In Estates litigation, it is not uncommon for parties to be close to settlement, but are stymied by haggling over the exact terms of the minutes of settlement (or contract) and the delays by the exchange of drafts back and forth, between the parties’ respective lawyers. This begs the question: at what point is the agreement binding? Is it only at the point where all the parties have signed the minutes of settlement? Or are parties bound before that point, when the settlement was made, just not in writing?

This was the issue in Prince v. Nytschyk Estate, a case where one of the parties died while settlement negotiations were ongoing, but before the minutes of settlement were signed by the parties. The estate of the deceased party sought to enforce the settlement, while the other party sought to renege on the terms of their agreement.

Background

Cherie Lewicki and Joseph Nytschyk lived together in a common law relationship for approximately 15 years. For most of that time, they lived in a house which was owned solely by Joesph.

Joseph died without a will in November 2013. Cherie agreed to allow Joseph’s two sons, Michael and John, to be appointed as the estate trustees for Joseph’s estate. Cherie continued to live in the home which was owned by Joseph. In January 2014, Cherie commenced a dependant’s support application against Joseph’s Estate, seeking support as a dependant and a declaration that title to the home owned by Joseph was held on trust for her. Michael and John, as estate trustees, resisted Cherie’s claim.

Through their lawyers, settlement discussions took place between Cherie and Michael and John, regarding her claim. Multiple versions of draft minutes of settlement were exchanged between the parties, but none were signed.

In October 2016, while these discussions were still ongoing, Cherie died suddenly.

Michael and John took the position that there had never been a full settlement agreement between the parties and that they were not bound to fulfill the agreement. As a result, the estate trustee and sole beneficiary of Cherie’s estate brought a motion to enforce the settlement.

The question which the court was required to determine was whether a binding settlement was made between Cherie and Michael and John before Cherie’s death, despite the fact that the parties did not sign the minutes of settlement.

The Settlement Discussions

Without signed minutes of settlement, all of the evidence as to whether there was an agreement came from correspondence between the parties’ lawyers.

In June 2015, Michael and John made an offer of settlement to Cherie on the following terms:

  1. Upon the approval of the CRA, the house belonging to Joseph would be transferred to Cherie;
  2. Cherie would remove her personal items from Joseph’s cottage and office; and
  3. No cash would be paid to Cherie out of the Estate.

Cherie responded to this offer and advised that she accepted the offer in principle, but sought confirmation regarding some tax and insurance issues.

After these issues were cleared up, Michael and John’s counsel prepared an initial draft of the minutes of settlement and provided it to Cherie’s counsel in July 2015. Cherie’s counsel did not respond initially and in August 2015, Michael and John’s counsel threatened to bring a motion to enforce the settlement.

After this time, further drafts of the minutes of settlement were exchanged between the parties and they continued to negotiate over some expenses relating to the property and other minor issues. At no time did either party suggest in the correspondence that a settlement had not been made.

All negotiations stopped in October, when Cherie passed away and Michael and John took the position that there was never a binding agreement.

The Court’s Analysis of the Deal

The court found that the “essential” terms of the settlement were established by Michael and John and accepted by Cherie in June 2015. Although the lawyers for both parties attempted to add terms proving protection for their respect clients after that time, the court did not find those terms to be essential to the settlement.

The court also relied on the fact that Michael’s and John’s counsel threatened to bring a motion to enforce the settlement as further proof that both parties understood the essential terms of the deal, which was to resolve the litigation and Cherie’s claim as a dependant by transferring the house to her.

A binding contract had already been established in June 2015 and the additional proposals made by the lawyers did not change this.

The court considered the fact that Cherie no longer needed the financial benefit (as she is deceased) and the addition of the asset to her estate was essentially a windfall to her heir. Nonetheless, the parties made a binding deal. While it was true that Cherie did not live to enjoy the benefit of the settlement, the deal did not cost the estate any more than anticipated. The settlement was not unfair and the court declined to use its discretion in favour of Joseph’s estate.

This case is a reminder that a binding contract may be made before minutes of settlement are signed. Once the essential terms are established, the deal may be binding, even where the parties are still haggling over addition of further and more minor terms. It is important for all parties to be aware of this fine line of when negotiations become a contract, so there’s no surprise when someone says: you’ve got a deal!

For questions about this case or for advice and guidance on other Estate Litigation matters, contact the estate litigation lawyers at Eisen Law in Toronto to find out how we can help. Call us at 416-591-9997 or contact us online.



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