Brown v. Cape Breton (Regional Municipality), 2011 NSCA 32

NOVA SCOTIA COURT OF APPEAL Citation: Brown v. Cape Breton (Regional Municipality), 2011 NSCA 32 Date: 20110401 Docket: CA 334499 Registry: Halifax Between: Sheri Lyn Brown Appellant v. Cape Breton Regional Municipality, a body Corporate Respondent Judge: The Honourable Justice Peter M. S. Bryson Appeal Heard: February 8, 2011 Subject: Practice. Discovery of Documents. Relevancy. Settlement Privilege. Exceptions to Privilege.

Summary: Appellant injured her knee in two separate accidents. She sued the respondent for the first injury and a third party forthe second. She settled the second claim. The respondent Municipality moved for disclosure of settlement documents, including thesettlement amount. Chambers judge ordered disclosure. Issues:

(1) Was the settlement information relevant and therefore disclosable within the meaning of new Civil ProcedureRules 15.02 and 14.01?

(2) If the settlement information was relevant, was it protected by privilege?

(3) If privileged, was there an applicable exception requiring disclosure? Result: New Rule 14.01 narrowed the range of disclosable documents from those having a “semblance of relevance” torelevancy. In this case, the settlement information could only be relevant if the injuries to the appellant’s knee were “indivisible” withinthe meaning of Athey v. Leonati, (SCC), [1996] 3 S.C.R. 458 and E.D.G. v. Hammer, 2003 SCC 52. The medical

evidence presently before the court is insufficient to be able to make a determination of indivisibility. Accordingly, there is no current basis to conclude that the settlement information is relevant. Moreover, it is protected from disclosure by the doctrine of settlement privilege. There are exceptions to settlement privilege which would warrant disclosure. Where privileged and relevant information is necessary to give effect to another compelling public policy interest, disclosure may be ordered. One such interest is avoidance of over-compensation or “double recovery”.

In this case, that would depend on a trial judge’s determination of indivisibility of injury and thus relevancy. In those circumstances, the privileged settlement communications may be disclosed to avoid over-compensation for the indivisible injury. These are matters for the trial judge. This information sheet does not form part of the court’s judgment. Quotes must be from the judgment, not this cover sheet. The full court judgment consists of 30 pages. NOVA SCOTIA COURT OF APPEAL Citation: Brown v.

Cape Breton (Regional Municipality), 2011 NSCA 32 Date: 20110401 Docket: CA 334499 Registry: Halifax Between: Sheri Lyn Brown Appellant v. Cape Breton Regional Municipality, a body Corporate

Respondent Judges: Saunders, Beveridge and Bryson, JJ.A. Appeal Heard: February 8, 2011, in Halifax, Nova Scotia Held: Leave to appeal granted. Appeal allowed with costs of $1,000 including disbursements to the appellant, per reasons for judgment of Bryson, J.A., Saunders and Beveridge, JJ.A. concurring. Counsel: Michael Dull and Scott McGirr (Articled Clerk), for the appellant Joseph R.

Wall, for the respondent Reasons for judgment : Introduction: [ 1 ] Sheri Lyn Brown alleges that on August 11, 2002 she sustained a serious and permanent knee injury when she fell from bleachers at a ball field owned by Cape Breton Regional Municipality (“Municipality”). She says that on June 6, 2004, she suffered further injuries to the same knee when she was struck by a car while riding her bicycle. Ms. Brown commenced actions for each event but settled her second claim following discoveries. The Municipality sought disclosure of the settlement agreement and related correspondence. Ms.

Brown refused and the Municipality successfully brought a motion for disclosure before the Honourable Justice Simon J. MacDonald. Ms. Brown now seeks leave to appeal, and if granted, appeals Justice MacDonald’s decision (unreported). [ 2 ] Justice MacDonald’s order was far reaching.

Those parts relating to disclosure of settlement related materials provided as follows: ...And Upon it appearing that the settlement documents and related settlement information regarding the settlement of the Plaintiff’s personal injury claim arising out of a 2004 motor vehicle accident involving an Edwin D’Cuhna are relevant and necessary to this claim; On the motion of the Defendant, Cape Breton Regional Municipality, the following is ordered: 1. . . . 2.

The Plaintiff, Sheri Lynn[sic] Brown, shall immediately produce all documents and information relating to the settlement of the Plaintiff’s claim for injuries sustained in a motor vehicle accident in 2004 involving an Edwin D’Cuhna, including the global amount of the settlement. Standard of Review: [ 3 ] Justice MacDonald’s order is both interlocutory and discretionary. An appeal is only available if the Chambers judge applied

[ 3 ] Justice MacDonald’s order is both interlocutory and discretionary. An appeal is only available if the Chambers judge applied wrong principles of law or has made clearly erroneous findings of fact, or if failure to intervene would give rise to a patent injustice: Nova Scotia (Attorney General) v. Smith , 2004 NSCA 106 at para. 18 and more recently A.B. v. Bragg Communications Inc. , 2010 NSCA 70 at para. 33 . Issues: [ 4 ] Ms. Brown’s Notice of Appeal raises three issues:

(1) Did the Learned Chambers Judge err in ordering the disclosure of the discussions which led to the global amount of settlement funds received by the Appellant in another action and not finding these discussions privileged?

(2) Did the Learned Chambers Judge err in holding that the amount of global settlement funds received by the Appellant for another incident, in which liability was contested, is relevant to the circumstances of this case; and

(3) Did the Learned Chambers Judge err in holding that the disclosure of a global amount of settlement funds received by the Appellant for another incident, in which liability was contested, is necessary in the circumstances of this case? [ 5 ] But Ms. Brown’s argument really is this: the settlement information (both the global amount and pre-settlement communications) is not relevant and is privileged. No exception to privilege applies in this case. Accordingly, the issues should be restated as follows: Did the Chambers judge err in: (

a) finding that the settlement information was relevant? (

b) failing to address whether the settlement information was privileged? (

c) failing to address whether there was an exception to the privilege rule requiring disclosure here? [ 6 ] The Chambers judge only addressed the first issue. What he said was this: [39] At this stage of the proceedings, I conclude whether you use the 1972 Rules “semblance of relevancy” or the 2009 Rules test of “relevancy” the information as to compensation and the discussions surrounding it should be disclosed. This information is all very relevant.

It could be very useful in assisting the defendant and possibly the trial judge to ensure if liable, the defendant pays a fair and proper amount of damages for the injuries Ms. Brown received as a result of her fall at the ball field. It would seem to me to be only fair and just that the plaintiff not possibly be over compensated for further injuries to the same area of her body which were sustained in a subsequent accident. [40] The parties are currently at the discovery stage and such information including supporting documentation is both relevant and necessary.

The supplying of this information could also lead to possibly more meaningful settlement negotiations. . . .

[42] I also adopt the reasoning of A.C.J. Smith in Glegg v. Smith and Nephew inc.[sic] (supra) that in light of my conclusion above itis unnecessary for me to answer whether the information sought is prima facie privileged. [7] It is clear that the Chambers judge confined his analysis to relevancy. But with respect, he did not identify or apply that testappropriately to the evidence before him. Necessity need not be considered in the context of relevancy. It may apply when consideringexceptions to a claim of privilege.

