ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 2867/13

DATE: 2015-06-11

BETWEEN:

DIANNE ROUILLARD
Applicant

– and –

JACQUES ROUILLARD
Respondent

M. Walz, Counsel for the Applicant

J.P. Paciocco, Agent for B. Ostroski, Counsel for the Respondent

HEARD: May 28, 2015

varpio, j.

REASONS FOR RULING

OVERVIEW

[1] This is a motion brought by the husband to have certain portions of the record struck. The husband submits that the impugned sections of the record breach:

a. The Family Law Rules regarding confidentiality;

b. Settlement privilege; and/or

c. Solicitor/Client privilege.

[2] As will be seen in the analysis below, the impugned sections of the record all breach one form of privilege or another and, as such, are struck from the record.

FACTS

[3] The facts relevant to this motion are fairly simple. This is a case where the parties are arguing about spousal support and NFP equalization payments. During the course of the litigation, the parties exchanged several offers to settle, some of which were signed, some of which were not signed and some of which were included in a case conference brief. In her affidavits, the wife (who was represented by counsel when the materials were filed) made reference to settlement discussions and included offers to settle as exhibits to affidavits.

[4] Attached to this decision as Schedule “A” are a list of the references and exhibits contained in the court record that the husband submits run afoul of the law of privilege. It should be noted that the wife agrees that certain portions of the record should be expunged.

GOVERNING LAW

[5] The common law dealing with the confidentiality of settlement negotiations is long settled. It was succinctly described by Pepall J. (as she was then) in Catalyst Fund Limited Partnership II v. IMAX Corporation 2008 16467 (ON SC) at paragraph 4:

With the exception of communications relating to non-standard terms included in certain IMAX contracts, all documents sent and received to or by the corporate finance branch of the OSC and SEC have been produced. There is nothing in the application that would render communications, if any, with the enforcement branch of the OSC or the SEC relevant. Even if there were, it is hard to imagine that communications between IMAX and the enforcement branch would not be covered by settlement privilege. The policy rationale that underlies settlement privilege was set forth in I. Waxman & Sons Ltd. v. Texaco Canada Ltd. et al. The privilege is intended to encourage amicable settlements and to protect parties to negotiations for that purpose. As Fraser J. stated in that case, it is in the public interest that it not be given a restrictive application. It arises in both a civil and criminal context and extends to a litigious dispute that exists or is contemplated. The privilege covers communications that are made with the express or implied intention that they will not be disclosed if the negotiations fail. [Emphasis added]

[6] Master Birnbaum, in Pine Valley Developments Corporation v. Marsh et al [2008] O.J. No. 2811 at paras 2 to 5 quoted the above-referenced passage and added the following:

Most litigation brought in this court settles: approximately 95% of cases settle. There is a public interest in having cases settle, so much so that the concept of privilege has evolved to include a privilege for settlement discussions and documents. The recent decision in Catalyst Fund Limited Partnership II v. IMAX Corporation sets out the policy for settlement privilege: "The privilege is intended to encourage amicable settlements and to protect parties to negotiations for that purpose."

Unfortunately, the brief negotiations between the plaintiff and Ms. Day did not result in settlement earlier this year, but that does not mean that the privilege does not remain.

Justice Perrell of this court is a recognized expert on the subject of privilege and in his article "A Privilege Primer, May, 2006, he wrote:

There is a privilege for without prejudice communications made to settle a dispute. The criteria for this privilege are that: (1) the communication must be made for the purpose of settling a dispute; and (2) the party making the communication must expressly or implicitly intend that the communication be excluded from evidence in the event that no settlement is achieved.

He goes on to say that the phrase "without prejudice" is not necessarily determinative of the issue of privilege; the contents of the document must be examined to determine that the content is indeed about settlement. It is clear the letter is a response to a settlement offer made by Ms. Day's counsel on February 11, 2008 in a letter marked "without prejudice." While Ms. Day may waive privilege for a letter written by her counsel, I find that there has been no waiver of the privilege of Mr. Drudi's letter, That this letter is protected by the privilege is supported by the comment in Waxman & Sons Ltd. v. Texaco Canada Ltd. et al.:

It is my opinion that the reply letter was fairly made for the purpose of expressing the writer's views on the matter of litigation or dispute and, as such, is protected by the rule. The correspondence received from the plaintiff indicated that it was without prejudice and therefore I am of the opinion that the defendant may reasonably have been induced into feeling that he was free to comment upon the action and his position in the action without such comments being introduced into evidence. The fact that his reply was without prejudice would substantiate this view. [Emphasis added]

[7] Thus, offers made within the context of negotiation are cloaked with privilege so as to ensure that a premium is placed upon “amicable settlement”. To attract common law privilege, it would appear unnecessary that formal incantations of “Offer to Settle” or “Without Prejudice” are necessary. Instead, it appears clear that the common law will protect those “communications that are made with the express or implied intention that they will not be disclosed if the negotiations fail”.

