COURT FILE NO.:12-CV-453236CP

DATE: October 8, 2013

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

THE TRUSTEES OF THE DRYWALL ACOUSTIC LATHING AND INSULATION LOCAL 675 PENSION FUND and 0793094 B.C. LTD.

Plaintiffs

– and –

SNC GROUP INC., IAN A. BOURNE, DAVID GOLDMAN, PATRICIA A. HAMMICK, PIERRE H. LESSARD, EDYTHE A. MARCOUX, LORNA R. MARSDEN, CLAUDE MONGEAU, GWYN MORGAN, MICHAEL D. PARKER, HUGH D. SEGAL, LAWRENCE N. STEVENSON, GILLES LARAMÉE, MICHAEL NOVAK, PIERRE DUHAIME, RIADH BEN AÏSSA and STÉPHANE ROY

Defendants

A. Dimitri Lascaris, John Archibald, and Peter Jervis for the Plaintiffs

Jim Hodgson, Michael Brown and Guy White for the Defendants, SNC Group Inc., Ian A. Bourne, David Goldman, Patricia A. Hammick, Pierre H. Lessard, Edythe A. Marcoux, Lorna R. Marsden, Claude Mongeau, Gwyn Morgan, Michael D. Parker, Hugh D. Segal and Lawrence N. Stevenson

Steven Sofer for the Defendant, Pierre Duhaime

Proceeding under the Class Proceedings Act, 1992

HEARD: September 30, 2013

PERELL, J.

REASONS FOR DECISION

A. INTRODUCTION AND OVERVIEW

[1] The action is a certified class proceeding in which the Plaintiffs, The Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund and 0793094 B.C. Ltd., claim that the Defendants, including SNC Group Inc., are liable for misrepresentation under the statutory secondary market liability regimes of the provinces and territories. See The Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2012 ONSC 5288.

[2] As a central aspect of the Plaintiffs’ misrepresentation claims, it is alleged that between November 6, 2009 and February 27, 2012, the corporate Defendant, SNC, bribed governmental officials around the world to secure contracts for projects financed by the World Bank.

[3] On this motion, the Plaintiffs seek production from SNC of documents that include a Negotiated Resolution Agreement between SNC and the World Bank. This agreement followed the World Bank’s investigations of bribes alleged to have made for construction projects it financed in Bangladesh and Cambodia. The documents were created in the course of what the World Bank characterize as “sanctions procedures”, but which the Plaintiffs characterize as “an investigation” and which SNC characterizes as a “sanction proceeding.”

[4] The motion was argued on September 30, 2013, and I made the following endorsement with reasons to follow:

This is a motion for the production of certain documents, including a Negotiated Resolution Agreement between the defendant SNC-Lavalin and a non-party, the World Bank. For written reasons to follow, it is my opinion that: (a) the documents are prima facie privileged; (b) no exception to the prima facie privilege applies or should be created; and (c) the prima facie privilege has not been waived. Accordingly, with further reasons to follow, the motion should be dismissed.

[5] My reasons for dismissing the motion follow.

B. FACTUAL BACKGROUND

1. Introduction

[6] It will be helpful to understanding the factual background to keep in mind that the issues to be determined on this motion are: (a) whether settlement privilege applies; (b) if so, whether there is an applicable exception to the privilege; and (c) if there is a privilege, whether the privilege has been waived in the circumstances of this case.

[7] It will also be helpful to keep in mind that the elements of settlement privilege are: (1) litigation had been commenced or was within contemplation; (2) the communication was made with the express or implied intention it would not be disclosed; and (3) the purpose of the communication was to bring about a settlement. See: Sable Offshore Energy Inc. v Ameron International Corp. 2013 SCC 37; Waxman & Sons Ltd. v. Texaco Canada Ltd., 1968 178 (ON SC), [1968] O.J. No. 1068 (H.C.J), affd., 1968 327 (ON CA), [1968] O.J. No. 1174 (C.A.); Moore v. Bertuzzi,2012 ONSC 3248.

[8] I will describe the factual background to this motion in two parts. In the first part, I will set out the background to the Plaintiffs’ demand for production of the documents. In the second part, I will describe the nature of the World Bank Sanctions Procedures and what the Plaintiffs label an investigative process and what SNC labels a sanctions proceeding.

[9] In the second part, I do not rely on the expert evidence presented by the parties. In this regard, the Plaintiffs delivered an affidavit from Bruce Zagaris, an American attorney retained to give an opinion about the World Bank’s sanctions process in general and specifically with regard to SNC. In response, SNC delivered an affidavit from Homer E. Moyer, Jr., an American attorney with a competing opinion.

[10] In the second part of the background about the World Bank Sanctions Procedures, since I do not rely on the opinions of either expert witness, it is, therefore, not necessary for me to resolve the differences between the experts.

[11] A witness that is qualified by education or experience to provide the trier of fact with an opinion that is outside the trier of facts’ knowledge and experience may provide an opinion to assist the trier of fact to come to his or her own conclusion: R. v. Mohan, [1994] 1 S.C.R. 9; R. v. Marquard, 1993 37 (SCC), [1993] 4 S.C.R. 223; R. v. Abbey, 1982 25 (SCC), [1982] 2 S.C.R. 24. However, in the case at bar, although both attorneys have impressive credentials and experience, and although their opinions provided helpful general information about the World Bank, the characterization of the World Bank Sanctions Procedures is a legal matter within the competence of the court.

[12] In my opinion, the opinions of Messrs. Zagaris and Moyer are not admissible evidence for the purposes of this motion, and I will undertake my own analysis and description of the World Bank Sanctions Procedures.

