This Week at the SCC (21/06/2013)

The Supreme Court of Canada released two decisions this week of interest to Canadian businesses and professions.

The first, Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, addresses the scope of settlement privilege in the context of multi-party litigation.  In cases where a plaintiff sues several defendants, it is common for the plaintiff to settle with only some of them, and agree to pursue the non-settling defendants only for their proportionate share of liability.  This type of arrangement, known as a Pierringer agreement, has the benefit of releasing the settling defendants not only from the plaintiff's claims, but also from potential contribution claims brought by the non-settling defendants (who can only be held severally, and not jointly, liable with the settling ones).

In Sable, the plaintiffs entered into multiple Pierringer Agreements, and disclosed all the terms of those agreements to the non-settling defendants, except the amounts agreed to.  The non-settling defendants brought an application to compel the plaintiffs to disclose the settlement amounts, which was denied at first instance, but subsequently granted by the Nova Scotia Court of Appeal.  In a unanimous decision written by Abella J., the Supreme Court of Canada overturned the Court of Appeal's judgment, and held the application should be rejected on the basis of settlement privilege.

Abella J. held that settlement privilege protects all communications made in the course of  negotiations undertaken for the purpose of settling the action, whether or not they are marked "without prejudice", and whether or not they result in a settlement.  Therefore, settlement privilege extends to both failed negotiations and the content of successful negotiations, including the negotiated settlement amounts.   While Abella J. recognized there could be exceptions to the privilege where a competing public interest outweighs the public interest in encouraging settlement (e.g., to address allegations of fraud or prevent overcompensation), she found there was no prejudice to the non-settling defendants in withholding the settlement amounts that met this test (particularly since the plaintiffs in Sable had disclosed all the non-financial terms of the Pierringer agreements).

The second case is Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36.  It involved a judicial review application of a decision by the Minister of Public Safety and Emergency Preparedness to deny the appellant's request for permanent residence in Canada.  The Court's decision transcends this context, however, and is important to a broad spectrum of administrative law cases for two reasons.

First, the Court clarified the standard of appellate of review on an appeal from a judicial review decision of a lower court.  LeBel J. confirmed that on such an appeal, the Court's job is to determine "whether the court below identified the appropriate standard of review and applied it correctly".  In other words, the appellate court does not afford deference to the lower court's findings on judicial review.

Second, the Court addressed the role of the legitimate expectations doctrine in the context of the duty of procedural fairness.  LeBel J. held that because the Minister followed a comprehensive procedural process set out in publicly available guidelines for dealing with the appellant's application, the appellant's legitimate expectations and right to procedural fairness were fulfilled, even though the guidelines were not published by the Minister's own department.

The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions.  The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.

settlement privilege; Pierringer agreements; Sable; Ameron; without prejudice; judicial review; standard of appellate review; legitimate expectations; procedural fairness



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