Federal Court Refuses To Recognize Common Interest Privilege In The Transactional Context

The doctrine of "common interest privilege" ensures that a document or communication that is already protected by solicitor-client or litigation privilege does not lose that protection when it is shared between two parties sharing a "common interest" in either litigation or a transaction. In a lengthy decision released on December 12, 2016, the Federal Court refused to recognize the version of this doctrine that has become known as "transactional common interest privilege." Iggillis Holdings Inc. v. Canada (National Revenue), 2016 FC 1352 (Iggillis) is significant because, in the words of the Court itself, it stands as the "first Canadian decision that concludes that [common interest privilege] should be limited to litigation-related matters."

The analysis in Iggillis is a marked departure from the existing body of common interest privilege case law that has been consistently developed and applied by Canadian courts. In concluding that common interest privilege has no application in the transactional context, the Court in Iggillis characterized the doctrine in a manner that is fundamentally different from the approach reflected in the prevailing Canadian authority. More specifically, the Court appeared to view the doctrine as a stand-alone form of privilege rather than as a limited defence to the waiver of other forms of privilege. For this reason, although the Iggillis ruling spans nearly 130 pages, it raises more questions than it answers. Furthermore, given the substantial body of existing Canadian case law that supports a contrary conclusion, the authority of Iggillis may legitimately be questioned. Further guidance from the Federal Court of Appeal is needed in order to provide parties with certainty concerning this important issue.

The Basics of Common Interest Privilege

Canadian courts have repeatedly affirmed the fundamental role played by legal privilege in safeguarding individual rights and in facilitating the administration of justice. Recognizing the importance of both solicitor-client privilege and litigation privilege, courts have developed principled mechanisms designed to ensure that the benefits of privilege are preserved and are lost only when appropriate. A significant tool that has been used for decades by Canadian courts to prevent the inappropriate loss of privilege is the doctrine of "common interest privilege." Despite its name, common interest privilege is not itself a species of legal privilege. Rather, it is a...