Skip to content

Settling for it: Two new NS decisions on settlement agreements and releases

By Jennifer Taylor

Introduction

It sounds simple: Two disputing parties, hoping to resolve their disagreement without drawn-out court proceedings, will mutually agree to a settlement on clear terms; release each other from all claims; and move on with their lives.

But we know real life isn’t that simple, and stumbling blocks often appear on the road to settlement. The parties might disagree about the terms of the alleged settlement, the details of the mutual release that follows, or both. What happens then?

Well, they end up in court after all.

Two recent Nova Scotia decisions canvass these issues, providing a welcome review of basic principles about settlements and releases. Both cases involved motions to enforce a settlement agreement under Nova Scotia Civil Procedure Rule 10.04.

Decision 1: Certified Design Consulting Inc v Alex Lane Properties Inc

First up was Certified Design Consulting Inc v Alex Lane Properties Inc, 2015 NSSC 367. This was a construction case. ALP wanted to develop a barn on its property into a residential building, and reached an agreement for CDC to become the general contractor (para 3).

Things did not go as planned with the construction work. ALP stopped paying CDC; CDC eventually filed a lien claim under the NS Builders’ Lien Act, and also commenced a lawsuit against ALP (para 8). The parties tried to work out their dispute after running into each other at a building supply store (para 9). Many back-and-forth emails followed.

The “critical email exchange” happened on September 14, 2015 (para 11). It’s worth setting out those emails, because they’re written—as these kinds of agreements often are—in the parties’ own words, not drafted by lawyers. Here’s what the principal of ALP wrote to the principal of CDC (see para 26):

I had the chance to meet with Kirk and Ross at Progressive Cabinets. They showed me a sale invoice for the cabinets for a total of $45K which was $6K higher than the contract allowance.

At this point, we are confirming that if the lawsuit is removed and the lien is removed, both part[ies] can part their separate ways.

You can have your lawyer send an agreement to Peter stipulating that these items will or have been done and that[’s] it. We will take over the cabinets with Progressive. We expect this to be done in a expeditious manner.

The principal of CDC responded, and agreed (see para 27):

OK, I agree with your offer. I will have my lawyer lift the lien and law suit removed. This has concluded our dealings period. There will be no further communications, business or legal dealings between Certified Design Consulting Inc or Alex Lane Properties. The contract is considered null and void, the complete issue is resolved period. Our relationship is concluded period. I have contacted my lawyer, instructed her to do the necessary paper work.

But subsequent events complicated matters. As the Court put it: “What was thought to have been a final settlement went off the rails when legal counsel for CDC…prepared mutual release documents and a consent order (that would serve to both vacate the lien and dismiss the legal action) and sent them to [APL’s counsel] for his review and approval” (para 13).

APL challenged two terms of the release that CDC’s lawyer provided: (1) The provision releasing the parties from all future claims, which “would encompass any presently unknown deficiencies which might later be discovered”; and (2) the provision preventing ALP “from ever bringing any kind of claim or action against any third party who might, in turn, claim contribution or indemnity against CDC” (para 15).

Furthermore, ALP said “it was a condition of the purported settlement agreement that its terms be subject to review and approval by its lawyer,” so it was entitled to wait and see what CDC’s counsel sent before confirming the settlement (para 16).

The Court disagreed – noting that the settlement offer, which came from ALP, said nothing about being contingent on approval by ALP’s own lawyer (paras 32-35). The emails exchanged on September 14 created a final and binding settlement agreement; the documentation to come was just meant toformalize that agreement, not affect its substance (paras 36, 39).

The Court also rejected APL’s challenge to the “future claims” provision, finding that the parties clearly intended to “end their contractual relationship and go their separate ways” (para 39).

However, there was something to APL’s second point, about third party claims. According to the Court, “there was never any discussion at any point in the settlement negotiations of the requirement that ALP undertake not to pursue a claim against any third parties who might claim contribution or indemnity against CDC” (para 44). The Court ordered a revised release without that clause, but otherwise declared the settlement agreement to be enforceable (paras 44-46).

Decision 2: Webber v Boutilier

The second decision was Webber v Boutilier, 2016 NSSC 5. The parties agreed that they had reached a settlement of two different personal injury claims at a judicial settlement conference in June 2015. Afterwards, defence counsel sent a standard release to plaintiff’s counsel, which he returned “with a large ‘X’” through two paragraphs.

The contentious paragraph was the “clause requir[ing] the plaintiff to hold the defendants harmless from any existing and future subrogation claims” (e.g. under the NS Health Services and Insurance Act – see paras 8, 12-14).

