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SCC rules exception to settlement privilege can apply to prove settlement in family mediations

Friday, December 17, 2021 @ 5:01 PM | By Cristin Schmitz

The Supreme Court of Canada has ruled that although family law mediations are generally confidential and protected by settlement privilege, as in other areas of the law there exists an exception to that privilege when needed to help prove the existence or scope of a mediated settlement.

In a Dec. 17, 2021, judgment of Canadawide application, the top court unanimously — albeit in two separate opinions — dismissed an appeal by the Association de médiation familiale du Québec v. Bouvier 2021 SCC 54.

Citing the need to protect vulnerable spouses, the appellant unsuccessfully urged the court to recognize, with respect to family law settlement mediations, a rule of absolute confidentiality shielding the parties’ discussions and the summaries of their mediated agreements.

That argument split the court 6-3 — with all judges agreeing that the Quebec appeal had to be dismissed, but reaching opposite conclusions on the key legal issue.

For the six-judge majority, Justice Nicholas Kasirer held that the settlement exception applicable in the context of commercial mediations, recognized in Union Carbide Canada Inc. v. Bombardier Inc. 2014 SCC 35, “generally applies” to communications in family mediations.

(A settlement exception allows the court to recognize and protect the confidential nature of mediation while allowing a party to a mediated settlement to prove that the mediation resulted in a binding contract.)

Justice Andromache Karakatsanis disagreed on this point, writing in a separate concurring opinion backed by Justices Rosalie Silberman Abella and Sheilah Martin, that “discussions that occur within family mediation sessions remain confidential and cannot be disclosed or adduced as evidence unless the parties specifically agree otherwise.”

The minority also deplored as “unprecedented and unwarranted” the majority’s award of solicitor-client costs against the losing appellant —which the majority nevertheless limited, as a “compromise”, to a maximum of $15,000 (plus disbursements), in view of the appellant’s non-profit status, concern about deterring less well-off litigants from pursuing matters of general interest, and other considerations. “Of all the reported cases of this Court, I could find only four cases where the Court ordered solicitor-client costs against a private party that raised a question of public importance,” Justice Karakatsanis remarked. Moreover, the Supreme Court “has never ordered costs on a solicitor-client basis against a non-profit organization that raised an issue of public importance.”

“An award of full indemnity or solicitor-client costs is an extraordinary measure that effectively penalizes this non-profit organization for bringing forth an issue of obvious importance to an area of law that touches the lives of so many Canadians,” the minority said. “It can only deter such parties from doing so in the future.”

Joanne Biron, Miller Thomson

Joanne Biron of Montreal’s Miller Thomson, lead counsel for the successful respondent husband in the case, who was also represented by co-counsel Emily Kissel, Michaël Plante and Emmanuelle Gascon, said the costs award in a 10-year legal odyssey was “exceptional and appropriate.”

“We are very happy with the Supreme Court’s decision. We are convinced this judgment will preserve the public’s confidence in the effectiveness of relying upon the family mediation process in Quebec,” Biron said. “We also consider that this decision will continue to promote access to justice in the area of family law.”

Biron said that for family law lawyers and clients “it was very important for the court to clarify, once and for all, certain rules concerning the admissibility of evidence in a context where two spouses or de facto spouses reached an agreement following a family mediation process. From the outset of this file, we were of the view that in certain circumstances, parties who previously participated in family mediation had to be in a position to prove the existence of an agreement reached between them. The majority’s decision confirms that they have this right.”

Kissel said the main takeway for the Quebec family law bar is that the principle of confidentiality and settlement privilege that applies to family mediation in Quebec is not absolute. “There are exceptions to same, and they are entirely necessary for mediation to fulfil its objective of having parties settle disputes out of court.”

Counsel for the Association de médiation familiale du Québec could not be reached immediately for comment.

Aaron Franks, editor of the Reports of Family Law, told The Lawyer’s Daily, the majority ruling will find application countrywide, including its key takeaway that “the settlement exception to settlement/mediation privilege applies in family law so as to allow a party to prove the existence of a settlement reached at mediation. It would be inimical to the family mediation process if a party to the settlement could not actually prove that it exists.”

Franks, of Toronto’s Epstein Cole LLP, said the majority and minority opinions parted ways in that the former generally sees family mediation as “special,” but not necessarily “different,” as the minority would have found.

