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No One Needs to Know: The Pierringer Agreement Settlement Amount Need Not Be Disclosed

In the recent Supreme Court of Canada decision of Sable Offshore Energy Inc. v. Ameron International, 2013 SCC 37, Sable Offshore Energy sued multiple suppliers and contractors who supplied paint and completed surface preparations that were meant to prevent the corrosion of numerous offshore and onshore facilities owned by Sable. A number of defendants negotiated settlements through Pierringer Agreements (also known as “proportionate share settlement agreements”) with Sable. These agreements assured that the settling defendants would not be subject to a contribution claim from the non-settling defendants, as the non-­settling defendants would only be accountable for their proportion of liability. The terms of the agreements were provided to the remaining non­-settling parties, but the actual settlement amount was not disclosed. The non­-settling parties sought disclosure of those settlement amounts.

The trial judge concluded the settlement amounts were covered by settlement privilege, but the Nova Scotia Court of Appeal over-turned the decision. The Supreme Court of Canada unanimously allowed the appeal.

Justice Abella described the importance of settlement privilege in litigation proceedings:

[2] The purpose of settlement privilege is to promote settlement. The privilege wraps a protective veil around the efforts parties make to settle their disputes by ensuring that communications made in the course of these negotiations are inadmissible.

[12] Settlement privilege promotes settlements. As the weight of the jurisprudence confirms, it is a class privilege. As with other class privileges, while there is a prima facie presumption of inadmissibility, exceptions will be found “when the justice of the case requires it” (Rush & Tompkins Ltd. v. Greater London Council, [1988] 3 All E.R. 737 (H.L.), at p. 740).

[13] Settlement negotiations have long been protected by the common law rule that “without prejudice” communications made in the course of such negotiations are inadmissible.