Supreme Court of Canada Upholds Common Interest Privilege Rule

November 15, 2018 | John Grant

The Supreme Court of Canada recently rejected a leave application of the Canada Revenue Agency, meaning the much heralded decision in Iggillis Holdings v Canada (MNR), 2018 FCA 51 is good law.  Confirmed is the Federal Court of Appeal’s conclusion that sharing legal advice with other transacting parties, or working together with other parties’ lawyers to develop the legal advice, will not waive solicitor-client privilege where the collaboration is done in pursuit of a common interest.

Privilege and the Common Interest Rule

Solicitor-client privilege protects communications between a lawyer and a client, made for the purpose of seeking or giving legal advice, that are intended to be confidential.  Common interest privilege is misnamed.  It is not a standalone privilege.  It is a rule that permits the sharing of privileged information without loss of solicitor-client privilege.

Impact on clients and counsel

The reality of legal discourse in Canada (including activities in the non-profit sector) means that clients and their counsel will often have a practical interest in sharing privileged advice or directly collaborating with another party’s counsel when there is a common interest.  Advice provided during a corporate merger/integration most readily comes to mind.

With leave to the Supreme Court of Canada being denied, the Federal Court of Appeal decision confirms that the common interest rule is firmly established in Canadian law.  The Court of Appeal in Iggillis remarked that

“[S]olicitor-client privilege is not waived when an opinion provided by a lawyer to one party is disclosed, on a confidential basis, to other parties with sufficient common interest in the same transactions. This principle applies whether the opinion is first disclosed to the client of the particular lawyer and then to the other parties or simultaneously to the client and the other parties. In each case, the solicitor-client privilege that applies to the communication by the lawyer to his or her client of a legal opinion is not waived when that opinion is disclosed, on a confidential basis, to other parties with sufficient common interest in the same transactions.”

Accordingly, parties to a transaction can have a “common interest” in completing the deal or in sharing legal advice.  They can generally share privileged documents, like tax memos and other legal opinions, without mistakenly losing privilege over those documents. Refreshingly undisturbed is the Federal Court of Appeal’s pronouncement that the interests of respective clients are better served if their lawyers collaborate on legal opinions dealing with the application of a statute to the transaction to be completed by the parties.

As a practical takeaway, best practices would dictate that parties consider signing a common interest privilege agreement to crystalize the common interest and intentions. In approaching such agreements, parties should be mindful that:

  • they must share a sufficiently common interest;
  • they will need to clearly demonstrate that they intended for the sharing of privileged communications and materials (e.g. an opinion) to remain confidential and that the exchange of privileged communications was made in furtherance of that common interest; and
  • as suggested by the Canadian Bar Association, they should limit the circumstances, if any, in which such materials may be disclosed to third parties (e.g. disclosure should be made only on consent of all parties and only after sufficient notification is given to other parties, or only where required by law).

Broadly, as a means of protecting their communications and materials, taxpayers should take all reasonable steps to develop, to claim, and to maintain solicitor-client privilege.

For more information on solicitor-client privilege and the common interest privilege rule, or for assistance with drafting common interest privilege agreements, please contact us.

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