Can a Judge Reject a Settlement Agreement?

Handshake representing that judges do not have to accept a proposed settlement but need to present reasons why

Written on behalf of Shariff & Associates

Courts encourage parties to negotiate and to try to resolve issues to reach a settlement and avoid a trial. Most parties will assume that if they can reach a resolution, and if both are represented by counsel, then litigation may come to an end. However, courts are not bound by the proposed settlements that parties reach. Judges will consider and must accept a settlement, and if it does not meet the best interests of the child, a proposal can be rejected.

Judges Have Authority to Review Settlements

The case of Richardson v. Richardson concerned an appeal from the orders of a trial judge. During the original trial, the parties negotiated Minutes of Settlement which would have resolved their dispute if they were accepted by the Court. The proposed settlement would have had the parties’ children move from their home in the Niagara region to live with the appellant in Ottawa. However, the trial judge refused to accept the settlement and did not give reasons for the decision. The trial resumed, and the trial judge decided it was in the best interests of the children to retain their primary residence in Niagara and gave the father final decision-making responsibility. The appellant mother appealed the decision and argued the judge’s refusal to accept the settlement was contrary to the best interests of the children and the principles of fundamental justice.

The Ontario Court of Appeal emphasized that settlements are important in family law and should be promoted and encouraged. Yet, judges have the authority to review proposed settlements and to reject them if they are found to not be in the best interests of the children. Importantly, courts will not just weigh the settlement terms, but will also look at the “general benefits to children that flow from parents resolving their disputes through compromise rather than litigation.” The Court here explained that if a judge rejects a settlement, reasons for the rejection should be provided. Likewise, if a judge does not take steps to facilitate a settlement, such as informing the parties of which aspects of an agreement are of concern, an explanation should also be provided. As the majority of the Court stated, “without explaining the basis upon which the parties’ settlement is rejected, the judge leaves the parties with no way of knowing, what, if anything, they could do to address the court’s concerns.” This is important because the parties may be able to address the concerns.

In this case, the proposed settlement was reached in the middle of a four-day trial. In these circumstances, the judge’s reasons could be very brief, but were necessary to avoid the appearance that the case had been prejudged. The trial judge’s decision to continue the trial without giving an explanation for why the proposed settlement was rejected undermined the settlement process and the Court’s duty to help parties settle their case as required by the Family Law Rules. Despite this, the Court of Appeal agreed that there were clear grounds for rejecting the settlement. While the trial judge should have provided reasons for the rejection, it did not mean that the settlement should be accepted.

Minutes of Settlement Are a Binding Contract

In Fishbach v. Fishbach, the parties entered into Minutes of Settlement where they decided to share decision-making responsibility of the children and a shared parenting schedule. They were seeking a final divorce order, but the matter was adjourned. In the interim an incident occurred, in which the applicant alleged he attended the respondent’s home, where he found her high on drugs and injured. The police arrived and the respondent’s former boyfriend was arrested. The applicant outlined the boyfriend’s connection to criminal activity as well as criminal charges against the respondent. The applicant argued the respondent’s lifestyle and her relationships meant that the children were not safe in her care, and that the parenting time they agreed to was no longer in the children’s best interests.

The judge noted that the agreement was a binding contract even though it had not been incorporated into a final order of the court. However, if it had, the applicant would need to make a motion to change to obtain the relief he sought. The question was whether the process differed because the final order had not been issued, and the Court found that it did not. Parties can set aside Minutes of Settlement under section 56(4) of the Family Law Act which deals with the setting aside of domestic contracts. In this case, however, the applicant did not argue that the validity or enforceability of the agreement was in dispute, and he acknowledged there was a binding contract. Instead, he argued that there was a pattern of concerning incidents which led him to find the respondent would continue her risky behavior and unhealthy relationships, and that if he had known this, he would not have entered into the Minutes of Settlement. On this basis he alleged the Minutes of Settlement should be set aside.

The judge did not accept that argument, explaining that the applicant was aware of the respondent’s actions, poor relationships, and connections to criminal activity. With that knowledge the applicant entered into the Minutes of Settlement and agreed it was in the best interests of their children that their parents shared decision-making responsibility and parenting time. Although the recent events were troubling, the respondent acted responsibly in the circumstances by removing the children from the home. Additionally, the applicant did not provide evidence of harm to the children from the pattern of “bad decisions” by the respondent.

There Are Limited Grounds to Set a Settlement Aside

As such, the Court in Fishbach v. Fishbach found that it was settled that courts have the authority to reject Minutes of Settlement if they find that “the terms are not in the best interests of the children who are the subject of the settlement.” Here, the applicant wanted the judge to set the Minutes of Settlemtn aside and make an order contrary to their terms. However, the judge explained that there are limited grounds on which contracts or settlements can be set aside and the applicant did not pursue that relief. Instead, the applicant argued the judge could make the requested order under the court’s parens patria jurisdiction. The judge explained that residual jurisdiction applied:

  1. When there is a gap in the legislation that does not address the circumstances.
  2. “To deal with uncontemplated situations where it appears necessary to do so for the protection of those who fall within its ambit”.

Neither was applicable here since the legislation provided a framework for the circumstances the parties found themselves in. The applicant referred to a pattern of behavior by the respondent, which indicated the incident he complained of could have been anticipated. Significantly, there was no evidence of a danger to the children. Therefore, because there was a final settlement, the applicant could try to set it aside as provided for in the Family Law Act, or if it became incorporated into a final divorce order, he would have the opportunity to commence a motion to change if he believed it constituted a “material change in circumstances.”

Settlements Can be Rejected if Not in the Best Interests of Children

Parties can reach a settlement at any time during their family litigation. Yet, while courts encourage parties to negotiate and explore settlement, this does not mean that a judge will necessarily accept a proposed settlement from the parties simply because it has been agreed upon. Further, if a judge decides to reject a proposed settlement, they will need to provide reasons for why it has been rejected.

Contact the Lawyers at Shariff & Associates for Advice on Preparing Your Separation Agreement

The experienced family lawyers at Shariff & Associates focus on providing pragmatic and comprehensive legal advice to clients involved in family law disputes. Whether you require assistance preparing a separation agreement, are seeking advice on relocation and mobility, or are involved in a dispute over child support, we will work with you to determine the most effective solutions applicable to your unique circumstances. To discuss your matter further or arrange a confidential consultation with one of our family lawyers, please reach out to us online, or call us at 905-591-4545.