Moreover, having decided that the requested information was relevant the Chambers judge shouldhave considered whether it was protected from disclosure by privilege.

ISSUE 1 - Was the settlement information relevant? [8] The classic description of what informs a party’s obligation of disclosure comes from the English Court of Appeal in TheCompagnie Financiere et Commerciale du Pacifique v. the Peruvian Guano Company (1882), 11 Q.B.D. 55, where Lord Justice Brettsaid (p. 63): ...It seems to me that every document relates to the matters in question in the action, which not only would be evidence upon any issue,but also which, it is reasonable to suppose, contains information which may— not which must—either directly or indirectly enable theparty requiring the affidavit either to advance his own case or to damage the case of his adversary.

I have put in the words “eitherdirectly or indirectly,” because, as it seems to me, a document can properly be said to contain information which may enable the partyrequiring the affidavit either to advance his own case or to damage the case of his adversary, if it is a document which may fairly leadhim to a train of inquiry, which may have either of these two consequences: ... [9] In the recent decision of Saturley v. CIBC World Markets Inc., 2011 NSSC 4, Justice Moir describes the retreat from thePeruvian Guano principle that animates disclosure principles now embodied in the 2009 Civil Procedure Rules.

The 1972 Nova ScotiaCivil Procedure Rules represented a dramatic change in the historic approach to disclosure in this jurisdiction. In Upham v. You (1986), (NS CA), 73 N.S.R. (2d) 73 (C.A.), Justice Matthews described the change: [27] Jones, J.A., said in Central Mortgage & Housing Corporation v.

Foundation Company of Canada Limited (1982), (NS CA), 54 N.S.R. (2d) 43; 112 A.P.R. 43, at p. 49: “Coupled with the requirements under the Rules for complete disclosure and inspection of documents, interrogatories, admissions, noticeof experts’ reports, and pre-trial conferences, it is apparent that our Rules are designed to ensure the fullest possible disclosure of thefacts and issues before trial and thereby avoid the element of surprise. Whereas the former Rules prevented pre-trial disclosure ofevidence I think one can now say the opposite is true.

The object is to avoid surprise, simplify the issues and, hopefully, discourage theneed for continued litigation . . .” [Emphasis added] [10] It may be that the previous culture of non-disclosure prompted the courts to construe the 1972 Rules very “liberally” – a termwhich frequents reported decisions since then. In Upham, the plaintiff was suing a doctor for unsightly scarring following a legoperation. She sought information about previous patients who had similar treatment.

While he found that the information was relevanton the face of the pleadings, Justice Matthews went further and said that this was not determinative of the issue: [37] ...Even if that were not so, the information requested, in my opinion, is relevant, at least at the discovery stage. The "answersought appears reasonably calculated to lead to the discovery of admissible evidence" in the words of Rule 18.12(2). The ultimatequestion respecting relevancy of the information obtained and its admissibility must, of course, be decided at trial.

Subsequently, Nova Scotia cases adopted the “semblance of relevancy” test expressed by Griffith, J. in Toronto Board of Education StaffCredit Union Ltd. v. Skinner (1984), 46 C.P.C. 292. The jurisprudence makes plain that a principal reason for a broad relevancy test wasthe handicap of a Chambers judge when assessing relevancy at an early stage, without the benefit of the knowledge of issues and factsenjoyed by a trial judge. [11] In Saturley, Justice Moir explains that the cost of civil justice was a motivating factor in the recent reform of Nova Scotia’sCivil Procedure Rules.

In the context of documentary disclosure, this drove a desire to narrow the “semblance of relevancy” test. Under

former Civil Procedure Rule 20, a party had an obligation to provide a list of documents “...relating to every matter in question in the proceeding...” (20.01(1)). Now, under new Rule 15.02, the party to a defended action must, amongst other things, disclose “relevant” documents. Rule 14.01(1) defines relevant for the purposes of disclosure: 14.01

(1) In this Part, “relevant” and “relevancy” have the same meaning as at the trial of an action or on the hearing of an application and, for greater clarity, both of the following apply on a determination of relevancy under this Part: (

a) a judge who determines the relevancy of a document, electronic information, or other thing sought to be disclosed or produced must make the determination by assessing whether a judge presiding at the trial or hearing of the proceeding would find the document, electronic information, or other thing relevant or irrelevant; (

b) a judge who determines the relevancy of information called for by a question asked in accordance with this

Part 5 must make the determination by assessing whether a judge presiding at the trial or hearing of the proceeding would find the information relevant or irrelevant.

(2) A determination of relevancy or irrelevancy under this

Part is not binding at the trial of an action, or on the hearing of an application. [ 12 ] The Rule requires the Chambers judge to decide relevancy as if he or she were entertaining a request for evidence at trial. In Murphy v. Lawton’s Drug Stores Ltd ., 2010 NSSC 289 , Justice LeBlanc discusses at some length the meaning of “relevant evidence”. In Murphy and Saturley , Justices LeBlanc and Moir conclude that the “semblance of relevancy” test has been displaced. I agree. However, the consequence is that judges have to determine relevancy long before trial, without the forensic advantages of the trial judge.

This is thought to be the price of reducing litigation cost. As Justice Moir observes in Saturley , we have to ask a Chambers judge to assume the vantage point of the trial judge, “imperfectly constructed though it may be” ( Saturley , para. 45 ). It remains to be seen whether this effort to save resources will be frustrated by the time and expense of extensive evidence on such motions in order to reproduce “the vantage point of the trial judge.” And of course any such ruling is not binding on the trial or application judge: Rule 14.01(2).

In any event, I agree with Justice Moir’s comments at para. 46 of Saturley that: [46] This examination of the legislative history, the recent jurisprudence, and the text of Rule 14.01 leads to the following conclusions: · The semblance of relevancy test for disclosure and discovery has been abolished. · The underlying reasoning, that it is too difficult to assess relevancy before trial, has been replaced by a requirement that judges do just that.

Chambers judges are required to assess relevancy from the vantage of a trial, as best as it can be constructed. · The determination of relevancy for disclosure of relevant documents, discovery of relevant evidence, or discovery of information likely to lead to relevant evidence must be made according to the meaning of relevance in evidence law generally. The Rule does not permit a watered-down version. · Just as at trial, the determination is made on the pleadings and evidence known to the judge when the ruling is made.

In my opinion, these conclusions follow from, and are enlightened by, the principle that disclosure of relevant, rather than irrelevant, information is fundamental to justice and the recognition that an overly broad requirement worked injustices in the past. [ 13 ] I also agree with Justice Moir that this does not mean a retreat from liberal disclosure of relevant information.

[14] So the question in this case is whether the settlement information with respect to Ms. Brown’s 2004 accident would be relevantto her 2002 accident. In that action she claims special damages and general damages. For her 2004 accident Ms. Brown made similarclaims. At discovery, she conceded that she was not seeking loss of future earning capacity in either case. Both liability and damageswere in issue in Ms. Brown’s action against the Municipality. Her left knee was allegedly injured in both accidents but commonality ofinjury alone cannot ground disclosure of settlement details of the second action.

