Is It Possible To Get Out Of Settlement Agreements?

December 26, 2012
Leisha Murphy

Frank and Jamie McCourt, the infamous former owners of the LA Dodgers, are back in court.

Jamie alleges that Frank vastly understated the value of the Dodgers, which was sold earlier this year for approximately $2 billion, leaving her with an unfair settlement.

A source close to Jamie told Vanity Fair magazine in 2011 that all she wanted out of the settlement was “… enough money to keep her houses in L.A., and live comfortably, and never have to deal with this again.” That was true when she believed $113 million was half of the pot.

Jamie now alleges that Frank either misled her into believing the Dodgers were worth less, or mistakenly provided her with inaccurate figures when the parties settled. She claims to have received 7% of the net assets, while Frank walked away with 93%.

What would happen to Jamie’s claim in B.C.?

According to the seminal cases of Hartshorne v. Hartshorne, 2004 SCC 22 and Miglin v. Miglin, 2003 SCC 24, the factors to consider are:

1 Were the circumstances of the negotiation fair? In other words, did one party exert pressure on the other party to sign an unfair agreement, or did one party take advantage of the other in some way? The presence of professional assistance, such as lawyers, can be perceived as balancing the playing field, making it difficult for a weaker party to later claim they were hoodwinked.

2 Is the final settlement in substantial compliance with the law (i.e. the Family Relations Act and/or theDivorce Act)?

3 Has an event occurred since the settlement to now make the settlement unfair? For example, the party who agreed to pay $2000 per month in spousal support was in a car accident after the settlement was reached and can no longer work. It would be unfair for that party to continue paying $2,000 per month if he or she is no longer working. On application to the court, the injured party may be able to change the terms of the settlement to pay less support in light of their new circumstances.

The new Family Law Act, set to come into force in March 2013, aims to strengthen private agreements between parties, making it more difficult to get out of agreements and negotiated settlements.

The law in California is different than B.C. If Frank and Jamie lived in B.C., Jamie would have a difficult time showing the settlement should be overturned, unless she can prove there was a significant error in the valuation of the Dodgers, settlers’ remorse is not sufficient.

Leisha Murphy
Leisha Murphy
Partner (Vancouver)
Connect Family Law

Leisha takes a heart-forward approach to her practice. Providing clients with guidance and education, she takes a “big picture” view , assessing the long-term impacts of decisions to ensure the best possible outcome for you and your family.