More on ICBC Settlements and Consent


Further to my previous posts on this topic, if a lawyer accepts an ICBC offer without clear client instructions a binding settlement could be created leaving the remedy of a separate claim against the lawyer in negligence.  Reasons for judgement were released last week by the BC Supreme Court, New Westminster Registry, dealing with this area of the law.
In last week’s case (Ng v. Schell) the Plaintiff was injured in a 2007 motor vehicle collision.  She retained a lawyer who allegedly entered into a settlement agreement for $95,000 plus taxable costs and disbursements.  The client apparently did not give instructions to accept such an offer.
The client retained new counsel and attempted to proceed to trial.  ICBC brought a motion to dismiss the lawsuit arguing a binding settlement had been reached.  Ultimately Madam Justice Maisonville declined to determine the issue in a Chambers Application and ordered that the matter proceed to trial so that the former lawyer could be subpoenaed and give evidence as to what occurred.  Prior to disposing of the matter the Court provided the following summary of the relevant legal principles:

[8] Both counsel agree that in a situation where a judgment has been rendered, normal rules of contract and agency are applicable.  However, in an interlocutory matter, such as here, where there is not yet a judgment, then the situation must fall into one of the four exceptions outlined in Hawitt for the court to have discretion to deny the application to order the settlement valid and enforceable and stay the proceeding.  Those four notable exceptions are set out in Hawitt at paragraph 20:

20  The judge may refuse the stay if:

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 of the facts of a type that would result in injustice 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.

[9] The first analysis, of course, is whether the previous solicitor was acting on instructions.  One of the leading cases in British Columbia is that of Smoliak v. Smart (Guardian ad litem of), [1995] B.C.J. No. 1559 (S.C.) where, at para. 17, Drake J. held:

17  Solicitors, of course, are agents of their clients in accordance with the terms of their retainers; and when retained to conduct litigation have the authority to compromise and settle an action brought for a client.

[10] It is settled law that a solicitor has authority to enter into settlement agreements as agent for the client in such circumstances and that if there is any restriction on that authority, notice must be given to the other side of such a want of authority.  Otherwise, in the absence of the other side being aware the authority was limited or restricted, the opposing side is entitled to rely upon the authority to settle.  The only exceptions, accordingly, in a situation where there appears to be authority to settle are the above exceptions from Hawitt.

As a practical matter these types of disputes can be avoided if settlement instructions are provided in writing, or, better yet, by clearly communicating in the course of negotiations that binding settlement will be made subject to clients confirming instructions evidenced by a signed full and final release.

bc injury law, Binding Settlements, Madam Justice Maisonville, Settlement Law

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ERIK
MAGRAKEN

Personal Injury Lawyer

When not writing the BC Injury Law Blog, Erik is the managing partner at MacIsaac & Company, based in Victoria, B.C. He is also involved with combative sports regulatory issues and authors the Combat Sports Law Blog.

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