Canada: Revisiting Settlement Privilege In Canadian Law: Three Case Studies

Last Updated: February 26 2014
Article by Justin R. Seitz

The Supreme Court of Canada's (SCC) latest word on settlement privilege was delivered in the June 2013 decision of Sable Offshore Energy Inc. v Ameron International Corp., 2013 SCC 37 (Sable). The SCC upheld settlement privilege and denied the disclosure of the plaintiff's settlement agreement with one of the numerous defendants, finding that the remaining defendants' reasons for disclosure did not outweigh the public interest in promoting settlement.

In a blog post published in August 2013, I discussed this decision and the merits of maintaining settlement privilege, mainly to promote access to justice by encouraging early settlement. In this post I revisit Sable and see how the Canadian courts have subsequently treated the decision as it applies to settlement privilege. All three cases address settlement privilege in different contexts – a personal injury matter, an estate matter, and an arbitration matter – and each suggest settlement privilege is alive and well in Canadian jurisprudence.

Fillmore v Estate of Earl Ivan Trenholm, 2013 NBQB 400

This case dealt with the administration of the estate of Earl Ivan Trenholm who died intestate. One of the deceased's daughters brought an application to have the Letters of Administration revoked on the grounds that the current Administrators, the deceased's wife and other daughter, failed to fulfill their responsibilities as Administrators by misleading the court in their application for appointment.

At the initial hearing of the matter objections were raised with respect to numerous paragraphs in affidavits that were filed which contained references to "without prejudice" communications and attempts to settle the matter. The Court went through the affidavits with Counsel for the parties and portions of the affidavits were struck. Briefs were to be submitted and oral submissions were to be made in court regarding the admissibility of the paragraphs in the affidavits relating to settlement. It was the Applicant's position that since administrators fall into the category of fiduciary who hold the estate property in trust for the beneficiaries, of which she was one, they are held to a high standard of care and their actions are reviewable by the beneficiaries; therefore settlement privilege is precluded.

The Court relied on the numerous authorities supplied by the parties, including Sable. As was acknowledged in Sable there are exceptions to settlement privilege (at para. 19). The Applicant referred to Lederman, J.'s comment in additional reasons in Ballard Estate Attorney General of Ontario et al. v Stavro et al. (1994) O.R. (3d) 350, which stated that, "[n]o privilege attaches to communications between solicitor and client as against person having a joint interest with the client in the subject matter of the communication". The Court acknowledged that this kind of 'all or nothing' approach was altered by authorities such as Haydu v Nagy 2012 BCSC 1870, which is in line with Sable, and stands for the position that there can be a selective waiver of privilege (at para. 30).

The Court concluded that "settlement negotiations fall into the category of privilege which must be protected, while any other correspondence which relates to how the administrators are managing the estate do not fall into the privilege category" (at para. 19). This is in line with the Sable decision.

Hermitage-Kilkenny v Morris, 2013 NBQB 407

As with the Fillmore case, at issue was whether an exception to settlement privilege existed in the circumstances. Ms. Hermitage-Kilkenny (the Plaintiff) and the Defendants were in a motor vehicle accident and she sued for damages. Prior to the accident the Plaintiff was also involved in two other separate motor vehicle accidents in which Consent Orders for Discontinuance were filed; both accidents were settled by global sums being paid with no apportionments amongst the various heads of damages. The Defendant was seeking disclosure of the global sum settlements and the Plaintiff was claiming settlement privilege to deny disclosure.

The Defendant argued that the settlement amounts were relevant to the present action and should be disclosed to prevent double-recovery (at para. 7). After reviewing the relevant case law, particularly Sable, the Court acknowledged that that there are exceptions to settlement privilege but that the issue before the Court came down to relevancy (at para. 12). At paragraph 12 the Court quoted The Law of Evidence in Canada, Sopinka, Lederman and Bryant, 3rd ed., which states that "[...] it must be established that disclosure of the communication is necessary, either to achieve that agreement of the parties to the settlement or to address a compelling or overriding interest of justice".

The Court concluded that "settlements in personal injury cases are not relevant enough to warrant an exception to settlement privilege" (at para. 13).

Thomson v University of Alberta, 2013 ABQB 410

At issue in this case was whether a letter written by the Chair of the Department of Medicine in a grievance process initiated by the Association of Academic Staff University of Alberta was producible. The Master found that the letter was privileged and therefore not producible because it was part of the grievance process, which is in effect, a settlement negotiation process. Furthermore, the Master found that there had been no waiver of the privilege and no exceptional circumstances applied to lift the privilege. The Plaintiff appealed.

Essentially the Court held that the Master applied the rule of settlement privilege too widely (at para. 5). Both parties agreed that the correct test which sets out when settlement privilege attaches to any form of communication was given in Costello v City of Calgary (1997) 53 Alta. L.R. (3d) 15, 2009 A.R. 1 (C.A.); The three conditions that must be complied with are:

  1. there is a litigious dispute;
  2. the communication was made with the intention that it would not be disclosed to the Court; and
  3. whether the purpose of the communication is to attempt a settlement (at para. 8).

It was the third test which was at issue. With reference to precedent the Court stated that the correspondence must be reviewed and determine whether it invites compromise, outlines approaches towards settlement, recognizes weaknesses, or makes admissions (at para.11). To put another way, as was stated in Bellatrix Exploration Ltd. v Penn West Petroleum Ltd. 2013 ABCA 10 at para. 2, there must be "at least a hint of potential compromise or negotiation" in the correspondence (at para.11). The Court mentioned and supported the Sable decision in that the negotiated amount in that case, to which privilege attached, was found to be a key component of the "content of a successful negotiation" (at para. 11).

The Court found that the correspondence "should not be cloaked with privilege" as there was no hint of potential compromise; it was basically an unconditional assertion of rights (at para. 15).

Canadian Courts Will Continue to Favour Settlement Privilege in Negotiations

As with any class privilege there are exceptions as the above cases have noted. When it comes to determining whether an exception is warranted each case will have to be examined on its facts. Given the increasing cost of legal fees and the corresponding effect of limiting access to justice for those who cannot afford lawyers, I suspect that the Canadian courts will continue to promote and protect settlement privilege. This is indeed an welcomed trend.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions