May 6, 2024
Dolden Case Brief – Delayed Disclosure of Pierringer Agreement is an Abuse of Process, Says Alberta Court – May 2024
PIERRINGER DANGER: DELAYED
DISCLOSURE OF PIERRINGER
AGREEMENT IS AN ABUSE OF PROCESS,
SAYS ALBERTA COURT
By Jakub Ksiazek, Dolden Calgary
The Alberta Court in Ball v 1979927 Alberta Ltd., 2024 ABKB 229, has clearly signaled that immediate disclosure of settlement agreements that “drastically alter the litigation landscape” is an absolute requirement and any delay in doing so, even absent prejudice, will result in an abuse of process and the potential for a permanent stay of the action.
The background facts in Ball are not overly relevant; what is important is that the plaintiffs and certain defendants entered into a Pierringer Agreement in early 2021, settling the dispute between them. The impugned Pierringer Agreement contained standard terms including the requirement for the plaintiffs to have the agreement approved by the Court. The plaintiffs, however, delayed in bringing a Court application for approval, and failed to circulate the signed Pierringer Agreement to the non-settling defendants for ten months. Once served, the non-settling defendants challenged the Pierringer Agreement, and argued that immediate disclosure of the agreement ought to have been made. The plaintiffs argued that no steps were taken in the action over those ten months, and therefore, there was no prejudice to the non-settling defendants.
The Court ultimately sided with the non-settling defendants. In very direct language, the Court found that immediate disclosure of agreements that alter the litigation landscape was required; prejudice was not part of the analysis. The requirement for immediate disclosure was in keeping with ethical obligations and the Court’s inherent jurisdiction to prevent abuses. The Alberta Court adopted the “bright line” test used in Ontario.
The end result was that the plaintiffs’ failure to disclose the Pierringer Agreement for ten months was an abuse of process. The Court permanently stayed the action as against the non-settling defendants.
Takeaway
The important take away from this decision is that settlements that alter the adversarial relationship between the parties, such as Mary Carter agreements, Pierringer Agreements, BC Ferries Agreements, or other proportionate liability agreements, must be immediately disclosed to all parties and to the Court to avoid any unwanted consequences. Any delay in doing so, be it strategic or even unintentional, risks the settlement agreement becoming unenforceable, and may result in prematurely ending the plaintiffs’ remaining claims against the non-settling defendants which, ironically, is the very thing such agreements seek to avoid in the first place.
For further information or if you have any questions about the above article, please contact the author: Jakub Ksiazek, Dolden Calgary, Email [email protected].
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