[8] Counsel for the wife suggests that, in order to be protected by common law privilege, an individual offer must be “amicable”, that is to say, the offer must be reasonable. An unreasonable offer would not, therefore, be privileged.

[9] That position constitutes a misreading of the law. The law hopes for amicable settlement but does not necessarily demand that all offers be reasonable. The policy reasons supporting this view are powerful. Firstly, “it is in the public interest that it [settlement privilege] not be given a restrictive application”. Courts want to encourage settlement and, if counsel had to consider whether a statement made during negotiation was sufficiently reasonable to attract privilege, the chilling effect upon negotiations could easily cause parties to hold their cards closer to the vest and thus diminish the likelihood of candid settlement discussions. Secondly, the mechanics of determining what constitutes a reasonable offer would generate motions regarding an interlocutory matter and would needlessly drive up costs of litigation. Finally, a party that engages in unreasonable settlement posturing during litigation runs the risk of severe costs sanctions. Costs is thus the appropriate remedy for improper conduct of litigation, not the admission of offers into evidence for what is likely a collateral purpose. Therefore, I reject this argument and I dismiss its applicability to this or any other case.

THE RULES

[10] The Family Law Rules also incorporate a confidentiality regime with respect to settlement discussions and conference briefs. Rule 17 of the Family Law Rules governs Conferences and the materials prepared therefor:

RULE 17: CONFERENCES

CONFERENCES IN DEFENDED CASES

17. (1) Subject to subrule (1.1), in each case in which an answer is filed, a judge shall conduct at least one conference. O. Reg. 383/11, s. 4 (1).

PURPOSES OF CASE CONFERENCE

(4) The purposes of a case conference include,

(a) exploring the chances of settling the case;

(b) identifying the issues that are in dispute and those that are not in dispute;

(c) exploring ways to resolve the issues that are in dispute;

(d) ensuring disclosure of the relevant evidence...

PURPOSES OF SETTLEMENT CONFERENCE

(5) The purposes of a settlement conference include,

(a) exploring the chances of settling the case;

(b) settling or narrowing the issues in dispute;

(c) ensuring disclosure of the relevant evidence;

(c.1) settling or narrowing any issues relating to any expert evidence or reports on which the parties intend to rely at trial;

(d) noting admissions that may simplify the case;

(e) if possible, obtaining a view of how the court might decide the case;

(f) considering any other matter that may help in a quick and just conclusion of the case...

CONTINUING RECORD, CASE CONFERENCE BRIEFS

(22) Case conference briefs do not form part of the continuing record unless the court orders otherwise and shall be returned at the end of the conference to the parties who filed them or be destroyed by court staff immediately after the conference. O. Reg. 89/04, s. 8 (5).

DELETIONS FROM CASE CONFERENCE BRIEF INCLUDED IN RECORD

(22.1) If the court orders that a case conference brief form part of the continuing record, that portion of the brief that deals with settlement of the case shall be deleted. O. Reg. 89/04, s. 8 (5).

CONTINUING RECORD, SETTLEMENT CONFERENCE BRIEFS

(22.2) Settlement conference briefs do not form part of the continuing record and shall be returned at the end of the conference to the parties who filed them or be destroyed by the court staff immediately after the conference. O. Reg. 89/04, s. 8 (5).

CONFIDENTIALITY OF SETTLEMENT CONFERENCE

(23) No brief or evidence prepared for a settlement conference and no statement made at a settlement conference shall be disclosed to any other judge, except in,

(a) an agreement reached at a settlement conference; or

(b) an order. O. Reg. 114/99, r. 17 (23).

