It depends on the nature of the lawsuit and how the settlement was paid out. If it was a personal injury lawsuit, then it is likely not taxable, but if the settlement included something like a severance payment, then all or part of it might be taxable. 

It would be a good idea to contact the Canada Revenue Agency (CRA) and check with them. If you are in Canada or the United States, you can call the CRA at 1-800-959-8281.