Admissibility of Settlement Agreements from Other Jurisdictions on Certification

It is common for similar class actions to proceed in Canada and the United States. Sometimes the American action settles first and plaintiffs in Canada will attempt to use that settlement—particularly the settlement agreement—to argue in favour of certification in Canada. A recent decision from the British Columbia Supreme Court has confirmed that settlements from other jurisdictions are not relevant to certification. But defendants should beware when settling with a regulator and admitting liability.

In Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2008 BCSC 1263, the plaintiff tendered an American settlement agreement in response to an argument that class members could not be identified.

The court held that the settlement agreement was not admissible because (paras. 45-48)

  1. what a defendant agreed to do as part of a settlement was not relevant to whether something could be proved in a contested proceeding; and
  2. the affiant had no direct knowledge of what the defendant could or could not do to verify class membership.

The same principles were recently applied in Mueller v. Nissan Canada Inc., 2021 BCSC 338. The court found that an American settlement agreement was not relevant to certification because the “existence of a settlement, even in a closely related proceeding, does not alter the plaintiff’s onus or burden of proof on [the certification] application” (para. 36).

However, defendants should beware of settlement agreements with regulators that admit liability. For example, in Hill v. Gordon-Daly Grenadier Securities, 2001 CanLII 38735 (ONSCDC), the court admitted a settlement agreement between the defendants and the Ontario Securities Commission. The defendants had made several admissions in the agreement and the court concluded they were akin to admissions against interest.

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