Settlement Privilege Stays Intact: The Court of Appeal Confirms Timing Is Everything in Mo’Allim v Gallant

I am pleased to share that the Alberta Court of Appeal has dismissed the appeal in Mo’Allim v Gallant, 2026 ABCA 201, a decision I argued for the successful respondent alongside Norm Assiff, KC and Anmol Metley of Assiff Law (which was a true privilege, pardon the pun).

The result confirms an important principle for anyone who litigates or settles personal injury and civil claims: a defendant cannot reachinto an opponent’s privileged settlement on the strength of an assertion, andthe question of disclosure does not arise — if it ever does — until a trial court has actually found the injuries to be indivisible.

This post explains what the case was about,where the Court accepted the arguments we advanced, and why the decision should matter to the civil litigation bar.

The Background

Nur Mo’Allim was injured in two separate motor vehicle accidents, sixteen months apart. In each, another driver failed to stop and struck his vehicle. He advanced two separate claims. The secondclaim settled; the first — against Clinton Gallant and the Attorney General of Canada — continued.

During questioning, the defendants in the first action sought production of the privileged settlement documents from the second action. Their theory was that some of the injuries pleaded in the twoactions overlapped, that the injuries might therefore be “indivisible,” and that without sight of the settlement Mr. Mo’Allim risked being overcompensated— recovering twice for the same loss.

An applications judge ordered the documents produced (though shielded from the trial judge until damages were determined). On appeal, Justice Burns of the Court of King’s Bench reversed, holding that settlement privilege should not be pierced pre-emptively on the basis of a hypothetical risk that might never materialize. The defendants appealed to the Court of Appeal. The appeal was dismissed.

The Legal Issue

Settlement privilege is a class privilege.It exists to encourage parties to resolve disputes without litigation, which serves the broader public interest in the efficient administration of justice.It is not absolute: it yields where a competing public interest — such as preventing a plaintiff from being overcompensated — outweighs the interest of encouraging settlement. That much was common ground.

The real dispute was about timing. The appellants wanted disclosure now — pre-trial — so they could assess their exposure. Our position was that the only thing that makes settlement documents relevant is the prevention of double recovery, and the risk of double recovery only becomes real once a trier of fact has found the injuries to be indivisible. Until then, the privilege exists and the risk does not.

A presently-existing right should not be displaced by a hypothetical future one until and unless that future risk actually crystallizes.

Where the Court Accepted Our Position

The Court of Appeal agreed with the core of the respondent’s case on each point that mattered.

Privilege exists now; the risk of overcompensation is hypothetical.

The Court accepted that, absent a determination of indivisibility —which must be made at trial — the risk of overcompensation was not sufficientto set aside settlement privilege. Crucially, the Court held that even thoughthe settlement documents were relevant and material, the finding that they wereprivileged “precludes an order to disclose the documents pretrial, regardlessof relevance and materiality” (para 29). Relevance alone does not defeatprivilege.

Sable governs even without a Pierringer Agreement.

The appellants argued that the chambers judge erred by relying on Sable Offshore Energy Inc v Ameron International Corp, 2013 SCC 37, because that case involved a Pierringer Agreement in multi-party litigation and this case did not. They urged the Court to follow out-of-province authority — principally Burwash v Levy, 2021 ONSC 7196 — that had ordered pre-trial disclosure. The Court rejected that argument, holding that the chambers judge “was not persuaded thatthe presence or absence of a Pierringer Agreement was a sufficient factor to depart from the guidance provided in Sable,” and that this did not constitute a palpable and overriding error (para 26).

Indivisibility is for the trier of fact, and disclosure can be managed at trial.

The Court confirmed that the lack of a finding of indivisibility does not make the documents irrelevant, but it does inform whether the risk of overcompensation outweighs the interest in promoting settlement at this time(para 29). Concerns about whether, when and how settlement documents should be disclosed are properly raised with the trial judge, and the appellants remain free to raise indivisibility and overcompensation at trial even though the documents were not produced pre-trial (para 34). The Court added practical guidance: it is good practice to advise the trial judge early of the existence of a settlement agreement, and any disclosure that becomes necessary can be managed through a partial bifurcation (paras 35–36).

The standard of review carried real weight here. The parties agreed the chambers judge had stated the correct legal test;the only question was whether she applied it properly — a question of mixed fact and law, reviewable for palpable and overriding error. The appellants were,in substance, disagreeing with a discretionary balancing rather than identifying an error. The Court found no palpable and overriding error.

Why This Decision Matters

For the civil litigation bar, Mo’Allim does several useful things.

First, it confirms that a bare assertion of overlapping or “indivisible” injuries does not unlock an opponent’s privileged settlement. A defendant cannot reverse the default presumption — treating privileged material as producible simply because it has raised an argument that might, after trial, make that material relevant.

Second, it protects more than the plaintiff. Settlement privilege belongs equally to the third party who settled in reliance on confidentiality. Those non-parties have no direct stake in the ongoing litigation, and their rights should not be breached unless and until a court finds it genuinely necessary.

Third, it keeps the timing of any disclosure where it belongs — after a trial determination, if at all — and offers a workable path (early notice to the trial judge, and bifurcation where needed) for managing the rare case in which the risk of overcompensation actually materializes.

Finally, it guards against a practical mischief. If a hypothetical risk of double recovery were enough to force pre-trial disclosure, every successive tortfeasor would have an incentive todemand an opponent’s settlement details, driving up cost and delay and pressuring plaintiffs — especially less-resourced ones — to accept earlier,lower settlements. That outcome would undermine the very interest in promoting settlement that the privilege exists to protect.

Settlement privilege is a presently-existing right, not a bargaining chip to be surrendered for a hypothetical. The Court of Appeal’s decision reaffirms exactly that.

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Zachary Al-Khatib is a litigation lawyer at ZK Law in Edmonton. This post is provided for general information only and is not legal advice. If you have a questiona bout settlement privilege, disclosure obligations, or a specific matter,please contact our office.

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