"Buyer's Remorse" Does Not Entitle Plaintiff to Rescind Settlement

In almost every settlement, there is an element of compromise.  In some cases, there is "settlor's remorse" and one of the parties tries to rescind the agreement.  Fortunately, the courts generally hold litigants to their bargains.

An example is Morant v. Sun Life Assurance Company of Canada, 2014 ONSC 2876 (S.C.J.).  The parties attended a mediation where they reached a settlement.  Approximately two weeks letter, the plaintiff's counsel wrote advising his client wished to resile from the settlement and would bring a motion to set it aside.  Plaintiff's counsel filed an affidavit deposing that at the time of the settlement, the plaintiff was in emotional and physical pain, extremely fatigued and felt unduly stressed and pressured.  The plaintiff herself did not file an affidavit.

Justice Daly dismissed the motion to set aside the settlement.  Justice Daley held that as a general rule parties are held to their agreements, although there are certain situations where courts may exercise discretion not to enforce a settlement: 

[34]           As a general rule parties are to be held to their bargains and to settlements which they negotiate and conclude. The court may exercise its discretion not to enforce the terms of a settlement where there is evidence that:

(a)               the resulting agreement and settlement was unconscionable, fraudulent or based on a party’s misapprehension of a material fact which was known to the opposite party;

(b)               the solicitor representing the party was not retained or did not have authority to settle the action and this limitation was known to the opposite party; and

(c)               the party lacked the legal or mental capacity to enter into the settlement agreement at the material time.

In the circumstances, there was no evidence that counsel did not have authority, that the plaintiff lacked capacity or that the settlement was unconscionable.  At most, the plaintiff's evidence was that she had a change of heart or "buyer's remorse", which does not constitute proper grounds for setting aside a settlement.

Settlement Implies Release Will be Furnished

In most cases, parties are able to agree on the form of release when a settlement has been reached.  A recent case confirmed that there is an implied agreement to furnish a release, unless there is an express agreement to the contrary.

In OZ Optics Limited v. Timbercon Inc., 2013 ONSC 6439 (S.C.J.), the parties agreed on a settlement, but were unable to agree on the wording of a release.  Justice McNamara held that the case law is clear that where a settlement is reached, it is normally implied that an executed final released will be provided, unless there is an agreement otherwise.  In the circumstances, there was no express agreement not to furnish a release.  Justice McNamara held that the draft release prepared by the plaintiff was fair, reasonable and reflective of the agreement reached by the parties.

Settlement Privilege

The Supreme Court of Canada recently commented on Pierringer Agreements.  The issue was whether the non-settling defendants had the right to know the amount of the settlement between the plaintiff and settling defendants.

In Sable Offshore Energy Inc. v. Ameron International Corp. [2013] SCC 37, the plaintiff sued a number of defendants.  It entered into a Pierringer Agreement with several defendants and the non-settling defendants requested disclosure of the settlement amounts.  The non-settling defendants received all non-financial terms of the Agreement, had access to all relevant documents and other evidence in the settling defendants' hands and were assured that they would not be held liable for more than their share of damages.  In addition, the plaintiff agreed to provide the settlement amounts to the trial judge at the end of trial, so that if the non-settling defendants established a right to set-off, their liability for damages could be adjusted downwards. 

The Court held that the settlement amounts did not have to be disclosed to the non-settling defendants.  The amounts were protected by settlement privilege, which is a class privilege, meaning there is a prima facie presumption of inadmissibility.  The public interest in promoting settlement was greater than any prejudice to the non-settling defendants.  The Court rejected the argument that the non-settling defendants required knowledge of the settlement amounts to know and present their case, or to explore their own settlement possibilities.

It is clear that the Court highly values settlement and this decision aims to encourage settlement and the use of Pierringer Agreements in multi-party litigation.