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The recent Ontario Court of Appeal decision in Kearns v. Canadian Tire Corporation, Limited., 2020 ONCA 709 is a stark reminder for employers to ensure that company representatives have complete knowledge on all of the relevant facts before entering into a settlement agreement with dismissed employees. Settlement agreements are binding contracts like any other, and a party’s unilateral mistake with respect to any terms of the agreement will not be rectified by the court unless the party can establish fraud or the equivalent of fraud.
Background
Canadian Tire terminated the employment of Jamie Kearns in July 2018 without cause. He was told he would be paid his statutory entitlements and offered an additional 30 weeks of pay in exchange for a release.
Mr. Kearns did not sign the release and instead sued for wrongful dismissal damages. During the litigation process, the parties successfully mediated the matter and executed Minutes of Settlement (the “Minutes”). As part of the settlement, Canadian Tire agreed to pay Mr. Kearns a lump sum payment of $150,000 “in addition to amounts already paid”.
Significantly, prior to mediation, payroll personnel mistakenly paid out the additional 30 weeks of pay to Mr. Kearns – a total gross payment of $115,465.20 – even though he had not signed the release. Representatives of Canadian Tire who attended the mediation were not aware that this payment had been made. Canadian Tire discovered this mistake prior to paying out the settlement funds. As such, Canadian Tire put Mr. Kearns on notice that he would be paid the settlement amounts less the 30 weeks ($115,465.20), leaving a balance of $45,174.36. Canadian Tire then paid out the settlement funds on this basis.
Mr. Kearns brought a motion to enforce the Minutes and require Canadian Tire to pay out the full settlement amount without deducting the $115,465.20 overpayment. The motions judge agreed that the deduction was improper. Canadian Tire appealed to the Ontario Court of Appeal. The Ontario Court of Appeal upheld the findings of the motion judge.
The Motions Judge and Court of Appeal Findings
The motions judge first considered the principles for establishing the existence of a binding contract, which are: (1) the parties had a mutual intention to create a legally binding contract; and (2) the parties reached an agreement on all of the essential terms. In applying these principles to the Minutes, the motion judge found that the Minutes included all the essential terms to form a contract, and further, that there was no ambiguity in the terms. The term “in addition to amounts already paid” was clear and unambiguous. The problem here was not one of ambiguity – the problem was the person with authority to bind Canadian Tire to the Minutes did not know the November 23, 2018 payment had been made.
The motions judge also considered Canadian Tire’s argument that the Minutes should be rectified or rescinded based on unilateral mistake. To establish unilateral mistake, Canadian Tire was required to prove that:
- That a mistake occurred; and
- That there was fraud or the equivalent of fraud on the employee’s part in that he knew or must be taken to have known, when the agreement was executed, that Canadian Tire misunderstood its significance and that the employee did nothing to enlighten the company.
Mr. Kearns’ evidence was that he did not know the November 23, 2018 payment had been made in error. Accepting this evidence, the motion judge found that there was no evidentiary basis on upon which a reasonable inference could be drawn that Mr. Kearns knew Canadian Tire was mistaken when it entered into the Minutes. The motions just also found that Canadian Tire had not demonstrated that the amount of the settlement was so large that it was far more than what Mr. Kearns would have been entitled or expected to receive.
The Court of Appeal upheld all the above, and also rejected Canadian Tire’s argument that the motion judge erred in failing to consider the subjective understanding of the Canadian Tire representatives at the mediation. The Court confirmed the factual matrix that must be considered in interpreting a contract consists only of objective evidence of the background facts at the time of execution of the contract, not the subjective understanding or state of mind of the parties.
Practical Implications
This decision raises several important practical considerations for parties entering into a settlement agreement:
- Ensure that the individual with authority to bind the party in a settlement agreement has access to and understands the most relevant and up to date information respecting the topic of the mediation.
- Clearly reference all past termination payments and/or settlement payments in the settlement agreement.
