COURT FILE NO.: 15-65254
DATE: 2021/11/01
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Joanne Burwash, Plaintiff
AND
Dr. Sheldon Levy, Dr. Abraham Isaac Orner, 7977085 Canada Inc., previously known as Riverfront Medical Services Limited, Jean Turgeon, Dr. Tilak De Fonseka Mendis and Dr. Kenneth William Gregory Suddaby, Defendants[^1]
BEFORE: Justice R. Ryan Bell
COUNSEL: Joseph Y. Obagi and Adam J. Aldersley, for the Plaintiff
Eli Mogil and Adam H. Kanji, for the Defendants Dr. Sheldon Levy, Dr. Abraham Isaac Orner, Dr. Tilak De Fonseka Mendis, and Dr. Kenneth William Gregory Suddaby
No one appearing for the Defendant 7977085 Canada Inc.
No one appearing for the Defendant Jean Turgeon
HEARD: August 3, 2021
ENDORSEMENT
Overview
[1] The public interest in and rationale behind settlement privilege was summarized by the Supreme Court of Canada in Union Carbide Canada Inc. v. Bombardier Inc., 2014 SCC 35, [2014] 1 S.C.R. 800, at para. 31:
Settlement privilege is a common law rule of evidence that protects communications exchanged by parties as they try to settle a dispute. Sometimes called the “without prejudice” rule, it enables parties to participate in settlement negotiations without fear that information they disclose will be used against them in litigation. This promotes honest and frank discussions between the parties, which can make it easier to reach a settlement: “In the absence of such protection, few parties would initiate settlement negotiations for fear that any concession they would be prepared to offer could be used to their detriment if no settlement agreement was forthcoming” (A. W. Bryant, S. N. Lederman and M. K. Fuerst, The Law of Evidence in Canada (3rd ed. 2009), at para. 14.315).
[2] On this refusals/production motion, Drs. Levy, Orner, Mendis, and Suddaby (the “defendant doctors”) seek production of settlement documentation from two previous actions (the “Tort Action” and the “SABs Action”) in which the plaintiff, Ms. Burwash, was involved. Ms. Burwash has undertaken to produce the relevant settlement documentation to the parties and the trial judge following the verdict or judgment. The defendant doctors say that disclosure of the settlement documents is required to prevent double recovery and that the justice of the case requires disclosure now.
[3] The defendant doctors also seek an order for the production of the portions of Ms. Burwash’s solicitor’s brief that deal with the assessment of damages. In the alternative, they seek production of her pre-trial conference brief in the SABs Action. The defendant doctors say that this information will be integral in assessing damages and facilitating meaningful settlement discussions prior to trial. Ms. Burwash opposes the request for the solicitor’s brief on the basis that she was not asked for it on discovery. Ms. Burwash opposes production of her pre-trial conference brief in the SABs Action on the basis that she has not waived settlement privilege over it.
[4] Ms. Burwash also brought a cross-motion to strike certain limitation defences in the pleadings of the defendant doctors and 7977085 Canada Inc. (“Riverfront”). Counsel advised at the outset of the hearing that the cross-motion has been settled on a without costs basis.
[5] In my view, the justice of this case requires that Ms. Burwash produce the documents relating to the settlement of the Tort Action and the SABs Action and her pre-trial conference brief in the SABs Action. My reasons follow.
Background Facts
The Tort Action and the SABs Action
[6] In January 2009, Ms. Burwash commenced the Tort Action arising from personal injuries suffered in a motor vehicle accident in January 2007. In 2009, Ms. Burwash also commenced an action against her accident benefits carrier, Intact Insurance, claiming statutory accident benefits.
[7] In both the Tort Action and the SABs Action, Ms. Burwash sought damages for certain costs of renovating her home to accommodate her medical needs arising from the motor vehicle accident. Because Ms. Burwash’s accident benefits carrier refused to fund the home renovations recommended in her treatment plan, Ms. Burwash undertook the renovations on her own account with funds borrowed from LexFund. The LexFund loan was in the amount of $315,789, with an effective interest rate of 30.6 per cent.
[8] The SABs Action was settled before trial. The Tort Action was settled after jury selection and preliminary motions, but before any witnesses were called. Both actions were settled for lump sum amounts. Ms. Burwash’s position is that there was no allocation made to the LexFund loan.
This Action
[9] Ms. Burwash commenced this action in August 2015. The defendants in this action are (or were in the case of SCM Insurance Services) the defendant doctors, an occupational therapist (Jean Turgeon), and medical assessment centres (SCM Insurance and Riverfront). The defendant doctors were involved in assessing Ms. Burwash in the context of the SABs Action. So, too, was Mr. Turgeon.
