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Articles

Keys to ADR: Key No. 009 – Hey, did you read it?

April 27, 2015

Most, if not all, mediators ask that the lawyers and their disputing clients sign a mediation agreement or contract either before or at a mediation session. These are often signed without due regard to their contents.

Many of these contracts make specific reference to confidentiality. But even if they don’t, lawyers can take comfort in Rule 24.1 to the extent that the Rule applies [1]. Rule 24.1 says:

CONFIDENTIALITY

24.1.14  All communications at a mediation session and the mediator’s notes and records shall be deemed to be without prejudice settlement discussions. O. Reg. 453/98, s. 1.

The Quebec Code of Civil Procedure [2] has a similar rule in the section that deals with judicial settlement conferences:

SECTION IV
SETTLEMENT CONFERENCE

151.14. A judge may preside a settlement conference. A judge enjoys judicial immunity while presiding such a conference….

151.16. The purpose of a settlement conference is to facilitate dialogue between the parties and help them to identify their interests, assess their positions, negotiate and explore mutually satisfactory solutions.

A settlement conference is held in private, at no cost to the parties and without formality.

Moreover, the Ontario Commercial Mediation Act [3] contains a more fulsome description of confidentiality and its limits:

Disclosure of information between parties

  1. (1) A mediator may disclose to a party any information relating to the mediation that the mediator receives from another party unless that other party expressly asks the mediator not to disclose the information. 2010, c. 16, Sched. 3, s. 8 (1).

Duty to keep confidential

(2) Information relating to the mediation must be kept confidential by the parties, the mediator and any other persons involved in the conduct of the mediation unless,

(a) all the parties agree to the disclosure and, if the information relates to the mediator, the mediator agrees to the disclosure;

(b) the disclosure is required by law;

(c) the disclosure is required for the purposes of carrying out or enforcing a settlement agreement;

(d) the disclosure is required for a mediator to respond to a claim of misconduct; or

(e) the disclosure is required to protect the health or safety of any person. 2010, c. 16, Sched. 3, s. 8 (2).

Exception

(3) The requirement to keep information relating to the mediation confidential does not apply to information,

(a) that is publicly available;

(b) that the parties, by their conduct, do not treat as confidential; or

(c) that is relevant in determining if the mediator has failed to make a disclosure required under subsection 6 (3). 2010, c. 16, Sched. 3, s. 8 (3).

All of this should seem straightforward. But, then again, maybe not.

Take the case of Union Carbide Canada Inc. v Bombardier Inc., a case that originated in Quebec and found its way to the Supreme Court of Canada.[4]

The parties were engaged in a multi-million dollar product liability dispute. A  mediation was agreed to and held before a lawyer, not a judge.

The mediation agreement contained the following clause:

  1. Anything which transpires in the Mediation will be confidential. In this regard, and without limitation:

(a) Nothing which transpires in the Mediation will be alleged, referred to or sought to be put into evidence in any proceeding;

(b)   No statement made or document produced in the Mediation will become subject to discovery, compellable as evidence or admissible into evidence in any proceeding, as a result of having been made or produced in the Mediation; however, nothing will prohibit a party from using, in judicial or other proceedings, a document which has been divulged in the course of the Mediation and which it would otherwise be entitled to produce;

(c)   The recollections, documents and work product of the Mediator will be confidential and not subject to disclosure or compellable as evidence in any proceeding.

A settlement offer was extended in the course of the mediation and was kept open for acceptance for a period after the mediation.  The other party accepted some time later.  A dispute arose over the scope[5] of the release and one of the parties then sought to enforce the settlement with the release it wanted while the other argued there was no settlement at all.  Legal proceedings to enforce the settlement were brought.

The party seeking to enforce the deal in its pleadings referred to documents and the discussions exchanged during the mediation to show that there was the deal. A motion was brought to strike portions of the pleadings that sought to rely on the documents and the discussions exchanged during the mediation on the grounds that they were confidential to the mediation process. There was no effort made to compel the mediator to give evidence as to the scope of the deal purportedly made.

The competing principles included: the application of the common law doctrine of settlement privilege [which applies in Quebec notwithstanding its omission from the Code] and the exceptions to it; and the freedom to contract out of that privilege.

With respect to the former, the Supreme Court of Canada acknowledged the public utility of settlement privilege and found that it applies even in the absence of statutory provisions or contract clauses. One of the exceptions to settlement privilege is “the rule that protected communications may be disclosed in order to prove the existence or scope of a settlement”.

The Court went on to observe that common law settlement privilege and confidentiality in the mediation context are often conflated and there are circumstances where they can conflict. For example, the confidentiality provisions in the mediation contract apply only during the mediation session, while settlement privilege, which is a rule of evidence, may apply both before and after the mediation.

Moreover, there are recognized exceptions to settlement privilege that a confidentiality clause may not recognize.

The Supreme Court then set out the heuristic steps that ought to be taken to sort out these competing interests:

  1. Does the confidentiality clause conflict with settlement privilege or its exceptions?
  2. If the confidentialty clause is wider than the common law, then presumptively the contract should prevail;
  3. However, this may not apply where the confidentiality clause purports to override the exception to the settlement privilege rule. In such a case, the override must be clear.
  4. Applying the foregoing to the case at bar, given the context that gave rise to the mediation and the contract made, it was clear that the parties had not agreed to contract out of the common law exception and hence, the mediation contract were at liberty to produce such evidence only insofar it was necessary to prove the terms of the settlement.

So the word to the wise is this: review carefully the terms of the mediation contract that the mediator or counsel prepared. Pay attention to the confidentiality clause. Our form of mediation contract provides that until the deal has been reduced to writing [and that includes the Minutes of Settlement and the Release] there is NO DEAL. This is especially important because most mediation agreements contain provisions that will prevent the mediator from giving evidence as to any alleged deal and many mediators make it a point to destroy their notes [including wall adorned flow charts etc.] immediately after the mediation if they made them at all.

Would this have solved the problem that was before the Supreme Court? Probably. If the parties could not have agreed on the wording of the Minutes of Settlement and the form of Release, then there would have been no deal.

If you have any questions about the article, please do not hesitate to contact Gary Caplan at Mason Caplan Roti LLP.


[1] Rules of Civil Procedure, RRO 1990, Reg 194

[2] Code of Civil Procedure, CQLR c C-25

[3] Commercial Mediation Act, 2010, S.O. 2010, c. 16, Sched. 3

[4] 2014 SCC 35 (CanLII).

[5] Union Carbide, the defendant, had argued that the settlement and the release included not only the products that were the subject matter of the Quebec action, but also that class of such products worldwide and for any future litigation.