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Repudiation of Settlement Agreement Must be Clear and Unequivocal


The central issues in this Court of Appeal settlement case are whether the parties reached a binding settlement agreement, and if the settlement was repudiated. This can sometime arise in ICBC personal injury cases after a settlement amount as been agreed upon but before the release has been signed.
As an important principle in the settlement of civil claims:
[46] It would be rare for post-settlement conduct to amount to repudiation or anticipatory breach. As the respondent correctly notes, where an agreement has been reached, but the release has yet to be finalized, the tendering of draft release documents to the other party which are ultimately not accepted will not generally amount to repudiation: see Fieguth.(Marcotte v. Marcotte,2018 BCCA 362)

This decision was made in the context of a family law dispute regarding terms of a divorce. Specifically, a dispute over the timing of a $25,000 payment as part of the settlement. The appellant disputed the enforcement of the agreement alleging the agreement had been repudiated.

There must be consensus between the parties on all the essential terms of their agreement for the existence of a valid settlement agreement.  This is an objective test with respect to certainty and consensus for the contract to be enforceable.

Whether formalization of the contract is a condition that must be met before the contract is enforceable, or, instead, whether the contract is enforceable in the absence of formalization despite the parties’ having intended to take steps later to formalize the agreement, is a question of construction.  Therefore, the focus with respect to contested contractual terms is on the actual communications between the parties and on an objective interpretation of the terms of the agreement as reflected in their communications (Marcotte supra para 32-33).

It is rare for conduct after a settlement to amount to a repudiation of a settlement agreement. As Chief Justice McEachern explained in Fieguth v. Acklands Ltd. (1989), 37 B.C.L.R. (2d) 62 (C.A.) at  72:

            It should not be thought that every disagreement over documentation consequent upon a settlement, even if insisted upon, amounts to a repudiation of a settlement. Many such settlements are very complicated, such as structured settlements, and the deal is usually struck before the documentation can be completed.  In such cases the settlement will be binding if there is agreement on the essential terms.  When disputes arise in this connection the question will seldom be one of repudiation as the test cited above is a strict one…  It will be rare for conduct subsequent to a settlement agreement to amount to repudiation.

 The appellant did not meet the “clear and unequivocal” threshold required for repudiation or anticipatory breach and failed to identify any palpable and overriding error by the judge. The appeal was dismissed, and the settlement agreement upheld.

Posted by Mr. Renn A. Holness, B.A. LL.B.-  Personal Injury Lawyer since 1994

Tags: Personal Injury Lawyers, release and waiver, Repudiation, Settlement, Settlement Agreement

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