[10] In this action, Ms. Burwash alleges that the defendants interfered in the expert opinions contained in the accident benefits file, which were, in turn, relied on by the tort insurer in the Tort Action, and that they misled Intact Insurance into denying the recommended treatment plans. Ms. Burwash claims damages for deceit, misrepresentation, negligence, and inducing breach of contract. Under this head of damages, Ms. Burwash seeks recovery of the financing costs associated with the LexFund loan. Ms. Burwash also claims general damages for pain and suffering and aggravated and punitive damages.
[11] Ms. Burwash was examined for discovery on June 17, 2020. On her discovery, Ms. Burwash refused to produce documents and to answer questions relating to the settlement of the Tort Action and the SABs Action on the basis of settlement privilege.
Settlement Privilege
[12] Settlement privilege is a class privilege, which creates a prima facie presumption of inadmissibility. Settlement privilege is important because parties would be reluctant to engage in settlement discussions if those discussions could be admitted at trial as evidence of concessions: R. v. Delchev, 2015 ONCA 381, 126 O.R. (3d) 267, at para. 24.
[13] Exceptions to settlement privilege will be found when the justice of the case requires it: Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, [2013] 2 S.C.R. 623, at para. 12. Exceptions to settlement privilege are justified where the evidence of the settlement or negotiations is intended for use other than illustrating the weaknesses of the other party’s case. “If a party is not seeking to admit the settlement offer or negotiations as evidence of a concession, an exception to settlement privilege would do little to detract from the ‘public interest in encouraging settlement’”: Delchev, at para. 31.
[14] As the Supreme Court of Canada held in Sable Offshore, at para. 19, to justify an exception:
…a defendant must show that, on balance, “a competing public interest outweighs the public interest in encouraging settlement”. These countervailing interests have been found to include allegations of misrepresentation, fraud or undue influence, and preventing a plaintiff from being overcompensated. [Citations omitted.]
[15] The defendant doctors concede that the refused questions and the documents in respect of which they seek production (apart from the solicitor’s brief) are subject to settlement privilege. They submit that privilege should be lifted and the information disclosed now (instead of post-judgment or verdict) because a) there is a significant risk of double recovery for Ms. Burwash, b) the prior settlement agreements in the Tort Action and the SABs Action are not Pierringer Agreements, and c) the overarching principles of efficiency, judicial economy, and promoting settlement militate in favour of immediate disclosure.
[16] Ms. Burwash takes the position that the defendant doctors have failed to identify any compelling public interest that would outweigh the substantial public interest protected by the settlement privilege. She asserts that the issue of double recovery only arises once a plaintiff has established liability against the defendants and has proven their damages at trial.
Analysis
Is there a countervailing public interest?
[17] In this case, the countervailing public interest is said to be the prevention of double recovery by Ms. Burwash given that the LexFund loan – part of the damages claim in this action – also formed part of the damages claims in the Tort Action and in the SABs Action, and that both of those actions were settled for lump sum amounts. The defendant doctors seek the information for this purpose and not for the purpose of attacking Ms. Burwash’s case on the merits.
[18] Preventing a plaintiff from being overcompensated has been recognized as a countervailing public interest that may outweigh the public interest in encouraging settlement: Sable Offshore, at para. 19, citing Dos Santos Estate v. Sun Life Assurance Co. of Canada, 2005 BCCA 4, 207 B.C.A.C. 54, at para. 20. In Dos Santos, the plaintiff’s claim against the defendant arose under a policy of long-term disability coverage under which the plaintiff’s wife had benefits for loss of income. The defendant sought details of a mediated settlement the plaintiff agreed to on his wife’s behalf in litigation arising from a motor vehicle accident in which the plaintiff’s wife was seriously injured. The British Columbia Court of Appeal agreed with the defendant that the only way to establish objectively what the plaintiff had actually received in compensation for lost earnings was to recognize an exception for the documents that would otherwise have been protected by settlement privilege: Dos Santos, at para. 37.
[19] Ms. Burwash argues that Dos Santos is distinguishable on its facts because in Dos Santos, there was a contract between the plaintiff and the defendant that entitled the defendant to a subrogation defence to the main action. No similar defence is available to the defendant doctors in this case.
