A recent decision of the Alberta Court of Queen’s Bench highlights the importance of carefully reviewing settlement agreements prior to their execution.
In Anderson Estate (Re), 2020 ABQB 428, the Alberta Court of Queen’s Bench revisited a settlement that had been negotiated during a judicial mediation.
Mr. Anderson had left a Last Will and Testament executed roughly one month prior to his death that directed that the residue of his estate be distributed to his three children, who were the parties to the litigation. The Will addressed certain advances made to his children during his lifetime, the disposition of real property, and declared the testator’s intent that the parties be treated equally.
One son, who later brought the motion with respect to the interpretation of the agreement, had previously disclaimed real property gifted to him under the Will because the value assigned to the property in the Will itself was significantly higher than the appraised value of the property (with a discrepancy of $2 million), such that he would take a correspondingly lower distribution from the residue of the estate to reflect his acceptance of the gifted property. The judicial mediation process had been initiated with the intention of resolving interpretation issues in respect of the Will arising from the son’s disclaimer of the property. The terms of the Will and the settlement agreement were not straightforward, but the settlement provided in part that the son would receive at a value of $4 million a different property than that bequeathed to him under the Will that he had disclaimed.
Pursuant to the terms of the settlement agreement, the matter returned to the case management judge for the determination of its proper interpretation. The son sought an interpretation of the agreement that provided that he had substituted his receipt of one property for the other at a notional cost corresponding to advances tied to the first property.
Justice Jones reviewed the law in general relating to ambiguities appearing in contracts, such as the settlement agreement that the parties had executed (at paragraphs 35 through 40, briefly summarized below):
- true legal ambiguity arises where a phrase is reasonably susceptible on its face to more than one meaning;
- courts can consider surrounding circumstances that include everything that affected the language of the document from the perspective of a reasonable person;
- extrinsic evidence, however, is intended to serve “as an objective interpretative aid to determine the meaning of the words the parties used”, with limitations set out by the Alberta Court of Appeal in Hole v Hole, 2016 ABCA 34;
- the goal of the courts is to give effect to the objective intentions of the parties, rather than to “second-guess the contract”;
- even in the absence of ambiguity, a judge is to consider relevant surrounding circumstances in interpreting the contract.
The judge found that the settlement agreement was not susceptible to more than one meaning, stating as follows (at para 84):
A retrospective determination that one entered into an agreement on terms less commercially favourable that one now thinks should have prevailed does not evidence ambiguity.
This decision may serve as a reminder to take care in ensuring that the meaning of a settlement agreement is properly understood by all parties and clearly set out without room for ambiguity. Remaining silent on certain points that should properly be addressed during the dispute resolution process may limit the rights of the parties to pursue them, even where the settlement agreement will otherwise lead to the distribution of an estate that may be perceived as unfair.
Thank you for reading.
The COVID-19 pandemic has changed the way the legal profession works at least on a temporary basis. In Ontario, lawyers are required to embrace technology to facilitate dispute resolution and to move files along. Mediations, discoveries, and Court hearings are being conducted virtually via videoconference. Today I will consider some of the benefits of remote mediation and then tips on how to master it.
- Cost – cost will inevitably be lower as it will be organized on an online platform.
- Convenience – The mediation can be arranged on short notice, as all parties can participate from their location of choice. Travel and the associated costs are no longer an issue. Participation of parties that might not have otherwise be available to participate in mediation may now be accessible.
Tips for Successful Remote Mediation:
- Ensure your client is set up with the proper technology: a computer equipped with webcam, microphone, and speakers. Lawyers cannot assume that every client has access to a computer and quick internet connection.
- Consider using a 3rd party provider such as Neesons Court Reporting & Mediation, to host the mediation. This provider can facilitate the movement of parties in and out of plenary and breakout rooms, summon the mediator, arrange a counsel-to-counsel meeting, and assist with technical issues. This will ultimately save the parties time and expense.
- Ensure your clients are aware of privacy and confidentiality within meeting rooms. Client comfort is essential for a successful mediation.