2. The Demand for Production

[13] SNC is a Canadian engineering and construction company with offices and projects around the world. In 2001, through a subsidiary corporation, SNC unsuccessful bid for a bridge project in Padma, Bangladesh that was being financed by the World Bank.

[14] The World Bank is an inter-governmental financial corporation whose 185 shareholders are governments, including Canada.

[15] The World Bank, which has headquarters in Washington, U.S.A., was created at the 1944 Bretton Woods Conference, and it is recognized in Canada by the Bretton Woods and Related Agreements Act, RSC 1985, c. B-7. The World Bank is governed by Articles of Agreement.

[16] In 2011, the World Bank began an investigation about the bidding for the Padma Bridge Project.

[17] On March 26, 2012, by letter notice pursuant to the World Bank Sanction Procedures, the World Bank temporarily suspended SNC’s subsidiary’s rights to bid on World Bank financed projects. The letter stated:

This Notice constitutes formal notice of (i) the commencement of administrative sanctions proceedings against SNC-Lavalin pursuant to the World Bank Sanctions Procedures and Sanctions Board Statute, and (ii) the imposition of a temporary suspension on SNC-Lavalin effective as of March 26, 2012 pursuant to Section 2.03 of the World Bank Sanctions Procedures.

[18] The March 26, 2012 letter was issued by the “Evaluation Officer” under the World Bank Sanction Procedures. The reference in the letter to the commencement of administrative sanctions is an allusion to section 4.01 of the World Bank Sanctions Procedure under Article IV (Commencement of Proceedings) and the reference to a temporary suspension is an allusion to article 2.01 of Article II (Temporary Suspension Prior to Sanctions Proceedings). As appears, the World Bank issued the notice of prior suspension and the commencement of sanction proceedings simultaneously rather than sequentially. Sections 2.01 and 4.01 state:

ARTICLE II

TEMPORARY SUSPENSION PRIOR TO SANCTIONS PROCEEDINGS

Section 2.01. Issuance of a Notice of Temporary Suspension.

(a) Submission by INT. If, before INT concludes an investigation, the Integrity Vice President believes that there is sufficient evidence to support a finding of a Sanctionable Practice against a Respondent and that it is highly likely that the investigation will be successfully concluded and a Statement of Accusations and Evidence will be presented to the Evaluation Officer within a maximum period of one year, INT may present to the Evaluation Officer a Request for Temporary Suspension consisting of the elements cited in Section 3.01(b), mutatis mutandis. INT shall accompany any such Request for Temporary Suspension with a description of the current progress of the ongoing investigation, including any evidence that remains to be gathered, together with a good faith estimate of the time required to complete its investigation and present a Statement of Accusations and Evidence to the Evaluation Officer in accordance with Section 3.01, which may not exceed one year. INT shall further represent to the Evaluation Officer that the investigation is being pursued with due diligence and dispatch.

(b) Contents of a Notice of Temporary Suspension. A Notice of Temporary Suspension shall contain the elements cited in Section 4.01(b)(ii) through (iv).

(c) Issuance of the Notice of Temporary Suspension. If the Evaluation Officer determines that:

(i) there is sufficient evidence to support a finding that the Respondent has engaged in a Sanctionable Practice, and

(ii) had the accusations been included in a Statement of Accusations and Evidence, the Evaluation Officer would recommend, as an appropriate sanction for such Sanctionable Practice, debarment for a minimum period of no less than two years,

then, the Evaluation Officer shall issue the Notice of Temporary Suspension to the Respondent and notify the persons specified in Section 10.02.

(d) Withholding of Certain Evidence. The Evaluation Officer may, in his or her discretion and upon request by INT, withhold from the Respondent particular materials submitted in evidence upon a showing by INT that there is a reasonable basis to conclude that (i) the disclosure of such evidence would have a material adverse effect on the investigation, and (ii) the Respondent would retain the ability to mount a meaningful response to the accusations against it notwithstanding the withholding of such evidence. The Evaluation Officer shall inform INT of his or her decision and allow INT an opportunity to request the withdrawal of the Request for Temporary Suspension if the Evaluation Officer determines that such materials should not be withheld.

ARTICLE IV

COMMENCEMENT OF PROCEEDINGS

Section 4.01. Issuance of Notice of Sanctions Proceedings.

(a) Issuance of Notice. If the Evaluation Officer determines that INT’s accusations in the Statement of Accusations and Evidence are supported by sufficient evidence, the Evaluation Officer shall issue a Notice of Sanctions Proceedings to the Respondent, with copies to the Sanctions Board Chair and the Integrity Vice President.

(b) The Notice shall:

(i) set out the sanction(s) recommended by the Evaluation Officer in accordance with Section 4.01(c);

(ii) if applicable, inform the Respondent of its temporary suspension and the manner in which it may provide an Explanation;

(iii) inform the Respondent of the manner in which it may contest the accusations and/or the recommended sanction6 in the Notice;

(iv) append the Statement of Accusations and Evidence, together with copies of these Procedures and the Sanctions Board Statute, as in effect at the time of issuance of the Notice.

(c) Recommendation of Appropriate Sanction. The Evaluation Officer shall recommend in the Notice an appropriate sanction to be imposed on each Respondent, selected from the range of possible sanctions identified in Section 9.01 of these Procedures with due consideration of the factors set forth in Section 9.02.7 The Evaluation Officer may also recommend the imposition of sanctions on Affiliates of the Respondent in accordance with Section 9.04.

(d) Statute of Limitations. ….

[19] As appears from the dual notice, it appears that the World Bank was still investigating the matter of corruption and bribery but it was also had enough information to commence proceedings against SNC.

