In the recent decision of Prince v Nytschyk Estate, 2016 ONSC 7459, the Ontario Superior Court of Justice enforced a settlement despite the lack of signed minutes of settlement at the time of death of one of the parties. In this case, Cherie Lewicki (“Cherie”) and Joseph Nytschyk (“Joseph”) were in a common-law relationship for about 15 years, during which time they lived together in a house in Joseph’s name alone. Joseph died intestate (without a Will) in 2013 and Cherie continued to live in the house until her death in 2015. Before her death, Cherie commenced a claim for dependent’s relief against Joseph’s estate. As part of her claim, Cherie sought a declaration that the house was held in trust for her based on a resulting or constructive trust. With the estate’s potentially significant exposure to a dependant’s support claim, the parties agreed to a settlement whereby the house would be transferred to Cherie. However, prior to the completion of any signed minutes of settlement, Cherie unexpectedly died.
The court in this case applied the Ontario Court of Appeal decision in Olivieri v Sherman, 2007 ONCA 491 to find that a binding agreement had been reached between the parties despite the lack of signed minutes of settlement and that the net proceeds of sale from the house ought to be paid to Cherie’s heirs. A settlement agreement is a contract, and for a contract to exist, the court must find that the parties “(a) had a mutual intention to create a legally binding relationship, and (b) reached agreement on all of the essential terms of the settlement”. The manner in which the settlement is to be formalized is not fundamental. The settlement need not be documented in writing.
A binding agreement was found to exist in the correspondence between counsel for the parties. Counsel for Joseph’s estate proposed a settlement which Cherie accepted in principle. Subsequently, counsel for the estate prepared and sent draft minutes of settlement to counsel for Cherie. When the estate did not receive a response from Cherie’s counsel, they threatened to bring a motion to enforce the settlement; yet, following Cherie’s death, counsel for the estate took the position that there had never been a binding agreement.
The court was satisfied that the essential terms of the settlement had been established by the estate and accepted by Cherie prior to her death. Any additional terms exchanged between counsel in draft minutes of settlement were not essential and merely attempted to provide protection for their respective clients in the execution of the agreement.
The court decided not to exercise its discretion to set aside the settlement, despite Cherie no longer requiring the financial benefit from the house. The court was not prepared to allow Joseph’s heirs to receive a gratuitous benefit, since it was not going to cost the estate any more than was originally anticipated and despite Cherie’s heirs receiving their inheritance sooner than otherwise anticipated.
As a matter of public policy, settlement of litigation is encouraged, as they reduce costs and add certainty to relationships. Therefore, settlement agreements should be enforced where a contract is found to exist. This case demonstrates the importance of keeping proper documentation in counsel’s file in order to substantiate his or her party’s position.