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Tag: Binding Settlements

The Point of No Return: More on ICBC Settlements, Finality And Consent

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As previously discussed (you can click here to read all my archived posts on this topic), a binding ICBC settlement can be reached even before the ‘full and final release’ is signed.  An oral contract can be the point of no return.  Reasons for judgement were released last week by the BC Supreme Court, Vancouver Registry, demonstrating that once a lawyer accepts a settlement offer on behalf of a client it likely becomes too late for the client to change their mind.
In last week’s case (Truong v. Marples) the Plaintiff was injured in a motor vehicle collision.  She hired a lawyer to advance her personal injury claim.  In the course of the lawsuit ICBC’s and the Plaintiff’s lawyer agreed to a $10,000 settlement.
The Plaintiff agreed her lawyer had authority to accept the offer but argued the deal should not be binding as the offer was ambiguous as it should not have disposed of her no-fault benefits claim with ICBC.  The Court disagreed finding that a binding settlement was reached.  In doing so the Court provided the following reasons:

[20] In terms of ambiguity, I find that there was no ambiguity in the settlement.  The settlement was agreed to between Mr. Grewal and Mr. Shane and they both state that there was no ambiguity and agree on what the deal was.  Their evidence, which was not shaken at the hearing, was that they reached a settlement of all issues, including those regarding tort and Part 7 benefits.

[21] Mr. Shane and Mr. Grewal had a history of working on the opposite sides of files.  It is apparent that the two have developed experience with each other.  Mr. Shane’s testimony also indicates that he has a direct working relationship with the Burnaby litigation department of ICBC, and that an “all in” settlement always meant that it included the tort claim and Part 7 benefits.  He displayed a sound understanding of Part 7 benefits and how they interact with a person’s private health insurance.  He stated that if a settlement did not include Part 7 benefits it was his practice to note that.  I accept his evidence on this point.

[22] The Release document sent by ICBC to Mr. Shane supports the settlement asserted by Mr. Grewal and Mr. Shane.  The document states that it is a release of all defendants, and ICBC under Part 7 of the Insurance (Vehicle) Regulation.  Mr. Shane reviewed this document, obviously found it satisfactory, and passed it on to Ms. Truong for her execution.

[23] I also accept Mr. Shane’s evidence that he always makes sure that his clients understand that the figures being proposed to settle include all potential entitlements they have from their claim which include the tort and Part 7 entitlements.  I also accept that he advised Ms. Truong, as per his practice, that prior to confirming any settlement figure with ICBC, that she would need to sign a Release, that this was not optional, or is something that she could refuse to do, and that their claim would be over.

[24] I am not persuaded that the Sharma case is particularly applicable here, given that both counsel involved in the settlement in the instant case agree as to what was settled

[25] Turning then to the question of whether the settlement was unjust and should not be sanctioned.  I have considered the various factors identified in the Pastoor case.  I am not persuaded that the circumstances justify intervention by the court.  Ms. Truong was represented by experienced counsel.  Mr. Shane provided her his opinion based on the information that he had at the time.  He knew that Ms. Truong had private health insurance, he formed a considered opinion that she had little chance of success on liability and the costs of pursuing that aspect, he had a sound understanding of Part 7 benefits, and he discussed that with Ms. Truong.  There was little evidence adduced as to what it would be in the case of Ms. Truong.  Mr. Shane in this hearing stated that it could be thousands of dollars.  Finally, he also received instructions to accept the offer.

[26] I am of the view that interfering with this settlement would do greater harm to encouraging settlement.  It would undermine the role of counsel in relation to a client, in relation to opposing counsel, and in the litigation process.

[27] The issues raised by Ms. Truong are, in my view, related to her relationship with Mr. Shane and not with the defendant.  Her remedy does not lie in having the settlement overturned.

