Report on Contribution after Settlement Under the Negligence Act

Abstract

The Negligence Act implements a number of policy goals for British Columbia: it creates a partial defence of contributory negligence, provides rules on apportionment of fault between wrongdoers, and establishes rights to contribution and indemnity between wrongdoers. This report tackles a relatively narrow range of issues that arise from how the courts have interpreted that last policy goal in the context of multiparty litigation. When responsibility for an injured party’s monetary loss or damages rests with more than one wrongdoer it is often difficult to get all the parties to agree to a settlement of the claim. In these circumstances some of the parties may be willing to enter into what may be called a partial settlement — that is, a settlement that purports to settle only a part of the injured party’s total claim with some, but not all, of the wrongdoers.In British Columbia it can be challenging to conclude a partial settlement because of the way in which the Negligence Act’s rules on contribution and indemnity are applied. Case law makes it clear that the non-settling wrongdoers retain their rights to contribution and indemnity from the settling wrongdoers. This undercuts the finality typically expected of a settlement agreement and thereby dramatically reduces the incentives for a wrongdoer to enter into a partial settlement. Sophisticated parties have found ways to craft partial settlements that blunt the full force of these rules, but in the BCLI’s view a legislative amendment would provide a clearer and more certain resolution of the issues. Creating incentives to settle complex, multiparty litigation will provide benefits both for the specific parties and for British Columbians generally.This report discusses the development of British Columbia law on contribution after a partial settlement, canvasses the options for reform, and sets out the BCLI’s final recommendations for reform of the law. It includes draft legislation, which illustrates how these recommendations may be implemented.