Probably most litigation lawyers have experienced the situation where a settlement is made on behalf of their client who then subsequently changes his or her mind.
I have found this to have occurred on several occasions in recent years after a mediation of many hours of negotiations concluding in an agreement is signed by all the parties, only to have one of the parties to express “settlement remorse” soon after and try and get out of the settlement.
The law relating to the enforcement of settlement agreements was discussed in Gaida Estate v. McLeod 2013 BCXSC 1168.
The court adopted the Alberta decision of Laughaug V. Canadian Immigration Specialists Ltd. 2011 ABQB 609 , where the court identified four situations in which a settlement agreement would be set aside:
a.) mutual mistake and a fresh action could be commenced to achieve the same effect;
b.) misapprehension or mistake by the lawyer entering into the agreement, but only if court intervention is necessary to give effect to the settlement;
c.) the lawyer settles without authority and the third party is aware of that limited authority;
d.) evidence that the lawyer entered into the agreement, in defiance of express and specific instructions from the client.
In British Columbia the legal principles applicable to the enforcement of settlement agreements are stated in the judgment Roumanis v Hill 2013 BCSC 1047.
The court found that the plaintiff solicitor had made to the settlement with the knowledge of the client and her express instructions and it was only after the lawyer communicated the acceptance to the opposing counsel that the plaintiff changed her mind.
The court upheld the settlement , finding that the court has no discretion to refuse to enforce a binding settlement made on the instructions of a client.
The BC Court relied upon the decision of Robertson v. Walwyn et al (1988) BCJ 485 (C.A.), which stated that a completed settlement agreement is the same as any other contract. If the contract is valid and enforceable by ordinary principles of contract law, and if it is in issue in appropriate proceedings, then the court in the end must give effect to it.
The Robertson decision held that where a settlement agreement is made with the knowledge and consent of the parties, and where there is no ground for setting aside the agreement under general contract principles, such as fraud, duress, lack of capacity or mutual mistake, then the court has no alternative but to enforce the agreement.
The agreement may be enforced within the same court action , it not being necessary to commence a separate action for its enforcement.
