Settlement privilege: A reasonable limit on the open court principle

7 minute read
31 January 2020

In settlements involving minor plaintiffs, defence counsel in our Alberta office routinely assist in seeking restricted access orders to ensure confidentiality of the terms of settlement.

Why is confidentiality important in out-of-court settlements?

Parties are undoubtedly more willing to settle outside of court because there is a degree of privacy. Normally, parties are free to resolve disputes without requiring Court approval; however, with settlements involving minors, provincial governments establish policies to review those settlements. In Alberta, the Minors' Property Act, SA 2004, c M-18.1 requires the Public Trustee and the Court to approve settlements entered into with minor plaintiffs.

Parties are granted privacy in settlements because of settlement privilege, which is often one of the most important terms agreed to by parties in resolving a matter. Settlement is a class privilege in Canada and settlement discussions are presumed to be private. The Supreme Court of Canada in Sable Offshore Energy Inc. v Ameron International Corp., 2013 SCC 37 recognized that without such protection, parties would be unwilling if not outright opposed to settling matters without a trial.

In having the Court approve settlements involving minors, a conflict is created between settlement privilege and the open court principle, which is the idea that Court proceedings are generally open to the public. Without a restricted access order, a minor's settlement information would be public. Given the importance of settlement privilege, parties can seek confidentiality relating to the court proceeding to approve a minor's settlement. Often media outlets will argue for greater access to settlement information and dispute parties seeking confidentiality, particularly where the litigation is based on contentious or publicly known facts.

The Court must exercise its judicial discretion as to when it is appropriate to limit the open court principle and afford the parties a privacy not normally granted in Court. Parties in actions involving minors routinely request restricted access orders (sometimes referred to as sealing orders) with respect to the quantum of settlement to protect the terms of settlement and to prevent serious risk to the administration of justice.

When is a restricted access order appropriate?

Recently, our office was involved in an application seeking a restricted court access order before Justice G. S. Dunlop in Athwal v Mather, 2019 ABQB 676. In that case, the Court considered which portions of the settlement approval process would be subject to a restricted court access order and remain confidential.

The Court reiterated that the law governing whether a particular case should be subject to a restricted access order is based on the Dagenais/Mentuck Test.[1] The Court quoted the test from the Supreme Court of Canada in Sierra Club of Canada v Canada (Minister of Finance), 2002 SCC 41:

A confidentiality order . . . should only be granted when:

(a) such an order is necessary in order to prevent a serious risk to an important interest, including a commercial interest, in the context of litigation because reasonably alternative measures will not prevent the risk; and

(b) the salutary effects of the confidentiality order, including the effects on the right of civil litigants to a fair trial, outweigh its deleterious effects, including the effects on the right to free expression, which in this context includes the public interest in open and accessible court proceedings.

Three important elements are subsumed under the first branch of the test. First, the risk must be real and substantial, well grounded in evidence, posing a serious threat to the . . . interest in question. Second, the important . . . interest must be one which can be expressed in terms of a public interest in confidentiality, where there is a general principle at stake. Finally, the judge is required to consider not only whether reasonable alternatives are available to such an order but also to restrict the order as much as is reasonably possible while preserving the . . . interest in question.

In considering whether a restricted court access order was appropriate, Justice Dunlop concluded that there is a public interest in protecting the privacy of children. He relied on Milne (next friend of) v Pfizer Inc., 2005 ABQB 236 to conclude that the benefit of providing freedom to minors to accept confidentiality provisions in settlements outweighs the harm of keeping the dollar amount of a settlement confidential.

In Athwal, the Court concluded that a restricted court access order was warranted with respect to the amount of the settlement, but not with respect to the minor's medical information. The Court went on to provide future litigants with useful direction about the information required to obtain approval of the settlement, while minimizing the disclosure of private medical information.

What's next for restricted court access orders?

The law currently works to balance the open court principle with the right of parties to resolve their disputes privately. Courts continue to recognize the importance that settlement privilege and confidentiality of settlements plays in the litigation process, which extends to settlements involving minors.

While restricted court access orders are routinely granted, few judgments are issued. The Athwal decision clearly articulates the state of the law in Alberta with respect to settlements involving minors and their right to confidentiality.

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