The Power of Perspectives

The Canadian Bar Association

Alexander Gay

The common interest: When privileged information is shared

December 14 2016 14 December 2016

 

In-house counsel are often asked to share privileged materials with third parties that have a common interest in a piece of litigation. Common interest privilege is a category of privilege that permits parties to disclose privileged evidence between themselves without losing privilege. The determination of common interest is a factual one, which may consider whether the parties share a common goal, seek a common outcome or have a self-same interest on either or both the general claims (e.g., both sued for exactly the same alleged misconduct) or certain specific allegations (e.g., an expert report on one specific matter in issue). Common interest privilege is asserted and the documents are shared—often with little to no understanding about the nature of the privilege claim being asserted or how to best share documents with the third party in a way that protects its subsequent dissemination.

A common interest privilege is not a stand-alone privilege that can be claimed on all documents shared with third parties in the face of actual or impeding litigation. In order to claim the benefit of a common interest privilege, the documents must benefit from either solicitor-client privilege or litigation privilege. Where the privileged document is shared, both the originating party and the third party receiving the document can claim a common interest privilege, independent of one another.

However, what often gets left out is that in the event the privilege claim is challenged, the facts surrounding the creation of the document may have to be examined—in which case the third party may not be in a position to speak to the creation of the document and may have difficulty asserting the privilege claim.

In addition, the channels used to deliver the privileged documents to the third party, such as an email or letter, are not privileged unless they describe the appended document. Only the documents that are appended and that have an underlying privilege claim benefit from the common interest privilege. Too often, this point is overlooked by litigation counsel when preparing their schedule B to their affidavit of documents. For litigators, it leaves the door open to a line of questioning that often exposes information on the timing of when the parties made the decision to share information.

Privileged information is also often exchanged with a third party on the assumption that there is a common interest between the company and the third party. However, where privileged information has been shared, and it turns out there is no common interest, the parties are left vulnerable in litigation. A common interest privilege may not be claimed by a third party in these circumstances.

Companies can be assured that one of the first things capable litigation counsel do is question the basis of the alleged shared common interest. As such, when delivering privileged documents to a third party, best practices require that a company deliver documents on a confidential basis, with a cover letter confirming the confidence. The law of confidence, which has its foundation in the law of equity, can act as a backstop in the event the common interest privilege claim cannot be asserted by the third party. Where a privileged document is delivered in confidence, the privilege continues to exist and there is some measure of protection afforded to the documents.

The concept of “limited waiver of privilege” is seen within the accounting profession when an accounting firm is given access to privileged documents for the purposes of completing an accounting exercise. In completing the accounting exercise, the accountant often gains access to legal advice that is subject to solicitor-client privilege. One of the foundational cases that deals with the doctrine of limited waiver is British Coal Corporation v. Dennis Rye [1988] 1 WLR 1113 (CA), where it was held that a party can provide privileged documents to a party for limited purposes, without waiving the privilege as against the world at large.

Within the context of a limited waiver of privilege, the issue becomes the extent to which the third party receiving the privileged information can waive privilege. Where there is a common interest privilege, the third party may assert privilege without having to confer with the company that provided the privileged document. Within the context of the law of confidence, the third party cannot assert a privilege over the document if the company that provided the information decides to no longer assert the privilege. In other words, the third party may not assert a privilege in its own right.

Of course, the problem with sharing privileged documents in confidence is that the case law in support of this legal position is sparse in Canada. In addition, the concept of sharing privileged information in confidence and for limited purposes is not one that has been accepted in all common law jurisdictions. The United States treats the sharing of information with a third party as a complete waiver of privilege and rejects the notion that disclosure by a company can be for limited purposes. This becomes an important consideration for companies with a North American presence.

The days where common interest privilege could be claimed to protect any and all information exchanged between companies, even where there is no actual or impending litigation, are over. The privilege is not a stand-alone privilege. It requires that a solicitor-client privilege or litigation privilege be asserted over the documents. Companies cannot afford to be complacent about how they release privileged information.

The principle of limited waiver of privilege offers a solution that should be considered even if the case law is still in its infancy in Canada. The inclusion of a statement in the email or cover letter advising counsel that the enclosed documents are privileged and that they are provided in confidence opens the door to additional arguments that can act as a backstop in the event that the common interest privilege fails.

Note: The views expressed in this article are those of the author and not those of his employer, the Department of Justice. This article was initially published in the Winter 2016 issue of CCCA Magazine.

Alexander Gay is General Counsel at the Department of Justice. He maintains a broad civil litigation practice, with an emphasis on commercial and trade disputes. He is also a part-time professor at the University of Ottawa (Faculty of Law) and the author of the Annotated Arbitration Act of Ontario, 1991 and countless articles. Mr. Gay is a member of the Law Society of Alberta, the Law Society of British Columbia and the Law Society of Upper Canada.

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