“Broad” Non Disparagement Clause Makes Settlement Agreement “Unjust to Enforce”

Reasons for judgement were published today by the BC Supreme Court, Victoria Registry, finding that the settlement of a personal injury claim could be set aside given the inclusion of a broad non disparagement clause.

In today’s case (Wannan v. Hutchison) the Plaintiff sued for damages for injury and loss she alleges to have suffered as a result of naturopathic treatments performed on her by the defendant.  In the course of the lawsuit the Defendant presented a formal settlement offer which the Plaintiff, through her counsel, accepted.   As part of the settlement a release had to be signed which included a confidentiality and non-disparagement clause.  After accepting the offer the Plaintiff objected to the broad language contained in the non disparagement clause as it prevented her from voicing her concerns about the treatments she received.

The Defendant brought an application to enforce the settlement.  The court rejected this finding that “that this is one of those rare cases in which it would be unjust to enforce the agreement.”.  In refusing to enforce the settlement Madam Justice Murray provided the following reasons:

[20]         I am satisfied that plaintiff’s counsel entered into the settlement under a misapprehension – both on her part and the part of her client. In these unusual times counsel are doing business differently. Instead of meeting face to face with clients, they are now forced to communicate electronically. It is a new way of doing business. That counsel inadvertently failed to attach the release to the offer to settle is not out of the realm of possibilities. I accept that counsel did not realize that she had failed to provide the release to her client until after she sent the acceptance email, and that her client did not understand the scope of the release when she instructed counsel to accept the offer.

[21]         I further accept that the non-disparagement clause in this case is unusually broad and that it is reasonable that the plaintiff failed to appreciate from simply reading the offer to settle, that the non-disparagement clause would include the treatment.

[22]         Plaintiff’s counsel reported the misapprehension to defendant’s counsel within 24 hours of the acceptance. The settlement had not been perfected. No further steps had been taken.

[23]         There is no evidence before me that there would be any prejudice to the defendant if the settlement is not enforced other than losing the settlement. Nor is there any evidence before me that there would be an impact on any third parties if the settlement is not enforced.

[24]         I am however satisfied that there would be prejudice to the plaintiff if the settlement is enforced. She would be silenced from publicly warning others about the treatment she received; something she feels strongly about.

[25]         In all of the circumstances, I am satisfied that this is one of those rare cases in which it would be unjust to enforce the agreement. Accordingly, I refuse to enforce the plaintiff’s acceptance of the settlement offer.