Pierringer Agreement Settlement Amounts Need Not Be Disclosed

Introduction

In Sable Offshore Energy Inc v Ameron International Corp1 the Supreme Court of Canada held that the settlement amounts contained in Pierringer agreements need not be disclosed to the remaining non-settling defendants in multi-party disputes. The decision in Sable is significant because the Supreme Court adopted a robust application of settlement privilege as it relates to the quantum of settlement. In order to qualify as an exception to settlement privilege, a party must demonstrate that the basis for disclosure outweighs the policy in support of promoting settlement.2

Facts

The plaintiff, an owner of gas processing facilities, commenced actions against several defendants for damages related to the paint system used for corrosion protection on its structures. The plaintiff entered into three Pierringer agreements, which left the non-settling defendants - Ameron International Corporation and Amercoat Canada - responsible only for their proportionate share of liability.

Pierringer-style settlement agreements originated in the United States and permit:

"one or more defendants in a multi-party proceeding to settle with the plaintiff and withdraw from the litigation, leaving the remaining defendants responsible only for the loss they actually caused. There is no joint liability with the settling defendants, but non-settling defendants may be jointly liable with each other."3

Although the terms of the Pierringer agreements were disclosed to Ameron and Amercoat, the settlement amounts were deliberately withheld. The plaintiff maintained that the quantum of settlement was subject to settlement privilege. The non-settling defendants filed an application to compel disclosure of the amounts paid under the partial settlement arrangements. The chambers judge dismissed the application and concluded that the public interest supported keeping the settlement amounts confidential. The Nova Scotia Court of Appeal overturned the decision of the chambers judge and ordered that the settlement amounts be disclosed as they could affect the amounts otherwise payable by the non-settling defendants.

Decision

The issue before the Supreme Court was whether the amount of money paid by the settling defendants should be disclosed to Ameron and Amercoat, or whether the amounts were subject to settlement privilege. Justice Abella, writing on behalf of the court, determined that the settlement amounts were protected by settlement privilege and therefore did not...