Legal Alert: SCC Decision Encourages Settlement of Contentious, Multi-Party Litigation

On June 21, 2013, the Supreme Court of Canada confirmed that when one of multiple defendants settles an action by entering into a Pierringer Agreement, settlement privilege protects settlement negotiations – including the settlement amount – from disclosure unless the a competing public interest outweighs the public interest in encouraging settlement:

• Pierrenger Agreements.  A Pierrenger Agreement allows one (or more) defendants in a multi-party action to settle with the plaintiff(s). It is inherent in a Pierrenger Agreement that the non-settling defendants remain liable for only their share of the damages and are severally – not jointly – liable with the settling defendants.
• Settlement Negotiations. Settlement privilege makes communications in the course of settlement negotiations – whether or not there is a settlement in the end – inadmissible.
• Settlement Amount. The amount of a concluded settlement is a key component of settlement negotiations.  It is protected by settlement privilege throughout the remainder of the litigation, until after trial, unless there is a competing public interest (such as misrepresentation, fraud or undue influence) that outweighs the public interest in encouraging settlement

The SCC’s decision reaffirms the primacy of the encouragement of settlement of contentious multi-party matters.  In light of the growing incidence of such litigation, this decision makes the Pierrenger form of settlement agreement an increasingly useful tool for any party in multi-party litigation – regardless of subject matter.

McInnes Cooper’s Robert Belliveau and Kevin Gibson represented the successful parties at the SCC.

Click here to read the SCC’s decision in Sable Offshore Energy Inc. v. Ameron International Corp.

Please contact your McInnes Cooper lawyer or any member of our McInnes Cooper Litigation Team to discuss this topic or any other legal issue.

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