Friday, June 21, 2013

Settlement privilege applies to the quantum of settlement

Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, released today, holds the quantum of a settlement is subject to settlement privilege.  The case also repeats the established law that "without prejudice" are not magic words and settlement privilege attaches to discussions intended towards settlement and that failed discussions are also subject to privilege:


[14]                          Rush & Tompkins confirmed that settlement privilege extends beyond documents and communications expressly designated to be "without prejudice".  In that case, a contractor settled its action against one defendant, the Greater London Council (the GLC), while maintaining it against the other defendant, the Carey contractors.  The House of Lords considered whether communications made in the process of negotiating the settlement with the GLC should be admissible in the ongoing litigation with the Carey contractors.  Lord Griffiths reached two conclusions of significance for this case.  First, although the privilege is often referred to as the rule about "without prejudice" communications, those precise words are not required to invoke the privilege.  What matters instead is the intent of the parties to settle the action (p. 739).  Any negotiations undertaken with this purpose are inadmissible.


[15]                          Lord Griffiths' second relevant conclusion was that although most cases considering the "without prejudice" rule have dealt with the admissibility of communications once negotiations have failed, the rationale of promoting settlement is no less applicable if an agreement is actually reached.  Lord Griffiths explained that a plaintiff in Rush & Tompkins' situation would be discouraged from settling with one defendant if any admissions it made during the course of its negotiations were admissible in its claim against the other:


In such circumstances it would, I think, place a serious fetter on negotiations . . . if they knew that everything that passed between them would ultimately have to be revealed to the one obdurate litigant. [p. 744]



[18]                          Since the negotiated amount is a key component of the "content of successful negotiations", reflecting the admissions, offers, and compromises made in the course of negotiations, it too is protected by the privilege.  I am aware that some earlier jurisprudence did not extend the privilege to the concluded agreement (see Amoco Canada Petroleum Co. v. Propak Systems Ltd., 2001 ABCA 110, 281 A.R. 185, at para. 40, citing Hudson Bay Mining and Smelting Co. v. Wright (1997), 120 Man. R. (2d) 214 (Q.B.)), but in my respectful view, it is better to adopt an approach that more robustly promotes settlement by including its content.

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