[20] On April 2, 2012 SNC issued a press release. The press release noted that the World Bank’s report was confidential and that SNC intended to provide a comprehensive response to the allegations.

[21] On June 29, 2012, the World Bank announced that it had cancelled the Padma Bridge Project, and the announcement stated that the World Bank had evidence of corruption and conspiracy between government officials, SNC executives, and private individuals in connection with the project.

[22] On August 14, 2012, the World Bank wrote to advise that the temporary suspension had been extended for a further six months.

[23] On September 20, 2012, the World Bank issued a press release announcing that the Government of Bangladesh was addressing the Bank’s evidence of corruption involving SNC. Subsequently, it was announced that the Government of Bangladesh would share the results of its own investigations by the Anti-Corruption Commission of Bangladesh, with an external panel of experts advising the World Bank.

[24] On January 15, 2013, the World Bank released a letter from its panel of experts to the Anti-Corruption Commission where the panel noted that there appeared to be a conspiracy involving government officials and four SNC representatives.

[25] On February 20, 2013, the World Bank panel of experts released a report concluding that SNC had promoted a systemic kick-back scheme.

[26] On April 17, 2013, in separate press releases, the World Bank and SNC announced that there was a settlement agreement; i.e., the “Negotiated Resolution Agreement”.

[27] The Negotiated Resolution Agreement provided that SNC would be debarred from World Bank financed projects for 10 years. The ban could be reduced to 8 years, if SNC complied with the conditions of the agreement.

[28] In its press release, the World Bank announced that the debarment was a consequence of SNC’s misconduct in relation to the Padma Bridge Project and another project, the Rural Electrification and Transmission Project in Cambodia. SNC’s press release indicated that it had signed the agreement to signal its determination to set standards for ethics in business conduct and for good governance that are beyond reproach.

[29] On April 25, 2013, Class Counsel wrote SNC’s lawyers to request production of the Negotiated Resolution Agreement and copies of all non-privileged communications with the World Bank in relation to the agreement or the World Bank’s allegations against SNC.

[30] On May 13, 2013, Class Counsel was advised that all the requested material was subject to settlement privilege.

[31] In this motion, the Plaintiffs seek production of from SNC: any Notices of Temporary Suspension; any Notice of Sanctions Proceedings and related documents; and the Negotiated Resolution Agreement.

[32] The World Bank takes no position with respect to this production motion.

3. World Bank Sanctions Procedures

[33] When the World Bank lends money for a project, the loan agreements incorporate the Bank’s procurement and anti-corporation guidelines. In 1996, the World Bank introduced a sanctions regime administered by the Integrity Vice President. In 2012, the Integrity Vice President (“INT”) had a staff of 94 persons and a budget of $20.6 million (USD).

[34] The World Bank Sanctions Procedures are available online at: http://siteresources.worldbank.org/EXTOFFEVASUS/Resources/WBGSanctions_Procedures_April2012_Final.pdf

[35] Section 1.01 of Article I (Introductory Provisions) of the World Bank Sanctions Procedures sets out the purpose of the procedures, which is ensure that funds provided by the World Bank are used only for their intended purposes. In furtherance of that purpose, the World Bank has established a regime for the sanctioning of firms and individuals found to have engaged in “Sanctionable Practices”, which are specified forms of fraud and corruption in connection with Bank-Financed Projects. The sanctions regime involves a two-tier sanctions process conducted by an “Evaluation Officer” and the “World Group Sanctions Board”.

[36] Section 1.02 of Article 1 provides definitions of: “affiliate,” “Anti-Corruption Guidelines,” “Consultant Guidelines,” “Days,” “Evaluation Officer,” INT,” “Notice,” Notice of Sanctions Proceedings,” “Notice of Temporary Suspension,” “Procurement Guidelines,” “Respondent”, “Sanctionable Practice”, “Sanctions Board”, “Sufficient Evidence”, “Voluntary Disclosure Program” or “VDP”, “World Bank” or “Bank”, “World Bank Group” or “WBG” and “World Bank Vendor Eligibility Policy”. For present purposes, the following definitions are relevant:

“Evaluation Officer” means the Evaluation and Suspension Officer appointed by the President of the Bank for cases governed by these Procedures. …

“INT” means the Integrity Vice Presidency of the World Bank Group; and the “Integrity Vice President” means the head thereof.

“Notice” means Notice of Sanctions Proceedings or Notice of Temporary Suspension, as the case may be.

“Notice of Sanctions Proceedings” means the document containing INT’s accusations of one or more Sanctionable Practices issued by the Evaluation Officer to a named firm or individual together with the sanction recommended by the Evaluation Officer in accordance with Section 4.01.

“Notice of Temporary Suspension” means the document containing INT’s accusations of one or more Sanctionable Practices issued by the Evaluation Officer to a named firm or individual in accordance with Section 2.01.

“Respondent” means an entity or individual alleged to have engaged in a Sanctionable Practice and who has been designated as such in a Notice, or in a settlement agreement. …

“Sanctions Board” means the World Bank Group Sanctions Board, and “Sanctions Board Chair” means the Chair of said Board. In respect of cases where the Sanctions Board Chair has convened a panel pursuant to Articles VII or VIII of the Sanctions Board Statute, and unless the context otherwise requires, the term “Sanctions Board” means the Sanctions Board Panel so convened, and “Sanctions Board Chair” means the Chair of said Panel.

“Sufficient evidence” means evidence sufficient to support a reasonable belief, taking into consideration all relevant factors and circumstances, that it is more likely than not that the Respondent has engaged in a Sanctionable Practice.

