Can a Lawyer Bind a Client to a Settlement Agreement Without Client Consent?
As strange as it may sound the answer is yes. Lawyers are client’s agents and as such their actions can bind their clients. If a lawyer agrees to a settlement even if the lawyer does not have or is mistaken about their client’s instructions the settlement agreement can be binding. Reasons for judgement were released today demonstrating this.
In today’s case (Park v. Palmer) the Plaintiffs took their claim to trial. The Plaintiffs were represented by their niece who was a lawyer from Toronto.
At the close of the Plaintiffs case the Defendants brought a no-evidence motion. (a motion to dismiss a plaintiff’s claim for failure to call any evidence on an essential element of the case).
The Plaintiffs were apparently concerned about the costs consequences they’d be exposed to if the motion was successful. Before the Court ruled on the motion the Plaintiff and Defence lawyers had settlement discussions. When the parties returned to court the Defence lawyer advised the court as follows:
My Lady, I can advise the court of a settlement that was just reached between my friend and I. The plaintiffs agree to withdraw and discontinue their action, and the defendants, in turn, agree to waive their costs. We wanted to alert Your Ladyship and with apologies for not being able to advise you of this earlier, but that is the arrangement. That is the settlement that has been agreed to between myself and my friend.
The Plaintiffs lawyer was present in Court when this statement was made.
The settlement the Plaintiff lawyer allegedly accepted was a Defence offer to “settle the matter by waiving costs and disbursements in return for the plaintiffs agreeing to discontinue and withdraw thier action against the defendants“.
Upon hearing that a settlement was reached the Court did not rule on the No Evidence Motion. Some time passed and the parties could not agree on whether or not there was a binding settlement. The Plaintiffs said that “they did not give instructions to settle (to their lawyer)”. The parties ultimately brought this matter before the Court and asked the presiding Judge to decide “whether or not a settlement was reached in this matter“.
Madam Justice Dillon held that the matter was indeed settled. Specifically the Court held:
Certainly (the Plaintiffs lawyer) was in the courtroom at that time (the court was informed there was a settlement). There is some controversy in the affidavits before me as to whether or not (the Plaintiffs) were in the courtroom. Notwithstanding that uncertainty, clearly (the Plaintiffs lawyer) had authority, as lawyer, agent, and representative of the plaintiffs, to speak on their behalf before the court. As a lawyer and officer of the court, this court can rely on what (the Plaintiffs lawyer) tells the court. ..
 While I realize that this creates an unfortunate situation for the plaintiffs, there is no doubt that (their lawyer) settled this matter before the court by the plaintiff agreeing to withdraw and discontinue their action and the defendants waiving their costs. The plaintiffs’ recourse now is against (their lawyer) for failure to follow instructions, if that indeed is the case.
 This court has to rely on the statements of legal counsel and, in the circumstances before me, I have no alternative but to enforce the settlement that was stated before me on July 4, 2008.
 Therefore, I order that this matter is discontinued. The plaintiffs’ writ and statement of claim is ordered to be withdrawn, and there will be no costs to the defendant.
It is worth noting that the Court did not decide whether the Plaintiffs’ lawyer actually had instructions to accept the settlement matter. Ultimately it does not matter. If the Plaintiffs did give those instructions then the case was settled. If the lawyer acted without instructions the case would still be settled but as Madam Justice Dillon pointed out “the Plaintiffs’ recourse is now against (their lawyer) for failure to follow instructions, if that indeed is the case“.
There is a good lesson to learn here for both clients and lawyers. If you are giving your lawyer instructions to settle it is vital to know that your lawyer can create an agreement that is binding on you even if you later change your mind. For this reason you should be committed to the result when giving a lawyer settlement instructions. For lawyers, it is a good idea to take important instructions in writing so that there is clarity and certainty before settlement offers are made and accepted.