Confidentiality and settlement privilege remain the most common reasons for choosing mediation.
The application of Settlement privilege applies as a rule of evidence that protects communications exchanged by the parties as attempts are made to settle a dispute. The Supreme Court of Canada observed, “[t]he 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.”
The purpose of settlement privilege is to encourage and promote settlement by allowing full and frank discussions between the parties. There is a prima facie presumption that any communication made in furtherance of settlement is inadmissible. However, this presumption of course can be displaced. The trigger for settlement privilege is the intent to settle (not simply adding the words “without prejudice”). Settlement privilege applies regardless of whether a settlement is ultimately reached. Settlement privilege applies even in the absence of contractual provisions providing for confidentiality.
Notably, there is an exception to the common law settlement privilege, which permits parties to produce evidence of confidential communications in order to prove the existence or the scope of a settlement agreement.
Confidentiality: The Rules of Civil Procedure stipulate, “all communications at a mediation session and the mediator’s notes and records shall be deemed to be without prejudice settlement discussions.” While mediation is intrinsically confidential, care should be taken to specify the confidentiality of the process by considering the inclusion of a confidentiality clause in the agreement to mediate. Often these clauses require the parties to keep anything that transpires at the mediation confidential. A confidentiality clause in an agreement to mediate differs from settlement privilege since the former is not a rule of evidence, but rather, a matter of contract. Notably, too, if such a clause is placed in a settlement agreement, take care to consider whether it is appropriate to the circumstances, for example, court approval is required under Rule 7 for settlements concerning persons under disability, and as such a confidentiality clause may not be appropriate.
In 2014, the Supreme Court of Canada weighed in on the interaction between settlement privilege and confidentiality clauses in mediation in the case of, Union Carbide Canada Inc. v Bombardier Inc. 2014 SCC 35. The SCC considered whether an absolute confidentiality clause in a mediation contract trumped the exception to settlement privilege, allowing disclosure of confidential communications to prove the existence or scope of an agreement. The SCC held that it is open to parties to contract for greater confidentiality than that provided by settlement privilege, but that doing so requires a clear and unequivocal statement of the parties’ intention to oust the common law. A standard mediation confidentiality clause would not have this effect. A contract purporting to oust the law of settlement privilege must be clear and unequivocal. If parties desire absolute confidentiality in the mediation process, they can contract to override the common law in an express provision to this effect. Whether or not to do so will be a strategic decision based on the specific facts of your case.
 Union Carbide Canada Inc. v Bombardier Inc., 2014 SCC 35 (“Union Carbide”) at para 31.
 Sable Offshore Energy v Ameron International Corp, 2013 SCC 37 (“Sable”) at para 2.
 Sable at para 17.
 Rule 75.1.11, Rules of Civil Procedure, RRO 1990. O Reg. 194.
 Union Carbide at para 51.
This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.