Case In Point
No Takebacks: Ontario Court Rejects Employee’s Attempt to Rewrite Settlement Terms in Johnstone v. Loblaw
Date: September 3, 2025
The Ontario Superior Court of Justice has delivered a clear message about the binding nature of settlement agreements in employment disputes, emphasizing that acceptance of settlement terms creates legally binding obligations that cannot be unilaterally modified after the fact.
In Johnstone v. Loblaw, Justice Brownstone enforced a settlement despite the employee’s subsequent attempts to introduce new conditions, stating emphatically that “Buyer’s remorse, a change of heart, or even growing concern about his ability to close his house purchase do not entitle him to renege on a settlement.”
Background
Scott Johnstone was employed by Loblaw Companies Limited (Loblaw) for approximately seven years when his employment was terminated without cause in 2022. Shortly before his termination, Johnstone had relocated from Winnipeg to Ottawa and was in the process of closing an agreement of purchase and sale for a new home in Ottawa. This timing created significant financial pressure, as Johnstone needed employment income confirmation to secure his mortgage.
Following termination, the parties engaged in extensive settlement discussions through counsel. The negotiations centered on four key areas: notice period, legal fees, letter of reference, and what the parties termed the “housing issue” – Johnstone’s desire for assistance with his mortgage obligations to facilitate the house purchase.
The Settlement Negotiations and Agreement
The settlement discussions evolved through several rounds of offers and counteroffers. Initially, Johnstone sought twelve months’ salary continuance and demanded that Loblaw guarantee his mortgage payments until he became re-employed. Loblaw rejected this approach but offered to provide a letter confirming Johnstone would receive regular salary during the notice period, which could be used for mortgage qualification purposes.
By May 19, 2022, Loblaw extended an offer comprising: eight months of notice, a $500 contribution toward legal fees, a detailed employment letter, and confirmation of its commitment to provide a letter confirming Johnstone’s employment income during the notice period. After further negotiation, Loblaw increased its legal fee contribution to $1,500 and provided a draft reference letter.
On May 28, 2022, counsel for Johnstone notified Loblaw of his acceptance:
I can confirm receipt of instructions to accept your most recent proposal, subject to mutual agreement on the supporting documentation that I would suggest you prepare for our review.
Loblaw subsequently prepared and circulated minutes of settlement and a release reflecting the agreed terms, along with the promised employment confirmation letter.
The Attempted Modifications
On June 6, 2022, rather than signing the settlement documents, Johnstone’s counsel attempted to introduce three new conditions that had never been part of the negotiations:
- A requirement that successful completion of the house purchase be a “fundamental term” of the settlement.
- An additional two weeks of short-term living expenses through the relocation company.
- A commitment regarding Johnstone’s performance rating to protect his bonus entitlement.
Loblaw rejected these additions, noting that the items had never been discussed during negotiations and were not related to “supporting documentation” but rather attempts to change essential terms of the agreed settlement. It maintained that a binding settlement had already been reached on May 28, 2022. The employer proceeded to make all payments contemplated by the settlement except for legal fees, as no invoice had been provided as required under the agreement.
Johnstone ultimately refused to sign the settlement documents and commenced litigation in April 2023, claiming wrongful dismissal and seeking damages related to his failed house purchase.
The Court’s Analysis
Citing Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., Justice Brownstone noted that a binding settlement exists where:
- the parties have intended to create a legally binding relationship, and
- have agreed on all essential terms.
The Court stated that agreements must reflect a clear meeting of the minds that would be apparent to an objective reasonable bystander, and the essential terms must be clear, determinable with reasonable certainty, and not too vague to enforce.
The Court found that all essential terms had been agreed upon by the parties: an eight-month notice period, $1,500 in legal fees, remaining terms from the original termination offer regarding benefits, and provision of a standard release. The housing issue had been specifically addressed and resolved through Loblaw’s commitment to provide employment confirmation letters.
Moreover, citing Fieguth v. Acklands Ltd., the Court emphasized that failure to accept settlement documentation does not release a party from the settlement. Documentation completion is separate from agreement formation – parties can tender whatever documents they think appropriate without rescinding the settlement agreement, but they cannot insist upon terms or conditions that have not been agreed upon.
The three requested new terms were deemed by the Court as attempts to change essential terms of the agreement, rather than clarify supporting documentation. The Court noted that housing costs and relocation were “front and centre” in the negotiations, with Loblaw maintaining a clear and unwavering position. The Court ultimately dismissed Johnstone’s claim, and in doing so, stressed the importance of being able to rely on counsel’s indication that a settlement proposal is accepted, emphasizing that lawyers must be able to trust when opposing counsel advises they have instructions to accept an offer, as this communication must evidence an intention to create a binding legal agreement.
Key Takeaways For Employers
- Safeguard your interests by ensuring their negotiation position remains clear, coherent, and thoroughly documented on all material terms.
- When an employee seeks to modify terms after acceptance, assess whether the request involves legitimate administrative documentation or represents an improper attempt to introduce new terms.
- Keep in mind, courts accord considerable legal weight to communications between counsel, creating strong presumptions of enforceability even when formal documentation remains incomplete.
To discuss how we can assist you with negotiating settlement agreements in employment disputes, please reach out to your regular Hicks Morley lawyer.
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