Maintaining Settlement Privilege Promotes Access To Justice

A major concern for the legal profession in Canada today is access to justice. More and more there is unequal access to the justice system with the poorest people suffering the most from rising legal costs. Any measures that may counteract this trend are welcome. The recent Supreme Court of Canada (SCC) decision in Sable Offshore Energy Inc. v. Ameron Interantional Corp., 2013 SCC 37 (Sable) is step in the right direction.

Background

Sable Offshore Energy Inc. (Sable) is an oil company with onshore and offshore facilities in Nova Scotia. It purchased protective paint and hired contractors to apply the paint to the surface of these facilities. The paint failed to prevent corrosion as promised, and Sable brought three lawsuits against several defendants. The lawsuit that is subject to this appeal was against the supplier of the paint as well as twelve other contractors and applicators responsible for applying the paint coatings. Sable was alleging negligence, negligent misrepresentation, and breach of collateral warranty.

One of the defendants settled with Sable and entered into a Pierrenger Agreement (the "Agreement" - named for the 1963 Wisconsin case of Pierringer v Hoger, 124 NW 2d 106 (Wis. 1963)). Effectively the Agreement released the settling defendant from all liability in return for a settlement amount. The terms of the Agreement insured that the remaining non-settling defendants, if found liable, would only be liable in proportion to the damage they actually caused. Sable amended its statement of claim against the non-settling defendants to reflect this change. The Agreement also provided that all the relevant evidence in the possession of the settling defendants would be given to the plaintiffs and be discoverable by the non-settling defendants; however the final negotiated settlement amount would not be disclosed.

The non-settling defendants applied for disclosure of the settlement amounts. Sable claimed the amounts were subject to settlement privilege. The trial judge found that the non-settling defendants were not entitled to disclosure of this information, however the decision was overturned by the Court of Appeal which ordered the amounts disclosed. Sable appealed to the SCC.

SCC's Decision and Reasoning

The SCC's analysis began with exploring the benefits of settlements. The SCC summarized these benefits citing Sparling v Southam Inc. (1988), 66 OR (2d) 225 (HCJ) (at para. 11):

"[The settlement of lawsuits] promotes the...