There exists a "class" privilege to protect settlement discussions. The discussions must be made during the course of settlement negotiations, for the purpose of settlement, and are not intended to be disclosed or used against the parties should the negotiations fail. The fundamental purpose underlying the privilege is to encourage settlement. The privilege applies to both civil settlement discussions and criminal resolution discussions. The privilege applies not only to the parties involved in the negotiations, but also protects communications from being disclosed to third parties.
The privilege is subject to exceptions. The starting point is that settlement discussions are privileged. Where the existence of an agreement, or the terms of a settlement are at issue, or the negotiation discussions give rise to a cause of action, the privilege may be overridden. The privilege may also be overridden where there exists a compelling public interest to do so.
The law of evidence has long accepted a "privilege" for "without prejudice communications" or "settlement discussions." As a general proposition, oral or written communications made during settlement discussions for the purpose of settlement are not admissible in evidence.115The privilege is in place primarily as a matter of public policy to encourage litigants to settle their disputes without the need to go to trial. Communications made for the purpose of settlement are protected from disclosure; otherwise few parties would engage in such settlement discussions for fear that any concessions or statements made could be used against them if no settlement is reached. A second rationale for the rule - occasionally cited - is the express or implied agreement of the parties themselves that communications in the course of their negotiations should not be admissible in evidence.116Most of the leading cases on settlement negotiation privilege involve private civil disputes. However, in principle the public policy
generators for such a privilege apply equally in criminal cases and protection of plea negotiations is well recognized in criminal cases.117There is some uncertainty as to the exact form of the privilege. The prevailing view is that settlement discussions are caught by a blanket "class" privilege and that discussions made during and for the purpose of settlement are prima facie privileged.118A counter position is that a privilege for settlement discussions falls to be decided on a "case-by-case" basis. In other words, the party seeking the protection of the privilege would need to show that the communications ought to be privileged given the particular case.119The case-by-case approach requires a balancing of the need for the disclosure of the communications versus the detrimental effects that could befall the negotiating parties.
A class privilege is the preferred approach. First, it provides, as a starting point, the greatest protection in accordance with the public policy interest to encourage settlement. The party seeking disclosure has to convince the court to override the privilege. Second, it complies with the parameters set by the Supreme Court of Canada for the recognition of a class privilege. In R. v. Gruenke, Chief Justice Lamer observed that a class privilege would only be appropriate where the protected communications "are essential to the effective operation of the legal system" and that "such communications are inextricably linked with the very system which desires the disclosure of the communication."120Arguably these essentials hold true for settlement discussions. Without settlement the administration of justice would be brought to an overburdened halt. Third, a blanket privilege provides greater certainty in application.
The privilege will be recognized when three preconditions exist:
1) A litigious dispute must be in existence or within 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 that negotiations failed.
3) The purpose of the communication must be to attempt to effect a settlement.121
The use or overuse of the phrase "without prejudice" is not required nor is it conclusive.122The substance and context of the communication has to be considered. For example, in Histed v. Law Society of Manitoba correspondence was exchanged between lawyers as to the appointment of a case management judge. In one of the letters the lawyer made disparaging remarks about a number of judges. The phrase "Strictly Confidential and Without Prejudice" was written on the top of the letter in question. The lawyer in receipt of the letter forwarded it on to the Law Society. At the disciplinary hearing the lawyer who wrote the offending letter claimed settlement privilege. The Court of Appeal gave short shrift to this argument and found that the letter was about process and had nothing to do with...