SETTLEMENT CONFERENCE JUDGE CANNOT HEAR ISSUE

(24) A judge who conducts a settlement conference about an issue shall not hear the issue, except as subrule (25) provides. O. Reg. 91/03, s. 6 (4)

[11] Rule 18 governs Offers to Settle and the effect said offers have upon the litigation:

RULE 18: OFFERS TO SETTLE

DEFINITION

18. (1) In this rule,

“offer” means an offer to settle one or more claims in a case, motion, appeal or enforcement, and includes a counter-offer. O. Reg. 114/99, r. 18 (1).

APPLICATION

(2) This rule applies to an offer made at any time, even before the case is started. O. Reg. 114/99, r. 18 (2).

MAKING AN OFFER

(3) A party may serve an offer on any other party. O. Reg. 114/99, r. 18 (3).

OFFER TO BE SIGNED BY PARTY AND LAWYER

(4) An offer shall be signed personally by the party making it and also by the party’s lawyer, if any. O. Reg. 114/99, r. 18 (4).

CONFIDENTIALITY OF OFFER

(8) The terms of an offer,

(a) shall not be mentioned in any document filed in the continuing record; and

(b) shall not be mentioned to the judge hearing the claim dealt with in the offer, until the judge has dealt with all the issues in dispute except costs. O. Reg. 114/99, r. 18 (8).

COSTS — DISCRETION OF COURT

(16) When the court exercises its discretion over costs, it may take into account any written offer to settle, the date it was made and its terms, even if subrule (14) does not apply. O. Reg. 114/99, r. 18 (16).

[12] The Family Law Courts have discussed the need for confidentiality in both settlement discussions and conference briefs. In A.B. v N.L.A. 2013 ONSC 2990, [2013] O.J. No. 2861 at paras 126 to 128, Czutrin J. stated:

Pursuant to the Family Law Rules, case conference briefs are not part of the continuing record and are to be returned to the parties (rule 17(22)). In the exception to this rule, where the case conference briefs are ordered to be part of the record under rule 17(22.1), the portion that deals with settlement must be deleted.

Parties at a conference are not present for the purpose giving evidence. This would defeat the main purposes of a conference which are to deal with the case procedurally and explore the chances of settlement and work toward resolution or trial readiness.

Similarly, offers to settle are not to be included in the continuing record and offers are not to be seen by the judge who decides a motion, trial or any event until after the event (rule 18(8)).

The Rules require a confidential settlement conference before a case is scheduled for trial (rules 17(10), (23)). The judge who conducts a settlement conference is prevented from hearing, at trial, the issue that was discussed at the conference (rule 17(24)).

[13] The wife’s counsel submitted that, as a general proposition, the wording of Rules 17 and 18 suggest that the contents of a settlement conference brief attract more protection than do the contents of a case conference brief. While that may be the case, case conference briefs are nonetheless subject to a presumption that their contents are confidential unless otherwise ordered by the Court. Rule 17 (22.1) makes clear that any reference to settlement within a case conference brief must remain confidential even if a judge chooses to admit the case conference brief into the record. I am thus satisfied that absent an overriding concern, case conference briefs should not be made a part of the court record lest parties become guarded and thwart possible settlement. While this concern is heightened with respect to settlement discussions made within case conference briefs, the need for candour and open discussion at case conferences (where emotions can easily sway otherwise rational and thoughtful people) is such that courts should utilize great caution when determining whether or not to admit any part of a case conference brief into evidence. Anything that could cause parties in family law litigation to remain guarded (and thus fail to explore all settlement options) is to be discouraged.

[14] Further, I am aware of no law that states that the Family Law Rules have rendered common law privilege precedent moot. Pursuant to typical statutory interpretation, I accept that, where the Rules are applicable, the Rules override the common law. However, where the Rules do not apply (as in the case of offers that do not comport with Rule 18(4)), I accept that the common law settlement privilege continues to govern the admissibility of any such communications.

APPLICATION TO THIS CASE

[15] Having reviewed the law, I can deal with each passage in turn, using the references from Schedule “A” as a guide.

Passage 1

[16] In this email entitled “The Deal”, Mr. Rouillard lays out terms that he is prepared to accept in order to settle the file. Mrs. Rouillard submits that the email is not signed and thus does not comport with the Rules. She also states that “The Deal” is a document whereby I cannot infer that the contents are intended to be privileged. I disagree. Mrs. Rouillard indicates that the inclusion of “The Deal” is necessary for the record to show that Mr. Rouillard is capable of being self-sufficient since the terms of settlement located within the document reflect Mr. Rouillard’s ability to earn a living.

