Does settlement privilege apply when settling a dispute with a public body?

Until very recently, the answer to this question would have had to be no. A trend in the case law of the Commission d’accès à l’information (“CAI”) suggested that settlement privilege did not offer any protection when an access to information request was made of a public body. In these decisions, the CAI refused to apply settlement privilege and favoured the disclosure of settlement agreements in response to an access to information request.

This trend now appears to be coming to an end. In Chambre de la sécurité financière c. Drapeau¹ (“Drapeau”), the Court of Quebec overturned the first instance decision of the CAI and recognized that settlement privilege takes precedence over the principle of disclosure provided for in the Act respecting access to documents held by public bodies and the protection of personal information (the “Act”). The settlement agreement at issue was declared confidential and therefore not subject to disclosure under the Access Act.

Background

The decision in Drapeau has been anticipated as, in recent years, the CAI has rendered no fewer than four decisions refusing to recognize the application of settlement privilege in the context of access to information requests.² These decisions were all appealed. The Drapeau case was the first to proceed and will necessarily have an impact on the treatment of the other CAI decisions on the subject currently before the Court of Quebec.

Facts

In response to an access to information request from Mr. Drapeau, the Chambre de la sécurité financière (the “CSF”) had refused to disclose an agreement settling the dispute between it and the Council of Professionals in Financial Services, on the grounds that this agreement was protected by settlement privilege.

At first instance, the CAI had ordered disclosure on the basis that settlement privilege had been set aside by the legislator by the adoption of the Act. According to the CAI, the Act is a quasi-constitutional law that protects citizens’ right to information, a fundamental tenet of our democratic society and enshrined in section 9 of the Act.³ Unless there is an applicable exemption to disclosure, the right of access principle must prevail.

The CAI further found that, prior to the Supreme Court’s 2013 decision in Sable Offshore,⁴ settlement privilege did not include the content of successful negotiations and thus did not constitute a rule of the common law at the time the Act acquired its paramount status. Therefore, this privilege cannot take precedence over the requester’s right of access. The CAI ordered the disclosure of the settlement agreement.

The CSF appealed to the Court of Quebec under section 147 of the Access Act.

Recognizing that the applicable standard of review to the issue of litigation privilege is correctness, the Court found that the CAI’s decision erred in law.

Following the recent decisions of the Court of Quebec in Marcotte⁵ and Desmarais⁶ regarding the precedence of litigation privilege over the Act, the Court explained that the quasi-constitutional nature of the Act does not justify disregarding generic privileges such as litigation privilege.⁷

As for the existence of protection of the content of successful negotiations, i.e., settlement agreements, by way of settlement privilege, the Court noted that the courts do not create the law, but merely interpret it. Accordingly, when the courts interpret or state the law by applying an existing legal rule to a new set of facts, particularly relating to the scope of a common law rule, their decisions have a declaratory effect. Thus, contrary to the CAI’s ruling, the Supreme Court did not “create” the part of settlement privilege that protects the content of successful negotiations in its 2013 decision in Sable Offshore. On the contrary, this element has always existed but was brought to light by the Supreme Court’s decision. Since the rule existed at the time the Act was adopted, the Quebec government would have had to exclude its application if such was their intent.⁸

According to the Court, the CAI’s reasoning would lead to an incongruous situation where the content of unsuccessful negotiations would have been protected since the adoption of the Act in 1982, but the content of successful negotiations would not have been protected and would remain accessible to requesters.⁹

The Court noted that this proposal would mean any public body wishing to know whether the settlement negotiations it conducts, or the settlement agreements it enters into, are confidential would be obliged to undertake an analysis of the state of the common law in 1982 and thereafter by studying the evolution of the scope and extent of this generic privilege.¹⁰ In the Court’s view, this complex exercise would be contrary to the principle of legal stability and, from this perspective, would certainly not encourage litigants to avail themselves of alternative dispute resolution mechanisms.

Conclusion

The Court of Quebec’s decision clarifies the scope of settlement privilege and its precedence over the Act. This decision is in line with the Marcotte and Desmarais decisions, which recognized the precedence of litigation privilege over the Act.

Thus, pursuant to the Court’s decision, a person who has settled a dispute or litigation with a public body will not see the confidentiality of that settlement stripped away in response to an access to information request. In keeping with the Drapeau decision, a public body will now have to refuse access to any requested settlement agreement or transaction reached with a third party on the grounds of settlement privilege

¹ 2021 QCCQ 1838 (the “Judgment”), on appeal from the decision of the CAI, 2019 QCCAI 175 (the “CAI Judgment”). At the time of publication of this commentary, the Judgment has not been appealed.
² See Green c. Ministère du Développement durable, de l’Environnement et de la Lutte contre les changements climatiques, 2019 QCCAI 166, Tilmant-Rousseau c. Office québécois de la langue française, 2019 QCCAI 288, Belzile c. Ministère de la Sécurité publique (Sûreté du Québec), 2020 QCCAI 115.
³ CAI Judgment, para. 39.
⁴ Sable Offshore Energy Inc. v. Ameron International Corp, 2013 SCC 37.
⁵ Agence du revenu du Québec c. Marcotte, 2019 QCCQ 7877.
⁶ Desmarais c. Autorité des marchés financiers, 2019 QCCQ 7874.
⁷ Judgment, para. 57.
⁸ Judgment, para. 68.
⁹ Judgment, paras. 83-86.
¹⁰ Judgment, para. 87.