BACKGROUND & HISTORY:
The parties participated in a settlement conference in August 2022. During the conference, with the assistance of Bennett J., they reached negotiated terms for a global financial settlement. The key terms of the agreement were that the parties would equally divide the net proceeds from the sale of the matrimonial home and a property in the Cayman Islands, and the husband would pay $150,000 to the wife in full satisfaction of all claims. The settlement was intended to achieve a "clean break" with no future claims between the parties.
However, the husband disputes the binding nature of the agreement, arguing that he was under extreme financial pressure, had no access to independent legal advice (ILA), and did not fully understand the terms. He believed the agreement was conditional upon the receipt of ILA and the execution of a written agreement. The wife, on the other hand, contends that the negotiated terms form a binding agreement and asserts that the husband failed to meet the burden of proof to persuade the court not to enforce the settlement.
LEGAL ISSUE(S):
Whether the parties reached a binding settlement at the Settlement Conference, considering aspects such as a "meeting of the minds," consensus on all essential terms, and whether the agreement was conditional upon the execution of a formal contract.
ANALYSIS:
The court found that there was no binding settlement. While there was a "meeting of the minds" during the Settlement Conference, the negotiated terms were contingent upon the husband having the opportunity to obtain ILA and review the draft Minutes of Settlement. The court summarized:
[32] In Andrews v. Lundrigan[10], the Ontario Court of Appeal summarized the relevant factors to consider when assessing whether a final agreement has been reached, in contrast to a “contract to make a contract”. The intention of the parties is important:
The term “intention” is not used in a subjective sense but rather to refer to whether “in the eyes of a hypothetical onlooker [the parties] appeared to have reached an agreement”: G.H.L. Fridman, The Law of Contract in Canada, 5th ed. (Toronto: Thomson Carswell, 2006), at p. 6. In making this determination, the court will look at the conduct of the parties at the time. As was said in Bawitko at p. 104, if in examining what transpired it is apparent that “execution of the contemplated formal document is not intended only as a solemn record or memorial of an already complete and binding contract but is essential to the formation of the contract itself”, there is no contract, or in this case, no settlement.
[33] The wife argues that the husband’s stated intention to resolve all issues during the Settlement Conference, and his repeated requests for a copy of the draft Minutes are evidence of the binding nature of the negotiated terms.
[34] I disagree.
....
[40] A reasonable observer would conclude that the negotiated terms were conditional upon the husband having the opportunity to consider family law legal advice in respect of “agreement/release/minutes of settlement to be signed.” Bennett J. correctly identified that the husband should obtain family law legal advice when he caucused with the husband, during the concluding phase of the Settlement Conference and in his endorsement.
The court found that the parties made the Settlement Conference agreement conditional upon the husband having the opportunity to retain family law counsel and consider the nature and consequences of the negotiated terms, his legal rights and obligations, and the relevant legislative scheme. The negotiated terms were subject to the execution of a formal contract, and the opportunity to review, revise and rescind the terms upon receipt of independent legal advice. The court emphasizes the importance of ILA as a safeguard to ensure parties understand the agreement's nature and consequences and make informed decisions.
The court went on to discuss ILA in more detail:
[44] The provision of ILA is not the act of rubber-stamping agreements already reached by self-represented litigants. A lawyer who accepts such a retainer is expected to meet with the client for a reasonable amount of time, and often more than once. In anticipation of the provision of legal advice the lawyer is also expected to review relevant court and related documents. Typically this includes the pleadings, financial disclosure, sworn financial statements, parenting assessments and reports, and any other issue-specific documents.
[45] In Harnett v. Harnett[16], McGee J. described what is encompassed in the provision of ILA:
[79] Providing independent legal advice means more than being satisfied that a party understands the nature and the contents of the agreement and consents to its terms. Gurney v. Gurney, 2000 BCSC 6 (CanLII), 2000 CarswellBC 90 (B.C. S.C.) The lawyer should make inquiries of the party so as to be fully apprised of the circumstances surrounding the agreement. The party should be advised of her legal rights and obligations. Simply stated, a client must understand the legislative scheme out of which she is opting.
[80] It is the lawyer who should offer his or her opinion on whether it is appropriate for the party to sign the agreement, and not leave that question to the party.
[81] It is only with comprehensive advice that a party can make an informed decision about the advisability of entering into an agreement as opposed to pursuing some other course. Only with comprehensive advice can a party appreciate the future risks and obligations of the agreement, and how best to organize one’s affairs accordingly.
CONCLUSION:
The court dismissed the wife's motion for summary judgment, finding that there was no binding settlement agreement. The court also emphasized the importance of parties considering the emotional and financial costs of a trial and encouraged them to explore settlement options to avoid further litigation.