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.
Mediation, with plenary sessions, small break-out rooms for parties and their counsel, and a mediator shuttling between the rooms seem like a distant, archaic memory. The former format of mediation is the antithesis of social distancing.
(I find it hard to now watch a tv show or movie without thinking to myself, “That’s not very good social distancing.”)
However, the show, litigation and mediations, must go on. Welcome to the age of virtual mediation.
Programs such as Zoom allow for parties to meet and discuss ideas and resolve differences without being physically in the same room. While the virtual alternative is not perfect, it is workable.
With Zoom, there are a few ways for mediations to be accommodated. One option is for the organizer to set up several online meetings: one to be used as a plenary session where everyone has access, and one for each of the parties to the litigation. In the plenary room, all of the parties and their counsel can join. In the parties’ separate room, only the party and their counsel can participate, with the mediator joining and leaving as necessary.
Another option is for the organizer to set up one meeting. The organizer would be able to admit participants into the meeting room, or put them into a virtual “waiting room” while others remain in the meeting room.
Another consideration when organizing a Zoom mediation is to ensure that the organizer has a Pro account or better. While the Basic account is free, it only allows for meetings of 40 minutes or less. The Pro account, at $20 per month per host, allows for meetings of up to 24 hours, which should probably enough for most mediations. (Some mediators are slow mediators: you know who you are.)
Some reporting services are offering virtual mediation assistance. Neesons, for example, can offer extensive technical support for mediations, examinations and arbitrations. They have also hosted a number of presentations on virtual examinations, arbitrations and mediations. Contact them if you want more information.
(Fun fact: Zoom Video was trading at $68.04 on December 31, 2019. On March 23, 2020, it was trading at $159.56. As of the time of writing this (April 2, 2020), share prices had relaxed to $118.10.)
Thank you for reading. Stay healthy. Practice safe litigation.
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
In the estates regime, mediations occur regularly, particularly in Toronto, where mediations are a mandatory part of the litigation, in accordance with Rule 75.1.02(1)(a)(i) of the Rules of Civil Procedure.
A mediation is always an opportunity to attempt to settle a matter without resorting to costly and time consuming litigation. At mediation, the parties will each stay in separate rooms and the mediator (that is usually chosen by the parties to the litigation), will shuttle between the rooms seeking a more in-depth understanding of the parties’ positions as well as probing opportunities for settlement. Sometimes, before the mediation begins, the mediator will do an introduction to all the parties before they break off into separate rooms, explaining how the day will go.
An important aspect of mediation is the fact that a mediator has no decision-making power. He or she cannot force the parties to settle but can provide his or her opinion on the issues. As such, settlement at mediation can only be reached upon the agreement of the parties themselves.
Another means of dispute resolution (other than litigation) that is not often resorted to in estate litigation, is arbitration. Before agreeing to attend an arbitration, however, it is important to consider whether this form of dispute resolution would be helpful in the particular circumstances of the matter.
Arbitration, unlike mediation, is an adversarial dispute resolution process (similar to litigation) determined and controlled by a neutral third party. The arbitrator can make a final decision, called an “award”, contrary to a mediator, who cannot. The most significant aspect of arbitration, however, is that the courts generally do not interfere in a dispute that is subject to an arbitration agreement. As such, there is a risk that should a decision be made by an arbitrator, the court would then refuse to hear the matter further, leaving arbitration as the ultimate medium of resolving the particular matter.
Why is that so important?
In a situation where the parties have already engaged in settlement negotiations and there appears to be a gap between their respective positions, an arbitration may be worthwhile to pursue, particularly should litigation be untenable to the parties given the cost involved and/or if the matter in dispute does not involve a lot of money. In such a situation, a final arbitral award may bring finality and allow the parties to move on, particularly if the gap between the parties’ positions is not significant.
If, however, the parties had not yet engaged in negotiations and no offers to settle were made, pursuing arbitration may be a serious gamble. That is so because the issues to be arbitrated are set out by the parties and though the arbitration process is similar to traditional litigation, the arbitrator will not have an opportunity to hear all the relevant evidence. As a result, agreeing to arbitrate in a situation like that may cause prejudice to a client who may then not be able to appeal the “award” made by an arbitrator, outside of the regime put in place by the Arbitration Act, 1991, SO 1991, c 17.
Thanks for reading!
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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.
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Estate planning can be tricky enough without some of the other issues often associated with aging – the need for care, moving homes, declining mental capacity, or the death of a spouse. Elder mediation – a specialized form of mediation that goes beyond mediation training and experience to include issues specifically related to the elderly – now has a presence in Canada after gaining a strong foothold in the United States.
The elder mediation specialty recognizes that conflicts often come to the surface as parents age and key decisions – such as those relating to ongoing health care, estate planning, and the upkeep and use of assets like cottages and vacation homes – need to be made.
How would you and your family cope when an elder member of your family enters a transition stage? Two U.S. elder mediators have identified four categories of families in how they handle a major elder transition:
- Graceful transitions – the family successfully manages old age and its transitions through targeted planning and effective communication, along with good legal and financial advice. Even as elders experience their inevitable physical decline, family members manage this process with dignity and respect.
- Successful struggles – the family has one or two major issues to work through but manages to come to a positive outcome with the support of friends, family and advisors.
- Quietly bruised – the family may be unable to move forward with important decisions and are living with situations that leave an aging parent in peril and increase emotional, financial and safety risks. There is often a sense of discomfort with choices made, and there may be disagreements festering under the surface about care giving, housing or inheritance decisions.
- Litigious – things have gone from bad to worse, and there is either the threat of litigation or actual litigation required to get decisions made. Wounds abound, and relationships are often destroyed forever between some family members.
You can find the full article here: http://www.mediationinstitute.net/training/wp-content/uploads/2011/12/MediationinEstatePlanningandElderCare.pdf
Elder mediation isn’t required in most family situations, but if either of the last two categories of family seem familiar, it’s a process well worth considering. Family Mediation Canada has more information on elder mediation in this country: http://www.fmc.ca/elder-mediation
Thank you for reading!