The Court of Appeal ruled today, in Wu v. Zurich Insurance Company, that a $3.1 million settlement of an accident benefits claim was enforceable by the estate of the injured claimant, who died before the settlement had been approved by the court and before the money had been paid.
At first instance, the insurer had been successful. Superior Court Justice John B. McMahon had held that court approval was a “true condition precedent” to the agreement being enforceable. He felt that the court could not approve the settlement after the plaintiff’s death and as a result, the estate was not entitled to have the settlement funds paid to it.
(The reason that court approval was necessary in the first place was that the claimant’s injuries had left her mentally disabled. The Rules of Civil Procedure require that any settlement of a claim made by or against a person under disability requires the approval of a judge.)
The Court of Appeal allowed the appeal from Justice McMahon’s decision and ordered that the settlement be paid to the claimant’s estate. In a unanimous decision, it held that court approval is not a condition precedent: “The requirement for court approval in the case at bar was not a negotiated term designed to allocate the risk of an uncertain future event that would affect the value of the bargain. As reflected by the language of the minutes of settlement – “subject to necessary court approval” – the requirement for court approval was a term legally imposed upon the parties specifically to protect the interests of the party under disability.”
The Court of Appeal also disagreed with Justice McMahon as to whether it was possible to approve a settlement after the death of the person under a disability. It ruled that such approval can indeed be given.