The parties married in 1992, separated in 2017, and commenced litigation in 2021. Both the wife and husband are experienced lawyers, however, neither have experience practicing family law.
The parties attended a Settlement Conference where an agreement was ultimately reached. The issue is whether the agreement reached is binding on the parties.
The wife argues that the agreement is binding, as the husband’s intentions and actions during the Settlement Conference support the conclusion that the negotiated terms formed a binding agreement. The husband however disagrees and believes that the terms were subject to his receipt of independent legal advice and the execution of a written agreement.
The court ultimately agreed with the husband, and found the agreement reached during the Settlement Conference did not form a binding agreement between the parties.
The main issue the court considered was whether the parties reached a binding agreement at the Settlement Conference. Within this main issue, the court considered three (3) sub-issues:
- Was there a “meeting of the minds” as observed by a reasonable observer?
- Was there a consensus on all essential terms of the agreement, or is the Court being asked to make an agreement for the parties?
- Was the agreement conditional upon and subject to the execution of a formal contract?
In determining whether there was a “meeting of the minds” between the parties, the court noted that both parties, being lawyers themselves, are sophisticated litigants who were also both motivated to resolve the matter in its entirety. It was also noted that the agreement reached was ultimately a compromise between the party’s two initial positions, and that the terms were clear that the agreement would be a full and final settlement of all issues, which included a lump sum payment by the husband to the wife, and mutual releases. The court therefore found that there was a “meeting of the mind” between the parties.
In considering the second sub-issue, the court considered tax issues between the parties, but ultimately found said issues did not detract from the party’s agreement on the negotiated terms, and because of this, the court did not find that they were being asked to make an agreement for the party’s, but rather to determine whether the party’s were bound to the terms they had previously agreed to during their Settlement Conference.
With respect to the third sub-issue, the wife argued that there was evidence supporting the binding nature of the agreement based on the husband’s stated intention to resolve all issues during the Settlement Conference, as well as his repeated requests for a copy of the draft Minutes of Settlement.
The husband however disagreed with the wife. The court noted that the husband was under extreme financial pressure and did not understand certain terms of the proposed agreement. He had also sent emails which clearly indicated his intention to retain family law counsel to review and provide legal advice on the draft Minutes of Settlement.
The court found that a reasonable observer would conclude the negotiated terms were condition upon the husband having the opportunity to obtain and consider family law legal advice. The importance of independent legal advice was emphasized by the court in their reasoning, as they wrote “the opportunity to obtain, consider and act on family law advice is the cornerstone to the family law justice system and sustainable agreements. Self-represented litigants must have the opportunity to obtain independent legal advice so that they can make informed decisions and provide informed consent.” Independent legal advice ensures this opportunity is provided as lawyers who are retained to provide independent legal advice are expected to meet with clients for a reasonable amount of time, and often more than once, as well as revise relevant materials in order to provide thoughtful, accurate and complete advice.
The court additionally noted that the wife had acknowledged the utility of the husband receiving independent legal advice, as the draft Minutes prepared by her counsel had a clause confirming that the party’s either received or had the opportunity to receive independent legal advice to understand the nature and consequences of the agreement.
The court ultimately held that the agreement reached at the Settlement Conference did not form a binding agreement because the negotiated terms contemplated that the husband would have the opportunity to retain family law counsel and obtain independent legal advice and were subject to the execution of a formal contract.
The court also noted their conclusion was supported by section 17(19) of the Family Law Rules as the agreement was not signed by the parties, nor witnessed, and therefore could not be held to be a binding agreement.