[37] Section 2.01, which has been set out above, of Article II (Temporary Suspension Prior to Sanction Proceedings) provides for the issuance of a notice of temporary suspension. Section 2.02 specifies that upon issuance of the Notice of Temporary Suspension, the Respondent shall be temporarily suspended from eligibility. Section 2.03 provides that within 30 days, the Respondent may explain in writing to the Evaluation Officer why it believes that, notwithstanding the evidence set forth in the Notice of Temporary Suspension, such Notice should be withdrawn. Within a further 30 days, the Evaluation Officer may decide to withdraw the Notice upon concluding that there is manifest error or other clear basis for supporting a finding of insufficiency of evidence against the Respondent. Section 2.04 provides an initial duration of the temporary suspension for 6 months with provision for extensions, expiration, and early termination.

[38] Section 3.01 of Article III (Referrals to the Evaluation Officer) describes in what circumstances the INT may seek to initiate sanctions proceedings. The section provides, among other things, that there can be a referral to an Evaluation Officer if as a result of investigation by INT, the Integrity Vice President believes that there is sufficient evidence to support a finding of one or more Sanctionable Practices in connection with a Bank- Financed Project. In order to initiate sanctions proceedings, INT shall submit to the Evaluation Officer a Statement of Accusations and Evidence including, among other things: INT’s specific accusations of Sanctionable Practices; INT’s summary of the facts constituting the Sanctionable Practice and the grounds for sanctioning any designated Affiliates; and the evidence in support of its accusations, together with any exculpatory or mitigating evidence. Section 3.02 requires the disclosure of exculpatory or mitigating evidence to the Evaluation Officer.

[39] The referral to an Evaluation Officer is one tier of a two-tier sanction procedure.

[40] Section 4.01, set out above, of Article IV (Commencement of Proceedings) provides for the issuance of Notice of Sanctions Proceedings. Section 4.02 provides that where the Evaluation Officer recommends a debarment exceeding 6 months, there is a temporary suspension from the date of the notice until the final outcome of the sanctions proceedings. Under section 4.02, the Respondent may within 30 days provide a written explanation to the Evaluation Officer as to why the Notice should be withdrawn or the recommended sanction revised. Within 30 days after receipt of the Explanation and upon consideration of the arguments and evidence presented therein, the Evaluation Officer may decide to terminate the temporary suspension. Under section 4.03, the Evaluations Officer may also withdraw the Notice upon concluding that there is manifest error or other clear basis for supporting a finding of insufficiency of evidence against the Respondent, or revise the recommended sanction in light of evidence or arguments as to mitigating factors presented by the Respondent.

[41] Section 4.04 provides that if the Respondent does not contest the accusations or the sanction recommended by the Evaluation Officer in the Notice within 90 days, the sanction(s) recommended by the Evaluation Officer in the Notice shall enter immediately into force.

[42] Section 5.01 of Article V (Referrals to the Sanctions Board) is the second tier of the World Bank’s sanction procedure. Section 5.01 specifies how the Respondent may contest the case by submitting to the Sanctions Board a written response to the accusations and or the recommended sanction within 90 days and the matter shall be referred to the Sanctions Board for its review and decision. INT may submit to the Sanctions Board a written reply to the Respondent’s arguments and evidence. Section 5.02 specifies the formal requirements for the written submissions. For example, all written submissions to the Sanctions Board are in English except that exhibits shall be in the original language with the pertinent parts translated into English. Section 5.03 provides that the Respondent may admit all or part of any accusation set forth in the Notice and may also present evidence and arguments of mitigating circumstances or other facts relevant to the decision of the Sanctions Board concerning an appropriate sanction.

[43] Section 6.01 of Article VI (Applications for a Hearing) provides that upon request by the Respondent or by INT the Sanctions Board will hold a hearing on the accusations against the Respondent. Section 6.02 provides that INT shall be represented in a sanctions proceeding by one or more representatives who may or may not be employees of the World Bank Group and that a Respondent may be self-represented or represented by an attorney or any other individual authorized by the Respondent, at the Respondent’s own expense. Section 6.03 provides that the hearing shall be confidential and not open or available to the public and section 6.03 specifies the rules for the presentations to the Sanctions Board. Section 6.03(b) and (c) state:

(b) Presentations by the Parties. Presentations to the Sanctions Board shall be subject to the following rules:

(i) Order. INT shall present its case first. The Respondent or Respondent’s representative shall present the Respondent’s case second. INT shall be permitted to reply to the Respondent’s case.

(ii) Length. The Sanctions Board Chair shall set a reasonable period of time for each presentation.

(iii) Form. Presentations shall be informal. They shall be limited to arguments and evidence contained in the written submissions filed with the Evaluation Officer and/or the Sanctions Board, and may rely upon or refute individual items of evidence.

(iv) Live Testimony. No live witness testimony shall be taken, except that one or more witnesses may be called and questioned by members of the Sanctions Board only. The Respondent or its authorized representative may make a statement during the hearing. There shall be no cross-examination, although rebuttal evidence may be presented during the hearing.

(v) Matters Relating to the Sanction. INT and the Respondent may present evidence of mitigating or aggravating factors relating to the appropriateness of a particular sanction.

(c) Response to Questions. The representative of INT and the Respondent or Respondent’s representative shall be subject to questions by the members of the Sanctions Board. A party’s refusal to answer, or failure to answer truthfully or credibly, may be construed against that party.