Disclosure depends on relevancy. That depends onwhether the two accidents resulted in an indivisible injury. [15] As a general proposition, where there is more than one cause of a plaintiff’s injury, the court must first determine whether thatinjury is divisible or indivisible. In Athey v. Leonati, (SCC), [1996] 3 S.C.R. 458, Justice Major describes theindivisibility principle: 24 The respondents submitted that apportionment is permitted where the injuries caused by two defendants are divisible (forexample, one injuring the plaintiff's foot and the other the plaintiff's arm): Fleming, supra, at p. 201.

Separation of distinct and divisibleinjuries is not truly apportionment; it is simply making each defendant liable only for the injury he or she has caused, according to theusual rule. The respondents are correct that separation is also permitted where some of the injuries have tortious causes and some of theinjuries have non-tortious causes: Fleming, supra, at p. 202.

Again, such cases merely recognize that the defendant is not liable forinjuries which were not caused by his or her negligence. 25 In the present case, there is a single indivisible injury, the disc herniation, so division is neither possible nor appropriate. The discherniation and its consequences are one injury, and any defendant found to have negligently caused or contributed to the injury will befully liable for it. [16] In E.D.G. v. Hammer, 2003 SCC 52 at para. 31, Chief Justice McLachlin made clear that this principle applies where there area number of tortious causes of an indivisible injury.

A finding of indivisibility is one of fact for the trial judge: E.D.G. at para. 33;Dingle v. Associated Newspapers Ltd. [1961] 2 Q.B. 162 at 188 (C.A.). [17] In the case of indivisible injury caused by more than one tortfeasor, both tortfeasors are responsible for 100 % of the plaintiff’sinjuries. But that does not dispose of the allocation of responsibility between the tortfeasors themselves. If one tortfeasor settles, thenthe settlement amount may be taken into account by the trial judge. By way of example, in Ashcroft v.

Dhaliwal, 2008 BCCA 352,leave to appeal ref’d: [2008] S.C.C.A. 488, the plaintiff was injured in two car accidents. She settled the second action. At para. 42,Huddart J.A. described how settlement amounts could be relevant to fixing damages payable by the first tortfeasor: 42 The two causes of action are not separate: they are linked by the indivisible injury the trial judge found to have been caused bythe separate torts. That link brings into play not only joint and several liability, but also the rule against double recovery. [18] Plaintiffs are entitled to full recovery but not double recovery: Ratych v.

Bloomer, (SCC), [1990] 1 S.C.R. 940at para. 94. That is why a settlement payment may be relevant in the case of an indivisible injury: Ashcroft; Laudon v. Roberts, 2009ONCA 383; Bradley v. Groves, 2010 BCCA 361. [19] Accordingly, unless the injury sustained by Ms. Brown was indivisible, the 2004 injury could have no bearing on anassessment of damages for her 2002 injury.

In that case, the settlement amount for the 2004 injury would be irrelevant. [20] As previously noted, when ordering disclosure in this case, the Chambers judge said: [39] At this stage of the proceedings, I conclude whether you use the 1972 Rules “semblance of relevancy” or the 2009 Rules test of“relevancy” the information as to compensation and the discussions surrounding it should be disclosed. This information is all veryrelevant. It could be very useful in assisting the defendant and possibly the trial judge to ensure if liable, the defendant pays a fair andproper amount of damages for the injuries Ms.

Brown received as a result of her fall at the ball field. It would seem to me to be only fairand just that the plaintiff not possibly be over compensated for further injuries to the same area of her body which were sustained in asubsequent accident.

[40] The parties are currently at the discovery stage and such information including supporting documentation is both relevant andnecessary. The supplying of this information could also lead to possibly more meaningful settlement negotiations. Relevancy is obviously the test. Necessity is not. That requirement only appears when considering possible exceptions to privilegediscussed later in this decision. [21] It is plain that the Chambers judge did not analyse how the 2004 settlement information could be relevant to an assessment ofdamages arising from the 2002 injury.

He expressed concern about over compensation, without explaining how that could occur. [22] It may be that this evidence would have been disclosed under the “semblance of relevancy” test which previously prevailed. Without extensive medical evidence, it is hard to say whether Ms. Brown’s knee injuries were divisible or indivisible. Under the formerRule, a Chambers judge may well have erred on the side of disclosure, e.g. Hodgson v. Timmons, 2006 NSSC 284; McMullin v. EastPort Properties Ltd., 2006 NSSC 352. One of the advantages of this kind of “error” would be no surprises at trial.

In the interest ofsaving time and money at this stage, the new Rules are not so indulgent. Trial judges may rule differently. Surprises may occur. Adjournments may result. It remains to be seen whether these concerns are more chimeric than real. But these are the risks one runswith the new Rule. We shall have to see. [23] Relevancy is a question of law: R. v. Mohan, (SCC), [1994] 2 S.C.R. 9 at para. 18. The medical evidencebefore the Chambers judge in this matter was extremely limited. It falls far short of providing the court with sufficient information todecide whether the injuries to Ms.

Brown’s knee were indivisible within the meaning of Athey. Without evidence which could supportthat determination one cannot say whether settlement information from the 2004 accident was relevant. In ordering disclosure, theChambers judge erred in law. Moreover, having determined that the settlement information was relevant, he was obliged to considerwhether settlement privilege prevented its disclosure. ISSUE 2 - Was the settlement information prima facie privileged? [24] Settlement privilege has been recognized by Anglo-Canadian courts for at least two centuries. A useful history of the doctrineappears in D.

Vaver, Without Prejudice Communications—Their Admissibility and Effect, (1974) 9 U.B.C. L. Rev. 85, to which some ofthe cases refer. [25] Various explanations have been offered for the theoretical foundation of settlement privilege. In Sopinka, Lederman & Bryant,The Law Of Evidence in Canada, 3rd ed., (Markham, ON: LexisNexis Canada Inc., 2009) at para. 14.316, (“Sopinka”) the authors quotefrom Wigmore on Evidence: 1.

That admissions in settlement negotiations are likely to be hypothetical or conditional only, as a supposition on which a settlementmight rest, whether that supposition is true or false, and that such an admission has no relevance and is inadmissible on that ground,though if an admission is clearly an unqualified admission of fact, it would be admissible; 2. That all admissions in the course of negotiations towards settlement are without prejudice, whether those words are used or not, andare protected by a privilege based on public policy, and are not admissible in evidence; 3.

That settlement negotiations are conducted on the normal contractual basis of offer and acceptance and with an express reservation ofsecrecy, and that, if a contract is reached, the negotiations are superseded by the contract itself, and become irrelevant and inadmissible,and if no contract is reached, then the negotiations are, for that reason, irrelevant; 4. That admissions made in the course of settlement negotiations may not be concessions of wrongs done, but merely an expression of adesire to purchase peace, and as such irrelevant and inadmissible.