[17] Despite the possibility that Mr. Rouillard’s offer to settle may disclose an inconsistency with his position seeking spousal support (a finding I am not making, one way or another), any probative value associated with that possible fact is overshadowed by the broader policy mandating that settlement discussions must generally remain privileged. “The Deal” was generated as a means of discussion the possible resolution of the file. If such discussions are not protected by privilege, then any discussion that does not clearly comport with the Rules would not attract privilege. As noted above, that is not the state of the law. As such, Entry 1 must be struck from the record.

Passage 2

[18] Mrs. Rouillard’s counsel submits that this document does not constitute settlement discussion but is, instead, an “opening letter” which commences a general discussion, and not settlement discussion. I disagree with counsel in that the discussion is clearly an attempt by Mr. Rouillard’s former solicitor to settle part, or all, of the dispute. As such, the letter (and the remainder of Entry 2) is covered by settlement privilege and ought not form part of the record.

Passages 3, 4 and 7

[19] These entries constitute discussion surrounding, and inclusion of, the case conference brief. Mrs. Rouillard’s counsel submits that Mr. Rouillard’s specific references to a debt to his mother are relevant to the spousal support issue.

[20] Despite the possible relevance of the alleged debt, the case conference brief cannot be included in the record as an exhibit to an affidavit. The Rules clearly provide that any inclusion of the case conference brief requires a Court Order. Doing an “end run” around the Rules by including a case conference brief in an affidavit is unacceptable. Further, the existence of a debt allegedly incurred by Mr. Rouillard can be cured by a disclosure order. Failure to satisfy same imports its own sanctions including possible contempt hearings. Thus, the probative value of any “debt disclosure” within the case conference brief is negligible and, as such, I will not permit the Brief – or any discussion regarding same – to be included in the trial record. Entries 3, 4 and 7 are struck from the record.

Passages 5 and 6

[21] Entry 5 is clearly protected by solicitor/client privilege and Entry 6 is subject to settlement privilege since the document was obviously made in contemplation of litigation. They are both to be struck from the record.

Passages 8, 9 and 12

[22] As noted in the legal discussion above, these items make reference to settlement discussions for contemplated litigation which are clearly intended to be privileged. As such, these items must be struck from the record, including the redacted document.

Passage 10

[23] This section deals with analysis of a document entitled “Offer to Settle” which falls with the purview of the Rules. Any reference thereto is obviously improper and Entry 10 is therefore struck from the record.

Passage 11

[24] Mrs. Rouillard consents to the striking of this entry from the record as it constitutes comments made by the judge at the case conference.

Passage 13

[25] I will not strike this portion of the record since it is only evidence in support of a request to have disclosure of certain information. I will not rule on the request since there is no motion before me and I leave it to the parties to either provide disclosure voluntarily or to bring a motion for same.

COSTS

[26] The parties are to fix a date with the trial coordinator for a costs hearing before me.

Varpio J.

Released: June 11, 2015

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

DIANE ROUILLARD

• and -

JACQUES ROUILLARD

reasons for ruling

Varpio J.

Released: June 11, 2015

SCHEDULE “A”

The Applicant wife agrees that items 5, 6, and 11 ought to be struck from the record.

Passages Under Review

1. Volume 1, Tab 12, Affidavit of Diane Rouillard sworn April 13, 2015, paragraph 9, last sentence plus attachment:

Attached hereto as Exhibit “A” is a copy of the email dated June 5, 2012, from Jake Rouillard to me entitled, “The deal”.

2. Volume 1, Tab 12, Affidavit of Diane Rouillard sworn April 13, 2015, paragraph 10:

After separation, the Respondent offered to transfer the company to our children in exchange for his claim for spousal support. Attached hereto as Exhibit “B” is a copy of the correspondence I received from Lorna Rudolph on May 8, 2012. Such offer leads me to believe that the Respondent has no need for support; such is a bargaining tool; and the Respondent will always control the family business.

3. Volume 1, Tab 12, Affidavit of Diane Rouillard sworn April 13, 2015, paragraph 20, last sentence:

Attached hereto as Exhibit “G” is a copy of Case Conference Brief, page 9 executed by Jacques Rouillard on January 8, 2014.

