Stamatopoulos et al. v. Harris et al.

[Indexed as: Stamatopoulos v. Harris]

Ontario Reports

Ontario Superior Court of Justice, Divisional Court,

Leitch, Swinton and Nordheimer JJ.

October 30, 2014

123 O.R. (3d) 234 | 2014 ONSC 6313

Case Summary

Civil procedure — Settlement — Mary Carter Agreement — Parties who enter into Mary Carter Agreement ("MCA") required to disclose to court and non-settling parties not only existence of MCA but also those terms of MCA which change litigation landscape. [page235]

The plaintiffs appealed an order dismissing their appeal from an order requiring them to produce to the defendant municipality an edited copy of a Mary Carter Agreement ("MCA") entered into between the appellants and the defendant H.

Held, the appeal should be dismissed.

Once an MCA is entered into, it is not sufficient to simply disclose its existence. The terms of the MCA which change the litigation landscape must be disclosed to the court and to non-settling parties.

Aecon Buildings, a Division of Aecon Construction Group Inc. v. Brampton (City), [2010] O.J. No. 5630, 2010 ONCA 898, 328 D.L.R. (4th) 488, 98 C.L.R. (3d) 1; Laudon v. Roberts, [2009] O.J. No. 1824, 2009 ONCA 383, 249 O.A.C. 72, 77 M.V.R. (5th) 165, 308 D.L.R. (4th) 422, 66 C.C.L.T. (3d) 207, 178 A.C.W.S. (3d) 135; Moore v. Bertuzzi (2012), 110 O.R. (3d) 611, [2012] O.J. No. 2485, 2012 ONSC 3248, 32 C.P.C. (7th) 376, 219 A.C.W.S. (3d) 298 (S.C.J.), affg (2012), 110 O.R. (3d) 124, [2012] O.J. No. 665, 2012 ONSC 597, 32 C.P.C. (7th) 324, 212 A.C.W.S. (3d) 47 (Master); Noonan v. Alpha-Vico, [2010] O.J. No. 2807, 2010 ONSC 2720, 99 C.P.C. (6th) 266 (Master); Sable Offshore Energy Inc. v. Ameron International Corp., [2013] 2 S.C.R. 623, [2013] S.C.J. No. 37, 2013 SCC 37, 332 N.S.R. (2d) 1, 2013EXP-2138, J.E. 2013-1134, EYB 2013-223434, 37 C.P.C. (7th) 225, 446 N.R. 35, 359 D.L.R. (4th) 381, 22 C.L.R. (4th) 1, 228 A.C.W.S. (3d) 78, consd

Other cases referred to

Bodnar v. Home Insurance Co., [1987] O.J. No. 2365, 25 C.P.C. (2d) 152 (Master); J. & M. Chartrand Realty Ltd. v. Martin, [1981] O.J. No. 739, 22 C.P.C. 186, 9 A.C.W.S. (2d) 400 (H.C.J.); Pettey v. Avis Car Inc. (1993), 1993 9392 (ON SCDC), 13 O.R. (3d) 725, [1993] O.J. No. 1454, 103 D.L.R. (4th) 298, 18 C.P.C. (3d) 50, 41 A.C.W.S. (3d) 44 (Gen. Div.); Stamatopoulos v. Harris, [2013] O.J. No. 3357, 2013 ONSC 4143, 47 M.V.R. (6th) 277 (S.C.J.) [Leave to appeal granted [2013] O.J. No. 5813, 2013 ONSC 7844, [2014] I.L.R I-5532 (Div. Ct.)]

APPEAL from an order dismissing an appeal from an order requiring the appellants to produce an edited copy of a Mary Carter Agreement to the respondent.

G.A. Bougadis and B. Goryayev, for appellants.

S. Persaud, for respondent Regional Municipality of Durham.

No one appearing for respondent Richard J. Harris.