- A lack of personal interaction means that your client may not be able to warm up to a mediator, which often times is necessary for a successful mediation. An effective mediator will structure a meditation in a way to facilitate adequate confidential one-on-one communication with the parties to assist with resolving the limitations of working with a
mediator through a video link rather than in person.
- Take lots of breaks as attending virtual mediation is more tiring than in person.
Thanks for reading!
With the enactment of Rule 75.1 of the Rules of Civil Procedure, those involved in disputes relating to an estate, trust or substitute decision-making matter in Toronto, Ottawa or the County of Essex are referred to mediation unless there is a court order exempting it under Rule 75.1.04.
As lawyers, “mediation” is a term we are familiar with. However it may not be as familiar to clients. Many of them may have never heard of “mediation” before. As such, if you or a client have an upcoming mediation, it is important to prepare early to avoid being caught off guard during the mediation.
What is Mediation?
Mediation is a form of alternative dispute resolution where people can settle their disputes outside of court. It is a voluntary process in which the parties meet with a neutral third-party (referred to as the “mediator”) who provides them with assistance in negotiating a settlement. The mediator does not impose a judgment as the process is led by the parties.
Mediation vs. Litigation
The big “pull factor” to mediation is that it vastly differs from litigation. The major differences include:
- Decision-Making: With mediation, the parties decide the outcome but with litigation, a judge imposes his or her decision upon the parties
- Private vs. Public Process: Mediation is a private and confidential process, whereas litigation is a public process
- Costs: The costs of mediation are typically lower than that of litigation
- Time: The mediation process tends to be faster than litigation
- Adversarial vs. Non-Adversarial: Mediation is viewed as a non-adversarial process, whereas litigation is viewed as an adversarial process
Preparation for Mediation
Preparation for mediation should start well in advance of the mediation date.
Preparing the Client
Start by explaining to the client what mediation is and how the process works. Assure the client that the mediator will be a neutral facilitator and that abusive behaviour by the other party will not be tolerated.
As part of discussing the mediation process with the client, let the client know about the time commitment that mediation entails. The mediation could last the entire day or even multiple days.
Determine the client’s interests and goals for the mediation. Are they looking to settle the case at mediation or are they prepared to go to trial? What types of offers would they be willing to accept?
Preparation for the Lawyer
Know the mediator’s background and approach beforehand. Is the mediator someone who has a background in estates law? Are they a lawyer? Are they a former judge? Knowing the answers to these questions can help the lawyer determine what approach would be the most beneficial to employ during mediation.
Prepare a comprehensive mediation brief and send it to the opposing counsel and mediator well in advance of the hearing date. A comprehensive mediation brief can maximize a lawyer’s presentation at the mediation. It is helpful to include copies of all relevant documents, such as the wills in question, within the brief. Additionally, it might be helpful to include a chronology of events as a schedule to the mediation brief.
If the mediation results in a settlement, ensure that the terms of the settlement are formally documented and that each client has signed the document. In some cases, however, a “cooling-off period” of one or two days from the proposed settlement might be necessary.
At the end of the day, the best approach a lawyer can take in preparing for mediation is to know the mediator, prepare their documents ahead of time and provide the client with as much information about the mediation process as possible. The more prepared the lawyer and the client are, the smoother the mediation will go.
For more information on preparing your client for an estate mediation, visit this link.
Thanks for reading,
Ian Hull & Celine Dookie
As lawyers, whether we are dealing with opposing parties, clients, or colleagues, we are often faced with having to say no at some point. Viewed as a negative response, the effect of saying no often leads to damaged or strained relationships.
Below is a brief overview of the rules that Mr. Latz espouses:
Rule #1 – Information is Key – at the outset it is important to determine your goals and then develop an information bargaining strategy. Ways to get and share information should be considered. Obtaining information is key before providing any response.
