Federal Court Of Appeal Confirms Common Interest Privilege Applies In Commercial Transactions

On March 6, the Federal Court of Appeal confirmed that common interest privilege (CIP) protects the sharing, between parties to a commercial transaction, of communications that are subject to solicitor-client privilege (SCP). IGGillis Holdings Inc. v. The Minister of National Revenue is among the clearest statements in support of the existence of such privilege in Canada.1

What You Need To Know

The decision restores certainty in this area of the law in Canada. Prior to the lower court's decision,2 Canadian courts had uniformly recognized the application of CIP to protect disclosure of SCP information that is shared between parties to a commercial transaction. The trial decision, which the Federal Court of Appeal overturned, had held that CIP should not apply in this context. IGGillis concludes explicitly that the law of CIP is uniform across Canada. CIP applies broadly. Many cases upholding the application of CIP involve M&A transactions where a target has shared privileged information about things such as asset or liability values or ownership. This case involves a tax dispute with the Minister of National Revenue, who sought to review legal advice shared between counterparties during negotiations over tax structuring issues. IGGillis confirms that CIP applies to legal advice given in the context of commercial transactions generally. Despite the apparent breadth of CIP, its limits are not yet known. The Federal Court of Appeal does not clarify the extent to which CIP can extend beyond commercial transactions to other types of common endeavours—such as, for example, to protect the sharing of SCP information between two parties pursuing a law reform initiative, or seeking to persuade a regulator. Analysis

Despite its name, CIP is not a freestanding legal privilege but an exception to the doctrine of waiver of SCP. One party's disclosure of information that is subject to SCP to another party with a common legal interest (such as the consideration or completion of a commercial transaction) does not waive the privilege attached to that information. Reliance upon CIP is common in the context of corporate commercial transactions in Canada. Notably, CIP is not universally available in the context of corporate commercial transactions in other jurisdictions.

In this case, the Minister of National Revenue sought to review legal advice that two commercial parties had shared with one another during negotiations. The Federal Court of Appeal held that...