Domestic Contracts and Minutes of Settlement: Rectifying Mistakes
McCabe v. Tissot, 2015 ONSC 2557, 2015 Carswell Ont 7860
This case considers whether and in what circumstances a Court should grant the equitable remedy of rectification of an alleged drafting error in a domestic contract. This case is relevant to virtually all family law proceedings in Ontario because the laws that govern family law proceedings in Ontario are aimed at encouraging parties to resolve their disputes through negotiated settlements. As a result, most family law disputes are resolved, at least in part, by some sort of negotiated agreement. As such Agreements are not immune from human error, parties and lawyers may occasionally seek a Court Order to rectify errors in an Agreement.
Ms. McCabe and Mr. Tissot were the parties to a matrimonial dispute involving multiple issues, of which a central issue was whether Mr. Tissot should share the cost of private school fees for the parties’ son. The issue of private school fees remained live throughout the parties’ negotiations and Ms. McCabe maintained throughout that the parties should each pay half of said expense. Ms. McCabe also made multiple Offers to Settle, which provided that Mr. Tissot would pay half of the cost of the parties’ son’s education, including the private school fees.
The parties reached a settlement agreement by way of Minutes of Settlement prepared by the parties’ counsel late one night after a mid-trial Settlement Conference and subsequent back and forth negotiations. Despite Ms. McCabe having insisted throughout negotiations that Mr. Tissot pay half of the private school fees, the final draft of the Minutes of Settlement that was signed by the parties did not include such a provision.
Ms. McCabe subsequently brought a Motion to have the Minutes of Settlement rectified to include the provision regarding the private school fees as she alleged that the private school fees were left out of the Minutes of Settlement due to an inadvertent drafting error by counsel.
Ms. McCabe’s position was as follows:
- Ms. McCabe’s counsel made an obvious error when the drafting of the Minutes of Settlement;
- Ms. McCabe failed to notice the mistake when executing the Minutes of Settlement; and
- The mistake was of a nature that Mr. Tissot and his counsel knew or should have known that the omission of the provision regarding private school fees was an error and that it did not reflect the agreement reached by the parties.
Mr. Tissot argued that the Minutes of Settlement should not be rectified. His position was as follows:
- Mr. Tissot and his counsel did not perceive an error in the Minutes of Settlement;
- The omission of the provision regarding private school fees was not an error; and
- Ms. McCabe was using this process to obtain a better deal because she was not happy with the terms to which she agreed.
The Court granted Ms. McCabe’s Motion in part and held that Mr. Tissot must agree to the rectification and take all necessary steps to effect the rectification within 10 days. In the alternative, if Mr. Tissot was not willing to elect to rectify the Minutes of Settlement, the Court ordered the Minutes of Settlement to be rescinded.
The rectification sought by Ms. McCabe is an equitable remedy and, as such, the Court has broad discretion to award or deny such relief. A Court may order rectification of Minutes of Settlement or another Agreement if it is satisfied that an error was made in a written agreement such that it was inconsistent with the oral agreement on which it was based.
The Court based its decision to grant Ms. McCabe’s Motion on the following:
- The remedy of rectification is available even where neither party is aware of the mistake or in the context of a unilateral mistake;
- It is sufficient that a party should have known or had good reason to know of the error and of the actual intentions of the parties;
- The inquiry into whether a party knew or should have known of another party’s mistake is an objective assessment based on what a reasonable person would have thought in the given the circumstances considering the evidence presented;
- In this case, all of the circumstances leading up to the preparation of the Minutes of Settlement support the conclusion that a mistake was made and Mr. Tissot and his counsel should have known of the mistake; and
- The Court is justified in imposing a strict requirement that both parties fully understand and agree to the provision in this case because the provision at issue also has implications for the welfare, well-being and education of the child and it represents an important part of the overall resolution of the parties’ dispute.
The Court found specifically that it was “abundantly evident” that the omission in this case was an error because, without the reference to splitting the cost of the private school fees, the paragraph of the Minutes of Settlement that previously contained said reference was ”virtually meaningless”. The Court further found that the omission resulted from an unfortunate error by counsel made while under the time pressure late in the evening.
The Court gave the following reasons for finding that Mr. Tissot and his counsel should have known the omission was an error:
- Ms. McCabe’s position regarding the private school expense was advanced in several months of correspondence between counsel, her evidence at trial, and her multiple Offers to Settle;
- Mr. Tissot’s counsel had revised the most recent Offer by hand to insert the provision in question as a term that Mr. Tissot was prepared to accept;
- The revised Offer was then followed by the exchange of e-mails between counsel that specifically referred to Mr. Tissot’s agreement to pay half of the private school expense; and
- Said specific reference clearly represented Mr. Tissot’s position on this issue at the time the Minutes of Settlement were prepared.