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Mary Carter is Harsh Mistress
Published in the May 2009 issue of Litigation Notes - View Article
A plaintiff settled with one defendant and proceeded to trial against a second defendant. At trial, the jury awarded the plaintiff less than he had received from the first defendant. As a result, he was liable for the costs of the second defendant.
In this case the plaintiff, Laudon was a passenger on a boat operated by the defendant Sullivan, which collided with another boat operated by the defendant Roberts. The plaintiff sued Roberts and Sullivan to recover damages for the injuries that he sustained in the accident. Before trial, Roberts settled with the plaintiff and paid him a total of $438,000. They entered into a “Mary Carter” agreement, whereby the plaintiff agreed not to claim from Roberts any amount in excess of that sum, regardless of the result at trial. The agreement also contained terms relating to Roberts’ continued participation in the trial, but did not require the plaintiff to re-imburse Roberts if out of any damages awarded at trial.
The plaintiff should have perhaps quit while he was ahead. He could have discontinued his action against Sullivan and kept his $438,000. Instead, he proceeded to trial, where the jury awarded him total damages of about $312,000. He was found to have been contributorily negligent to the extent of 11%. Roberts was found 50% liable and Sullivan 39%. The trial Judge awarded him 39% of $312,000, or about $121,000.
However, Sullivan appealed the judgment and argued that because the plaintiff had already recovered more from Roberts than the jury had awarded him, his action against Sullivan should be dismissed with costs. The Court of Appeal agreed. Counsel for the plaintiff argued that where the plaintiff has entered into a transaction, given consideration for the benefit received and the transaction does not prejudice the position of the remaining defendant, then the remaining defendant should not be entitled to set off against the damages for which he would otherwise be liable, the sum received by the plaintiff.
The Court of Appeal disagreed, stating that it is a “…fundamental principle of tort law in this country that an injured plaintiff should be neither over nor under, but fully compensated by way of damages for injuries sustained by the negligence of others”. The Court quoted from the case of Dixon v. British Columbia, [1979] B.C.J. No. 304, which allowed that there are situations where a plaintiff “…may benefit from an independent insurance policy which he has maintained for himself, or [from] ex gratia payments from a third party such as an employer”, but that where “…the payments are directly related to the plaintiff’s claim against both defendants, i.e. for damages for the injuries suffered by their joint torts….he may not recover more than the quantum fixed by the Court at the time of trial”.
The Court went on to quote from Lord Denning in Bryanston Finance v. de Vries, [1975] 2 All E.R.:
In the present case, the question that arises is this: suppose that the plaintiff settles with one of the wrongdoers before judgment by accepting a sum in settlement; or suppose that by consent an order is made by which the plaintiff accepts an agreed sum from the one tortfeasor and discontinues against him, but goes on against the other.I believe this to be a new point. It should be solved in the same way as the payment into court was solved.If the plaintiff gets judgment against the remaining tortfeasor for a sum which is more than the sum already recovered (by the settlement or the consent order) he is entitled to enforce it for the excess over which he has already recovered.But, if he gets judgment for less than he has already recovered, then he recovers nothing against the remaining tortfeasor and should pay the costs.I do not think that it should depend on whether the sum was paid under a covenant not to sue or a release…That is an arid and technical distinction without any merits. It is a trap into which the unwary fall but which the clever avoid. It should be discarded now that we have statutory provision for contribution between joint wrongdoers. The right solution nowadays is for any sum paid by the one wrongdoer under the settlement to be taken into account when assessing damages against the other wrongdoer.If the plaintiff recovers more, he gets the extra. If he recovers less, he loses and has to pay the costs. And as between the joint wrongdoers themselves, there can be contribution according to what is just and equitable...”
Consequently, the plaintiff’s claim against Sullivan was dismissed and the plaintiff was ordered to pay Sullivan’s costs of trial.
Roberts sought to have the amount for which Sullivan had been found liable paid over to him by way of re-imbursement, or alternatively to have the matter returned for re-trial to allow the cross-claims to be tried properly. The Court refused this relief on the grounds that Roberts had not cross- appealed and was out of time to do so and because the trial had proceeded on the clear understanding that Roberts and Sullivan were not cross-claiming against each other.
Laudonv., 2009 ONCA 383 (CanLII)