Deal or No Deal?

Contracts of all kinds often fall apart over relatively minor details, despite the parties’ agreement on the majority of issues.  However, without complete agreement, there is no agreement.  Settlements are no different.  The Human Rights Tribunal of Ontario (the “Tribunal”) recently confirmed that this principle is no less true in the context of human rights litigation.

In Barrett v Willis Canada Inc, the parties had entered into significant discussions about settling a potential human rights complaint.  Even though the parties seemed to agree to a resolution of the majority of the issues between them, the individual filed a complaint with the Tribunal.  The respondent brought a motion seeking dismissal of the complaint before the Tribunal arguing that it was an abuse of process, because there was a settlement agreement between the parties.

The Tribunal found that although the parties had worked diligently to finalize an agreement, they had not reached agreement on all of the issues, and at least one was still in dispute at the time the complaint was filed.

The unresolved issue was the allocation of settlement money.

Anyone who has been involved in the settlement of an employment related matter is likely aware that the characterization of parts of a settlement can have significant tax consequences for both parties, as well as other consequences such as employment insurance clawbacks. The parties could not agree on the proper disposition of funds to avoid these consequences.

As a result of the failure of the parties to agree on this final point, there was no agreement.  Without an agreement, there was no abuse of process and no reason to dismiss the complaint as a preliminary matter.

This case is a reminder about the importance of ensuring that settlements are complete, in writing, and clearly agreed to by both parties.  Failure to ensure that a settlement has these characteristics will prevent employers from relying on that settlement in order to shield themselves from litigation.  Usually, matters such as this will settle prior to going to hearing.  However, even in that case, unnecessary legal fees may be incurred which could have been avoided by ensuring that fruitful discussions continue to their complete resolution.

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