[26] In Canada, the second Wigmore criterion predominates, although the intent of the parties themselves is also a factor. Thepublic policy importance of the doctrine has been recognized by the Supreme Court of Canada in Kelvin Energy Ltd. v. Lee, (SCC), [1992] 3 S.C.R. 235 at para. 48, quoting from Sparling v. Southam Inc. (1988), (ON SC), 66 O.R. (2d) 225at 230: ...Courts consistently favour the settlement of lawsuits in general. To put it another way, there is an overriding public interest in favour ofsettlement.

This policy promotes the interests of litigants generally by saving them the expense of trial of disputed issues, and it reducesthe strain upon an already overburdened provincial Court system. [Emphasis added in original.] These words epitomise the development of the privilege from the 18th century cases in which it originates.

But they are truer at thebeginning of the 21st century than ever before, because the expenditure of public and private resources on litigation is greater than ever –as the explosion of alternate dispute resolution attests. [27] Whether potentially relevant settlement communications should be disclosed involves a competition between the public policyof full disclosure serving the truth-seeking function of the court, against that which fosters informal resolution of litigious matters. As ageneral proposition the latter has prevailed. Settlement discussions require candour.

That will not be forthcoming without the protectionfrom non-disclosure that settlement privilege confers. [28] It is obvious that the express or implied intention of the parties also plays a role. It is the parties who enjoy the privilege andwho may waive it (Hubbard, Magotiaux & Duncan, The Law of Privilege in Canada (“Hubbard, Magotiaux & Duncan”) atpara.12.280.40). Supportive public policy simply recognizes that the private intent of the parties has a broader public utility.

But whileprivate intention may be included in and buttressed by public policy, the latter is not exhausted by the former and the two are notcoincident. That is apparent when exceptions to settlement privilege are considered which can override the intention of the parties,(paras. 62-74 below). [29] Protecting settlement details from disclosure owing to their privileged status also serves the public interest by denying non-settling litigants an unfair tactical advantage.

As Lord Justice Pill put it: ...It could be a severe disincentive to negotiations generally if, by declining to negotiate, a party can routinely claim the advantage ofknowing what other parties have agreed before condescending to negotiate for himself. (Gnitrow Ltd. v. Cape Plc., [2000] 1 W.L.R.2327 at 2332 (Eng. C.A.).) [30] It is generally accepted that there are three conditions that must be met to attract settlement privilege:

(1) A litigious dispute must be in existence or in contemplation;

(2) The communication must be made with the express or implied intention that it would not be disclosed to the court in the event thatnegotiations failed;

(3) The purpose of communication must be to attempt to effect a settlement. (per Sopinka, at para. 14.322) [31] Often, but not always, such communications are prefaced with the words “without prejudice”. Their absence is not fatal. Privilege is not a matter of words or form – the court will look at content and context, to see if potential settlement is intended, althoughno specific offer need be mentioned, (see for example Hansraj v. Ao, 2002 ABQB 385, appeal allowed in part: 2004 ABCA 223). [32] Canadian courts have not been unanimous concerning the scope and extent of settlement privilege.

Questions have arisen aboutwhether the communications alone are privileged or whether a concluded agreement is also privileged and whether privilege is confined

to the parties or embraces others as well. In I. Waxman & Sons Ltd. v. Texaco Canada Ltd. et al., (ON SC), [1968] O.J.No. 1068, the defendant requested settlement documents relating to previous litigation with another party.

The Ontario Court of Appealendorsed the analysis of Justice Fraser at first instance who, after reviewing the authorities, said: 39 ...I am of opinion that in this jurisdiction a party to a correspondence within the "without prejudice" privilege is, generallyspeaking, protected from being required to disclose it on discovery or at trial in proceedings by or against a third party. 40 In my opinion the privilege as so often stated, is intended to encourage amicable settlements and to protect parties to negotiationsfor that purpose. It is in the public interest that it not be given a restrictive application.

Disclosure was refused. [33] On the other hand, in Derco Industries Ltd. v. A. R. Grimwood Ltd. (1985), (BC CA), 57 B.C.L.R. 395, theBritish Columbia Court of Appeal ordered disclosure of settlement documentation between a litigant and a third party. In Derco, therewere two separate actions arising from a construction project. Grimwood sued the owner for delays. Grimwood settled its action againstthe owner. Derco was a supplier to Grimwood. Derco brought suit against Grimwood, the owner, and the construction manager alsoseeking damages for delay.

Derco argued that settlement information relating to the settled action between Grimwood and the ownerwas arguably relevant and producible on the Peruvian Guano test. The British Columbia Court of Appeal declined to follow Waxman. At pp. 399-400, Lambert J.A., speaking for the court said: But the balance that should be reached between those competing legal interests may well be different in a case between a third partylitigant, on the one hand, and the parties to the settlement, on the other hand, than that balance would be between the parties to thesettlements themselves.

It is simple to conceive of cases where a settlement between a plaintiff and one of two several tortfeasors mayoperate to the detriment of the other several tortfeasor, or where a compromise may in some other way induce cooperation. I am notthinking of cases of fraud, which must come within an exception to any principle that prevents production, but of cases where theoutcome of the litigation with one tortfeasor may be influenced by the consequences of a compromise with the other tortfeasor.

So, to theextent that there is a rule that prevents the production of documents that were prepared in the course of negotiations leading to aconcluded settlement, it is my opinion that the rule does not extend to the prevention of the production of those documents at the instanceof a litigant who was not a party to the settlement and whose claim for production comes under the rule in the Peruvian Guano case.This is the view adopted by Phipson On Evidence, (13th ed. (1982), para. 19-11), and was the view of Phipson On Evidence at the timeof the Schetky case, (6th ed. (1921), p. 232) and at the time of the Waxman case, (11th ed. (1970), para. 680).

It is consistent with thereasons of the four judges of this court who sat on the Schetky case. Derco did not extend privilege to prevent disclosure to third parties. Nor did Derco address the solution to perceived proceduralunfairness, by requiring partial disclosure of evidentiary agreements (see para. 66 below). [34] In Rush & Tompkins Ltd. v. Greater London Council, [1988] 3 All ER 737, the House of Lords had occasion to considerWaxman and Derco, and favoured the former. At p. 739, Lord Griffiths quoted from Cutts v.

Head [1984] 1 All ER 597 at 605-606 (perOliver L.J.), setting out the rationale for the rule: ‘That the rule rests, at least in part, on public policy is clear from many authorities, and the convenient starting point of the inquiry is thenature of the underlying policy.

It is that parties should be encouraged so far as possible to settle their disputes without resort to litigationand should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course,as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should, asit was expressed Clauson J in Scott Paper Co. v. Drayton Paper Works Ltd. (1927), 44 RPC 151 at 157, be encouraged freely and franklyto put their cards on the table . . .

The public policy justification, in truth, essentially rests on the desirability of preventing statements oroffers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability.’ [35] After considering the merits of disclosure and non-disclosure, and referring to Derco and Waxman, Lord Griffiths decidedagainst disclosure (p. 744): I have come to the conclusion that the wiser course is to protect without prejudice communications between parties to litigation fromproduction to other parties in the same litigation.

