Deal or No Deal – Reaching a Settlement in Family Law Matters
In a late-2010 court decision called Swift v. Swift the only issue was whether the spouses had reached a full and binding agreement at their earlier Settlement Conference. The case illustrates the factors that go into determining whether negotiating parties in a family law matter have reached a deal or not.
The spouses, who had three children together, separated after 11 years of marriage. Since that time, there was a great deal of acrimony between them, and in March of 2010 they tried to resolve their issues and differences by attending a Settlement Conference before an Ontario family court judge.
At the end of that Settlement Conference, their respective lawyers advised the judge verbally that the spouses had reached a settlement, and that Minutes of Settlement would be filed with the court accordingly. The judge made a handwritten notation on the file, indicating that the matter “appears settled”.
Shortly afterward, the husband started paying support in accordance with the Settlement terms. His lawyer promptly prepared draft Minutes of Settlement which purported to reflect the spouses’ agreement, and forwarded it on to the wife and her lawyer.
This prompted some back-and-forth correspondence between them, requesting changes. Soon, it became clear that the spouses were not in agreement as to what the Minutes of Settlement were to contain.
In particular, the husband claimed that he couldn’t move forward with finalizing them unless three matters were dealt with, specifically: who would be responsible for certain outstanding assessment fees from a doctor; what would be done with their jointly-owned time share property; and how certain issues with the Canada Revenue Agency would be resolved in connection with the husband’s 2009 spousal support deduction. The husband said that there could be no final settlement without resolution of these essential items.
The matter came back before a judge to determine whether the spouses had reached a consensus at that March 2010 Settlement Conference respecting all the essential terms of the agreement. This included considering whether the husband’s three outstanding issues were essential, or only ancillary in nature.
The wife’s position was that she and the husband had indeed agreed to all of the essential terms, and that there had been a binding settlement agreement even if there was no formal written document confirming it. The three items raised by the husband were only ancillary and did not form part of the Settlement Agreement. She should be able to bring a motion for summary judgment at this stage.
In contrast, the husband pointed to the three specific unresolved items he raised. He also added that the matters of spousal and child support still required resolution at trial.
The court considered the law on how contracts are formed. First of all, the lack of a formal written document was not conclusive: as long as the parties verbally agree to all the essential provisions and terms, the fact that they agree to execute a formal written document in the future does not affect the underlying validity of the oral agreement between them. Next, the court has to look at whether there is a “meeting of the minds” between them during negotiations, and will look at the parties’ manifested intentions in determining whether there was a final settlement. This also involves looking at the spouses’ conduct, and whether a reasonable person in their situation would believe and understand that they had come to an agreement.
In short, the court has to embark on three lines of inquiry:
1) whether there was an evident “meeting of the minds”;
2) whether there was consensus on all the essential terms of the agreement (or whether there were still vague and imprecise parts); and
3) whether the parties made their agreement conditional upon executing a formal written contract.
In this case, the court concluded that at the March 2010 Settlement Conference both spouses had agreed to all the essential terms that were to form the basis of the final settlement between them. The three unresolved items raised by the husband were not of an essential character. Moreover, it was not a pre-condition that the agreement had to be reduced to a formal written contract before it would be binding. This was reinforced by the spouses’ subsequent conduct, and by the behaviour of their lawyers immediately after the Settlement Conference (including the preparation of draft Minutes of Settlement). Finally, the court found that the mere fact that the judge may have written that the matter “appears settled” was not conclusive, and did not preclude the current court from deciding whether the spouses had reached a settlement agreement or not.
In summary, a reasonable onlooker would have concluded that a settlement had been reached in this case. Accordingly there was no genuine issue remaining for trial and that the wife’s motion for summary judgment was granted.
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For the full text of the decision, see: Swift v. Swift (2010), 2010 ONSC 6049 (Ont. S.C.J.); additional reasons at (2010), 2010 CarswellOnt 8830, 2010 ONSC 6385 (Ont. S.C.J.) http://bit.ly/hAEkbd