Mahamad v. Matthews, 2011 ABQB 187

Court of Queen ’ s Bench of Alberta Citation: Mahamad v. Matthews, 2011 ABQB 187 Date: 20110321 Docket: 0103 11313 Registry: Edmonton Between: Abdulahi Mahamad and Susan Kathy Kolbowicz Plaintiffs - and - Stephen Matthews, Robert Pagee, Keith Smith, F. Metselaar, Brian Stadel (collectively referred to as the “ Police ” ), Seinab Addow, otherwise known as Rukiya Malin Ali, Asha Mahamad, and Robert Wasylychen, Colleen M. Connolly Defendants _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice J.B. Veit _______________________________________________________

Summary [ 1 ] The police defendants in this action ask the court to order the plaintiff Abdulahi Mahamad to disclose to them the settlement agreement he has reached with the defendant Colleen Connolly. The applicants allege that the agreement is relevant and material because they have a right to ensure that the plaintiff is not over-compensated. They also argue that an executed settlement agreement is no longer privileged because it is no longer communication exchanged in furtherance of a settlement. [ 2 ] The application is denied.

[3] The police defendants correctly assert that Mr. Mahamad should not be over-compensated. However, disclosure to them ofthe settlement agreement after the court has assessed Mr. Mahamad’s damages will avert any potential problem in that area. Thedefendants have not established that disclosure of the settlement agreement will significantly help determine one or more issues in thepleadings. [4] Moreover, although I endorse the result achieved in Sable Offshore Energy Inc., I would achieve the same result bycharacterizing the information in the settlement as not material to the non-settling defendants.

With respect to those who have a differentview, I have concluded that settlement agreements are not privileged. Cases and authority cited [5] By Applicant Police: Bedard v. Amin, 2010 ABCA 3; Laudon v. Roberts, 2009 ONCA 383; Ashcroft v. Dhaliwal, 2008BCCA 352; Noonan v. Alpha-Vico, 2010 ONSC 2807; Western Canadian Place Ltd. v. Con-Force Products Ltd., 1998 ABQB 1051, [1998] A.J. No. 1295, 233 A.R. 180. [6] By Mr. Mahamad: British Columbia Children’s Hospital v Air Products Canada Ltd. 2003 BCCA 177 , [2003]B.C.J.

No. 591; Milicevic v Jakubec 2005 ABQB 654 [7] By the court: Sable Offshore Energy Inc. v Ameron International Corp. 2010 NSSC 473, [2010] N.S.J. No. 713; Begg v.East Hants (Municipality) et al. (1986), (NS CA), 75 N.S.R. (2d) 431 (C.A.); Globe and Mail v Canada (AttorneyGeneral) 2010 SCC 41, [2010] S.C.J. No. 41, at paras. 76 and 80 1. Background [8] Mr. Mahamad’s statement of claim alleges that the defendants caused him general damages of $250,000.00, and that thedefendant Colleen Connolly caused him general damages in the amount of $50,000.00. Broadly speaking, Mr.

Mahamad claims that thepolice acted negligently and oppressively against him by failing to properly investigate claims and allegations made against him and byacting recklessly before properly assessing information they received with the result that Mr. Mahamad was charged and prosecutedimproperly and suffered injury to his reputation. Some of the information the police received was from the defendant Connolly. Thepolice defendants have been advised that, prior to April 6, 2010, Mr. Mahamad entered into an undisclosed settlement agreement withMs. Connolly.

Since learning of that agreement, the police have repeatedly requested disclosure of the settlement agreement, always tono avail. [9] There may well be a confidentiality term in the settlement agreement. [10] A trial has been set for two weeks in October 2011. 2. Is the settlement agreement relevant and material to the remaining defendants? [11] For the purpose of this application, I am willing to assume that the settlement agreement is relevant.

