Plaintiff Who Does Not Sign Release Still Bound By Agreement

In Lacroix v Loewen, the Plaintiff instructed her counsel to settle with ICBC on a specified amount, but then changed her mind before signing the full and final release. ICBC’S lawyer brought an application to dismiss the lawsuit because of the settlement. The Court dismissed ICBC’S application. The lawyer for ICBC appealed, and was successful. The Court of Appeal commented that:


[36]           The correct interpretation in such a case is to analyze the evidence to determine whether it is clear to the objective reasonable bystander, in light of all the material facts, that the parties intended to contract and whether the essential terms of that contract can be determined with a reasonable degree of certainty. Not only must there be an offer and acceptance, but the evidence must be capable of demonstrating that there is an agreement on all essential terms. In this case, a correct analysis would have led the judge to consider the evidence and determine whether it showed, objectively, that the parties intended a tort settlement, or a tort and Part 7 settlement, or whether the evidence was incapable of supporting either conclusion. To answer the first Fieguth question, the trial judge had to be able to determine the entire scope of the settlement.


[37]           Instead of determining the entire scope of the settlement based on the evidence, the judge instead appears to have acknowledged that there was an offer and acceptance, and then implicitly concluded that there was a settlement of the tort claim. He then proceeded to examine whether the evidence also supported settlement of the Part 7 claim. In doing so, he incorrectly applied the principles of contractual interpretation. In interpreting a contract, what is relevant is the parties’ outward manifestations as to the scope of the whole settlement. That scope is to be assessed as a whole, on all of the material evidence, and not in individual pieces. 


[38]         Applying the principles of contractual interpretation, the communications between Mr. Mickelson and the adjuster, Mr. Per, objectively indicate that there was an enforceable settlement including both tort and Part 7 claims. Looking at all the material facts, the reasonable objective bystander would conclude that the parties intended to make a final settlement of both tort and Part 7 claims.  


[39]         At the time of the discussions between Mr. Mickelson and Mr. Per, there was no outstanding action for either tort damages or Part 7 benefits. There was simply a “file” which included both tort and Part 7 claims. When Mr. Mickelson and Mr. Per spoke, the evidence indicates that their discussions concerned the “file” as a whole, and the “merits” of her claims. No differentiation was made between tort and Part 7. Their discussions about “settlement” were directed to settling the “file”/“matter”. This is clear from Mr. Per’s affidavit, which states:


3.   On March 11, 2004, I received a telephone call from John Mickelson with respect to special expenses which he wanted covered. After a discussion of the merits of the file I offered to settle the matter for $5,500.00. John Mickelson stated that he would speak to his client and get back to me.

9.   On March 16, 2004, I spoke to John Mickelson by telephone with respect to the returned cheque and release. I specifically asked Mr. Mickelson if he had instructions from Ms. Lacroix to settle the matter at the time that the counter offer was made and accepted by myself. He told me that he did have such instructions.


[Emphasis added.]


[40]         The judge correctly noted at para. 30 of his reasons that, “There was no mention of the fate of any subsequent Part 7 claims until the release was forwarded to counsel for the plaintiff”. However, the trial judge failed to acknowledge that there was little or no specific mention of individual aspects of any claims, tort or Part 7. The objective observer would conclude that was so because Mr. Mickelson and Mr. Per’s discussions were directed to a settlement of the “file” or “matter” as a whole. Both sides understood the benefits and advantages of settling early, and concluding the matter in its entirety. To an objective observer, they did so.


[41]         While the above conclusion makes it unnecessary to consider the repudiation issue, a word or two is warranted. While the chambers judge cited proper authority in Fieguth in relation to repudiation, he incorrectly applied that authority. The judge concluded that the mere tendering of documents with terms that have not been agreed upon can constitute repudiation. That is an error. As set out above, in Fieguth Chief Justice McEachern said at p. 70:


…One can tender whatever documents he thinks appropriate without rescinding the settlement agreement. If such documents are accepted and executed and returned then the contract, which has been executory, becomes executed. If the documents are not accepted then there must be further discussion but neither party is released or discharged unless the other party has demonstrated an unwillingness to be bound by the agreement by insisting upon terms or conditions which have not been agreed upon or are not reasonably implied in the circumstances.


[42]          This passage continues to be a correct statement of the law and to accord with sound practice.

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