Northwest Waste Solutions Inc. ("Northwest") commenced an action against Super Save Disposal Inc. ("Super Save") and personal defendants (former Northwest employees) in relation to allegations the personal defendants left Northwest for Super Save and disclosed confidential information to Super Save in breach of their employment agreements.
After commencing the action Northwest made an agreement with one of the personal defendants, Mr. Lamb. Mr. Lamb first left Northwest to join Super Save, and then left Super Save to join Mountain Spring Water Co. Ltd., a company controlled by Northwest. The agreement provided that Northwest would pay Mr. Lamb's legal expenses to defend the action commenced by Northwest against him (the "Legal Fees Agreement"). A subsequent agreement provided that Northwest would not enforce any judgment it obtained against him (the "Judgment Agreement").
The agreements were not immediately disclosed to the other parties. During the course of the litigation the Judgment Agreement was disclosed to the other parties, but not the Legal Fees Agreement.
Super Save applied to strike Northwest's claim and stay the proceedings on the basis of abuse of process and failure to immediately disclose the agreements.
At the trial level, the chambers judge stated the agreements "changed the landscape of the litigation" and ought to have been disclosed immediately. The issue was the appropriate remedy. The chambers judge found the decision to not disclose the agreements was based on counsel's honest belief there was no such obligation and, in those circumstances, counsel's mistake should not be visited upon the client unless a fair trial would be irredeemably prejudiced. Failure to disclose did not inevitably lead to dismissal of the claim. The chambers judge held no remedy was required.
With respect to counsel's duty to disclose, the Court affirmed the following statement from Bilfinger Berger (Canada) Inc. v. Greater Vancouver Water District, 2014 BCSC 2449:
 Since the court must never be misled about the position of a party in the adversarial process, I conclude that it is necessary to disclose immediately any agreement which affects the party's position in a way that is different than that revealed by the pleadings. An agreement between parties who are adverse on the pleadings, such as between a plaintiff and defendant, or a defendant and third party, which contains a full or partial settlement or release or reservation of rights, or a degree of cooperation not to be expected between adverse parties, should therefore be disclosed immediately.
With respect to remedy, the Court found that when the agreements were made the law on the duty to disclose in British Columbia was not clear. In terms of a comparison between jurisdictions, the Court noted there is a "long history of a duty to disclose" in Ontario that should be well-known to counsel in that province; however, the recent treatment of this issue in the British Columbia jurisprudence was not sufficient to put counsel on notice of a duty to disclose, failing which there may be a stay of proceedings (see, for example, dissenting reasons of Huddart J.A. in B.C. Children's Hospital v. Air Products Canada Ltd., 2003 BCCA 177). The Court, however, concluded the chambers judge erred granting no remedy. It ordered full indemnity costs to Super Save for efforts to obtain disclosure of the agreements and for the application in the court below.
Northwest Waste should be considered "notice" (in the words of the Court of Appeal) regarding counsel's duty to immediately disclose to other parties to litigation any agreement that affects the party's position in a way that is different than revealed by the pleadings, failing which the court may order a stay of proceedings.