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When individuals or businesses become entangled with the law, they are quickly in need of the aid and guidance of those skilled in the law, namely their lawyers. Such assistance, to be of value, must be based on a full and frank disclosure of the client’s circumstances, both good and bad.

The likelihood of full disclosure would be greatly diminished if the client felt that the information they provided would not remain confidential, and might thereafter be used against them. Hence, the doctrine of privilege developed to prevent such use (abuse) by those opposed to the client.

History

The development of privilege began in the Sixteenth Century when lawyers were first exempted from testifying against their clients. It has since expanded in scope to cover communications during, or in contemplation of, litigation. It grew again to cover any and all consultations for legal advice, whether litigious or not.

Rationale

The law is both complex and difficult. Its understanding and application is the purview of lawyers. Their assistance is both critical and essential to the fair and even application of the law. The lawyers, in turn, must know everything the client knows to allow them to properly advise and guide the client. To ensure that such disclosure occurs the client must have the utmost confidence that their communications will remain confidential.

Exceptions

There are exceptions to every rule. Privilege is a right of the client, so the first and most obvious exception would be the client’s consent to disclosure. Other exceptions would include exchanges where legal advice is neither sought or offered. Finally, privilege would never exist for guidance sought in order to further the commission of fraud or a crime.

No Longer Just a Rule of Evidence

The courts have slowly expanded the doctrine to cover new situations of need. It is no longer just a rule of evidence preventing the use of privileged information in a courtroom. This development involves a temporal shift from once only being available at the time such evidence is sought to be tendered in court to much earlier applications and situations. Temporal limits still exist but they are retreating. It is not yet, however, a property right. It remains somewhere in between.

The Current Test

Each piece of evidence over which privilege is sought must be:

  • a communication between solicitor and client;
  • which entails the seeking or giving of legal advice; and
  • which is intended to be communicated in confidence by the client to the solicitor.

Disclosure to Third Parties and Common Interest Privilege

As we have seen, the doctrine of privilege is constantly evolving. A further example is the old rule that any disclosure of a privileged document or communication, however, occasioned, meant the loss of the privilege that once attached. The privilege was considered to have been waived or lost. That position has, in turn, been modified to protect the privilege where the disclosure was made to a third party in confidence and who had a sufficient common interest with the party making the disclosure.

This modification has been made and accepted in complex commercial transactions, most often related to the disclosure of memoranda of law dealing with the potential tax consequences of the proposed transactions. The parties may be adverse in overall interest (buyer and seller) but both have a common interest in minimizing or eliminating any adverse tax consequences. This clearly is the law in British Columbia and Alberta based on the Federal Court of Appeal’s (FCA) ruling in Iggillis Holdings Inc v. Canada. Leave to appeal the decision was recently denied by the Supreme Court of Canada (SCC).

It is not too far a stretch, in reading the decision, that the concept of a common interest privilege is now well entrenched in the law throughout Canada. A good starting point for this geographical expansion is the Federal Court decision of Pitney Bowes of Canada v. Canada which contains a discussion of the principles and a summary of some of the cases arising from an Ontatio based transaction.

Takeaways

  • Parties who are working together and who expect to have to claim a common interest privilege should strongly consider drafting a common interest agreement expressing their intentions of confidence, their common interest and the uses intended for the privileged document (memorandum of law) in furtherance of that common interest;
  • It is likely not only commercial transactions and tax advice that is protected but also the common interest sharing of opinions, evidence, medical reports, legal opinions etc. amongst joint defendants in civil claims.

For more information on solicitor-client privilege and the common interest privilege rule, or for assistance with drafting common interest privilege agreements, please contact the Toronto litigators at Milosevic Fiske LLP. We are the lawyer’s other lawyers turn to for representation and counsel in their litigation files. Call us at 416-916-1387 or contact us online for a consultation.