Tag: settlement advice

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. ..

[11] 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.

[12] 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.

[13] 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.

I Accept Your Settlement Offer…Wait a Minute, What Settlement Offer?


Reasons for judgement were released yesterday by the BC Supreme Court, New Westminster Registry, dealing with a very interesting set of facts.  Can a Defendant accept a Formal Settlement Offer from a Plaintiff when the Plaintiff forgot the offer was made in the first place?
In yesterday’s case (Burton v. Bakker) the Plaintiff was injured in a 2005 BC motor vehicle accident.  He hired a lawyer to help him advance his ICBC claim.  In the course of the lawsuit the Plaintiff’s lawyer made a formal settlement offer to resolve the claim for $40,000.  Some time after this the Plaintiff switched lawyers.  When the new lawyer took over the file “there was no copy of the settlement offer made (by the last lawyer) in the file and the correspondence accompanying the file made no reference to (the) offer“.
Almost one year passed.  During this time the potential value of the Plaintiff’s claim appreciated significantly.  The Plaintiff’s new lawyer continued to be unaware of the outstanding offer made by the first lawyer.  Then the Defendants lawyer, without any prior notice to the Plaintiff’s new lawyer, accepted the formal settlement offer.  The parties could not agree if there was a binding settlement which resulted in the Defendants applying to Court for “a declaration that there is a binding settlement agreement“.
Madam Justice Bruce of the BC Supreme Court presided over the application.   The Plaintiff’s lawyer argued that “the offer to settle was made under a misapprehension of the facts underlying the claim such that it would result in an injustice to enforce the settlement“.  Ultimately the Court held that this is an issue that would better be dealt with by the trial judge as opposed to in a pre-trial chambers application.  Before reaching this conclusion, however, Madam Justice Bruce provided a useful discussion of the powers of BC Courts to offer remedies in the enforcement of settlement agreements.  Here are the highlights of the Courts discussion:

[20] The enforcement of settlement agreements is not a separate field of law exempt from the ordinary principles of contract law and the rules of procedure. The various means of enforcing a settlement agreement may involve equitable principles, discretionary remedies, and rules regarding the entry of consent orders; however, this does not oust the general principles of contract law. This proposition of law is amply supported by the reasoning of the Court of Appeal in Robertson where Lambert J.A. says at 386:

The law in relation to the enforcement of settlement agreements by stays of proceedings brings together principles of contract law, principles of the law of agency as they apply to barristers and solicitors, rules of equity as they apply to discretionary remedies, and rules of procedure as they apply to the pronouncement and entry of consent orders. In each case, the issues between the parties must be dealt with in accordance with those principles. The effectiveness and the enforcement of settlement agreements does not constitute a separate field of law to which the ordinary principles of contract law, agency, and equity, and the ordinary rules of procedure, do not apply.

[21] It is because the enforcement of settlement agreements involves such a collage of legal and equitable principles that the remedies available to the court have become somewhat muddied. On the one hand, it is apparent that the Rules of Court and in particular, Rules 37A and 37B addressing settlement offers, are not a complete code that have ousted the principles of contract law in respect of the enforcement and interpretation of settlement agreements. As Madam Justice Ross says in Thom at paras. 33 to 34:

[33] In my view, the decision in Acadia Hotels did not have the effect contended by counsel for the respondent of completely ousting the principles of mistake from a consideration of Offers to Settle.

[34] I find support for this conclusion in Craig Estates and in Vickaryous v. Vickaryous (2001), 19 R.F.L. (5th) 195, [2001] B.C.J. No. 1343, 2001 BCSC 930 (S.C.) per Garson J. In both decisions, the principles applicable to unilateral mistake were applied in relation to the acceptance of an Offer to Settle. Moreover, in 256593 B.C. Ltd., Mr. Justice Donald approved of the statement of law made by Baker J. in the Craig Estate decision.

[22] Thus, on an application for a declaration that a settlement agreement is binding on the parties, the court may apply the ordinary principles of contract law to determine the matter and grant or dismiss the application based on these principles.

[23] On the other hand, in an application to enforce a settlement agreement, the court has a broader range of remedies available to it that in an ordinary contract case, particularly because of s. 8 of the Law and Equity Act. This provision authorizes the court to grant a stay of proceeding in any cause or matter before it if it is just and fit in all of the circumstances. Alternatively, the court may exercise its discretion to leave the issue of the settlement agreement to the trial judge. As Garson J. (as she then was) says in Vickaryous v. Vickaryous, 2001 BCSC 930, 19 R.F.L. (5th) 195 at paras. 28 to 29:

[28] This application is brought pursuant to Rules 1, 2, 18A, 27 and 57 of the Rules of Court and s. 8 of the Law and Equity Act.

[29] In an application such as this, the court may grant or dismiss the application to enforce a settlement, pursuant to Rule 18A. Alternatively, pursuant to s. 8 of the Law and Equity Act the court may exercise its discretion in favour of granting a stay of the proceedings pending completion of the settlement agreement. The court also has a discretion to leave the settlement issue to be resolved at trial. (English v. Storey, [1999] B.C.J. No. 1647 (B.C.S.C.) and Hawitt v. Campbell (1983), 148 D.L.R. (3d) 341, 46 B.C.L.R. 260 (C.A.).)

