A. Introduction
Two recent English decisions make one think. The precise legislation and legal conclusions discussed in them may well not apply in Alberta. But they raise some basic universal aspects of enforcing settlements or other agreements in disputes. So trying to distinguish the English cases is somewhat beside the point. These cases suggest that you re-think how you would enforce a settlement or procedural agreement which you make in a dispute. Is it time to stop relying on brief vague wording, and to draft a new stronger wording for a settlement or release or other agreement?
A great many law firms are now set up as limited liability partnerships. The opposing lawyer on a file often will give you a written undertaking to do or not to something. Is the undertaking enforceable if he or she or someone else in his or her law firm breaks the undertaking? What if any adequate remedy would call for payment of a large sum of money? Can you sue to enforce the undertaking? Is it a contract? Can you get summary enforcement from the court or the Law Society? Is the undertaking by the individual solicitor, or by the limited liability partnership? Does that affect whether the court has inherent control over whoever gave the undertaking? Enforcement largely failed, in Harcus Sinclair llp v. Your Lawyers [2017] EWHC 2900 (Ch), [2018] 1 WLR 2479 (Nov 15 ʼ17).
B. Whose Undertaking?
Remember that trust conditions between lawyers in Alberta have been held to be undertakings enforceable as such. They are also true trusts, but sometimes the property entrusted is not worth much money, or there are prior claims such as intervening mortgages with priority. So enforcing the trust condition as a trust may not be an adequate remedy.
C. Are Some Releases Illegal?
It is very common to exact a general release upon settling a particular dispute. The release may bar future claims for any facts now existing (or even be broader still). A settlement contract may call for active performance, or may bar ancillary activity, such as soliciting past customers. There are very good reasons for including all those things in the release.
But Legislatures love to pass legislation restricting freedom of contract, and theoretical writers applaud that. Even when the legislation does not expressly bar contracting out, still the contract and the legislation conflict. Courts will ask whether the legislation or public policy is intended to bar such contracting out. Such legislation, and applying such public policy, are very common where consumers or employees are being “protected” by the legislation.
And sometimes legislation requires various formalities, such as a certificate of independent advice, or a notarial certificate.
It is possible that such legislation does not prevent parties from settling a lawsuit, or from agreeing to arbitrate a dispute. But even then, such legislation might invalidate any part of a release by an employee or consumer going beyond the strict limits of the existing dispute or lawsuit. See Yukos Int. UK v. Merinson [2018] EWHC 335 (Comm), [2018] 2 WLR 1541 (Feb 27).
– Hon. J.E. Côté
The Commentaries are intended to call the attention of lawyers to promising or threatening developments in the law, in civil procedure, in developing their skills, or simply to describe something curious, funny or intriguing.
Justice Côté recently retired from the Court of Appeal of Alberta and currently acts as an arbitrator, mediator, or referee under Rules 6.44 and 6.45 of the Alberta Rules of Court.
He may be contacted through Juriliber at email: info@juriliber.com or phone 780-424-5345.
