Parties to an estate dispute often choose to enter into a settlement at an early stage of the litigation process. Reaching a settlement at a pre-trial conference or at mediation can help avoid the time, legal costs and uncertainty associated with a full-fledged trial of the issues. With the introduction of the new Rule 75.2 to the Rules of Civil Procedure, which comes into effect on January 1, 2016, Ontario’s courts will be better-placed to encourage parties to mediate their disputes before trial. While mediation is already mandatory in Toronto, Ottawa and Essex County under Rule 75.1, the new rule will empower courts across the province to order that a mediation session be conducted in a contested passing of accounts pursuant to Rule 74.18 or in an order giving directions under Rule 75.06.
If the parties are able to reach an agreement at mediation, the terms of the settlement will often be documented in the minutes of settlement. But what happens if the parties come to disagree about how the minutes of settlement are to be interpreted? This issue was recently addressed in the Ontario Superior Court of Justice’s decision in Mountain v Mountain Estate, 2015 ONSC 4929.
In this case, the parties signed the Minutes of Settlement on March 19, 2014. A dispute subsequently arose regarding the liability of the tax consequences of the implementation of the Minutes, and the parties sought orders from the Court.
The Honourable Justice Gray held that “the Minutes of Settlement, being a contract, are to be interpreted in the same way as any other contract.” In the result, after reviewing the terms of the Minutes based on the principles of contractual interpretation, Justice Gray concluded that the Minutes of Settlement in the case at bar were unambiguous and further clarification regarding the liability of tax consequences was not required.
The recent Mountain decision echoes the Ontario Court of Appeal’s decision in Olivieri v Sherman, 2007 ONCA 491, where the appellate court held that a settlement agreement is a contract subject to the general laws of contract. The decision also serves to emphasize the importance of carefully documenting and drafting the minutes of settlement in order to mitigate the risk of future contractual disputes. In particular, parties should turn their minds to any issues that may arise from the implementation of the settlement and try to address those issues in the minutes of settlement.
Thank you for reading.
Umair Abdul Qadir