[20] I would not restrict the application of Dos Santos in the manner suggested by Ms. Burwash. To do so would appear to be contrary to the principle expressed by the Court of Appeal for Ontario in Delchev that exceptions to settlement privilege will be justified where the evidence is intended for use other than challenging the opposing party’s case on the merits. In my view, the fact that the long-term disability policy at issue in Dos Santos contained a subrogation clause does not change the proposition, recognized by the Supreme Court of Canada, that the prevention of overcompensation or “double recovery” may justify an exception to settlement privilege.
The Impact of Sable Offshore
[21] Ms. Burwash asserts that the defendant doctors are simply seeking “advance disclosure” of what, if any, credits might be available to them at the conclusion of the trial should they be found liable to Ms. Burwash. She asserts that the defendant doctors’ arguments have been explicitly rejected by the Supreme Court of Canada in Sable Offshore.
[22] In Sable Offshore, the plaintiff sued a number of defendants who had supplied the plaintiff with paint intended to prevent corrosion of its offshore structures and onshore facilities. The plaintiff also sued contractors and applicators who had prepared surfaces and applied the paint. The plaintiff alleged that the paint failed to prevent corrosion. The plaintiff entered into Pierringer Agreements with some of the defendants, allowing those defendants to withdraw from the litigation, while permitting the plaintiff’s claims against the non-settling defendants to continue. All of the terms of the Pierringer Agreements were disclosed to the non-settling defendants with the exception of the amounts for which the parties settled. The non-settling defendants sought disclosure of the settlement amounts.
[23] The Supreme Court of Canada allowed the appeal from the decision of the Nova Scotia Court of Appeal, which had ordered the settlement amounts be disclosed. Abella J., writing for the court, concluded at para. 30:
A proper analysis of a claim for an exception to settlement privilege does not simply ask whether the non-settling defendants derive some tactical advantage from disclosure, but whether the reason for disclosure outweighs the policy in favour of promoting settlement. While protecting disclosure of settlement negotiations and their fruits has the demonstrable benefit of promoting settlement, there is little corresponding harm in denying disclosure of the settlement amounts in this case.
[24] Like Ms. Burwash, the plaintiff in Sable Offshore agreed that at the end of the trial, once liability had been determined, it would disclose to the trial judge the amounts it settled for. As a result, if the non-settling defendants established a right to set-off, their liability for damages would be adjusted downwards, if necessary, to avoid overcompensating the plaintiff: Sable Offshore, at para. 25.
[25] As for any concern that the non-settling defendants would be required to pay more than their share of damages, Abella J. confirmed that it is inherent in Pierringer Agreements that non-settling defendants can only be held liable for their share of the damages and that they are severally, and not jointly, liable with the settling defendants: Sable Offshore, at para. 26.
[26] In response to the defendant doctors’ argument that disclosure of the documents would allow them to assess their exposure, Ms. Burwash relies on para. 27 of Sable Offshore where Abella J. wrote:
It is therefore not clear to me how knowledge of the settlement amounts materially affects the ability of non-settling defendants to know and present their case. The defendants remain fully aware of the claims they must defend themselves against and of the overall amount that Sable is seeking. It is true that knowing the settlement amounts might allow the defendants to revise their estimate of how much they want to invest in the case, but this, it seems to me, does not rise to a sufficient level of importance to displace the public interest in promoting settlements.
[27] Ms. Burwash also asserts that the defendant doctors’ argument that disclosure of the settlement documents would permit meaningful settlement discussions was rejected by Abella J. at paras. 28-29:
The non-settling defendants also argued that refusing disclosure impedes their own possible settlement initiatives since they are more likely to settle if they know the settlement amounts already negotiated. Perhaps. But they may also, depending on the amounts, arguably come to see them as a disincentive. In any event, theirs is essentially a circular argument that the interest in subsequent settlement outweighs the public interest in encouraging the initial settlement. But the likelihood of an initial settlement decreases if the amount is disclosable.
Someone has to go first, and encouraging that first settlement in multi-party litigation is palpably worthy of more protection than the speculative assumption that others will only follow if they know the amount. The settling defendants, after all, were able to come to a negotiated amount without the benefit of a guiding settlement precedent. The non-settling defendants’ position is no worse.
[28] These paragraphs must be read in the context of the multi-party litigation that was before the court in Sable Offshore. The particular settlements negotiated and at issue in Sable Offshore were Pierringer Agreements, developed “to address the obstacles to settlement that arose in multi-party litigation”: Sable Offshore, at para. 21. Under a Pierringer Agreement, the plaintiff’s claim is only “extinguished” against those defendants with whom the plaintiff has settled, and the claims against the non-settling defendants continue. The settling defendants are assured that they will not be subject to a contribution claim from the non-settling defendants, who will be accountable only for their share of liability at trial: Sable Offshore, at para. 23.