[44] Section 7.01 of Article VII (Evidence) specifies the forms of evidence in a sanctions proceeding. Section 7.01 states:

Section 7.01 Forms of Evidence

Any kind of evidence may form the basis of arguments presented in a sanctions proceeding and conclusions reached by the Evaluation Officer or the Sanctions Board. The Evaluation Officer and the Sanctions Board shall have discretion to determine the relevance, materiality, weight, and sufficiency of all evidence offered. Hearsay evidence or documentary evidence shall be given the weight deemed appropriate by the Evaluation Officer or the Sanctions Board. Without limiting the generality of the foregoing, the Evaluation Officer and the Sanctions Board shall have the discretion to infer purpose, intent and/or knowledge on the part of the Respondent, or any other party, from circumstantial evidence. Formal rules of evidence shall not apply.

Section 7.02. Privileged Materials.

Communication between an attorney, or a person acting at the direction of an attorney, and a client for the purpose of providing or receiving legal advice and writings reflecting the mental impressions, opinions, conclusions or legal theories of an attorney in connection with a legal representation shall be privileged and exempt from disclosure.

Section 7.03. No Discovery.

Except as expressly provided for in these Procedures, the Respondent shall have no right to review or obtain any information or documents in the Bank’s possession.

[45] Section 8.01 of Article VII (Decisions by the Sanctions Board) provides that the Sanctions Board shall determine, based on the record, whether or not it is more likely than not that the Respondent engaged in one or more Sanctionable Practices. If the Sanctions Board determines that it is not more likely than not then the proceedings shall be terminated. If the Board determines that it is more likely than not that the Respondent engaged in one or more Sanctionable Practices, it shall impose a sanction or sanctions from the sanctions identified in Section 9.01. In either case, the Sanctions Board shall issue a written decision setting forth a recitation of the relevant facts, its determination as to the culpability of the Respondent, any sanction to be imposed on the Respondent and its Affiliates and the reasons therefore.

[46] Section 8.02 provides that the review and deliberation of the Sanctions Board shall be restricted to the record consisting of the Notice, the Explanation (if any), the Response, the Reply, all other related written submissions of arguments and evidence, and all arguments presented at any hearing before the Sanctions Board. Section 8.02 also provides that “More likely than not” means that, upon consideration of all the relevant evidence, a preponderance of the evidence supports a finding that the Respondent engaged in a Sanctionable Practice. With respect to the burden of proof, the section states:

Burden of Proof. INT shall have the burden of proof to present evidence sufficient to establish that it is more likely than not that the Respondent engaged in a Sanctionable Practice. Upon such a showing by INT, the burden of proof shall shift to the Respondent to demonstrate that it is more likely than not that the Respondent’s conduct did not amount to a Sanctionable Practice.

[47] Section 8.03 provides that the decision of the Sanctions Board shall be final and without appeal, and shall be binding on the parties to the proceedings. The decision shall take effect immediately, without prejudice to any action taken by any government under its applicable law.

[48] Section 9.01 of Article IX (Sanctions) describes the range of possible sanctions, which include: reprimand, conditional non-debarment, debarment; debarment with conditional release; and restitution to the borrower or to any other party or actions to remedy the harm done by the misconduct. Section 9.04 specifies the scope of sanctions and the imposition of sanctions on affiliates of the Respondent. Section 9.02 sets out the factors to consider in determining an appropriate sanction. Section 9.03 provides for a procedure to ensure that there has been compliance with the sanctions.

[49] Article X (Disclosure) provides for disclosure to the public of information concerning the identity of each sanctioned party and the sanctions imposed and for the distribution of decisions, determinations and settlements within the World Bank Group. The Article provides that the Bank may make materials submitted by INT or the Respondent to the Evaluation Officer and/or the Sanctions Board available to another multilateral development bank or other international or multinational organization, or to national development agencies or the investigative or prosecuting authorities of its member countries, if the Bank determines that doing so would be in the best interests of the Bank; provided that the recipient of such materials agrees to keep them confidential on terms and conditions acceptable to the Bank.

[50] Article XI (Settlement) address settlement negotiations and settlements. Section 11.01 provides that at any time during sanctions proceedings, INT and one or more Respondents, acting jointly, may request the Evaluation Officer for a stay of proceedings for the purpose of conducting settlement negotiations. Section 11.02 provides that before or during sanction proceedings but before a decision by the Sanctions Board, INT and a Respondent may submit a signed copy of any settlement agreement to the Evaluation Officer for review and upon confirmation by the Evaluation Officer that the terms of the settlement agreement do not manifestly violate Sections 9.01 or 9.02 or any guidance issued by the Bank in respect thereof, the Evaluation Officer shall impose the sanction therein stipulated.

[51] If the settlement agreement is non-compliant or if the Evaluations Officer finds that a Respondent did not enter into the settlement agreement freely and fully informed of its terms, and without any form of duress, the Evaluation Officer shall promptly inform INT and the Respondent and the agreement shall be terminated without prejudice to any party thereto.

[52] Pursuant to section 11.03 if the settlement agreement provides for the definitive disposition, in whole or in part, of the case subject to sanctions proceedings, the case (or such part thereof as the agreement may specify) shall be closed as of the effective date of the agreement or any other such date specified in said agreement, on such terms, including the imposition of such sanctions on the Respondent, as may be stipulated in the agreement.

[53] Section 11.03 (d) provides that if a settlement agreement is to become effective before the commencement of sanctions proceedings, the terms of the agreement shall have the same effect as if sanctions proceedings had been commenced and concluded with the outcome as may be specified in the agreement. Section 11.04 provides for compliance procedures for settlement agreements.

[54] Article XII (Enforcement of Debarment Decisions by Other Multilateral Development Banks) empowers the World Bank to enforce debarment by another multilateral development bank

[55] Article XII (Additional Provisions) provides a variety of miscellaneous provisions, such as an effective date for the procedures and for amendments to the procedure.