- Ensure that there is, in fact, a meeting of the minds at the time of the execution of the settlement agreement.
- Keep in mind that absent fraud or the equivalent of fraud, a plea of unilateral mistake will not save a party from being bound to the terms of a settlement.
This publication is intended only to provide general information. It should not be relied on as legal advice. Employers and employees facing specific circumstances should consult their legal counsel for specific advice. For specific legal advice, please contact: Leslie Dizgun, Allyson Fischer, Mitchell Smith, Justin Anisman, William McLennan, or Alyssa Jagt.
Steven J Weisz, Sharon Kour, Caitlin Fell, and Christopher McGoey contributed to Chamber and Partners Insolvency 2019 Second Edition Guide.
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To demonstrate that the lawyer has explained the details of the settlement to the client, "the full and final release is the final linchpin," he tells the legal publication. "It’s always a good idea to have the client sign the actual mediation agreement. You want to confirm those things in writing as soon as possible." Read the full article on AdvocateDaily.com
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Charges Unconditionally Withdrawn Against MorEnergy.
LONDON, ONTARIO--(Marketwired - Sept. 8, 2014) - After laying charges under the Consumer Protection Act against MorEnergy Services Inc. and its directors, the Ministry of Consumer Services has withdrawn all charges unconditionally.
The decision to withdraw the charges was not a surprise to president John Nassar, who stated MorEnergy prides itself on customer relations since 2003 and has worked with the ministry and the consumer to ensure that this 11 year reputation is upheld. Read the full article on MarketWired.com
Paralegal Society of Ontario - AGCO Rules of Practice CPD . PSO Education Committee is hosting an event on Alcohol and Gaming Commission of Ontario- Rules of Practice. It is a great learning opportunity about the Commission and its procedures for those who would like to think outside of the box and expand their business arenas to a non-traditional tribunal.
Honickman focuses practice on defamation law. Before making his name as a defamation lawyer and civil and criminal litigator, Lorne Honickman was a well-known legal specialist for CityTV Toronto for more than 20 years. Read the full article on AdvocateDaily.com
Mammoliti blames Veld festival deaths on promoters, 2 councillors. A Toronto city councillor could be facing legal trouble for a statement he released in the wake of two deaths at a music festival held over the weekend. Read the full article on www.thestar.com
Forcillo faces second charge in Yatim fatal shooting. A Toronto Police officer has been charged with attempted murder arising from the shooting death of Sammy Yatim, Toronto criminal lawyer Lawrence Gridin tells the Toronto Star.
The new charge is on top of the second-degree murder charge laid by Ontario's Special Investigations Unit against Const. James Forcillo in relation to the death of the teenager last summer. Gridin is defending Forcillo with Peter Brauti, both with Brauti Thorning LLP. Read the full article on AdvocateDaily.com
Honickman recognized as leading defamation expert. Toronto civil litigator Lorne Honickman has been recognized in the 2014 Canadian Legal Lexpert Directory for his expertise in defamation and media.
Honickman, partner at Brauti Thorning LLP, was called to Bar 1997 and began practicing law full time, after a distinguished 20-year career as a television broadcaster. His practice is extensive and wide ranging, covering several areas of corporate, civil, regulatory and criminal litigation. He has appeared in all levels of court in Ontario, as well as the Supreme Court of Canada and has acted for clients in many high profile civil and criminal trials. Read the full article on AdvocateDaily.com
Brauti urges council not to suspend JP for misconduct. An Ontario justice of the peace, who admits to two counts of judicial misconduct, shouldn’t face a 30-day suspension without pay, Toronto criminal lawyer Peter Brauti told a review council, reports the Toronto Star.
