On January 29, 2016, the Supreme Court of British Columbia
issued reasons for judgment in Northwest Waste Solutions v. Accili,
2016 BCSC 115. The case provides important guidance to litigants in
multi-party litigation where a plaintiff has agreed to cap or limit
a defendant's liability, but the defendant remains a party to
the action while the plaintiff focuses its efforts on the other
defendants. These types of arrangements, often called "Mary
Carter-type" agreements, have been the subject of much
judicial commentary in British Columbia and elsewhere in
In this case, the plaintiff had commenced legal proceedings
against Super Save Disposal Inc. ("Super Save") and
several individual defendants, all of whom were former employees of
the plaintiff. The plaintiff alleged that Super Save had induced
the employees to breach their employment contracts with the
plaintiff. After the litigation was commenced, one of the
individual defendants, Michael Lamb, commenced employment with
another company controlled by the plaintiff. The plaintiff agreed
that it would pay Mr. Lamb's legal costs of defending the
action and would not enforce any judgment against Mr. Lamb. The
plaintiff did not immediately disclose the existence of this
arrangement to the other defendants. When Super Save became aware
of the arrangement, it brought an application to strike the
plaintiff's Notice of Civil Claim on the basis of
non-disclosure of the arrangement.
Super Save relied on a decision of the Ontario Court of Appeal
which expressed in the strongest terms the obligation to disclose
arrangements of this nature, as they "change the landscape of
the litigation" and may jeopardize a fair trial. Super Save
alleged that the failure to disclose the arrangement immediately
amounted to an abuse of process.
The plaintiff conceded that the agreement should have been
disclosed immediately after it was made. The issue before the
judge, therefore, was the appropriate remedy. The plaintiff
submitted that dismissal of its action was not an appropriate
sanction in the circumstances, as plaintiff's counsel had taken
responsibility for the failure to disclose and the failure was not
deliberate but rather resulted from a misapprehension of the law on
the part of plaintiff's counsel. In addition, the agreement in
this case did not contain any evidentiary agreements which might
have distorted the evidence at trial, and minutes of Mr. Lamb's
evidence had been provided so that all parties were on an equal
Mr. Justice Affleck accepted that the plaintiff's failure to
disclose was made based on an honest belief by plaintiff's
counsel that there was no obligation to disclose. He also found
that there was no irreparable prejudice to Super Save's ability
to defend the action. Accordingly, he declined to strike out the
Despite the outcome, the decision underlines that the British
Columbia Courts have clearly accepted the principle that the
parties to a Mary Carter-type agreement have an immediate
obligation to disclose it to the non-settling parties. In another
case, the Court might very well conclude that the remedy of
striking the action entirely is justified. Where plaintiffs enter
into such agreements, they are well-advised to ensure that
disclosure of the agreement is made immediately upon its conclusion
so that there can be no suggestion that the right to a fair trial
has been irredeemably prejudiced.
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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