16, 2024 proposal for a unilateral release in her favour did not, by itself amount to a repudiation of the settlement agreement. By the same token, nor did the petitioner's insistence that the form of release be mutual. Having disagreed on the form of release, it was incumbent on the parties to resolve those terms, as the court in Fieguth suggests, "by application to the court or by common sense " [45] However, the obligation to resolve the terms of the release cannot be the basis to violate an express term of the agreement: Stewart v. Stewart, 2019 BCSC 985, at para. 119. [46] In Stewart, the terms of the settlement agreement were reduced to

writing. Among other things, the agreement provided for the payment of the settlement funds within 30 days of the execution of the agreement. It also provided for the execution of a mutual release to be "held and to be effective upon all of the obligations by the party under [the] agreement had been completed". There was no agreement as to when the release was to be executed, nor was there any requirement to provide an acknowledgement of receipt of funds. [47] On the date set for the payment of funds, certain of the defendants refused to pay the settlement funds to the plaintiff without, among other things, the executed release and an acknowledgement of payment. The plaintiff sought to enforce the settlement agreement, arguing that it had no obligation to provide the release or the acknowledgement prior to being paid. [48] The defendants, on the other hand, argued that if the requirement to pay the settlement funds was read to create a "free-standing" obligation, the purpose of the settlement agreement would be defeated, as after having received the agreement, the plaintiff could refuse to cooperate with the necessary planning steps, leading to further litigation, expense, and in that case, significant tax consequences. On that logic, they argued that the agreement implied that the plaintiff would provide the executed acknowledgement and release concurrently with the payment:

Stewart at paras. 103-105 and 113. [49] The court rejected the defendant's argument. Referring to para. 44 of the Fieguth decision cited above, it stated: [119] While Fieguth and Kuo suggest that the parties are expected to engage in discussions to complete the agreement, that discussion and negotiation cannot be the basis to violate an express term of the agreement. Here, I am unable to find that there was an implied term that the plaintiff would provide a Mutual Release and Acknowledgement before the defendants had to pay the plaintiff the section 7 funds. [120] I reject the submission of the ... defendants that section 7 of the settlement agreement does not create a freestanding obligation to pay the plaintiff $3.8 million. ... to conclude otherwise would render the time limit within the section otherwise meaningless. [122] This interpretation does not frustrate the purpose of the settlement agreement. If the defendants pay the plaintiff $3.8 million, the plaintiff will still be obliged to fulfill whatever obligations he has agreed to in the settlement agreement when those obligations arise. He will not be able to refuse to comply with the other terms of the settlement agreement, and the defendants' benefits in that agreement will not be lost. [Added emphasis.] [50] The court concluded: [123]... I find that the insistence of the various defendants, at various junctures

following November 11, 2018, to impose undertakings and obligations on the plaintiff were unnecessary and in breach of the settlement agreement. The agreement itself makes it clear what the $3.8 million was to address, and is in and of itself, sufficient evidence of what the payment would release. As the plaintiff agreed to provide an Acknowledgement on November 12, 2018, that together with whatever banking record would have been created by a payment on, or after that date, was more than sufficient evidence of the payment. [124] To expect more from the plaintiff by November 12, 2018, was, in my opinion, unreasonable. [51] In my view, that reasoning leads to the same conclusion in this case. [52] As was the case in Stewart, as I have found, the settlement agreement also required the release of claims. However, as was also the case in Stewart, there is nothing that requires that the release be executed prior to or as a condition of the payment of the settlement funds. Indeed, as the court suggested in Fieguth, the issue of the release can well be determined after its completion by agreement or reference to the court. Determining the specifics of the release language later will not deprive the respondent of its benefit. [53] By contrast, the timing of the obligation to pay the funds to affect the transfer is expressed: the $420,000 was to be paid by January 18, 2024. In my view,

by her refusal to release that payment to the petitioner on January 18, 2024, as expressly contemplated by the agreement, without release, the respondent has sought to impose a term that does not exist and demonstrated an unwillingness to be bound by the agreement. [54] Given the clear and unambiguous terms of the settlement agreement, a reasonable observer would conclude that it was the parties' intention that the transfer funds be paid to the petitioner on January 18, 2024. The respondent's entitlement to a release did not change the obligation to pay the funds on that date. [55] The respondent's refusal to release the funds to the petitioner on January 18, 2024 and to impose an undertaking that was not contemplated by the parties constitutes a repudiation of the settlement agreement. [56] By counsel's letter of April 12, 2024, the petitioner accepted that repudiation, bringing the agreement to an end. IV. Disposition and Costs [57] It follows that the respondent's application to enforce the terms of the settlement agreement is dismissed. [58] The petitioner is entitled to costs of this application. "Ahmad J."