Bouvier confirms the general importance of mediation as a dispute resolution mechanism in the area of family law — and the impact extends to the common law provinces,” Franks said. It “confirms that a settlement reached in family mediation that is meant to be a settlement will be enforceable.”

Hilary Linton, Riverdale Mediation

Toronto family law lawyer Hilary Linton of Riverdale Mediation Ltd. told The Lawyer’s Daily the top court has clarified for family mediators the circumstances in which a mediation summary report might be read by the court to clarify terms of a post-mediation agreement, and what steps they and their clients should take if they do not want that to happen.

“Although the case involves aspects of family law and mediation that are unique to Quebec, the decision is relevant for Ontario family law professionals,” Linton explained.

She advised that mediators will need to explain to their clients the exception to without-prejudice settlement privilege, “unless they specifically contract out of it in their Agreements to Mediate — which they will also need to explain clearly to their clients.”

Linton added that, given the strict requirements for a domestic contract set out in Ontario’s Family Law Act, “I would expect that Ontario courts would give little, if any, weight to a Mediation Summary Report as evidence of a post-mediation agreement formed between two unrepresented parties, as the Supreme Court did in this case. “This should particularly be so where counsel are not present at the mediation, which is surprisingly prohibited in Quebec,” she said.

In Linton’s view, the minority’s opinion is “compelling” in citing good reasons for not permitting the exception to settlement privilege in family mediation. “The best course of action is for mediators to add a clause to their Agreements to Mediate that contracts out of this exception to settlement privilege,” she suggested. “That can be done in plain language, in a sentence or two.”

She noted, however, that parties should understand that the exception to settlement privilege explained in Bouvier can operate to protect against bad faith bargaining in mediation. “It is intended to ensure the primary purpose of mediation — to help parties resolve disputes — is supported by the law,” Linton said. “Whether you agree with the decision or not — we now have clarity on this important point from the Supreme Court and also a road map for addressing the issue in practice.”

Christine Vanderschoot, Vanderschoot Family Law

Christine Vanderschoot of Toronto’s Vanderschoot Family Law told The Lawyer’s Daily the ruling strengthens the process of mediation by ensuring that the good intentions of the parties, when coming to settlement, will be upheld by the courts if one party later decides to take the position that there was no mediated settlement.

The court did not open the door very wide, however, she suggested. “This ruling only allows very limited elements of the otherwise confidential mediation process to be admitted into evidence in court proceedings for the limited purpose of proving the existence of settlement terms reached during mediation. This is a common sense result, given that the alternative would suggest that parties who became dissatisfied with a mediated settlement could later simply deny its existence and seek another result, which is exactly what was attempted, unsuccessfully, in this case.”

Vanderschoot added, the decision “applies to all future litigants across Canada who may have wished to rely upon the confidential nature of mediation to later advance further claims by denying a mediated settlement was achieved” and ensures that such attempts will not succeed in family courts.

The case arose after Michel Bouvier and Isabelle Bisaillon, de facto spouses of three years, entered family mediation in 2012 to resolve the terms of their separation. In Quebec, family mediation by certified mediators, subsidized by the province, is available to married, civil union and common law spouses with, or without, children.

The pair disagreed over custody and support of their children, their respective rights in the family’s home and what compensation should be paid to Bisaillon for the hit her career took due to her childcare responsibilities.

At the end of the process, the mediator recorded his conclusions about what had been agreed to in mediation in a standardized “summary of mediated agreements”.

In 2014, Bisaillon went to court, seeking more money and division and sale of the residence. Bouvier responded that the parties had entered into a contract during mediation, as set out in the summary. His ex-spouse denied that a contract existed (the parties had not signed a written contract), and objected to the admission into evidence of the summary on the basis that it was protected by a rule of absolute confidentiality in the mediation process.

At the Supreme Court of Canada, the Association de médiation familiale du Québec was permitted to step into her shoes to argue the appeal.

The top court’s judgment unanimously dismisses the association’s appeal from a Quebec Court of Appeal decision below, which in turn upheld the trial judge’s conclusion — reached on the basis of the summary and the parties’ post‑mediation conduct — that there was a contract between the parties: 2017 QCCS 3788; 2020 QCCA 115.

