With the current strain on judicial resources, settlement is a
frequent (and frequently encouraged) conclusion to ongoing
litigation. In order to incentivise settlement out of court, the
concept of settlement privilege developed - the idea being that
negotiations will be more productive if parties know that their
discussions are without prejudice and cannot be subsequently
disclosed. What do you do, then, when there are settlements with
multiple parties and you may not want to disclose just how much (or
how little) you have settled for?
The Supreme Court of Canada recently addressed this issue in Sable Offshore Energy Inc v Ameron
International Corp. In this case, Sable Offshore Energy
Inc. ("Sable") sued a number of defendants who had
supplied it with paint intended to prevent corrosion of its
offshore structures. Sable entered into Pierringer Agreements with
all but two of the defendants. A Pierringer Agreement allows one or
more defendants in a multi-party proceeding to settle with the
plaintiff by segregating their liability, leaving the remaining
defendants to continue the defend against the remainder of the
The terms of the Pierringer Agreements were disclosed to the
non-settling defendants, but not the amounts paid by the settling
defendants. The two non-settling defendants applied for disclosure
of the amounts paid by the settling defendants. In response, the
settling defendants argued that the negotiated amounts were
protected by settlement privilege and could not be disclosed.
In a unanimous decision, the SCC held that financial terms of
settlements do not need to be disclosed in multi-party proceedings.
The Court further confirmed that settlement privilege extends to
the content of both successful and unsuccessful negotiations and
that it protects not just the subject of negotiations, but also the
ultimate settlement amount. To rely on an exception to this
privilege, the party seeking disclosure must show that, on balance,
a competing public interest outweighs the public interest in
The SCC's decision stresses the importance of settlement
privilege in promoting settlements. Parties to a multi-party
proceeding can now be assured that their discussions during
negotiations will be protected from disclosure, whether or not the
discussions are fruitful and ultimately lead to a settlement
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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