Pierringer Agreements and the Requirement to Disclose Settlement Agreements

In a lawsuit with multiple parties, a defendant may want to settle with the plaintiff to avoid the cost, time, stress, and risk of going to trial. As a result, the Canadian courts recognize Pierringer agreements, which allow one or more, but not all, defendant(s) to settle with the plaintiff and be removed from the lawsuit completely, while the remaining defendant(s) proceeds to trial.

Once the defendant and the plaintiff reach a settlement; the lawsuit is discontinued against that defendant and the plaintiff amends the lawsuit to remove the defendant from the lawsuit. As a result, the defendant does not usually participate in the remaining steps of the lawsuit.

The plaintiff must be cautious and careful to assess the settlement as it cannot retrieve any excess amounts from the settling defendant. For example, if the judge finds that the plaintiff would have been entitled to more compensation from the defendant it settled with, the plaintiff is not entitled to that additional amount. Moreover, the remaining non-setting defendant is only responsible for the loss it actually caused to the plaintiff.

Disclosure Requirements

Pierringer agreements are covered by settlement privilege, meaning that the financial terms of the agreement do not need to be disclosed to the non-settling defendant. The non-settling defendant is however entitled to know all non-financial terms of the settlement, as well as the right to be provided with relevant documents and evidence in the settling defendant’s possession and have access to the settling defendant’s experts at trial.

The plaintiff is required to disclose the settlement agreement immediately to the non-settling defendant, especially if it has an effect of changing the adversarial position of the parties. If the plaintiff does not promptly disclose the settlement agreement, the judge may order a stay of proceedings, which means to suspend or stop the lawsuit.

The financial terms of the settlement will be disclosed to the judge and the non-settling defendant at the conclusion of trial to ensure that the plaintiffs are not over compensated or receive a double recovery. In the instance that the plaintiff is awarded a higher amount than what was claimed, the judge will adjust the award accordingly.

Please note that this article is intended for information purposes only. It is not intended to provide legal advice. If you have any specific questions, please contact a lawyer.

Tags: Civil Litigation Law, Commercial Litigation Law, Contract Disputes

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