Civil procedure

10. Mediation & Settlement

TOPIC 2: Mediations, Formal offers to settle, Types of settlement agreements

Readings 2: SCCRs Part 12, Part 11, 7-7

Sable Offshore Energy v Ameron International Corp

Union Carbide v Bombardier

Settlements

RULE 9-1 – p.33

Offers to Settle

Different Types of Settlement Agreements

(1) Mary Carter Agreements

Multi-defendant scenario.

A partial settlement to litigation where some Defendant(s) settle with P by accepting a term of which, guarantees P a certain monetary requirement so the D’s liability is capped; and any money to be repaid recovered from the remaining defendant(s)

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  Regardless of the settlement, that D remains a party in the lawsuit and pursue the co-defendants along with the P to a lawsuit they’ve already settled
  
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  Extremely rare in Canada; more frequent in the US (and this arrangement is secret in US)
  
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  It’s in the settling D’s interest to increase the liability of the non-settling D as it reduces their own liability
  

Example Scenario:

6 million case  D agrees to P ½ of that (so 3 mill) BUT for every dollar P win at trial, it is agreed that D get half of that amount  At the end, P actually wins 8 mil  D actually gets 1 mil back – half of 2 mil

(2) Pierringer (BC Ferries) Agreements See Sable Offshore Energy case below

Multi-defendant scenario, but P will settle issue with defendant(s), but not all.

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  It is a partial settlement (contract), where D will pay an amt of money and P expressly waives any right to recover from that settling defendant(s). Then P amends the pleadings where P expressly severs liability b/w settling and non-settling defendants
  
  • 
    W/o amending the pleadings, and only removing from D from style of cause without amending the factual allegations; then defendant B, C, D can third party drag defendant A back into the action
    
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  The key part of this is that pierringer agreements allow defendant(s) to be liable for only the smaller portion that they are liable for by severing liability between multi-party defendants; so that they are not held jointly liable.
  

Sable Offshore Energy Inc v Ameron International Corp (2013) SCC

[Pierringer agreements; settlement privilege should be up kept unless public interest that outweighs]

FACTS

Sable sued a number of D’s who supplied them with paint for prevention of corrosion. They also sued the people who applied the paint. Needless to say it didn’t work. Sable entered Pierringer agreements with most of the defendants, the remaining Ds wanted disclosure of the settlement amounts. The TJ said no, NCCA said sure.

ISSUE

Should settlement privilege extend to the amounts settled for? YES, unless public interest issue.

RULE

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  While settlement privilege may be overruled if a competing public interest outweighs the interest in keeping the settlement a secret, settlement itself is a noble goal that should be promoted.
  
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  Settlement privilege ensures the settlements are kept secret in order to achieve the best possible settlement between the parties.
  

ANALYSIS

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  Settlement not only honours the courts desire to have a quick and efficient end to the proceedings, but in some ways, it is also the purest form of party autonomy.
  
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  You can safely assume that if the parties decided to settle, it is (somewhat) within their best interests to do so, and as a result, everyone else gets more court time.
  
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  Preserving settlement privilege allows parties to negotiate in good faith and allocate risk accordingly in the determination of how much they might need to pay. Economic concerns are also important.
  

*Note: Pierrenger agreements get around the problem of the release of one defendant extinguishing the Ps entire claim or a settling defendant facing post settlement contribution claims from non settling defendants.
HOLDING

Settlement amounts re-privileged.

Settlement Privilege

Settlement Privilege protects the confidentiality of successful AND unsuccessful settlements

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  Settlement Privilege – meant to effect full & frank communication b/w parties seeking to settle a matter
  
  • 
    There’s express/implied intention that this info won’t be disclosed to the court
    
  • 
    Will often see settlement privilege involve terms like “without prejudice” (which basically means – “I’m communicating with you on this issue, with an understanding by doing so, I’m not prejudicing my client”)
    
    • 
      Obviously disclosing some settlements in Court may prejudice a party (ex – Excuse me Judge, D offered $1 mil to settle the case, obviously they're guilty)
      
  • 
    Settlement Privilege covers all the documents of failed settlements AND successful settlements  all this information remain privileged
    
  • 
    Settlements involving minors, mental disability and class actions are not considered privileged.
    

See Rule 9-1(5) – p.34

Consequences that flow from refusing a reasonable offer to settle [look at 9-1(5) and (6)]

Cost options

(5) In a proceeding in which an offer to settle has been made, the court may do one or more of the following:

(a) deprive a party of any or all of the costs, including any or all of the disbursements, to which the party would otherwise be entitled in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle;

(b) award double costs of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle;

(c) award to a party, in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle, costs to which the party would have been entitled had the offer not been made;

(d) if the offer was made by a defendant and the judgment awarded to the plaintiff was no greater than the amount of the offer to settle, award to the defendant the defendant's costs in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle.

EXAMPLE

--Case starts on Jan. 1, 2010

B/w Jan – June: The Court will normally order ordinary costs

--Offer to settle on June 1, 2010  P offers to settle for $100: if the D says we’re not gonna settle goodbye

In between June – Dec  Court will order double costs

--Judgment Dec. 1, 2010  if P received judgment where P gets $100+ the way that costs rule work is the P has won the lawsuit, so they’re entitled the costs.

EXAMPLE 2

-- On June. 1, 2010  Instead, if D offers to settle to 100, but P says no,

In between June – Dec  Court will order double costs

--Judgment on Dec. 1 And P wins, gets $100 or less

B/c the P gets the money, they will get ordinary costs to June 1,

the Court will give them nothing from June to Dec because they have turned down the defendant’s order, they will get the same amount as if they accepted settlement.
*NOTE: on above 2 examples, we know that the Court has broad, discretionary powers relating to Costs SO, for example, if litigation was so important and in public interest, Court can see why they declined the offer of settlement. And may not be penalized for not accepting the offer of settlement as P did in example 2

Union Carbide v Bomardier

[Confidentiality clause in a mediation contract will not restrict party from producing evidence of communications made in the mediation in order to prove terms of the settlement]

FACTS

Parties entered into private mediation and signed standard mediation contract incl. confidentiality clause. Disagreement arose as to the scope of settlement. Bombardier filed a motion, and Ds sought out to strike out allegations contained in motion, that they referred to events taken during course of mediation, which violates the mediation contract’s confidentiality clause.

ISSUE

Will a confidentiality clause in mediation contract displace the exception to common law settlement privilege which allows a party to disclose protected communications in order to prove the existence or scope of privilege? NO, unless that is the clearly intended effect of the mediation contract.

RULE

Confidentiality clause in a mediation contract will not restrict party from producing evidence of communications made in the mediation context in order to prove the terms of settlement

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  Settlement privilege protects communications exchanged during process of settling disputes to promote honest & frank discussions b/w party.
  
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  However it will cease to be privileged, if disclosing it is necessary to prove existence or scope of settlement
  
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  Both the privilege and its exception are to help promote out-of-court settlements
  

ANALYSIS & HOLDING

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  Court held that B could refer to events that had taken place in the course of mediation process in order to prove the terms of settlement
  
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  In the case, the parties did not clearly intend to override the common law privilege exception; nor the parties amended the standard mediation contract.