Master Dash Orders Defendants to Produce Proportionate Liability Sharing Agreement

Master Ronald Dash has ordered that a secret agreement, entered into by defendants and a third-party in Moore v. Bertuzzi, 2012 ONSC 597 (CanLII), must be disclosed to the plaintiffs. In his reasons, the master undertook a comprehensive review of the jurisprudence relating to disclosure of Mary Carter agreements, Pierringer agreements and other “proportional sharing agreements” that can potentially “change the landscape of the litigation”.

The Master placed considerable reliance upon the decision of Master MacLeod in Noonan v. Alpha-Vico, 2010 ONSC 2720 (CanLII).

The Moore v. Bertuzzi case is familiar. It arises out of a 2004 incident that took place in an NHL hockey game between the Vancouver Canucks and the Colorado Avalanche. Moore was struck from behind by Bertuzzi and suffered a serious injury. In the lawsuit, both Bertuzzi and the owners of the Vancouver Canucks (“Orca Bay”) were named as defendants. By the time of the motion heard by Master Dash, Bertuzzi had commenced a third-party action against his former coach, Marc Crawford in which Bertuzzi claimed contribution or indemnity. There were also crossclaims between the Bertuzzi and Orca Bay, also for contribution or indemnity.

In September, 2011, counsel for the plaintiffs learned that in July of that year, Bertuzzi, Orca Bay and Crawford had entered into minutes of settlement which, among other things, provided for an allocation of liability in particular proportions, notwithstanding the outcome of the trial. The third party claim against Crawford was dismissed on consent, without the knowledge of counsel for the plaintiffs.

On this motion, the plaintiff Moore sought disclosure and production of the agreement. In the course of the argument of the motion, counsel for the defendants advised the plaintiffs’ lawyer that they would be seeking an order, dismissing the crossclaims among their clients.

The defendants and third party resisted disclosure and production of the agreement, relying upon “settlement privilege”.

The master reviewed the jurisprudence that has considered whether settlement privilege is a class privilege or a case-by-case privilege. (In the former case, documents to which the privilege applies are assumed to be protected unless it can be shown that an exception applies. If settlement privilege is properly consider on a case-by-case basis, it will be presumed that documents are not protected unless the party asserting the privilege is able to satisfy the illness upon him or her, to establish the justice of extending the privilege in that particular case.)

The Master concluded that the caselaw on this issue is still somewhat unsettled, in that there are two streams of authorities, one endorsing each theory. However, the Master was satisfied that, regardless of which approach was taken, the result would be the same in this case.

He was quite critical of counsel for the defendants and the third-party, for their failure to disclose the settlement agreement to the plaintiffs’ counsel and to the court. He noted that the Court of Appeal had said, in Aecon Buildings v. Brampton, 2010 ONCA 898 (CanLII) (C.A.), that “we do not endorse the practice whereby such agreements are concluded between or among various parties to the litigation and are not immediately disclosed. While it is open to parties to enter into such agreements, the obligation upon entering such an agreement is to immediately inform all other parties to the litigation as well as to the court.”

In this case, the question became, whether the proportional sharing agreement would “change the landscape of the litigation”. The Master inspected the agreement. He concluded that it would “change the landscape of the litigation” and that therefore, the agreement had to be produced (subject to redaction of two unrelated provisions). He provided a non-exhaustive list of ways in which the litigation landscape could be affected by the agreement:

  • It may affect the rights of the formerly adverse defendants to cross-examine each other’s witnesses.
  • It could affect the right of multiple defendants to cross-examine the plaintiff and his witnesses.
  • It could affect the application of the three expert rule under section 12 of the Evidence Act, since only three experts may be called “upon either side” without leave.
  • If a proportional sharing of liability has been pre-determined by the defendants, the judicial determination of that issue in ignorance of the agreement could be considered a sham.
  • No longer being able to rely on adversity among defendants could affect the plaintiffs’ preparation for trial. For example it may require them to take steps to ensure that necessary evidence, which may no longer be called by the defendants, is before the court.
  • It could affect certain pre-trial motions, such as motions by each defendant for separate defence expert examinations in the same speciality. As will be discussed, that is a live issue in this action.
  • Knowing how liability is divided could affect the way that plaintiffs and the pre-trial judge conduct pre-trial conferences. The same could be said for Rule 49 settlement offers and mediation.

This decision, like the Noonan case are cautionary tales for counsel entering into agreements that partially settle a lawsuit. Counsel for the defendants and the third-party in Moore argued that if the Master were to order production of the settlement agreement, “it would mean that all settlement agreements, at least as among defendants, would need to be disclosed”. The Master disagreed with this proposition, but acknowledged that “it may be that most if not all secret agreements that end adversity between defendants, change their relationship from that set out in their pleadings and pre-determine how liability will be allocated need to be disclosed”.

Certainly, lawyers will have to tread very carefully and inspect the “litigation landscape” closely before deciding not to disclose an agreement by which a partial settlement of a lawsuit is achieved.

This entry was posted in Discovery, Practice and Procedure, Privilege. Bookmark the permalink.