Is It Improper to Include Details of Settlement Discussions Within the Pleading Documents For a Lawsuit?

It is Improper For Pleading Documents, Among Others, As Filed In the Course of Court Litigation to Contain Details of Settlement Negotiations and Any Such References Should Be Struck From Such Documents.

A Helpful Guide For How to Understand Court Rules Regarding Settlement Privilege That Preclude Pleading of An Offer-to-Settle

Lawsuit Document Containing Improper Pleadings When a dispute that may develop into a legal action within a court of law, the parties to the dispute often try to resolve the issues prior to actually commencing a court proceeding.  During efforts to resolve the dispute, settlement offers including negotiation discussions are often exchanged.  Subsequently, if the settlement discussions were unsuccessful and a court proceeding begins, the settlement negotiation details must remain undisclosed to the court and therefore be omitted from all court documents including the claim and defence pleadings.

The Law

The rules of pleading documents within the course of litigation, whether as claims or defences, precludes settlement discussion details including the specifics of any offer-to-settle, release terms, and the like.  The rules in this respect are found within the common law which deems the pleading of settlement details as scandalous; and accordingly, such scandalous pleading should be struck in accordance to Rule 12.02(1)(b),(c) of the Rules of the Small Claims Court, O. Reg. 298/98 or Rule 25.11(b) of the Rules of Civil Procedure, R.R.O. 1990, Regulation 194.  Specifically, the cases of Renzone v. Onyx Homes Inc., 2020 ONSC 7722 and 2030945 Ontario Ltd. v. Markham Village Shoppes Limited, 2013 ONSC 1020, among other cases, confirm the scandal of pleading settlement details as well as providing the legal test for what should be deemed as settlement details.  Specifically, these cases state:

[14]  I begin with Rule 25.11. This Rule allows the Court to “strike out or expunge all or part of a pleading…with or without leave to amend on the ground that the pleading…is scandalous, frivolous or vexatious…”.

[15]  It is settled law that referring to settlement offers or discussions, which are thus subject to “settlement privilege”, may well be considered scandalous, frivolous or vexatious, leading to that part of the pleading being struck given that such communications are inadmissible. See, in that regard, 2030945 Ontario Ltd v. Markham Village Shoppes Ltd 2013 ONSC 1020 at para. 8.

[8]  I agree with the defendant that references to settlement offers, discussions and negotiations should not be included in a pleading. The law in this regard is summarized by Master Beaudoin (as he then was) in Canadian Gateway Development Corp. v Canada (National Capital Commission), [2002] O.J. No. 3167 (S.C.J. – Master) at paragraphs 8 and 9 where he states as follows:

8  A Master had jurisdiction pursuant to Rule 25.11(b) to strike out a pleading on the ground that the pleading is scandalous, frivolous or vexatious. Although the defendant correctly submits that a Master cannot generally strike out a defence as being untenable, that it not the nature of the motion here. The law is clear that evidence of privileged communications, such a settlement discussions, should not be before the Court. (See I. Waxman & Sons v. Texaco Canada Ltd., 1968 CanLII 178 (ON SC), [1968] 1 O.R. 642 (H.C.J.), aff'd 1968 CanLII 327 (ON CA), [1968] 2 O.R. 452 and Sopinka, Lederman and Bryant, The Law of Evidence in Canada, 2nd Edition, Vancouver, Butterworths, 1999). If such discussions are inadmissible in a civil proceeding, any reference to them in a party's pleadings can be considered scandalous, frivolous or vexatious and should be struck from their pleading.

9  Per Sopinka and Lederman at p. 810, there are three conditions under which settlement discussions will be considered privileged and inadmissible:

(a) a litigious dispute must be in existence or within contemplation;

(b) the communication must be made with the express or implied intention that it would not be disclosed to the court in the event negotiations failed; and,

(c) the purpose of the communication must be to attempt to affect a settlement.

Summary Comment

Court documents such as claims or defence pleadings, among various others, must exclude references to settlement negotiations such as the details of offers and discussions intended to resolve the dispute. Where references or details to settlement negotiations are improperly included within court documents, such should be struck and kept from view of the court.


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