Many people assume that the most challenging part of settlement
negotiations is the bargaining. While that is certainly a prime
consideration, it is arguably more important to determine and
articulate what you want from the bargain.
This year Northwest Value Partners Inc. ("Northwest")
learned the hard way that a deal is a deal. It's hard to
add terms after the deal is done. In Wilson v. Northwest Value Partners Inc. 2015 ONSC 4726
Justice Faieta of the Ontario Superior Court of Justice refused to
overturn a settlement reached between the parties in respect to a
wrongful termination case despite the ex-employee's ongoing
refusal to abide by the terms of his employment agreement.
Northwest terminated Mr. Wilson's employment. Mr.
Wilson brought a wrongful dismissal claim against the
company. The parties entered into negotiations and agreed to
a settlement that included a release from Mr. Wilson. Shortly
thereafter, Northwest learned that Mr. Wilson had started working
for their competitor, allegedly in violation of a non-competition
clause in his employment agreement. Northwest refused to
finalize the settlement and Mr. Wilson brought an action against
them for payment of the settlement funds.
Northwest asked the Court to set aside the settlement agreement
on a number of grounds: first, Mr. Wilson had made a material
misrepresentation by failing to inform them that he was working for
their competitor; second, Northwest made a unilateral mistake of
fact which led them to sign the settlement agreement; and third,
because upholding the settlement would prejudice the company's
ability to pursue a claim for breach of the non-competition
obligations contained in Mr. Wilson's employment contract.
The Court rejected all of the company's arguments, noting
the parties never discussed Mr. Wilson's post-termination
employment status, nor was the non-competition clause in his
employment agreement incorporated in any way into the settlement
terms. The Court did say the company could still continue
with its claim against Mr. Wilson for breach of his employment
contract. That was probably little comfort for Northwest, which was
forced to comply with the settlement agreement and pay Mr. Wilson,
who was now working for their competitor, approximately
This case serves as a good reminder to all employers to consider
all the important issues when approaching a settlement
negotiation. If post-employment compliance with
non-competition or non-solicitation obligations is important,
remember to turn your mind to it during settlement negotiations.
Ask the right questions and keep your settlement goals in
If an employer is offering an employee something beyond the
statutory or contractual rights upon termination, it may be
appropriate to tie the additional payments to new or ongoing
obligations of non-competition, non-solicitation and/or
Non-competition and non-solicitation provisions may be valuable
bargaining points. In some cases, the value ascribed to
obtaining, reinforcing, or relinquishing restrictive covenants may
be significant to one or both parties.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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