In multi-party litigation it is not an infrequent experience that one party takes up an

unreasonably intransigent attitude that makes it extremely difficult to settle with him. In such circumstances it would, I think, place aserious fetter on negotiations between other parties if they knew that everything that passed between them would ultimately have to berevealed to the one abdurate[sic] litigant. What would in fact happen would be that nothing would be put on paper, but this is in itself arecipe for disaster in difficult negotiations which are far better spelt out with precision in writing.

If the party who obtains discovery of the without prejudice correspondence can make no use of it at trial it can be of only very limitedvalue to him. It may give some insight into his opponent's general approach to the issues in the case but in most cases this is likely to beof marginal significance and will probably be revealed to him in direct negotiations in any event.

In my view, this advantage does notoutweigh the damage that would be done to the conduct of settlement negotiations if solicitors thought that what was said and writtenbetween them would become common currency available to all other parties to the litigation. In my view, the general public policy thatapplies to protect genuine negotiations from being admissible in evidence should also be extended to protect those negotiations frombeing discoverable to third parties.

Accordingly, I would allow this appeal and restore the decision of the official referee. [36] In 1992, the British Columbia Court of Appeal reconsidered Derco. In Middelkamp v. Fraser Valley Real Estate Board, (BC CA), 1992 B.C.J. No. 1947 (B.C.C.A), a five-court panel overruled Derco and followed Waxman and Rush. TheBritish Columbia Court of Appeal characterized the privilege attaching to settlement negotiations as a “blanket” or “class” privilege.

Atpara. 17, Chief Justice McEachern applied Waxman and Rush & Tompkins: 18 Considering the enormous scope of production which is required by our almost slavish adherence to the Peruvian Guanoprinciple, the questionable relevance and value of documents prepared for the settlement of disputes, and the public interest, I findmyself in agreement with the House of Lords that the public interest in the settlement of disputes generally requires "without prejudice"documents or communications created for, or communicated in the course of, settlement negotiations to be privileged.

I would classifythis as a "blanket, prima facie, common law, or "class" privilege because it arises from settlement negotiations and protects the class ofcommunications exchanged in the course of that worthwhile endeavour. [37] Chief Justice McEachern extended the privilege to apply to third parties as well because failing to do so would frustrate thesettlement-promoting policy of the privilege: 19 In my judgment this privilege protects documents and communications created for such purposes both from production to otherparties to the negotiations and to strangers, and extends as well to admissibility, and whether or not a settlement is reached.

This isbecause, as I have said, a party communicating a proposal related to settlement, or responding to one, usually has no control over whatthe other side may do with such documents. Without such protection, the public interest in encouraging settlements will not be served. [38] It was observed by the Court in Middelkamp and has been noted elsewhere that most Canadian jurisdictions have more liberalpre-trial disclosure than in England. That tends to tip the balance against disclosure of settlement communications because disclosure isalready especially generous.

That would also apply in Nova Scotia, notwithstanding the recent narrowing of pre-trial documentarydisclosure to “relevancy” as opposed to “semblance of relevancy”. [39] Although focused on the exclusion of admissions, the settlement privilege rule operates more broadly in practice. In Unileverv. Procter & Gamble, [2001] 1 All E.R. (C.A.), the English Court of Appeal explained the modern approach (pp. 795-96): In those circumstances I consider that this court should, in determining this appeal, give effect to the principles stated in the moderncases, especially Cutts v.

Head, the Rush & Tompkins case and Muller’s case. Whatever difficulties there are in a completereconciliation of those cases, they make clear that the without prejudice rule is found partly in public policy and partly in the agreementof the parties. They show that the protection of admissions against interest is the most important practical effect of the rule.

But todissect out identifiable admissions and withhold protection from the rest of without prejudice communications (except for a specialreason) would not only create huge practical difficulties but would be contrary to the underlying objective of giving protection to theparties, in the words of Lord Griffiths in Rush & Tompkins Ltd. v.

Greater London Council [1988] 3 All ER 737 at 740, [1989] AC 1280at 1300: ‘to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose ofestablishing a basis of compromise, admitting certain facts.’ Parties cannot speak freely at a without prejudice meeting if they mustconstantly monitor every sentence, with lawyers or patent agents sitting at their shoulders as minders. [Emphasis added.] [40] And on p. 793, Walker L.J. observed that the protection extends beyond mere admissions:

...Conversely, however, I respectfully doubt whether the large residue of communications which remain protected can all be described asadmissions. One party’s advocate should not be able to subject the other party to speculative cross-examination on matters disclosed ordiscussed in without prejudice negotiations simply because those matters do not amount to admissions. And see: Inter-Leasing Inc. v. Ontario (Minister of Finance) (2009), (ON SCDC), 256 O.A.C. 83 (Div. Ct.) at para.21. [41] Some of the cases distinguish between extending privilege from negotiations to the concluded agreement itself.

For example,in Hudson Bay Mining and Smelting Co. v. Fluor Daniel Wright (1997), (MB KB), 120 Man. R. (2d) 214 (Q.B.),aff’d (1998), (MB CA), 131 Man. R. (2d) 133 (C.A.), Hamilton J. (as she then was) cited an earlier edition ofSopinka and noted that two of the three conditions for finding privilege (para. 30, supra) related to communications only and not aconcluded agreement. Without further analysis, the court concluded that privilege did not extend to settlement agreements. Hudson Baywas mentioned favourably by the Alberta Court of Appeal in Amoco Canada Petroleum Co. v.

Propak Systems Ltd., 2001 ABCA 110 atpara. 40, with the important caveat that settlement amounts should not necessarily be disclosed, (Amoco involved a Pierringeragreement). But Hudson Bay was not followed by the British Columbia Court of Appeal in British Columbia Children’s Hospital v. AirProducts Ltd., 2003 BCCA 177. With respect, Hudson Bay seems wrong. The distinction it draws is arbitrary. The reasons forprotecting settlement communications from disclosure are not usually spent when a deal is made.

Typically parties no more wish todisclose to the world the terms of their agreement than their negotiations in achieving it. Often there would be no negotiation if this wereso. The 3rd edition of Sopinka recognizes this at para. 14.341: However, the better view is that the privilege applies not only to failed negotiations, but also to the content of successful negotiations, solong as the existence or

interpretation of the agreement itself is not in issue in the subsequent proceedings and none of the exceptions areapplicable. The rationale behind the privilege supports this position. If parties to settlement negotiations believed that their statementsmight be used by a third party in subsequent proceedings, whether or not they reached agreement, they might be less frank in thosediscussions. To like effect is Hubbard, Magotiaux & Duncan at paras. 12.280.30 to 12.280.35.

Absent an exception, privilege should cloak aconcluded agreement as well as negotiations. [42] During oral submissions, the Municipality argued that settlement privilege did not extend to a concluded agreement, relying onBegg v. East Hants (Municipality) (1986), (NS CA), 75 N.S.R. (2d) 431 (N.S.S.C.A.D.). But Begg involved a disputeabout whether settlement communications could be examined to decide whether an agreement had been reached.

That is a well knownexception: it would be absurd if the purpose of privilege – effecting settlement – could be frustrated by arguing that the privilegedmeans of achieving it was inadmissible. To the extent that Begg can be read to say privilege ceases upon conclusion of an agreement,that was obiter, and I would respectfully not follow it for the reasons set out in the preceding paragraphs. [43] Regarding privilege in this case, the Chambers judge said: [42] I also adopt the reasoning of A.C.J. Smith in Glegg v.

