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Settlement - General

. McAfee v McAfee

In McAfee v McAfee (Ont CA, 2017) some lawyer (and I expect their insurer as well) breathed a sign of relief at this ruling:
[1] The appellant purported to accept portions of the respondent’s offer to settle, most if not all of which favored him, relying on the severability clause that had been put in the offer. In particular, he accepted the term providing that he did not have to pay arrears of child support or spousal support from the date of separation to date.

[2] He did not accept any other essential term of the offer in exchange to resolve the matter. Within hours of the purported acceptance, counsel for the respondent advised the appellant that the severability clause had been included in error and that his partial acceptance of the offer was rejected.

[3] The court has the jurisdiction to correct an inadvertent error in an offer to settle: Milos v. Zagas, 1998 CanLII 7119 (ON CA), [1998] 38 O.R. (3d) 218.

[4] We agree with the motion judge that the mistake made by the respondent’s counsel was obvious on the face of the offer and that the severability clause made no sense in the context of this offer. As the motion judge put it at para. 8 of his reasons:
To allow the [appellant] to accept the clauses that financial benefit him and require the [respondent] to litigate all other clauses more than a year after the offer was submitted would be blatantly unfair.
. Welsh v Ontario

In Welsh v Ontario (Ont CA, 2019) the court comments on the procedure to be used when the parties need to modify a settlement, in this case over the amount of class action fees:
[11] Given the motion judge’s concerns, the appropriate course of action would have been for him to allow the parties an opportunity to make submissions and, if they desired to do so, agree to change the terms of the settlement in order to address those concerns and obtain approval of class counsel’s fees. However, he was not permitted to modify unilaterally the terms of a negotiated settlement without the consent of the parties. See: Dabbs v. Sun Life Assurance Co. of Canada, [1998] O.J. No. 1598, at para. 10; Ford v. F. Hoffmann-La Roche Ltd. (2005) 2005 CanLII 8751 (ON SC), 74 O.R. (3d) 758, at para. 127.

[12] There is no question that it was within the motion judge’s discretion to express concerns about the amount of class counsel’s fees, and to reduce the amount of class counsel’s fees and make them proportionate to the settlement result achieved. However, the motion judge erred in law by imposing the donation term that altered the settlement agreement.
. Huma v. Mississauga Hospital

In Huma v. Mississauga Hospital (Ont CA, 2020) the Court of Appeal considered whether a settlement had been reached in a medical malpractice case:
[17] On the question of whether a binding settlement agreement was reached, the unexpressed views of Elena Huma—that she thought she was taking an exploratory step—are properly ignored. The conduct of the parties, including the language they used, is viewed objectively in order to determine whether a contract has been made: Olivieri v. Sherman, 2007 ONCA 491, 86 O.R. (3d) 778, at para. 44.

[18] The motion judge considered whether the words used in the emails, viewed objectively, manifested agreement on the essential terms of a settlement, as opposed to a situation where the parties were engaged in continuing negotiation. The May 18 Email proposed two essential but straightforward terms of settlement—the action was to be dismissed, and no costs were to be sought. The respondents accepted those terms.

[19] Although the respondents, in accepting, each introduced a request for a release, that was not, in and of itself, the introduction of a new term inconsistent with the existence of a settlement agreement. “Settlement implies a promise to furnish a release unless there is a contractual agreement to the contrary”: Hodaie v. RBC Dominion Securities, 2011 ONSC 6881, at para. 18, aff’d 2012 ONCA 796; see also Kuo v. Kuo, 2017 BCCA 245, at para. 38.

[20] Where a settlement has been agreed to, the implied obligation to furnish a release is to provide one that does not go beyond the terms to which the parties have agreed: Hodaie, at para. 19. The releases proffered by the respondents each introduced terms beyond what would be strictly necessary to end the claims in the action on a without costs basis, which was the essence of the settlement. The hospitals’ proposed release included an acknowledgment or waiver of independent legal advice and an undertaking to keep the terms of the settlement confidential. The physicians’ proposed release also included a term of confidentiality and extended not only to the claims in the action, but to all claims up to the time of the release.

[21] Nevertheless, the proffering of overly broad releases does not negate the existence of a settlement, where there is no evidence that the settlement agreement was conditional on the respondents obtaining a release with those and only those proposed provisions: Hodaie, at para. 18. Nor does a party proffering an overly broad release repudiate an existing settlement unless, after discussion, the party refuses to proceed without it being signed: Kuo, at para. 41.

[22] In this case, the motion judge concluded that the overly broad releases were not part of the parties’ settlement. The agreement on the essential terms—dismissal of the action without costs—remained binding.

[23] As for the appellants’ argument that no contract was made because Elena Huma lacked authority from the other appellants, we interpret the motion judge’s reasons to mean that he rejected the evidence of Ms. Huma that she sent the May 18 Email without such authority. He stated:
Finally, the plaintiffs argued that it would be contrary to the interests of justice to enforce the settlement agreement. loan Huma is the injured party, having lost most of the functioning in his legs, and based on Elena Huma's evidence, never agreed to the settlement, nor was consulted. This claim conflicts with the email of May 18, 2018, which is signed by all three plaintiffs, stating “We are sending this email to you to inform you that we decided to dismiss this action.” (Emphasis added.)

Without evidence from loan Huma himself, and without other evidence in the record corroborating that Elena Huma had no authority to speak for the other plaintiffs, I am not prepared to find that the settlement should not be enforced as unjust.
[24] Although located in the portion of his reasons dealing with whether he would exercise his discretion not to enforce the settlement, the motion judge’s rejection of the evidence that Elena Huma sent the May 18 Email without authority is nonetheless dispositive on the issue of whether the settlement was made without authority. In light of the form of the May 18 Email—ostensibly sent on behalf of all the appellants—and the absence of any evidence from the other appellants that they had not authorized that email, there was a basis in the evidence for the motion judge’s finding, and it is entitled to deference on appeal.

[25] The court has an undoubted discretion to refuse to enforce a settlement that is unconscionable. Here the motion judge recognized the discretion, cited the correct test, concluded on the evidence that the settlement was not unconscionable and refused to exercise the discretion. He found that the settlement could not be said to be grossly unfair or improvident, given the absence of evidence of the likelihood that the appellants’ action might succeed. Although the appellants were self-represented, he found that Elena Huma was sophisticated and there was no evidence the appellants had been pressured into agreeing to settle. He rejected the evidence that the settlement had been agreed to without the authority of all the appellants.




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