Email accepted employer’s settlement offer with conditions
The Supreme Court of British Columbia has dismissed a summary judgment application brought by a former executive against her employer, ruling that no binding settlement agreement had been reached between the parties.
The worker was the chief revenue officer or EMV Automotive USA and Xos Services Canada (EMV), related companies that produce and sell electric trucks, starting in December 2021.
The worker’s employment with EMV ended on April 24, 2024, and he filed a claim for compensation under his employment agreement. The worker and the company soon began discussing a settlement of his claim.
On Aug. 26, EMV’s legal counsel presented a settlement offer stating that the company would pay the worker a lump sum of US$441,667 less applicable deductions and a lump sum of US$10,768 in lieu of continuing her benefits for 12 months. In exchange, the worker would sign a release including confidentiality and non-disparagement provisions.
Conditions for acceptance of settlement offer
On Sept. 3, the worker’s counsel responded that the worker had instructed them to accept EMV’s settlement offer if the following conditions were met:
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The form of release was mutually acceptable after EMV provided a draft for review.
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The payments be made in a tax-effective manner (such as a certain amount paid as legal fees and the rest paid as non-employment income with no source deductions).
Two days later, EMV’s counsel said that it would confirm the payment details with the company, prepare a draft release for review, and would respond with instructions from EMV.
Before the matter went any further, the worker applied for a summary judgment in court on the basis that the parties had reached a settlement agreement based on the email exchange of Sept. 5. EMV countered that the response to its settlement offer constituted a counter-offer, not an acceptance. The worker’s request for a mutually acceptable form of release and payment in a tax-effective manner were new terms not included in its offer, the company said.
The court found that a summary process was appropriate in this instance, noting there were no concerns over the credibility of the evidence or fairness of the negotiation. The court also pointed out the difference between essential contractual terms and matters of performance or completion, such as the form of release.
The court also referred to the BC Court of Appeal’s determination that a contract is executed when all documents are accepted and executed, while “there must be further discussion” if any documents aren’t accepted by both parties. In addition, a settlement is binding “if there is agreement on the essential terms,” the court said.
Fundamental new condition to settlement agreement
As far as the settlement went, the court agreed with EMV that the worker’s request for tax-effective payment terms introduced a fundamental new condition to the settlement negotiations. The tax treatment of the settlement payment was a condition that was fundamentally important to both parties – it was a significant departure from EMV’s intention and could lead to a risk of penalties for EMV for misclassifying the nature of the settlement payment -and would have to be negotiated further, said the court, noting that EMV had yet to provide a draft release for review by the worker’s counsel and the company’s counsel indicated that further instructions were coming.
The court determined that the matters of the form of payment and release were still unresolved and, as a result, the worker’s position that a binding settlement agreement had been reached was unsupported.
“This is a significant gap that cannot be overlooked or resolved by resorting to common sense or common practice,” said the court in dismissing the worker’s application with costs awarded to EMV. See Brink v. Xos Services (Canada), Inc., 2025 BCSC 658.
