The British Columbia Supreme Court has ruled that a settlement agreement remains enforceable despite a former investment advisor’s claims of fraud, upholding a financial institution’s claim for outstanding settlement payments.
The ruling stems from a case where CIBC Wood Gundy sought payment of the outstanding amount owing under a settlement agreement it reached with former employee — identified here as M.B. — in 2023. The agreement had resolved earlier litigation involving an employment loan and wrongful dismissal counterclaim.
According to court documents, M.B. had commenced employment with the investment firm in 2013. As part of his employment terms, the company provided him with an interest-free loan of $1 million.
Five years later, in April 2018, the firm terminated M.B. for cause. At that time, approximately $600,000 remained outstanding on the loan.
The firm initiated legal proceedings in January 2019, seeking repayment of the outstanding loan balance plus accrued interest. M.B. counterclaimed, alleging wrongful dismissal and asserting that he was terminated for whistleblowing activity.
Settlement reached during trial
The trial commenced on June 19, 2023. Shortly before it began, the firm delivered a settlement offer of $500,000 to be paid by M.B. After two weeks of trial, M.B., through his counsel, accepted the offer.
The parties finalized their settlement agreement in October 2023. The agreement stipulated that M.B. would pay the firm $500,000 in two instalments: $250,000 by September 15, 2023, and the remainder, plus accrued interest, by November 30, 2023.
While M.B. made the first payment, he failed to make the second payment by the agreed-upon deadline, even after receiving an extension to February 28, 2024.
Claims of fraud
In March 2024, the firm commenced proceedings to enforce the settlement agreement. M.B., now self-represented, claimed the settlement was unenforceable because it was obtained through fraud.
M.B. advanced four arguments as to why the settlement agreement was allegedly obtained through fraud: (1) it was based on fraudulent misrepresentations; (2) witnesses called by the firm committed perjury at trial; (3) witness tampering prevented him from calling evidence; and (4) inadequate document discovery prevented him from proving his case.
In dismissing these arguments, the court noted: “I acknowledge that M.B. is unhappy with the settlement. He says the facts are not as he understood them to be at the time he agreed to settle the litigation. His defence theory at trial was that he was dismissed because he had uncovered a fraud. However, he says he did not understand the full extent of the fraud at the time.”
No grounds to invalidate the settlement
The court systematically rejected each of M.B.’s claims:
Regarding alleged misrepresentations, the court found that the statements M.B. relied upon were publicly available and were not representations made by the firm to him with the intention that he rely on them in entering the settlement.
On the perjury allegations, the court noted that M.B. had believed the testimony to be false at the time it was given and decided to enter into the settlement agreement with this knowledge.
Concerning witness tampering, the court found that with one exception, M.B. had not subpoenaed the witnesses he claimed were tampered with, and he had been aware of his concerns before agreeing to the settlement.
As for inadequate document discovery, the court stated this was an issue that should have been addressed before trial or with the trial judge, and M.B. was aware of the state of discovery when he decided to settle.
The court emphasized: “While I do not question that M.B. has changed his mind about the settlement based on further consideration of the facts, that is not a basis for setting aside a settlement.”
Settlement agreements enforceable as contracts
In granting summary judgment to the firm, the court reinforced established legal principles regarding settlement agreements, noting they are enforceable as contracts.
“Where parties have agreed to a settlement, to find it unenforceable there must be some basis ‘for setting aside the agreement under general contract principles, such as fraud, duress, lack of capacity, or mutual mistake,'” the court explained, citing Robertson v. Walwyn Stodgell Cochrane Murray Ltd.
The court further emphasized: “Even if a settlement turns out not be desirable from the point of view of one of the parties, even if they received (or believed they received) poor advice from counsel, and even if they later change their minds, the courts not only should, but must, enforce the bargain the parties came to, if it was pursuant to a valid contract.”
Judgment awarded
The court granted summary judgment in favour of the firm in the amount of $250,000 plus accrued interest of $42,587.16, representing the unpaid portion of the settlement agreement.
The court also struck part of M.B.’s counterclaim seeking rescission of the settlement agreement, finding it was effectively his defence to the firm’s claim and disclosed no genuine issue for trial.
For more information, see CIBC Wood Gundy v Bockhold, 2025 BCSC 896 (CanLII).
