Loblaw Wins in Ottawa Court After Failed Real Estate Deal
Settlement agreements are intended to produce finality. Once the essential terms are agreed and confirmed in writing, Ontario courts treat the agreement as binding regardless of what happens next. Johnstone v. Loblaw Companies Limited, 2025 ONSC 4755 is a clear illustration of that principle applied in a situation where an employee attempted to walk away from a settlement after his circumstances changed significantly following the collapse of a real estate purchase.
The Ontario Superior Court in Ottawa enforced the settlement on summary judgment, without a trial, holding that a binding contract had been formed when the employee's lawyer confirmed acceptance in writing and that subsequent events, including a failed home purchase and deposit loss, did not provide grounds to reopen the deal. For businesses and individuals managing commercial disputes that settle during litigation, the decision is a useful restatement of what finality actually means.
What happened
Scott Johnstone had worked for Loblaw for more than seven years. In 2022 he relocated from Winnipeg to Ottawa, and was terminated without cause shortly after arriving. In settlement negotiations following the termination, Mr. Johnstone asked Loblaw to cover housing and relocation costs as part of the package. The parties reached an agreement: eight months of salary continuance, benefit coverage, a contribution to legal fees, and a full release of claims.
Before the formal paperwork was signed, Mr. Johnstone's Ottawa home purchase collapsed. He lost his deposit and faced legal claims from the sellers. He then sought to reopen settlement talks, demanding that Loblaw guarantee his mortgage and cover additional relocation costs beyond what had been agreed. Loblaw refused on the basis that a binding settlement had already been reached. The company moved for summary judgment in Ottawa to enforce the agreement.
Justice Brownstone answered both questions clearly. Yes, a binding agreement was formed when Mr. Johnstone's lawyer confirmed acceptance of the essential terms in writing. No, the failed home purchase did not provide grounds to reopen the deal. The settlement was enforced on summary judgment without a trial.
The Court's reasoning
The Court found that the essential terms of the settlement had been agreed and that Mr. Johnstone's lawyer had confirmed acceptance in writing. Under basic contract law principles, an agreement is formed when an offer containing the essential terms is accepted. The fact that formal settlement documentation had not yet been signed did not prevent a binding contract from arising: the written confirmation from counsel was sufficient. This is a well-established principle in Ontario settlement law and one that both parties to a negotiation need to understand before counsel sends any communication confirming agreement.
Mr. Johnstone's argument was essentially that the collapse of his home purchase and the resulting financial losses justified reopening the deal. The Court rejected this squarely. Buyer's remorse, or in this case the equivalent in settlement terms, is not a legal basis to void or reopen an agreement. Ontario courts consistently hold that once the essential terms of a settlement are agreed, subsequent changes in a party's circumstances do not entitle them to renegotiate. The settlement was made in the context of the termination dispute. It represented the parties' agreed resolution of that dispute at the time it was reached.
Mr. Johnstone argued that his real estate losses were not covered by the release because the formal documents had not been signed and the specific losses had not been specifically addressed. The Court found that housing and relocation costs had been expressly part of the settlement negotiations and that the agreed terms addressed those concerns. The release therefore covered the claims arising from the real estate situation. The fact that the specific property transaction collapsed after the settlement was agreed did not bring those losses outside the scope of what had been resolved.
The Court granted summary judgment enforcing the settlement without directing a trial. Where the material facts are not genuinely in dispute and the legal question of whether a binding agreement was formed can be resolved on the record, summary judgment is the appropriate vehicle. The Court found there was no genuine issue requiring trial: the agreement was formed, the terms were clear, and the subsequent events did not create a legal basis for rescission or renegotiation.
What this means for employers and businesses managing settlements
The decision in Johnstone v. Loblaw is a useful restatement of principles that apply well beyond the employment context. Settlement agreements in any commercial dispute are subject to the same contract formation rules: once the essential terms are confirmed in writing by counsel, the agreement is binding.
Document the agreement the moment it is reached
The moment the essential terms are agreed, those terms should be recorded in writing and confirmed by both sides' counsel. The period between verbal or informal agreement and formal documentation is the window during which a party may attempt to reopen negotiations. Closing that window quickly by confirming the agreement in writing protects both parties from the kind of dispute that arose in Johnstone.
Ensure the release is broad enough to cover related claims
The Court found that the release in Johnstone covered the real estate losses because housing and relocation had been part of the negotiations. Where a settlement is reached in a dispute that has multiple connected threads, the release should be drafted broadly enough to cover all claims arising from the underlying relationship and its unwinding, not just the claims specifically pleaded. Gaps in a release create grounds for further litigation that a broader draft would have prevented.
Buyer's remorse is not grounds to reopen a settlement
A party who agrees to a settlement and then experiences regret, whether because their circumstances change or because they conclude they could have done better, does not have legal grounds to reopen the deal in Ontario. Courts treat settlement agreements as contracts and apply contract law principles to them. Rescission requires a recognized legal ground: misrepresentation, duress, mistake, or failure of consideration. Changed circumstances after the agreement is formed are not among those grounds.
Summary judgment is available to enforce settlements efficiently
Where a party attempts to relitigate a settled dispute, the other side does not need to proceed to a full trial to enforce the agreement. Summary judgment is available where the material facts are not in genuine dispute and the legal question of whether a binding agreement was formed can be resolved on the record. This makes the enforcement of settlement agreements relatively efficient and cost-effective compared to full trial proceedings.
Reached a settlement in principle but the other side is now trying to reopen negotiations or walk away?
If the essential terms were confirmed in writing by counsel, you may already have a binding agreement that can be enforced on summary judgment. Get advice on your position before making any further concessions.
Call: 1-800-771-7882 Find Out If Your Settlement Is Already BindingThe employment litigation dimension
Although the broader lessons from Johnstone apply to any commercial settlement, the case arises from an employment termination and the specific context matters for employers managing employment litigation in Ontario.
Termination settlements frequently involve multiple connected issues: notice periods, benefit continuation, relocation costs, outstanding expenses, and releases of human rights or other statutory claims. Where the employee's circumstances are complex at the time of termination, those complexities need to be addressed explicitly in the negotiation rather than left to be resolved later. Johnstone illustrates both the risk of that approach for the employee and the protection it ultimately provided to Loblaw once the Court found the agreed terms covered the housing and relocation concerns.
For employers, the practical takeaway is to negotiate broad releases that address all potential claims arising from the employment relationship and its termination, and to confirm the agreement in writing immediately once terms are reached. Leaving the formal documentation to follow days or weeks later creates a window for the employee to reconsider, and while the Court in Johnstone found the settlement was already binding, not every fact pattern will produce that result as cleanly.
Dealing with a settlement dispute or trying to enforce an agreement in Ontario?
Whether you are seeking to enforce a settlement that the other side is trying to reopen, or assessing whether a proposed settlement adequately protects your position, get legal advice before taking the next step.
Get Advice on Your Settlement Or call us: 1-800-771-7882Practical takeaways
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