Background
The underlying action arose from a motor vehicle accident on September 2, 2011. Following a “to be spoken to” attendance in the action, the appellant Sae-Bin Im accepted a settlement offer from the respondent Hamid Elias-Haghighi for $170,000 and consented to the dismissal of his action on May 7, 2019. Two days later, on May 9, 2019, Im delivered a letter to the respondent seeking to cancel the settlement, citing medical issues arising from the accident that he claimed affected his mental and emotional state on the day he accepted the offer.
The respondent moved to enforce the settlement. Justice Shaun S. Nakatsuru of the Superior Court of Justice granted the motion on December 18, 2019, finding the settlement agreement valid and enforceable. The motion judge rejected Im’s argument that he lacked the capacity to understand the agreement due to his mental and emotional state, finding insufficient evidence that his condition impacted the voluntary nature of his agreement. The motion judge noted that the settlement was carefully explained to Im, that he understood it before executing it in the presence of a witness, that Im himself had instigated the settlement discussions that day, and that the $170,000 figure fell within the range of settlement numbers Im had proposed and represented an increase over the respondent’s previous offer.
The Court’s Holding
The Court of Appeal for Ontario—Roberts, Favreau and Copeland JJ.A.—dismissed the appeal. The court found no basis to interfere with the motion judge’s rejection of Im’s evidence that he was exploited or confused about the settlement agreement he signed. Nor was the court persuaded that there was any other basis to interfere with the motion judge’s exercise of discretion to enforce the settlement.
On appeal, Im relied on a 2024 medical report to support his argument that his mental and emotional state affected his ability to accept the settlement proposal. The court reviewed the report and was not persuaded it would have affected the outcome before the motion judge.
The court ordered that the respondent is entitled to costs from the appellant in the all-inclusive amount of $5,000, to be deducted from the $170,000 settlement amount. The respondent waived the other costs orders made in the proceedings. In accordance with the settlement, $165,000 shall be paid to the appellant.
Key Takeaways
- A settlement agreement will be enforced where the evidence shows it was carefully explained, understood before execution, and signed in the presence of a witness, even where one party later claims diminished mental capacity.
- A party’s own initiation of settlement discussions and the fact that the agreed amount falls within the range that party proposed are factors supporting enforcement.
- New medical evidence tendered on appeal will not disturb a settlement enforcement order unless the appellate court is persuaded it would have affected the outcome before the motion judge.
- Costs may be deducted directly from the settlement proceeds, as the court ordered here ($5,000 from the $170,000 settlement, leaving $165,000 payable to the appellant).
Why It Matters
This decision reinforces the strong presumption in favour of enforcing settlement agreements in Ontario civil litigation. Where a party seeks to resile from a settlement on capacity grounds, the evidentiary burden is significant: the court will look to the circumstances surrounding the execution of the agreement, including whether the terms were explained, whether the party demonstrated understanding, and whether the party initiated the discussions. The decision also signals that appellate courts will give deference to a motion judge’s factual findings on capacity and credibility, and that late-produced medical evidence must be shown to be outcome-determinative to warrant disturbing an enforcement order.