Rule #2 – Understand the Meaning of No – before saying no, Mr. Latz suggests that you consider the best alternative to a negotiated agreement. Referred to as ‘BATNA’, this is widely used in negotiation theory to think about what your plan B is. Mr. Latz further suggests that, at this time, steps should be taken to strengthen this plan.
Rule #3 – Explain your No with Fair Objective Criteria – if you are going to say no, explain why. This should be based on fair and objective criteria such as market-value, precedent, professional standards, or tradition.
Rule #4 – Combine your No with a ‘Yesable’ Offer – Mr. Latz suggest that you design an offer-concession strategy. Considerations should be had to the timing of making such an offer.
Rule #5 – Control the Setting – if you are going to say no, consider the importance of the setting on the relationship. For instance, there may be value in having a face to face discussion as opposed to over the telephone.
Of course, this is just an overview of the issues Mr. Latz discussed. I encourage you to visit Mr. Latz’s website at www.negotiationinstitute.com for more information.
Consider this blog interesting? Please consider these other related blogs:
We were proud to support the second annual Family Dispute Resolution conference, “FDRevolution,” held by the Family Dispute Resolution Institute of Ontario (FDRIO) last week. The FDRIO mandate includes providing information for the public and legal professionals about family dispute resolution (FDR) processes and options.
The primary focus of the FDRIO is, unsurprisingly, family law. There is a lot, however, that those of us who practice in estates can learn from FDR. We have blogged many times about the importance of family dynamics in resolving estates disputes. Last week’s conference provided a lot of valuable information about managing family relationships and effectively avoiding and resolving family disputes.
Remember culture affects everything
Baldev Mutta and Amandeep Kaur of Punjabi Community Health Services, Peel Region gave a presentation on cultural competence. They reminded the audience that culture affects decision-making, communication, and social interactions.
Legal practitioners must be aware of how culture affects their own perceptions and a client’s perceptions of a legal issue. It is important for lawyers and mediators to suspend judgement and recognize how a client’s cultural lens is different from the dominant “Canadian” culture. FDR practitioners can better help clients by asking clients to identify and describe their perceptions of the conflict or issue and then determining what values and beliefs led to that perception. Understanding how and why a client is making certain decisions can help lead to a successful resolution.
The importance of Emotional Intelligence
The keynote speaker Karen BK Chan spoke about the importance of emotional intelligence (EI) and provided some practical tools to use in dispute resolution. Chan suggested that EI is twice as important as IQ or technical skills, which she described as “threshold capabilities.” A high EI can help lawyers and mediators manage tense situations. Some practical tips for strengthening EI include: listen to , ask for, and reflect on feelings; promote empathy between parties in order to facilitate dialogue; and to name and normalize strong emotions.
For information about the FDRIO and news and events, see their website.
Thank you for reading.
Other Articles You Might Enjoy
Last week, the family of Martin Luther King Jr. settled a dispute surrounding two cherished family artifacts: the late reverend’s personal travelling bible and 1964 Nobel Peace Prize medal. King’s three surviving children—Martin, Dexter, and Bernice—disagreed about whether or not to sell these treasured items. The two brothers, who wanted to sell to a private buyer, outvoted their sister, who had possession of the items and wished to keep them in the family. Former President Jimmy Carter acted as the mediator in the case.
Sadly, this kind of case is far too common. We have written about such “family wars” several times. Of course, no two family disputes will be exactly the same; each unhappy family is unhappy in its own way. Individual personalities and family dynamics as well as the significance of the issues in dispute make each family dispute different. The facts in this case are unusual because of the particular items in dispute. This family bible is significant not only to the family, but also to American history. The bible at issue was used by President Barack Obama during his inauguration in 2013. As well, not every family will have a former U.S. President act as mediator.
On the other hand, the themes represented in this case often arise in family disputes, no matter how celebrated or obscure the family. Here, the brothers desired to sell because the Estate needed the money. Bernice, however, could not conceive of selling her father’s cherished possessions. Conflict between sentimentality and more material considerations often fuel estate disputes.
