Is the Court bound by the agreement between the parties?
The court explores - Whether the court is bound by an agreement made between the parties in order to reach a settlement? In the recent Court of Appeal decision, Richardson1, the court looked at a trial decision that was contrary to a settlement that the parties had negotiated. The Court of Appeal was faced with the question of whether the trial judge's refusal to accept the negotiated settlement between the parties was contrary to the best interests of the children, the principles of fundamental justice, and indicative of bias. The Court of Appeal said no and concluded that they would not interfere with the trial judge's decision to not accept the settlement between the parties.
In the court process, parties often negotiate a settlement in order to avoid trial. A settlement can be reached at any time during the process. One of the goals of the family court process is to encourage resolution between the parties when possible. An offer to settle should set out all the ways in which the disputed issues can be settled. Parties are strongly encouraged to consider ALL offers because rule 18(14) provides costs consequences for failing to accept an offer if the party who made the offer obtains an order that is favourable as or more favourable than the offer. If the other party makes you an Offer to Settle, you do not accept that Offer, and the order ultimately made by the court is as favourable or more favourable to the offering party than their Offer was, the offeror is entitled to their legal costs, unless the court orders otherwise, to the date the Offer was served, and full recovery of costs from that date.
In other words, if the offer that is presented to you ends up being better than what you received when you went to trial, you may have to pay substantial costs to the other side.
In the Richardson2 case, the parties advised the trial judge, during the trial, that they were negotiating a settlement. The trial judge granted an adjournment but advised the trial would continue the following day whether or not a settlement had been reached.
The proposed settlement was presented to the judge the following day. The settlement contained language that the children would move from one party's primary custody (father) to the other party's primary custody (mother); however, the final decision-making would remain with the father. This move involved significant travel (Niagara Falls to Ottawa).
The trial judge reviewed the proposal and refused to approve it. No reasons provided.
The trial judge decided that a move from one party's residence to the other was not in the children's best interest; furthermore, the trial judge amended the time sharing to reduce travel, ultimately reducing the mother's access to the children.
This case was brought to the Court of Appeal to explore the rejection of the proposed settlement.
It is well established that judges have the authority to review settlements and to reject them if they are not in the best interests of the children3. The Court of Appeal stated:
"whether a settlement is in the children's best interests should take into account more than just the settlement terms. It should also consider the general benefits to children that flow from parents resolving their disputes through compromise rather than litigation".
While rejecting the proposed settlement undermines the settlement process and the court's duty to help the parties settle their case4, the Court of Appeal found that:
"the findings of the trial judge, which were made after a full hearing on the merits and are not contested on appeal, make clear that sound bases exist for rejecting the proposed settlement".
This decision leaves the question - given the strongly encouraged process of settlement, how and why was the Richardson agreement not upheld?
Ultimately, this decision reveals that, even when a settlement is proposed, the judge can reject the proposal if it fails to meet the threshold of "best interests of the child".
In this case, the dissent of Justice Nordheimer is noteworthy. He stated:
"In my view, the conduct of the trial judge with respect to his rejection of the parties' settlement, without reasons, so tainted the conduct of the proceeding that his disposition cannot be allowed to stand. To do otherwise fundamentally undermines the need for court proceedings not only to be fairly conducted but, as importantly, be seen to have been fairly conducted".
If you are contemplating a settlement outside the trial process, it is worthwhile to discuss your case with a family lawyer prior to signing.
If you have more questions related to Family Law, please visit our website or contact Kenna Bromley at Devry Smith Frank LLP to discuss any questions regarding your specific family law situation and your options 249-888-6641 or kenna.bromley@devrylaw.ca.
Footnotes
1 Richardson v. Richardson, 2019 ONCA 983
2 Ibid
3 Martin v. Martin, 1981 CarswellBC 773 (C.A.), at para. 7; C.T.G. v. R.R.G., 2016 SKQB 387, 86 R.F.L. (7th) 312, at para. 11; and Harper v. Harper (1991), 1991 CanLII 8330 (ON SC), 78 D.L.R. (4th) 548 (Ont. Gen. Div.), at p. 553
4 Family Law Rules, O. Reg. 114/99, r. 2(5)(c)
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