4. Volume 1, Tab 12, Affidavit of Diane Rouillard sworn April 13, 2015, paragraph 27, reference to Case Conference Brief:

However in his Case Conference Brief, page 5, the Respondent indicated that there was a debt to his mother Yvette Rouillard in the sum of $51,000.00 He has not able [sic] to produce any documentation to substantiate this debt.

5. Volume 1, Tab 12, Affidavit of Diane Rouillard sworn April 13, 2015, paragraph 39, last sentence:

Attached hereto as Exhibit “M” is a copy of the email dated July 31, 2012.

6. Volume 1, Tab 12, Affidavit of Diane Roulliard sworn April 13, 2015, paragraph 43:

As part of the negotiations, I was offered an initial equalization payment of $20,500.00 and 3 months later $38,500.00. Attached hereto is Exhibit “O” is a copy of said deal.

7. Volume II, Tab 2, Affidavit of Diane Rouillard sworn April 27, 2015, paragraph 4:

See Exhibit “G” – Page 8 of the Applicant Wife’s Affidavit sworn April 13, 2015.

[Note: same Exhibit as item 3 above]

8. Volume II, Tab 2, Affidavit of Diane Rouillard sworn April 27, 2015, paragraph 5:

In his document entitled “Separation Agreement” (attached hereto and marked as Exhibit “A” to this my Affidavit), the Respondent Husband states that the company will be transferred to our children but that he will retain the assets. In his “Addendum to Separation Agreement” (attached hereto and marked as Exhibit “B”), the Respondent Husband requests the books and records of the family business so that he could get them to his new accountant.

9. Volume II, Tab 2, Affidavit of Diane Rouillard sworn April 27, 2015, paragraph 29:

In addition to his unreasonable proposal dated June 5, 2012 that, despite our net worth of over $1,000,000.00 (including our solar contract with a potential net worth of $200,000.00 and including his WSIB pension valued at over $61,000.00), I would get the camp, which was appraised at $206,000.00 and a $38,500.00 debt, there were a couple of other proposals which were just as unreasonable. On a hand written document dated April 7, 2012 (see Exhibit “I” attached to this my Affidavit) he proposed that I retain the camp and the 2005 Jetta and receive an equalization payment of $20,500.00 which is completely unreasonable given the fact that the Respondent would continue to have in possession the remaining 80% of our total assets.

10. Volume II, Tab 2, Affidavit of Diane Rouillard sworn April 27, 2015, paragraph 55:

According to the Respondent Husband, the balance owing was $11,000.00 as at the date of separation (See Exhibit “L” attached to this my Affidavit) and that there is a balance of $5,000.00 owing as per the Respondent Husband Offer to Settle dated April 24, 2015 (See Exhibit “M” attached to this my Affidavit).

11. Volume II, Tab 2, Affidavit of Diane Rouillard sworn April 27, 2015, paragraph 61:

Justice McMillan was quite clear at the case conference that courts are aware of “legal ownership” versus reality of situation.

12. Volume II, Tab 9, Affidavit of Diane Rouillard sworn May 25, 2015, paragraph 15:

Nevertheless, attached hereto and marked as Exhibit “C” at this Affidavit is a copy of the correspondence received from Ms. Lorna Rudolph, dated May 8, 2012, with all contents blocked save and except for the paragraph whereby the Respondent indicates he would give up his claim for spousal support in exchange for the transfer of the company operating as Rouillard Trucking from me, as Director and Officer, to our children as sole Directors and Officers. Since the Respondent is adamant that he is not receiving any benefits through the corporation other than this small paycheck, it is obvious then that he has no need for spousal support and is therefore not entitled to spousal support.

13. Volume II, Tab 2, Affidavit of Diane Rouillard sworn April 27, 2015, paragraph 20:

As far as Exhibit “M” of the Affidavit of Diane Rouillard, sworn April 27, 2015, Volume II, Tab 2, I am prepared to have this Exhibit expunged from the record; provided the Respondent produces all evidence of all payments made towards the debt to my mother-in-law Yvette Rouillard; including but not limited to the $8,000.00 paid by the Respondent and the $3,000.00 paid by the applicant confirmed by the Respondent in all the Exhibits; all statements and cancelled cheques from our joint personal Royal Bank Account #00422-5333893; all hand-written notes; receipts, statements, up to and including the date of separation (March 7, 2012), which documentation is found in the matrimonial home, which is in the possession of the Respondent.