Brauti’s client, JP Alfred “Budd” Johnston, appeared before a Justice of the Peace Review Council where he apologized for his actions in late 2012 that gave rise to the complaints. According to an agreed statement of facts, Johnston threw out a docket of cases because a Crown attorney was 71 seconds late to court and he mocked a self-represented defendant, says the Star story. Read the full article on AdvocateDaily.com
Judge turns down bid for blanket ban on Magnotta trial evidence. MONTREAL - The judge overseeing the trial of alleged murderer Luka Rocco Magnotta has denied a defence motion to limit what media can report on the criminal proceedings.
Magnotta's lawyer was seeking a publication ban on the reporting of any evidence presented at his client's murder trial, which begins in September. Read the full article on AdvocateDaily.com
Incarceration doesn't rehabilitate people. Toronto criminal lawyer Peter Thorning says long periods of time behind bars isn’t the way to rehabilitate people.
He made the comments in court at the sentencing hearing of a man who was convicted of killing Toronto-area woman, Mimi Khonsari, more than a decade ago, reports PostMedia. Read the full article on AdvocateDaily.com
Is baseball fan's $10M lawsuit a hit?. Toronto civil litigator Lorne Honickman questions whether there is cause of action in a $10-million defamation lawsuit that a man has filed against ESPN and its announcers, among others, for "mental anguish" after he was mocked for sleeping in his seat during a national baseball telecast at Yankee Stadium. Read the full article on AdvocateDaily.com
Brauti concerned about perception in streetcar shooting case. The media has unfairly depicted the police officer who has been sent to trial over the shooting death of a man on a streetcar as a steroid-using Rambo, Toronto criminal lawyer Peter Brauti tells Sun Media.
The court of pubic opinion has been so harsh, in fact, when it comes to Const. James Forcillo that his lawyer wonders whether there is any chance he can get a fair trial in Toronto, reports the newspaper. Read the full article on AdvocateDaily.com
Free speech wins in Marineland injunction hearing. Although a judge has upheld an order preventing an activist from protesting on Marineland’s property, the court’s refusal to broaden the injunction is a positive result for the right of free speech, says Toronto civil and commercial litigator Kevin D. Toyne. Read the full article on AdvocateDaily.com
A marriage licence is critical to a legal union. Some interesting problems can arise for couples who have participated in religious marriage ceremonies in Ontario and some may find out they’re not legally married after all, Toronto lawyer Michael Cochrane writes in Lawyers Weekly. Read the full article on AdvocateDaily.com
Animal ownership cases 'a different beast'. Before lawyers agree to take on a case involving ownership of an animal, they should be aware that these types of lawsuits present unique challenges, Toronto civil and commercial litigator Kevin D. Toyne writes in Lawyers Weekly.
For example, in the eyes of the law, animals are considered property rather than children writes Toyne, partner with Brauti Thorning LLP, who successfully represented the primate sanctuary in the ownership dispute over Darwin, the IKEA monkey. Read the full article on AdvocateDaily.com
One happy client can open door to more cases. When it comes to getting the most out of the referral process, Toronto personal injury lawyer Mark MacNeill tells Lawyers Weekly a basic approach is most often best.
"Make your client happy, and answer your phone and return phone calls," MacNeill, partner with Brauti Thorning LLP, says in the article. "Even if you’re not able to get the best results for a variety of reasons, if a client knows you’ll be a straight shooter with them, they will refer you.". Read the full article on AdvocateDaily.com
Straw purchasers beware: you could be on the hook forever. A recent Court of Appeal for Ontario ruling confirms that mortgage lenders and insurers face an uphill battle in trying to hold an innocent third party responsible for the frauds of others, says Toronto commercial litigator Trung Nguyen. Read the full article on AdvocateDaily.com
"Puppy raiser" should keep dog unfit for service. As closing arguments wrapped up this week in the ownership fight over a would-be service dog, the charity at the centre of the case has yet to prove it owned the animal, Toronto civil and commercial litigator Kevin D. Toyne says in the Waterloo Region Record. Read the full article on AdvocateDaily.com
Lawyers’ job to identify hidden franchises. Although the act governing franchise law in Ontario was enacted more than a decade ago, confusion remains as to whether certain business relationships are franchises, Toronto business lawyers Scot Patriquin and Mark Tozer write in Lawyers Weekly. Read the full article on AdvocateDaily.com
Meet the lawyer who won the IKEA monkey trial.