As we have discussed before, it important for a lawyer to recognize the role of passion and sentimentality in estates disputes. Feelings should not be the sole driving force in litigation. As well, communication is the most effective tool to avoid estate litigation. Testators should speak to their families, particularly their children, about their wishes and the terms of their will, to avoid surprises and hurt feelings.
Thank you for reading.
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
In my recent post, To Litigate or To Mediate, I discussed the benefits of participating in mediation at the early stages of litigation.
Today, I’d like to discuss some of the mistakes commonly made by lawyers when preparing for and attending mediation. From my experience, each of the following mistakes can dramatically impact the likelihood of achieving a successfully mediated resolution.
(1) Choosing the wrong mediator – a mediator’s knowledge, experience, and approach to the dispute can have a significant impact on the outcome of the mediation. As such, it is important to choose a mediator that has considerable knowledge and experience relevant to your dispute
(2) Failing to prepare the mediator – a mediator who has a thorough understanding of the facts, issues and positions of the parties will be better placed to assist the parties in reaching a settlement. To assist the mediator in this regard, each party should provide the mediator with a mediation brief outlining the facts, issues and the law they feel are relevant prior to the mediation.
(3) Arriving unprepared for the mediation – to make the most of the mediation each side should arrive prepared. Counsel for each side should have a command of the facts, the law and a considered plan for approaching the session. Also, it is important not to forget a calculator and any relevant documents, including court orders.
(4) Failing to prepare the client – if your client understands the purpose of the mediation, the strengths and weaknesses of his or her case and how the mediation is expected to unfold, he or she will be better placed to achieve more at the session.
(5) A lack of commitment to resolve the dispute – Rule 75.1 of the Rules of Civil Procedure requires that parties to any estate dispute commenced in Toronto, Ottawa and Windsor, submit to mandatory mediation prior to attending court for a trial. Unfortunately, this can result in parties attending mediation, not because they wish to settle the dispute, but rather because they have been ordered by the court to attend. The mediation should be approached, by both sides, with a commitment to resolve the dispute.
(6) Failing to listen to the other side – listen to the other side to identify their interests, perceptions and motivations. Doing so is extremely useful for generating options to settle the dispute.
(7) Failing to set aside sufficient time for the mediation – while there will often be significant downtime during the session, it is important to set aside sufficient time for the parities to thoughtfully consider a range of options and positions. A settlement is significantly less likely to occur if the parties run out of time or feel rushed into making a decision.
(8) Failing to ensure all the necessary parties attend – to get the most out of any mediated session all relevant parties should be present, however, it is essential for the person(s) with settlement authority to attend the mediation. If the individuals attending do not have authority to settle the dispute, no agreement will be finalized at the session.
(9) Failing to ensure the settlement is properly documented – any agreement reached by the parties at the mediation will be non-binding unless and until reduced to a written agreement that is signed by all the parties. A draft settlement agreement can be prepared by counsel prior to attending mediation, such that agreed terms can be finalized efficiently prior to the close of the mediation session.
While mediation can be a challenging process to navigate, it has the potential to result in a viable and effective settlement. By avoiding these common pitfalls you can significantly increase your chances of reaching a successfully mediated settlement.
Thank you for reading,
The loss of a loved one coupled with an actual or perceived impropriety in the handling of his/her estate often results in contentious estate litigation. And, while litigation may ultimately resolve the dispute, it is not always the best means of dealing with such emotionally charged disagreements.
Mediation is a highly effective alternative to litigation. In fact, Rule 75.1 of the Rules of Civil Procedure requires that parties to any estate dispute commenced in Toronto, Ottawa and Windsor, submit to mandatory mediation prior to attending court for a trial on the matter.
There are many benefits of such mediation at the early stages of litigation:
Mediation is faster and far cheaper than going to trial: Litigating an estate dispute to trial can be an expensive undertaking. If a dispute can be settled early through mediation the overall costs can be significantly reduced.
