In a recent Ontario decision, the court refused to enforce a settlement between the beneficiaries of a testator’s estate after the negotiations failed.
Daughter and Neighbours Dispute Estate Distribution
The testator was in a common-law relationship with a partner for 46 years.
In 2011, the testator and the partner had executed wills that left everything to each other, or to the partner’s daughter if both were deceased. The daughter was also named as an alternate estate trustee.
The partner died on February 10, 2018, leaving everything to the testator under his 2011 will.
The testator died on September 12, 2018 at the age of 91. Her estate was estimated to be worth close to $1.7 million in personal and real property. The partner’s daughter would have been the sole residuary beneficiary under the testator’s 2011 will.
However, the testator had also executed a holograph will on August 8, 2018, and then a typed will on August 24, 2018, leaving the bulk of her estateto two of her long-time neighbours and friends (the “neighbours”). She also made an individual bequest of $25,000 to the daughter along with other bequests.
After the testator’s death, one of the neighbours was initially made estate trustee pursuant to the August 2018 will, although the daughter had filed an objection to that designation.
Negotiations between the neighbours and the daughter began in January 2019. On June 26, 2019, counsel for the neighbours asked for draft minutes of settlement, which were produced, altered, and exchanged between them and the daughter up to July 5, 2019, as changes were proposed and responded to. In mid-July 2019 the neighbours retracted all prior offers to settle and retained new counsel and refused to sign the minutes.
As a result, the daughter sought to enforce the terms in the minutes as representing the agreement among the parties. Among other terms, the essential terms of the agreement would have given $300,000 to each neighbour.
Court Dismisses Daughter’s Motion to Enforce the Settlement
At issue was whether the neighbours had accepted an offer to settle and then refuses to comply with its terms. The court cited the relevant Rule 49.09 of the Rules of Civil Procedure, which provides:
49.09 Where a party to an accepted offer to settle fails to comply with the terms of the offer, the other party may,
(a) make a motion to a judge for judgment in the terms of the accepted offer, and the judge may grant judgment accordingly; or
(b) continue the proceeding as if there had been no accepted offer to settle.
The court explained that a settlement agreement will be enforced where there is a binding agreement and there is no reason for a court not to enforce the settlement. It also stated that a settlement need not be in writing to be valid. It further explained that a settlement agreement is a contract and subject to the general rules regarding offer and acceptance. Finally, it noted that:
“A court has discretion not to enforce an otherwise binding settlement, but that discretion is to be exercised rarely […]. Factors to consider in deciding whether to enforce a settlement can include such things as: whether an order giving effect to the settlement has been taken out or not, thus affecting the pre-settlement position of parties; whether the party seeking to enforce would be prejudiced if the settlement was not enforced; the degree to which a party would be prejudiced by enforcement compared to the prejudice to the other party of non-enforcement; and the effect of enforcement on third parties.”
In this case, the court noted the daughter’s submission that, beyond the essential terms relating to the $300,000 payout to each neighbour, the rest of the terms were simply fine tuning and that conduct of the neighbour’s counsel should be taken as akin to acceptance of terms in the minutes of settlement.
However, the court found that the neighbours had in fact put forward additional terms and conditions which formed counteroffers.
The court therefore held that the neighbours had never agreed to the terms in the minutes of settlement, stating:
“[I]t cannot be the case that the [daughter] alone can dictate what terms of the settlement were essential. The designation of a $300,000 portion of the estate as the only “essential” term leaves the [neighbours] with no recourse for negotiating other terms that would satisfy their interests. The minutes of settlement were intended to set out all terms, in order to allow the parties to assess the individual terms in the context of all the circumstances of the estate and permit a comprehensive resolution. The [neighbours] had legitimate concerns that prompted counteroffers. A settlement cannot be imposed where no agreement was reached.”
In the result, the court dismissed the daughter’s motion to enforce settlement.
Estate disputes are complicated: they involve high levels of emotion, usually by individuals who are grieving the loss of a family member or who are dealing with a loved one who is very ill. Such disputes can become quite lengthy and can take months or even years to resolve, prompting individuals to take sides, creating acrimonious divisions, and eating into the value of an estate.
At Campbells LLP, our team of compassionate and highly skilled Oakville estate litigation lawyers have been assisting clients with estate disputes and resulting litigation since 1999. We are proud of the strong, long-lasting relationships that we build with our clients and provide a steady sounding board and legal advice to guide them through what can be one of the most emotionally draining times in their lives. With our help, we can ensure that the legacy of our client’s loved ones is carried out exactly as they wished, that their health and well-being is taken care of, and that their estate is protected.
At Campbells LLP, our exceptional estate lawyers can represent you in all estate litigation matters. We know that many individuals work during the week and cannot meet during the day. One of our lawyers would be pleased to meet with you in the evening or during the weekend, by appointment, if your schedule so requires. Contact us online or at (905) 828-2247. We look forward to speaking with you and going through this process by your side.