A Settlement Agreement Is a Binding Contract, Not an “Agreement to Agree”
By Daniel Waldman, Pallett Valo LLP
When parties agree to settle a lawsuit, there is no going back. The Ontario Superior Court recently confirmed this in Lumsden et al. v The Toronto Police Services Board et al.
In 2013, David Lumsden sued the Toronto Police Services Board, the Chief of Police, and six others in an action related to his arrest and detention as a youth. His father, Brian Lumsden, acted on his behalf as a self-represented litigant.
In 2019, after various motions brought by Mr Lumsden, he surprisingly agreed by email that he and his son were willing to settle the entire action on a without-costs basis, provided an outstanding-costs award would be forgiven. The defendants’ counsel confirmed the deal by email and stated that the Lumsdens would need to sign a full and final release.
Then, Mr Lumsden sent the defendants’ lawyers a claim for alleged damage to his computer caused by a video disc from the defendants, asking for the release to contain an exception to allow for legal action. The defendants’ lawyer emailed him a release with the requested exemption. He refused to sign. The defendants brought a motion under the Rules of Civil Procedure, permitting a party to move for judgment when an adverse party fails to follow a settlement agreement. Mr Lumsden claimed there was only a tentative “agreement to agree”.
The court held that there was a binding agreement on the essential terms and that the release reflected the settlement and the requested exception. Mr Lumsden also claimed financial hardship, ill health, coercion to enter into the agreement under duress, and that the agreement should be set aside on the basis that it was unconscionable, all of which the judge rejected.
This case demonstrates the necessary finality of an agreement to settle. Once a party opts to put an end to a lawsuit, they cannot have a change of heart. This holds true whether the agreement is reduced to a formal contract and whether the party is represented by counsel.
Daniel WaldmanGGI member firm
Pallett Valo LLP
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Pallett Valo LLP is one of Ontario’s Top 10 Regional Law Firms. The firm practices in the areas of business law, commercial litigation, commercial real estate, construction, insolvency and corporate restructuring, employment and labour, and wills, estates, and trusts.
Daniel Waldman is a member of the commercial litigation practice and a member of the Remedies Group. Daniel has a commercial litigation practice with an emphasis on real property litigation, including commercial leasing, commercial real estate, construction law, and debt collection.
Published: Litigation & Dispute Resolution Newsletter, No. 12, Spring 2020 l Photo: Deyan - stock.adobe.com