Most lawyers will advise their clients that parties to litigation should take every opportunity to settle disputes rather than going to trial. Settling offers some obvious benefits, including a certain result, less legal fees, and the opportunity to structure a settlement beyond the usual “zero sum” (or one side wins and the other loses) result that courts generally must impose.
Sometimes, the parties themselves will work out settlements or the parties’ lawyers will do so on their clients’ behalf. Other times, the parties will seek the assistance of a neutral to assist them. This might be a trained mediator or, in certain courts such as Manitoba’s Court of King's Bench and Canada’s Federal Court, a judge may assist the parties in trying to settle. These efforts have been shown to be successful in the great majority of cases.
One element of settlement, irrespective of whether by the parties without counsel, with counsel, or with the assistance of a neutral that sometimes gets forgotten is the last piece of the puzzle, namely, recording the agreements reached. Failure to properly document a settlement can be worse than failing to settle at all as is illustrated by a recent decision, SSE Holdings, LLC v. Le Chic Shack Inc., from the Federal Court.
The case itself was relatively straightforward in that the plaintiffs sued the defendant for trademark infringement. As the lawsuit was progressing towards trial, the parties agreed to enter into a court-assisted mediation. A mediation session took place and the plaintiffs thought that, at the end of it, the parties had an agreement to settle the action. The defendant disagreed and denied that any settlement was reached at the mediation or afterwards.
The plaintiffs filed a motion seeking a court order to enforce what they say are the terms of the settlement. The court was asked to decide whether the parties had agreed to settle. The judge hearing the matter dismissed the motion for lack of evidence. The judge noted that at no point during the mediation session:
- did either of the parties put the contents of their discussions or the proposed terms of an agreement in writing;
- did a party share any written terms of agreement with the other;
- was a written document containing settlement terms prepared and exchanged between the parties.
In fact, shortly after the end of the mediation session, the case management judge assisting the parties issued a direction that stated that the mediation adjourned at the request of the parties. The case management judge later issued a further order regarding amendments to the schedule for the pretrial steps and filings in the action.
For these and other reasons, it seemed clear to the judge hearing the motion to enforce the alleged settlement that the motion could not succeed.
The lesson learned through the experience of these parties is that one should never leave a settlement session without a signed written statement attesting to whatever was agreed, failing which one risks that the dispute will continue.