Smith and Nephew Inc.[sic] (supra) that in light of my conclusion aboveit is unnecessary for me to answer whether the information sought is prima facie privileged. [44] In fact, the judge was referring to Associate Chief Justice Smith’s decision in Berta v. Armstrong, 2007 NSSC 373.

At para. 38of his decision, the Chambers judge explicitly agreed with paras. 24, 25 and 29 from Berta: [24] In my view, the interests of justice require an exception to the general rule relating to settlement privilege in situations where thePlaintiff may be over-compensated in damages if production is not ordered. [25] In the case at Bar, the Plaintiff injured her neck, shoulders and upper back in the 1998 collision. She commenced an action in relation to that accident. The Plaintiff re-injured the same areas of her body in the June 29th, 2000 motor vehicle accident. She then

settled the action relating to the 1998 collision. The Plaintiff’s claim for damages in this present action is broad. In my view, theinformation requested is both relevant and necessary in the circumstances of the case (see the comments of Finch, C.J. B.C. in DosSantos (Committee of ) v.

Sun Life Assurance Co. of Canada, supra) in order to avoid the possibility of double or over-recovery ofdamages. . . . [29] As indicated above, in my view, the interests of justice require the disclosure of the information sought regardless of whether thisinformation would be prima facie protected from disclosure based on the doctrine of settlement privilege. The information requested isboth relevant and necessary in the circumstances of this case in order to avoid the possibility of double or over-recovery of damages.

Inlight of my conclusion in this regard, it is unnecessary for me to answer whether the information sought is prima facie privileged. [45] In Berta, Associate Chief Justice Smith did not decide relevancy because the parties had agreed on that. The real issue waswhether the information was privileged and, if so, whether an exception should be made.

Berta decided that even if the requestedinformation were privileged, it should be produced because of a risk of double recovery. [46] At para. 39 of his decision the Chambers judge endorses that concern: ...It would seem to me to be only fair and just that the plaintiff not possibly be over compensated for further injuries to the same area ofher body which were sustained in a subsequent accident. ... [47] The Chambers judge here adopts an exception to the privilege rule without first determining whether privilege applies.

Perhaps what he means is that assuming that the information sought was privileged, the exception of double recovery should apply. Butas previously set out, he did not explain how double recovery could occur. [48] Ms. Brown rightly argues that her settlement negotiations and agreement regarding her 2004 accident are privileged. That doesnot dispose of the issue because Middelkamp, Rush, and other cases all recognize exceptions to non- disclosure for privilege in specialcircumstances.

Although the settlement materials are prima facie privileged, it is still necessary to consider whether they should bedisclosed under any of the exceptions to privilege. ISSUE 3 - Exception to privilege [49] Consideration of this issue requires a prefatory discussion concerning the nature of settlement privilege. Class or case-by-case privilege? [50] The law generally recognizes two broad categories of privilege. The first is a “blanket” privilege acknowledged as belonging toa class. Documents and communications falling into this class are prima facie privileged.

An example of a blanket privilege issolicitor/client privilege. The second is a “case-by-case” privilege. This refers to communications for which there is a prima facieassumption that they are not privileged. But they may acquire privileged status in particular cases by application of the four-part“Wigmore” test (para. 53 below). Some journalist-source or doctor-patient communications may fall within this latter category (R. v.Gruenke, (SCC), [1991] 3 S.C.R. 263, per Lamer C.J.C. at p. 286 and R. v.

National Post, 2010 SCC 16 at paras. 43-46). [51] The “blanket” versus “case-by-case” distinction matters because the question of whether settlement discussions are prima facieprivileged or not is at issue. If the former, then the settlement communications are inadmissible and an applicant has the burden ofestablishing an exception to privilege. If the latter, then the claimant of privilege must establish it and the need for an exception to aprima facie rule does not arise. [52] Although many courts call settlement privilege a “class” or “blanket” privilege, recent Ontario decisions have questioned this

characterization, culminating in Liquor Control Board of Ontario v. Magnotta Winery Corporation et al., (2009) (ON SCDC), 97 O.R. (3d) 665 at paras. 45-48. At para. 46, Carnwath J. said: [46] The case-by-case analysis is preferable. It is particularly important in the following instances: (

a) where discussions have led to a settlement, the litigation has resolved, but an argument arises over the terms of the settlement; (

b) where the interests of third parties in other litigation might be affected; and (

c) where there is a dispute over whether litigation was “in contemplation”. I conclude that any analysis undertaken to establish common-law settlement privilege must be done on a case-by-case analysis. [53] Magnotta was affirmed, but without explicit discussion of the “class” versus “case-by-case” privilege analysis (2010 ONCA681). The “case-by-case” approach assumes that settlement communications are not prima facie privileged, but require application ofthe four-step Wigmore test approved by the Supreme Court of Canada in Slavutych v. Baker et al. (SCC), [1976] 1S.C.R. 254 at 260:

(1) The communications must originate in a confidence that they will not be disclosed.

(2) This element of confidentiality must be essential to the full and satisfactory maintenance of the relation between the parties.

(3) The relation must be one which in the opinion of the community ought to be sedulously fostered.

(4) The injury that would inure to the relation by the disclosure of the communications must be greater than the benefit thereby gainedfor the correct disposal of litigation. [Emphasis in original.] [54] Magnotta is at odds with the Canadian decisions that have adopted the “class or “blanket” approach to settlement privilege (e.g.Heritage Duty Free Shop Inc. v. Canada (Attorney General), 2005 BCCA 188; British Columbia Children’s Hospital v. Air ProductsCanada Ltd., Waxman, the majority in Middelkamp; Dos Santos (Committee of) v. Sun Life Assurance Co. of Canada, 2005 BCCA 4).

Nova Scotia courts have adopted the class approach: Berta, supra; Gay v. UNUM Life Insurance Company of America, 2003 NSSC228. Many secondary sources agree: Sopinka at p. 1033; David M. Paciocco & Lee Stuesser, The Law of Evidence, 5th ed. (Toronto,ON: Irwin Law, 2008) at pp. 248-54; Gordon D. Cudmore, Civil Evidence Handbook, loose-leaf, (Toronto, ON: Thomson Reuters,1994), ch. 6 at 6-30.14(2). [55] With respect, Magnotta and the Ontario cases are not compelling. First, those decisions do not engage all the contraryjurisprudence.

Second, despite Magnotta’s reliance on Supreme Court decisions such as Slavutych, no Supreme Court decision suggeststhat settlement privilege is not a class privilege. For example, one of the cases relied upon in Magnotta is M. (A.) v. Ryan), (SCC), [1997] 1 S.C.R. 157. But at paragraph 20 of Ryan, McLachlin J. (as she then was) talks about the Wigmore test applying tonew situations where “...reason, experience and application of the principles that underlie the traditional privileges so dictate: ...” Again,at para. 32, reference is made to “new” privileges in the context of the Wigmore test.

