Lawyer Accepts Settlement Offer on Client’s Behalf Knowingly Without Instructions to Do So; Result? Not Good

Justice Price held that a lawyer falsely informed the opposing party that he had received instructions to accept their offer to settle and asked for a draft release “believing that when he received it, he could prevail upon his client to accept the settlement and sign the release.”

However, not only could the lawyer not convince his client to accept the offer, he ended up having to pay substantial indemnity costs to both parties when the offeror brought a motion to enforce the settlement.

The full decision of the case can be found here.

The plaintiff retained a lawyer to sue the Toronto Transit Commission (TTC) and one of its streetcar drivers for a personal injury she had suffered in a collision with a streetcar in 2009.

In 2011, the TTC made an offer to settle for $10,000. The offer was open for acceptance for one week. The plaintiff’s lawyer never responded to the offer.

Just over a month later (well after the offer had expired), the TTC followed up with the plaintiff’s lawyer and asked if the offer had ever been presented to the plaintiff. The plaintiff’s lawyer indicated that he had been unable to get a hold of the plaintiff but would try again. Once again, the plaintiff’s lawyer never got back to the TTC.

About 3 months later the TTC insurance adjuster and the plaintiff’s lawyer had a telephone discussion which resulted in the TTC making a final offer of $12,500. The offer was confirmed via email by the TTC shortly after the phone call. 10 minutes after the offer was sent via email, the plaintiff’s lawyer responded by stating “…I now have instruction to resolve this matter for $12,500.00 all inclusive. Please e-mail me your release and I will have my client execute it.”

The only problem is that the plaintiff’s lawyer did not have those instructions. The plaintiff’s lawyer later indicated that he was instructed by the plaintiff’s father to accept the offer. The plaintiff and her father both denied this. The lawyer’s evidence was also suspect given that the timing of events (according to him) on the day in question was not logical.

The TTC brought a motion to enforce the settlement. The motion was opposed by the plaintiff.

Justice Price found that the plaintiff’s lawyer accepted the offer “because he had failed to make timely efforts to obtain his client’s instructions regarding the TTC’s earlier Offer dated September 27, 2011, and faced embarrassment and possible liability when that Offer was withdrawn on October 4, 2011… [He] falsely informed [the adjuster] that he had received instructions to resolve the matter for the amount of her Offer [$12,500]. He asked her to send him a release, believing that when he received it, he could prevail upon his client to accept the settlement and sign the release.”

Given the circumstances, Justice Price dismissed the TTC’s motion to enforce the settlement as enforcing the settlement would be unfair to the plaintiff.

The plaintiff’s lawyer was ordered to bear the costs of both parties on the motion on a substantial indemnity basis.

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