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Motions to Enforce Minutes of Settlement and the Court’s Discretion to Grant Judgment

In the case of Gelber v. Gelber,[1] the Applicant brought a motion under Rule 49.09 of the Rules of Civil Procedure[2] (the “Rules”) seeking relief from the court to exercise its discretion and enforce the minutes of settlement (the “Minutes”) that had been entered into with the Respondent.

Background

Herman Gelber (the “Deceased”) passed away on September 6, 2013. Leaving behind his surviving spouse, the Applicant, and his son from a previous marriage, the Respondent.  The Deceased left a Will in which he left the Respondent a legacy of $400,000.00, and the residue of the estate was left to the Applicant.

The Applicant and the Deceased lived in a residential unit, pursuant to a life lease occupancy agreement. The notice of lease registered on the title showed both the Deceased and the Applicant as tenants with the term ending on the death of the survivor of them. A dispute arose between the Applicant and the Respondent on whether the life lease occupancy passed to the Applicant by right of survivorship, or formed part of the Deceased’s estate. If the lease did not form part of the Deceased’s estate, there would be insufficient value in the estate to pay the Respondent the $400,000 legacy.

Each of the Applicant and Respondent commenced an application seeking a declaration from the court in support of his/her own position. A few years passed from when the litigation had commenced. Thereafter, the Applicant, retained new counsel and offers to settle were exchanged again between counsel for the parties and the matter was settled by counsel on behalf of their respective clients. Minutes were prepared by the Applicant’s counsel as confirmed and instructed by the Respondent’s counsel. The Minutes were sent to the Respondent’s counsel for execution by the Respondent, however, he refused to sign the Minutes.

The Applicant commenced a motion to enforce the Minutes. The Respondent argued against the enforcement and listed various reasons as a defense to the dismissal of the Applicant’s motion, such as, there was no formal acceptance of any offer to settle, at no point did he see any “so called ‘final’ settlement”; he never told his lawyer to accept any offer but told her that he may potentially settle the matter on markedly different terms; that the Minutes were not final and that he did not have the intention to accept it; that his lawyer did not obtain his final instructions before soliciting minutes of settlement on his behalf, and that there was no settlement because there was no agreement on the essential terms.

The court reviewed various case law and legal principles relating to this subject matter and applied the law to the facts of the case, to determine: a) whether an agreement to settle was truly reached by the Parties, and b) whether the agreement should be enforced.[3]

In determining whether an agreement to settle had been reached by the parties, the court had to find that the parties intended to create a legally binding contract and that there was an agreement on all the essential terms of the settlement agreement. Since the parties were represented by legal counsel when the settlement was entered into, and the Respondent took the position as mentioned above, the court considered the case of Scherer v. Paletta[4] which states that the authority of a solicitor to enter into settlement discussions and compromise a client’s position is well-settled law. The court reviewed the Respondent’s retainer agreement with his counsel and saw there was nothing in the record to suggest that his counsel’s authority to accept the settlement was in any way limited, and if the Respondent believed that he was not properly represented in the negotiations, he may have other recourse against his counsel, but any such belief does not lead to the result that no agreement to settle was reached.

The court stated that:

Where a settlement is negotiated between duly appointed counsel with no limitation of authority, the settlement ought to be binding on the parties. I find that the settlement agreement as evidenced in the correspondence between the lawyers for the parties demonstrates a mutual intention to create a legally binding relationship and there was agreement on all essential terms of the settlement.[5]

The court also considered that a failure to enforce settlement agreements duly entered into by lawyers would be contrary to both the court and public policy of encouraging settlement and would result in chaos in the settlement process.[6]

In rejecting the Respondent’s position that no binding settlement had been reached as the draft minutes of settlement forwarded by counsel had not been executed, the court considered the case of Ferron v. Avotus Corp, where the trial court held:

I also conclude that the parties’ agreement as to the essential provisions was not conditional upon the execution of the Minutes of Settlement and Release. The straightforward draft Minutes of Settlement are just over two pages in length and in a widely spaced format, and the substantive provisions are consistent with the essential terms agreed to.[7]

The court in this matter stated that the Minutes, in this case, was also straightforward and that the substantive provisions are consistent with the essential terms to which the parties agreed. The court rejected the Respondent’s position that there was no agreement to the essential terms of the contract, as the Respondent’s counter-offer increasing the amount he would receive did not mention anything about the issue that he was now raising to be an essential term of the contract.

In considering whether the agreement should be enforced, the court applied the five factors listed in L-Jalco Holdings Inc. v. Lawrynowicz & Associates[8] to the facts of this matter and favoured enforcing the Minutes, as the offer and acceptance were clear as evidenced in the email correspondence between counsel for the parties, there was no mistake in drafting the Minutes, there was no prejudice to the Respondent in enforcing the Minutes, and that the settlement was reasonable and brought an end to five years of litigation. Costs were awarded against the Respondent.

Takeaway

Even though judges have a direction on whether to grant a judgment enforcing minutes of settlement according to Rule 49.09 of the Rules, rarely do they refuse so if the facts of the matter clearly show that the parties had the intention to enter into the minutes to put an end to the litigation and that the settlement terms are reasonable, clear, and no party will be prejudiced by the enforcement of same.

[1] Gelber v. Gelber, 2020 ONSC 1570, 2020 CarswellOnt 4786 [“Gelber”]

[2] Rules of Civil Procedure, R.R.O. 1990, Reg. 194

[3] Olivieri v. Sherman, 2009 ONCA 772, [2009] O.J. No. 6235, at para. 41. Sets out the test of what judges should consider when exercising their discretion to grant judgment: a) whether an agreement to settle was truly reached, and b) whether the agreement should be enforced.

[4] In Scherer v. Paletta, [1966] 2 O.R. 524 (C.A.), Evans J.A., writing for the majority, at paras. 10 and 11

[5] Gelber, supra note 1 at Para 26

[6] Marcel Equipment Ltd. v. Equipements Benoit D’Armours et Fils Inc., [1995] O.J. No. 673 (Gen. Div.), at paras. 77-78.

[7] Ferron v. Avotus Corp, [2005] O.J. No. 3511 (S.C.J.), aff’d 2007 ONCA 73, [2007] O.J. No. 353, at para 28.

[8] L-Jalco Holdings Inc. v. Lawrynowicz & Associates, 2018 ONSC 4002, 294 A.C.W.S. (3d) 274, at para. 38: a) whether the offer was clear and unequivocal; b) whether a mistake was made; c) whether the settlement was reasonable; d) the degree of prejudice to either party if the agreement is not given effect; and e) the effect of the settlement on third parties if the settlement is not enforced.

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