Addressing the main legal issue in the appeal, Justice Kasirer noted that there are safeguards for vulnerable spouses in the family mediation process in Quebec which are absent from civil and commercial mediation: “the government‑certified family mediator chosen by the parties under the standard mediation contract, and the judge who is asked to confirm any agreement arising from family mediation” which serve “to alleviate the risks associated with the absence of legal advisers during family mediation sessions.”

“Given the significance of the procedural safeguards inherent in family mediation, it is, in my respectful view, an error to insist on the absolute nature of confidentiality,” Justice Kasirer wrote. “A rule of absolute confidentiality might not only deflect family mediation from its participatory and consensual foundations, but also undermine the parties’ adherence to this process for resolving their dispute, or even to the settlement itself.”

To reject the settlement exception recognized in Union Carbide in favour of absolute confidentiality “would interfere with the primary objective of family mediation, which is to reach an agreement resolving an existing or anticipated dispute,” he said. “Moreover, the interpretation of the standard mediation contract widely used in Quebec, and of the contract signed by the spouses in this case, supports the conclusion that parties to such a process do not exclude from the outset the settlement exception from Union Carbide.”

Accordingly, where spouses enter into a settlement at the end of a mediation process governed by the standard contract, “the settlement exception can apply and allow them to file in evidence the communications that are necessary to establish the existence or terms of their agreement,” the majority held.

However, Justice Kasirer stressed that an unsigned summary of mediated agreements given to the spouses is not a contract, because it is not a juridical act that results from an agreement of wills between the spouses and that is intended to produce legal effects. It is “simply a working tool for the spouses,” he said. “Proof that the parties actually entered into an agreement must still be made in accordance with the rules of the law of evidence.” Moreover, because the parties are encouraged to obtain independent legal advice after receiving that document, they may also decide to bind themselves contractually on different terms, or not to bind themselves at all.

The majority concluded that the former spouses, through their communications following the mediation sessions, had expressed their intention to be bound contractually. “Even without the summary of mediated agreements, their testimony regarding their communications during mediation and the evidence concerning their communications thereafter were admissible and could serve to prove the existence and terms of a settlement, in accordance with the principles set out in Union Carbide and in the absence of any objection based on the applicable rules of evidence,” Justice Kasirer held. “The parties exchanged consents after being given the summary and entered into a binding agreement, which, in the circumstances of this case, reflected the terms recorded in the summary.”

While concurring in this result, Justice Karakatsanis argued that discussions within mediation sessions remain confidential and cannot be disclosed or adduced as evidence unless the parties specifically agree otherwise. “Rules relating to the confidentiality of settlement negotiations applied in civil and commercial cases cannot simply be transposed to the family law context: doing so undermines both the unique legal approach to family law settlements developed by our courts and the broader objectives of the family mediation regime,” she wrote. “Our Court has long recognized that family law settlements are unique,” she continued. “The family mediation process, therefore, not only strives to reach settlements. It also aims to restructure relationships by cultivating dialogue and equipping the parties with the necessary tools to collectively navigate the traumatic upheaval of a family breakdown. It invites the parties to work together to forge a stronger foundation for a continuing relationship, and the ability to respond to future circumstances. At the same time, mediation aims to compensate for pre-existing power imbalances that are often exacerbated by the economic consequences of separation. Creating a confidential space where parties can speak freely and without prejudice is essential to achieving these goals.”

Justice Karakatsanis said confidentiality is particularly crucial because the Quebec family mediation regime prohibits the presence of lawyers during mediation sessions, which take place before a trained and accredited mediator, who need not have legal training. “The prohibition of lawyers means that parties do not necessarily know or contemplate the legal implications of what they say in an environment that is designed to be confidential,” she said. “The absence of lawyers in the mediation room can also enhance, rather than mitigate, a power imbalance between the parties.”

Justice Karakatsanis said commercial mediation is intrinsically different: the parties are often sophisticated; they are usually assisted by counsel; and in most cases the only objective is reaching a settlement. “Thus, in the commercial context, the justification for settlement privilege and its exception is to promote the settlement of legal disputes. But the disclosure of mediation discussions does not advance — and indeed, may undermine — other broader objectives of family mediation.”

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