Unsettling Settlements: Federal Court Sets Aside Labour Arbitrator’s Decision

November 10th, 2015 by

It is trite to say that the vast majority of litigation is concluded by settlement. Generally, settlement agreements are cheaper, less intrusive and allow the parties to play an active role in the disposition of their legal battles. It is also trite to say that settlements will represent the end of the litigation in a particular case. However, where there are issues with the settlement itself, the agreement only begins a new chapter in the litigation.

In Baptiste, the Federal Court was called upon to judicially review the decision of a labour arbitrator to terminate the proceedings as he believed the parties had concluded a settlement of the matter. Though simple, the facts bear repeating. The applicant had been employed by the Respondent for a number of years. After being dismissed, the applicant brought a complaint to the provincial labour commission in Quebec. The tribunal believed that they didn’t have jurisdiction to hear the complaint, and referred the applicant to a federal labour arbitrator.

Before the complaint was heard, counsel for the applicant and respondent engaged in settlement discussions. In January 2015, the parties’ lawyers came to an agreement in principle and, in the coming weeks, the settlement was drafted. In contemplation of the settlement, the respondent forwarded cheques to the applicant’s counsel in accordance with the agreed-upon terms. In March, the parties advised the labour arbitrator that a settlement had been reached and, on this information, the arbitrator terminated the complaint.  Because the applicant was unavailable during this time, he didn’t see the settlement agreement until April, well after the complaint was terminated. Finding that the terms were markedly different from those he had told his lawyer to settle on, he brought an application to set aside the decision of the arbitrator to terminate his  complaint.

The applicant argued that he didn’t agree to settle on the proposed terms and, as such, no settlement was concluded and the complaint shouldn’t have been dismissed. The respondent argued that a settlement had been reached, and that now the applicant was simply trying to backtrack.

Reviewing the facts, the court found that, prior to the draft agreement, nothing had been put in writing evincing the willingness of the applicant to settle on the proposed terms. He found that the applicant’s evidence in this regard was clear, and that the respondent had not proffered evidence strong enough to displace this. Given this, the Court found that there was no settlement concluded.

The Court then turned to whether the decision of the arbitrator was unreasonable in light of a lack of settlement. The Court quickly determined that the arbitrator had no grounds to terminate the complaint if no settlement had been concluded. As such, the decision was set aside as unreasonable and remitted back for fresh consideration.

If you have any employment law-related issues or issues relating to the settlement of litigation, please contact the experienced team at Devry Smith Frank LLP.


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