Loose ends can wipe out comprehensive settlements

Failure to obtain court approval of the settlement of a minor’s modest Family Law Act claim as part of a comprehensive personal injury settlement can result in the nullification of the entire settlement, according to Justice Gregory Mulligan of the Ontario Superior Court of Justice in his April 28 decision in Downing v. Reynolds[2014] O.J. No. 1897.

In Downing, an injured mother signed a full and final tort release in both her personal capacity and as litigation guardian for her minor children claiming under Ontario’s Family Law Act. The minor children were not involved in the accident in any way, but at least one child, Sharlene, attended on the scene after the car accident and witnessed her mother being extricated from the vehicle.

Because the claim involved minor plaintiffs, the settlement was mandated to be court approved in accordance with Rule 7.08 of the Rules of Civil Procedure. However, court approval, while contemplated in the settlement, was never sought by plaintiffs’ counsel in relation to the minors’ claims.

Moreover, despite undertaking to defence counsel to obtain court approval before disbursing the settlement funds, plaintiff’s counsel proceeded to disburse the majority of the settlement funds.

Long after the settlement was reached, new plaintiff’s counsel, retained to act for the minor claimant Sharlene Downing, moved to set aside the comprehensive tort settlement, arguing that her injuries and damages, as a witness to her mother’s extrication, were more serious than anticipated at the time of the original settlement, and that accordingly, the settlement, which was never formally court-approved, should be set aside.

Read the full article as it originally appeared in The Lawyers Weekly on June 27, 2014: Loose ends can wipe out comprehensive settlements.

For more information, please contact personal injury lawyer Darcy Merkur at 416-868-3176 or by EMAIL.