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After Settling Your Lawsuit, A Cooling Off Period?

Case Comment – Morgan v. Saquing (2009 Ontario Superior Court)

Following up on our recent blog entry on another settlement situation, this case provides an illustration of an apparent settlement of a lawsuit which went awry.  This was a motion to enforce the settlement, pursuant to Rule 49.09 of Ontario Rules of Civil Procedure.

The plaintiff appeared to settle his 2002 car accident, and also his LTD (long-term disability) lawsuit, at mediation.  The LTD aspect was settled for $35,000 and the car accident appeared to settle for $55,000.  No “cooling off” period was discussed between counsel; among the lawyers, this file appeared to be settled.

Privately, at the mediation, the plaintiff signed a short handwritten direction to his own counsel authorizing the settlement.  It was only two sentences long and the penmanship was difficult to read.  The handwritten authorization allowed the lawyer to settle the tort and disability matters for $90,000 all inclusive, and then it also stated, “This shall be your good, sufficient and irrevocable authority for so doing.” (emphasis added)

The plaintiff later claimed that the latter part of the handwritten direction (“for so doing”) was misinterpreted by the plaintiff as a cooling off period expressed as “for 30 days”.  Due to the poor penmanship, the motions Judge did not rule out the possibility that the direction could have been read as “for 30 days”.

Interestingly (and in our view problematic), the plaintiff accepted the $35,000 settlement from the long-term carrier, as agreed upon at the mediation, but was refusing to settle with the MVA defendant for $55,000.

So this motion was brought by the MVA defendant to enforce the $55,000 settlement.

The motions Judge did not enforce the $55,000 settlement but still allowed the plaintiff to settle with the long-term carrier.  It was found that this ‘mistake’ in the plaintiff’s understanding of the terms of the settlement (i.e. that the plaintiff had apparently agreed to a 30 day cooling off period) prevailed.  Further, it was held that no prejudice would arise as against the MVA defendant if the settlement was not enforced – i.e. the plaintiff and the MVA defendant would be in essentially the same position as before the subject mediation.

Finally, the plaintiff was awarded motion costs of $2,500, payable by the MVA defendant who sought to enforce the settlement.

Gregory Chang
Toronto Insurance Litigation Lawyer