The current Minors' Property Act (Alberta) ("MPA") came into force in Alberta on January 1, 2005. Our experience with clients suggests that it might be a good time to review the settlement procedure set forth under the Act. We are aware that some clients have or are using forms created for the "small obligations" provisions under the Act in settlements for small amounts (less than $5,000) to avoid obtaining a court ordered settlement. What follows is a refresher on settlement in the context of the MPA.
The MPA makes clear under s. 4(3) that "a settlement of a minor’s claim is binding on the minor only if the settlement is confirmed under subsection (2)." In our view there is no language in the MPA that could lead to the conclusion that the "small obligations" section creates an exception to the clear language in section 4(3). The only relationship between section 4 of the Act and the "small obligations" section is that section 4(4)(c) permits the court a discretion to order payment of the settlement amounts to whomever it sees fit (e.g. the minor) if the amount is less than the amount specified in the Regulation (currently $5,000).
Where clients elect to use a procedure other than specified under s. 4, such as the "small obligations" procedure or a release and discontinuance, they should do so with the understanding that the potential remains that the minor could in future bring a further or additional claim.
Unfortunately, the MPA does not account for the possibility that settlement will occur without involvement of the court. We recognize that this puts our clients in a difficult position as not every settlement merits legal involvement. We also appreciate that our clients are sophisticated at assessing risk and can make the determination as to what risk to accept.
Given that we have all been working with the MPA since 2005 we thought it would be a good idea to remind our clients that routinely used settlement procedures may not provide an enforceable release.