[29] Justice Abella concluded that the defendants’ interest in knowing the settlement amounts did not “rise to a sufficient level of importance to displace the public interest in promoting settlements” because encouraging the first settlement in multi-party litigation is “palpably worthy of more protection” than the assumption that others will only follow if the first settlement amount is disclosed. In other words, “someone has to go first.”
[30] The factual matrix before me is entirely different. The settlement agreements in the Tort Action and the SABs Action are not Pierringer Agreements. The defendant doctors were not parties to either the Tort Action or the SABs Action. This is an entirely separate action, but the damages claimed by Ms. Burwash in this action include recovery for the costs of the LexFund loan, which Ms. Burwash has confirmed formed part of the damages claims in the Tort Action and the SABs Action. The Sable Offshore observation that “someone has to go first” does not apply in this case.
[31] By contrast, I note that Ms. Burwash has entered into a Pierringer Agreement with SCM Insurance. In accordance with the principles from Sable Offshore, the defendant doctors accept that they are not entitled to notice of the amount received by Ms. Burwash under the Pierringer Agreement with SCM Insurance until the conclusion of the trial.
[32] Double recovery, save for a few narrow exceptions, is not permitted: Laudon v. Roberts, 2009 ONCA 383, 308 D.L.R. (4th) 422, at para. 55. In this case, there are two public interests that must be weighed against the public interest in encouraging settlement. The first is the recognized public interest in preventing overcompensation. The second is the public interest in encouraging settlement in subsequent actions. While Ms. Burwash says that there is no risk of double recovery given her undertaking to produce the relevant settlement documents once liability is established, in my view, the defendant doctors are entitled to test, at this stage of the proceeding, Ms. Burwash’s position that neither of the prior settlements resulted in funds allocated towards the LexFund loan. Producing this information now would allow the defendant doctors to assess their exposure and permit meaningful settlement discussions.
[33] This is not a Pierringer-type case where the likelihood of an “initial settlement” decreases if the amount of that initial settlement is disclosable: see Sable Offshore, at para. 28. The initial settlements here occurred in other actions to which the defendant doctors were not parties. In my view, disclosure in this case would serve to promote and would not detract from the public interest in encouraging settlement.
Concluding Observations on the Justice of the Case
[34] The defendant doctors also maintain that the principles of efficiency and judicial economy favour disclosure of the settlement documents at this stage of the proceeding.
[35] In Hryniak v. Maudlin, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court of Canada wrote of the “shift in culture” required to achieve the goal of providing fair and just processes for resolving civil disputes efficiently, affordably, and proportionately: Hryniak, at para. 28. The administration of the courts is to be conducted so as to promote the efficient use of public resources: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 71(e). Rule 1.04(1) provides that the rules are to be liberally construed to secure the just, most expeditious, and least expensive determination of the case on its merits, while r. 1.04(1.1) addresses the need for proportionality in the application of the rules: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rr. 1.04(1) and (1.1).
[36] In my view, the defendant doctors are entitled to test Ms. Burwash’s evidence that the settlement amounts in the Tort Action and the SABs Action were lump sums and that no amount was allocated to the LexFund loan. If disclosure is withheld until liability and damages are determined, the defendant doctors will be unable to engage in meaningful settlement discussions.
[37] The defendant doctors submit that if disclosure is withheld until the trial on liability and damages is completed, a separate trial on the allocation of funds to the “LexFund Loan head of damages” would be required. The defendant doctors say that this separate trial would involve the defendants in the Tort Action, the SABs Action, and any party found to be liable in this proceeding, and would require the calling of witnesses from all three actions, including Ms. Burwash’s counsel.
[38] For her part, Ms. Burwash argues that a post-trial motion will be required to determine if the defendant doctors are entitled to any credit or set-off for amounts recovered in the Pierringer Agreement with SCM Insurance, the Tort Action, or the SABs Action, regardless of whether production is ordered now or at the conclusion of the trial. Therefore, early disclosure of the settlement documents would not result in any judicial efficiencies or economies.
[39] I do not find Ms. Burwash’s argument persuasive. The fact remains that without the settlement documents from the Tort Action and the SABs Action, the defendant doctors will not be able to engage in meaningful settlement discussions, including at mediation or through a pre-trial conference. The purpose of the pre-trial conference is to promote settlement of some or all of the issues in dispute without a hearing, and to obtain orders or directions to ensure that any necessary hearing is expeditious, orderly, and efficient: Rules of Civil Procedure, r. 50.01. In my view, postponing production of the documents would not promote efficiency and would be inconsistent with the public interest in encouraging settlement; any postponement would impede the defendant doctors’ ability to fully engage in a process aimed at promoting settlement.
