R. v. Nestle Canada Inc.: Settlement Privilege in Criminal Proceedings
Canadian courts have long recognized that there is a compelling public interest in promoting an open and productive settlement process, both in civil and criminal proceedings. Plea bargaining in criminal and quasi-criminal prosecutions is essential to the proper operation of the justice system in Canada. A 1998 study found that 91.3% of all criminal cases in Ontario were resolved without a trial. Courts in Canada have acknowledged that without resolution discussions, the Canadian system of criminal justice would collapse under its own weight. The openness and productivity of resolution discussions is assured by the imposition of settlement privilege, which wraps a protective veil around the information that is exchanged.
In some cases this must be balanced against an even greater interest, the ability of a criminal accused to make full answer and defence. In R. v. Nestle Canada, a very recent decision of the Ontario Superior Court of Justice, the Court held that where a member of a price-fixing cartel provides information against other members of the cartel to the Crown in exchange for immunity from criminal prosecution, that information must be disclosed to the other members that are charged. This paper examines the Nestle Canada decision and its implications for the law of settlement privilege in Canada.
A. Settlement Privilege Protects Against Information Being Used Against Parties
Information exchanged and offers made during the plea bargaining process cannot be used against either the accused or the Crown prosecutor. An offer by an accused to plead guilty to an offence in resolution discussions with the Crown cannot be used as evidence at trial that the individual did in fact commit the offence. Similarly, an offer of a reduced sentence for a guilty plea made by the Crown cannot later be adduced to argue that the accused should receive that lesser punishment. In fact, even if plea bargaining is successful and the parties enter a joint submission on sentencing, the content of those discussions should not be presented to the sentencing judge, only the result.
B. Settlement Privilege Does Not Protect Against Information Being Disclosed to Another Accused
While it is clear that the information disclosed to authorities during plea bargaining cannot be used against the person disclosing it, two decisions of the Ontario courts suggest that the information can be provided to a third party that is charged in a closely-connected criminal or quasi-criminal proceeding.
Nestle Canada involved Cadbury Canada Inc. and Hershey Canada Inc. disclosing the results of internal investigations to the Canadian Competition Bureau in return for leniency. The Canadian Competition Bureau operates an Immunity Program whereby the first party to disclose an offence to the Bureau and provide evidence leading to the filing of charges against another party receives immunity from prosecution. In 2007, Cadbury contacted the Bureau and advised that an internal investigation had revealed a domestic chocolate price-fixing cartel. Cadbury provided a great deal of information that they had collected during this investigation, including records and interviews, and received immunity from prosecution in return.
The Bureau executed search warrants on the other members of the alleged cartel, including Hershey Canada, Nestle Canada Inc., and Mars Canada Inc. Immediately after execution, Hershey approached the Bureau and offered to co-operate in return for consideration under the Bureau’s Leniency Program. Hershey also disclosed information that had been obtained during its internal investigation of the matter, including employee interviews. Hershey pleaded guilty to price fixing and received a $4 million fine.
Nestle, Mars and others were charged with price-fixing. In the course of making disclosure to the accused, the Crown prosecutor inadvertently disclosed the information that had been provided by Cadbury and Hershey. The accused corporations refused to return or delete the information when the Crown requested they do so. At issue was whether the remaining accused were entitled to the information or whether it was protected by privilege.
In Canadian criminal law, the Crown must disclose to an accused person all information in its possession, whether inculpatory or exculpatory, unless the information is clearly irrelevant or is protected by privilege. The only potential source of privilege in the Nestle Canada case was settlement privilege. Solicitor-client privilege did not apply to the information disclosed by Cadbury or Hershey because disclosure to an adverse party, especially a prosecuting authority such as the Competition Bureau, is a waiver of that privilege. This is settled law in Canada.
On settlement privilege, Nordheimer J. affirmed that settlement discussions cannot be used against the settling party in a criminal proceeding. The privilege also extends to the use of that information in a subsequent civil proceeding. However, Nordheimer J. held that, where the disclosing party has resolved the charges (or potential charges) against them, settlement privilege doesn’t protect against disclosure of the information to another accused against whom the information may be used. In these situations, disclosure of the information would not result in any significant risk of prejudice to the disclosing party. They are free from the jeopardy of criminal prosecution. The only competing rights, then, are the right of the accused to make full answer and defence against the public interest in promoting the resolution of disputes. Nordheimer J. held that the right to full answer and defence trumps:
[S]ettlement privilege does not apply to prohibit the disclosure of factual information provided to the Crown in respect of a proposed criminal prosecution in circumstances where the person providing that information does so with the knowledge that the Crown intends to rely on some or all of that information for the purposes of that criminal prosecution.