I repeat my previous words of caution about settlement instructions.  If a lawyer enters into a binding settlement without a client’s consent the client’s remedy is against their lawyer as opposed to the Defendant in the ICBC Claim.  In the best interests of everyone involved it is vital that lawyers do not accept an ICBC settlement offer unless they have clear instructions from their clients to do so.  A best practice when giving settlement instructions to a lawyer is to do so in writing to help avoid potential complications.

More on ICBC Settlements and Consent

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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.

Binding ICBC Claims Settlements: Lawyers and Client Consent

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(Update:  The case discussed in the below post went to trial on February 15, 2011 with reasons for judgement released on February 18, 2011 with Mr. Justice Truscott finding that no binding settlements were entered into).
As previously discussed, lawyers act as agents for their clients and can enter into a binding settlement even if their client did not instruct the lawyer to do so.   (This, of course, would be improper and I address this at the bottom of this post).  Reasons for judgement were released this week by the BC Supreme Court, New Westminster Registry, further demonstrating this reality.
In this week’s case (Johnson v. Wells) the Plaintiff was involved in 2 motor vehicle collisions.  She hired a lawyer to deal with one of these claims.  In the lawyers dealings with ICBC he settled the claim that he was retained for apparently with his clients instructions.  However, a disagreement arose as to whether the settlement covered the second claim.   ICBC alleged that the lawyer entered into a settlement agreement for both claims.  The lawyer disagreed.  The BC Supreme Court was asked to decide whether there was a binding settlement.
The Plaintiff gave evidence that she “had not even retained (the lawyer for the second claim)…I had no intention of settling that claim and I did not instruct (my lawyer) to settle that claim“.  Ultimately the Court deemed that there was not enough information to decide whether there was a settlement for the second claim and that ICBC’s adjuster needed to be cross examined.  The reasons for judgment, however, do not focus on whether the client consented, rather, on the communications between the lawyer and ICBC and what was agreed to regardless of the client’s instructions.  In ordering that ICBC’s adjuster be cross-examined Mr. Justice Truscott provided the following reasons:

[40]         I have concluded that the plaintiff’s application to cross-examine Adjuster Johnston on her affidavit should be allowed.

[41]         The cross-examination will be restricted to why Adjuster Johnston attributed $5,000 to the 2006 accident and $2,500 to the 2008 accident, what was said between her and Mr. Albertson about the 2008 accident and its settlement, why she thought Mr. Albertson was retained by the plaintiff or the 2008 accident, what discussion there was between the two of them on the terms of the release, and what discussion there was between the two of them on settlement of any Part 7 benefits claim.

[42]         I see no usefulness in questioning Adjuster Johnston about Mr. Albertson’s authority to settle the 2006 accident because he clearly had that authority from the plaintiff given the plaintiff’s affidavit evidence.

Implicit in this judgment is that a binding settlement could have been entered into, regardless of the client instructions, depending on the discussion between the lawyer and ICBC.
If a lawyer enters into a binding settlement without a client’s consent the client’s remedy is against their lawyer as opposed to the Defendant in the ICBC Claim.  In the best interests of everyone involved it is vital that lawyers do not accept an ICBC settlement offer unless they have clear instructions from their clients to do so.  As previously discussed, a best practice when giving settlement instructions to a lawyer is to do so in writing to help avoid potential complications.

