Gilbertson Davis LLP Enforces Liquidated Damages Clause in Settlement Agreement by Summary Judgment

Andrew Ottaway, B.A. (Hons.), LL.B.Business Litigation, Business Torts | Economic Torts, Civil Litigation, Commercial and Contract Litigation, Contract Disputes, Fraud, Fraud Recovery, Fraudulent Schemes, Shareholder Disputes, Summary Judgment0 Comments

In Haas v. Viscardi, 2018 ONSC 2883 (CanLII) the plaintiff settled a claim of $200,000 based on fraudulent misrepresentation with three defendants. The settlement agreement provided for various payments by the defendants on specified dates.  The settlement agreement required Viscardi to make payments of $30,000 in three installments. If Viscardi failed to make the payments on the dates provided, the settlement agreement provided that Viscardi would consent to judgment for $60,000 (the “Consent Judgment Clause”).

Viscardi made one payment of $10,000, but failed to make the remaining two payments, in breach of the settlement agreement.  He then refused to consent to judgment. The plaintiff commenced a claim to enforce the settlement agreement, and brought a motion for summary judgment.

The motion judge rejected Viscardi’s argument that the Consent Judgment Clause was an unenforceable penalty clause.  The judge considered the test for whether a liquidated damages clause is an unenforceable penalty: whether the amount stipulated is “extravagant” and whether the clause is “unconscionable”.

The judge found that the Consent Judgment Clause amount was not extravagant – it was approximately ⅓ of the initial $200,000 claim against the three defendants, which claim the plaintiff had compromised by settlement. The motion judge also found that the Consent Judgment Clause was not “unconscionable”: Viscardi was represented by a lawyer who participated in negotiations.  He appeared to be a sophisticated businessman, who entered freely into the settlement agreement.

The motion judge found that the Consent Judgment Clause was enforceable and found Viscardi liable for $60,000.

The lawyers at Gilbertson Davis have experience in fraud litigation and contract litigation.  Please contact us for an initial consultation.


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About the Author
Andrew Ottaway, B.A. (Hons.), LL.B.

Andrew Ottaway, B.A. (Hons.), LL.B.

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