In its June 21, 2013 decision in Sable Offshore Energy Inc. v. Ameron
International Corp., 2013 SCC 37, the Supreme Court of
Canada clarified that the financial terms in partial settlements of
multi-party litigation need not be disclosed to the non-settling
parties who remain in the litigation, absent exceptional
circumstances. The decision provides much needed clarification of
the scope of settlement privilege, and further underscores the
importance the Court places on facilitating early resolution of
disputes in a busy and often overburdened judicial system.
In Sable Offshore Energy (Sable), the
plaintiff sued multiple defendants who had supplied it with paint
intended to prevent corrosion of Sable's offshore facilities.
Sable subsequently entered into a "Pierringer Agreement"
with some of the defendants. A Pierringer Agreement is a form of
arrangement that permits a plaintiff to settle with some defendants
in multi-party litigation where a settlement cannot be reached with
all. The settling defendants are then able to extricate themselves
from the litigation. Non-settling defendants are protected by
having their potential liability expressly limited to their
proportionate share, and by continuing to have access to the
settling defendants' evidence. Yet prior to the Supreme
Court's decision, there had been conflicting case law from
lower courts as to whether non-settling defendants were entitled to
know the dollar amount of the settlements with the settling
The Supreme Court unanimously held that the financial terms of
the settlement need not be disclosed, absent exceptional
circumstances. It clarified that the doctrine of "settlement
privilege", which protects from disclosure documents and
concessions made during settlement discussions, applies not just to
the negotiation stage but to the terms of the settlement itself.
The rationale for the privilege is that parties will be more likely
to settle if they have confidence from the outset that their
negotiations will not be disclosed. In doing so, the Court noted
that early resolution of litigation is always to be encouraged, in
order to facilitate parties resolving disputes on their own terms
rather than adding to the load of an already overburdened court
The Court accepted that departures from this general protection
may be warranted in exceptional situations where the interest in
promoting settlement is outweighed by some other public interest.
These countervailing instances may include allegations of
misrepresentation, fraud or undue influence, and preventing a
plaintiff from being overcompensated. However, the Court held that
in the majority of cases, the ability of non-settling defendants to
continue to fairly proceed with defending litigation would, at
most, be marginally compromised by not knowing the settlement
With respect to Sable in particular, the Supreme Court
held that there was no tangible prejudice created by withholding
the amounts of the settlements since the court order approving the
settlement included additional protections for the non-settling
defendants. This included a requirement that the plaintiffs get
production of all relevant evidence from the settling defendants
and make this evidence available to the non-settling defendants on
discovery and a requirement that, with respect to factual matters,
there be no restrictions on the non-settling defendants' access
to experts retained by the settling defendants.
This decision demonstrates that the Supreme Court is alive to
the importance of encouraging settlement in multi-party litigation.
It is also welcome news for defendants who may wish to extricate
themselves early from complex, multi-party proceedings without
risking the terms of settlement being made public.
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In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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