April 29, 2015

In 1999, a pilot program was implemented in Toronto requiring mandatory mediation for all estates, trusts, and substitute decisions matters.  In 2002, mandatory mediation was expanded to Windsor and Ottawa.  The pilot program was considered a success and mandatory mediation has been enshrined in rule 75.1 of the Rules of Civil Procedure (see the Ministry of the Attorney General’s Fact Sheet on the Mandatory Mediation program). Even in other Ontario jurisdictions where mediation remains voluntary, mediation is increasingly popular for estate matters.

Mediation provides parties with a chance to reach a settlement faster and more economically than via a lengthy court proceeding.  It also offers parties certainty, control over the outcome, and privacy – where the parties are all capable adults, the court does not need to approve a settlement and the terms may remain private.  However, by definition, mediation involves compromise, even sacrifice, on both sides.  The agreements reached at mediation are binding.  As a result, parties have been known to feel “settlement regret” after the fact.  Some parties go so far as to try to overturn the settlement.  When this happens, the court has imposed a high threshold to cross before it will allow a party to get out of a settlement.

In the recent case of Rawlins v Rawlins, the Ontario superior court court dealt with a motion to enforce a settlement reached at mediation.  In that case, the deceased had named her two sons, Michael and Robert, as trustees of her estate.  The brothers could not agree as to the administration of the estate, and litigation ensued.  In December of 2011, two years after their mother’s death, the brother attended at mediation in an attempt to resolve the matter.

The brothers were both represented by counsel at the mediation, and had chosen a well-respected and experienced mediator.  The mediation resulted in a full settlement of the issues and the brothers signed “Minutes of Settlement” (the written agreement setting out the terms of the settlement).  Unfortunately, in the months following the mediation, the settlement began to break down.  Robert changed counsel twice, and his new counsel alleged that he had been coerced into signing the Minutes of Settlement by his former counsel and the mediator.  As a result, Robert argued that the settlement could not be enforced against him.  Because of Robert’s refusal to adhere to the settlement, Michael brought an application seeking to enforce the terms of the settlement.

The court carefully reviewed the caselaw regarding settlements.  First, the court held that settlements are contracts and subject to the same rules as contracts.  For a valid contract to exist, the parties must (1) have a mutual intention to create a contract and (2) agree on all the essential terms of the contract.  The court could look to the contract itself for evidence of mutual agreement on terms.  In this case, the minutes of settlement were detailed, clear, and comprehensive.  This suggested the parties intended to settle and on agreed terms.

The court also held that there was no evidence of coercion or duress.  The mediator had all the parties sign a contract before they began which explained that any one of them could end the mediation at any time.  As a result, the court was not persuaded by Robert’s argument that he had “no choice” but to sign the minutes of settlement.  In addition, the court was suspicious as to why it took Robert nine months after the settlement was executed before he claimed coercion and duress.

Finally, the court held that the principle of finality was important.  Settlements are to be upheld except in exceptional circumstances, such as fraud or mistake.  As a result, the court issued a judgment in accordance of the minutes of settlement, confirming that the terms of the settlement had the full force of law.

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