Privilege, Settlement, and Common Sense

April 9, 2022

By Brian Babcock

Settling your disputes before going through the time, trouble, expense, and delay of a trial or other final hearing is a good thing. This is recognized both by court rules and ethical rules applying to lawyers. Both sets of rules encourage settlements.

Privilege, which is the technical legal term for the expectation of privacy in certain documents or communications,  is also an important value in society, as we have written about before.

“Settlement privilege” is a variety of privilege that has some overlap with solicitor client privilege and some overlap with litigation privilege (the privilege that makes most communications between opposing lawyers “without prejudice” or protects the privacy of draft documents and planning for trial). Normally communications about settlement are without prejudice and are not admissible in court.

So what happens when privilege and settlement values appear to collide?

Sorting out situations where values are in conflict is a large part of what appeal courts do. So we were interested to read an otherwise routine case that went to the Ontario Court of Appeal in which a key issue was whether or not a judge asked to enforce a settlement had made a mistake by considering correspondence about the settlement.

In the case of Idea Notion Development Inc. v. CTO Boost Inc., the documents in question were expressly stated to be “without prejudice”. The party opposing the enforcement of the settlement took the position that that made them inadmissible for the purposes of determining whether or not there was a settlement. However, in a 2014 Supreme Court of Canada case, the court clarified that “settlement privilege” does not apply and documents are admissible when necessary to prove “the existence or scope of the settlement”. Therefore, it was appropriate and permissible for the motion judge to take into account the documents discussing the terms of the alleged settlement to determine whether or not they actually constituted a complete deal.

You may think that this is just common sense, but a lot of people, including not just ordinary people like you, but also lawyers and even judges, sometimes wonder how much common sense matters in the courts. There appears to be a trend in favor of applying common sense, as we have written about before.

This case involved another demonstration of common sense. The Court of Appeal had to consider the issue that some of the documents were not properly filed on the motion. Because there was no prejudice to the responding party, which was not taken by surprise and was able to address all of the documents, the court found that any irregularity did not affect the validity of the judge’s decision. This is consistent with the underlying philosophy in the Rules of Civil Procedure that the primary goal of the rules is to achieve a just and fair result. Judges are given wide discretion to forgive irregularities where there is no prejudice. That is not an excuse to be sloppy but is common sense.

Although this decision is primarily a reminder of the rules established by the Supreme Court in 2014, it is a useful reminder because:

  • You need to know that all rules of evidence, including those regarding privilege, have exceptions
  • You need to be aware that communications that you or your lawyer make to the other side may be admitted in court in certain circumstances, even if they are labeled “without prejudice”
  • Simply labeling communications “without prejudice” is not magic – we used to deal with one insurance company that had those words preprinted on all of their correspondence
  • One of the exceptions to privilege is that “without prejudice” communications made in the course of settlement may be admitted in court if disclosure is necessary to prove the existence or scope of the settlement – this may actually work in your favor if you are the party wanting to enforce the settlement
  • It demonstrates both in the ruling on privilege and the ruling on the irregularities that courts increasingly will apply common sense to achieve a just in fair result
  • This means that taking unreasonable positions will seldom benefit you in the end and will undermine your credibility or your lawyer’s credibility with the judge and may cause more harm to your case then the tactic is worth

All rules of evidence are very technical. The rules surrounding claims of privilege are especially complex and difficult to understand. This is a significant disadvantage to being self-represented, and is also a reason to take care in selection of your lawyers.

The litigation team at Weilers Law have had significant specific experience in arguing issues of privilege before the courts. Our in-depth experience in this area may give you an advantage if privilege is going to be an important issue in your case. It also demonstrates the depth and range of expertise available at Weilers Law. We also encourage our clients to approach resolving disputes using common sense.

Common sense suggests that it may be our privilege to represent you.