A Mary Carter Agreement limits the liability for some of the defendants in a multi-party personal injury suit.

There are many laws that have bearing on any one civil law case. However, a trial becomes increasingly complex when there are multiple defendants who may have various degrees of fault in a negligence suit and/or may reach separate agreements with the plaintiff.

One of the legal maneuvers than can influence a personal injury suit with respect to limiting liability and damages for one or more of the defendants is a Mary Carter Agreement. A Mary Carter Agreement (MCA) is a method of settling a suit involving more than one defendant.

In this agreement, one or more of a larger group of defendants agree to pay a certain sum of money to the plaintiff in exchange for no further liability (i.e. their damages are capped at the amount they already paid the plaintiff). The defendants who are named in the MCA often still play a role in the trial and sometimes will receive a portion of money that is paid to the plaintiff by the remaining (non settling) defendant(s).

Ontario law experts conclude that there are two key reasons for utilizing the MCA: on the plaintiff's part, it helps ensure against a possible unfavorable outcome for the civil trial; for the settling defendant, it ultimately helps reduce whatever costs they may incur. However, while the MCA has some benefits for both the plaintiff and settling defendant, it is a somewhat controversial legal move that often has negative results for the non-settling defendant or defendants.

This is a circumstance that Shannon Pitt realized, as one of the defendants in a personal injury suit.

Case example

Plaintiff Rumiana Cormack was injured while swimming near a harbour entrance, by a motor boat driven and owned by defendant Benjamin Chalmers.

At the time of the accident, Ms. Cormack had been staying at the home of Ms. Pitt and Erik Rubadeau. In the aftermath of her accident, she proceeded to sue the three parties, Ms. Pitt, Mr. Rubadeau and Mr. Chalmers, for negligence.

Under the personal injury claim, all three were considered jointly liable. However, on the eve of the civil trial, Cormack v Chalmers, 2015, Ms. Pitt sought a summary judgement for an order declaring that Ms. Cormack's claims were subject only to several liability and not joint liability.

Ms. Pitt's reasoning for this was that a pre-trial agreement, the Mary Carter Agreement, had been reached between Ms. Cormack and Mr. Chalmers. Ms. Pitt's defense counsel argued that due to the MCA, the relationship between the defendants had changed and consequently, Ms. Pitt was no longer jointly liable with Mr. Chalmers.

The plaintiff's counsel disagreed and argued that the joint liability was still valid.

Prior the MCA, Mr. Chalmers sought a declaratory judgement in Federal Court that his liability was limited at a maximum amount, due to the Marine Liability Act. Ms. Pitt consented to Mr. Chalmers' claims and admitted that he was entitled to the relief he was seeking. A consent judgement of Mr. Chalmers' request was granted by the Federal Court, to which Ms. Pitt also agreed.

It was at this time that Mr. Chalmers entered into a settlement agreement MCA) with Ms. Cormack, to which Ms. Pitt was not included. The agreement essentially stated that Mr. Chalmers' liability would be capped in all respects; he would pay only a fixed amount to Ms. Cormack and he would be 'save harmless' in the event that he was ordered to pay more than his capped amount. Mr. Chalmers also agreed not to contest the amount of the damages sought by Ms. Cormack.

Ms. Pitt was particularly bothered by the 'save harmless' provision to hold Mr. Chalmers harmless in any further crossclaim or in any other claims arising from the circumstances of the accident. She argued that the provision changed the relationship between all the parties, to the extent that it nullified their joint liability. 

Justice Timothy Ray disagreed.

Justice Ray challenged the two legal references Ms. Pitt's counsel put forth - Moore v. Bertuzzi and Stephen Moore's Limitations and Joint and Several Liability - noting that they dealt with the issue of privilege and disclosure of partial settlement agreements respectively, but not the legal effects on the rights of the other parties involved in the case after a settlement, which is what this legal issue was about.

Justice Ray argued that this particular issue was similar to situations when one defendant enjoys immunity at law or limited liability at statute or having no assets to pay. In any of these situations, the other defendants are not protected from joint liability.

Justice Ray added that he knows of no legal authority which supports the idea that the relationship between the parties changes when the settling party remains a defendant after the MCA, to the extent that the non-settling defendant is no longer jointly liable. As a result, Justice Ray ruled to dismiss the defendants' motion.

There are often varying degrees of accepted fault and liability in cases with multiple defendants. The Mary Carter Agreement is one approach that sometimes aids in resolving an injury suit when one or more defendants has different liability.

For the non settling defendants, like Ms. Pitt, who were excluded from the MCA agreement, such agreements may appear unfair and difficult to accept, particularly since, under the law, all parties (settling and un-settling) continue to have joint liability.

The experienced team of personal injury lawyers at Gluckstein Lawyers have successfully settled many personal injury suits for our clients. If you or someone you love was injured in an accident, call us to arrange a consultation.

Using the facts of your accident and your injuries, we can give you frank assessment of the strength of your potential claim for damages. Let us help you get the benefits you are owed.