Settlement discussions and privilege

Settlement discussions are a cornerstone of family law. These discussions are extremely important because the goal is to settle the case and finalize the matter. This of course finalizes the matter for the parties involved, but it also finalizes the litigation process and relieves the burden on the court system.

One obstacle is that the information discussed and disclosed in pursuit of a settlement might be highly prejudicial to one or both of the parties if no settlement were reached and it were heard in a court of law. This could theoretically hinder the possibility of settlement because individuals may avoid certain discussions out of fear of prejudicing themselves in the process. However, in practice, special rules apply to settlement discussions designed to facilitate and promulgate settlement rather than hinder it. Benson v. Kitt, 2018 ONSC 7552 reiterates that settlement discussions are protected by the common law rule of settlement privilege and therefore cannot be disclosed in a court of law:

[19] Settlement privilege is a common law rule of evidence that protects communications exchanged by parties as they try to settle a dispute. It enables parties to participate in settlement negotiations without fear that information they disclose will be used against them in litigation, thereby promoting honest and frank discussions and the possibility of achieving settlement. Settlement privilege applies even in the absence of contractual provisions providing for confidentiality.

The Supreme Court, in Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, remarks at paragraph 12, “Settlement privilege promotes settlements….” And further at paragraph 17, “As McEachern C.J.B.C. pointed out, the protection is for settlement negotiations, whether or not a settlement is reached. That means that successful negotiations are entitled to no less protection than ones that yield no settlement.”

Notwithstanding, the Supreme Court did note that settlement privilege is not absolute and that there are exceptions when the public interest weighs in favour of its disclosure:

[19] There are, inevitably, exceptions to the privilege. To come within those exceptions, a defendant must show that, on balance, “a competing public interest outweighs the public interest in encouraging settlement” (Dos Santos Estate v. Sun Life Assurance Co. of Canada, 2005 BCCA 4, 207 B.C.A.C. 54, at para. 20). These countervailing interests have been found to include allegations of misrepresentation, fraud or undue influence (Unilever plc v. Procter & Gamble Co., [2001] 1 All E.R. 783 (C.A. Civ. Div.), Underwood v. Cox (1912), 1912 CanLII 582 (ON SCDC), 26 O.L.R. 303 (Div. Ct.)), and preventing a plaintiff from being overcompensated.

A more recent Supreme Court case, Quebec Family Mediation Association v. Bouvier, 2021 SCC 54, outlines the exception related to settlement discussions and being allowed to prove a settlement actually exists:

[ 98 ] In Union Carbide, Wagner J., as he then was explained that the settlement exception serves the same public interest as the privilege itself, that is, the promotion of settlements: “Once the parties have agreed on a settlement, the general interest of promoting settlements requires that they be able to prove the terms of their agreement” (para. 35). It is in this sense, as Wagner J. observed, that disclosure to prove the terms of an agreement promotes settlements generally.

Settlement discussions are extremely important not only for the parties but for the court system as well. The common law promotes settlement discussions by making the information privileged and confidential. This allows parties to speak freely and candidly. However, settlement privilege is not absolute. For more blog posts click here.