At our weekly meeting this morning, Ankita Abraham discussed the case of Deschenes v. Lalonde, 2020 ONCA 304, an appeal from a judgment rescinding and setting aside a settlement agreement.
The plaintiff sued a priest who allegedly sexually assaulted her in the early 1970s. The plaintiff also sued the Roman Catholic Episcopal Corporation of the Diocese of London in Ontario (“the Diocese”) for vicarious liability for the priest’s actions and negligence in failing to prevent the assaults.
The Diocese stated that they had no knowledge or reason to believe otherwise, of the priest’s prior abuse of others until 1992, well after the alleged assaults had ceased.
On the understanding of this information and the fact that the law respecting vicarious liability was uncertain, the plaintiff settled her action in 2000.
In 2006, the plaintiff was made aware that the Diocese had received police statements which alleged that the priest had assaulted three girls well before the plaintiff was assaulted.
In 2008, the plaintiff commenced a new action against the Diocese and others, claiming rescission of the settlement agreement and other relief.
The parties brought a summary judgment motion to determine the enforceability of the settlement agreement entered into in 2000.
The motion judge found in favour of the plaintiff, and rescinded and set aside the 2000 settlement agreement and the order dismissing the initial action. The Diocese appealed.
The Court of Appeal indicated that a settlement agreement cannot be rescinded merely on the basis of new information being received following the settlement, which would have strengthened the case.
However, a settlement agreement, as a contract, can be rescinded for issues such as fraud, misrepresentation, duress, undue influence, unconscionability, or mutual or unilateral mistake.
The Court of Appeal further confirmed the test for rescission of a contract due to misrepresentation. There has to be proof that the misrepresentation was material and was relied on by the party seeking to rescind the contract.
The Court of Appeal, upon review of the motion judge’s reasoning and analysis, held that, despite the confusing language used, the motion judge had correctly applied the law of innocent misrepresentation.
The Court of Appeal also found that the motion judge did not err in his assessment of materiality, as the motion judge accepted the evidence presented by the plaintiff and her former counsel that she would not have settled her claim as she did if they had known about the 1962 police statements.
Lastly, the Court of Appeal noted that the plaintiff did not seek to resile from the settlement agreement simply because of the new information, but rather because certain key information provided by the Diocese was false.
As such, the Court of Appeal saw no error in the manner in which the motion judge exercised his discretion. Therefore, the Court found no reason to interfere with the motion judge’s determination that the interests of fairness and justice favoured the equitable remedy of rescission in this case. As a result, the Court of Appeal dismissed the appeal.