In Bajenaru v Marchie, 2017 ONSC 2864, Justice Faieta confirmed that where a settlement is conditional on a party obtaining a release in a form that is acceptable to that party, there is no agreement and therefore no settlement until the desired release has been obtained.

The facts on the motion before Justice Faieta were straightforward.  The plaintiff, a minor, and her parents commenced an action for damages resulting from injuries suffered by the minor during an operation performed by the defendant physician at the defendant hospital.  A settlement offer was made by the plaintiffs and accepted by the defendants, conditional on the defendants obtaining releases from the plaintiffs in a form that was acceptable to the defendants.  Copies of the desired releases were forwarded to plaintiffs’ counsel by the defendants’ counsel.  While the plaintiffs agreed to provide releases on behalf of the minor plaintiff’s parents in their capacity as Family Law Act claimants, they refused to provide a release from the minor plaintiff’s litigation guardian on the minor plaintiff’s behalf, taking the position that the minor plaintiff’s claim would be dealt with by way of judgment via court approval of settlement, and that any release provided by the litigation guardian on the minor plaintiff’s behalf would not be enforceable at law, and was unnecessary.  The defendants’ counsel insisted on the release, as it included an indemnity clause.

The plaintiffs brought a motion further to rule 49.09 of the Rules of Civil Procedure to enforce the “settlement”.  Justice Faieta found that the parties had an agreement on all the essential terms, and that the delivery of a release, in a customary form whose terms reflect the agreement reached by the parties, is an implied term of the settlement of an action unless the parties otherwise agree.  However, this implied term was rebutted where the parties agree that a settlement was conditional on the defendants obtaining a release in a form acceptable to them.  While the terms of the proposed release were not contrary to public policy, the conditional nature of the settlement meant that the settlement ceased when the parties failed to agree to the terms of a release.  As such, there was no longer a settlement and the plaintiffs’ motion for judgment to enforce the settlement was dismissed.

While his comments were ultimately obiter, Justice Faieta’s finding that the release requested by the defendants was not contrary to public policy should reassure plaintiffs’ counsel moving forward that releases can be soundly executed by litigation guardians on behalf of minors despite the remaining need for court approval and judgment.  This decision should also serve as a reminder that conditional terms of settlement are exactly that – preconditions that must be met for a settlement to be found and enforced.  Where these conditional terms have not been met, the court will not find that the parties have entered into a binding settlement.

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