Kevin Toyne on trying a case that went viral
In December 2012, a small monkey wearing a puffy shearling coat sauntered into a Toronto IKEA, having just escaped from a car in the parking lot. Once shoppers spotted the well-dressed primate, known as Darwin, they snapped his picture and posted the photographs online. Almost instantly, the images circulated far and wide, triggering a media storm around the world. The commotion ended when Toronto Animal Services apprehended Darwin and transported him to Story Book Farm Primate Sanctuary in Sunderland, about an hour northeast of Toronto. At this point, the light-hearted story turned into a nasty legal battle. Darwin’s owner, Yasmin Nakhuda, sued the sanctuary to regain possession of the animal. This past September, a Superior Court judge ruled in the sanctuary’s favour, explaining that Nakhuda lost ownership of the monkey as soon as Darwin left her car. And in February, Nakhuda, a lawyer herself, decided not to appeal. Read the full article on Precedent Magazine
Prelim begins for officer charged in teen's shooting death.
TORONTO – A preliminary hearing starts Tuesday for a police officer charged with second-degree murder in the shooting death of a teenager on a Toronto streetcar last summer.
The two-week hearing for Const. James Forcillo, 30, will determine if there's enough evidence to go to trial.
Toronto criminal lawyer Peter Brauti, partner with Brauti Thorning LLP, is representing Forcillo. Read the full article on AdvocateDaily.com
Cameras let public 'attend' trials: Niman. The decision to open some Manitoba courts to cameras is a “meaningful boon to access to justice” and the judges in that province should be applauded, says Toronto criminal lawyer Richard Niman.
In an interview with AdvocateDaily.com, he says the notion of allowing cameras into the courtroom is a positive move forward, as long as there are adequate protections in place. Read the full article on AdvocateDaily.com
When workplace issues turn violent. The violence recently seen in a Toronto workplace reminds us that not a year goes by without some horrific workplace violence. Would you believe that in the United States more than 1,000 people die each year as a result of violence in their workplace? When you think of it, that is more than 20 people a week killed at work. Read the full article on AdvocateDaily.com.
To ‘appeal’ or ‘oppose’ a construction decision. You’ve just received an unfavourable decision from a construction lien master and have been instructed to seek a reversal. You’re confident in the errors made, but all of a sudden are stuck on what can only be the simplest of questions. For reference, you flip open your copy of the Construction Lien Act, and of course, its annotated counterpart by D. Glaholt and D. Keeshan. Read the full article on AdvocateDaily.com.
Court system – not Divorce Act – needs overhaul. The court system – not the Divorce Act – needs updating in order to improve access to justice in family law, and create more effective processes overall, says Toronto lawyer Michael Cochrane. Read the full article on AdvocateDaily.com
Details of proposed auto insurance bill unclear. Clarity is needed when it comes to the inner workings of Bill 171, which names the Licence Appeal Tribunal as the new location for the dispute resolution section of the Financial Services Commission of Ontario (FSCO), Toronto personal injury lawyer Mark MacNeill tells Law Times. Read the full article on AdvocateDaily.com.
OCC upholds decision clearing Toronto cop of homicide.
TORONTO – Ontario’s highest court has upheld a decision clearing a Toronto police officer of a homicide charge in the shooting death of a man during a drug and weapon search. Const. David Cavanagh, who was represented by Toronto criminal lawyers Peter Brauti and Lawrence Gridin, had been charged with second-degree murder, but two lower court judges separately ruled the death of Eric Osawe was accidental. Read the full article on AdvocateDaily.com
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