More on ICBC Injury Claims, Lawyers and Binding Settlements

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Further to my previous post on this topic, reasons for judgement were released today by the BC Court of Appeal discussing the principles behind binding settlement agreements in ICBC injury claims when lawyers accept an offer on their client’s behalf.
As I wrote earlier:
Lawyers act as agents for their clients.  Lawyers can, therefore, bind their clients to a settlement.   Typically a client will give a lawyer authority to settle their claim for X dollars and the lawyer will attempt to get that amount or more.  If a lawyer accepts an ICBC settlement offer on behalf of their client the client is typically bound to the settlement, even if the client later wishes to get out of the settlement by not signing ICBC’s full and final release.
Today’s case (Lacroix v. Loewen) demonstrated this principle.  In Lacroix, the Plaintiff gave her lawyer instructions to accept a settlement offer.  The lawyer then did accept ICBC’s settlement offer.  The client, after speaking with some friends, decided not to proceed with the settlement and did not sign ICBC’s settlement contract.  The client proceeded with her Injury Claim and ICBC brought an application to dismiss the lawsuit on the basis that it was already settled.  The Chamber’s judge ruled that the case was not settled because ICBC insisted on a term beyond the scope of the initial settlement agreement thus ‘repudiating‘ the contract.  ICBC appealed and succeeded.  In setting aside the lower court’s judgement the BC Court of Appeal found there was no repudiation and set out the following principles:
25] The chambers judge held that there was a settlement and that ICBC then repudiated the agreement by insisting upon terms that were not agreed upon….

[38] Applying the principles of contractual interpretation, the communications between Mr. Mickelson and the adjuster, Mr. Per, objectively indicate that there was an enforceable settlement including both tort and Part 7 claims. Looking at all the material facts, the reasonable objective bystander would conclude that the parties intended to make a final settlement of both tort and Part 7 claims.

[39] At the time of the discussions between Mr. Mickelson and Mr. Per, there was no outstanding action for either tort damages or Part 7 benefits. There was simply a “file” which included both tort and Part 7 claims. When Mr. Mickelson and Mr. Per spoke, the evidence indicates that their discussions concerned the “file” as a whole, and the “merits” of her claims. No differentiation was made between tort and Part 7. Their discussions about “settlement” were directed to settling the “file”/“matter”. This is clear from Mr. Per’s affidavit, which states:

3.   On March 11, 2004, I received a telephone call from John Mickelson with respect to special expenses which he wanted covered. After a discussion of the merits of the file I offered to settle the matter for $5,500.00. John Mickelson stated that he would speak to his client and get back to me…

9.   On March 16, 2004, I spoke to John Mickelson by telephone with respect to the returned cheque and release. I specifically asked Mr. Mickelson if he had instructions from Ms. Lacroix to settle the matter at the time that the counter offer was made and accepted by myself. He told me that he did have such instructions.

[40] The judge correctly noted at para. 30 of his reasons that, “There was no mention of the fate of any subsequent Part 7 claims until the release was forwarded to counsel for the plaintiff”. However, the trial judge failed to acknowledge that there was little or no specific mention of individual aspects of any claims, tort or Part 7. The objective observer would conclude that was so because Mr. Mickelson and Mr. Per’s discussions were directed to a settlement of the “file” or “matter” as a whole. Both sides understood the benefits and advantages of settling early, and concluding the matter in its entirety. To an objective observer, they did so.

[41] While the above conclusion makes it unnecessary to consider the repudiation issue, a word or two is warranted. While the chambers judge cited proper authority in Fieguth in relation to repudiation, he incorrectly applied that authority. The judge concluded that the mere tendering of documents with terms that have not been agreed upon can constitute repudiation. That is an error. As set out above, in Fieguth Chief Justice McEachern said at p. 70:

…One can tender whatever documents he thinks appropriate without rescinding the settlement agreement. If such documents are accepted and executed and returned then the contract, which has been executory, becomes executed. If the documents are not accepted then there must be further discussion but neither party is released or discharged unless the other party has demonstrated an unwillingness to be bound by the agreement by insisting upon terms or conditions which have not been agreed upon or are not reasonably implied in the circumstances.

[42] This passage continues to be a correct statement of the law and to accord with sound practice.

I repeat my advice that the lesson in this case is to make sure that when you give your lawyer settlement instructions understand that he/she can make a binding commitment on your behalf based on these instructions.  Better yet, if you don’t know your lawyers negotiation tactics consider asking him or her to negotiate on a non-binding basis giving you, the client, the final say when the claim settlement paperwork is presented to you.