Bioriginal Food & Science Corp. et al. v. Gerspacher et al., 2012 SKQB 469

• Judge: R.S. Smith, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: Wednesday November 14, 2012
• Jurisdiction: Saskatchewan
• Citations: 2012 SKQB 469;(2012), 410 Sask.R. 158 (QB)

Bioriginal Food v. Gerspacher (2012), 410 Sask.R. 158 (QB)

MLB headnote and full text

Temp. Cite: [2012] Sask.R. TBEd. DE.017

Bioriginal Food & Science Corp. (plaintiff/defendant by counterclaim) v. SasCoPack Inc. (plaintiff) and Steven Naccarato and Classic Foods and Produce Ltd. (defendants/plaintiffs by counterclaim) and Gene Gerspacher, Twenty Eleven Visions Corp. and Janice Craig (defendants) and Joe Vidal and Adam Perrin (defendants by counterclaim)

(2009 Q.B. No. 1665; 2012 SKQB 469)

Indexed As: Bioriginal Food & Science Corp. et al. v. Gerspacher et al.

Saskatchewan Court of Queen's Bench

Judicial Centre of Saskatoon

R.S. Smith, J.

November 14, 2012.

Summary:

The plaintiffs alleged that the defendants Naccarato and Gerspacher, while employed by the plaintiffs, engaged in a "secret commission conspiracy" with another employee (the defendant Craig) and the corporate defendant (Classic Foods). The defendants denied and defended the allegations. Naccarato filed a counterclaim. The plaintiffs and Gerspacher entered into a Pierrenger Settlement Agreement under which Gerspacher agreed to pay an amount in satisfaction of the claims against him, without admitting liability, and the plaintiffs undertook to delete him as a defendant and indemnify him against future contribution sought by the non-settling or remaining defendants. Gerspacher also agreed to produce relevant records and to participate at trial as a witness. The plaintiffs and Gerspacher applied for approval of the agreement (to the extent such approval was necessary) and to amend their statement of claim to remove Gerspacher as a defendant. The remaining defendants asserted that a copy of the agreement, including the consideration paid by Gerspacher, should be disclosed to them.

The Saskatchewan Court of Queen's Bench, after concluding that its approval was necessary, approved the settlement agreement and ordered that it be disclosed without the particulars of the actual consideration paid by Gerspacher. The court ordered that a copy agreement with the settlement amount redacted was to be filed with the court and sealed until the expiry of the time for an appeal had passed or, if an appeal was taken, until the appeal was determined. After the examinations for discovery, the remaining defendant could revisit the issue of the agreement's disclosure. The court approved the amendments to the statement of claim on the condition that they were not to issue until after the time to appeal the decision had passed or, if an appeal was taken, until the appeal was determined.

Practice - Topic 9851.1

Settlements - Mary Carter or Pierrenger agreements - The plaintiffs and one of the defendants entered into a Pierrenger Settlement Agreement under which the defendant agreed to pay an amount in satisfaction of the claims against him, without admitting liability, and the plaintiffs undertook to delete him as a defendant and indemnify him against future contribution sought by the non-settling or remaining defendants - The defendant also agreed to produce relevant records and to participate at trial as a witness - The plaintiffs and the defendant applied for approval of the agreement (to the extent such approval was necessary) - The Saskatchewan Court of Queen's Bench concluded that parties entering into such a settlement agreement had to not only disclose the fact of the agreement, but also seek court approval of the same - The court approved the agreement - See paragraphs 8 to 22.

