In Peres v Moneta Porcupine Mines ( 2021 ONSC 5798) Justice Pinto had the task of determining whether or not a deal had been struck at a mediation where instead of leaving the mediation with a fully executed Memorandum of Settlement ( MOS) the parties exchanged a series of emails setting out the bare bones of the deal with the intention of finalizing it later.
This sometimes occurs at a mediation, especially at the end of a long day when everyone is tired and nobody wants to face the long and boring job of actually writing up the deal.
In this case, there was an agreement that the Plaintiff would be issued a large amount of stock options with the proviso that it was ” subject to Board approval acting reasonably”.
Then what happened? The Board of Directors met and decided the whole deal was too generous and refused to approve the settlement.
The Court found that the Employer had not provided any evidence that there was a reasonable basis for refusing to grant the stock options after its representatives at the mediation had agreed to the deal.
It therefore enforced the deal with the caveat that if specific performance of the deal was not possible then the Plaintiff would be entitled to monetary damages. In accordance with the MOS, the Court appointed the mediator as an arbitrator if there were any issues outstanding between the parties.
Here is the funny part. The MOS was to include a confidentiality clause. In his judgement the Judge of course set out the correspondence between the lawyers which set out the terms of the ” confidential ” agreement. So now the entire world knows the deal!
Here are some tips on how to avoid this nightmare scenario :
- Since the purpose of the mediation is to settle the case, come prepared with a draft MOS with all the usual clauses and releases, leaving blanks for the monetary terms.
- As the mediation is proceeding and items are agreed to, add these items to your draft MOS.
- Be patient when the mediator says that they insist that the deal be put into a MOS and signed during the mediation, not after.
- If you need approval at a mediation from a person or persons not present, tell them to make themselves available by phone as you may well be calling them later that night for approval.
If you want a copy of this case email me at barry@barryfisher.ca