However, I am of theview that it is not material. [12] Rule 5.2(1) states that a record is relevant and material only if the record could reasonably be expected to significantly helpdetermine one or more of the issues raised in the pleadings, or to ascertain evidence that could reasonably be expected to significantlyhelp determine one or more of the issues raised in the pleadings. This rule is much narrower than its predecessor. Not only is tertiary

relevance excluded, but, more importantly here, the materiality or weight of the evidence must be addressed with a view to determining whether the record will significantly help to determine one of the issues raised in the pleadings. [ 13 ] The settlement between the plaintiff and the defendant Connolly is clearly relevant to the issue of the final calculation of damages that the police might have to pay to the plaintiff: the principle preventing double recovery or over-recovery applies here as it applies in every case Bedard , Laudon , Ashcroft , Noonan .

However, the weight of the case law in Canada establishes that disclosure of a settlement is only necessary for the purpose of preventing over-recovery after the plaintiff’s damages have been determined. Therefore, the police defendants’ request for the settlement agreement at this time is premature. [ 14 ] Is there any other way in which disclosure of the settlement agreement could significantly help to determine one of the issues raised raised in the pleadings? [ 15 ] The very nature of settlement agreements precludes them from being material for any purpose other than avoiding double recovery.

Parties reach settlements for any number of reasons, many of which can be unconnected from legal bases. For example, a party may agree to settle an action because they do not wish to have their dispute aired in public; a settlement reached on that basis cannot possibly significantly help to determine one or more of the issues raised in the pleadings. A party may agree to settle an action to avoid non-recoverable costs; such a settlement cannot possibly significantly help to determine one or more of the issues raised in the pleadings. Many more examples could be given of reasons why settlements are reached.

Although I have indicated below that I disagree with the British Columbia Court of Appeal’s view of the privilege which attaches to settlement agreements as opposed to settlement negotiations, I agree with their analogy between the relevance of settlement agreements and the relevance of statements by co- conspirators as assessed by our own Court of Appeal: “I doubt that any admissions of the settling defendants could have any relevance in the continuing litigation”: B.C. Children’s Hospital , at para. 37.

As I said earlier, I am even willing to concede some minimal relevance, but that is not sufficient under Alberta’s discovery rules.. [ 16 ] In coming to the conclusion that the settlement agreement is not material, I note, as well, that the defendants are aware that, at least on some level, the defendant Connolly is adverse in interest to them because she has settled with the plaintiff.

In other words, I am of the view that the existence of a settlement agreement between the plaintiff Mahamad and the defendant Connolly is relevant and material to the police defendants, but I am of the view that the content of that agreement is not material. [ 17 ] Finally, I note that these proceedings have had a very long history and that we are almost literally on the eve of trial. In other words, the defendants have had the opportunity of fulsome information concerning Ms. Connolly and Mr.

Mahamad. [ 18 ] The applicants must satisfy the court that the settlement agreement here would significantly help determine one or more issues in the lawsuit; they are unable to meet that burden. 3. Is the settlement agreement privileged? [ 19 ] The settlement agreement between the plaintiff Mahamad and the defendant Connolly is not privileged. [ 20 ] In coming to that conclusion, although aware of the conflicting authority at the appeal level in Canada, see, for example, B.C. Children’s Hospital and Begg , I adopt the analysis made by McMahon J. in Western Canadian Place Ltd.

In my view, the latter decision more accurately tracks the basis for the privilege. Moreover, the latter decision relates solely to a finalized agreement reached after settlement negotiations, which is the situation here. I note that some of the English authority referred to by the British Court of Appeal dealt with a request for disclosure of “everything” that passed between the plaintiff and the settling defendant. Other cases refer to a request for correspondence passing between the plaintiff and a settling defendant. I agree that all such communications during negotiation are privileged.

However, in my view, once an agreement has been reached, the agreement itself is no longer privileged. Indeed, in my view the recent Supreme Court of Canada discussion of the privilege relating to settlement negotiations emphasizes that the privilege is accorded so that admissions or positions taken during negotiations should not be raised against the negotiating party if the matter does not settle and the dispute is heard by a court.

