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New Settlement Rule for Promoting Out of Court Settlements in Civil Cases


In this ground breaking out of court money settlement case(Sable Offshore Energy Inc. v. Ameron International Corp.,2013 SCC 37) the Supreme Court of Canada has established that since a negotiated amount is a key component  of successful negotiations, reflecting the admissions, offers, and compromises made in the course of negotiations, it  is protected by settlement privilege. The Court was aware of earlier jurisprudence which did not extend the privilege to the actual concluded agreement amount but overturned these cases finding that, it is better to adopt an approach that more robustly promotes settlement by including its content.
In this lawsuit Sable sued Ameron, Amercoat, and 12 other contractors and applicators who were responsible for preparing surfaces and applying the paint coatings.  The claims against Ameron and Amercoat were for negligence, negligent misrepresentation and breach of a collateral warranty.
The claimant entered into three Pierringer Agreements with some of the defendants.  A  Pierringer Agreement allows one or more defendants in a multi-party proceeding to settle with the claimant and withdraw from the litigation, leaving the remaining defendants responsible only for the loss they actually caused. There is no joint liability with the settling defendants, but non-settling defendants may be jointly liable with each other. In this case Ameron and Amercoat did not settle.  All the terms of the Pierringer Agreements were disclosed to Ameron and Amercoat except the amounts agreed to. The Court of Appeal overturned  ordered the amounts disclosed hence this Appeal. I found the head note of this Supreme Court of Canada case to be a very useful and pithy statement of the law and I reproduce it here:

The purpose of settlement privilege is to promote settlement.  Settlements allow parties to reach a mutually acceptable resolution to their dispute without prolonging the personal and public expense and time involved in litigation.  Settlement privilege protects the efforts parties make to settle their disputes by ensuring that communications made in the course of those negotiations are inadmissible.  The protection is for settlement negotiations, whether or not a settlement is reached.  That means that successful negotiations are entitled to no less protection than ones that yield no settlement.  Since the negotiated amount is a key component of the content of successful negotiations, reflecting the admissions, offers, and compromises made in the course of negotiations, it too is protected by the privilege.

As with other class privileges, there are exceptions.  To come within those exceptions, a defendant must show that, on balance, a competing public interest outweighs the public interest in encouraging settlement.

The non-settling defendants have received all the non-financial terms of the Pierringer Agreements.  They have access to all the relevant documents and other evidence that was in the settling defendants’ possession.  They also have the assurance that they will not be held liable for more than their share of damages.  As for any concern that the non-settling defendants will be required to pay more than their share of damages, it is inherent in Pierringer Agreements that non-settling defendants can only be held liable for their share of the damages and are severally, and not jointly, liable with the settling defendants.  The defendants remain fully aware of the claims they must defend themselves against and of the overall amount that Sable is seeking.  There is therefore no tangible prejudice created by withholding the amounts of the settlements which can be said to outweigh the public interest in promoting settlements.

For car accident injury claimants with multiple personal injury claims this decision means that the settlement amount in one case will not have to be disclosed to the defendants in any other personal injury cases unless an exception can be argued.
Posted by Personal Injury Lawyer Mr. Renn A. Holness, B.A. LL. B.

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