FAMILY LAW

BINDING BARGAINS

When is a Deala Deal? SolicitorAgreementsin MatrimonialMattersDavid C. Day, Q.C.Lewis, Day, Dawe & Burke

Perhaps as early as "legal memory," whichSir William Holdsworth defined! as thearbitrarily-adopted date - 03 September 1189- before which the memory of law does notreach, solicitors have, both orally and inwriting, made settlement bargains on behalf ofclients. Solicitors are in fact ethically obligedto explore, fully, prospects of reasonable set-tlement, under chapter III, paragraph 6 ofThe Canadian Bar Association's Code OfProfessional Conduct? as counsel were re-minded in King v. King,3 and are legallyrequired to do so by certain legislation -notably, the Divorce Act,4 subsection 9(2).

The extent to which solicitors' agreements(their existence, content, and meaning havingbeen established) bind clients is described byEvans I.A. in Scherer v. Paletta=

A solicitor whose retainer is established inthe particular proceedings may bind his clientby a compromise of these proceedings unlesshis client has limited his authority andthe opposing side has knowledge of thelimitation, subject always to the discretionarypower of the Court, if its intervention by themaking of an order is required, to inquire intothe circumstances and grant or withhold its

I Some Makers Of English Law (The Tagore Lectures1937-38) (William S. Hein & Co., Buffalo, 1983) 8.2 (Ottawa, 1988) 10. (Parenthetically, Rule 8.02 of TheLaw Society Rules (Newfoundland) continues to adhereto the "Code of Professional Conduct as adopted by theCanadian Bar Association on August 25, 1974.")31992 Nfld CA No. 147,24 February 1994, CameronLA. (Gushue and Marshall, JJ.A.), unreported; noted at:[1994] W.D.F.L. No. 625.4 RSC, 1985, c. 3 (2nd Supp.).5 [1966] 2 OR 524 (CA) at 527.

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intervention if it sees fit; and subject also tothe disability of the client.

In other words, at common law, solicitors'agreements bind clients, subject to the excep-tions identified by Evans I.A., if such agree-ments are made during pendency of andpertain to the subject of litigation. (Whatamounted to a solicitors' bargain, purportingto settle marital property (as well as parenting, and support) issues, made when the only liti-gation commenced and pending between theclients was under the Divorce Act - a maritalproperty proceeding under the Famity LawAcf6 not having been instituted as of the dateof the solicitors' bargain - failed to bind theclients in Tucker v. Tucker.')

To what extent, therefore, were thesecommon law principles governing solicitors'agreements abrogated, varied or supplanted bydomestic contract statutory enactments such assubsection 55(1) of Ontario's Family LawAct,S which states:

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A domestic contract and an agreement toamend or rescind a domestic contract are un-enforceable unless made in writing, signed bythe parties and witnessed

and comparable legislation in the otherCanadian jurisdictions'i?

Not at all, concluded Russell J. in Picco v.PiCCO,IO a decision interpreting section 35 ofThe Matrimonial Property Act (Newfound-land), ancestor of the similarly-worded presentsubsection 65(1) of the Family Law Act(Newfoundland). He held: '_)

If the Legislature intended to change thecommon law with respect to the effect ofsettlements of litigation by parties' solicitors,I presume it would have done so, to use theexpression of Fauteux , J., in Goodyear Tire &Rubber Co, of Canada v. T. Eaton Company,

6 RSN, 1990, c. F-2.7 (1993),48 RFL (3d) 5 (Nfld CA).8 RSO 1990, c. F.3.9 See: Matrimonial Property Act, RSA 1980, c. M-9,section 38; Family Relations Act, RSBC 1979, c. 121,subsection 48(3); Marital Property Act, RSM 1987, c.M45, subsection 1(1); Marital Property Act, SNB1980, c. M-l.l, section 37; Matrimonial Property Act,RSNS 1989, c. 275, section 24; Family Law ReformAct, RSPEI 1988, c. F-3, section 48; Civil Code ofQuebec, SQ 1991, c. 64, art. 440; The MatrimonialProperty Act, SS 1979, c. M-6.1, section 38.10 (1987), 12 RFL (3d) 345 (Nfld UFC).

[1956] S.C.R. 610. at p. 614. with"irresistible clearness" leaving no doubts asto its intention.

In my opinion the common law position thatsolicitors can bind their clients is still goodlaw and if this is to be abrogated or altered bystatute the language of the statute must beclear leaving no doubt what was intended. I I

Hewas, accordingly, satisfiedthat non- compliancewith the adjectivalstatutory requirementsfor makinga domestic contract, in the context of commencedlitigationeitherpending or during trial, did not vitiate ''an agreementreached by exchangeof correspondence,between solicitorson instructionsof their respectiveIclients, To same affect is Geropoulous v.'IGerOpoulOUS,12 a decisionofOntarioCourt ofAppeal,.interpreting subsection 54(1) of Ontario's former,Family Law Reform Act,13 worded similarly to its:'present equivalent, subsection 55(1) of Ontario's,'Family Law Act (which is identical to subsection'165(1) ~fNewfQ_undland'sF!1!!li/y Law Acf~.