There is nothing new about settlement privilege. Ryan did not alter the law for blanket privilege (Heritage, supra, at para. 29, citing R. v. McClure, 2001 SCC 14). [56] But the fundamental reason that the case-by-case analysis should be rejected is that it does not adequately support the policyunderlying settlement privilege. If settlement discussions and agreements are not prima facie privileged and therefore are disclosable,the very reason for protecting and fostering informal resolution of disputes is at risk. The price of this approach is uncertainty ofapplication of the rule.

For this reason, the words of Binnie J. in National Post at para. 44, are apposite. When rejecting a class privilege

for journalists, Binnie J. noted the importance of certainty: ...It is particularly important in the case of class privilege that the rules be clear in advance to all participants so that they may governthemselves accordingly. [57] The uncertainty of a “balancing” test similar to Wigmore’s 4th criterion, was rejected by Rosenberg J.A. in General AccidentAssurance Co. v. Chrusz, (1999) (ON CA), 45 O.R. (3d) 321 (C.A.); [1999] O.J. No. 3291 (Q.L.) at paras 168-170),in the context of litigation privilege: 168 I agree with Carthy J.A.'s analysis of litigation privilege.

The litigation privilege is well established, even if some of the nuancesare not. In my view, the competing interests or balancing approach proposed by Doherty J.A. is more appropriate for dealing withemerging claims of privilege such as those claims dealt with in Slavutych v. Baker, (SCC), [1976] 1 S.C.R. 254 and R. v.Gruenke, (SCC), [1991] 3 S.C.R. 263. I am concerned that a balancing test would lead to unnecessary uncertaintyand a proliferation of pre-trial motions in civil litigation. [Emphasis added.] 169 That is not to say that litigation privilege is absolute.

The Supreme Court of Canada has made it clear that all of the establishedprivileges are subject to some exceptions. As Cory J. said in Smith v. Jones (1998), (SCC), 132 C.C.C. (3d) 225(S.C.C.) at 239: Both parties made their submissions on the basis that the psychiatrist's report was protected by solicitor-client privilege, and it should beconsidered on that basis. It is the highest privilege recognized by the courts. By necessary implication, if a public safety exceptionapplies to solicitor-client privilege, it applies to all classifications of privileges and duties of confidentiality.

It follows that, in thesereasons, it is not necessary to consider any distinctions that may exist between a solicitor-client privilege and a litigation privilege.[Emphasis of Rosenberg J.A.] 170 In my view, with established privileges like solicitor-client privilege and litigation privilege it is preferable that the general rulebe stated with as much clarity as possible. Deviations from the rule should be dealt with as clearly defined exceptions rather than as anew balancing exercise each time a privilege claim is made. See Smith v. Jones at p. 242. Where, as in Smith v.

Jones, a party seeks toset aside the privilege, the onus properly rests upon the party seeking to set aside the privilege. See Smith v. Jones at p. 240. [Emphasisadded.] [58] Although Justice Rosenberg was speaking of litigation privilege, he expresses a salutary warning against uncertainty – whichnecessarily increases cost for litigants – something courts routinely lament. Unlike relationships such as doctor-patient or priest-penitentthat may acquire a privileged status in special circumstances on a Wigmore analysis, settlement communications are important to thefunctioning of the justice system itself.

In this sense, settlement privilege appropriates something of the policy underlying solicitor-client and litigation privileges. [59] Moreover, as a general proposition, the “truth seeking” purpose of litigation is not seriously impaired by protecting settlementcommunications. Their probative value is suspect (see points 1 and 4 of Wigmore explanation, para. 25, supra). Such communicationsonly arise in the context of the dispute, for the purpose of resolution, and are secondary to the dispute itself. Typically they would notexist but for the privilege.

So as a matter of policy, the argument for disclosure is inherently weaker for such communications. Correspondingly, the policy favouring non-disclosure is inherently stronger. That strength is entitled to the greater certainty which classprivilege confers. The practical fruit of that strength is the imposition of a burden on the challenging party to overcome the privilege. [60] If settlement privilege enjoys a “class” status, those seeking an exception carry the burden of establishing an exception. Ifsettlement privilege requires a case-by-case analysis, then the burden rests with the claimant of privilege.

As a matter of practice, itwould be unwise to send a message to litigants and the bar that communications designed to explore settlement are prima faciedisclosable unless a judge, applying the Wigmore test, says otherwise. The importance of the doctrine, coupled with the need forrelative certainty of application, favours a class approach. [61] The blanket or class privilege approach enjoys broad historical, judicial, academic and principled support. For these reasons itis preferable to the uncertainty of a case-by-case analysis.

Exceptions to Class Privilege: [62] Ms. Brown acknowledges that there are exceptions to settlement privilege, but argues that none apply here. She cites DosSantos and Heritage, arguing that exceptions should be “narrowly defined” and require “compelling policy reasons” in order to displaceprivilege. The Municipality counters that there is an exception for double recovery, relying upon Berta, Dos Santos, UNUM and Inglisv.

Nova Scotia (Attorney General), 2007 NSSC 314. [63] Even those cases that most strongly endorse the policy reasons for protecting settlement communications from disclosurerecognize that there are exceptions. In Middelkamp, Chief Justice McEachern listed several possible exceptions (fraud, or to rebutdefences of laches, want of notice, or a limitation period) without explicitly endorsing them, or providing an analytical foundation forthem (para. 20).

In Dos Santos the court recognized an exception for double recovery but more broadly was prepared to grant anexception if a party could show a compelling public interest that outweighed the public interest in encouraging settlement. An exceptionwould only be found where the disclosure was both relevant and necessary in the circumstances of the case to support anothercompelling or overriding interest of justice. In Dos Santos, the plaintiff put the subrogation rights of his insurer in issue.

The defendantinsurer had a contractual right to know what recovery the plaintiff had received in earlier litigation, which affected the insurer’sobligation to pay the plaintiff. To avoid double recovery, disclosure was ordered. [64] The threshold for an exception requiring disclosure obviously cannot be relevance alone. If that were so, a great deal ofprivileged communication would be disclosable.

Accordingly, one must also link relevance to a compelling policy reason to show thatdisclosure is necessary to give effect to that policy (Dos Santos at para. 20). [65] In Heritage Duty Free Shop, the British Columbia Court of Appeal described exceptions to the rule as “narrowly defined”(para. 25). The court quoted from para. 19 of Dos Santos, where Chief Justice Finch discussed the burden of challenging privilege: 19 However, the test for discharging the burden to establish an exception should not be set too low. The public policy behindsettlement privilege is a compelling one.

It is so compelling that even threats arising in the context of settlement negotiations may notjustify an exception: Unilever, supra at p. 2449-2450. In Dos Santos a successful attack on privilege required that: 20 ...the defendant must show that a competing public interest outweighs the public interest in encouraging settlement.

An exceptionshould only be found where the documents sought are both relevant, and necessary in the circumstances of the case to achieve either theagreement of the parties to the settlement, or another compelling or overriding interest of justice. [Emphasis added.] This test was endorsed in Heritage. [66] A good example of an exception balancing disclosure against privilege arises in multi-party litigation. Fairness may requiredisclosure of non-financial terms of settlement agreements in multi-party litigation, because it could assist the court in assessing thequality of a settling party’s evidence.

