Court of Appeal Decision Highlights Important Lessons on Settlement Agreements
On June 23, 2017, the Alberta Court of Appeal concluded that Jan Buterman was bound by a settlement he reached in relation to his complaint of discrimination. The Court of Appeal upheld the March 17, 2016, decision of Alberta’s Court of King's Bench and the October 30, 2014, decision of Alberta’s Human Rights Tribunal which found that transgender teacher Buterman had entered into a settlement agreement with the Greater St. Albert Roman Catholic Separate School Board District (“School Board”), thus relinquishing his human rights claim against the School Board.
On October 1, 2009, Buterman filed a human rights complaint in response to the School Board’s October 14, 2008 decision to remove him from its roster of substitute teachers because he was a transgender person. At the time, Buterman was in the process of transitioning from female to male.
On October 2, 2009, the School Board offered to settle the complaint by way of a cash settlement (“First Settlement Proposal”) in exchange for withdrawal of the human rights complaint, which Buterman rejected. Following the School Board’s second settlement offer, Buterman advised he was willing to accept the First Settlement Proposal, which he had originally rejected. That same day the School Board advised Buterman that the First Settlement Proposal remained open and agreed to Buterman's acceptance of that offer. The School Board and Buterman exchanged letters to discuss the wording of the settlement agreement, and the money was put in trust for Buterman.
On April 10, 2011, Buterman informed the media (and not the School Board) that he had rejected the School Board’s settlement offer due to the confidentially clause contained in the release.
In its October 30, 2014, decision Alberta’s Human Rights Tribunal found the parties had agreed to a settlement. The Court of Appeal agreed, finding it was reasonable for the Tribunal to have concluded that the First Settlement Proposal remained open when it was accepted, and noted that:
- The draft settlement documents had simply documented an existing settlement agreement; and
- The object of a settlement agreement is to bring an existing dispute to a close, not to create a situation where one or both of the parties can treat the agreement as merely another step in a continuing dispute.
Tips and Takeaways for Employers
- Without prejudice communications as to whether there is a settlement agreement can become evidence if one party is required to prove a settlement agreement was reached.
- To ascertain whether a settlement agreement has been reached, a court will assess whether the parties were objectively of a common mind, and whether the settlement agreement terms were clear and certain. A lack of certainty of terms will result in the Court concluding a settlement agreement was not reached.
- A settlement agreement occurs once the settlement offer has been accepted on the essential terms even if the parties still have to complete the settlement through additional documentation like a Release.
- A settlement offer should contain clear settlement terms and, when appopriate, provide for a clear deadline for which the settlement offer remains open.