It is not uncommon for a Plaintiff to suffer bodily injuries caused by multiple different accidents and to have two or more contemporaneous bodily injury actions as a result. Where the injuries overlap and are contemporaneous, it is often beneficial to resolve these actions together on a global basis.
However, in cases where an action concerning a prior or subsequent accident has already settled on its own, the Defendant in the remaining matter can be left in the dark as to what heads of damage the Plaintiff has already been compensated. Without consideration of the prior settlement, there is a risk that the Plaintiff could be overcompensated:
It is a fundamental principle of tort law that an injured person should be compensated for the full amount of the loss, but no more…the plaintiff is to be given damages for the full measure of the loss as best that can be calculated. But he is not entitled to turn an injury into a windfall (Ratych v Bloomer, 1990 CanLII 97).
In the 2024 decision of Mo’Allim v Gallant, 2024 ABKB 368, Applications Judge Summers of the Alberta Court of King’s Bench considered an application by a defendant involved in a 2018 accident seeking an order for the production of settlement information in an action for a subsequent accident that had already settled. The Plaintiff objected to that disclosure, arguing that the documents were subject to settlement privilege.
Judge Summers considered a line of case law, mostly from British Columbia, regarding exceptions to settlement privilege in similar circumstances. Although there are strong public policy considerations which support the importance of settlement privilege, there may be exceptions in certain circumstances:
Public interest in settlement of disputes generally requires without prejudice documents or communications created for, or communicated in the course of, settlement negotiations to be privileged.
Privilege protects documents and communications created for such purposes both from production to other parties to the negotiations and to strangers, and extends as well to admissibility, and whether or not a settlement is reached…without protection, the public interest in encouraging settlement will not be served…there must be exceptions to this general rule (Middlekamp v Fraser Valley Real Estate Board, [1992], 71 BCLR (2d) 276, paragraph 19-21).
The British Columbia Court of Appeal in Dos Santos v Sunlife Assurance Co of Canada, 2005 BCCA 4, held that in order to establish an exception to settlement privilege, it must be shown that the public interest in encouraging settlement is outweighed by a competing public interest (paragraph 20). Where there was a relationship between claims the Plaintiff made against the Defendant and settlement funds that may have already received by the Plaintiff in settlement with another party, then there may be an exception to settlement privilege (paragraph 33-39).
The Alberta Court of Appeal in Bellatrix Exploration Ltd. v Penn West Petroleum Ltd., 2013 ABCA 10, cited Dos Santos for the proposition that the prevention of double recovery is a recognized exception to settlement privilege (paragraph 29).
In Mo’Allim, Judge Summers also considered the case of Dholliwar v Yu, 2015 BCSC 670. In Dholliwar, two out of three actions arising out of separate accidents settled, and the defendant in the third action sought an order for the settlement documents from the first two actions. The defendant argued that the injuries resulting from the three accidents were indivisible and, as such, the Applications Judge found that the settlement documents were relevant:
[…] to avoid double recovery, there must be a deduction from the full measure of damages of any extra benefit received by [the Plaintiff], and judgement given for the net amount only […]
[…] there is no doubt that information on the settlements will have to be produced if and when the trial judge concludes that the injuries are indivisible, as the trial judge will then be asked to determine the amount for which these defendants are liable. The question remains as to whether it is necessary that they be produced now, in advance of such a finding […]
[…] on the basis that indivisibility is at issue, and that there is potential for over-compensation, it is appropriate to require disclosure of the settlement documents at this time. I accept the submission of the defendants that such disclosure is necessary, in that it may assist in the settlement of the plaintiff’s claims arising from the third accident….the defendants…wish to have the information necessary to assess their exposure, both for the purposes of settlement and in the preparation of their case for trial (Dholliwar at paragraph 19-26 referring to Ratych v Bloomer).
Ultimately, Judge Summers determined in Mo’Allim that the injuries alleged in both accidents had “tremendous overlap”. The Defendant’s position that the injuries were “indivisible” made the settlement documents relevant to the action, and therefore the Defendants were entitled to the information from the settlement of the 2020 accident at the time of the application. The settlement documents were not to be disclosed to the trial judge until after a determination had been made regarding damages, and if it was concluded by the trial judge that the injuries were not, in fact, indivisible, the settlement documents would be irrelevant and the trial judge would not consider it at all (paragraph 24-25).
Mo’Allim was appealed and in April 2025 Justice Burns of the Alberta Court of King’s Bench reversed the Chambers decision. The impact of the appeal concerned the timing of the disclosure: whether it should happen at the time of the application for production during the course of litigation and in advance of trial, or after a trial judge has made the pertinent determinations after trial.
Justice Burns confirmed that “if damages in a prior or subsequent action have been settled for an indivisible injury in the settled action, the possibility of overcompensation [in the unsettled action] is extant” (paragraph 28). She recognized that while there may be exceptions to settlement privilege, those exceptions “must be narrowly construed” (paragraph 25 citing Bellatrix at paragraph 28).
The Court considered the case of Burwash v Levy, 2021 ONSC 7196, where the defendants brought an application for production of settlement documents in prior settled actions. In addition to the public interest behind settlement privilege, that is, to encourage settlement, the Court in Burwash also recognized a public interest in encouraging the settlement of the subsequent, unsettled action through the production of prior settlement records:
Producing this information now would allow the defendant doctors to assess their exposure and permit meaningful settlement discussions […]
[…] In my view, the defendant doctors are entitled to test Ms. Burwash’s evidence that the settlement amounts in the Tort Action and the SADs 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 (paragraph 32 and 36).
However, Justice Burns found this reasoning to be “removed from the purpose of the exception [to settlement privilege] – which is the prevention of double recovery”, and cited the Supreme Court in Sable Offshore Energy Inc. v Ameron International Corp., 2013 SCC 37, at paragraph 27:
[…] 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 review 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.
Justice Burns was not prepared to depart from Sable and held in order to protect the class settlement privilege, including the interests of parties who are strangers to the litigation and did not agree to waive privilege, the production of settlement documents must only occur once the trial judge has made a determination with respect to the indivisibility of injuries and damages. The risk of overcompensation is ameliorated by the production of settlement documents after a trial judge has assessed damages.
As it stands, it is unlikely that this decision will assist in reaching timely settlements for the unsettled action, as settlement privilege will be maintained until after a decision from a trial Justice on indivisibility of injuries and damages. Where there is evidence of a contemporaneous accident with similar injuries, defendants should continue to pursue global resolutions.