March 16, 2021 – Respecting Settlements Reached By Counsel

“Settlement agreements among parties should be enforced unless the court is satisfied that, in all the circumstances, there is a real risk of clear injustice: L-Jalco Holdings Inc. v. Lawrynowicz & Associates, 2018 ONSC 4002, 294 A.C.W.S. (3d) 274, at para. 34; or there is prejudice, mistake or any other “good reason not to enforce”: Sentry Metrics Inc. v. Erenwein 2013 ONSC 959, [2013] O.J. No. 685, at para. 16.

A judge has discretion to refuse to enforce an agreement where: a) a material fact relevant and significant to the resolution has not been disclosed; and b) the existence of the material fact was or could reasonably have been within the knowledge of the party seeking to rely on the settlement agreement: Saballoy Inc. v. Techno Genia S.A., [1993] A.J. No 276 (Alta QB), at paras. 22-24.

Where parties are engaged in litigation and have properly retained solicitors who enter into settlements on their behalf, these settlements ought to be binding upon the parties and the court should so order: Marcel Equipment Ltd. v. Equipements Benoit D’Armours et Fils Inc., [1995] O.J. No. 673 (Gen. Div.), at para. 78.

The settlement agreement is an enforceable contract and the rules of contractual interpretation apply: L-Jalco Holdings Inc., at para. 34.

The authority of a solicitor to enter into settlement discussions and compromise a client’s position is well-settled. In Scherer v. Paletta, 1966 CanLII 286 (ON CA), [1966] 2 O.R. 524 (C.A.), Evans J.A., writing for the majority, at paras. 10 and 11, stated as follows:

The authority of a solicitor to compromise may be implied from a retainer to conduct litigation unless a limitation of authority is communicated to the opposite party. … A solicitor whose retainer is established in the particular proceedings may bind his client by a compromise of these proceedings unless his client has limited his authority and the opposing side has knowledge of the limitation, subject always to the discretionary power of the Court.

Where a settlement is negotiated between duly appointed counsel with no limitation of authority, the settlement ought to be binding on the parties. I find that the settlement agreement as evidenced in the correspondence between the lawyers for the parties demonstrates a mutual intention to create a legally binding relationship and there was agreement on all essential terms of the settlement.

A failure to enforce settlement agreements duly entered into by lawyers would be contrary to both the court and public policy of encouraging settlement and would result in chaos in the settlement process: Marcel, at paras. 77-78.”

         Gelber v. Gelber, 2020 ONSC 1570 (CanLII) at 19-22, 24, 26-27