“In Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, the Supreme Court of Canada set out the rationale for settlement privilege and the principles that apply to the assertion of settlement privilege. Abella J., writing for the Court, held, at para. 2, that “the purpose of settlement privilege is to promote settlement”, and “the privilege wraps a protective veil around the efforts parties make to settle their disputes by ensuring that communications made in the course of these negotiations are inadmissible”. Settlement privilege extends beyond documents and communications expressly designated to be “without prejudice”. See Sable, at paras. 12-14.
Settlement privilege will attach to a document or communication where (a) there is a litigious dispute, (b) the communication has been made with the express or implied intention it would not be disclosed in a legal proceeding in the event negotiations failed; and (c) the purpose of the communication is to attempt to effect a settlement: Re Hollinger, 2011 ONCA 579, at para. 16.
Settlement privilege is a class privilege and, while there is a prima facie presumption of inadmissibility, exceptions will be found “when the justice of the case requires it”. See Sable, at paras. 12 and19.
Where settlement privilege is asserted over documents and communications made in furtherance of settlement, the party asserting the privilege must first show that they are prima facie protected by settlement privilege. If this is done, the party seeking disclosure on the ground that an exception to the privilege applies must show that, on balance, a competing public interest outweighs the public interest in encouraging settlement. See Sable, at para. 19.
In Union Carbide Inc. v. Bombardier Inc., 2014 SCC 35, the Supreme Court of Canada explained that settlement privilege is a common law rule that protects communications exchanged by the parties as they try to settle a dispute. The Supreme Court of Canada held, citing Sable, that settlement privilege promotes a priority of our justice system of encouraging settlements. Settlement privilege applies even in the absence of statutory provisions or contract clauses with respect to confidentiality, and the privilege applies even after a settlement is reached. In a mediation held to discuss settlement, the parties’ communications are protected by the common law settlement privilege. See Union Carbide, at paras. 31-34, and 39.”