Minutes of Settlement forming a Contract

Lumsden et al. v. The Toronto Police Services Board et al., 2019 ONSC 5052 (CanLII)

[18] In Olivieri v. Sherman, 2007 ONCA 491, the Court of Appeal observed, at para. 41, that a settlement agreement is a contract. This requires a court to find that there was a mutual intention to create a legally binding contract and that the parties reached an agreement on all the essential terms of the contract. However, the Court noted at para. 44, that “whether a concluded agreement exists does not depend on an inquiry into the actual state of mind” of a party. Rather, where “as here, the agreement is in writing, it is to be measured by an objective reading of the language chosen by the parties to reflect their agreement.” See also B.O.T. International v. CS Capital et al., 2013 ONSC 5329 at para. 20.

[19] There is no requirement, therefore, of formal minutes of settlement, and an email exchange can suffice. As Justice M.F. Brown stated in Amirvar at paras. 14, 15 and 19:

Although the plaintiff’s offer was made orally, it was accepted in writing through the emails sent between the lawyers for the parties. The emails demonstrate that the parties accepted the terms as a binding settlement, a position that is supported by Mr. Miller providing his consent to the defendant taking out a dismissal order and providing his authority to execute the consent for the same.

The Courts have acknowledged that the terms of a contract are often expressed orally before being drafted into a formal written document but the formal written document, itself, does not alter the binding validity of the original oral contract. There is no merit in the argument that a settlement cannot be reached until the execution of a written release or if a plaintiff has objections to a release. See Kaur v. The Manufacturers Life Insurance Company, [1999] O.J. No. 3564 (Ont. C.A.) at para. 3.

….

As well, the documentation of taking out the dismissal order and executing the full and final release were not terms of the contract, but simply the formal documentation of settlement. The terms of the release are not the terms of settlement, and any issue the plaintiff may have with the wording of the release is not a valid reason to suggest that the parties had not reached agreement on all the essential terms. See Bawitko Ltd. v. Kernels Popcorn Ltd., 1991 CanLII 2734 (ON CA), [1991] O.J. No. 495 (Ont. C.A.). [emphasis added]

[20] Similarly, in Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., 1995 CarswellOnt 4182, appeal dismissed, 1995 CarswellOnt 4172, Chapnik J. stated:

It is well established that settlement implies a promise to furnish a release unless there is agreement to the contrary. On the other hand, no party is bound to execute a complex or unusual form of release: although implicit in the settlement, the terms of the release must reflect the agreement reached by the parties. This principle accords with common sense and normal business practice.

[21] The Court of Appeal explicitly agreed with Justice Chapnik’s conclusions. It is therefore well established that a full and final release is an implied term of a settlement that has already been reached. A settlement is not tentative, therefore, because the parties must still agree on the wording of the Release. Or, to put it another way to address an argument made by Brian Lumsden, a settlement agreement is not “an agreement to agree”.

[22] Viewing the correspondence objectively, I conclude that there was a binding agreement reached on all essential terms between the parties. The straightforward terms were that the action would be dismissed without costs, and that other costs ordered to be paid would be forgiven. This was accepted by Brian and David Lumsden. The draft Release reflected the settlement, and included an exception for Brian Lumsden’s benefit, as he had requested. It was not open to the plaintiffs to object to the Release, and they cannot rely on it to resile from their agreement.