This routinely occurs in the case of Mary Carter and Pierringer agreements: Pettey v. Avis CarInc. (1993), (ON SC), 13 O.R. (3d) 725; Laudon v. Roberts at para. 39; Conrad v. Snair, [1995] N.S.J. No. 622 (Q.L.)at p. 6; Sable Offshore Energy Inc. v. Ameron International Corporation, 2010 NSSC 19, reversed on unrelated grounds: 2010 NSCA107, and more recently: Sable Offshore Energy Inc. v. Ameron International Corporation, 2010 NSSC 473.

But the actual settlementamounts are usually excluded unless and until the trial judge decides otherwise. [67] Some courts have argued that it is necessary to go further and disclose the settlement amount itself (Noonan v. Alpha-Vico,2010 ONSC 2720; Pikus-Pace v. Calgary Olympic Development Assn., 2008 ABQB 688; Par-Pak Ltd. v. Morguard Investments Ltd.,[2010] O.J. No. 4488). They hold either that the agreement (unlike negotiations) is not privileged or that the settling parties have anadvantage which should be redressed by disclosure.

For reasons already described, privilege should extend to a concluded agreement. And it is well to recall the words of Lord Justice Pill and Lord Griffiths that disclosure favours intransigent non-settling litigants, therebycompromising the prospects of settlement in first place (paras. 29 and 35, supra). If indeed settling parties thereby enjoy an advantageover non-settling parties, it is one for which they have bargained. The court should hesitate to expropriate that advantage by ordering

disclosure at the instance of non-settling parties, intransigent or otherwise. The argument that disclosure would facilitate settlementamongst the remaining parties ignores that, but for the privilege, the first settlement would often not occur. [68] In a thorough and well analyzed decision reviewing Canadian and English authorities, Chief Justice Wells suggests a principledapproach to settlement privilege exceptions. In Meyers v.

Dunphy, 2007 NCLA 1 (2007 NLCA 1 , 262 Nfld. & P.E.I.R. 173),the Chief Justice said: 27 While the approach of Finch C.J.B.C. [in Dos Santos] may not be identical with that of Lord Robert Walker [in Unilever], in myview, the difference lies more in expression than in substance. Lord Robert Walker puts forward a list of "the most important instances".Finch C.J.B.C. proposes a general description of the standard; "addressing a compelling or overriding interest of justice".

Nevertheless,such an overriding interest of justice will usually, although perhaps not always, arise because of some blameworthy or meritoriousconduct on the part of one party or the other. As noted above, apart from usage to prove that the without prejudice negotiations haveresulted in an agreement, or a particular exception was stated, blameworthy or meritorious conduct by one party or the other is thecommon feature of Lord Robert Walker's list of "most important" instances.

Thus, a principled basis for analysis of a claimed exceptionto settlement privilege, that is totally consistent with both approaches can be identified. In my view it is reflected in the followingprinciples: 1. Protection of admissions against interest, for the purpose of encouraging settlement discussions, is a compelling public policybasis for settlement privilege; 2.

Express or implied agreement of the parties can also be a basis for the rule, and where the admissions fall within what can clearlybe identified as a term of an express or implied agreement between the parties that factor is also to be considered; 3. Except where a special reason exists, or on the basis of express or implied agreement, protection should not be withheld fromidentifiable admissions while extending it to others expressed in the privileged communication; 4. Without prejudice communications are admissible to prove those communications have resulted in a compromise agreement; and 5.

Where exclusion of the communication would facilitate an abuse of the privilege, or another compelling or overriding interest ofjustice requires it, without prejudice communications are admissible. . . . I would add, with respect to point 5, that disclosure should be both relevant and necessary to give effect to the compelling and overridinginterest of justice. [69] Broad statements of principle have a disarming simplicity about them. But how are they applied in practice? A usefulsummary of categories of exception and relevant cases can be found in Unilever and Berry v.

Cypost Corp., 2003 BCSC 1827. [70] In Myers, Chief Justice Wells neatly summarizes categories of exception noted by the English Court of Appeal in Unilever:

(1) Whether without prejudice communications have resulted in a concluded compromise agreement;

(2) To show that an agreement apparently concluded between the parties during the negotiations should be set aside on the groundof misrepresentation, fraud or undue influence;

(3) Where a clear statement made by one party to negotiations, and on which the other party is intended to act and does in fact act,

may be admissible as giving rise to an estoppel;

(4) If the exclusion of the evidence would act as a cloak for perjury, blackmail or other unambiguous impropriety, but such an exception should only be applied in the clearest cases of abuse of a privileged occasion;

(5) In order to explain delay or apparent acquiescence in responding to an application to strike out a proceeding for want of prosecution but use of the letters is to be limited to the fact that such letters have been written and the dates at which they were written;

(6) Whether the claimant had acted reasonably to mitigate his loss in his conduct and conclusion of negotiations for the compromise of proceedings brought by him; and

(7) Where an offer is expressly made “without prejudice except as to costs”. [ 71 ] In Berry , Burnyeat J. usefully organizes the authorities around seven general categories of exception with corresponding cases illustrative of each: (

A) Unlawful Communications/Impropriety such as Threats and Fraud (

B) Communications Prejudicial to the Recipient (

C) Concluded Settlement Agreement Itself is in Issue (

D) Where a question of Laches is raised as a Defence (

E) Under

Section 5 of the B.C. Limitation Act which extends limitation periods where there has been written confirmation of the existence of the cause of action (

F) Contents of a Without Prejudice Communication Form Part of a Legal Claim or Defence [Citations omitted.] [ 72 ] Without necessarily endorsing all the examples in those cases, they exemplify circumstances that may attract potential exceptions to the privilege. The obvious exception that could apply here involves the risk of double recovery. It was the rationale for the exception in Dos Santos , UNUM , and Berta . [ 73 ] Ms. Brown relies on a number of cases to argue that the double recovery exception should not apply.

But a close reading of those cases suggests that the disclosure may well have been available at trial, if the court at that stage decided that double recovery was a genuine risk ( Milicevic v. Jakubec , 2005 ABQB 654 at paras. 9 and 38 ; Pangburn v. Leeder-Kroyer , 2003 Carswell Ont. 4789 at para. 9 ; Chappel v. Dysko , 2008 Carswell Ont. 13 at para. 20 ). [ 74 ] The double recovery rule is a widely acknowledged exception permitting disclosure of documents otherwise protected by settlement privilege. It could form the basis of a disclosure order in this case should the trial judge ultimately determine that the

communications sought here were relevant and necessary to avoid double recovery in this case. Conclusion (

a) At this stage of the proceedings relevance of the settlement communications has not been established; (

b) The settlement communications are prima facie privileged and not disclosable; (

c) The exception for double recovery may apply in the circumstances of this case, assuming relevancy. That will be a matter for the trial judge. [ 75 ] I would grant leave to appeal and allow the appeal with costs of $1,000 including disbursements (the amount on which both parties agreed) to the appellant. Bryson, J.A. Concurred in: Saunders, J.A. Beveridge, J.A.