Nestle and Mars were thus entitled to the internal investigation information that had been provided to the Competition Bureau by Cadbury and Hershey.
A similar result was reached in the murder prosecution of infamous serial killer Paul Bernardo. Bernardo’s wife, the equally infamous Karla Homolka, reached a deal with the prosecution whereby she would testify against Bernardo in exchange for pleading guilty to manslaughter and receiving a sentence of 12 years in prison. Bernardo applied for disclosure of the entirety of the Crown’s file concerning the plea negotiations. The Court held that Bernardo was entitled to the file, since Ms. Homolka was no longer at risk of criminal prosecution. In an oft-cited passage, Lesage J. stated:
In these circumstances, the negotiations between counsel for the Crown and counsel for Ms. Homolka are not being sought so that they may be used against her, rather they are being requested so that they can be used in the defence of another person. Although I readily accept the Crown's position that a privilege ought to exist in the sense that the information should not be used against her in a subsequent prosecution, I do not conclude that the "privilege" ought to extend when that person, i.e. Ms. Homolka, is not an accused nor is at any risk of prejudice. In this circumstance, it is intended that she testify on behalf of the Crown, putting another at penal risk.
C. Settlement Privilege Protects Information Where Charges Against an Accused Still Pending
While it is now uncontroversial in Canadian law in light of Nestle Canada and Bernardo that information disclosed in the course of resolution discussions may be disclosed to another accused against whom that information may be used, this rule only applies where the disclosing person has completely resolved the charges against them and they are no longer at risk of criminal prosecution. The courts in Nestle Canada and Bernardo were both alive to this distinction. The decisions in these cases are at least partially premised on the fact that Cadbury, Hershey and Karla Homolka would not suffer any prejudice from the information being disclosed as the charges against them had been resolved.
The contrary situation was presented in R. v. R.F.S., where two young offenders were jointly charged with second degree murder. R.F.S. had considerable settlement discussions with the Crown which went as far as preparing an agreed statement of facts and setting a date to plead guilty to a lesser offence. R.F.S. changed his mind and decided not to plead guilty. The co-accused sought disclosure of the agreed statement of facts and all other information relayed to the Crown. The Court held that the Crown file should not be disclosed. Shuler J. distinguished Bernardo as R.F.S. was still subject to criminal prosecution. Thus, there remained a significant risk of prejudice to him if the information was disclosed to the co-accused.
In light of Nestle Canada and Bernardo, corporations and individuals in Canada should be aware of the implications of providing information to law enforcement or regulatory authorities in return for a plea deal. Once the proceedings against the disclosing party have been resolved, the Crown will be under an obligation to disclose any relevant information to other persons charged in relation to the matter.
David Porter is a partner who leads the White Collar Defence and Investigations practice at McCarthy Tétrault LLP in Toronto, Canada. Trevor Courtis is a graduate of the University of Saskatchewan law school and is an articling student at McCarthy Tétrault LLP.
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 Pirie v. Wyld (1886), 11 O.R. 422 at 427 (C.A.); Bombardier inc. c. Union Carbide Canada inc., 2014 SCC 35 at paras. 31-32.
 Department of Justice Canada, “Plea Bargaining” (2004), online:
 R. v. Delchev, 2012 ONSC 2094 at para 35.
 Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37 at para. 2.
 2015 ONSC 810 [Nestle Canada].
 R. v. Larocque (1998), 124 C.C.C. (3d) 564 (Ont. Gen. Div.) at paras. 12-13.
 R. v. Roberts, 2001 ABQB 520 at para. 60.
 R. v. Tkachuk, 2001 ABCA 243 at para. 34.
 R. v. Stinchcombe,  3 S.C.R. 326 at 345.
 Nestle Canada at para. 34.
 Nestle Canada at para. 53.
 Nestle Canada at para. 53.
 Nestle Canada at para. 69.
 R. v. Bernardo,  O.J. No. 1718 (C.J.) [Bernardo].
 Bernardo at para. 17.
 See also R. v. Delorme, 2005 NWTSC 34 [Delorme]; R. v. Dickson, 2014 ABPC 233.
 Delorme at para. 30.
 Nestle Canada at para. 64.
 Bernardo at para. 17.
 2003 NWTSC 58 [R.F.S.].
 R.F.S. at paras. 12-14.
 See also R. v. Lake, 1997 CarswellOnt 6601 (Gen. Div.).