The Court of Appeal reaffirms that the duty to disclose a settlement that changes the litigation landscape not only applies to the conventional partial settlement structures like Mary Carter Arrangements or Pierringer Agreements, but to any settlement that converts former foes into friends in the litigation. That was the issue in this appeal, and the consequences of not disclosing the settlement was profound – a dismissal of the action against the remaining defendants.
The case is also helpful because it helps define the term “immediately.” In this case, the settling parties took about three weeks to advise the remaining defendants and the court of the partial settlement. The settling parties argued that by any yardstick, this would satisfy the term “immediately.” The lower court and appellate court disagreed. To this end, the appellate said: “The standard is “immediate”; it is not “eventually” or “when it is convenient”. As the motion judge said: “The rules really can’t be any clearer. Where an agreement involves a party switching sides from its pleaded position, it must be disclosed as soon as it is made.” The appellate court seems to be swayed by the following comments made by the motions judge below:
“…. although the failure to immediately disclose a settlement agreement may adversely affect other parties to the litigation, judges may also be impacted. As he wrote:
I, for one, read the evidence before I read the parties’ factums. In preparing for the motion, due to the misleading manner of presentation, I would not have known at the outset, as required, that the defendant Secure was on the plaintiff’s side pursuant to a settlement agreement that requires its support to the plaintiff’s satisfaction. [Emphasis added.]”
Tallman Truck Centre Limited v. K.S.P. Holdings Inc., 2022 ONCA 66
https://www.canlii.org/en/on/onca/doc/2022/2022onca66/2022onca66.html