[56] The World Bank Sanctions Procedures include a confidentiality provision. Section 13.06 states:

Section 13.06. Confidentiality.

Neither the Respondent (including any Affiliate thereof) nor the Bank shall disclose to, or discuss with, any third party any part of the record, or information relating thereto, except as follows:

(a) The Respondent may disclose any part of the record in its possession in accordance with these Procedures (i) to legal counsel engaged for the purpose of representing or advising the Respondent in the proceedings to which the record relates, and discuss the case with such counsel, provided that such counsel agrees that it shall not disclose to, or discuss with, any third party any part of the record, or information relating thereto; (ii) as required by an order of any court of competent jurisdiction, including pursuant to any procedure for the discovery of documents in proceedings before such court; or (iii) pursuant to any law or regulation having the force of law to which the Respondent is subject. Except as provided in (i) above, the Respondent shall provide INT and the Evaluation Officer or the Sanctions Board, as the case may be, with reasonable prior notice of any such disclosure.

(b) The Bank may disclose materials and other information in accordance with Article X or as otherwise permitted by its policies and procedures.

A violation of this Section 13.06 (whether by a Respondent and/or any of its Affiliates, or by legal counsel thereto) shall be (i) an aggravating factor in determining an appropriate sanction if the violation is brought to the attention of the Evaluation Officer or the Sanctions Board during sanctions proceedings, and (ii) a separate basis for sanction if the violation comes to light after the conclusion of sanctions proceedings.

C. DISCUSSION AND ANALYSIS

[57] I begin the discussion and analysis be pointing out two assumptions in my reasoning and analysis.

[58] The first assumption is that the documents sought by the Plaintiffs are relevant. The second assumption is that the documents sought are not collected documents that would have been producible in the normal course. In other words, documents that existed before the settlement negotiations and that should have been produced are not immunized from production by my conclusion that settlement privilege applies. It is for this reason that I added the description prima facie to my conclusion that the documents are privileged.

[59] Turning now to the Plaintiffs’ submissions. They make three arguments. First, the Plaintiffs argue that SNC has not proven the three elements necessary to establish settlement privilege; namely: (1) that litigation had been commenced or was within contemplation; (2) that the communication was made with the express or implied intention it would not be disclosed; and (3) that the purpose of the communication was to effect a settlement.

[60] I note here that the Supreme Court in Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, discussed further below, made it clear that the settlement privilege applies regardless of whether the negotiations produce a settlement or not.

[61] The premises of the first argument are that the World Bank’s Sanction Procedures are not “litigation” or only the post-investigation tiers of the procedure involving the Sanctions Board are litigation and in this case, the case never made it beyond the investigations stage, and, therefore, the first element of settlement privilege is unsatisfied. Further, the Plaintiffs submit that the second element is not satisfied because there was no express or implied intention of confidentiality, and the third element is not satisfied because SNC’s communications that lead to the Negotiated Resolution Agreement were for other purposes.

[62] The Plaintiff’s second argument is that if the elements of the settlement privilege have been satisfied, then in the extraordinary circumstances of this case, there should be a public policy exception to the settlement privilege.

[63] The Plaintiff’s third argument is that if the elements of the settlement privilege have been satisfied and there is no exception, then the words and conduct of SNC demonstrate that it has waived the settlement privilege.

[64] I disagree with all of these arguments.

[65] The Plaintiffs’ first argument is built on some comments by Justice Abella in the recent Supreme Court of Canada decision, Sable Offshore Energy Inc. v. Ameron International Corp., supra. In Sable Offshore Energy, the Supreme Court applied settlement privilege to the monetary terms of three Pierringer Agreements with some of the defendants. Justice Abella commented about the policy behind the settlement privilege at paragraphs 1, 2, and 11 as follows:

1. The justice system is on a constant quest for ameliorative strategies that reduce litigation's stubbornly endemic delays, expense and stress. In this evolving mission to confront barriers to access to justice, some strategies for resolving disputes have proven to be more enduringly successful than others. Of these, few can claim the tradition of success rightfully attributed to settlements.

2. The purpose of settlement privilege is to promote settlement. The privilege wraps a protective veil around the efforts parties make to settle their disputes by ensuring that communications made in the course of these negotiations are inadmissible.

3. Settlements allow parties to reach a mutually acceptable resolution to their dispute without prolonging the personal and public expense and time involved in litigation. The benefits of settlement were summarized by Callaghan A.C.J.H.C. in Sparling v. Southam Inc. (1988), 1988 4694 (ON SC), 66 O.R. (2d) 225 (H.C.J.):

[T]he courts consistently favour the settlement of lawsuits in general. To put it another way, there is an overriding public interest in favour of settlement. This policy promotes the interests of litigants generally by saving them the expense of trial of disputed issues, and it reduces the strain upon an already overburdened provincial Court system.

This observation was cited with approval in Kelvin Energy Ltd. v. Lee, 1992 38 (SCC), [1992] 3 S.C.R. 235, at p. 259, where L'Heureux-Dubé J. acknowledged that promoting settlement was "sound judicial policy" that "contributes to the effective administration of justice".

[66] From these comments, the Plaintiffs argue that the purpose of the settlement privilege is to reduce the demands on the overburdened court system and, therefore, the settlement privilege is confined to disputes that directly or indirectly involve procedures before the courts.

[67] Then, the Plaintiffs argue that in the immediate case, the Negotiated Resolution Agreement was not a settlement of litigation because: (a) the sanction procedures of the World Bank are a private sector system immune to court intervention; i.e. they are not litigation: or (b) if the World Bank’s sanction procedures are litigation, then the procedures had not gone far enough and the Negotiated Resolution Agreement was reached during the pre-litigation or investigation phase.

