Enforcing Settlements and Settler’s Remorse

Enforcing Settlements and Settler's Remorse | Disinherited

Sojka v Sojka 2018 BCSC 562 reviews the law with respect to enforcement of a settlement reached at a mediation where both parties were represented by counsel, and one party attempted to renege on the agreement by utilizing what the court regarded as “settler’s remorse.”

The plaintiff brought on a court application to enforce the minutes of settlement that were signed by the parties and their counsel, and relied upon S 8(3) of the Law and Equity act and the inherent jurisdiction of the court to enforce the terms of settlement, which the court in fact did.

The defendants in their attempt to renege on the settlement argued that they were mistaken as to certain evaluations of property at the mediation, which the court found was not in fact the case, finding that the minutes of settlement and release  constituted a clear agreement between the parties.

The court followed the decision of Roumanis v Hill 2013 BCSC 1047 as to when the enforceability of a settlement agreement ought to be decided on a summary procedure.

The court stated:

The question of the proper procedure to adjudicate the enforceability of the settlement was addressed in Mackenzie v Mackenzie (1975) BCJ 1114 were the court reviewed the authorities and concluded that the court ought to enforce settlement upon application in the action of justice could be done by proceeding summarily.

The court found that there is a sound policy for the courts to enforce the terms of a valid settlement agreement as stated by the BC Court of Appeal in Robertson v Walwyn et al (1988) 24 BCLR )2d) 385 (BCCA):

“Justice affects both parties and requires a balancing of their interests. The fact that the settlement agreement may not have been a desirable one from the point of view of the Robertsons, or the fact that they may have received for advice from their lawyer, or the fact that the later change their minds, cannot provide grounds for setting aside the settlement agreement, or refusal to enforce it. And it would do scant justice to the interests of the defendants in this case to recognize the validity of the settlement agreement, and that it will ultimately prevail, but to refuse to enforce it at this time and in these proceedings.”

Hawitt v Campbell 1983 Carswell BC 199 (BCCA) set out that a court could refuse to exercise its discretion to perfect a settlement where:

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 the facts of the type that would result in an justice or make it unreasonable or unfair to enforce the settlement;

3. There was fraud or collusion;

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.

Enforcing/Interpreting Settlements

Enforcing/Interpreting Settlements

Walsh v Walsh 2018 BCSC 199 deals with an application to interpret or give effect to a settlement agreement, that unfortunately the parties could not ultimately agree upon.

While lawyers typically strive to settle court actions, as well as have an ethical duty to do so, it occasionally occurs that the settlement affected is ambiguous or one party has a change of heart and tries to escape from it.

The courts try very hard to give effect to the spirit and intent of a settlement.

Fieguth v Acklands Ltd (1989) 37 BCLR (2d) 62 BCCA at paragraph 42 offers an often cited authority when dealing with such:

“Many such settlements are very complicated, such as structured settlements, and the deal is usually struck before the documentation can be completed. In such cases the settlement will be binding if there is agreement on the essential terms. When disputes arise in this connection, the question will seldom be one of repudiation as the test cited above is a strict one, but rather a final agreement has been reached, which the parties intend to record informal documentation, or whether the parties have only reached a tentative agreement which will not be binding upon them until the documentation is complete. Generally speaking, litigation is settled on the former rather than the latter basis and parties who reach a settlement should usually be held to their bargains. Subsequent disputes should be resolved by application to the court or by common sense within the framework of the settlement to which the parties have agreed and in accordance with the common practices which prevail amongst members of the bar. It will be rare for conduct subsequent to a settlement agreement to amount to repudiation.”

The parties have a choice of making an application to the court, within the court action, or under the provisions of the Law and Equity act, section 10, which provides the court with the responsibility “to grant, either absolutely or unreasonable conditions that it seemed just, all remedies that any of the parties may appear to be entitled to in respect of any legal or equitable claim properly brought forward by them so that all matters in controversy between the parties may be completely and finally determined and all multiplicity of legal proceedings may be avoided.”

Authorities dealing with section 10 of the Law and Equity act, are Zak v Zak 2015 BC SC 1993 at paragraphs 25 – 28 , and Cheung v Chung 2009 BCSC 1951 at paragraph 15-1.

