Think You’ve Reached a Settlement Agreement? Maybe You Didn’t!
In an ideal world, separating and divorcing couples would all be able to reach a settlement on all the legal disputes arising from the resolution of their various legal issues. This would save time, and money, and avoid their having to go to court.
Sadly, we know that in Canadian Family Law this tends to be the exception, rather than the rule.
In fact, even in the more atypical case where former spouses are able to agree on at least some of their issues and reach a Settlement Agreement (or “Minutes of Settlement”), they may not be as successful at reaching consensus as they think. It may become evident only after-the-fact that they do not agree on how to interpret and apply the agreement’s terms. Surprisingly, this can happen even when they have reached that purported settlement with the help of separate lawyers, and after extensive negotiation.
This was the situation in a case called Wiebe v. Treissman. They parents thought they had reached a Settlement Agreement, and it was formalized into a Final Order of the court. However, the parents later disagreed on how their agreement was to be applied and interpreted in their everyday life. In its judgment, the court set the stage this way:
Both parties were represented by experienced counsel. One would have thought that the terms of the Minutes and Final Order would clearly and unambiguously set out the agreements between the parties on the many issues previously in dispute. Not so, it appears. Instead the parties have engaged in a further 18 months of wrangling respecting the meaning of their agreement and the mechanics for dividing family property.
And so it is that the parties appeared before me over four days in early August 2017 seeking a determination of their interpretation dispute … Several binders of materials were tendered to the Court including lengthy affidavits with well over 100 exhibits, and books of authorities containing over 75 cases which the parties evidently thought necessary for the Court to review. Judgment was reserved.
Although the specifics of this couple’s dispute were unremarkable, it gave the Ontario court an opportunity to set out some of the guiding principles that inform the exercise of trying to interpret a Settlement Agreement (that is formally embodied in a Consent Order).
Borrowing from two leading Supreme Court of Canada decision on general principles of contractual interpretation, the court in Wiebe v. Treissman noted the following:
- A Consent Order is simply a species of contract.
- It is to be interpreted by reading its provisions as a whole, giving the words used their ordinary and grammatical meaning in a manner consistent with the surrounding circumstances known to the party at the time of the order.
- It is not governed by the subjective views of the parties after-the-fact. Instead, the court must interpret by looking at its language, the circumstances in which it was granted, and the pleadings in the litigation.
The court added that contractual interpretation is not a mechanical task – it involves more than simply reading the words that the parties used, and giving them their plain and ordinary meaning. Plus, in situations where the contract is ambiguous, it involves looking at the surrounding circumstances or “factual matrix” that the parties were aware of at the time the agreement was signed. The question of what amounts to “surrounding circumstances” will vary from case to case.
In a future Blog we will take a look at how these principles are applied to real-life Settlement Agreements / Consent Orders where the spouses each thought they had reached a negotiated deal with the other – but were sadly mistaken.
For the full text of the decisions, see:
Wiebe v Treissman, 2017 BCSC 1523
Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53
Bhasin v. Hrynew, 2014 SCC 71