What is the standard of review of a finding as to whether or not
a party has repudiated a settlement agreement? The Ontario Court of
Appeal answered this important question in Remedy Drug Store Co. Inc. v. Farnham,
released August 19, 2015. In overview, the Court held that a
"blended" standard is appropriate, reflecting the fact
that the test for repudiation is a question of law, but whether a
party repudiated a settlement agreement is a question of fact.
Here, the decision was reviewable on a correctness standard because
the judge had misstated the law and it was "not a minor"
The Background Facts
The case emerged from duelling claims brought by the parties
after the appellant, just before departing from employment with the
respondent, forwarded a large number of emails to her personal
computer, and allegedly took confidential information with her. The
parties entered into discussions to resolve their claims. Both
parties submitted that they had settled the claims but disputed
what the terms of that settlement were. The appellant also alleged
that the respondent had repudiated the settlement agreement. On the
respondent's motion to enforce the settlement agreement, the
judge found that the claims were settled on the terms proposed by
the appellant but that the respondent had not repudiated the
The Standard of Review
Justice Epstein, on behalf of a unanimous Court, addressed the
standard of review issue as follows:
 The question of whether a party
repudiated an agreement is a question of fact, but whether the
motion judge applied the proper legal test in determining whether
there was a repudiation is a question of law. Therefore, in the
typical case, a blended standard of review applies.
 As explained by Saunders J.A. of
the Nova Scotia Court of Appeal in [White v. E.B.F.
Manufacturing Ltd., 2005 NSCA 167], at para. 60:
[T]here are mixed standards of review
to be applied. When deciding, as he did, that the License Agreement
had not been repudiated, the trial judge was obliged to apply
proper legal principles. In that sense the standard for our review
on appeal, to that segment of his decision making, is one of
correctness. However, in arriving at that conclusion he was also
obliged to carefully consider the evidence and make certain key
findings. Such findings are reviewable on a palpable and overriding
error basis [...]
 In my view, the motion
judge's decision is reviewable on a correctness standard
because he did not articulate the correct legal principles.
Specifically, at para. 46, he wrote:
Although I have ultimately disagreed
with the position taken by [the respondent] with respect to the
terms of the settlement agreement, it cannot be said that [the
respondent's] position was so patently unreasonable as to
evidence an insistence upon terms and conditions which could not
possibly have been reasonably implied in the circumstances.
 Here, the motion judge fell into
error. The test for anticipatory repudiation is not, as the motion
judge expressed it, whether the breaching party's position was
so "patently unreasonable as to evidence an insistence upon
terms and conditions which could not possibly have been reasonably
implied in the circumstances." With respect, reasonableness
has nothing to do with it. As I have already discussed, the correct
analysis focuses on what the purported breaching party's
conduct says about its objective intention in relation to future
performance of the contract. And this was not a minor misstatement
as this error appears to lie at the heart of the motion judge's
Despite this correctness review, Justice Epstein went on to
conclude that the respondent had not repudiated the settlement
agreement as "a 'reasonable person' would not conclude
that [the respondent] no longer intended to be bound by the
settlement agreement" (para. 64).
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