The Limited Secrecy of Settlement Conferences (or, The Truth Is Out There)

In order to fulfill their function, settlement discussions require a certain zone of confidentiality to be created. Parties must be free to compromise, and usually that means recognizing vulnerabilities in one’s own case that, in other circumstances, one would be hesitant to acknowledge. If, for whatever reason, settlement is not reached, the parties will want to know that their good faith compromises will not be used against them as the litigation pursues its course.

For this reason, there is a privilege that attaches to settlement discussions, protecting the parties who engage in them and assuring them that their negotiations will not be used against them. But this privilege, not surprisingly, is not absolute.

In Viconte Inc. v. Transcontinental Inc., 2020 QCCQ 1475, the Court was seized of a case where the parties to a structured settlement conference before a Superior Court judge (commonly known as a “conférence de règlement à l’amiable” or “CRA”) had a dispute over whether a settlement was validly reached. Specifically, the defendant claimed that the plaintiff withheld important information, such that the settlement was concluded on the basis of fraudulent misrepresentation.

The defendant’s entire case depended on its capacity to make proof of what happened at the settlement conference. But negotiations at a settlement conference are generally covered by settlement negotiation privilege. Moreover, the Code of Civil Procedure indicates that a CRA is confidential:

Art. 163  A settlement conference is held in the presence of the parties, and, if the parties so wish, in the presence of their lawyers. It is held in camera, at no cost to the parties and without formality.

The settlement conference does not stay the proceeding, but the judge presiding over the conference, if of the opinion that it is necessary, may modify the case protocol accordingly.

Anything said, written or done during the settlement conference is confidential.

The Court held that the defendant’s argument claim could proceed, and the defendant could adduce proof of what occurred during the CRA. The specific use to which the defendant sought to put the CRA evidence in this case was determinative.

It is well-recognized that settlement discussions can be relevant and admissible in order to discuss whether a settlement was reached, and, if so, its scope. It stands to reason, as the Court concluded, that the same would apply to a question of validity:

[46]     La Cour suprême a bien établi que l’une des exceptions au privilège de confidentialité des communications faites en vue d’un règlement vise la possibilité de démontrer l’existence ou la portée d’une entente. Le Tribunal ne voit pas en vertu de quel principe l’exception ne s’appliquerait pas si c’est la validité de la transaction qui est remise en cause plutôt que son existence ou sa portée.

[47]     On remarque que dans la jurisprudence où les objections sont accueillies, il s’agit souvent de cas où on veut prouver la mauvaise foi de la partie adverse de manière générale, ce qui peut se faire par d’autres moyens, ou encore de cas où on veut invoquer ce qui s’est passé dans la CRA dans le cadre d’un litige connexe.

[48]     Une distinction doit être faite entre la preuve de faits liés de façon intrinsèque à la transaction elle-même (soit son existence, son étendue, ses modalités, sa validité), où la preuve peut être permise, des faits liés à une cause qui se situe à l’extérieur du dossier où la transaction a été conclue.

[49]     Sont ici exclus de l’analyse les jugements ayant permis à un tiers de connaître le montant d’une transaction dans le cadre d’un litige présentant une connexité véritable avec le dossier réglé ou dans lequel se pose une question relative à la solidarité.

Taking a step back, at the level of fundamental justice, the alternative would be practically unthinkable.

The law generally strives to put parties in a place where they are able to advance their causes of action so the parties can reach a just outcome. The various privileges that exist certainly limit that ability, often for policy reasons. But in practical terms, they usually apply to discoverability. In other words, they limit a party’s ability to obtain new information from the opposing party.

It is far rarer to see a rule of evidence forbid a party from using information that is already in her possession. While such situations do exist – for instance, at arts. 2858 or 2862 – courts generally maintain an implicit reticence to close their eyes to relevant information that a party has and wants to produce.

On this point, the Supreme Court has articulated a general disdain for an evidentiary rule that would allow a party to avoid justice with impunity. In Juman v Doucette, 2008 SCC 8, the Court had to decide whether information compelled in a pre-trial deposition could be used outside that specific litigation. The Court ruled, on the facts of that case, that it could not. But the Court also recognized that this prohibition on the use of discovery information could not be taken so far as to allow a party to tell one story under oath in one proceeding, and a diametrically opposed version in another. There is a higher value to truth and judicial legitimacy that must be respected.

Moreover, it would be fundamentally unjust to have a situation where a party knows the adverse party is lying to the Court, but the Court refuses to hear it.

In Viconte Inc. v. Transcontinental Inc., the defendant had an argument to put forward based on allegations of fraudulent misrepresentation. It so happened that the fraudulent misrepresentation in question took place during the course of a CRA. Holding that the defendant could not invoke the discussions during the CRA would effectively create an immunity for the plaintiff—and indeed all parties in all CRAs. CRAs would become lawless zones, where the parties could act in bad faith without consequence.

That is not the reality that litigants themselves experience, and it would not be doing justice to them to exclude everything in a CRA from view. Settlement negotiation privilege only needs a very narrow space to fulfill its purpose of promoting good faith discussions and settlement. Blanket immunity for faults committed during a CRA is unnecessary and would undermine the search for truth that is a basic feature of our justice system—especially when the truth is known to everyone else in the courtroom besides the judge.