Should the Solicitor’s Brief or the SABs Action Pre-trial Conference Brief be Produced?
[40] The defendant doctors argue that Ms. Burwash’s solicitor’s brief – excluding the provision of any legal advice – in relation to the assessment of damages is relevant given Ms. Burwash’s position that the lump sum settlements in the Tort Action and the SABs action were not allocated to the LexFund loan. Relying on Lizotte v. Aviva Insurance Company of Canada, 2016 SCC 52, [2016] 2 S.C.R. 521, at paras. 19-22, the defendant doctors submit that while this information would have been subject to litigation privilege while those actions were ongoing, litigation privilege ended with the conclusion of those proceedings.
[41] In the alternative, the defendant doctors submit that Ms. Burwash should be required to disclose her pre-trial conference brief in the SABs Action, particularly given that the Tort Action pre-trial conference brief has already been disclosed. This information, the defendant doctors say, will be integral in assessing damages and facilitating meaningful settlement discussions prior to trial.
[42] While Ms. Burwash asserts that her solicitor’s brief was not requested on discovery and is not the proper subject matter of a refusals motion, her primary position appears to be that the pre-trial conference brief in the SABs Action is subject to settlement privilege.
[43] I first explain how Ms. Burwash’s pre-trial conference brief in the Tort Action came to be disclosed in this action. Prior to the settlement of the Tort Action, Ms. Burwash sought production of the complete file from CIRA Medical Services Inc., a predecessor to SCM Insurance. CIRA was not a party to the Tort Action. Justice Patrick Smith ordered the documents be produced on a third-party records motion, under r. 30.10. Ms. Burwash’s pre-trial conference brief in the Tort Action was among the materials produced by CIRA pursuant to Smith J.’s order. Because the brief was already in the hands of a third party – CIRA – Ms. Burwash could not claim settlement privilege over it. Ms. Burwash says that this cannot, however, be used as evidence that she waived settlement privilege over the pre-trial brief in the SABs Action.
[44] I would be reluctant to order production of Ms. Burwash’s solicitor’s brief in light of the defendant doctors’ alternative request for production of Ms. Burwash’s pre-trial conference brief in the SABs Action. While the defendant doctors emphasize that they do not seek production of any legal advice contained in the solicitor’s brief, I anticipate the possibility of disputes and the need for judicial rulings as to what does and does not constitute legal advice.
[45] Production of the pre-trial conference brief in the SABs Action does not raise these same issues. While the brief is subject to settlement privilege, the countervailing public interests in preventing double recovery and encouraging settlement in the present action, justify an exception to the settlement privilege. In my view, the justice of the case requires that Ms. Burwash also produce this document.
Disposition
[46] Ms. Burwash is ordered to answer the questions refused on her examination for discovery and to produce the relevant documents that relate to the settlement of the Tort Action and the SABs Action, including records that evidence the payment of the LexFund loan. Ms. Burwash is also ordered to produce her pre-trial conference brief in the SABs Action. If necessary, Ms. Burwash shall reattend on her examination for discovery to answer proper questions arising from the questions ordered to be answered and the documents ordered to be produced.
[47] The parties are encouraged to agree on costs of the motion. In the event that they are unable to agree, they may make written submissions limited to a maximum of three pages. The defendant doctors shall deliver their costs submissions by November 15, 2021. Ms. Burwash shall deliver her responding submissions by November 29, 2021. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves.
Ryan Bell J.
Justice R. Ryan Bell
Date: November 1, 2021
COURT FILE NO.: 15-65254
DATE: 2021/11/01
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Joanne Burwash, Plaintiff
AND
Dr. Sheldon Levy, Dr. Abraham Issac Orner, 7977085 Canada Inc., previously known as Riverfront Medical Services Limited, Jean Turgeon, Dr. Tilak De Fonseka Mendis, and Dr. Kenneth William Gregory Suddaby, Defendants
ENDORSEMENT
Ryan Bell J.
Released: November 1, 2021
[^1]: SCM Insurance Services, previously known as CIRA Medical Services Inc., previously known as Riverfront Medical Services (2011) Inc., was a named defendant in the action. The plaintiff has entered into a Pierringer Agreement with SCM Insurance.