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Civil Litigation - Pleadings - Where Settlement Privilege Involved

. Stronach v. Stronach

In Stronach v. Stronach (Div Ct, 2021) the Divisional Court raises the issue of how to plead (and proceed) where the admissibility of matters that may be settlement privileged is disputed:
[2] The motion judge struck out portions of fresh as amended statements of defence of the appellants on the ground that they pleaded documents and communications that are subject to settlement privilege.

[3] The impugned pleadings concern matters that are prima facie subject to settlement privilege. It is not clear that this privilege has been waived or that there is another basis for admitting these privileged matters into evidence. Therefore, these matters ought not be pleaded and ought not be the subject of disclosure and discovery prior to trial. Admissibility of evidence that is prima facie covered by settlement privilege remains an evidentiary ruling that may be raised with the trial judge, who will decide that issue on the foundation provided to assess the privilege issues on the complete record before them at trial. Accordingly, for the reasons that follow, we dismiss the appeals.


[25] As a matter of general principle, pleadings motions are not the appropriate stage in an action to engage in what is essentially a trial judge’s function of determining the admissibility of evidence at trial. Nevertheless, when issues of privilege are raised in the context of a pleadings motion, it is necessary for the court to consider whether a pleaded communication or document is subject to privilege. This is primarily because the pleadings define the issues in an action and, hence, the scope of discovery.

[26] As a general rule, a judge hearing a Rule 25.11 motion must refrain from engaging in an evaluation of the admissibility of evidence, a task which is more appropriately undertaken by a trial judge, while at the same time ensuring that a fair trial is not prejudiced or delayed.

[27] In the context of a motion to strike portions of a pleading that refer to what are alleged to be privileged communications or documents, Rule 25.11 permits a court to determine the issue where it is feasible and appropriate to do so. This will depend, in large measure, on the nature of the impugned allegations and the evidentiary record that is available to the motion judge.

[28] The question of whether the motion judge properly applied the test under Rule 25.11 boils down to whether it was appropriate for the motion judge to make a finding that the IO communications, the EY valuation and the July communications were prima facie covered by privilege. In Belsat Video Marketing Inc. v. Zellers Inc., 2003 CanLII 44163 (ON SC), Master MacLeod (as he then was), at para. 23, stated that unless the pleading is self-evidently an improper reference to the contents of a settlement discussion, it is not possible at the pleadings motion stage to determine whether settlement privilege should apply. In Bellatrix Exploration Ltd. v. Penn West Petroleum Ltd., 2013 ABCA 10, the Alberta Court of Appeal observed, at para. 28:
… not only must the ambit of the settlement privilege be broad, but the exceptions to the exclusionary rule must be narrowly construed and only be given effect where another policy objective can be shown to outweigh any impact that may arise to the settlement objective.
[29] In the present case, the motion judge had before him a substantial evidentiary record. Unlike many strikeout motions, which occur at a very early stage of the litigation, the litigation was already mature at the time that the strikeout motion arose, directed as it was to a fresh as amended statement of defence which was responding to a fresh as amended statement of claim.

[30] That said, the appellants raise concerns which would be more valid if the effect of the motion court judge’s decision had been to make evidentiary rulings that were binding on the trial judge. He did no such thing. Even without the struck-out portions of their defences, the defendants have joined issue with the allegations made with the plaintiffs. The impugned sections of the pleadings relate essentially to evidence that they wish to be able to tender in support of their defences that they did not breach their fiduciary obligations or engage in self dealing.

[31] We find no fault in the conclusion of the motion judge that he had before him a sufficient record to deal with the settlement privilege issues raised by the plaintiffs on the Rule 25.11 motion before him. That record was sufficient for him to conclude it was plain and obvious that the impugned paragraphs addressed documents and communications that were prima facie privileged.


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