“Without Prejudice” Communications

In Marziale v Adam 2022 BCSC 1308 the Court concluded that a “Without Prejudice” letter was inadmissible on the basis that it was protected by settlement privilege.

The general inadmissibility of communications made with the intent to settle the action is set forth at paras. 14-15 of Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37 [Sable]

Rush & Tompkins confirmed that settlement privilege extends beyond documents and communications expressly designated to be “without prejudice”. In that case, a contractor settled its action against one defendant, the Greater London Council (the GLC), while maintaining it against the other defendant, the Carey contractors. The House of Lords considered whether communications made in the process of negotiating the settlement with the GLC should be admissible in the ongoing litigation with the Carey contractors. Lord Griffiths reached two conclusions of significance for this case. First, although the privilege is often referred to as the rule about quote “without prejudice” communications, those precise words are not required to invoke the privilege. What matters instead is the intent of the parties to settle the action (p. 739). Any negotiations undertaken with this purpose are inadmissible.

Lord Griffiths’ second relevant conclusion was that although most cases considering the “without prejudice” rule have dealt with the admissibility of communications once negotiations have failed, the rationale of promoting settlement is no less applicable if an agreement is actually reached. Lord Griffiths explained that a plaintiff in Rush & Tompkins’ situation would be discouraged from settling with one defendant if any admissions it made during the course of its negotiations were admissible in its claim against the other:

In such circumstances it would, I think, place a serious fetter on negotiations . . . if they knew that everything that passed between them would ultimately have to be revealed to the one obdurate litigant. [p. 744]

The breadth of the protection of without prejudice communications is demonstrated in the case of Middelkamp v. Fraser Valley Real Estate Board (1992), 96 D.L.R. (4th) 227 (B.C.C.A.) at para. 18, where Chief Justice McEachern stated:

“In my judgment this privilege protects documents and communications created for such purposes both from production to other parties to the negotiations and to strangers, and extends as well to admissibility, and whether or not a settlement is reached. This is because, as I have said, a party communicating a proposal related to a settlement, or responding to one, usually has no control over what the other side may do with such documents. Without such protection, the public interest in encouraging settlements will not be served.”

In Marziale the Letter was clearly prepared for the purpose of attempting to negotiate a settlement, which did not occur, and therefore invoked settlement privilege.

There was no express waiver of the settlement privilege following the preparation and delivery of the Letter to the petitioner.

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