[68] The bottom line of these various arguments is that the Plaintiffs posit a narrow court-centric scope for the settlement privilege. With respect, these arguments are unsound and unconvincing.

[69] Although the venerable settlement privilege emerged during the former times when the courts had a virtual monopoly on access to justice, in contemporary times, the courts have many partners in administering justice. Those partners are both in the public and the private sector of adjudication and of administering justice.

[70] The adjudicative jurisdiction of the superior courts has been reduced by numerous public authorities, administrative agencies, administrative tribunals, and by arbitrators in the private sector. The courts do not have a monopoly on litigation. Save for its core jurisdiction and subject to the division of powers and the constraints of s. 96 of the Constitution Act, 1867, both the federal and the provincial governments can confer adjudicative jurisdiction onto administrative tribunals, and in contemporary times these tribunals have enormous workloads in administering justice and providing access to justice.

[71] The purposes of promoting settlement espoused by Justice Abella are not limited to the courts, and given her own experience as a former chair of the Ontario Labour Relations Board, a member of the Human Rights Commission of Ontario, a member of the Ontario Public Service Labour Relations Tribunal, and of the University of Toronto Academic Discipline Tribunal, it is inconceivable that she intended to circumscribe the scope of the settlement privilege to a court-centric privilege. If anything, he comments may be read for a liberal and broad mandate and scope for settlement privilege.

[72] In my opinion, I would cause considerable harm to access to justice and the administration of justice if I were to accept the Plaintiff’s narrow scope for the settlement privilege. For instance, such a ruling would imperil the ability of a securities commission to negotiate a settlement with those participating in capital markets under the supervision of the commission.

[73] I accept that not all disputes are litigious in the sense necessary to trigger the settlement privilege, but the sanction procedures of the World Bank Sanctions Procedure, described above, with their superstructure of notices, accusers, (the Evaluation Officer, INT), respondents, statements of accusations, notice of the case to be met, responses, replies, opportunities to be heard, rights of representation, evidence, onus of proof, and an adjudicative tribunal are patently litigation.

[74] I do not see how the asserted fact, which I doubt, but will accept for the purposes of argument, that the World Bank is never subject to any court’s supervision makes the World Bank Sanctions Procedure non-litigious. Practically speaking, many administrative tribunals are immune to court supervision because they have an exclusive jurisdiction, are protected by privative clauses, and very rarely have any difficulty abiding by the rules of natural justice or operating within their exclusive jurisdiction. Notwithstanding the typical absence of any court supervision, the proceedings before these tribunals would qualify as litigation for the purposes of the settlement privilege.

[75] Further, in the immediate case in determining whether the circumstances that led to the Negotiated Resolution Agreement were litigation, it is worth noting that section 11.03(d) of the World Bank Sanctions Procedure provides that if a settlement agreement is to become effective before the commencement of sanctions proceedings, the terms of the agreement shall have the same effect as if sanctions proceedings had been commenced and concluded with the outcome as specified in the settlement agreement.

[76] In any event, having considered the Plaintiffs’ arguments to the contrary, I am satisfied that the first element for settlement privilege (that litigation had been commenced or was within contemplation) is satisfied in the case at bar.

[77] I am also satisfied that the second element (the communication was made with the intention that it should not be disclosed) and the third element of settlement privilege (the purpose of the communication was to effect a settlement) are satisfied.

[78] I accept that there was no expressed intention that the communications should not be disclosed, but the circumstances of the immediate case, including, but not limited to, the confidentiality provisions of the World Bank Sanction Procedures, are strongly indicative that the parties to the negotiations intended that their settlement discussions not be disclosed and be treated as confidential.

[79] I do not see how the press releases of the parties, which had public relations purposes, detracted from the expected confidentiality of the settlement negotiations, which to use language of Justice Abella, “wraps a protective veil around the efforts parties make to settle their disputes by ensuring that communications made in the course of these negotiations are inadmissible.”

[80] Similarly, the factual circumstances reveal that the primary and predominant purpose of the communications was to effect a settlement.

[81] I, therefore, conclude that the communications that lead to the Negotiated Resolution Agreement are prima facie privileged, and I turn to the Plaintiffs’ second argument that in the circumstances of this case, the court should create an exception to the settlement privilege.

[82] The second argument is based on another comment of Justice Abella at paragraph 12 of her judgment in Sable Offshore Energy Inc. v. Ameron International Corp., supra, where she stated:

12. Settlement privilege promotes settlements. As the weight of the jurisprudence confirms, it is a class privilege. As with other class privileges, while there is a prima facie presumption of inadmissibility, exceptions will be found "when the justice of the case requires it" (Rush & Tompkins Ltd. v. Greater London Council, [1988] 3 All E.R. 737 (H.L.), at p. 740).

