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lundi 22 septembre 2014

“Without Prejudice”: Not an Absolute Protection of Settlement Discussions

By Ashley Kandestin
ZSA Recrutement Juridique

The Superior Court recently ruled that settlement privilege is not breached where allegations relating to settlement discussions are made not to demonstrate one party’s admissions or concessions on relevant issues, but rather to prove that party’s bad faith. In Ludmer c. Canada (Attorney General), 2014 QCCS 4352, Justice Hamilton was asked to address the validity of amendments to the plaintiff’s motion to institute proceedings relating to the defendants’ settlement offer. The defendants contested the amendments based on settlement privilege (the “without prejudice rule”) and proportionality.


Justice Hamilton refers to a recent Supreme Court of Canada decision, explaining that settlement privilege, as a rule of evidence, encourages frank discussions between parties to a litigation by cloaking their communications from the courtroom, where they could be used to one party’s detriment by influencing the trial judge. Reminding us that the right to amend under article 199 of the CCP is the rule rather than the exception and that authorized amendments do not bind the trial judge, Justice Hamilton boils the motion to amend down to one question:

[18]        The question is whether the proposed amendments are « useless » because they cannot be proven at trial without relying on inadmissible evidence relating to settlement discussions, or « contrary to the ends of justice » because the breach of the settlement privilege would have the effect of discouraging settlement discussions.
Justice Hamilton answers the question by referring to a string of cases holding that the privilege is not absolute and does not apply where settlement discussions are disclosed for the purpose of demonstrating a party’s bad faith or abuse of procedure. He states that:

[27]        … I will refuse authorization to amend only if it is clear that the proposed amendments involve a clear breach of the settlement privilege, in that they announce an intention to use the settlement discussions to prove a concession made by the CRA on an issue relevant at trial.  In case of doubt, I will authorize the amendments and the issue will be dealt with by the trial judge.
Not ruling on the existence or not of bad faith in the defendants’ settlement offers, and leaving that analysis to the trial judge, Justice Hamilton authorizes the plaintiff’s amendments, holding, under a liberal interpretation of article 199 CCP, that the plaintiff has the right to at least make the argument.

The full decision can be read here

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