July 30, 2024
Settlements may be reached calmly and with reflection, or hurriedly in a hallway.
In any case, it is important to make sure that the terms of settlement are clear and complete.
THE ISSUE
One of the terms of most settlements is to require a release to be signed. But the minutes of settlement, formal or scrawled in bad handwriting, seldom if ever spell out what the terms of the release will be.
The good news is that judges will rarely allow settlements to be revoked by disagreements over releases. The bad news is that this introduces more uncertainty, cost and confusion.
THE CASE
Haider v. Rizvi illustrates the complexity. It is a recent Ontario Court of Appeal case in which the issue was whether a draft release complied with Minutes of Settlement. The issue arose because the releasing party wanted to make sure they preserved their rights to sue another party not subject to the release.
The confusion arose because a typical release often includes a “no claims over” clause which bans the releasing party from suing outsiders who may turn around and add the other settling party to a lawsuit. This is usually important because the protected party is paying money and expects finality and protection.
Earlier Superior Court cases had compelled settling parties to sign a “standard form of release”. One recent case referred to in Haider explains:
Furthermore, the overarching purpose of a general release is to resolve all matters as between the settling parties arising from the subject matter of the claims released, and not only the specific causes of action pled. A standard general release is typically broad in its scope. It covers not only the specific litigation being resolved, but any and all actions, causes of action, demands, rights or claims, etc., howsoever arising from further damages, indemnities, costs, etc. of any other matters that were raised, or could have reasonably been raised, in the resolved litigation. The standard general release is not designed to only prevent the releasor from continuing with the resolved litigation against the releasee. Instead, a standard general release presumptively extends to any other proceeding against the releasee that could be commenced or continued with whether it be within the same settled proceeding by non-settling parties or by virtue of a new proceeding being commenced against the releasee by a non-settling party or a non-party. …
As the Court of Appeal points out in Haider:
The settlement of a claim implies an obligation to furnish a release absent agreement to the contrary. So long as the settlement remains on foot, it will bar subsequent proceedings that fall within its terms. The absence of a signed release makes no practical difference to the finality of a settlement.
[citations omitted]
Despite this, Haider says that a Superior Court judge faced by the issue ought to order that a standard form of release be signed.
What that “standard form” will contain will depend upon the judge’s view of the circumstances, and what terms are necessary to achieve the scope of the settlement agreed upon. That will often require a “no claims over” clause.
In Haider such a clause was ordered, but without an indemnity for “claims over”. The Court suggests that this preserved the rights to sue the other person the releasor had in mind.
TAKEAWAYS
- The terms of a release are an important part of settlement.
- As we have explained before, too many people do not pay enough attention to the form of release.
- Few settlements will start out including an agreed form of release.
- If you cannot agree on a form of release, the court will decide for you.
- This may add considerably to the cost of finalizing the settlement.
WHAT WEILERS LLP CAN DO FOR YOU
At Weilers LLP, part of our proud tradition is realizing that the deal is not finished until the paperwork is done. Our progressive approach in this context means that we stay current, and constantly work to improve our advocacy and negotiating skills to benefit our clients. If you need lawyers who know the law, are good advocates and negotiators, give us a call. We may be the right lawyers for you.