The judgment of the court was delivered by

[1] NORDHEIMER J.: — The appellants appeal, with leave, from the order of C. Brown J. dated July 18, 2013 [ [2013] O.J. No. 3357, 2013 ONSC 4143 (S.C.J.)] that dismissed the appellants' appeal from the order of Master Dash dated September 14, 2012. The order of the master required the appellants to produce to the respondent the Regional Municipality of Durham an edited [page236] copy of a "Mary Carter Agreement" entered into between the appellants and the respondent Richard J. Harris.[^1]

[2] The central issue raised by this appeal is whether, once a "Mary Carter Agreement" ("MCA") is entered into, the terms of the MCA must be disclosed or whether it is sufficient to simply disclose the existence of the MCA. The appellants say that, after consenting to the partial judgment, they did all they were obliged to do by disclosing to Durham and the court the existence of the MCA. Durham says that it is entitled to know the terms of the MCA or at least those terms of the MCA that might change the litigation landscape. The master agreed with the position of Durham and ordered disclosure of an edited copy of the MCA, preserving the confidentiality of the terms of the MCA that he found did not fall within the changed litigation landscape exception. When I refer to the litigation landscape, I mean to refer, in particular, to what would appear to an outside observer to be the position of the various parties to a proceeding. As will be discussed below, one significance of the terms of a MCA or like agreement is that they usually change what would otherwise be those apparent positions.

Background

[3] On the evening of November 5, 2004, the plaintiff Steve Stamatopoulos was a passenger in the front seat of a vehicle operated by the defendant Richard Harris. While travelling on Durham Regional Road #39, Mr. Harris lost control of his vehicle, left the road and ended up in a roadside ditch. As a result, Mr. Stamatopoulos sustained serious personal injuries.

[4] Mr. Stamatopoulos and his family members commenced this action for $11 million in damages plus prejudgment interest and costs. They claimed against the defendant driver, Mr. Harris, the respondent, Durham (as the entity with jurisdiction over the road), Mr. Stamatopoulos' accident benefit provider, State Farm Insurance and Her Majesty the Queen in Right of the Province of Ontario (against whom the action was dismissed on October 12, 2005).

[5] By way of a judgment dated May 18, 2010, partial judgment was obtained for the plaintiffs against Harris in the amount of $1,378,000, all inclusive. Judgment was also obtained for the plaintiffs against State Farm Insurance for the sum of $1,100,000, all inclusive. The judgment also ordered that the [page237] cross-claim of Harris be continued against Durham, subject to the executed and sealed MCA.

[6] On September 14, 2012, Durham brought a motion for an order compelling the plaintiffs and/or Harris to disclose a copy of the MCA. On that day, the master ordered that an edited version of the MCA was to be produced to Durham. The plaintiffs appealed the master's order, which appeal was heard on March 28, 2013. By order dated July 18, 2013, C. Brown J. dismissed the appeal. The plaintiffs sought leave to appeal from the order of C. Brown J. Leave to appeal was granted by DiTomaso J. by order dated December 18, 2013 [[2013] O.J. No. 5813, 2013 ONSC 7844 (Div. Ct.)]. In granting leave, DiTomaso J. found that both of the separate tests for granting leave to appeal were met.

Analysis

[7] The sole issue in this appeal is whether the terms of a MCA must be disclosed to the non-settling defendants. This is not an appeal from the specific editing that was ordered by the master. It is asserted by the appellants that there are conflicting decisions on the issue of whether the terms of a MCA must be disclosed. Indeed, that appears to be the principal reason why leave to appeal was granted. With respect, and as I shall explain, I do not see any such conflict in the existing authorities.

