Can A Lawyer Keep Their Prior Settlement Negotiations Secret In A Subsequent Related Claim?
Sneak peek – the answer is: Not always. In the case of Burwash v. Levy, 2021 ONSC 7196 the plaintiff’s lawyer was ordered to produce portions of their file that normally would be covered by settlement privilege and not subject to production.
Settlement privilege is a rule of evidence from the common law that protects communications exchanged by parties as they try to settle a dispute. Sometimes called the “without prejudice” rule, it enables parties to participate in settlement negotiations without fear that the information they disclose can be used against them in litigation. Put succinctly, this means that if I say “I’ll settle my case for $500,000”, this can’t be brought up later against me. This rule promotes honest and frank discussions between the parties, which can make it easier to reach a settlement: “in the absence of such protection, few parties would initiate settlement negotiations for fear that any concession they would be prepared to offer could be used to their detriment if no settlement agreement was forthcoming”.
(A.W. Bryant, S.N. Lederman and M.K. Fuerst, The Law of Evidence in Canada, (3rd ed. 2009) at para. 14.315), summarized by the Supreme Court of Canada in Union Carbide Canada Inc v. Bombardier Inc., 2014 SCC 35 ats para 31
The rule cited above is so well known that most lawyers would have a challenging time explaining to you the origins of the rule or a case that stands for the proposition. The protection is so readily known that it is considered “trite law”. It was interesting (and surprising) that this summer in Ottawa there was a case which brought the boundaries of settlement privilege squarely to the fore.
In Burwash there was a refusals/production motion in a medical malpractice claim. The requested production was related to settlement documentation from two previous actions, namely a motor vehicle tort action, and a statutory accident benefits action.
In the medical malpractice action, the plaintiff had given an undertaking to produce the requested settlement documentation but only after the trial and for the purpose of reconciling the judgment with whatever order was made at the end of the medical malpractice action. In contrast, the defending doctors were not content with this undertaking and instead brought the aforementioned motion to obtain production of the requested documents before the end of trial. “The defendant doctors say that disclosure of the settlement documents is required to prevent double recovery and that the justice of the case requires disclosure now” at para 2.
The defendant doctors also sought an order for production of portions of the plaintiff counsel’s brief dealing with assessment of damages. It is this portion of the requested order that I think many lawyers would find particularly disconcerting.
It was the plaintiff’s position that settlement privilege had not been waived over any of this information and that it ought not be produced in the manner requested by the defendant doctors.
There are exceptions to the principle of settlement privilege. Settlement privilege creates prima facie presumptions of inadmissibility, but it is not absolute. The Supreme Court in Sable Offshore Energy Inc v. Ameron Internationa Corpl, 2013 SCC 37 at para 12 said that there are exceptions to settlement privilege which are justified where the evidence of the settlement or negotiations is intended for use other than illustrating the weaknesses of the other party’s case. “If a party is not seeking to admit the settlement offer or negotiations as evidence of a concession, an exception to settlement privilege would do little to detract from the public interest and encouraging settlement”.
The Supreme Court went further in Sable at para 19 and said: “…. A defendant must show that, on balance, a competing public interest outweighs the public interest in encouraging settlement. These countervailing interests have been found to include allegations of misrepresentation, fraud, or undue influence, and preventing a plaintiff from being over compensated.”
It will not be surprising to note that the plaintiff and defendant doctors in the within medical malpractice action took diametrically opposed views as to whether these exceptions existed in this case.
The court in Burwash went on at paragraph 32 however to cite the law which says that “Double recovery, save for a few narrow exceptions, is not permitted..in this case, there are two public interests that must be weighed at the public interest in encouraging settlement. The first is a recognized public interest in preventing overcompensation. The second is the public interest in encouraging settlement in subsequent actions. While Ms. Burwash says that there is no risk of double recovery given her undertaking to produce the relevant settlement documents once liability is established, in my view, the defendant doctors are entitled to test…[various aspects of what the plaintiff’s prior settlements were applied to].”
Laudon v. Roberts, 2009 ONCA 383 at para 55
In the Burwash case, the defendant doctors also made an argument that judicial economy and efficiency required the production of the requested materials. They made arguments, which the court ultimately found compelling, that additional judicial resources would be required to determine issues that might be avoided altogether if production was ordered.
Ultimately, Ms. Burwash was ordered to produce: 1) the relevant documents that relate to the settlement of the tort action and the SABS action, including records that evidence the payment of the Lex Fund Loan (a litigation loan used for home modifications), 2) Ms. Burwash was also ordered to produce her pre-trial conference brief in the Statutory Accident Benefits schedules action., 3) if necessary, Ms. Burwash was ordered to re-attend on her examination for discovery to answer proper questions arising from the questions ordered to be answered and the documents ordered to be produced.
In summary, this case should give counsel pause when considering how best to navigate claims that incorporate multiple actions and multiple defendants in multiple settlement negotiations. This has always been and remains a tough tight rope to walk and the Burwash case has not made anything easier for plaintiff’s counsel.
About the Author
Warren WhiteKnight is a Lawyer and Partner at Bergeron Clifford LLP. He is based in the firm’s Kingston office but travels throughout Eastern Ontario each week as clients’ needs require. He holds a Certified Civil Litigation Specialist designation by Law Society of Ontario.
Warren is a Queen’s Law graduate where he achieved top 10% standing all three years, and received numerous course prizes and scholarships. He has been the Past President of the Frontenac Law Association.
Warren regularly represents his clients in court and tribunal proceedings and has an excellent track record of achieving results both in court and in out of court settlements.