Absent the "pendency of court proceed-ings, "15 the Newfoundland Court of Appealreached an opposite conclusion in Tucker v.Tucker. There, the husband's solicitor sent aletter pro~osal to settle parenting, support andproper~y ~ssue~ ~etween separated spouses.The wife s solicitor responded with a draftwritten agreement incorporating the letter'ssettlement proposals (and drafts of collateralagreements required to perform the settle-ment!. A Divorce Act proceeding was thenpendmg. between the spouses. A marital prop-erty action under the Newfoundland FamilyLaw Act had not been instituted. The husbandbalked at signing the draft written settlement~greement. In reversing the trial judge on theIssue, Cameron J .A. for the NewfoundlandCourt of Appeal accepted but did not decidethat the exchange between solicitors consti-tuted a solicitors' agreement, and continued:

[ ... J The trial judge held that as a practicalmatter solicitors who are dealing withissues under the Divorce Act [under which aproceeding had been commenced] can be

II Ibid. at 351.12 (1982),26 RFL (2d) 225 (ant CA).13 RSO 1980, c. 152.14 SN 1~79, c. 32. section 35; rep./sub. SN 1988, c. 60,subsec~lOn 65(1); rep./sub. RSN. 1990, c. F-2.subsection 65(1).15 Geropoulos v, Geropoulos (1982). 26 RFL (2d) 225(am CA), per Robins J .A. at 232.

FAMILY LAW

expected to deal with other matrimonialissues [such as involving marital propertyapropos which a proceeding had not beentaken] to attempt to anive at a global settle-ment. Certainly courts have often noted thedesirability of resolving property issues sothllt support GflII be determined with 11clearerpicture of the means of the parties. The trialjudge held the existence of the divorce peti-tion was sufficient to take the "agreement"outside the operation of s. 65(1) [ofNewfoundland's Family Law Act).

[ ... JIn Ontario, it has been held that where theagreement pre-dates the litigation the statutemust be complied with (Tanaszczuk v.Tan asz czuk (1988), 15 R.F.L. (3d) 441(U.F.C.); Davis v, Gregory (1990), 29 R.F.L.(3d) 62 (Gen. Div.». [... ]16

After referring to the 1981 trial decision ofEberle 1. of Ontario High Court in Geropoulosv. Geropoulos (affirmed on appeal) 17

Cameron I.A. similarly concluded: 'The policy argument in favour of the positiontaken by the trial judge is that it avoids theunnecessary institution of litigation (see thecommentary of James G. McLeod inCampbell v. Campbell (1985). 47 RF.L. (2d)392 (ant. H.C.), at p. 393). However, it couldlikewise be said that all negotiations ofseparation agreements are made in theshadow of possible litigation. and to findall such agreements outside s. 65(1) [ofNewfoundland's Family Law Act] wouldnullify the section, as it relates to separationagreements.

To accomplish the objective of encouragingsettlement of litigation, maintaining the in-tegrity of the system which enables solicitorsto compromise litigation, and preserving thelegislation, s. 65(1) must apply to all domes-

, tic contracts except those that may becharacterized as settlement of issues inlitigation commenced before the agreementwas reached. The exchange of correspon-dence between the parties' solicitors in thiscase is therefore subject to s. 65(1) andcannot be enforced. 18 '

16 See Tucker v. Tucker, supra note 7 at 10 1117 (1981),23 RFL (2d) 206, at 212; aff:d (i982) 26RFL (2d) 225 (Ont CA). '18 Tucker v, Tucker, supra note 7 at 11-12.

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FAMILY LAW

In Bennett v. Hulan.'? in which the issueinvolved validity of an oral solicitors' bargaindesigned to amend, rather than to constitute, asettlement agreement, the husband appellanttook the inning in Newfoundland Court ofAppeal with questionable prospect, perhaps,of ultimately winning the match. Husband andwife had made a written separation agreementthat complied with the adjectival requirementsof Newfoundland domestic contract law.Subsequently, their solicitors made an oralagreement purporting to alter an aspect of themartial property provisions of the writtenseparation agreement. To this juncture, nolitigation had been commenced between thespouses. The wife declined to honor the pur-ported alteration of the separation agreement.Her husband sued, apparently for specificperformance of the separation agreement asamended. The trial judge declined reception ofevidence of the solicitors' oral amendingagreement; ruling that to do so would offendthe parol evidence rule. From this decision thehusband appealed to Newfoundland Court ofAppeal which, per Goodridge C.J.N. (orally),held:"

The trial judge misconstrued the parolevidence rule in this matter and, in so doing,

19 (1993),50 RFL (3d) 233 (Nfld CAl.20 Ibid. at 234.

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rejected evidence that was otherwise admis-sible. The parol evidence rule provides thatevidence may not be introduced to show thatthe provisions of a written document that isnot ambiguous do not reflect what was agreedbetween the parties in respect thereof. Therule, however, does not operate to excludeevidence of a subsequent oral agreementwhich purports to vary or rescind an earlierwritten document.

The proceeding was remitted to the trialjudge for re-hearing. If, as appears, litigationin relation to marital property was not pendingwhen the solicitors' oral amending agreementwas made, that amending agreement is, likely,invalid; failing required compliance, in thecircumstances. with present subsection 65(1)of the Newfoundland Family Law Act.

Consonant with decisions earlier consid-ered in this commentary, courts have held"that oral undertakings by solicitors to a court,on behalf of clients, during trial of litigation,in relation to the subject matter of thelitigation (such as a solicitor's undertaking tothe court during trial of a divorce proceedingthat his client will, without order, financiallysupport the other party until final determi-nation of spousal support), bind their clients.

21Butler v. Butler, noted at: [1989] WDFL No. 543(Nfld UFC), per Noonan J.; Wedgwood v. Wedgwood(1988),69 Nfld & PEIR 134 (Nfld UFC).