Practice - Topic 9851.1

Settlements - Mary Carter or Pierrenger agreements - The plaintiffs alleged that the defendants Naccarato and Gerspacher, while employed by the plaintiffs, engaged in a "secret commission conspiracy" with another employee (the defendant Craig) and the corporate defendant (Classic Foods) - The plaintiffs and Gerspacher entered into a Pierrenger Settlement Agreement under which Gerspacher agreed to pay an amount in satisfaction of the claims against him, without admitting liability, and the plaintiffs undertook to delete him as a defendant and indemnify him against future contribution sought by the non-settling or remaining defendants - Gerspacher also agreed to produce relevant records and to participate at trial as a witness - The plaintiffs and Gerspacher applied for approval of the agreement - The remaining defendants asserted that a copy of the agreement, including the consideration paid by Gerspacher, should be disclosed to them - The Saskatchewan Court of Queen's Bench, after approving the agreement, observed that it was well settled that, prima facie, settlement negotiations and agreements were privileged - However, problematic debate revolved around exceptions that should be recognized - There had to be a judicial weighing of the competing principles of privilege and disclosure/relevance - The agreement here was relevant to the remaining defendants - Its existence substantially changed the litigation landscape and the relationship between the defendants - However, the question remained whether the consideration paid by Gerspacher was relevant and disclosable - Arguably the damages paid by each defendant could be individually calculated - The only portion of the claim that could not be placed into "neat defendant-specific silos" was the speculative claim for lost customers - That claim did not amount to a sufficiently compelling reason to override the public interest in protecting the settlement privilege at this stage - The defendants also asserted that without knowledge of the consideration, they had an imperfect understanding of the plaintiffs' financial considerations and were thus prejudiced - However, imperfect knowledge was virtually always the case in settlement negotiations - The focus of the court's analysis was balancing the competing policy concerns, not creating an ideal negotiating platform for each party - The court ordered the agreement to be disclosed without the particulars of the consideration paid by Gerspacher - See paragraphs 23 to 35.

Practice - Topic 9862

Settlements - Court approval - [See first Practice - Topic 9851.1].

Practice - Topic 9867

Settlements - Disclosure - [See second Practice - Topic 9851.1].

Cases Noticed:

Marble v. Saskatchewan et al., [2004] 7 W.W.R. 580; 236 Sask.R. 14; 2003 SKQB 282, refd to. [para. 8].

Buildings v. Brampton (City) et al., [2010] O.A.C. Uned. 727; 328 D.L.R.(4th) 488; 2010 ONCA 898, affd. [2011] N.R. Uned. 68; [2011] O.A.C. Uned. 585; [2011] 2 S.C.R. 560; 2011 SCC 33, refd to. [para. 10].

Sable Offshore Energy Inc. et al. v. Ameron International Corp. et al. (2011), 310 N.S.R.(2d) 382; 983 A.P.R. 382; 346 D.L.R.(4th) 68; 2011 NSCA 121, refd to. [para. 12].

Moore v. Bertuzzi et al., [2012] O.T.C. Uned. 3248; 110 O.R.(3) 611; 2012 ONSC 3248, refd to. [para. 23].

Gulka Enterprises Ltd. v. Bayer CropScience Inc., [2009] 9 W.W.R. 327; 328 Sask.R. 155; 2009 SKQB 101, leave to appeal denied (2009), 331 Sask.R. 280; 460 W.A.C. 280; 2009 SKCA 68, refd to. [para. 23].

Dos Santos Estate v. Sun Life Assurance Co. of Canada (2005), 207 B.C.A.C. 54; 341 W.A.C. 54; 249 D.L.R.(4th) 416; 2005 BCCA 4, refd to. [para. 23].

Noonan et al. v. Alpha-Vico et al., [2010] O.T.C. Uned. 2720; 99 C.P.C.(6th) 266; 2010 ONSC 2720, refd to. [para. 24].

Brown v. Cape Breton (Regional Municipality) (2011), 302 N.S.R.(2d) 84; 955 A.P.R. 84; 331 D.L.R.(4th) 307; 2011 NSCA 32, refd to. [para. 28].

Counsel:

Angela D. Giroux, for the plaintiffs, Bioriginal Food & Science Corp. and SasCoPack Inc.;

Naheed Bardai, for the defendants, Steven Naccarato and Twenty Eleven Visions Corp.;

Richard W. Elson, Q.C., for Classic Foods and Produce Ltd.;

Deidre L. Aldcorn, for Janice Craig;

Gary D. Young, Q.C., for Gene Gerspacher;

No one appearing for Joe Vidal and Adam Perrin.

This application was heard by R.S. Smith, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Saskatoon, who delivered the following judgment on November 14, 2012.