[83] The Plaintiffs argument for a new exception to the settlement privilege is set out in paragraph 82 of their factum, which states:

82. As held in Sable Offshore Energy, exceptions to settlement privilege will be recognized “when the justice of the case requires it” or where “a competing public interest outweighs the public interest in encouraging settlement.” Should this Court find that a “litigious dispute” existed prior to the conclusion of the Negotiated Resolution Agreement, there are compelling reasons for the Court to find that an exception to settlement privilege applies:

(a) the documents sought on this motion may contain or constitute the best evidence that SNC engaged in bribery during the Class Period in Asia, and they may contain admissions or other information that the Plaintiffs are unlikely to obtain by other means;

(b) the World Bank publicly expressed concerns as to adequacy of the response of the Government of Bangladesh to its investigation, and accordingly canceled its $1.2 billion IDA credit in support of the Padma Multipurpose Bridge Project, effective immediately;

(c) the World Bank almost certainly has investigative resources that are far superior to those of the Plaintiffs, and almost certainly has greater ability than the Plaintiffs to procure the cooperation of the authorities in Bangladesh;

(d) Bangladesh is a distant jurisdiction whose culture, language and legal system are substantially different from those of Canada, and such differences may well pose insurmountable challenges to the Plaintiffs’ efforts to acquire, by means other than an order requiring SNC to produce such documents, the evidence encompassed within the Withheld Documents;

(e) the World Bank can withhold and withdraw funding if it is not getting cooperation from authorities in developing countries, which is leverage the Plaintiffs do not have to overcome any resistance they may encounter from the authorities of Bangladesh; and

(f) Canada is a party to the United Nations Convention Against Corruption (“UNCAC”), which, at Article 13, provides that:

Each State Party shall take appropriate measures, within its means and in accordance with fundamental principles of its domestic law, to promote the active participation of individuals and groups outside the public sector, such as civil society … in the prevention of and the fight against corruption and to raise public awareness regarding the existence, causes and gravity of and the threat posed by corruption.

This participation should be strengthened by such measures as: …

(d) Respecting, promoting and protecting the freedom to seek, receive, publish and disseminate information concerning corruption. That freedom may be subject to certain restrictions, but these shall only be such as are provided for by law and are necessary:

(i) For respect of the rights or reputations of others;

(ii) For the protection of national security or ordre public or of public health or morals.

[84] That the settlement documents may contain the best evidence that SNC engaged in bribery and that it will be difficult or impossible to secure the evidence from the authorities in Bangladesh and that the World Bank has leverage that the Plaintiffs do not have are not public policy reasons for abrogating the settlement privilege in the interests of justice.

[85] Once again, to repeat the words of Justice Abella, the settlement privilege is designed to provide a protective veil around the efforts parties make to settle their disputes by ensuring that communications made in the course of these negotiations are inadmissible. That protective veil does not come down because settlement privilege will deny a third party important evidence and admissions to prove its case. The protection does not disappear because the third party has a significant claim or a difficult case to make.

[86] And, in my opinion, the protective veil does not come down to pursue purposes outside of the litigation, like Canada’s responsibilities under the United Nations Convention Against Corruption.

[87] The Plaintiffs are suing for money because of a violation of domestic securities market legislation, and they and Class Counsel are not on a mission to end corporation in Bangladesh in the interests of justice. Upon examination, the public policy exception that the Plaintiffs seek is not an exception to the settlement privilege but is an overheated submission that the settlement privilege should never apply because it will never be in the interest of justice since it interferes with a litigant’s ability to prove a difficult and perhaps important case. This policy argument for an exception to settlement privilege simply does not work, and I reject it.

[88] This brings the discussion to whether SNC waived the settlement privilege in the circumstances of this case.

[89] Privilege may be waived intentionally or inferentially or as a matter of fairness or consistency. In S. & K. Processors Ltd. v. Campbell Ave Herring Producers Ltd., (1983), 1983 407 (BC SC), 35 C.P.C. 146 at p. 148-49 (B.C.S.C.). which was followed in Ontario in Browne (Litigation Guardian of) v. Lavery (2002), 2002 49411 (ON SC), 58 O.R. (3d) 49 (S.C.J.), Justice McLachlin, as she then was, stated:

Waiver of privilege is ordinarily established where it is shown that the possessor of the privilege (1) knows of the existence of the privilege, and (2) voluntarily evinces an intention to waive the privilege. However, waiver may also occur in the absence of the intention to waive, where fairness and consistency so require.

[90] In the immediate case, there is no express waiver by SNC and no basis for an implied waiver based on fairness or consistency.

[91] The Plaintiffs argue that it is not fair that in the class action about misrepresentations in the secondary market, SNC relies on a due diligence defence about its internal safeguards at the same time as it is making admissions and collecting documents for a settlement with the World Bank about the involvement of its employees in bribing government officials in Bangladesh and Cambodia. I, however, fail to see any unfairness to the Plaintiffs or any inconsistency in the Defendants pursuing a due diligence defence at the same time as they negotiate a settlement with the World Bank. Whether SNC has a due diligence defence will turn on what it knew and did before it was embroiled in World Bank proceedings and not on what it communicated to the World Bank later while negotiating the Negotiated Resolution Agreement.

[92] The Plaintiffs’ waiver argument, therefore, fails

D. CONCLUSION

[93] For the above reasons, the motion is dismissed.

[94] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with SNC’s submissions within 20 days of the release of these Reasons followed by the Plaintiffs’ submissions within a further 20 days.

Perell, J.

Released: October 8, 2013

COURT FILE NO.:12-CV-453236CP

DATE: October 8, 2013

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

THE TRUSTEES OF THE DRYWALL ACOUSTIC LATHING AND INSULATION LOCAL 675 PENSION FUND and 0793094 B.C. LTD.

Plaintiffs

‑ and ‑

SNC GROUP INC., IAN A. BOURNE, DAVID GOLDMAN, PATRICIA A. HAMMICK, PIERRE H. LESSARD, EDYTHE A. MARCOUX, LORNA R. MARSDEN, CLAUDE MONGEAU, GWYN MORGAN, MICHAEL D. PARKER, HUGH D. SEGAL, LAWRENCE N. STEVENSON, GILLES LARAMÉE, MICHAEL NOVAK, PIERRE DUHAIME, RIADH BEN AÏSSA and STÉPHANE ROY.

Defendants

REASONS FOR DECISION

Perell, J.

Released: October 8, 2013.