When drafting agreements among parties, is there any flexibility to add or remove conditions after it’s already been agreed-upon, without undermining its legitimacy? What rights do each party have to make changes unilaterally?
A recent decision by the Honourable Justice Kurke provides a reminder to all counsel to carefully review final releases for the insertion of additional conditions that were not part of the settlement negotiations.
In Trumble v. The Manufacturers Life Insurance Company counsel had reached a financial settlement via email. In his email, counsel for Manulife confirmed the monetary amount of the settlement, that Manulife would draft a final release of its choosing, and that the settlement funds would be delivered within fifteen business days.
He also established that plaintiff counsel would appear the following day at To Be Spoken To Court to advise that the matter had been settled and that the action could be removed from the trial list.
However, when plaintiff counsel received the release, he noticed an additional condition that had never been discussed previously. The release stated that if the plaintiff returned to work within five years from signing the release, she would need to reimburse Manulife any monies earned. Plaintiff counsel had his client initial his strike-through of this condition and then executed the release. However, Manulife refused to release the funds.
Plaintiff counsel was forced to bring a motion to set aside the endorsement, advising the court that the action had been settled. The issue before the court was whether the removal of the condition nullified the settlement and whether the additional condition did not impact the agreement already reached by counsel.
Defence counsel suggested that eliminating this condition would require the release to be fully renegotiated between the parties. Which, in turn, would lead to uncertainty, increased costs, and parties unable to reach agreements.
Justice Kurke ruled that this condition was an additional condition to the final release. Otherwise, he stated it, “defies what was agreed to because it lays it open, and it implies that the release is anything but “full and final”, which was what was agreed to”.
The Justice continued by saying, “The arbitrariness of such a condition and the period outlined in such a condition, in my view, are antithetical to what was agreed to, which was a “full and final” release”.
The judge agreed that Manulife was free to draft its release in a manner of its choosing, provided it did not add conditions which could cause it to be litigated. Costs were fixed at $5,500.00 in favour of plaintiff counsel.
So the next time you feel like taking out a pen or your computer to unilaterally revise an agreed-upon settlement, think twice. And, of course, make sure that every release you’ve agreed to doesn’t get changed without your approval.