In Brown v. Cape Breton, the Nova Scotia Court of Appeal considered the application of settlement privilege to a related action that raised the possibility of “double recovery”. Bryson J.A., writing for the court, held that settlement communications should be approached as a “class” privilege, noting that they attract policy considerations akin to those relevant to solicitor-client and litigation privileges. He disagreed with a series of Ontario cases that approached settlement privilege on a case-by-case basis, finding that settlement communications are prima facie privileged. He concluded that the exception for double recovery might apply if the communications were found relevant to the issue of damages, but that this question was to be remitted to the trial judge.
At trial, the plaintiff alleged that in 2002 she sustained a serious and permanent knee injury when she fell from bleachers at a municipal ball field in Cape Breton. She alleged that she suffered further injuries to the same knee, two years later, when, while riding her bike, she was hit by a car. Having brought actions in respect of both injuries, she settled the second claim following discoveries. Cape Breton then sought disclosure of the settlement agreement and related correspondence. Ms. Brown refused, and the municipality successfully brought a motion for disclosure. Ms. Brown sought leave to appeal the decision of the Chambers judge (unreported).
Bryson J.A. reasoned that case-by-case privilege does not do justice to the policy underlying settlement privilege. If settlement discussions and agreements are not prima facie privileged, then the hope that parties work towards informal resolution of disputes is at risk. Moreover, the “truth seeking” purpose of litigation is not seriously impaired by protecting settlement communications, which arise only with a view to resolving a dispute, and typically would not exist but for the privilege. So, as a matter of policy, the argument for non-disclosure is stronger; settlement communications must benefit from the greater certainty class privilege confers. Noting that disclosure is appropriate where relevance of the evidence is linked to necessity established on the basis of a compelling policy reason, Bryson J.A. recognized a widely acknowledged exception for “double recovery”. However, he held that the chambers judge made an error in law by ordering disclosure without properly analyzing the relevance of the communications to the issue of damages. Granting leave and allowing the appeal, he concluded: “[This exception] 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.”
April 1, 2011
Link to Decision
Tony Drake, Leo Elias & Marc Gibson
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