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Duress and Settlement Agreements in Alberta

We often come across clients who have previously entered into settlement agreements, and we are often asked are they binding? Sometimes. Duress is an argument which can be used, in certain circumstances, to escape from a settlement agreement. In the recent Alberta case of Wetaskiwin Animal Clinic Ltd v Hartley, 2021 ABQB 144, the court looked at this issue at paragraph 27:

[27] A settlement agreement may be avoided if one party took advantage of the other by duress or undue influence: Tardif v Campbell, 2008 ABQB 776 at para 26; Dickieson v Dickieson, 2011 ABQB 202 at para 13 [Dickieson].

[28] Duress is the coercion of a person’s will through an illegitimate form of pressure, with one party dominating the will of another at the time that an agreement is executed: Attila Dogan Construction & Installation Co Inc v AMEC Americas Ltd, 2014 ABCA 74 at para 18 [Attila Dogan]; Ramdial v Davis (Litigation guardian of), 2015 ONCA 726 at para 42 [Ramdial]; Hatton v Richards, 2021 ABQB 25 at para 30.

[29] The coercion vitiates consent: Pao On v Lau Yiu Long, [1979] 3 All ER 65 at 78; Attila Dogan at para 18. A power imbalance or vulnerability does not necessarily lead to a finding of duress: Dickieson at para 23; Orcheski v Hynes, 2007 ABQB 194 at paras 23-24; Ramdial at para 42. If duress is made out, the settlement agreement is voidable by the party who signed under duress: Dairy Queen Canada, Inc v MY Sundae Inc, 2017 BCCA 442 at para 48.

[30] The Alberta Court of Appeal in Attila Dogan acknowledged that the presence of duress is often tested by looking for certain indicia or “badges” of duress, and further that duress might be proven even in the absence of the usual badges (paras 20 and 21). These indicia are:

a. Whether the party protested at the time the agreement was formed;

b. Whether the party had a realistic alternative to entering into the agreement, such as another legal remedy;

c. Whether the party had the opportunity to speak with independent legal counsel;

d. Whether, after entering into the agreement, the party took steps to avoid it within a reasonable period of time; and

e. If a party can show that points (a) to (d) are met, whether the pressure exerted was illegitimate.

See also: Dickieson at paras 21-22; Roenisch v Bangs (1993), 1993 CanLII 7017 (AB QB), 138 AR 15, 8 Alta LR (3d) 148 (QB) at paras 53-63.

It is a very fact specific analysis. If you think that you entered into a settlement under duress, please feel free to contact us.

The information contained in this article is not legal advice. No solicitor client relationship is formed through this article. The reader is encouraged to retain counsel for advice in these matters.

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