Enforcing Settlement Agreements

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.

Offers to Settle Double Costs

Offers to settle double costs

Sim v Sim estate 2017 BCSC 345 discussed offers to settle and rejected an award for double costs finding that the offer was one that ought not to have reasonably been accepted as it required the plaintiff to give up the claim entirely while providing no rationale.

[1]             The plaintiffs were unsuccessful in seeking a variation of the will of the late Alexander William Sim, pursuant to s. 2 of the Wills Variation Act, R.S.B.C. 1979, c. 435. Costs were awarded to the defendants. The defendants now seek double costs under Rule 9-1(5) of the Supreme Court Civil Rules.

Settlement Offers

[4]             By letter dated August 11, 2015,  the plaintiffs offered to settle all claims if the defendants: paid them $250,000; made a life insurance policy, under which the plaintiffs were beneficiaries, irrevocable; agreed to continue to pay the premiums on the policy and paid the plaintiffs’ costs and disbursements at Scale B. The plaintiffs’ offer was open for 30 days.

[5]             On August 13, 2015, the defendants rejected the plaintiffs’ offer and countered with an offer that Mrs. Sim would agree to make the life insurance policy irrevocable, the plaintiffs would agree to make the future premium payments and each party would bear their own costs. The defendants’ offer remained open until it was revoked on December 11, 2015 which was after the trial had commenced but before it finished.

[6]             Based on Mrs. Sim’s life expectancy the cost to the plaintiffs of agreeing to pay the future life insurance premiums would have been $20,857. The plaintiffs did not respond to that offer by the defendants.

[7]             At the Trial Management Conference on September 9, 2015, the presiding judge recommended that the parties try to settle the case. By email on September 10, 2015 the defendants’ counsel suggested to plaintiffs’ counsel that if he responded to his clients’ offer they may reach a settlement. On September 14, 2015 the defendants’ counsel emailed plaintiffs’ counsel and said he looked forward to a response to his offer on August 13, 2015 and a possible settlement without trial.

[8]             On the same day, plaintiffs’ counsel, in effect, rejected the defendants’ offer of August 13th and the case proceeded to trial.


[10]         In Hartshorne v. Hartshorne, 2011 BCCA 29, our Court of Appeal offered some guidance when a trial court is asked to award double costs.

[11]         At para. 25 the Court of Appeal states:

[25] An award of double costs is a punitive measure against a litigant for that party’s failure, in all of the circumstances, to have accepted an offer to settle that should have been accepted. Litigants are to be reminded that costs rules are in place “to encourage the early settlement of disputes by rewarding the party who makes a reasonable settlement offer and penalizing the party who declines to accept such an offer. (Authorities are cited)

[12]         The Court goes on to state, at para. 27:

[27] The first factor – whether the offer to settle was one that ought reasonably to have been accepted – is not determined by reference to the award that was ultimately made. Rather, in considering that factor, the court must determine whether, at the time that offer was open for acceptance, it would have been reasonable for it to have been accepted…the reasonableness is to be assessed by considering such factors as the timing of the offer, whether it had some relationship to the claim (as opposed to simply being a “nuisance offer”), whether it could be easily evaluated, and whether some rationale for the offer was provided.

[13]         I do not agree with the plaintiffs that the results of the trial were mixed. All of the plaintiffs’ claims were dismissed with costs.

[14]         The order that Mrs. Sim continue to pay the premiums on the life insurance policy and make the policy irrevocable simply confirmed what she had agreed to do in her testimony. As defendants’ counsel said, the court put her position “in stone”.

[15]         However, I do not consider the defendants’ offer to have been one that ought reasonably to have been accepted by the plaintiffs. In assessing reasonableness, I cannot consider the ultimate decision in the case. At the time of the defendants’ offer they were essentially asking the plaintiffs to give up their claim entirely and, in addition, pay the future premiums for the life insurance policy. Accepting the offer would have required the plaintiffs to completely accept the defendants’ position. Furthermore, no rationale was provided by the defendants to the plaintiffs for the terms of the offer.

[16]         In the end result the defendants’ application for double costs is dismissed and they remain entitled to costs at Scale B.