Month: November 2021

Ideally, productive mediations lead to settlements. Unfortunately, mediations can sometimes take a very long time. It isn’t surprising that after a long day of mediating, the wrongful dismissal lawyers might decide not to draft the formal minutes of settlement until the next day. While understandable, this decision could be a mistake.

In one recent case, choosing to delay drafting the materials had a serious consequence: the defendant employer decided they no longer liked the “agreement” that had been reached, but for which no formal document had yet been drafted. They took the position that no settlement had been reached at all.

The Mediation and Settlement

The plaintiff, Mr. Peres, was terminated from his position as President and CFO of the defendant employer. Mr. Peres commenced an action on December 2, 2020, which was the subject of a mediation that occurred on February 23, 2021. Present at the meeting was the plaintiff and his counsel as well as three representatives of the defendant and their counsel. Those representatives included the CEO and the Chair of the Board.

The mediation lasted all day. When the mediation was finally over, counsel exchanged emails summarizing and generally agreeing to the terms of the agreement. There was a list of five numbered points that defined the agreement. However, one provision of the agreement in particular, point 2, was problematic. It read, per plaintiff counsel’s email:

“2.         700,000 options are being granted in reasonable short order at a current exercise price and with an expiry date of November 10, 2023.”

To which defendant’s counsel replied:

“AGREED, SUBJECT TO BOARD APPROVAL ACTING REASONABLY.”

It was expected that the defendant would send the plaintiff draft minutes of settlement the next day. They did not. Instead, the defendant informed the plaintiff that the settlement as provided in the email did not receive the necessary Board approval.

At issue now is whether these emails, absent formally drafted minutes of settlement, constituted an agreement and whether that agreement can or should be enforced.

Was There An Agreement?

According the plaintiff, an agreement had been reached via email. The defendant used the word “AGREED”. The defendant later confirmed this in a subsequent email by saying “sounds good.”

On the other hand, the defendant argued that the emails were, at most, an agreement to agree, which is no agreement at all. There was no unequivocal offer or acceptance. Further, the entire settlement was subject to and conditional on the Board’s approval. The Board did not approve the agreement, thus there was no agreement.

After considering the perspective of each side, the trial judge found that there had indeed been an agreement. Although some further work was required in writing up the details, the parties had agreed on the essential terms of the agreement. The essential terms were clear, and the only remaining task was to put those essential terms into formal legal language. It was not necessary, strictly speaking, for the agreement to be produced in formal writing in order to be an agreement.

Is the Agreement Enforceable?

Having found that there was an agreement, the next question to be addressed was whether it can or should be enforced. Predictably, the defendant argued that it cannot and should not because the Board never approved the settlement as required by the emails forming the agreement. Although approval was only needed for point 2 of the agreement, the defendant argued this provision was an “essential pillar” of the overall agreement. If the Board did not approve this provision, they did not approve the rest.

The trial judge found that the agreement should be enforced in any event. The agreement stated that the board, acting reasonably, could disapprove. The trial judge found that there was no reasonable basis for the Board to decline the provision. That being the only provision in dispute, the rest of the agreement is capable of enforcement and should be enforced.

As such, the agreement reached by email was enforceable, despite not having been formally drafted or signed by the parties.

Important Takeaways

This case is an important reminder that what you say by email matters. You do not need formally drafted and executed minutes of settlement and release to have an enforceable agreement. If the essential terms of the agreement are clear, that will likely be enough.

Nevertheless, this entire situation could be easily avoided. Parties should be willing and able to present a formal settlement agreement promptly after the mediation has concluded. An easy way to accomplish this would be by having draft minutes of settlement, even in template form, prepared in advance so that you need only fill in the details discussed during the mediation. This would ensure there is no confusion moving forward and would prevent the possibility that one party might feel free to repudiate the agreement they reached at mediation.

The legal process is complicated. When you aren’t familiar with it, it’s easy to make mistakes. Some of these mistakes can be very costly. Some mistakes can be fixed. Some cannot, and if you make one of these mistakes, you may see your entire case thrown out. It is absolutely essential, for instance, that you bring your proceeding to the correct forum and within the correct amount of time.

In the recent Ontario Superior Court decision Andrew Scott v. Community Living Temiskaming South (“Andrew Scott”), a plaintiff had his entire case dismissed because he mistakenly commenced the proceeding in the wrong forum and because he did so too late.

The Time for Bringing Proceedings

The Limitations Act, 2002 sets out the two-year limitation period that applies to employment law proceedings. If you bring your claim more than two years after the claim was discovered, the court will have no choice but to dismiss your claim. In Andrew Scott, the plaintiff originally brought a claim for wrongful dismissal before amending it to a claim for constructive dismissal. Where a constructive dismissal arises from a change of position, case law suggests that the limitation period starts to run from the date of the change in position. In Andrew Scott, that change of position occurred on March 27, 2017. The plaintiff, however, brought his first claim on April 4, 2019, and then amended it on January 13, 2020. These dates are 24 months and 33 months, respectively, after the date the limitation period began to run. As a result, both claims fell outside the limitation period and were therefore dismissed.

Mitigation Efforts Irrelevant to Limitation Period

The plaintiff in Andrew Scott argued that the limitation period should have started later because he had remained with the employer in an effort to mitigate his losses in conformity with employment law principles. The Superior Court, however, did not believe this had any effect on when the limitation period began. Justice Koke found that mitigation cannot toll the limitation period as there is no reason a plaintiff could not mitigate his losses and commence an action at the same time.  Mitigation efforts, Justice Koke found, are wholly irrelevant to when a plaintiff discovers their losses and when the limitation period begins to run.

The Forum to Bring Proceedings

In the context of employment law, the proper forum will often depend on whether or not the employee bringing the proceeding is unionized. In Andrew Scott, the plaintiff was a member of a union when bringing his complaint. Notably, he commenced an action in the Ontario Superior Court. As it turns out, this was a significant error on his part. According to the Ontario Labour Relations Act, the resolution of disputes arising under a collective agreement should be provided through arbitration, not the courts.  Courts are not able to hear claims arising under collective agreements. Rather, a unionized employee with a claim against their employer must rely on the grievance process under the collective agreement and cannot turn to the courts for help.

The plaintiff in Andrew Scott, as a unionized employee, should not have turned to the courts for help. His answer lied in arbitration. As a result, Justice Koke found that he had no jurisdiction to hear the plaintiff’s claim, and the claim was dismissed.

The plaintiff may have had a case had he brought his complaint to the correct forum in the correct amount of time. He lost all chances of proving that case, however, when he brought it too late and to the wrong forum.  This case should serve as an important lesson not to delay in bringing a claim, and to ensure you bring it where it must be brought.