Alberta Court of Appeal Deducts Settlement From Judgment

In our March and June 2009 updates, we reported on Court of Appeal decisions from B.C. and Ontario, respectively, in which the Courts deducted a settlement amount from the trial damages (applications for leave to appeal to the Supreme Court of Canada were denied in both cases). The Alberta Court of Appeal has now followed suit in Bedard v. Amin, 2010 ABCA 3.

The Plaintiff suffered injuries within days of his birth which resulted in cerebral palsy, severe developmental delay and physical disabilities. The Plaintiff sued Calgary Health Region ("CHR"), the Foothills Medical Centre and two physicians.

Prior to trial the Plaintiff reached a settlement agreement with CHR and the Foothills Medical Centre. The settlement was reached by Pierringer agreement. The key terms of the agreement were that CHR and the Foothills Medical Centre would pay a sum of money to the Plaintiff and would no longer be parties to the action. The liability of the non-settling defendants (i.e. the two physicians) would be limited to their several liability.

At trial, the two physicians were found liable in negligence and held to be 25 per cent responsible for the injuries, for a total amount of $700,000. Because of the nature of the Pierringer agreement the trial judge assessed the liability of the settling defendants (CHR and Foothills Medical Centre) and concluded they were not liable.

At trial, the judge deducted the amount of the settlement from the damages that were to be paid by the two physicians. On appeal, the Court of Appeal found that based on the principle that plaintiffs are not entitled to double recovery, the Plaintiff did have to deduct his settlement amount from the damage award. The Alberta Court of Appeal confirmed the B.C. and Ontario decisions and determined that even if the settlement proceeds are deducted from the Plaintiff's ultimate award for damages, he will still recieve full compensation for his injuries as assessed by the trial judge.

However, the Court of Appeal did include one qualification. Only the net settlement proceeds, after an appropriate deduction for costs incurred in the claim against the settling defendants, should be set off against the damage award at trial.

In conclusion, although the Court recognized some unfairness in allowing the non-settling defendants to receive the benefit of the settlement amount, that unfairness was outweighed by the principle against double recovery.

This alert is a general overview of the subject matter and cannot be regarded as legal advice. Please contact Alexis Moulton or Dave Risling, or any other member of our Insurance Practice Group for further advice on this or any other Insurance Law matter.