Supreme Court of Canada to Review Settlement Agreements in Family Law

Last month, the Supreme Court of Canada granted the application for leave to appeal from the judgment of the Court of Appeal for Ontario in Sylvia H.C.C. Richardson v. Mark Edward Richardson, a family law case. In this matter, the trial judge made a custody order contrary to terms of minutes of settlement signed by the parties during the course of the trial.  The majority of the Court of Appeal upheld the order and confirmed that judges have the authority to reject settlements.

The principal questions to be considered by the Supreme Court of Canada are: (a) When is it appropriate for courts to reject parties’ reasonable settlement agreements? (b) What are the standards for rejecting such settlements and what are the appropriate steps for a trial judge to take in such circumstances? (c) When, if ever, is it appropriate for a trial judge to continue to sit on a trial after being privy to the parties’ settlement positions?

BACKGROUND FACTS:

The parties were married in 2003, separated in 2012 and divorced in 2015. Both parties have since remarried. Their daughter was born in 2005 and they had a son in 2011.

They all resided in the Niagara region until 2017. In 2015, the parties participated in an assessment pursuant to s. 30 of the Children’s Law Reform Act, R.S.O. 1990, c. C.12. Ms. Richardson was seeking to have the children move with her to Ottawa, where she planned to relocate. The assessor recommended that the children stay in the Niagara region and that the parties have joint custody. The parties accepted this recommendation and settled the matter pursuant to a consent order in 2016. At the time both parties had residences in the Niagara region and Ms. Richardson was dividing her time between the Niagara region and the Ottawa area, where she had a home with her new spouse.

In July 2017, Ms. Richardson sold her Niagara residence and moved to Ottawa. She brought a motion to change the consent order on the basis that it would be in the children’s best interests to reside primarily with her in Ottawa. The parties could not settle the matter and it proceeded to trial. On the third day of the trial, counsel for the parties presented a proposed settlement to the trial judge that provided that the children would move from their home in the Niagara region to Ottawa to live primarily with their mother but gave the father final decision-making authority. The trial judge did not accept the terms of the minutes of settlement, without reasons for doing so, and stated that he wanted to hear all of the evidence. Counsel did not seek any clarification and raised no objection to the trial judge’s decision to reject the proposed settlement and continue with the trial. The trial proceeded. The trial judge concluded that the children would not relocate to Ottawa. This decision was upheld by a majority of the Court of Appeal.

THE COURT OF APPEAL DECISION:

The Court of Appeal was faced with the competing interests of the value of settlements in family law and the trial judge’s rejection of the proposed settlement without providing reasons for doing so. However, the appellate court also noted that settlement is generally to be encouraged and when a settlement is rejected on the basis of the children’s best interests, the Court must also consider the general benefits to children that flow from parents resolving their disputes through compromise. The Court of Appeal stated:

[25]      There is no dispute about the importance of settlements in family law. Settlements are to be promoted and encouraged, as our colleague Nordheimer J.A. explains.

[26]      Nevertheless, it is well established that judges have the authority to review settlements and to reject them if they are not in the best interests of the children … Further, whether a settlement is in the children’s best interests should take into account more than just the settlement terms. It should also consider the general benefits to children that flow from parents resolving their disputes through compromise rather than litigation.

[27]      If a judge rejects a settlement, the reasons for rejecting the settlement should be provided. Moreover, if the judge does not take any steps to facilitate settlement – such as sending the parties away with some direction as to the aspects of the agreement that are of concern, or arranging a settlement conference either with him or her or with another judge – the reason for this should also be provided. 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. The concerns may have been of a nature that could be addressed, but in the absence of reasons the parties will have no opportunity to address them.

The majority of the Court of Appeal held that the trial judge concluded that it was in the children’s best interest that they remain in the community where they were born and raised. The majority of the appellate court held that the trial judge made no error in doing so and the best interests of the children require that the order be upheld and the appeal dismissed.

Nordheimer J.A. (Dissenting) disagreed with the majority’s disposition of the appeal and explained that the trial judge’s rejection of the parties’ settlement, without reasons, tainted the conduct of the proceeding so that his decision cannot be allowed to stand.

Nordheimer J.A. stressed the importance of settlements in the litigation process and stated:

[62]      The importance of settlement in the overall litigation process cannot be overstated. It is especially so in the family law context. Indeed, the Family Law Rules, O. Reg. 114/99, directly provide that it is one of the ways in which the court promotes the primary objective…

[63]      The importance of settlement is heightened when dealing with children. A settlement brings closure to the matter. It helps the parties refocus on the children’s best interests. It ends (or at least reduces) the present conflict and leads the way for the non-litigious resolution of future disputes. Further, it may benefit the children in that they will, hopefully, understand that the arrangements were agreed upon by their parents, rather than imposed by a court…

…

[66]      In my view, my colleagues fail to give proper effect to what occurred through the way in which the trial judge dealt with the settlement. Simply put, there is neither excuse nor justification for the trial judge’s treatment of the settlement. If he was not prepared to approve it, he was required to tell the parties why and provide them with an opportunity to respond. The trial judge’s actions, in rejecting the settlement without explanation, fundamentally undermine the whole settlement process and its importance to the overall functioning of the litigation process, especially family litigation. His actions also deeply undercut the authority of the Family Law Rules, and of judges generally, in urging parties to resolve their disputes. For a judge to reject a settlement on parenting issues without explanation undermines one of the most important messages to the public in the context of family law: settling your dispute is in your children’s best interests.

[67]      Further, parties, both in the family law context and in civil proceedings generally, must be able to rely on the courts enforcing settlements freely reached so that they will have confidence that their efforts in pursuit of settlement are worthwhile.

Nordheimer J.A. would allow the appeal and give effect to the Minutes of Settlement.

The Supreme Court of Canada granted the application for leave to appeal from the judgment of the Court of Appeal for Ontario.

The foregoing information provides only an overview of settlement agreements in family law. Specific legal advice should be obtained. If you have questions in the above regard, please contact Alison Boyce at (613) 566-2224 or [email protected].