ONCA upholds settlement agreement that parents treated as effectual for years

In a recent case, the Court of Appeal for Ontario declined to terminate a settlement agreement that both parties entered with the advice of counsel and complied with for several years.

In Dembo v. Hannas, 2020 ONCA 564, the parties married in 1996 and separated in 2003. Their daughter E, born in 1996, was dependent on the parties due to learning disabilities, developmental delays and cognitive impairments.

The parties executed a settlement agreement in 2015 which would bar them from filing claims against each other. One of the provisions of the agreement stated that the parties would jointly hire an expert who would assist them in ensuring that E would continue to receive benefits from the Ontario Disability Support Program and from other government funding initiatives. While the settlement agreement was not made into a final order, both parties adhered to its terms over the next several years.

The parties retained an expert in disability law who issued recommendations on how to amend the settlement agreement to address the possible risk of compromising E’s ability to receive disability benefits. In May 2018, the appellant mother contended that the settlement agreement was not binding.

The Ontario Superior Court of Justice held that the settlement agreement amounted to a binding separation agreement pursuant to ss. 54 and 55 of the Family Law Act, R.S.O. 1990, c. F.3 because there was a meeting of the minds on the essential terms. The agreement settled the outstanding issues between the parties, the motion judge said.

The mother appealed from this decision, contending that paragraph 22 of the settlement agreement was a simple condition which created an implied right to terminate the agreement if E’s continued ODSP eligibility was at risk. She also argued that the motion judge should have exercised her discretion to refuse to enforce the settlement agreement.

The Court of Appeal for Ontario dismissed the mother’s appeal and rejected the mother’s arguments on the basis that she had raised neither of these arguments before the Superior Court. The appeal court applied the general rule that appellants cannot raise new issues on appeal because the appeal court did not find that it would be in the interests of justice to allow the exception.

Regarding the first argument, the appeal court said that the right to terminate an agreement to deal with a speculative risk should not be lightly implied from paragraph 22 of the settlement agreement. The appeal court also noted that the parties entered the agreement with the assistance of their lawyers and honoured the agreement for many years.

As to the second argument, the appeal court stressed that the court’s discretion to refrain from enforcing a settlement is limited because it is important for there to be certainty in the resolution of family disputes. The mother failed to show that it would be in E’s best interests to terminate the agreement and to litigate the issues due to a risk to E’s continued eligibility for disability benefits.

Aside from dismissing the mother’s appeal, the appeal court also awarded the respondent father costs of $15,000, inclusive of taxes and disbursements.