In Apotex Inc v Allergan Inc, 2016 FCA 155, Stratas JA overturned a Federal Court order enforcing a supposed settlement agreement reached between Apotex and Allergan. Though Allergan believed that the two parties had come to an agreement, Apotex denied that an agreement had been reached. In a series of emails exchanged between the two parties in January and February of 2014, counsel for Apotex agreed to recommend to its client that it accept a draft agreement without amendments proposed by counsel for Allergan. In response, Allergan agreed to settle on the terms posed in the amendment-free draft.
At trial, Allergan stressed that this exchange of emails constituted offer and acceptance of all essential terms, and sought a court order enforcing the agreement. Hughes J of the Federal Court granted this order. On appeal, Stratas JA found that this exchange of emails could not have constituted legally-effective acceptance of Allergan’s offer. Counsel for Apotex expressly stated that they would recommend that their client accept the offer. This made it clear that Apotex’s counsel did not have the apparent authority to bind their client, and as such, could not have proposed or accepted an offer. Furthermore, Stratas JA opined that Hughes J’s order that Apotex comply with the terms of the agreement was over-extensive, and that the Federal Court in cases such as this one should only rule on the existence of the agreement itself.