The defendants brought a Rule 10.04 motion before the same Judge who had conducted the settlement conference. She found that the settlement “was full and final and included a clear understanding, that all matters were settled as against the defendants including any subrogated claims” (para 21). It was up to the plaintiff and not the defendants to explore the possibility of any subrogated claims, which hadn’t been done here (paras 18-20).

Conclusion

The process of settlement can be messier in reality than in theory. The deal is not necessarily done when one party purports to accept the other side’s settlement offer, because there is probably still documentation—like a formal written agreement and mutual releases—that needs to be drawn up. Settlements often stumble on whether this “further documentation is a condition of there being an agreement, or whether it is simply an indication of the manner in which the agreement already made will be implemented” (see Certified Design Consulting at para 30, point 3).

And, as these two cases show, there may be a fight over the terms of a release.

On Rule 10.04 and similar motions, the court will do its best to determine what the parties objectively intended. And if the court finds they intended to reach a settlement agreement, a release will usually be considered an implied term of that agreement (Certified Design Consulting at para 41, citing the ONCA in Cellular Rental Systems Inc v Bell Mobility Cellular Inc). These cases suggest that dissatisfaction with the specific terms of the release will not usually derail what was meant to be a final settlement.

SHARE

Archive

Search Archive


 
 

Cap or no cap? Court of Appeal confirms damages are substantive law in interprovincial tort claims

November 12, 2024

Joe Thorne & Jennifer Taylor In 2005, a bus accident occurred in Nova Scotia. The people injured in the accident were residents of Newfoundland and Labrador, which is where they sued the bus owner and driver…

Read More

2024 Nova Scotia election: Employer obligations

October 31, 2024

By Killian McParland and Sophie Poulos As recently announced, the next Nova Scotia provincial election will be held on Tuesday, November 26, 2024. Under Nova Scotia’s Elections Act, every employee who is an eligible voter (i.e.…

Read More

Greener light for growth – Province provides further clarity on renewable energy future in Nova Scotia

October 24, 2024

By Sadira Jan, Dave Randell, Nancy Rubin, Kimberly MacLachlan, and Onye Njoku Bill 471, the Advancing Nova Scotia Opportunities Act, received Royal Assent and introduces changes to the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation…

Read More

Bill C-49 is blowin’ a gale: A significant step in offshore renewable energy legislation

October 22, 2024

By Sadira Jan, Dave Randell, Nancy Rubin, G. John Samms, Kimberly MacLachlan, and  Jamie Gamblin Bill C-49 received Royal Assent and will amend the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act and the Canada-Nova Scotia…

Read More

2024 New Brunswick election: employer obligations

October 17, 2024

By John Morse The New Brunswick provincial election is set to take place on Monday, October 21, 2024, with polling hours between 10:00 a.m. to 8:00 p.m. Under the New Brunswick Elections Act, all employees…

Read More

CAPSA releases guidelines on Capital Accumulation Plans and Pension Plan Risk Management

September 11, 2024

Level Chan and Dante Manna On September 9, 2024, the Canadian Association of Pension Supervisory Authorities (CAPSA) released the long-awaited final revisions to Guideline No. 3 – Guideline for Capital Accumulation Plans (CAPs) and the…

Read More

Nova Scotia legislative update: “Stronger Workplaces for Nova Scotia Act” – Bill No. 464

September 6, 2024

Sean Kelly and Tiegan A. Scott On September 5, 2024, the “Stronger Workplaces for Nova Scotia Act” (Bill No. 464) was introduced in the Nova Scotia House of Assembly for first reading by the Honourable Jill Balser…

Read More

Historic human rights ruling: Alberta tribunal sets record with landmark damages award, redefining the rules on compensation and deterrence

September 3, 2024

John A.C. Morse and Lauren Sorel The Human Rights Tribunal of Alberta (the “Tribunal”) recently awarded three complainants a total of $273,274.91 in compensation, with $155,000.00 of this amount designated as general damages – a…

Read More

Zoning changes and constructive taking: Newfoundland and Labrador Court of Appeal affirms the finding in Index v Paradise

August 28, 2024

Stephen Penney and Megan Kieley1 The Newfoundland and Labrador Court of Appeal’s recent decision in Index Investments Inc v Paradise (Town)2 is a significant decision for municipalities. The Court of Appeal endorsed the Newfoundland and…

Read More

Immigration red flags: five organizational issues that open employers to risk

August 15, 2024

By Kathleen Leighton & Brittany Trafford The Temporary Foreign Worker Program (“TFWP”) and International Mobility Program (“IMP”) provide Canadian employers the opportunity to hire foreign workers to address their labour needs, particularly when qualified Canadians…

Read More

Search Archive


Scroll To Top