[24] In Hawitt v. Campell, (1983) 148 D.L.R. (3d) 341, 46 B.C.L.R. 260 (C.A.) [Hawitt CA], , the Court of Appeal articulated the circumstances in which the court may refuse a stay of proceedings and held that the same factors should apply whether the application is for a stay of proceedings or for summary trial on the issue. These factors are described by MacFarlane J.A. in Hawitt CA at paras. 20 to 23:

[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.

[21] Refusal of a stay would leave the parties to their remedy in the action or in an action on the settlement.

[22] My fourth point arises from an analogy between a summary application to stay, and an application for summary judgment. In either case, if there is a triable issue then the parties ought to be left to their remedy at trial.

[23] In exercising his discretion to refuse to grant a stay, a judge will consider not only whether there was the required misapprehension by the solicitor but whether the result of that would be unreasonable or unfair to the client. It is in that sense that I understand the reference to reasonableness and fairness in the authorities cited.

[25] Finally, in Robertson the Court of Appeal clarified that the judgment in Hawitt CA deals with an application for a stay of proceedings or summary relief and does not address the legal and equitable principles that ultimately govern whether the settlement is binding on the parties. The latter question is to be determined by the ordinary principles of contract law. As Lambert J.A. says in Robertson at 388:

…But the remarks made in the course of the reasons in Hawitt v. Campbell that a stay might be refused if a settlement obtained as a result of a misapprehension was unreasonable or unfair should not be regarded as introducing a rule that settlements are not binding if they are unreasonable or unfair. In my opinion, those remarks were intended to apply to the exercise of the judge’s discretion upon a summary application for a stay. A judge hearing such an application might refuse a stay, if there had been a misapprehension of instructions, on the ground that to allow it might be unjust. The result of a refusal would be to leave the parties to seek their remedies in the action, in which the settlement might be pleaded, or to seek them separately in an action on the settlement. In short, Hawitt v. Campbell deals with the considerations which apply to the judicial discretion under s. 8 of the Law and Equity Act to grant or refuse a stay. But those same considerations do not determine whether a settlement is binding or not.

[26] Applying these principles to the case at hand, I find it would be inappropriate to grant a stay of proceedings or to grant the summary relief claimed by the defendants. In my view, Mr. Burton has raised a triable issue that there was a unilateral mistake and unfair reliance upon it by the defendants. Further, he has raised a triable issue that the offer to settle was made under a misapprehension of the facts underlying the claim such that it would result in an injustice to enforce the settlement. The parties should be left to pursue their remedies in respect of the settlement agreement at the trial of the action set to commence on April 19, 2010.

Ultimately this case serves as an important reminder that great care should be taken before making a settlement offer in an ICBC Claim otherwise the consequences could cause regret.  If the parties to this lawsuit are unable to come to a resolution before the case goes to trial the presiding Judge will certainly be asked to grapple with this interesting issue.  If that occurs I will be sure to write about the reasons for judgement once they are released

$75,000 Pain and Suffering Awarded to Cyclist Injurd in Car Accident

OK, I’m back in Kelowna, but this time more for pleasure than business, so this case summary will be a little light on the usual details.
Reasons for judgement were relesed today finding a motorist at fault for a 2003 impact with a cyclist. The Plaintiff suffered serious injuries and was awarded close to $500,000 in compensation for his losses and injuries.
In this case the cyclist was travelling on the side-walk. This is prohibited in law but simply violating the motor vehicle act does not automatically make one negligent for an accident. In this case the court found that while the cyclist was unlawfully riding on the sidewalk, he was not responsible for the accident because this did not cause the accident, rather
the accident was caused by (the Defendant) either failing to stop his vehicle before driving across the sidewalk in accordance with s. 176(1) of the Act, or by failing to look to his right before starting motion after looking away for a period of time during which a person could have appeared to the right of his vehicle.”
Here the court found that the Plaintiff was a credible witness that did not exaggerate his symptoms. The injuries were summarized by the Plaintiff’s treating family physician as follows:
fracture of the distal tibia, laceration of his scalp, laceration of his left shin, post-traumatic periostitis of the left shin, a partial tear of his anterior tibiofubular ligament (an ankle ligament) and retrocalcaneal bursitis (a bursa in the ankle/heel area).
In other words, a very serious ankle injury.  Evidence was also led that the Plaintiff suffered from a Mild Traumatic Brain Injury (MTBI) and that this resulted in some on-going cognitive problems.
The Plaintiff was a young man who suffered from a significant period of disability and there was evidence of some permanent partial disability.
Damages were assessed as follows:

a. Cost of future care: $73,078.00

b. Lost wages: $185,684.40 less the amount actually earned by the Plaintiff from December 3, 2003 to the date of trial;

c. Loss of future wages: $72,526.40.

d. Loss of earning capacity: $80,000.00

e. Non-pecuniary damages: $75,000.00

f. Special damages: $2,811.45.

g. In-trust claim: $14,040.00

Contact

If you would like further information or require assistance, please get in touch.

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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