The Power of Perspectives

The Canadian Bar Association

Yves Faguy

The CBA’s intervention on common interest privilege

October 5 2017 5 October 2017

 

The CBA intervened this week in Iggillis Holdings Inc. v Canada (National Revenue) at the Federal Court of Appeal in Edmonton. Mark Tonkovich, Jacques Bernier, and Stephanie Dewey of Baker McKenzie appeared for the CBA in this matter of common interest privilege. We interviewed Tonkovich about the intervention.

CBA National: The Federal Court's ruling in Iggillis Holdings turns on the question of common interest privilege. How does the concept work and in what context?

Mark Tonkovich: The concept is better thought of as an exception to the principle that disclosing solicitor-client privileged material to parties outside the solicitor-client relationship waives that privilege.  The common interest exception is essentially that a client's sharing of privileged material with a third party in pursuit of a common interest between the two will not waive privilege as against any other person.  The question of context is actually key here: while the Federal Court accepted that the common interest principle applies in the litigation context, the Court concluded that there is no similar rule in the transactional or advisory (non-litigation) context.

N:  So what is at stake in the wake of the Federal Court ruling?

MT:  The Federal Court of Appeal is being asked to provide clarity on the common interest exception, including whether it exists outside of litigation on the facts of this particular case (which involved two groups of clients and two different law firms contributing to a single tax law memorandum).  The appeal decision will be especially important because the Federal Court's very detailed analysis actually introduced significant confusion and uncertainty into the law of privilege by departing from prior cases.  It also cast doubt over established practices on how Canadian lawyers operate in transactional fields where multiple clients benefit from a common understanding of the law governing their transaction.  The issue arose in a tax case, but it applies in contexts as varied as M&A, environmental, competition, IP, securities, real estate, divorce and matrimonial, and wills and estates law.

N: What is the purpose behind the CBA's intervention?

MT: As the national voice of the legal profession, it was important for the CBA to assist the court in fully canvassing the underlying privilege issues.  Being sensitive to its role as an intervener, the CBA did not take a position on the facts but instead emphasized the importance of the appeal and the need for clarity in the law. We made submissions on the need to consider whether law firms initially retained by separate clients but working together to effectively advise all transacting parties might actually be engaged in a limited-scope joint retainer. The CBA also took the opportunity to explain the best practices for the profession in this potentially tricky area, and to emphasize that – despite suggestions to the contrary in this case – no legal advice is less protected by privilege, and no regulator has a preferred status in challenging privilege claims over advice relevant to its jurisdiction.

N: Should it matter what kind of legal advice is originally sought?  Should that have any bearing on whether solicitor-client privilege exists?

MT: No, the type of legal advice sought should not matter.  As long as there is a confidential communication between lawyers and clients for the purpose of seeking or obtaining legal advice, solicitor-client privilege should attach.  The privilege is all about protecting the solicitor-client relationship, which has for decades been seen as fundamental to our legal system.  It is important to keep that big picture in mind.

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