[8] I begin with the decision in Laudon v. Roberts, [2009] O.J. No. 1824, 2009 ONCA 383. The issue in that case was whether a plaintiff is obliged to deduct, from a jury's damages award, a payment that he had received pursuant to a MCA. The Court of Appeal concluded that the plaintiff was obliged to deduct the payment. It will be seen, therefore, that the issue that is now before this court was not directly raised in Laudon -- perhaps because it seems that the MCA in that case had been disclosed to the parties. I take that from the fact that the MCA appears as an appendix to the reasons of the Court of Appeal. Regardless, a fair reading of the decision in Laudon shows that the court took it, almost as granted, that the terms of the MCA had to be disclosed. For example, at para. 23, MacFarland J.A. said:

In my view the motion brought at the outset of trial and which resulted in the October 12, 2006 ruling was premature. At that point in time the trial had not yet begun and all that was required was full disclosure of the agreement, excepting only the monetary amount paid.

(Emphasis added)

[9] In a footnote to the emphasized portion, MacFarland J.A. cited two earlier decisions, J. & M. Chartrand Realty Ltd. v. Martin, [1981] O.J. No. 739, 22 C.P.C. 186 (H.C.J.) and Bodnar v. Home Insurance Co., [1987] O.J. No. 2365, 25 C.P.C. (2d) 152 (Master), [page238] both of which had concluded that agreements, such as a MCA or like agreement, had to be disclosed to the other parties and to the court.

[10] The decision in Laudon goes on to discuss the reasons why a MCA must be disclosed to the other parties and to the court. MacFarland J.A. summarized those reasons, at para. 39, where she said:

The existence of a MCA significantly alters the relationship among the parties to the litigation. Usually the position of the parties will have changed from those set out in their pleadings. It is for this reason that the existence of such an agreement is to be disclosed, as soon as it is concluded, to the court and to the other parties to the litigation.

(Emphasis added)

[11] In reaching its conclusion on this point, the decision in Laudon quotes with approval from the earlier decision in Pettey v. Avis Car Inc. (1993), 1993 8669 (ON SC), 13 O.R. (3d) 725, [1993] O.J. No. 1454 (Gen. Div.) that had also considered this issue. In answering the specific question as to when a MCA had to be disclosed, Ferrier J. said, at pp. 737-38 O.R.:

The answer is obvious. The agreement must be disclosed to the parties and to the court as soon as the agreement is made. The non-contracting defendants must be advised immediately because the agreement may well have an impact on the strategy and line of cross-examination to be pursued and evidence to be led by them. The non-contracting parties must also be aware of the agreement so that they can properly assess the steps being taken from that point forward by the plaintiff and the contracting defendants. In short, procedural fairness requires immediate disclosure. Most importantly, the court must be informed immediately so that it can properly fulfil its role in controlling its process in the interests of fairness and justice to all parties.

[12] This issue was again considered in Aecon Buildings, a Division of Aecon Construction Group Inc. v. Brampton (City), [2010] O.J. No. 5630, 2010 ONCA 898. Speaking once again for the court, MacFarland J.A. said, at para. 13:

We do not endorse the practice whereby such agreements are concluded between or among various parties to the litigation and are not immediately disclosed. While it is open to parties to enter into such agreements, the obligation upon entering such an agreement is to immediately inform all other parties to the litigation as well as to the court.

(Emphasis in original)

[13] Notwithstanding what seem to me to be fairly clear statements of principle by the Court of Appeal on the issue, it was suggested before us, as it was before the leave judge, that certain decisions of this court, subsequent to Laudon, conflict [page239] with it. Indeed, the judge who granted leave to appeal adopted the position of the appellants that the decisions in these cases were "contrary" to Laudon. Specifically, the appellants contend that, until these three cases, the law in Ontario was that only the existence of the MCA had to be disclosed but not its terms, at least until the commencement of the trial. The three cases are Noonan v. Alpha-Vico, [2010] O.J. No. 2807, 2010 ONSC 2720 (Master); Moore v. Bertuzzi (2012), 2012 ONSC 597, 110 O.R. (3d) 124, [2012] O.J. No. 665 (Master); and Moore v. Bertuzzi (2012), 2012 ONSC 3248, 110 O.R. (3d) 611, [2012] O.J. No. 2485 (S.C.J.).

