Court Enforces Settlement

In Trieu v Diep 2015 BCSC 950 the parties settled litigation only to have one of the parties later take the position that there was no settlement made, but the court enforced the settlement by way of a court order.

The judge found that the settlement agreement was valid and binding on the defendant’s estate.

As a procedural note, the law is that it is not necessary to commence a separate civil action to enforce the agreement – it can be done within the same court action as the subject settlement in issue.

 

It has long been settled practice that an application could be made to enforce a settlement in the action that was settled and there need not be a separate proceeding to enforce it: McKenzie v. McKenzie (1975), 55 D.L.R. (3d) 373 (B.C.S.C.), varied on other grounds (1976), 69 D.L.R. (3d) 765 (B.C.C.A.).

 

 

 

The principles that apply to a situation like this when there is some evidence that the client does not agree with the settlement made by his counsel and challenges that he ever gave instructions to make the settlement are set out in the Court of Appeal decision in Hawitt v. Campbell (1983), 148 D.L.R. (3d) 34 at 346 (B.C.C.A.) as follows:

The judge may refuse the stay if:

1. there was a limitation on the instructions of the solicitor known to the opposite party;
2. there was a misapprehension by the solicitor making the settlement of the instructions of the client or of the facts of a type that would result in injustice or make it unreasonable or unfair to enforce the settlement;
3. there was fraud or collusion; and
4. there was an issue to be tried as to whether there was such a limitation, misapprehension, fraud or collusion in relation to the settlement.

Refusal of a stay would leave the parties to their remedy in the action or in an action on the settlement.

My fourth point arises from an analogy between a summary application to stay, and an application for summary judgment. In either case, if there is a triable issue then the parties ought to be left to their remedy at trial.

I find as a matter of construction of the parties’ agreement that the agreement was binding notwithstanding that further documents were contemplated.

[33]        I refer to the recent BC Court of Appeal decision in Vancouver Canucks Limited Partnership v. Canon Canada Inc., 2015 BCCA 144 at paras. 76-77 which I set out below:

[76] As the trial judge noted, the traditional test for determining whether a contract is subject to execution of a formal agreement is set out in Von Hatzfeldt, and was affirmed by the Supreme Court of Canada in Calvan Consolidated Oil & Gas Co. v. Manning, [1959] S.C.R. 253 at 261, a case in which the Court found an agreement in place because the parties had not expressed in writing an intention to defer the legal effect of the documents and had substantially performed the contract:

Whether the parties intend to hold themselves bound until the execution of a formal agreement is a question of construction and I have no doubt in this case. The principle is well stated by Parker J. in Hatzfeldt-Wildenburg v. Alexander, in these terms:

It appears to be well settled by the authorities that if the documents or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of the further contract is a condition or term of the bargain, or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognise a contract to enter into a contract. In the latter case there is a binding contact and the reference to the more formal document may be ignored.

Whether or not it is relevant, I am fully satisfied that the parties thought they were bound until very close to the institution of this action. There was substantial performance on both sides … Neither party felt the necessity of a formal agreement when they were dealing in a very serious way with the subject-matter of their contract and there was no difficulty. The trouble arose when Manning was not satisfied with what had been done.

[77] Further, in United Gulf Developments Ltd. v. Iskandar, 2008 NSCA 71 at para. 82, Cromwell J.A. affirmed that the purpose of the purported agreement is relevant in deciding whether it is final or conditional:

… it has long been settled that whether the legal effect of a document is conditional on future agreements must be decided having regard, not only to the terms of the document, but to the “genesis and aims of the transaction.”: Hillas & Co., Ltd. v. Arcos, Ltd., [1932] All E.R. Rep. 494 (H.L.) per Lord Wright at 502; Canada Square Corp. v. Services Ltd. (1981), 34 O.R. (2d) 250 at 258.]