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.

Tsaoussis v. Baetz, 1998 CanLII 5454 (ON CA)

A minor plaintiff, like any other plaintiff, is entitled to full but fair compensation if the minor establishes a personal injury claim. The parens patriae jurisdiction does not expand that entitlement. For example, a minor plaintiff who cannot establish that the defendant's negligence caused the injury, cannot succeed on the basis that, despite that failure, compensation is in the minor's best interests. Similarly, a minor, like any other plaintiff, is entitled to have the compensation assessment made on a once and for all basis and to be paid that compensation in a single lump sum. The parens patriae jurisdiction does not enable the court to create a different compensation regime for minor plaintiffs involving periodic reviews of the adequacy of the compensation provided to the minor. The court must protect the minor's best interests, but it must do so within the established structure for the compensation of personal injury claims: Kendall v. Kindl Estate (1992), 10 C.P.C. (3d) 24 (Ont. Gen. Div.).

Finality is as important in cases involving minor plaintiffs as it is in cases involving adult plaintiffs. The need for finality must temper the goal of meeting the minor's best interests just as it must temper the desire to provide every plaintiff with full but fair compensation. Proposed settlements of minors' personal injury claims, especially those involving very young children with head injuries, raise real concerns about the adequacy of compensation provided by those settlements. The risk of under-compensation in those cases is very real. [See Note 10 at end of document.] That risk demands that the court vigorously exercise its parens patriae jurisdiction when asked to approve a settlement. Once the settlement is approved, however, and the judgment is final and not appealed, the parens patriae jurisdiction is spent. It can only be re-asserted if there is a valid basis for setting aside the final judgment.

In arriving at the conclusion that the best interests of the minor justified setting aside the previous final judgment, Leitch J. relied exclusively on the decision of the British Columbia Court of Appeal in Makowka v. Anderson (1990), 1990 CanLII 196 (BC CA), 67 D.L.R. (4th) 751, 45 B.C.L.R. (2d) 136. In Makowka, a motion judge was asked to approve an infant settlement. He did so over the objections of the Public Trustee acting on behalf of the infant. The Public Trustee argued that more time was needed to assess the extent of the minor's head injury and the cause of her various medical problems. The Public Trustee appealed the judgment approving the settlement and sought to introduce evidence on appeal of medical assessments done between the judgment approving the settlement and the hearing of the appeal. Those assessments confirmed the Public Trustee's concerns and indicated that the minor's injuries were serious and that in all likelihood she would suffer significant long- term disabilities.

Mehedi v. George Brown College and Steven Bartlett, 2013 ONSC 1343

[3] Following a mandatory mediation session arising from the civil proceeding, the Applicant and Respondents settled both the civil action and the human rights application. Formal minutes of settlement dated July 4, 2011 were signed. The settlement provided that the College would pay the plaintiff $10,800 as damages and reimbursement for legal expenses and the College would bear the costs of the mandatory mediation session. The applicant agreed to the dismissal of all proceedings.

[4] On July 11, 2011, the Applicant signed the necessary documents to dismiss the human rights proceeding and the civil action. On the same day, he received a cheque for $10,800 from the College which, I note, he immediately cashed. There is no dispute that the College paid the mediator.

[12] In the end result, at the time that the settlement was reached, the applicant knew his situation and he knew the losses that he claimed that he suffered through the actions of the College. With that knowledge in mind, he accepted a certain sum of money in settlement of his claims. He seems to feel that he is now entitled to return before the Human Rights Tribunal and ask for more under the guise that the settlement has been contravened. He is not. The matter was concluded by the settlement. No contravention of the settlement has been demonstrated. The Human Rights Tribunal was correct in finding that there was no basis upon which the settlement could be revisited and thus no basis upon which the applicant’s current complaint could possibly succeed.

[13] The application for judicial review is dismissed.

Catalyst Fund General Partner Inc. v. Hollinger Inc., 2006 CanLII 23918 (ON SC)

[16] In Mohammed v. York Fire & Casualty Insurance Co., 2006 CanLII 3954 (ON CA), [2006] O.J. No. 547 (C.A.), the plaintiff’s counsel had settled on his behalf a fire loss claim where the defence was that he intentionally set the fire. Following a successful appeal from a criminal conviction of arson with respect to the fire, the plaintiff sought to set aside the Minutes of Settlement and Consent Order.

[17] Lang J.A., speaking for a unanimous appellate panel, summarized the operative principles for the setting aside of a Consent Order in the following paragraphs of their reasons, which I adopt:

[34] Minutes of settlement are a contract. A consent judgment is binding. Both are final, subject to reasons to set them aside. Finality is important in litigation. This is so for the sake of the parties who reached their bargain on the premise of an allocation of risk, and with an implicit understanding that they will accept the consequences of their settlement. Finality is also important for society at large, which recognizes the need to limit the burdens placed on justice resources by re-litigation, a limitation reflected in the doctrine of res judicata: See Tsaoussis (Litigation Guardian of) v. Baetz 1998 CanLII 5454 (ON C.A.), (1998), 165 D.L.R. (4th) 268 at paras. 15, 17, 18 (Ont. C.A.).

[35] For these reasons, the avenues to set aside a settlement and consent dismissal are restricted. Rule 59.06 sets out the procedure for setting aside such an order. It provides that a party may bring a motion in the original proceeding to “have an order set aside or varied on the ground of fraud or of facts arising or discovered after it was made”.

[36] However, this court has said that the rule, while providing an expeditious procedure to determine whether an order should be set aside, does not prescribe or delineate a particular test: Tsaoussis at para. 39. Rather, to succeed, “[t]he appellant must demonstrate circumstances which warrant deviation from the fundamental principle that a final judgment, unless appealed, marks the end of the litigation line” (para. 20).

[37] This case is analogous to Tsaoussis, which also considered the consequences of a change in circumstances following a judgment. There, two years after a judgment approving the settlement of a minor’s personal injury claim, a motion was brought on behalf of the minor to set aside the judgment on the basis that the child’s injuries were more extensive than had been expected. The minor’s motion was dismissed.

[38] In Tsaoussis, this court confirmed the importance of finality in litigation at para. 20:

Attempts, whatever their form, to reopen matters which are the subject of a final judgment must be carefully scrutinized. It cannot be enough in personal injury litigation to simply say that something has occurred or has been discovered after judgment became final which shows that the judgment awards too much or too little. On that approach, finality would become an illusion. The applicant must demonstrate circumstances which warrant deviation from the fundamental principle that a final judgment, unless appealed, marks the end of litigation.

[39] In terms of rule 59.06(2)(a), the court in Tsaoussis stated at para. 44:

These and numerous other authorities (e.g. Whitehall Development Corp. v. Walker) recognize that the finality principle must not yield unless the moving party can show that the new evidence could not have been put forward by the exercise of reasonable diligence at the proceedings which led to the judgment the moving party seeks to set aside. If that hurdle is cleared, the court will go on to evaluate other factors such as the cogency of the new evidence, any delay in moving to set aside the previous judgment, any difficulty in re-litigating the issues and any prejudice to other parties or persons who may have acted in reliance on the judgment. The onus will be on the moving party to show that all of the circumstances are such as to justify making an exception to the fundamental rule that final judgments are exactly that, final. In a personal injury case, new evidence demonstrating that the plaintiff was inadequately compensated cannot, standing alone, meet that onus [citations omitted].

[18] For its part, Inc. now urges that the actions of the respondent directors in context represent a breach by those directors of their obligations imposed under the Canada Business Corporations Act, R.S.C. 1985 c. C-44, s.122 (the “CBCA.”)