[14] In each of these subsequent decisions, the court ordered disclosure, prior to trial, of the terms of the MCAs involved. As may already be apparent, I do not see any of these cases as having been decided "contrary" to Laudon. Rather, each of those decisions is consistent with the implicit holding in Laudon, and more explicitly made in cases prior to Laudon, that both the existence of the MCA and its terms must be disclosed immediately.

[15] I do not believe that it is necessary to review each of these three cases, at least in part because two of the decisions are from the same case. It will be sufficient to refer to the most recent of them, namely, the decision of Perell J. in Moore. In a thorough fashion, Perell J. reviewed the state of the law regarding the issue surrounding the need to disclose a MCA. I should mention that a secondary issue was before him and that is whether MCAs are covered by a class privilege or require a case-by-case privilege analysis. Perell J. concluded that they were subject to a class privilege -- the same conclusion, I note, that was subsequently reached by the Supreme Court of Canada in Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, [2013] 2 S.C.R. 623, [2013] S.C.J. No. 37.

[16] In any event, in the course of his reasons, Perell J. referred to Laudon and to Pettey. He adopted the principles enunciated in those cases for why a MCA must be disclosed. He relied on the same reasoning as did the courts in those two cases. Consistent with those decisions, he said, at para. 76:

The court needs to understand the precise nature of the adversarial orientation of the litigation in order to maintain the integrity of its process, which is based on a genuine not a sham adversarial system and which maintenance of integrity may require the court to have an issue-by-issue understanding of the positions of the parties.

[17] I return, at this point, to the decision in Sable because it is also said to conflict with Laudon. Again, I do not find any conflict between the two. It should be first remembered that the decision in Sable dealt with a "Pierringer Agreement" and not a MCA. There are significant differences between the two, including [page240] the fact that, under a MCA, the settling defendant remains in the action whereas, in a "Pierringer Agreement", the settling defendant is removed from the proceeding.

[18] It should also be remembered that, in Sable, the issue was whether the amounts that had been paid by the settling defendants should have to be disclosed to the non-settling defendants. The Supreme Court concluded that they did not have to be disclosed. Of importance for purposes of this case, however, is the fact that all of the other terms of the "Pierringer Agreement" had been disclosed to the non-settling defendants. This was made clear by Abella J., at para. 8: "All the terms of the Pierringer Agreements were disclosed to Ameron and Amercoat except the amounts agreed to."

[19] The decision in Sable actually has little to do with the issue raised here although it does stand as yet another case where the terms of such agreements were disclosed. What Sable does confirm is that not every term of such agreements must be disclosed. As long as the terms in the agreement that affect the litigation landscape are disclosed, other terms may be withheld. This is consistent with the decision of the master, in this case, where he ordered an edited version of the MCA produced.

[20] Consequently, in my view, the authorities in this province have been consistent for more than 30 years. Once a MCA or like agreement is entered into, both the existence of the MCA and its terms must be disclosed to the other parties and to the court. If there is any issue that one or more clauses in the MCA should not have to be disclosed, because the disclosure of those specific clauses are not relevant to the principles that require the MCA to be disclosed (recognizing that the MCA is prima facie privileged), the disclosing party is entitled to edit the MCA for disclosure purposes subject to any order of the court.

[21] The appellants argue that a general requirement, that the terms of MCAs have to be disclosed, will impede settlement. I see no reason why that should be the result of such a requirement. I note that there is nothing in the record before us, to which the appellants can point, that provides a proper foundation for that concern.

Conclusion

[22] The appeal is dismissed. The appellants will pay to the respondent Durham the costs of the appeal fixed in the amount of $15,000, inclusive of disbursements and HST, the amount having been agreed between the parties.

Appeal dismissed.

Notes

[^1] At the hearing, we were advised that counsel for Mr. Harris took no position on this appeal.

End of Document