The obverse is also true: once a settlement has been reached, the settlement is not privileged because it is no longer necessary to protect the party who negotiated in good faith: Globe and Mail . 76 It is important to pause and reiterate here the importance placed, by both the judiciary and the legislature, on confidentiality at the

pre-trial stage, whether the proceedings are examinations for discovery, mediation or settlement negotiations. It is also important to note that the rationale animating the confidentiality undertaking in all of these contexts is the same. . . . 80 Even in the absence of a legislated rule of procedure, the common law has long recognized that, in order to encourage parties to resolve their disputes through settlement negotiations, those negotiations must remain confidential. Indeed, the privilege dates back to at least the 1790s when, in Waldridge v.

Kennison (1794), 1 Esp. 143 , 170 E.R. 306 , Lord Kenyon C.J. observed: ... any admission or confession made by the party respecting the subject matter of the action, obtained while a treaty was depending, under faith of it, and into which the party might have been led, by the confidence of a compromise taking place, could not be admitted to be given in evidence to his prejudice ... . This approach has translated into a rule of evidence, whereby the contents and substance of settlement negotiations are, should a dispute ultimately proceed to trial, inadmissible (Histed v.

Law Society of Manitoba, 2005 MBCA 106 , 195 Man. R. (2d) 224 , at para. 44 ; Canadian Broadcasting Corp. v. Paul, 2001 FCA 93 , 198 D.L.R. (4th) 633 ). In Quebec, the Court of Appeal in Gesca held recently that settlement negotiations held outside the framework provided by the C.C.P. -- in other words those not presided over by a judicial mediator -- similarly benefit from the protection of confidentiality (para. 47). [ 21 ] Finally, I note that in coming to the conclusion that the settlement agreement is not privileged, I assume that it contains the strongest term on confidentiality.

As Upham emphasizes, although confidentiality and privilege are related concepts, they are not the same: Confidentiality by itself does not equate privilege. Lord Denning put it this way in Riddick v. Thames Board Mills Ltd., [1977] 3 All E.R. 677 at p. 687 : "Discovery of documents is a most valuable aid in the doing of justice. The court orders the parties to a suit, both of them, to disclose on oath all documents in their possession or power relating to the matters in issue in the action. Many litigants feel that this is unfair.

I have often known a party, faced with such an order, saying to his solicitor: "Need I disclose this document to the other side? It will damage our case greatly if they get to know of it.' The solicitor's answer is, and must be: "Yes, you must disclose it, however much it damages your case.' Again I have known a party to say to his solicitor: "But these are my own confidential papers, my own personal diary, our own inter-departmental memoranda.

Must I disclose them?' The answer of the solicitor again is: Yes, you must disclose them.' Confidential information has no privilege from disclosure: see Alfred Crompton Amusement Machines v. Customs & Excise Comrs (No.2) [ [1973] 2 All E.R. 1169 at 1180, 1184, [1974] A.C. 405 at 429, 433]. The court insists on your producing them so as to do justice in the case. "The reason for compelling discovery of documents in this way lies in the public interest in discovering the truth so that justice may be done between the parties.

That public interest is to be put into the scales against the public interest in preserving privacy and protecting confidential information. The balance comes down in the ordinary way in favour of the public interest in discovering the truth, i.e. in making full disclosure...." With respect to those who are of a different view, it appears to me that a confidentiality term in a settlement agreement does not automatically create privilege: 4. Conclusion [ 22 ] For the reasons set out above, the defendants’ application is denied. 5.

Costs [ 23 ] If the parties are not agreed on costs, I may be spoken to within 30 days of the release of this decision.

Heard on the 8 th day of March, 2011. Dated at the City of Edmonton, Alberta this 18 th day of March, 2011. J.B. Veit J.C.Q.B.A. Appearances: Cherisse Killick-Dzenick, Reynolds Mirth Richards & Farmer LLP for the Applicants, Stephen Matthews, Robert Pagee, Keith Smith, F. Metselaar, Brian Stadel (the “Police”) Barry J. Massing, Barrister and Solicitor for the Respondents, Abdulahi Mahamad and Susan Kathy Kolbowicz