Settlement privilege (or negotiation privilege) is a class privilege designed to promote settlement. It creates a prima facie presumption of inadmissibility. Any information disclosed under settlement privilege cannot subsequently be used against the accused. Exceptions include where the information is used "to rebut an allegation of prejudice at the hands of the Crown."
The parties need the ability to have "full and frank discourse" in order for agreements to take place. Without protection these discussions may not take place.
The privilege protects the public interest in favouring settlement. It "promotes the interests of litigants generally by saving them the expense of trial".
The disclosure of "without prejudice" communications has a tendency to promote litigation.
The privilege applies where the following criteria are established:
- A litigious dispute must be in existence or within contemplation.
- 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.
- The purpose of the communication must be to attempt to effect a settlement.
Where settlement fails the privilege is invoked and the communications cannot be used in the course of litigation. However, if settlement is successful, the communications may be used to prove the existence of a settlement contract.
The privilege is possessed by both parties to the litigation and cannot be unilaterally waived by one party.
Courthouse hallway discussions concerning offers to settle and related discussions are prima facie privileged".
Discussions of possible admissions by defence counsel are protected by privilege.
The use of the term "without prejudice" alone is not determinative of whether settlement privilege applies.
Settlement privilege applies to resolution discussions and is prima facie inadmissible on an abuse of process motion.
Sable Offshore Energy Inc. v Ameron International Corp., 2013 SCC 37 (CanLII) at para 12
R v Delchev, 2015 ONCA 381 (CanLII) at para 24
Sable at para 12
Delchev at para 24
R v Zarinchang,  OJ No 1548 (ONCA) at para 28
R v Bernardo,  OJ No 1718 (ONSC) at para 16
Zarinchang at para 28
- R v Pabani, 1994 CanLII 8723 (ON CA)
Kelvin Energy Ltd. v Lee, 1992 CanLII 38 (SCC),  3 SCR 235 at para 48
- Pirie v Wyld (1886), 11 O.R. 422,  O.J. No. 188 (QL) (Ont. H.C.), at para 18 (“... letters written or communications made without prejudice, or offers made for the sake of buying peace, or to effect a compromise, are inadmissible in evidence. It seemingly being considered against public policy as having a tendency to promote litigation, and to prevent amicable settlements.”)
Calgary (City) v Costello, 1997 ABCA 281 (CanLII) at para 60
Delchev at para 24
John Sopinka, Sidney N. Lederman & Alan W. Bryant, The Law of Evidence in Canada, 3rd ed. (Markham: LexisNexis Canada Inc., 2009) at para 14.322
Hansraj v Ao, 2002 ABQB 385 (CanLII) at para 13
- Hansraj v Ao at para 13
Hansraj v Ao at para 13
R v Delchev,  OJ No 3963 (ONSC) at para 19
- Delchev, ibid.
R v Lake,  OJ No 5447 (Ont. Gen. Div) at paras 41 to 52
TDL Group Ltd. v Zabco Holdings Inc. et al., 2008 MBQB 86 (CanLII) at para 30
Flegel Construction Ltd. v Cambac Financial Projects Ltd., 1983 CanLII 1019 (AB QB)
- Delchev at para 27
Possible exceptions to settlement privilege include:
- Whether without prejudice communications have resulted in a concluded compromise agreement;
- To show that an agreement apparently concluded between the parties during the negotiations should be set aside on the ground of misrepresentation, fraud or undue influence;
- Where a clear statement made by one party to negotiations, and on which the other party is intended to act and does in fact act, may be admissible as giving rise to an estoppel;
- If the exclusion of the evidence would act as a cloak for perjury, blackmail or other unambiguous impropriety, but such an exception should only be applied in the clearest cases of abuse of a privileged occasion;
- In order to explain delay or apparent acquiescence in responding to an application to strike out a proceeding for want of prosecution but use of the letters is to be limited to the fact that such letters have been written and the dates at which they were written;
- Whether the claimant had acted reasonably to mitigate his loss in his conduct and conclusion of negotiations for the compromise of proceedings brought by him; and
- Where an offer is expressly made “without prejudice except as to costs”.
Meyers v Dunphy, 2007 NLCA 1 (CanLII)
Communications regarding plea negotiations fall under the category of "public interest privilege" and so cannot be used in court. This includes negotiations regarding bail hearing as well as sentencing hearings.
This privilege exists to permit "frank and full discussions between counsel for the accused and counsel for the Crown." 
This kind of privilege cannot be waived by one party alone.
It is prudent to set "terms of engagement in advance of negotiations" so the documents and reports provided to the other side pursuant to settlement negotiations will not be used for any other purpose.
R v Bernard,  A.J. No. 1007, 2002 ABQB 747 (CanLII) (Alta. Q.B.)
- R v Roberts, 2001 ABQB 520 (CanLII),  A.J. No. 772 (Alta. Q.B.)
R v Bernardo,  O.J. No. 1718, (Ont. Gen. Div.)(*no link) at para 16
R v Delorme,  N.W.T.J. No. 51 (N.W.T. S.C.), 2005 NWTSC 34(*no link) at para 18
R v Roberts, supra, at para 60
R v Griffin,  A.J. No. 1455, 2009 ABQB 696 (CanLII) (Alta. Q.B.) at para 65
R v Bernard, supra, at para 39
R v Griffin, supra, at para 54
- Griffin, supra – Doctors letter disclosed to crown was used in a production order. Report was found to be privileged, invalidating the ITO