Supreme Court


Civil Procedure

OFFER TO SETTLE
Mere fact of signing mediation agreement with confidentiality clause not automatically displacing privilege

Bombardier commenced action against Dow Chemical claiming that gas tanks supplied by Dow for personal watercraft were unfit for intended use. Parties entered into standard mediation agreement containing confidentiality clause. Bombardier accepted Dow’s settlement offer, but parties disputed terms of settlement. Dow refused to send settlement so Bombardier filed motion for homologation of transaction in Superior Court. Dow’s motion to strike out certain allegations on ground they referred to mediation process dismissed. Communication that leads to settlement will cease to be privileged if disclosing it is necessary to prove existence or scope of settlement. Both common law privilege and exception form part of Quebec civil law but parties can tailor confidentiality requirements by contract. To determine whether absolute confidentiality clause in mediation agreement displaces common law exception to settlement privilege, it must be asked whether confidentiality clause actually conflicts with settlement privilege or with recognized exceptions to that privilege. Mere fact of signing mediation agreement with confidentiality clause not automatically displacing privilege and exceptions. Agreement that could have effect of preventing application of recognized exception must be clear. Mediation agreement indicated, on its face, common intention to be bound by confidentiality, but nature of contract, circumstances in which it was formed and contract as whole revealed that parties did not intend to disregard usual rule that settlement privilege can be dispensed with in order to prove terms of settlement. Mediation agreement was signed on eve of mediation with apparent purpose of settling ongoing dispute. It was standard form provided by mediator, and neither party amended provisions relating to confidentiality. No evidence that parties thought they were deviating from usual settlement privilege. Would be unreasonable, absent express provision to contrary, to assume that parties who have agreed to mediation for purpose of reaching settlement would renounce right to prove terms of settlement. In course of motion for homologation, parties may produce evidence to prove terms of settlement.

Bombardier inc. c. Union Carbide Canada inc.

(May. 8, 2014, S.C.C., McLachlin C.J.C., LeBel J., Rothstein J., Cromwell J., Moldaver J., Karakatsanis J., and Wagner J., File No. 35008) 239 A.C.W.S. (3d) 941.

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