Mediation is confidential: Court is a public forum and sealing orders are rarely granted for estate litigation matters. Mediation occurs outside the court and can keep family matters private. Further, all discussions at mediation are “without prejudice”, therefore, if no agreement is reached those mediation discussions cannot be used in litigation proceedings by any party without the permission of the others.
There is greater control over the process with mediation: Unlike at trial where you are assigned a judge, you can choose a mediator with skills and experience directly relevant to your estate dispute. You can also guide the discussions that take place at mediation to ensure your concerns are being addressed.
Mediation is less intimidating: Rather than an adversarial court setting, mediation takes place at a neutral location; it is informal and is designed to promote open communication and understanding. The mediator will not judge the merits of each party’s interests, nor render any decision. Rather, he/she will assist the parties in considering the strengths and weaknesses of their respective cases and work with them to discover a mutually acceptable outcome.
Mediation has higher rates of compliance: Mediation is a collaborative process. Unlike court proceedings, there is no clear winner or loser. If the parties are able to negotiate a resolution of the dispute, a written mediation settlement agreement is signed by all the parties, at which point the agreement will become an enforceable contract. As every party is actively involved in the process, each is more likely to take ownership in the outcome and abide by the ultimate agreement.
There is a broader scope of remedies available with mediation: At mediation, unlike at court, remedies can be tailored to each party’s needs. Options can be presented back and forth until each party is satisfied with the terms of the agreement.
The Attorney General’s office has put together a fact sheet, which provides some additional information on mediation practice and procedure, which can be accessed here.
Given the many benefits mediation has to offer it is certainly worth considering as an alternative to litigation in the early stages of your estate dispute.
Thank you for reading,
Lucian Freud, the famous German-born British Painter, died on July 20, 2011, leaving an Estate worth roughly £96 million (before taxes and payment of debts). Freud apparently had “at least 14” children.
Freud’s estate was the subject of contentious litigation. I previously blogged about the proceedings here. The High Court of England and Wales released their decision on July 30, 2014. You can read it here.
Lucian Freud executed a Will on May 10, 2006, which revoked his previous will of June 25, 2004. The claimants, Freud’s lawyer and one of his daughters, were the executrices of the 2006 Will.
The claimants sought a declaration that clause 6 of the Will vested the entirety of the residue of the Estate in the executrices. The clause made no mention of a trust, but the claimants maintained that the gift was indeed subject to a trust.
This estate planning tool is called a “secret trust.” Once a Will is admitted to probate, it is a public document which can be accessed by anyone. When a wealthy individual dies, they can use a secret trust to protect the privacy of their beneficiaries, who will be inheriting large sums of wealth and who may find the newfound attention unwelcome. Thus the testator devises a gift to persons who secretly hold that gift in trust for beneficiaries pursuant to a confidential trust agreement.
The defendant was one of Freud’s fourteen children. The defendant, somewhat confusingly, argued that on a proper construction, the Will did not devise the residue of the Estate to the claimants for their benefit absolutely, but rather for trusts which were “not set out in the Will.”
When a Will refers to a trust but does not spell out who the beneficiaries of the trust are it is referred to as a “half-secret” trust. Even though the residue clause did not specifically mention a trust in this instance, the defendants argued that a proper construction of the Will as a whole made it clear that the clause was indeed in reference to a trust.
If the trust was half-secret, then the Defendant could then challenge the validity of the half-secret trust. If the half-secret trust was declared invalid, then the residue would become an intestacy. Accordingly, Freud’s sizable residuary estate would be divided amongst his 14 children.
The High Court sided with the claimants. The sixth clause of the 2004 Will explicitly referenced a trust, creating a half-secret trust. The sixth clause of the 2006 Will conspicuously omitted the reference to the trust. If Freud had intended to create a half-secret trust in the 2006 Will, why would the language not simply have been repeated? Accordingly, the sixth clause of the 2006 Will created a secret trust and neither the Defendants nor the public will ever know who inherited Freud’s estate.
If you would like to learn more about secret trusts, You can read David Smith’s excellent primer on the subject here.
Thank you for reading,